Elon Musk’s artificial intelligence firm, xAI, has successfully raised $10 billion in a new funding round, marking a significant escalation in the AI arms race. The raise comes as Musk’s public feud with President Donald Trump resurfaces, now entangled in political and fiscal tensions that may impact his business empire.
xAI Secures Strategic Capital to Expand Grok AI and Supercomputing
The $10 billion capital raise was split evenly between secured debt and strategic equity investments, according to reports. The oversubscribed round included major institutional investors eager to back Musk’s vision of decentralized AI development and expansion.
The funding will scale xAI’s Memphis-based Colossus supercomputer and accelerate training for the Grok chatbot.
This move positions xAI as a formidable challenger to OpenAI, which recently closed a $40 billion round, and Anthropic, now valued over $60 billion. With the new capital, xAI’s valuation stands at $80 billion, reflecting investor confidence in Musk’s roadmap.
In a strategic move earlier this year, Musk merged his X platform (formerly Twitter) with xAI, integrating Grok into the platform’s core functionality.
Trump Threatens DOGE Investigation Into Musk’s Companies
As Musk advances his AI ambitions, tensions with President Trump have resurfaced. In a post on Truth Social, Trump accused Musk of benefiting disproportionately from government subsidies and called for the Department of Government Efficiency (DOGE) to audit his businesses.
“Perhaps we should have DOGE take a good, hard, look at this? BIG MONEY TO BE SAVED!!!” — President Trump
Trump even proposed halting rocket launches, satellite deployments, and electric car production as cost-cutting measures, claiming it would “save a fortune” for taxpayers.
Musk quickly responded on X, saying, “I am literally saying CUT IT ALL. Now,” rejecting dependency on federal funds and advocating for full elimination of government support across the board.
This political clash previously wiped $150 billion off Tesla’s market cap during a June confrontation, underscoring the economic impact of their rivalry.
Crypto Policy Shifts: Lummis Proposes Tax Breaks as Trump Tightens Oversight
Amid the Musk-Trump feud, Senator Cynthia Lummis introduced a proposal to ease crypto taxes, including:
- No taxes on digital transactions under $300, capped at $5,000 annually.
- Deferral of taxes on mined, staked, or airdropped crypto until sold.
- Application of the 30-day wash sale rule to crypto.
Meanwhile, the Senate rejected a separate amendment seeking to ban officials from owning or promoting crypto post-office, signaling ongoing political division over digital asset regulation.
AI Expansion Meets Political Firestorm
Elon Musk’s xAI is now one of the best-funded AI firms globally, but its success is increasingly tied to political crossfire. As Musk grows more vocal about government spending, and Trump doubles down on fiscal scrutiny, the intersection of AI, politics, and crypto regulation will be a key area to watch in the second half of 2025.
The tech vs. government narrative is intensifying — with real financial consequences.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.