AI may live in the cloud, but its future is buried in the ground. This month, tensions between the US and China escalated over access to critical minerals. Beijing announced tighter export controls on rare earth elements, materials that are essential to manufacturing magnets, semiconductors, batteries, and other components used across AI infrastructure. In response, President Trump threatened to impose additional 100% tariffs on Chinese imports if the restrictions aren’t lifted by Nov. 1.
China currently processes over 90% of the world’s rare earth supply, giving it outsized control over one of the most critical chokepoints in the global economy. This dominance isn’t easily replaced. While the US is investing in domestic processing capabilities and building new supply chains through alliances with countries like Australia and Canada, it could take a decade or more to meaningfully reduce dependency on China’s refining infrastructure and production scale.
In that context, this week’s funding announcements of $350 million by Redwood Materials and $1.38 billion by Crusoe feel especially timely. Founded by Tesla cofounder JB Straubel, Redwood is building a domestic supply chain for battery-grade materials, recycling lithium, cobalt, and other critical inputs needed for EVs, grid storage, and AI accelerators. One of its first large-scale deployments in Nevada is powering off-grid data centers with second-life EV batteries.
The modular data centers at Redwood’s Nevada site are built and owned by Crusoe, a seven-year-old startup that was founded in 2018 to convert flared gas into compute. Crusoe has evolved into a vertically integrated AI infrastructure provider, developing hyperscale data centers in energy-rich regions like West Texas and Wyoming. It’s now the lead builder for Stargate, the $500 billion initiative backed by OpenAI, Oracle, and Softbank to expand AI capacity across the US. Its Abilene campus is expected to be one of the largest AI compute sites ever built.
Together, Redwood and Crusoe are quietly constructing the physical backbone of AI, bolstering energy security, and supporting the strategic interests of the nation. Their innovations in energy storage and recycling are crucial steps toward reducing China’s dominance and building a more resilient, technologically advanced infrastructure for the future. In an industry dominated by software narratives, it’s a reminder that the most important breakthroughs of the AI age may be coming from the physical worlds of power and steel.
