IIRC the large majority of their hardware (at least one tranche, they might have gotten more later) was Elon effectively stealing it from Tesla for xAI, saying “I’m personally doing Tesla a favor, since they can’t fully utilize it currently”, and is now renting that (stolen) compute to subsidize SpaceX.

Because hardware depreciates quickly, datacenter rentals are a competitive business with much lower profit margins than the IPO prospectus requires (even if there is a temporary bottleneck now) and there's no real moat.

The original batch was probably Musks "AI will solve everything, i have a small dick, i want to buy all the hardware and be the first" which became "Ah shit Grok doesn't need all the compute, we can't sell it properly our IPO is coming soon we need better numbers.

And

"Shit why did we agree to buy so much hardware if i can't even use the current one fully?"

to

"Ah fuck it, who cares if i indirectly pivot to selling this compute. It brings money and my Fanboys probably think its some magic smartness and not just ignorance"