Mazama Energy, a geothermal startup backed by Vinod Khosla, announced Thursday that it has raised $135 million in an oversubscribed Series B. The company plans to use the cash to develop horizontal wells in super-hot rocks, a phrase that sounds like a geological hazard but is actually the latest hope for powering AI data centers without burning natural gas.

Each well is designed to generate 15 megawatts of electricity. Mazama says it plans to start generating electricity sometime next year, and that its first site in Oregon is capable of producing 10 gigawatts. That's a sharp upward revision from last year's estimate, when Khosla pegged the site at 5 gigawatts - because nothing says "we've done our homework" like doubling your resource estimate in twelve months.

Enhanced geothermal startups are shaping up to be the dark horse in the race to power AI data centers and other large loads on the grid. While tech companies and data center developers have been throwing their weight behind natural gas, geothermal startups have been quietly advancing their technology. Quietly, because drilling through 750°F rock tends to be loud.

Unlike previous geothermal projects, enhanced geothermal startups are targeting deeper and hotter rock. Mazama, for example, has drilled past 10,000 feet in 15 days on its way to about 15,000 feet deep. At those depths, the company can access 750°F (400°C) heat, which at high pressures turns water into a "supercritical" fluid that's neither fully liquid nor fully gas - a state that lets it absorb far more energy than ordinary steam. Mazama says that will allow each well to produce up to 10 times more power than traditional geothermal technologies.

Given the depths Mazama is targeting, the potential payoff is significant. Tapping just 1% of super-hot rock worldwide could generate more than 63 terawatts of electricity, according to the University of Twente and the Clean Air Task Force. That's a lot of terawatts, which is the technical term for "more than we currently know what to do with."

While work at its Oregon site is still in the early stages, the startup has already secured land for a second development. Mazama aims to complete development of the first site by 2030, at which point it says it should generate 200 megawatts of electricity.

The new round was led by Centaurus Capital and Doerr Capital, with participation from ConocoPhillips and Shell Ventures. Existing investors including Khosla Ventures and Gates Frontier returned, and new investors SiteGround Capital, H. Barton Asset Management, and the Jeffrey and Marieke Rothschild Foundation also joined the round. Because if there's one thing oil majors and venture capitalists can agree on, it's that the future of energy involves drilling deeper holes.