Nvidia’s UK Partner Is a 16-Month-Old Crypto Mining Spinout

An Nvidia Corp. logo at the refreshment area at the ai-Pulse conference at Station F technology campus in Paris, France, on Friday, Nov. 17, 2023. The race for AI dominance has intensified geopolitical rivalries as countries seek to harness the technology's potential for economic growth and influence. Photo by Nathan Laine /Bloomberg

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(Bloomberg) — Nscale, a little known British data center company that spun out of a crypto miner last year, has found itself at the forefront of a massive artificial intelligence-fueled data center boom. 

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Nvidia Corp. is investing £500 million ($683 million) in Nscale, Chief Executive Officer Jensen Huang told reporters in London on Wednesday, and said the UK-based company would be part of an AI infrastructure buildout valued at as much as £11 billion. OpenAI named it as a partner for Stargate UK, an offshoot of an even larger US effort to increase the capacity to run AI systems. Microsoft Corp. said this week it would rent $6.2 billion in computing power from Nscale in Norway. 

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The 16-month-old British startup is part of a new generation of “neocloud” firms that run and lease capacity in data centers specially designed for AI and other data-intensive workloads, often filled with advanced chips known as graphics processing units. They’re raking in considerable sums from investors and creditors to build these centers despite being relative newcomers with limited experience. Their arrival underscores how desperate Silicon Valley titans and governments have become to get their hands on more AI computing capacity.  

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It’s a high-stakes business. Nscale is now on the hook for securing the Nvidia GPUs that dominate the AI industry, finding the land for its facilities and sourcing the vast volumes of electricity necessary to power their centers. It’ll also be expected to regularly replace worn-out or older-generation hardware to meet customers’ demand for the latest and greatest products, which may require financing every three to five years.

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Nscale CEO Josh Payne framed the company’s UK announcements this week — part of £31 billion in US investment pledges made around President Donald Trump’s visit to the country — as a victory for British tech. “As a UK-based company, we’re showing how we can be makers, not takers, of the most important technology of our time,” he said in a statement.

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Nscale was spun out of Arkon Energy, an infrastructure provider for cryptocurrency mining, and officially launched in May 2024. CoreWeave Inc., which similarly counts Microsoft and OpenAI among its partners, also has its roots in crypto, giving it experience building high-performance data centers. Nebius Group NV, a Dutch cloud computing infrastructure company that emerged from the Russian internet giant Yandex, signed a deal this month to provide Microsoft with AI capacity for as much as $19.4 billion.

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The selling point for neoclouds is the fact that they offer companies more flexible access to high-performance chips and other AI-related services without the capital expenditure. Unlike traditional data center operators, companies like Nscale and Coreweave provide the AI computing power themselves: Nvidia chips all ready to go. They also offer shorter-term leases than the traditional firms that require multiyear commitments. 

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While much of the demand for neoclouds maps back to tech giants like Microsoft, OpenAI, Google and Meta Platforms Inc. as they jostle for AI dominance, the business model can theoretically democratize access to hardware and make it easier for startups to develop AI services without having to build their own infrastructure.