TLDR
- Nvidia announced a $683 million investment in Nscale, a UK AI infrastructure company that spun off from crypto miner Arkon Energy in May 2024
- The partnership aims to scale the UK’s AI capacity to 60,000 GPUs by 2026 as part of the government’s national AI infrastructure push
- Nscale is part of the “neocloud” industry that provides flexible AI computing power without requiring companies to buy their own hardware
- Microsoft signed a $6.2 billion deal to rent computing power from Nscale in Norway, while OpenAI named it as a partner for Stargate UK
- The investment comes as AI chip pricing has dropped from tens of dollars per GPU hour to just a couple of dollars due to easing supply constraints
Nvidia has committed $683 million to Nscale, a British AI infrastructure company that emerged from cryptocurrency mining roots just 16 months ago. The partnership represents a major bet on the UK’s artificial intelligence capabilities and highlights the rapid transformation of former crypto operations into AI powerhouses.
Nscale officially launched in May 2024 after spinning off from Arkon Energy, a cryptocurrency mining infrastructure provider. The company has quickly positioned itself as a key player in the “neocloud” sector, which provides ready-to-use AI computing power to companies without requiring them to purchase their own hardware.
The Nvidia investment forms part of a broader £11 billion AI infrastructure buildout in the UK. The partnership will help scale the country’s capacity to 60,000 GPUs, which will be deployed across Nscale’s data centers by 2026.
“Sovereign AI infrastructure is key to national resilience, economic growth and strategic autonomy,” said Nscale CEO Josh Payne. The expansion aligns with the UK government’s push to develop national AI capabilities following Prime Minister Keir Starmer’s January announcement of a 50-point plan to capture AI opportunities.
The timing coincides with President Donald Trump’s visit to the UK, where American companies pledged £31 billion in investments. Nscale framed the announcement as evidence that Britain can be a maker of cutting-edge technology rather than just a consumer.
Major Cloud Computing Deals
Nscale has secured major partnerships with tech giants beyond Nvidia. Microsoft signed a $6.2 billion agreement to rent computing power from the company’s Norwegian facilities. OpenAI has also named Nscale as a partner for Stargate UK, an expansion of the larger US Stargate initiative.
The Norwegian project showcases Nscale’s ability to execute large-scale infrastructure projects. The site, located above the Arctic Circle, was originally planned for a green ammonia factory before being repurposed for AI computing. The facility provides access to 230 megawatts of clean hydropower.
Nscale’s success reflects the broader “neocloud” boom, where companies specializing in AI infrastructure are attracting massive investments. These firms offer more flexible access to high-performance computing than traditional data center operators, typically providing shorter-term leases and ready-to-use AI chips.
The company raised $155 million in December 2023 through a financing round led by New York-based Sandton Capital Partners. In January, Nscale announced a separate £2 billion commitment to UK computing facilities, working with Open Innovation AI from the United Arab Emirates.
Market Challenges Ahead
The neocloud industry faces pricing pressures as AI chip supply constraints have eased. Companies that once charged tens of dollars per GPU hour now charge just a couple of dollars for the same service, according to the Uptime Institute.
Industry experts predict consolidation ahead as smaller players struggle to serve large customers. Second-hand AI hardware is becoming available at discounted prices, further pressuring margins.
To avoid a race to the bottom, neocloud companies will need to differentiate through specialized services or industry focus. Nscale’s partnerships with major tech companies and government backing may provide competitive advantages in this challenging environment.
The UK government has expressed confidence in Nscale’s execution capabilities. “It’s clearly a credible company,” said Kanishka Narayan, an undersecretary for Britain’s technology department, citing the successful Norway project as evidence.
Nvidia reached a $4 trillion market capitalization in July, surpassing the total value of all cryptocurrencies combined at that time.
