Microsoft Pulls Out of Nscale's UK Data-Center Project Over Power Shortage

What happened

On October 19, The Wall Street Journal reported that Microsoft is pulling out of a 50MW Nscale data center in Loughton, outside London — The Telegraph broke the news on October 18 (cited by Dealroom). The site was to be Nscale's first UK data center, housing around 23,000 Nvidia GB300 chips to power Microsoft Azure services, and was expected to go live by the end of this year.

The direct cause is power: grid operators recently told Nscale the site would not get sufficient electricity until the early-to-mid 2030s. A Microsoft spokesperson said the company remains committed to its partnership with Nscale and that the decision relates to a single site; an Nscale spokesperson said the company remains committed to the Loughton project, is exploring alternative power sources, and that the "London-wide grid issue" has no impact on its other contracts.

Key facts

1. The site: The Loughton 50MW data center, Nscale's first UK site, planned for ~23,000 GB300 chips to power Azure, expected to go live by year-end.
2. Direct cause: Grid operators said the site won't get enough power until the early-to-mid 2030s; Nscale says it is exploring alternative power sources.
3. Customer concentration: Microsoft accounts for about 40% of Nscale's contracted revenue, with Anthropic the other major customer, according to Electronics Weekly; Nscale has not yet secured committed financing to build the capacity needed for Anthropic's $45 billion compute contract.
4. IPO timing: Nscale filed a registration statement with the US SEC last month and reportedly plans to go public this month, raising about $3 billion at a ~$35 billion valuation; it raised $2 billion earlier this year at a $14.6 billion valuation and another $3.36 billion last month via Third Point-led convertible notes.
5. Industry backdrop: Australian peer Firmus pulled its IPO earlier this month; CoreWeave shares fell sharply last week and its corporate bond yield has risen to about 15%; Jensen Huang said last week Nscale could become the most valuable UK startup of the past decade, with Nvidia having invested about $2 billion.