Bitcoin mining offshoot Nscale loses Microsoft AI deal as power delay stretches into 2030s

Technology giant Microsoft MSFT walked away from a planned U.K. AI data center run by Nscale, a company spun out of bitcoin BTC$82,836.58 mining, after the local grid operator said it may not be able to power the site for a decade.

The site in Loughton, Essex, about 6 miles northeast of London, was meant to house 23,040 Nvidia chips and supply 50 megawatts of computing to Microsoft’s Azure cloud by early 2027, according to the Guardian, which followed initial reporting by the Financial Times. UK Power Networks, which runs the local grid, told Nscale there may not be enough capacity until the early-to-mid 2030s.

Nscale announced the project last year alongside Microsoft, Nvidia NVDA and OpenAI. When the Guardian visited in February, the site was still a working scaffolding yard. Nscale has since cleared the location and is looking at other ways to bring in power. It said its other Microsoft contracts remain in place.

Nscale grew out of Arkon Energy, which built sites for bitcoin mining. Its founder, Josh Payne, took that experience in locking down land and power and turned it into a business selling computing to AI companies. Much of the listed mining industry is now running that playbook.

When CoinDesk looked at the industry shift in March, public miners had announced more than $70 billion in AI and high-performance computing contracts. They had also cut their combined bitcoin holdings by more than 15,000 BTC from their peaks, partly by selling coins to pay for the buildout.

Mining was already getting squeezed then. The report put the average listed miner’s cash cost to produce one bitcoin near $80,000 in the fourth quarter of 2025, and bitcoin was trading around $70,000 by March.

AI contracts pay steadily for years, but the sites are far more expensive to build. Estimates suggest an AI-ready facility runs $8 million to $15 million per megawatt, compared with roughly $700,000 to $1 million for bitcoin mining, and AI customers expect the servers to stay up around the clock.

The money also takes time to show up. In its latest mining report, fund manager CoinShares counted more than 4 gigawatts of AI capacity under contract across the miners it tracks, with only about 550 megawatts actually billing customers. Contract backlogs topped $100 billion, while annualized AI revenue stood at just over $1 billion.

Unless Nscale finds its own power or gets the grid to move a lot faster, the site it just cleared could sit idle for years.

Meanwhile, Britain’s grid queue is long. Energy regulator Ofgem says data center projects have requested connections totaling about 73 gigawatts of demand. It is weighing tougher rules because some applicants may never build, which holds up projects that are ready to go.

UPDATE (Oct. 19, 11:23 UTC): Adds site’s location relative to London in second paragraph.