Microsoft has withdrawn from a UK AI data center project planned by Bitcoin mining-rooted Nscale after being warned that its power connection could be delayed until the 2030s.
The development, reported by CoinDesk via the Financial Times and The Guardian, highlights the challenge companies shifting from mining to AI face in turning major contracts into revenue: They need not only to build the data center, but also to secure the power it requires on time.
2027 target hits years-long wait for power
The facility in Loughton, Essex, was planned to house 23,040 Nvidia chips and provide capacity for Microsoft’s Azure cloud service in early 2027. However, local grid operator UK Power Networks warned that sufficient power capacity for the 50-megawatt project might not be available until sometime between the early and mid-2030s.
Nscale announced the project last year alongside Microsoft, Nvidia, and OpenAI. The company cleared the site, which had been used as a storage depot for construction scaffolding, and is now evaluating alternative power supply options. Its other contracts with Microsoft remain in place.
Why is the AI pivot so costly for Bitcoin miners?
Nscale grew out of Arkon Energy, which developed Bitcoin mining sites. Founder Josh Payne turned the land and energy procurement experience he gained in mining into a business that provides computing capacity to AI companies. Many publicly traded mining companies are following a similar path.
AI contracts can provide recurring revenue over several years, but the cost of building facilities is much higher. Estimates put the cost of an AI-ready data center at between $8 million and $15 million per megawatt, compared with approximately $700,000 to $1 million for Bitcoin mining. AI customers also expect servers to run continuously.
CoinShares’ latest mining report shows the gap between signing contracts and generating revenue. Although the miners it tracks have contracted more than 4 gigawatts of AI capacity, the capacity currently being billed to customers is about 550 megawatts. The contract backlog exceeds $100 billion, while annualized AI revenue stands at just over $1 billion.
The problem in the UK is not limited to a single project. According to energy regulator Ofgem, data center requests for grid connections have reached approximately 73 gigawatts. The regulator is considering stricter rules to prevent projects that may never be built from filling up the connection queue and delaying ready-to-go investments.
Not investment advice.