Nscale Wins $14B Microsoft AI Deal, Secures Texas Site via Lease with Ionic Digital

In a major step forward for its AI infrastructure ambitions, U.K.-based Nscale, a spinoff from bitcoin mining firm Arkon Energy, has struck a computing deal with Microsoft worth up to $14 billion.

Nscale said in a release on Wednesday that it will deploy approximately 104,000 Nvidia GB300 chips at a Texas data center over the next 12–18 months, and another 12,600 GPUs in Portugal’s Start Campus. 

Ionic Digital announced separately on Wednesday that its Cedarvale facility in Barstow, Texas, will provide the colocation service for Nscale’s hardware used for the Microsoft deal. The lease agreement covers a period of 10 years and the site’s full 234 megawatt capacity.

The Microsoft contract is being seen as a landmark deal underpinning Nscale’s push toward an initial public offering. The Financial Times reported that the contract is worth up to $14 billion and describes it as part of Nscale’s plan to scale its AI cloud services and anchor itself with marquee customers. 

Under the agreement, the Texas site leased from Ionic Digital currently supports around 240 MW of power, and Microsoft retains the option to expand that to another 700 MW starting in late 2027. The campus may eventually scale up to 1.2 GW of power consumption—on par with some of the largest AI compute campuses currently planned. 

For Ionic Digital, the agreement with Nscale presents a pivot in its business model: rather than solely relying on bitcoin mining, the company is monetizing its energy and infrastructure assets to host AI workloads. The Cedarvale lease is reported to carry total contracted revenues of about $2 billion over its 10-year term, structured under a triple-net lease that reduces Ionic’s operating risk. 

Ionic intends to redeploy much of its mining fleet from Cedarvale to its Midland, Texas site and use the cash flows to support upgrades or further expansion. 

Nscale’s deal with Microsoft follows a string of capital raises. In September, the company raised $1.1 billion in a Series B round led by Aker ASA, valuing it at around $3 billion. 

Shortly after, it closed a $433 million pre-Series C SAFE investment, with participation from Blue Owl, Dell, NVIDIA, Nokia, and existing investors. 

These rapid funding rounds underscore strong investor appetite for AI infrastructure platforms, especially ones that control both compute and the physical assets to host them. 

That said, the success of the Microsoft deal will depend heavily on execution. Nscale must deliver on GPU deployment timelines, manage power and cooling logistics, and integrate capacity across its leased and owned facilities. Delays or cost overruns could strain financial performance and investor confidence.