Microsoft has scrapped plans to use a proposed U.K. AI data center operated by Nscale after a local electricity network operator warned that the facility might not receive sufficient power until the 2030s. The Nvidia-backed company had planned to install 23,040 AI chips at the site as part of its expansion into high-performance computing.
The facility, located in Loughton, Essex, around six miles northeast of London, was expected to deliver 50 megawatts of computing capacity to Microsoft’s Azure cloud platform by early 2027. However, UK Power Networks reportedly informed Nscale that the area might not have enough grid capacity until the early-to-mid 2030s, according to The Guardian, following earlier reporting by the Financial Times.
Nscale first announced the project last year alongside Microsoft, Nvidia, and OpenAI. When The Guardian visited the site in February, it reportedly remained a working scaffolding yard. Nscale has since cleared the location and is exploring alternative options for securing electricity. The company confirmed that its other Microsoft agreements remain unaffected.
Bitcoin Miners’ AI Expansion Faces Power Constraints
Nscale traces its origins to Arkon Energy, which developed infrastructure for Bitcoin mining. Founder Josh Payne used that experience in securing land and electricity to build a business focused on supplying computing infrastructure to AI companies. Other publicly traded Bitcoin miners are pursuing similar strategies as they seek new sources of revenue.
A CoinDesk report in March found that listed mining companies had announced more than $70 billion in artificial intelligence and high-performance computing contracts. Their combined Bitcoin holdings had also declined by more than 15,000 BTC from previous peaks, partly as companies sold coins to finance infrastructure investments.
The shift comes as mining economics face increasing pressure. The same report estimated that the average listed miner’s cash cost of producing one Bitcoin approached $80,000 in the fourth quarter of 2025. By March, Bitcoin was trading at approximately $70,000, putting additional pressure on mining profitability.
AI contracts can offer more predictable income over multiple years, but the infrastructure required to support them is substantially more expensive than conventional mining facilities. Industry estimates place the cost of constructing AI-ready data centers at $8 million to $15 million per megawatt, compared with approximately $700,000 to $1 million per megawatt for Bitcoin mining operations.
AI customers also require continuous service, meaning facilities must maintain reliable electricity supplies and keep their servers running around the clock.
AI Contract Backlogs Outpace Actual Revenue
Despite the large value of announced AI agreements, many mining companies have yet to convert their contracted capacity into substantial revenue.
CoinShares’ latest mining industry report identified more than four gigawatts of AI capacity under contract among the miners it tracks. However, only around 550 megawatts were actively billing customers. Contract backlogs had exceeded $100 billion, while annualized AI revenue stood at just over $1 billion.
Nscale’s difficulty securing electricity illustrates one of the major obstacles facing the sector. Even when a company has customers and infrastructure plans in place, delays in obtaining grid connections can postpone deployment and revenue generation.
Unless Nscale secures an alternative power source or persuades the grid operator to accelerate the connection timeline, its cleared Loughton site could remain inactive for years.
U.K. Electricity Grid Delays Threaten Data Center Growth
The setback also highlights the wider challenge of meeting Britain’s growing electricity demand from data centers.
According to the U.K. energy regulator Ofgem, proposed data center developments have requested grid connections representing approximately 73 gigawatts of demand. The regulator is considering tighter rules because some applicants may never build their projects, leaving viable developments waiting for capacity.
For companies shifting from Bitcoin mining to AI computing, access to reliable power is becoming as important as securing customers and financing. Nscale’s stalled project shows how grid bottlenecks can undermine even major technology partnerships, delaying infrastructure deployment and the revenue expected from AI contracts.
