Nscale, a partner of NVIDIA Cloud Services, plans to acquire a large U.S. data center before its IPO

Nscale CEO Josh Payne

According to sources familiar with the matter and financing documents reviewed by The Information, Nscale, an emerging cloud service provider heavily supported by NVIDIA with clients including OpenAI and Microsoft, is in negotiations to acquire a large AI data center site in the United States.

The site is located in West Virginia. Once acquired, this young UK-based cloud service provider will become a significant player in the U.S. AI infrastructure sector overnight. Nscale told investors that the site in Mason County, West Virginia, is highly valuable as it has already received local regulatory approval and has secured power infrastructure for the initial phase of the project.

However, developing the initial AI data center facilities on this site still requires hundreds of billions of dollars in funding.

Under the proposed deal, Nscale will acquire American Intelligence & Power (AIP), which owns the site along with related permits and power agreements. The terms of the deal have not been disclosed. Financing materials show that Amazon, Meta Platforms, and Fluidstack—an emerging cloud provider closely collaborating with Google and Anthropic—have all expressed interest in the site.

Last year, Nscale, which had modest revenue at the time, told investors that acquiring this data center park would double its short-term revenue expectations. Negotiations between Nscale and AIP are ongoing, and a final agreement is not guaranteed.

On Monday, Nscale announced the completion of a $2 billion funding round led by Norwegian investment firm Aker ASA and 8090 Industries, the latter of which was co-founded to develop the West Virginia site through AIP. Prior to this round, Nscale was valued at $14.6 billion. (The company also announced that former Meta COO Sheryl Sandberg and former UK Deputy Prime Minister and former Meta Global Affairs President Nick Clegg have joined the board.)

The acquisition of this site is expected to enhance Nscale’s IPO prospects.

Last month, media reports indicated that Nscale is preparing to go public alongside other NVIDIA-supported AI cloud providers such as Lambda and Crusoe. 8090 Industries, an investor in Nscale, revealed to potential investors that the company might go public before September.

Company Background

Nscale is one of several “neo-cloud” providers spun off from cryptocurrency mining businesses, and in 2024, it separated from Australian crypto mining firm Arkon Energy.

NVIDIA Shareholding

Documents show that before the latest funding round, NVIDIA was Nscale’s largest preferred stockholder, holding over 10% last year. In recent years, NVIDIA has supplied AI chips to emerging cloud providers like CoreWeave and Lambda, helping them gain a foothold in a fiercely competitive market. These smaller cloud providers help NVIDIA diversify its customer base beyond a few major cloud giants like Microsoft and Google, which are the primary sources of GPU revenue.

Compared to traditional cloud providers, these smaller cloud companies are more willing to purchase various NVIDIA hardware products and are less likely to develop their own AI chips, thus posing less threat to NVIDIA.

Nscale’s shift from leasing cloud servers to owning data centers and power resources aligns with the strategies of Google, CoreWeave, and others—these companies prefer acquiring such assets rather than relying solely on external suppliers. In the long term, this approach can help cloud providers reduce costs, and some believe that having greater control over facilities can minimize costly delays in building complex AI server networks.

In December last year, Nscale acquired Future-tech, a European data center engineering consultancy with 60 employees, demonstrating its intent to expand into data center development.

Spokespersons for Nscale, AIP, and Meta declined to comment.

Revenue Growth Expectations

Nscale projects significant revenue growth over the coming years, from approximately $1.5 billion in 2026 to about $9 billion in 2027. The documents show that if the deal with AIP is completed, its 2027 revenue forecast could be raised to $30 billion, surpassing analyst estimates for CoreWeave’s revenue that year (based on materials prepared by Goldman Sachs for CoreWeave’s financing).

It remains unclear which clients Nscale plans to partner with to achieve these revenue targets. Investors are skeptical of exaggerated revenue projections from other cloud providers like Oracle.

Like Oracle, Nscale is one of six cloud providers collaborating with OpenAI, and it has also signed large server leasing agreements with Microsoft. In investor materials, Nscale states it is in talks with ByteDance for several billion dollars in compute capacity and may lease servers to NVIDIA—another key customer of Nscale’s invested cloud providers.

Monarch Compute Project

AIP was established earlier this year by 8090 Industries in partnership with Houston-based energy company Fidelis New Energy to develop the West Virginia site. Before co-founding AIP, Fidelis New Energy had been developing the AI data center park in West Virginia for several years.

AIP’s flagship project in Point Pleasant, West Virginia, is called the “Monarch Compute Park,” which aims to be operational by 2027 with 2 GW of compute capacity, expanding to at least 8 GW by 2030. Achieving 2 GW by 2027 would make it one of the largest data center projects in the U.S.; for comparison, OpenAI’s Stargate data center in Texas has a capacity of 1.2 GW once completed.

Building 1 GW of NVIDIA servers costs over $50 billion, so an 8 GW capacity would require hundreds of billions of dollars. Nscale may need to secure investment-grade tenants like Microsoft and Google or obtain financial guarantees from these companies to finance the infrastructure.

“Unregulated Utility” Model

AIP’s website promotes this 2,000-acre West Virginia site as a microgrid with independent power, not connected to the public grid—an “behind-the-meter” model. For a long time, behind-the-meter power has been viewed as a fast way for data centers to access electricity. Last week, former U.S. President Donald Trump supported this model, urging tech giants like Microsoft, Amazon, OpenAI, and xAI to build their own AI power facilities to avoid soaring electricity prices.

Nscale’s materials regarding the potential deal indicate that the initial phase of development on this West Virginia site will include 2 GW of power without requiring additional approval from local utilities, state government, or energy regulators. The materials include photos of Fidelis executives with West Virginia Governor Patrick Morisi, who signed a new law near the Monarch facility aimed at attracting data center projects to the state.

Nscale’s financing documents state that this West Virginia site is “America’s first unregulated power utility designed specifically for AI, capable of serving large-scale cloud providers faster than the public grid.”