Microsoft walked away from Nscale’s Essex data centre

On October 18 Microsoft terminated its lease agreement for the Loughton data centre that Nscale is building in Essex, north-east of London. The site was due to receive grid power at the end of this year, and the network operator has told Nscale that a supply may not arrive until the 2030s. UK ministers promoted the project in 2025 as the country’s largest sovereign AI data centre, with plans for 23,000 Nvidia GPUs. Microsoft was the only announced customer. The Guardian

Nscale says it remains committed to Loughton and to the UK, and that it is looking at other power sources and other sites. Its relationship with Microsoft continues on projects in Norway, Portugal and the United States. What the company has lost is the anchor tenant of a £2bn project that its government championed. BBC

The timing is awkward. Nscale filed for a US listing last month, seeking up to $3bn at a $35bn valuation. Microsoft and Anthropic account for roughly 85% of its contracted value. With the anchor tenant gone, some investors are pushing for $16bn to $19bn instead. Nscale’s flagship site in Norway runs 6.4MW of a planned 30MW and is six months behind schedule. Rival data centre operators sold off during the same week as investors re-priced the debt behind them. Bloomberg Law TNW Yahoo Finance

If you rent inference, one of your assumptions has moved

Most product pricing assumes that inference keeps getting cheaper on a schedule. The pressure that pushed those prices down came from GPU supply, and the constraint that binds now is grid power and financing. Power connections have slipped into the 2030s. A lease can be cancelled while the wait runs on.

Before you commit money to rented capacity, ask whether the capacity is already built, who the anchor tenant is, and whether the power agreement is signed. If you buy a cheap API, the same question applies one level down: where does that provider buy its capacity? The longer the commitment, such as a reserved-throughput or prepaid-credit deal, the more the answer matters.

The opposite route gains value too. Running a small open model yourself is one way to buy back some independence from somebody else’s grid schedule, and an afternoon spent measuring how far a 27B-class model gets on your own workload tells you how much is available there.

Whether this cancellation is a UK grid problem or a signal about the rented data centre business as a whole is still open. Nscale says its other contracts are unaffected. Watch whether the listing proceeds as planned, and whether Loughton finds another power source.

The rest of today’s news

  • Anthropic commits 5% of its shares to a public benefit fund: subject to stockholder approval the fund starts with 5% of the company, and the board may add 2% for every 50% rise in value above a baseline, taking the total to about 20% once founder and employee pledges are counted. Anthropic
  • Disney will hire most of Character.AI’s workforce: a court filing shows job offers to at least 60 employees, the majority of the workforce, at roughly $60m in annual compensation, alongside a $20m licence for the startup’s assets and its former CEO as Disney’s first CTO. TechCrunch
  • Samsung will build Nvidia’s custom HBM base dies on TSMC’s 3nm process: Nvidia asked Samsung, SK Hynix and Micron for the base dies, and Samsung’s first use of a TSMC 3nm line follows. Reuters
  • OpenAI confirms it is building a humanoid robot: Sam Altman says a demo should arrive in 2027, and the careers page lists 27 robotics roles. Engadget