The dropped Texas expansion follows an earlier blow this year when Microsoft abandoned a $3 billion lease at Nscale's Essex facility in the United Kingdom. In Ward County, Nscale initially leased about 240 megawatts to Microsoft in October 2025, but the tech giant opted against taking up the additional capacity. Led by Josh Payne and backed by Nvidia, the firm must now navigate these client losses while simultaneously handling construction delays and local opposition at its flagship West Virginia site.
Key points
Nscale must secure replacement clients for its Texas facility or risk losing billions of…: Nscale must secure replacement clients for its Texas facility or risk losing billions of dollars in expected revenue ahead of its planned $35 billion initial public offering.
Ionic Digital is now free to absorb power capacity for its own use or market it to rival…: Ionic Digital is now free to absorb power capacity for its own use or market it to rival cloud companies because Nscale failed to secure the necessary energy.
Operational friction in the United States and the United Kingdom complicates Nscale's bro…: Operational friction in the United States and the United Kingdom complicates Nscale's broader global expansion roadmap across Norway and Portugal.
Sources checked by our analysis pipeline: 1
Microsoft has rejected an option to expand its existing deal with Nscale for computing power at a Texas data centre. The update comes as a fresh setback to the UK’s most valuable AI start-up as it prepares for a potential $35 billion stock market listing. The US software giant has decided not to take up an option to lease additional computing capacity worth tens of billions of dollars, according to people familiar with the matter cited by the Financial Times (FT). As per the report, the decision could force Nscale to find new customers for the site or risk losing billions of dollars in potential future revenue.
Why Microsoft rejected Nscale’s Texas data centre deal
Nscale had secured a deal with Microsoft in October 2025 to lease around 240MW of computing capacity at a data centre site in Ward County, Texas. The agreement also included an option for Microsoft to lease additional capacity. Nscale later clarified to the FT that the option was closer to 500MW and related to additional capacity at its own site. Microsoft has now decided against…
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