Odaily Planet Daily report: AI data center developer Nscale plans to raise up to $3 billion through an IPO as early as this month, but has been exposed to challenges including delays in data center construction, equipment failures, regulatory issues, and employee complaints. The flagship project, originally intended to build a 30-megawatt data center, is now approximately six months behind schedule, prompting the company to house hundreds of construction workers aboard a floating hotel vessel to accelerate progress. Additionally, the project has experienced incidents such as leaks in the liquid cooling system and transformer fires. Local safety inspections also uncovered ten violations, including ungrounded components in high-voltage systems.
Nscale was spun off from cryptocurrency mining company Arkon Energy in 2024 and has since secured over $103 billion in contracts, yet it operates almost no data centers of its own; as of August, its actual completed computing capacity was less than 1% of its planned total, relying heavily on leased capacity from other data center operators to fulfill contracts. Nscale’s IPO filings show that Microsoft and Anthropic account for approximately 85% of its contract value; Anthropic has committed to spending about $44.6 billion on dedicated AI chip infrastructure at the Monarch campus in West Virginia, but Nscale has not yet secured the financing or long-term chip supply agreements needed to fulfill this contract.
Meanwhile, Nscale is seeking an IPO valuation of up to $35 billion. CEO Josh Payne previously summarized its model as “owning land, power, data centers, chips, and software,” but several of its projects have yet to achieve this vertically integrated approach, with power supply, grid connection, construction progress, and customer delivery posing potential bottlenecks. (Bloomberg)