In just two years, a company that started as a cryptocurrency miner has become Europe’s most valuable AI startup. Now, it is investing over €695 million ($812 million) in Portugal to expand its AI hardware infrastructure. This rapid transformation highlights a new trend in the tech industry, where crypto companies are pivoting to support AI growth.

Massive Investment in Portugal’s AI Future

Recently, Nscale announced a major investment in Portugal, focusing on building new data center capacity at the Start Campus site in Sines. The deal involves supplying more than 66,000 Nvidia Rubin GPUs, a crucial step in expanding Europe’s AI infrastructure. The investment is split into two parts: €230 million for shared infrastructure and €465 million for a second 200-megawatt building. This site is permitted for up to 1.2 gigawatts of power, making it one of the largest data centers in Southern Europe.

Microsoft has committed to leasing capacity at the site through a multiyear deal announced last October. The company plans to invest $10 billion in the build-out, aiming to address the rising demand for AI computing power. Nscale’s role is to provide the GPU hardware that Microsoft will use to serve its cloud customers. The GPUs are scheduled for delivery starting late 2027, and the chips are among Nvidia’s latest generation, which already faces high demand and limited supply.

The Rise of the Neocloud Model

Nscale operates as what’s called a “neocloud”: a cloud provider that focuses solely on leasing GPU compute power to AI developers. Unlike big hyperscalers like Amazon or Google, neocloud companies don’t offer a broad range of services. Instead, they specialize in acquiring large amounts of GPUs, housing them in data centers, and renting them out to AI firms that can’t get hardware directly from Nvidia.

This model requires massive capital, long-term contracts, and the ability to build data centers faster than the giants. Nscale’s strategy is to create a dedicated compute layer in Europe, helping the continent develop its own AI infrastructure. Their transition from crypto mining to AI hardware was driven by the economics of GPU demand, which now make AI compute far more profitable than mining cryptocurrencies.

The company spun out from Arkon Energy, a crypto mining infrastructure provider, in early 2024. Crypto companies already had the large electrical capacity and GPU experience needed for AI. When AI demand surged, it made economic sense to pivot. Nscale raised over $3 billion in just 18 months, quickly becoming a major player in Europe’s AI infrastructure scene.

Europe’s Compute Challenges and Opportunities

Europe faces hurdles in building its AI compute capacity, mainly due to high energy costs and regulatory uncertainties. For example, OpenAI paused a data center project in the UK last year, citing electricity prices four times higher than in the US and unresolved copyright issues. This shows how challenging it can be for big tech companies to invest in Europe’s AI infrastructure.

However, companies like Nscale are betting on the continent’s potential by creating dedicated GPU networks. Their focus on Europe’s energy advantages—cheaper power and fewer grid constraints—could give them an edge. The goal is to establish a local compute layer that supports the growing AI industry across the region.

Overall, Nscale’s story illustrates a shift in how AI infrastructure is built and financed. What began as a crypto mining operation has become a significant force in Europe’s AI economy, showing how adaptable and innovative companies can be in the fast-changing tech landscape.

Inspired by

• https://thenextweb.com/news/nscale-portugal-microsoft-neocloud-ai-infrastructure

Sources

• nscale.com