Microsoft has pulled out of a planned U.K. AI data center project developed by Nscale after warnings that the facility might not receive sufficient electricity until the 2030s. The Nvidia-backed company had planned to deploy 23,040 AI chips at the site, but prolonged power delays have disrupted the project’s original schedule.

The proposed facility in Loughton, Essex, approximately six miles northeast of London, was expected to deliver 50 megawatts of computing capacity to Microsoft’s Azure cloud platform by early 2027. However, UK Power Networks reportedly warned Nscale that adequate grid capacity might not be available until the early-to-mid 2030s, according to The Guardian, which followed an earlier report by the Financial Times.

Nscale announced the development last year alongside Microsoft, Nvidia, and OpenAI. When The Guardian visited the location in February, the site was reportedly still operating as a scaffolding yard. Nscale has since cleared the area and is exploring alternative methods of securing electricity. The company said its remaining Microsoft agreements continue as planned.

Bitcoin Miners Turn to AI as Mining Margins Tighten

Nscale originated from Arkon Energy, which developed facilities for Bitcoin mining. Founder Josh Payne used his experience securing land and power infrastructure to establish a business focused on providing computing services to AI companies. Other publicly traded mining firms are adopting similar strategies to diversify their businesses.

A CoinDesk report published in March found that publicly listed Bitcoin miners had announced more than $70 billion in AI and high-performance computing contracts. Their combined Bitcoin holdings had also fallen by more than 15,000 BTC from peak levels, partly because companies sold coins to help finance their expansion into AI infrastructure.

The transition comes as Bitcoin mining becomes increasingly difficult to sustain financially. The March report estimated that the average listed miner’s cash cost to produce one Bitcoin approached $80,000 in the fourth quarter of 2025. By March, Bitcoin was trading around $70,000, putting additional pressure on mining operations.

AI agreements can provide companies with recurring revenue over several years, but the facilities needed to support these workloads require substantially higher investment. Industry estimates put the cost of an AI-ready data center at $8 million to $15 million per megawatt, compared with approximately $700,000 to $1 million per megawatt for Bitcoin mining infrastructure.

AI customers also demand uninterrupted computing services, requiring reliable electricity supplies and servers that operate continuously.

AI Contract Values Outpace Current Revenue

Although mining companies have announced substantial AI deals, much of the planned capacity has yet to translate into revenue.

CoinShares’ latest mining industry report identified more than four gigawatts of AI capacity under contract among the companies it tracks. Yet only around 550 megawatts were actively generating customer billings. Contract backlogs exceeded $100 billion, while annualized AI revenue remained slightly above $1 billion.

Nscale’s power difficulties demonstrate how infrastructure constraints can delay the financial benefits of these agreements. Securing major customers and investment does not guarantee that a data center can begin operating on schedule if electricity connections remain unavailable.

Without an alternative power supply or a significantly accelerated grid connection, the cleared Loughton site could remain dormant for years.

Britain’s Grid Constraints Complicate AI Expansion

The setback also highlights the growing challenge of supplying electricity to data centers across the United Kingdom.

According to energy regulator Ofgem, proposed data center developments have requested grid connections representing approximately 73 gigawatts of demand. The regulator is considering stricter rules because some projects may never be built, potentially leaving viable developments waiting for available capacity.

For Bitcoin miners seeking to become AI infrastructure providers, access to dependable electricity is emerging as a major competitive factor. Nscale’s stalled development illustrates how grid bottlenecks can disrupt high-profile technology partnerships, delay computing capacity, and postpone the revenue companies expect from the AI boom.