--- title: "Nscale lost a US$3.22bn Microsoft contract when its grid connection was withdrawn" summary: "Nscale’s amended IPO filing of 12 November: a US$105.8bn contract book led by Anthropic and Microsoft, US$307.5m of nine-month revenue, a US$1.69bn loss and US$5.5bn of debt." url: https://www.thetechbag.com/blog/nscale-microsoft-3-22bn-contract-cancelled-grid-connection format: Analysis desk: "Cloud & DevOps" region: Global published: 2026-11-14 facts_checked: 2026-11-14 author: TechBag (The TechBag Journal) tags: ["Nscale IPO","Nscale S-1","Nscale Microsoft contract","Nscale Loughton","NSCL","Nscale","Nscale Anthropic","Loughton data centre","grid connection","UK Power Networks","Monarch Compute Campus","total contract value","take-or-pay contracts","customer concentration","GPU cloud","neocloud","data centre power","Microsoft","Anthropic","NVIDIA","Stargate UK"] cover: https://www.thetechbag.com/blog/covers/nscale-microsoft-3-22bn-contract-cancelled-grid-connection.png --- # Nscale lost a US$3.22bn Microsoft contract when its grid connection was withdrawn *Nscale’s amended IPO filing of 12 November: a US$105.8bn contract book led by Anthropic and Microsoft, US$307.5m of nine-month revenue, a US$1.69bn loss and US$5.5bn of debt.* Analysis · Cloud & DevOps · By TechBag · Published 2026-11-14 · Facts checked 2026-11-14 · Canonical: https://www.thetechbag.com/blog/nscale-microsoft-3-22bn-contract-cancelled-grid-connection The short version 1. Nscale’s amended IPO filing of 12 November says a Microsoft contract worth US$3.22bn “was terminated” after the local power provider withdrew the connection date and power allocation for its data-centre site in Loughton, Essex. Its September filing did not mention it.[1][2] 2. The contract book still grew, to US$105.8bn, and about 80% of it sits with two customers: Anthropic, up to US$44.6bn, and Microsoft, about US$40.6bn after the cancellation. Only US$6.4bn of it was active, because a contract’s term starts only when the GPUs are delivered.[1] 3. For January–September, Nscale reports revenue of US$307.5m against US$21.3m a year earlier, a net loss of US$1.69bn, and debt of US$5.5bn on 30 September, up from US$78.9m at the end of 2025.[1] Nscale, a London-based company spun out of Arkon Energy in May 2024, rents out Nvidia GPU capacity in data centres it owns, leases or shares, with sites in Norway, Portugal, Iceland, the US and the UK. It has applied to list on the New York Stock Exchange as NSCL, and its filings carry no price range yet.[1] Until the end of 2024 most of its revenue came from hosting cryptocurrency miners; now its customers include Microsoft and Anthropic. This piece reads both filings to answer three questions: what happened at Loughton, why a power connection can end a GPU contract, and what it means for a company this young to have most of a US$105.8bn book with two customers.[1] ## A US$3.22bn contract ended at the grid connection Between September 2025 and April 2026, Nscale signed statements of work with Microsoft that provide for payments “of up to approximately $43.8 billion through December 2033”. The September filing stated that figure and nothing more. The November amendment keeps the sentence and adds what happened next:[1][2] > Subsequently, a single statement of work valued at $3.22 billion was terminated without any impact to any other statements of work. This resulted from a site-specific development at our data center site in Loughton, UK, whereby the local power provider withdrew the connection date and the associated power allocation that was scheduled to be delivered to the site.Nscale plc, amended registration statement (Form S-1/A), 12 November 2026 US$3.22bn the Microsoft statement of work terminated after the Loughton connection date was withdrawn More than ten times Nscale’s US$307.5m of revenue for January to September 2026. Nscale says it remains committed to Loughton and the UK, is “exploring alternative power sources for the site”, and that “this London-wide grid issue has no impact on our other contracts”. The amendment also adds a line that the September filing lacked: Nscale has “experienced delays at a limited number of sites including our greenfield site in the UK”, none of which, it says, had a material impact.[1] **Figure: The cancellation became public a month after Nscale's first filing and entered its prospectus in November** *Events in Nscale's filings and reports, September 2025 to November 2026* | Date | Event | Detail | | --- | --- | --- | | 16 Sept 2025 | Stargate UK announced | With NVIDIA, Microsoft and OpenAI; Microsoft statements of work signed from this month | | 24 Apr 2026 | Portugal site bought for Microsoft | Microsoft statements of work, signed by April, total up to US$43.8bn; OpenAI leaves Stargate UK the same month | | 25 Aug 2026 | Anthropic signs up to US$44.6bn | Four agreements at the Monarch campus, West Virginia | | 18 Sept 2026 | S-1 filed: book US$103.4bn | As of 31 August; Microsoft still at US$43.8bn, no mention of Loughton | | 29 Sept 2026 | Anthropic takes its Building 2 option | 60 days to agree terms, subject to extension | | 18 Oct 2026 | Withdrawal reported | The Telegraph reports Microsoft has pulled out of Loughton | | 12 Nov 2026 | S-1/A: US$3.22bn terminated | Book US$105.8bn; nine-month results added | Source: Nscale S-1 (18 Sep 2026) and S-1/A (12 Nov 2026); DatacenterDynamics (19 Oct 2026) · as of 14 November 2026 The press filled in the site. The Telegraph reported Microsoft’s withdrawal on 18 October; DatacenterDynamics reported that the project had aimed for completion in late 2026, as agreed between Nscale and UK Power Networks, the local distribution network operator, and that a grid connection was now not expected until the 2030s. National Grid told the publication it had not agreed to the 2026 date. When Nscale announced Loughton in January 2025, it described about US$3bn of investment, 50 MW of AI capacity and a power allocation of up to 90 MW. Microsoft UK’s chief executive, Darren Hardman, said its US$30bn UK investment plan “will not change”.[3] ## Why a power connection decides whether a GPU contract exists A GPU contract of this kind sells capacity that does not exist yet. Nscale’s filing is plain about the order of events: “Contract terms commence upon successful delivery of GPU compute clusters”, and each Microsoft service term runs five to six years “from acceptance of each tranche”. Before a tranche can be accepted, a building has to be energised: tens of megawatts at a fixed date, which on a grid-connected site only the network operator can supply.[1] **Figure: A contract signed today earns nothing until power, GPUs and acceptance arrive in that order** *How Nscale's take-or-pay contracts become revenue, as its S-1/A describes them, November 2026* 1. 01SignA take-or-pay statement of work. Its value counts as “contracted” in the US$105.8bn book. 2. 02Power the siteA connection date and a power allocation from the grid, or on-site generation. Loughton stopped here. 3. 03Deliver and acceptGPUs installed, tested and accepted, tranche by tranche, by the agreed dates. 4. 04EarnThe term starts, five to six years for Microsoft’s tranches, and the value moves to “active”. Source: Nscale S-1/A, Prospectus Summary, Business and Risk Factors (12 Nov 2026) · as of 14 November 2026 Nscale’s own summary calls access to “reliable, large-scale contiguous power” the “primary gating factor” for AI infrastructure, and its risk factors spell out the Loughton case in advance: “At sites where we require a connection to the utility grid, we may encounter delays in securing such connection or may be unable to secure the capacity required.”[1] The same queue is forming elsewhere: on 9 November Norway’s grid operator [paused new data-centre grid reservations](https://www.thetechbag.com/blog/norway-pauses-data-centre-grid-reservations-2027), and Nscale has Norwegian sites at Glomfjord and Kvandal. Nscale’s answer is to build its own power. Its Monarch campus in Mason County, West Virginia, bought in March 2026, is planned around “behind-the-meter” generation that operates “independently from the utility grid”, with 2 GW of gross capacity expected by the first half of 2028 and a runway to over 8 GW.[1] That is where the Anthropic contract will run, on terms stricter than Microsoft’s: a late tranche is excused only for industry-wide supply constraints on the GPU systems, and if a tranche is not delivered within a set period after its expected date, Anthropic “is entitled to terminate that tranche without liability”. It may also terminate if monthly uptime stays below agreed thresholds.[1] ## US$105.8bn of contracts, about 80% with two customers Nscale measures its business by total contract value (TCV): US$105.8bn of “active and contracted” value at the date of the amendment, against US$103.4bn on 31 August and US$38.0bn at the end of 2025. The book grew by US$2.4bn between the two filings even after the US$3.22bn came out. Of it, US$6.4bn was active, up from US$2.6bn on 31 August; the weighted average contract life is about 5.7 years, and customer prepayments average about 20% of TCV.[1][2] **Figure: Anthropic and Microsoft hold about 80% of Nscale's US$105.8bn contract book** *Contracted value by customer, US$bn, as of 12 November 2026* Anthropic (Monarch, West Virginia) 44.6 US$bn Microsoft, after the Loughton termination 40.6 US$bn Figure AI 3.5 US$bn All other contracts 17.1 US$bn | | Value (US$bn) | | --- | --- | | Anthropic (Monarch, West Virginia) | 44.6 | | Microsoft, after the Loughton termination | 40.6 | | Figure AI | 3.5 | | All other contracts | 17.1 | Source: Nscale S-1/A (12 Nov 2026) · as of 12 November 2026 · Microsoft is US$43.8bn less the US$3.22bn terminated; all other contracts is the remainder (our arithmetic) Microsoft’s capacity sits mostly outside the UK: over 12,600 Nvidia Grace Blackwell GPUs in the first building at Sines, Portugal; over 66,000 Vera Rubin GPUs at a second Sines site from late 2027; and the extra capacity at Stargate Norway that Microsoft took after OpenAI withdrew in April 2026. Anthropic’s four agreements cover four tranches of Vera Rubin NVL72 systems at Monarch, and on 29 September it exercised a right to contract for a second building; if both sides sign, it has a further option on a third. Figure AI, a humanoid-robot maker, signed for about US$3.5bn, half of it payable in Figure’s own shares.[1] Concentration is not new for Nscale; only the names have changed. One customer, renting data-centre space in Norway, paid 93% of its 2024 revenue. In 2025 its largest customer paid 73%, and in January–June 2026, 52%. Nscale expects that 2025 customer, unnamed in the filing, to be under 20% of 2026 revenue.[1] TechBag countHow the shares are worked out The filing gives each contract’s value but does not split TCV by customer. Microsoft’s US$43.8bn less the US$3.22bn terminated is about US$40.6bn, 38% of US$105.8bn; Anthropic’s US$44.6bn is 42%; together, 80%. Figure is 3%, and the remaining US$17.1bn, 16%, covers every other contract. The cancelled statement of work alone equals 3% of the book.[1] ## Revenue rose 14-fold; debt rose 70-fold Revenue for January–September was US$307.5m against US$21.3m a year earlier; about US$166.9m of it came in July–September alone, more than the whole first half’s US$140.6m. The operating loss was US$837.5m and the net loss US$1.69bn, 5.5 times revenue.[1] The largest single item behind the gap is not cash: US$629.9m of losses on fair-value adjustments, which the filing attributes, for the first half, mainly to warrants issued to Sandton and NVIDIA, which grow as the company’s value rises. Depreciation was US$339.8m, net interest US$242.2m and share-based pay US$174.0m. On Nscale’s adjusted EBITDA measure, the loss was US$289.5m.[1] **Figure: Nscale's debt went from US$78.9m to US$5.5bn in nine months, 18 times its revenue** *Revenue and losses for January to September 2026; cash and total debt at period end, US$m* Revenue, Jan–Sep 2026 308 US$m Operating loss, Jan–Sep 2026 838 US$m Net loss, Jan–Sep 2026 1,692 US$m Total debt, 31 Dec 2025 78.9 US$m Cash, 30 Sep 2026 3,576 US$m Total debt, 30 Sep 2026 5,516 US$m | | Value (US$m) | | --- | --- | | Revenue, Jan–Sep 2026 | 308 | | Operating loss, Jan–Sep 2026 | 838 | | Net loss, Jan–Sep 2026 | 1,692 | | Total debt, 31 Dec 2025 | 78.9 | | Cash, 30 Sep 2026 | 3,576 | | Total debt, 30 Sep 2026 | 5,516 | Source: Nscale S-1/A, preliminary results and balance-sheet table (12 Nov 2026) · as of 12 November 2026 The borrowing follows the contracts. Nscale funds each build with project-level loans secured on the contract’s cash flows, and says it has raised more than US$13.4bn: US$6.7bn of equity, more than US$5.7bn of project financing and a US$900m revolving credit line. Cash stood at US$3.58bn on 30 September, up from US$1.50bn.[1] The Anthropic contract needs more. Nscale has placed GPU and equipment orders for it, some of which “cannot be contractually deferred, reduced or cancelled”, and says it “will be required to obtain additional financing to meet our forecast obligations in 2027”. As of the amendment it had no binding commitments for any of the financings that contract requires.[1] ReportedWhere the money already comes from NVIDIA appears on several sides: it guarantees up to US$860.3m of Nscale’s lease obligations at a Ward County, Texas facility, holds warrants, and invested in a US$3.36bn convertible-note round that converts into shares at the IPO, including a US$1.0bn sale to NVIDIA due to close on or around 16 November. Nscale is also buying Anyscale, the company behind the open-source Ray framework, for shares.[1] ## What has to happen next Most of Nscale’s book is still a promise of capacity. By its own count, a small share of every measure was running when it filed: **Figure: About 6% of Nscale's contract book was active when it filed** *Active against active-and-contracted measures, as of 12 November 2026* US$6.4bn active, of US$105.8bn contracted value 50,000 active GPUs, of 461,000 active or contracted 7 of 17 data-centre sites active 5.7 yrs weighted average contract life Source: Nscale S-1/A (12 Nov 2026) · as of 12 November 2026 The September filing, as of 31 August, counted 25,000 active GPUs and five active sites, so delivery doubled in about ten weeks.[2] The 461,000 total and the 1.37 GW of active and contracted capacity did not change between the filings, though one Microsoft contract left the book.[1][2] Our viewWhat to watch Four things in Nscale’s next amendments: the price range and share count, which turn the book into a valuation; whether the Building 2 agreement with Anthropic is signed inside its 60-day window, which runs to about 28 November unless extended; binding financing for the Anthropic build; and whether Loughton finds another power source or another customer. Other GPU clouds whose contract books turn into revenue only on delivery: [Cerebras, with US$26.1bn](https://www.thetechbag.com/blog/cerebras-26-1bn-contracts-210m-revenue-openai) waiting on data-centre capacity, and [Nebius, which plans US$40–45bn of capex](https://www.thetechbag.com/blog/nebius-drops-arr-325m-one-off-capex-40-45bn). India: no Nscale site, and the same question for any capacity contract Nscale has no site or customer in India in its filing. Its Asia-Pacific headquarters is in Singapore, opened in October 2025, and the one Asian country it lists among markets for new builds is Indonesia.[1] For an Indian company reserving GPU capacity, from Nscale or anyone else, Loughton is the clause to read first. Ask whether the site is already energised or only has a connection date, and from whom; what happens to the contract if that date moves; and whether a power delay counts as an excused delay, as industry-wide GPU shortages do in Anthropic’s terms. A GST-registered business that imports such a service from abroad pays the 18% GST itself under the reverse charge.[4] For India’s own grid question, see [how much power India’s data centres draw, and what AI may add](https://www.thetechbag.com/blog/india-ai-data-centres-power-gigawatts). How we did this Figures as of 14 November 2026, 7:30pm IST Every Nscale figure is from its SEC filings: the amended registration statement (S-1/A) filed on 12 November and the original S-1 of 18 September. The nine-month figures for 2026 are preliminary, estimated and unaudited: the filing says its closing procedures were not complete and that its auditor, KPMG, performed no procedures on them; the 2025 comparatives are from unaudited financial statements. TCV, GPU and site counts in the S-1/A are “as of the date of this prospectus”; in the S-1 they are as of 31 August 2026. TechBag arithmetic: Microsoft’s remaining value (US$43.8bn less US$3.22bn), which assumes the terminated statement of work was one of those counted in the US$43.8bn, as the filing’s wording indicates; the customer shares and “all other contracts”, set against TCV, which the filing does not split by customer; July–September revenue (nine months less six months); the growth multiples, debt against revenue, and the end of the Building 2 window (29 September plus 60 days). The filing does not say when the Loughton statement of work was terminated or by which party; the withdrawal’s timing and the site’s size come from DatacenterDynamics’ report, which cites The Telegraph, and are attributed as such. Nscale is not listed and has set no price range, so there is no share price or market value. Nothing published after 7:30pm IST on 14 November is included. Spotted an error? Write to us; corrections are published at the foot of the piece. Sources 1. [Nscale plc: Amendment No. 1 to Form S-1 registration statement (S-1/A)](https://www.sec.gov/Archives/edgar/data/2110365/000119312526458722/ck0002110365-20261112.htm) — 12 November 2026 2. [Nscale Ltd (now Nscale plc): Form S-1 registration statement](https://www.sec.gov/Archives/edgar/data/2110365/000119312526395475/ck0002110365-20260918.htm) — 18 September 2026 3. [DatacenterDynamics: Microsoft pulls out of delayed Nscale data center in Loughton, Essex](https://www.datacenterdynamics.com/en/news/microsoft-pulls-out-of-delayed-nscale-data-center-in-loughton-essex/) — 19 October 2026 Trade press; cites The Telegraph of 18 October 2026. 4. [India Briefing: Digital services in India: OIDAR, GST applicability and compliance](https://www.india-briefing.com/news/tax-digital-services-oidar-in-india-gst-applicability-and-compliance-22465.html) — updated 29 September 2023 **Disclosure.** TechBag is a software reseller: it earns when companies buy through it, including from vendors named here. The analysis is TechBag’s own; no vendor paid for or saw this piece before publication. Facts are labelled reported, TechBag count or our view. **Read this next:** [Norway pauses data-centre grid reservations; 31,300 MW in line exceeds its peak demand](https://www.thetechbag.com/blog/norway-pauses-data-centre-grid-reservations-2027) — Another grid queue: Norway paused data-centre grid reservations, with 31,300 MW reserved, queued or requested against a 25,000 MW peak. Go deeper on TechBag - [Cerebras’s contract book reached US$26.1bn, 124 times its US$210.8m quarter](https://www.thetechbag.com/blog/cerebras-26-1bn-contracts-210m-revenue-openai) — another AI compute company whose contract book becomes revenue only as capacity is delivered - [Nebius drops ARR after a US$325m one-off; plans US$40–45bn of capex](https://www.thetechbag.com/blog/nebius-drops-arr-325m-one-off-capex-40-45bn) — a GPU cloud funding a build-out ahead of its contracts - [Anthropic sets IPO range at US$70–78; its own suppliers will buy US$26bn of the shares](https://www.thetechbag.com/blog/anthropic-ipo-70-78-suppliers-buy-26bn-stock) — the customer side: Anthropic's filing names Nscale among the companies it buys GPU capacity from