Inside Norway's Arctic AI Data Center: Nscale's $10B Bet

Arctic ambitions

High above the Arctic Circle in Narvik, Norway, a massive construction site is taking shape on blasted black rock. British startup Nscale is building one of Europe's largest AI data centers here, a facility that will eventually house tens of thousands of Nvidia processors and consume roughly as much electricity as 190,000 U.S. homes.

The location may seem improbable—a former Viking port shrouded in winter darkness—but it offers two critical advantages: abundant cheap hydroelectric power at 3 to 4 cents per kilowatt-hour, far below Europe's 10-cent average, and a frigid climate that reduces cooling costs for heat-generating chips. According to TIME, which toured the site in March, around 350 workers are currently on site, with numbers expected to reach 1,500 as construction accelerates.

Why it matters

The Narvik facility exemplifies the unprecedented scale of AI infrastructure investment reshaping global energy markets and corporate strategy. With more than 800 data centers under construction worldwide and tech companies projected to spend $7 trillion on such facilities by 2030, the race for computing capacity is creating new geopolitical dynamics around energy access, raising electricity prices in previously cheap markets, and forcing difficult tradeoffs between AI ambitions and climate commitments.

From Stargate to Microsoft

The project was initially branded Stargate Norway, intended as the first European outpost of the $500 billion joint venture announced by President Trump and OpenAI CEO Sam Altman in January 2025. However, Nscale dropped the Stargate name in April after OpenAI delayed signing a formal contract, according to a person familiar with the negotiations.

Microsoft stepped in to replace OpenAI as the primary customer, though OpenAI will still rent capacity through its existing Microsoft contracts. The shift reflects OpenAI's apparent effort to demonstrate financial discipline ahead of an expected IPO. OpenAI also withdrew from Stargate U.K. and canceled a planned Texas expansion.

Nscale's meteoric rise

Despite the customer shuffle, Nscale's trajectory has been remarkable. The company is barely two years old but already valued at $14.6 billion after raising $2 billion in March—the largest funding round in European history for this type of venture. CEO Josh Payne, 32, aims to build a "$1 trillion hyperscaler" competing with Amazon, Microsoft, and Google.

Nscale spun out of Arkon Energy, a heavily indebted cryptocurrency mining operation that lost $102 million on $19 million in revenue in 2024. Payne, who started his career in Australian coal mines, pivoted to AI infrastructure just as ChatGPT launched and cryptocurrency markets collapsed. Former Meta COO Sheryl Sandberg joined Nscale's board in March, her first major business move since leaving Meta's board in 2024.

The company has employed creative financing, including a deal where Nvidia paid $60 million for stock options now worth around $200 million while providing an $860 million backstop for a Texas facility. Such arrangements have raised questions about circular dependencies in the AI supply chain.

Energy and environmental tensions

The Norway facility's estimated cost exceeds $10 billion, with chips accounting for 60 to 80 percent of expenses. While Nscale argues data centers enable renewable energy investment by providing consistent demand, the company is simultaneously building a larger, gas-powered facility in West Virginia that bypasses grid connection delays.

Electricity prices in northern Norway are expected to double within two to three years, partly due to data center demand, according to energy analyst Tor Reier Lilleholt. The pattern mirrors dynamics worldwide, where AI infrastructure is straining power grids and generating political opposition.

TIME first reported these details from the Narvik construction site and Nscale's broader strategy.