Nvidia backs AI data center startup Nscale as it hits $14.6B valuation
cnbc.com
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However what it does allow all these companies investing to do is fund significant capital expenditure but hide it on their balance sheet. They all know if they funded capex directly it would create a deprecation storm that would tank their future earnings. Instead they give the money to another entity to do the building and magically it’s (the equity) now just an asset on their balance sheet with no deprecation. It’s “worth” a lot as a line item there, but only because the hype driving this financial engineering keeps the shares valuable.
Meanwhile the startup isn’t public and thus the fact that it has this massive deprecation on the books is mostly out of sight and out of mind, with some random sky high valuation that’s not based in any normal sense of business reality.
That all works great… until the bubble busts of course.
"Starting to"? :)
That being said, financial engineering tricks like depreciation and tax sheltering are of course hugely important in the global economy. It's likely that NVDA has a lot of cash sitting in Europe that it doesn't want to repatriate because it would have to pay taxes on it.
I've seen this suggested before as well, but I don't think I've heard a lot of actual concrete things. What big efficiency wins are to be had specializing on "AI" datacenters as opposed to what the past mega hyperscalers have done? What techniques seem to be out there that cloud providers and others have slept on? What makes them so different, in terms of operating a datacenter?
I'm genuinely asking.
But are they actually doing things differently than the high compute parts of the hyperscaled datacenters? Are there radical new ways of distributing heat in the datacenter that only makes sense at that level of energy usage per square foot? Is AI energy use that much higher per square foot of other high-compute parts of datacenters, or is it just that its now something like 90% of the floor plan versus maybe only 50-60%?
> handle transmitting large amounts of data over the internet
I certainly can't speak for all datacenters, and I've never been in a hyperscaler datacenter. But of all the datacenters I've spent time in, the space for the outside network connectivity was rather small compared to the rest of the space for storage and compute. Think a few small office suites dedicated to outside networks coming in and connecting to the clients in the datacenter compared to a medium to large sized warehouse full of compute and storage.
Labor and land is expensive, energy is scarce and expensive, and colocation is not that valuable because latency is dominated by compute instead of transmission.
But there must be a good reason I am missing.
More cynically, someone in the UK might want to do something that makes money with these data centers once the AI thing goes bust.
I mean, there's a reason Luleå is a popular datacenter spot: access to hydro & wind- but also "free cooling"; datacenters create a lot of heat and having a cold environment makes it easier to maintain ambient temperatures that are sustainable with lower energy consumption.
Additionally, people tend to prefer their servers are in geopolitically stable countries that are less likely to be bombed or undergo civil war (and the US likes to ensure civil war in countries that have a lot of oil) - and you want your datacenters to avoid any environmental hazards like earthquakes.
I can't imagine preferring the equator for datacenters.
the bottleneck is they keep running out of water for cooling
They were among the worst (and most expensive) datacenters I've worked with, but they were used because we were latency sensitive (game servers).
Haven't heard of anyone deploying to Indo/Malay though, maybe I missed something here.
singapore ran out of land. malaysia ran out of water and electricity
indonesia is unstable politically and just started confiscating foreign owned farms
india is too politically risky. people will just steal your shit
middle east - israel/iran chabad trump war etc. all within ballistic missile range, unstable
africa is africa
latin america no infrastructure (highways, power grid, etc)
labor is other bottleneck. it actually borderline impossible to bring in skilled engineers and technical specialist to remote energy rich areas
India is a huge place and some parts of it are vastly better managed than others.
> latin america no infrastructure (highways, power grid, etc)
The governance problem is quite real in Latin America actually, but I think it may have potential. If some infrastructure gets funded in the process it would have beneficial side effects all around.
rule of law why country like singapore and finland end up being richer than brazil or argentina
Jeez what a way to dismiss the second largest continent and the second most populous landmass in the world.
I'd argue Africa is the best place to start such a thing. Cheap labour, plenty of renewable energy. The biggest issue it probably has is how little bandwidth it has, and might require additional sea cables.
But "africa is africa" is not a way reason to dismiss the continent.
1 physical security is a problem, and in some countries like equatorial guinea or south africa foreigners arent allowed to own assets outright
2 cheap labour cant actually do anything. they are nice people but they cant read instruction manuals. cant set up data centres
3 no infrastructure. why zambia and kenya etc are 99% cellphones, is because there is no grid and no landlines because people steal all the copper wires
https://iol.co.za/the-star/news/2026-02-18-r23-billion-lost-...
stories engineers have told me about building things in africa: - i was working on an oil rig and one day the local employees started playing hide and seek and trying to kill us until a ransom was paid. for 48 hours we hid in a ventilation area until the ransom was organised, then had to go straight back to work with the people who were trying to murder us with power tools the day before for a month - the person who gave my company a contract was chainsawed to death on a beach
large scale offshore wind in norway could generate 50-75% of the entire US production with 80% uptime and then DCs built in norway or EU area
If a substantial part of the output of new nuclear plants goes to data centers, then those plants do NOT serve the common good. It's a simple matter about which there should be no confusion.
WeWork was a legit real estate business with a SaaS multiple on valuations.
In many cases this 20x+ increase over 3 mo.
This is going in other industries too. Claude cowork is just an example and beginning of the trend.
Show me any product that / company that charge you 20x and customers are happy , well its anthropic
Would I be paying 20€ to ask those questions? I dunno, i dont feel any particular need. Would I be paying 200€?! Are you insane hell no
At some point the price will rise. But the value has to have risen for existing buyers to be ok with that - but can they perceive the value? Hmmm difficult to tell. Benchmarks are not an objective way to measure that.
In the long run google is most likely to acquire a serious cost advantage given their level of vertical integration.
Managers of firms care about impact of financials. They don’t care about the metrics you are measuring / gaming. Ultimately all ‘progress’ has to show in the cash flows.
Are you taking more cost reduction projects and more revenue-generating projects? Are you actually delivering? Are customers perceiving you to be as trusted as before? Etc. are the only things that matter. ‘Show me the money’.
To me this is akin to the discussion re. Scrum, agile etc. Who cares? Show me the money.
You personally will not pay , but these who will will replace people who are not productive.
That’s actually the limiting factor. There will be top 5% of developers who will throw away on the street remaining 95%. No EU socialism will protect the rest . It is very unclear what is the new world market , with no web developers , no custom dashboard teams , no analytics teams , no devops whose role is to babysit human devs. From one side it’s a market for opportunity to automate , but human devs are generators of unlimited inefficiencies. Once the market settles down , the demand for lots of tools will shrink.
On my spendings to anthropic . I’m a manager, and top user I burn tokens on tickets creation , planing , even sprint filtering , for sure the most went to coding. Bugs are getting fixed by just sharing a screenshot and a sentence or two of description in 80% of the cases , all the way including to PR creation and making sure release is live and good with tests.
There are ways to cut the cost a bit , maybe 30-40% but it’s not practical .
I mean, I imagine some top% vibe coding bros paying 200$. I would require some serious evidence that the average developer pays for it.
I certainly wouldn't. It's moderately useful, but not 200$/mo useful.
And I doubt someone can have the cognitive load to follow 10 Claude max. Let alone 1.
The person I was replying to said the average developer pays 200$. I call bullshit on that one.