Microsoft declines 500MW Nscale option in Texas

Microsoft declined an option for about 500MW of additional Nscale capacity in Texas, forgoing a doubling of the compute agreement signed in October 2025, the Financial Times reported.

The option was closer to 500MW than the 700MW previously reported and applied to a separate Nscale-owned site in Ward County, outside the Ionic Digital campus in Barstow where Microsoft already runs. The expanded lease would have been worth tens of billions of dollars in future revenue to Nscale, the Financial Times said.

Microsoft remains the largest customer in Nscale's $103 billion backlog and the one that just declined the option. Discussions were held several months ago and had no impact on the backlog, a person familiar with the matter told Data Center Dynamics. Microsoft still accounts for about 40% of it.

The capacity Microsoft declined has another taker: Nscale signed a $3.5 billion agreement with humanoid robotics company Figure to deploy 100,000 Nvidia Vera Rubin GPUs at its self-owned Barstow data center.

The original contract, signed in October 2025, leases about 230MW of Nvidia infrastructure at Nscale's Barstow data center, which Nscale leases from Ionic Digital. That capacity is live and Microsoft operates from the site, according to a LinkedIn post from Nscale chief executive Josh Payne, who said the Ionic site went from a steel shell to an operational AI data center in nine months.

Ionic Digital's expansion at Barstow depends on a power connection agreement. The company plans to add 466MW to the campus, bringing it close to 700MW, but does not yet have permission to bring that power to the site, according to Data Center Dynamics' source. Nscale offered Microsoft capacity instead at its own data center on adjacent land, which has behind-the-meter power. That is the capacity Microsoft declined. If the Ionic campus secures its power connection agreement, Nscale holds right of first refusal on the capacity.

The Microsoft relationship continues elsewhere, in the US, Norway and wider Europe. Microsoft pulled out of Nscale's Loughton data center project in the UK because of grid connection delays, and Nscale is still pursuing the project. Nscale is also in talks over a second $45 billion agreement with AI lab Anthropic. Nvidia is in talks to backstop debt on the 460MW Monarch campus, as Private Wealth Daily previously reported.