Nscale Analysis 2025: How Liquid Cooling Moved from Niche to Necessity in AI Data Centers

Industry Adoption: Nscale’s Liquid Cooling Strategy from Niche Bet to Hyperscaler Prerequisite

Between 2021 and 2024, Nscale emerged as a specialized AI hyperscaler with a distinct, forward-looking thesis: the future of high-performance computing (HPC) would be defined by liquid cooling. During this foundational period, the company launched from stealth mode, establishing its vertically integrated model by building a GPU cloud service on AMD Instinct MI300X accelerators and acquiring Kontena, a modular data center specialist. This strategy was an early bet that traditional air cooling was fundamentally inadequate for the next wave of AI hardware. The company’s initial projects, like the N1 data center in Glomfjord, Norway, served as commercial proof points, integrating partner technologies like Lenovo’s Neptune™ liquid cooling to demonstrate a co-designed, full-stack solution. This period was characterized by building capabilities and validating the technical and economic viability of a liquid-cooling-first approach, positioning Nscale as a niche provider for demanding AI workloads.

The landscape shifted dramatically from January 2025 to the present day, marking an inflection point where Nscale’s niche strategy became a mainstream necessity for the world’s largest technology companies. This transition was catalyzed by the arrival of power-intensive hardware like NVIDIA’s Blackwell platform. Nscale moved from conceptual validation to massive-scale execution, underscored by a landmark, multi-billion dollar deal to deploy approximately 200,000 liquid-cooled GPUs for Microsoft. Further validation came from a joint venture with Aker and OpenAI for the “Stargate Norway” AI gigafactory, a 230MW project powered by renewable energy. The variety of applications expanded from general AI cloud services to specific, large-scale deployments for cornerstone tenants. This demonstrates that liquid cooling is no longer an alternative but a foundational requirement for deploying next-generation AI at scale. The new opportunity lies in becoming the go-to infrastructure partner for hyperscalers who cannot build or retrofit specialized liquid-cooled facilities fast enough, while the primary threat becomes the immense execution risk associated with delivering these gigawatt-scale projects on time and on budget.

Table: Nscale’s Capital Mobilization for Liquid-Cooled AI Infrastructure

Table: Nscale’s Strategic Partnerships for AI Infrastructure Dominance

Geography: Nscale’s Nordic-Centric Strategy Goes Global

Between 2021 and 2024, Nscale’s geographic footprint was strategically concentrated in the Nordics, specifically Norway. The selection of its initial 60MW site in Glomfjord was a calculated move to leverage the region’s abundance of low-cost, 100% renewable hydropower and naturally cool climate. This provided an ideal testbed to prove the operational and economic efficiency of its liquid-cooled, sustainable data center model. This early-stage, focused approach allowed the company to control variables and build a strong operational case study before pursuing broader expansion. The acquisition of Finland-based Kontena in July 2024 further solidified this Nordic focus, bringing in regional expertise in modular, high-density data center construction.

From 2025 onwards, Nscale’s geographic strategy has exploded from a regional focus to a multi-continental expansion, driven by massive anchor-tenant agreements. While Norway remains a strategic hub with the 230MW “Stargate Norway” project and the Glomfjord expansion, Nscale has aggressively entered new markets. Key projects now include a 15MW deployment in Iceland with Verne (leveraging geothermal and hydro), a major deployment in Portugal with Start Campus for Microsoft (using cold ocean water for cooling), and a planned £2 billion investment in the UK, starting with a 90MW-capable site in Loughton. This expansion also includes plans for new data centers in the United States as part of the expanded Microsoft deal. This geographic diversification shows that Nscale is following hyperscaler demand into regions that offer a trifecta of renewable energy, favorable climates, and supportive infrastructure, transforming its Nordic-first model into a global blueprint for sustainable AI.

Technology Maturity: Nscale’s Liquid Cooling Evolves from Integrated Feature to Core Enabler

In the 2021–2024 period, Nscale’s technology was in the early commercialization and integration phase. The company’s primary innovation was not inventing liquid cooling but vertically integrating it as a standard feature within a full-stack AI cloud platform. The launch of its GPU cloud service in May 2024, utilizing AMD MI300X accelerators and partner tech like Lenovo’s Neptune™ liquid cooling, was a key validation point. The acquisition of Kontena brought in modular “Edge data room” solutions and the “KONNECT ICE” containerized cooling unit, demonstrating a focus on creating scalable, replicable, and rapidly deployable infrastructure. The technology was commercially available but at a limited scale, with the Glomfjord data center acting as the main showcase. The focus was on proving that a co-designed, liquid-cooled stack could deliver superior performance and efficiency.

The period from 2025 to today marks the transition of Nscale’s liquid cooling technology from a commercial offering to a scaled, mission-critical enabler. The technology is no longer just an option but the fundamental prerequisite for deploying next-generation hardware like the NVIDIA GB200 NVL72 and Blackwell Ultra GPUs, which Nscale now offers. These systems are engineered to function as single massive GPUs, and their thermal output makes traditional air cooling non-viable. Projects like the Verne deployment in Iceland (85% liquid-cooled), the Start Campus facility in Portugal (supporting >130kW racks), and the “Stargate Norway” gigafactory all explicitly call for closed-loop, direct-to-chip liquid cooling. This shift from deploying thousands of GPUs to deploying hundreds of thousands for clients like Microsoft and OpenAI validates that Nscale’s specialized technology has achieved scaled commercial maturity and is now defining the new standard for AI data center design.

Table: SWOT Analysis of Nscale’s Liquid Cooling Strategy

Forward-Looking Insights: Nscale’s Year Ahead Is All About Execution

The data from 2025 paints a clear picture: Nscale has successfully transitioned from a promising startup to a critical pillar of the global AI infrastructure build-out. The year ahead will be defined not by strategy, but by execution. The market has validated the company’s liquid-cooling-first approach through over $1.5 billion in funding and cornerstone contracts with Microsoft and OpenAI. Now, the focus shifts to delivering on these monumental promises.

Three key signals will be critical to watch. First, the operational launch of the 30MW Glomfjord expansion in Q2 2025 will be the first major test of Nscale’s accelerated deployment capabilities. Second, progress on the “Stargate Norway” project, with its ambitious goal of deploying 100,000 NVIDIA GPUs by the end of 2026, will serve as a barometer for the company’s ability to manage gigawatt-scale construction. Finally, the phased deployment of 4,600 Blackwell GPUs in Iceland will provide a real-world proof point for its hybrid cooling model and its ability to integrate into partner-operated facilities. Nscale has created a new standard where advanced liquid cooling is the foundation of AI infrastructure; its challenge now is to build that future on time and at an unprecedented scale. Any delays will create an opening for fast-following competitors, but successful and timely execution will solidify its position as an indispensable leader in the AI arms race.

Frequently Asked Questions

What is Nscale’s core business strategy?
Nscale is a specialized AI hyperscaler focused on building and operating vertically integrated, liquid-cooled data centers. Its strategy is to provide purpose-built infrastructure for next-generation AI hardware that traditional air-cooled facilities cannot support. This has made them an essential partner for hyperscalers like Microsoft and OpenAI who need to deploy power-intensive GPUs at a massive scale.

Why has liquid cooling become a necessity for AI data centers?
Liquid cooling is now a foundational requirement because the latest generation of AI accelerators, like NVIDIA’s Blackwell platform, are so power-intensive and generate immense heat. Traditional air cooling is fundamentally inadequate for these systems, which can create rack densities exceeding 130kW. As a result, advanced methods like direct-to-chip liquid cooling are the only viable way to operate this hardware efficiently and at scale.

Who are Nscale’s main customers and partners?
Nscale’s primary customers are major technology companies and hyperscalers. The article highlights a landmark deal to deploy approximately 200,000 GPUs for Microsoft and a joint venture with Aker and OpenAI for the “Stargate Norway” AI gigafactory. Its key technology partners include NVIDIA and AMD for GPUs, Lenovo for its Neptune™ liquid cooling systems, Nokia for data center networking, and VAST Data for storage solutions.

How is Nscale funding its large-scale infrastructure projects?
Nscale has mobilized significant capital through several funding rounds. Key investments listed in the article include a $155 million Series A in late 2024, followed by a landmark $1.1 billion Series B and a $433 million SAFE agreement in September 2025. This capital, raised from investors like Aker, Nokia, and Nvidia, is designated for the global expansion of its liquid-cooled AI infrastructure, including major projects in the UK, Norway, and for clients like Microsoft.

Where is Nscale building its data centers?
Nscale began with a Nordic-centric strategy, establishing its first sites in Norway to take advantage of renewable energy and the cool climate. Since 2025, driven by major contracts, the company has expanded globally. Key projects are now located in Iceland, Portugal, and the United Kingdom, with further expansion planned in the United States. Its strategy involves selecting locations that offer a combination of renewable energy, supportive infrastructure, and favorable climates for cooling.