After leaving high school in an industrial area of Australia, Josh Payne took an unlikely path to becoming the head of a multibillion-dollar data center company now in the middle of the artificial intelligence building boom.
He spent three years working in a coal mine and has built websites selling protein supplements and electronics. Then he started a recruitment platform for Australian construction workers before getting involved in renewable energy and crypto mining.
Then about two years ago, Mr. Payne landed on A.I. data centers.
It was opportune timing. In 2024, having decamped from Australia to London, Mr. Payne started his data center company, Nscale, just as tech companies were desperate for partners who could provide the electricity, semiconductors and other computing power needed to build A.I. Building on his cryptocurrency and energy connections, Mr. Payne was able to offer just that.
He now counts Microsoft, OpenAI and ByteDance, which owns TikTok, as customers. Jensen Huang, the chief executive of the A.I. chip maker Nvidia, gave Mr. Payne a bottle of Johnny Walker scotch after signing a contract with Nscale last year.
“He was surprised to hear I came from the coal mines,” Mr. Payne said in a recent interview.
On Monday, Nscale announced that it had raised $2 billion from Nvidia and other investors, including the Norwegian industrial giant Aker and the venture capital firm 8090 Industries. The deal values the company at $14.6 billion.
Sheryl Sandberg, the former chief operating officer of Meta, is joining Nscale as an adviser and member of its board of directors. Nick Clegg, another former Meta executive, and Sue Decker, a former Yahoo executive, also joined the board.
Mr. Payne’s unorthodox path is illustrative of today’s A.I. boom: investments pouring in, upstart companies growing at a dizzying pace, new fortunes being made.
Nscale shares another characteristic of this A.I. era by racking up substantial financial obligations. Last month, the company took on $1.4 billion in debt, including from Blue Owl, a Wall Street firm facing scrutiny for risky lending practices. It raised another $1.1 billion from investors in September.
In the next five years, the company expects it will need more than $45 billion for data center projects worldwide, with developments underway in Britain, Iceland, Norway, Portugal, Texas and an unannounced location in Southeast Asia.
Nervous global investors see signs of a wider A.I. bubble. They argue that even if A.I. is a generational technology, young companies risk spending billions without a clear path to generating a return. They are building facilities that have life spans of 15-plus years, but often have contracts in place for only about five years.
Critics warn that if the boom stalls — or customers do not renew their contracts — some companies will fail.
“It increasingly appears to us a question of when, not if, the A.I. bubble bursts,” the hedge fund Man Group warned in a recent report.
Mr. Payne said Nscale was building facilities only in places where it had customers. The power needed will total about 5.5 gigawatts, equal to about five million American homes.
“We are experiencing insatiable demand,” Mr. Payne said.
Nscale is part of a new generation of data center providers known as neoclouds, which aim to profit off A.I. by taking on the financial risk of building the massive infrastructure needed for the technology. Other companies in the space include CoreWeave, based in New Jersey; Nebius in Amsterdam; and IREN in Sydney, Australia.
Microsoft and other A.I. giants are using neoclouds to offload some of their own liabilities. They can strike a deal with a company like Nscale to acquire computing power quickly, then wait to see how demand for A.I. develops before committing to their own costly projects.
Oyvind Eriksen, the chief executive of Aker, one of Norway’s largest companies, said he met Mr. Payne last year after the Nscale leader reached out on LinkedIn. They struck a deal to build data centers in Norway, and Mr. Eriksen is now on Nscale’s board of directors.
He said the company could outlast a downturn because it had access to capital, reliable cheap electricity and contracts with customers that help cover the cost construction and semiconductors.
“It is likely there will be volatility,” Mr. Eriksen said. Nscale, he said, could acquire other struggling companies “when the correction happens.”
Mr. Payne said his interest in entrepreneurship had started from reading books like “The 4-Hour Work Week” during downtime at the mine. He became fascinated by data centers about five years ago while working for investors financing renewable energy projects in Australia. Data centers were viewed as an ideal consumer of unused electricity.
He learned that the Arctic areas of northern Norway had some of the most inexpensive renewable energy in Europe — hydropower that costs about 3 cents per kilowatt-hour, compared with about 20 cents on average across the continent. In 2022, he booked flights to Oslo from Sydney that took more than 24 hours.
“I stayed for two weeks, and I left with a letter of intent to acquire a project, which at the time was a Bitcoin mine,” he said.
After ChatGPT was released in late 2022, interest in data centers exploded. But Mr. Payne’s big break did not come until last year when he landed a meeting with Microsoft. The company is now Nscale’s biggest customer; they are working together on projects in Norway, Portugal, Britain and Texas.
The Microsoft deal, estimated last year by Bloomberg to be worth $23 billion, comes with considerable risks. If Microsoft decides it no longer needs Nscale when the contract runs out, Mr. Payne must find another huge customer for the data centers and 200,000 Nvidia A.I. chips.
Nscale’s average contract length is about five and a half years, Mr. Payne said, though he would not disclose terms of the Microsoft deal. He said that Nscale expected to be partners with the tech giant for a “long time,” but that his company would be able to find other uses for its data centers if the contract lapsed.
Nscale is trying to add more customers, including governments in Europe that are looking for non-American tech companies to team up with on A.I, Mr. Payne said.
“The supply-demand imbalance is so large that we will completely diversify our customer base over the next two or three years,” he said.
Microsoft declined to comment.
Nscale’s costs are adding up, and Mr. Payne said the company might hold an initial public offering as early as this year to generate more capital. Every data center costs about $9 million to build per megawatt of electricity it will consume, he said.
Ms. Sandberg, who was introduced to Mr. Payne through a headhunter late last year, said she had done due diligence on Nscale’s business before agreeing to join the board. She said Mr. Payne’s vision and youthful ambition were reminiscent of her former boss, Mark Zuckerberg.
“Every market, every business has its risks — and certainly there are things that Nscale is going to have to navigate,” she said. “My job is to come on the board and use the experience I have to help Josh navigate those challenges.”
Adam Satariano is a technology correspondent for The Times, based in London.
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