Nvidia Leases Up to $50 Billion of Data Center Capacity, Reviving Circular Finance Concerns

Nvidia has signed a long-term lease for a hyperscale US data center project worth as much as $50 billion.

Nvidia agreed to lease the entire 1-gigawatt data center that Hut 8 is building in Texas, the Financial Times reported on July 28, citing multiple people familiar with the matter. The facility will house Nvidia graphics processing units. Once completed, the site will be subleased to neo-cloud providers and others, the report said.

Hut 8 filings show the lease is worth $19.6 billion over 15 years. If extension options are exercised through the 30th year, the total value would rise to $50 billion.

The deal is being viewed in the industry as an aggressive capital commitment by Nvidia as it tries to defend its lead in the artificial intelligence chip market, where competition is intensifying as Google and others push further into the sector.

Nvidia has previously invested billions of dollars in neo-cloud companies such as CoreWeave to encourage them to buy and operate its GPUs. This time, the company has moved to secure in advance the physical capacity where its chips will be deployed.

The data center leased by Nvidia has already secured power, which is becoming harder to obtain as competition among developers intensifies.

Hut 8 also secured more favorable terms for the debt financing needed to develop the data center, helped by Nvidia's lease commitment.

Google, a rival to Nvidia, is also offering support for data centers built around its tensor processing unit chips, or TPUs. That includes financial guarantees and support for low-interest bond issuance for developers.

The FT said Nvidia's latest lease could revive concerns about so-called circular finance. The term refers to arrangements in which AI chipmakers and their customers deepen ties through equity investments or funding support, creating increasingly tangled creditor relationships.

Such financing can help expand the industry ecosystem quickly. But it also carries the risk that distress could spread uncontrollably if market conditions deteriorate sharply, making it one of the AI industry's main vulnerabilities.

Hut 8 did not disclose the counterparty to the contract, but said the data center will be built to Nvidia's DSX architecture standards.

Nvidia said it is working with ecosystem partners to accelerate efficient AI infrastructure deployment. It said those efforts are being carried out through the DSX architecture.

Go Jeong-sam, Hankyung.com reporter, jsk@hankyung.com