Here's an interesting report to discuss, as it claims that a European AI cloud firm managed to secure a substantial tax break on NVIDIA's AI chips, only to use them for crypto-mining.
AI Cloud Firm Northern Data Reportedly Purchased a Huge Chunk of NVIDIA's AI Chips, But For Crypto-Mining
The demand for AI chips is so massive worldwide that governments are enabling firms to build up their computing power through incentives and measures such as tax breaks. However, a European AI firm, Northern Data, is being investigated by Swedish authorities for receiving a tax break worth approximately €100 million, compared to NVIDIA's H100 AI chips, which are valued at around €400 million. The investigation centers on the company's use of AI chips, as it is alleged that the firm obtained these chips for cryptocurrency mining rather than utilizing them for AI computing workloads. Northern Data is also backed by the stablecoin giant Tether.
According to Bloomberg, raids have been conducted in Frankfurt and Boden, Sweden, resulting in arrests that led to the disclosure of a significant VAT fraud by Northern Data. The supposedly 'rebranded' AI cloud firm went heavy during the mining era, disclosing itself as an 'environmentally friendly' Bitcoin mining entity, and the firm is claimed to have a decent computing arsenal for mining activities, however, its most recent purchase of NVIDIA's H100 GPUs worth about €400 million is what is concerning European authorities, since the deal did involve a massive tax break.
Of course, crypto-mining isn't as big as it used to be a few years ago, and with that, companies like Northern Data need to come up with newer strategies to stay afloat, which is why they decided to join the AI bandwagon, like every other firm out there. It's actually interesting that the company has employed AI accelerators for GPU mining, even though they are not the optimal choice, as AI chips aren't suitable for crypto-related algorithms. Perhaps the intention here was to capitalize on the tax break offered by Northern Data, as it accounts for a significant portion of the total value of chips purchased.
AI has shown us that those who jump onto the bandwagon often face severe consequences, and we have seen several startups promoting AI in their operations solely for marketing and 'buzz' purposes. Northern Data seems like another example.
About the author: Muhammad Zuhair is a hardware and technology reporter for Wccftech, specializing in the semiconductor industry and the complex interplay between technology, manufacturing, and geopolitics. His coverage focuses on the corporate strategies and technological roadmaps of industry giants like TSMC, NVIDIA, Samsung, and Intel. Zuhair's expertise lies in deconstructing complex topics such as fabrication nodes (e.g., 2nm process), the economic impact of policies like the CHIPS Act, and the strategic development of AI infrastructure from NVIDIA, AMD and Intel.
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