AI Cloud Firm Northern Data Reportedly Purchased a Huge Chunk of NVIDIA’s AI Chips But for Crypto-Mining
Northern Data, a European firm that has positioned itself as an AI cloud computing company, is under investigation by Swedish and European authorities over allegations that it used NVIDIA’s high-end AI chips for cryptocurrency mining rather than artificial intelligence workloads. The controversy follows reports that the company received nearly €100 million in tax breaks tied to a €400 million purchase of NVIDIA H100 GPUs, raising serious questions about the legitimacy of its operations.
According to Bloomberg, authorities in both Frankfurt and Boden, Sweden, have carried out raids at Northern Data facilities, uncovering what prosecutors have described as a significant VAT fraud scheme. Several arrests were made in connection with the investigation, which centers on whether the company misrepresented the intended purpose of its massive GPU acquisition in order to qualify for government tax incentives aimed at promoting AI infrastructure.
Northern Data, which has previously branded itself as an “environmentally friendly” Bitcoin mining company, pivoted heavily toward AI computing in recent years, rebranding its services to align with the global artificial intelligence boom. The company is also financially backed by Tether, the issuer of the world’s largest stablecoin, and had announced ambitions to build AI data centers across Europe. However, prosecutors now allege that the firm continued to use a large share of its computing resources — including the newly purchased H100 chips, for crypto-mining operations instead of AI processing.
The irony lies in the fact that AI accelerators like NVIDIA’s H100 are not optimized for crypto-mining algorithms. While technically capable of performing mining calculations, their architecture is designed for tensor operations and high-performance parallel workloads, not hash computations. This has led experts to believe that Northern Data’s true motive may have been to leverage the tax break attached to AI infrastructure investments, rather than to pivot genuinely toward artificial intelligence.
The situation also underscores a broader trend of companies attempting to ride the AI wave for financial or regulatory advantage. Over the past two years, governments across Europe, Asia, and the United States have introduced incentive programs to encourage the development of domestic AI compute capacity, including subsidies, tax credits, and energy discounts. These programs are meant to reduce dependence on foreign technology providers and support innovation in AI research, but they also create opportunities for exploitation when companies misrepresent their actual use cases.
While cryptocurrency mining has waned in profitability since the mid-2020s, several former mining firms have tried to reposition themselves within the AI sector to attract investors and maintain access to capital. Northern Data appears to be a prominent example of that shift - one that may now face severe legal and reputational consequences.
The European investigation highlights the increasingly fine line between legitimate AI computing and disguised crypto-mining operations. As AI hardware like NVIDIA’s H100 becomes the most sought-after commodity in tech, governments are tightening oversight to ensure that public incentives go toward actual innovation rather than speculative ventures.
What do you think - is this a case of corporate fraud disguised as AI innovation, or a symptom of governments rushing too fast into subsidizing the AI race?
