Northern Data, a leading cloud service provider in Europe’s artificial intelligence (AI) sector, has been shaken by operations in Germany and Sweden. The company is alleged to have misappropriated €100 million in VAT relief received from purchasing approximately €400 million worth of NVIDIA AI chips, using them for cryptocurrency mining instead of AI computations.
NVIDIA H100 GPUs at Center of Investigation
Swedish authorities are acting on suspicion that these incentives are being misused amid a global chip shortage and governments offering tax breaks to encourage AI development. The investigation focuses on the large quantities of NVIDIA H100 GPUs Northern Data purchased.
As reported by Bloomberg, raids were conducted at the company’s facilities in Frankfurt and Boden, Sweden, and arrests were made. Authorities say there is strong evidence that the company used this high-performance hardware for crypto mining operations that generated profits but were not eligible for tax incentives, rather than for the AI workloads that would qualify for the tax break.
Northern Data, known as an “eco-friendly Bitcoin mining” company, strategically rebranded itself as an AI cloud company as crypto markets stagnated. This transformation allowed the company to access massive computing capacity, benefiting from a significant tax break.
However, experts note that AI accelerators (especially the H100) are not the most efficient hardware for traditional crypto algorithms. This fuels speculation that the company’s primary purpose may be to reap tax benefits equivalent to a quarter of the total value of purchased chips, rather than to provide AI services.
Northern Data, which is also backed by stablecoin giant Tether, has not yet officially commented on the accusations against it. The incident has sparked serious debate about whether the global AI trend is being used as a marketing tool and the oversight of government incentives. As the investigation deepens, concerns about “vaporizing” projects and unethical practices in the AI sector are expected to grow.
