Long-term colocation bet: WhiteFiber wins a decade-long, 40 MW deal with Nscale — what investors should watch

What happened and why shareholders should care

WhiteFiber announced a 10-year colocation contract with Nscale to deliver 40 megawatts of critical IT load at a campus in Madison, North Carolina. The deal is being reported as worth about $865 million over the life of the agreement. For investors, this is a classic large commercial win: it promises long-term revenue visibility but also commits WhiteFiber to a heavy, front-loaded buildout and power sourcing obligations.

On the surface, the agreement turns a sales pitch into a long runway of recurring cash if WhiteFiber can build and operate the facility on time and on budget. But the headline dollars mask two realities investors need to weigh: meaningful near-term capex and execution risk, and concentrated revenue tied to one large customer for a decade.

How this deal will probably show up in the numbers

Colocation contracts like this are typically recognized as service revenue over time. Most of the $865 million will flow into WhiteFiber’s top line gradually as racks and power capacity are delivered and services are billed. That creates a predictable revenue stream once the site is live, which investors value because it reduces quarter-to-quarter surprise.

However, the accounting and cash story has two parts. First is the construction phase: building the campus and installing infrastructure usually requires large, upfront capital spending. WhiteFiber will likely book construction costs on its balance sheet as assets and then depreciate them while the company starts billing Nscale for space and power. That means earnings can look lumpy early on — big capex hits the cash-flow statement now, while revenue recognition ramps later.

Second, margin dynamics should improve once the site is operational. Colocation services often carry solid gross margins because ongoing operating costs are lower than the initial build. But those margins depend on efficient construction, favorable power pricing, and utilization rates. For investors, that means the contract is accretive in the medium term if WhiteFiber keeps costs under control, but it may be neutral or even dilutive to free cash flow during the build phase.

In practical terms: expect the contract to show up initially as a large new booking or backlog item that underpins revenue guidance over several years, followed by a phased contribution to revenue and EBITDA as capacity comes online.

What delivering 40 MW in Madison will actually look like

The project is slated for delivery in two phases. That staged approach is common; it limits early capex while allowing revenue to begin as soon as the first phase is ready. Each phase will require substantial civil and electrical work: power feeds, substations or upgrades, cooling systems, and redundant infrastructure to meet colocation standards.

Power sourcing is the single biggest operational challenge. Securing reliable, cost-effective power — and the transmission capacity to bring it to the site — is essential. If local utilities need to upgrade lines or substations, permitting and construction timelines can stretch, which delays revenue and raises costs. On the flip side, if WhiteFiber locks attractive, long-term power contracts or taps into renewable sources, it can protect margins and appeal to customers who care about emissions.

Operational responsibility typically includes day-to-day facility management, security, and service-level guarantees. For investors that means more predictable operating expenses once the campus is open, but also ongoing performance risk if uptime targets are missed.

Who Nscale likely is and why the customer matters

Nscale appears to be taking capacity that suggests large-scale computing use — the sort of demand you see from cloud-scale users, high-frequency trading, or crypto mining firms. The long ten-year term signals that Nscale wants surety of power, space and long-term pricing stability.

From WhiteFiber’s perspective, landing a single, multi-year anchor tenant can be very positive. It reduces vacancy risk and supports long-range financial planning. But it also concentrates revenue: a large share of future cash flow will depend on one counterparty. That concentration raises renegotiation, cancellation, and counterparty-credit risks that investors must factor in.

Contract structure matters. If this is classic colocation — WhiteFiber owns the facility and sells space and power — the company keeps control and recurring revenue. If it’s more of a wholesale or build-to-suit deal, the economics and risk allocation could be different, with Nscale potentially taking on more operational or credit risk. The announced summary didn’t detail exclusivity or early-termination terms; those clauses will be important for shareholders.

How this compares to the broader data-center market

Data-center deals of this size are meaningful but not unprecedented. Large providers such as Digital Realty (DLR) and Equinix (EQIX) routinely sign multi-year, multi-megawatt contracts with enterprise and cloud customers. What sets this pact apart for WhiteFiber is scale and duration for a single campus, which can dramatically reshape a smaller provider’s growth profile.

Demand drivers that matter include AI workloads, cloud expansion, and, potentially, crypto-mining activity. Those use cases tend to prefer long-term, predictable power and capacity deals. For the broader market, this contract is another sign that big, concentrated customers are still willing to commit to long tenors — a tailwind for mid-size operators that can secure land and power.

For investors, the comparison to big, listed peers highlights two trade-offs: larger providers trade at premiums for scale, liquidity and diversification, while a company that wins a single giant deal can see faster earnings acceleration — but also faces higher company-specific risk.

Main risks and the near-term events to watch

Key risks are execution, power, and customer concentration. Execution risk covers timeline slips, cost overruns, and permitting delays. Power risk centers on securing transmission and affordable energy. Customer concentration risk arises if too much future revenue depends on Nscale and the contract has weak termination protections.

Regulatory and ESG issues are also real. Large data centers draw scrutiny over land use, water for cooling, and carbon intensity. If local opposition or stricter rules force changes, costs or schedules could rise.

Investors should watch for the following near-term events: construction milestones and phase-one commissioning; updated capex guidance and how the company plans to fund the build; any detailed disclosure on power contracts and exclusivity; and the customer’s financial disclosures or filings that indicate their ability to meet long-term obligations. Quarterly reports that translate the headline deal into backlog and revenue guidance will be the clearest signals of how this will affect earnings.

Bottom line: the Nscale deal gives WhiteFiber a clear path to steady, long-term revenue — but only if the company manages a costly build and avoids getting too dependent on one customer. For investors, the news is promising but conditional: positive for long-term value if execution goes well, risky if power or delivery problems crop up.

Sources

• linkedin.com
• coindesk.com
• coindesk.com
• indices.coindesk.com
• coindesk.com
• coindesk.com