[HN Gopher] Revealed: UK's multibillion AI drive is built on 'ph...
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Revealed: UK's multibillion AI drive is built on 'phantom
investments'
Author : tablets
Score : 82 points
Date : 2026-03-09 14:45 UTC (8 hours ago)
(HTM) web link (www.theguardian.com)
(TXT) w3m dump (www.theguardian.com)
| Havoc wrote:
| Sounds a lot like Zuckerberg getting caught on a hot mike at the
| trump dinner about how many billion meta is investing
|
| All made up bullshit numbers
| smy20011 wrote:
| Just multibillion?
| parliament32 wrote:
| The US is no different. All the deals seem to make sense until
| you take a step back and realize it's just a bunch of circular
| investments. This bubble bursting is going to be orders of
| magnitude funnier than the NFT/web3 implosion, I can't wait.
|
| https://en.wikipedia.org/wiki/AI_bubble
| harel wrote:
| I don't disagree, but I can't join you wishing for it to
| happen. It's going to be bad for all of us.
| recursive wrote:
| The longer it's delayed, the worse it will be.
| embedding-shape wrote:
| > is going to be orders of magnitude funnier than the NFT/web3
| implosion, I can't wait.
|
| When was that? Seems I missed it, the market cap of
| cryptocurrencies in general seems to still be around ~2.5T USD,
| way above what I thought an "implosion" would mean.
| parliament32 wrote:
| Oh crypto is doing fine, no issues there. NFTs however, like
| all the hype of pictures of monkeys selling for ridiculous
| amounts of money, that's the implosion I was referring to.
| bombcar wrote:
| The "blockchain" collapse was covered up by the AI
| explosion, many of the NFT/blockchain things that would
| have died out pivoted to be AI (or AI on the blockchain!).
| embedding-shape wrote:
| > many of the NFT/blockchain things that would have died
| out pivoted to be AI (or AI on the blockchain!).
|
| I'm guessing you're talking about smaller projects?
| AFAIK, neither Bitcoin nor Ethereum have anything to do
| with AI, and combined they're 1.5T USD in market cap,
| that's not propped up by AI, is it?
| bombcar wrote:
| Yes - the scam/hype around crypto was always on the
| "application" of it (or shitcoins) - BTC and ETH have
| just chugged along as they actually have an underlying
| use case.
| mikkupikku wrote:
| Is the US really no different? I can name at least a few US
| companies making a serious attempt at AI stuff, and while I
| haven't invested in any of them I can understand how billions
| of dollars are being thrown around here.
|
| But in the UK? What UK AI orgs are there? Deep Mind is/was but
| they're owned by Google since a long time ago. Is there even a
| single large UK company taking money for AI that isn't just
| flagrantly scamming by _any_ measure?
| devonkelley wrote:
| The NFT/web3 comparison is tempting but I think it misses
| something. NFTs had no underlying utility beyond speculation.
| AI is already generating real revenue for companies that
| figured out the execution layer. The bubble isn't in the
| technology, it's in the gap between what gets announced and
| what actually gets deployed.
|
| The circular investment thing is real though. Half the "AI
| investments" are just cloud compute commitments rebranded as
| strategic AI spending. That part is absolutely going to unwind.
| bArray wrote:
| To build a Gigawatt AI data center in 2025 is reported to cost
| $35bn [1]. If you're not going to build it to top specs, why even
| bother. Given that this is the UK, once all the bureaucracy is
| done, it'll be at least 50% more expensive.
|
| A large business is estimated to use 50MWh at PS14,706 a year
| [2]. It'll cost in excess of PS300k per year just to run
| electricity, not that the grid has that in spare capacity [3].
| It's completely in contrast to their green energy campaign.
|
| Then, they don't even have any kind of contract actually in
| place:
|
| > Asked about the terms of the contract that Nscale had signed to
| build the supercomputer by the end of this year, the government
| did not reply directly. Instead, it said that Nscale's entire
| $2.5bn investment was "not a formal contract, rather an intention
| to commit capital", and "may well include equipment and capital
| funding".
|
| There's not enough serious capital invested to get this off of
| the ground (or even to break ground seemingly). And then there
| are basic questions, like:
|
| 1. Why would build a data center that is supposed to create
| tonnes of jobs, in a location where it costs a lot to employ
| people?
|
| 2. Why would you outsource your data center if you live in the US
| or EU, when there are better options available locally? These
| data centers sure as hell won't be used by British companies
| because the government are crushing them with tax.
|
| 3. The energy cost is far too high compared to locations with
| nuclear or hydro electricity generation.
|
| This whole thing stinks. I think it's a complete and utter lie.
|
| [1] https://uk.investing.com/news/stock-market-news/how-much-
| doe...
|
| [2] https://www.moneysupermarket.com/gas-and-
| electricity/busines...
|
| [3] https://watt-logic.com/2025/01/09/blackouts-near-miss-in-
| tig...
| mrwh wrote:
| The UK has been chronically bad at providing jobs and training
| for its young people. I saw that 20 years ago when I was there.
| That is a key reason, perhaps the primary reason, for its long
| term productivity malaise. And the response is to lean into a
| technology that will make this situation profoundly worse? It's
| another lazy quick fix that is neither quick nor a real fix. The
| UK needs to invest in its people, not funnel yet more money to
| big tech.
| tim333 wrote:
| Patrick Boyle had I thought a very good youtube on what's gone
| wrong - not enough investment in productive capital and too
| much propping up house prices roughly
| https://youtu.be/T3neJOdknqc
| slavoingilizov wrote:
| The UK has 3 of the top 10 universities in the world:
| https://www.timeshighereducation.com/world-university-rankin...
|
| It's a talent pool that many big employers want to tap into
| across a range of skills and industries. Cambridge is the best
| place to do bio-science and research. That is largely because
| the UK provides training and opportunities to its young people.
|
| "I saw that 20 years go" is one data point that ignores the
| wider statistics. I'm not sure what else you can back your
| argument with.
| mrwh wrote:
| That's rather the point: the UK has been great at educating a
| very narrow sliver of its population, decided at 18 years
| old. Pointing to Oxbridge as a success story is very much
| like pointing to London as a world city. Yes, it's world
| class -- now look at the rest of the country.
| nitwit005 wrote:
| The people who aren't graduates of those universities also
| matter.
| varispeed wrote:
| These rankings are meaningless. If you actually studied in
| the UK, you'd notice a massive change in the last 5 years.
| Universities do not teach anymore (perhaps with a few
| exceptions), they are facilitating visas for foreign students
| without any expectation they'll be learning anything and
| nobody cares. They pass the exams barely attending any
| lectures. Everyone is happy, except home students who get
| massive debt and no actual useful skills.
| katdork wrote:
| It's actually more like the past 10 years? (Certainly was
| when I was in university back 8 years ago) Maybe longer.
|
| But, I like to reference
| https://marktarver.com/professor.html on the state of
| education in the UK.
| varispeed wrote:
| Training is one thing, but wage compression is another. Why
| study for many years, miss out on life if you can get warehouse
| job with little training and you won't be meaningfully worse
| off? You get smaller flat, less organic food and a car few
| years older than your engineer peer. These talks about
| productivity always miss the elephant in the room - why people
| bother to show up in the first place? It's the money. If there
| is no money, then you can lead horse to water...
| robotswantdata wrote:
| Even if you get paid well, the tax cliff at 100k-170k where
| it makes sense not to work and reject promotions to be
| eligible for childcare is outrageously stupid.
|
| UK is finished
| mmarian wrote:
| I'm curious which countries you think are best at this?
| Razengan wrote:
| It's such as shame to see the country that produced the Sinclair
| Spectrum and so many classic gaming legends become so irrelevant
| in computing and gaming..
| bombcar wrote:
| More than just that, so much of early "computer science" has
| .uk addresses associated, they had some serious chops in early
| software development, too.
| harel wrote:
| It's OK, we're doing badly across the board, not just
| computing. :-(
| OJFord wrote:
| Counter- (or at least more recent data-) point: Raspberry Pi,
| Arm.
| tim333 wrote:
| There's still stuff going on with Deepmind and Grand Theft
| Auto but a lot is owned by American companies these days. The
| UK is a bit lacking on the capital markets and the like these
| days.
| arkensaw wrote:
| arent they all?
| CrzyLngPwd wrote:
| The current government, like the last one, are just a front for
| funnelling income tax from the poor to the rich, and of course
| doing whatever the Epstein Regime wants them to do.
|
| But yeah, we need a power-hungry datacenter more than we need
| proper sewerage, proper water management investment, shorter
| hospital wait times, decent border patrol, or some of the fucking
| potholes fixed!
|
| Still, it makes a change to just giving the money to the
| NarcoFuhrer clown in Ukraine, I suppose.
| maest wrote:
| > just a front for funnelling income tax from the poor to the
| rich,
|
| I don't know about all the other accusations you make, but this
| one is pretty off the mark, considering this has been the most
| unpopular government amongst the rich in a while. I mean, it's
| Labour, what did you expect?
| elmomle wrote:
| Yeah, parent post to yours is sensationalist astroturf
| garbage. Russian troll accounts call Zelenskyy a NarcoFuhrer.
| CrzyLngPwd wrote:
| Odd that you know what zelensky is called by the russians,
| are you a russian troll?
|
| Anyway, troll, I'm sure the russians care about the UK
| pothole situation.
| wrs wrote:
| > "mainline AI into the veins" of the British economy
|
| Wow, what a terrible, yet perhaps inadvertently accurate,
| metaphor.
| ___rob_m wrote:
| no-one will build AI datacentres in the UK, it has one of the
| highest industrial energy costs in the world. the only way
| anything is getting built is with govt subsidies
| samrus wrote:
| From what i gather the red flags are
|
| - coreweave used the initial investment to buy gpus and put them
| in existing datacenters, rather than building new datacenters
| from scratch
|
| - nscale is very behind on their planned datacenter, and will
| miss the deadline
|
| - coreweaves new datacenter in partnership with datavita is
| probably on track, but its not clear how datavita will get the
| 1GW of energy to run it
|
| I lean towards AI skepticism, but these dont seem thay bad to me.
| My guess would be the first 2 are the promises of silicon valley
| velocity hurtling headfirst into european administrative process.
|
| And the third seems like just the challenge the firm has taken
| on, which could be solved with huge solar plant or something. We
| wont know until they try. Which is ambitious but theres nothing
| wrong with that.
|
| If there were credible red flags as to the demand for the supply
| these datacenters will generate, or the projected 47b boost to
| the economy if that supply were produced, then thered be real
| cause to doubt. Because the whole value chain might not be well
| thought out. And thays the part i personally am not entirely sure
| about.
|
| But if thats fine then just being negative because the companies
| didnt meet their how ambitions is a bit cruel. And this sort of
| attitude will just suffocate any silicon valley style dynamism
| that europe might be hoping to cultivate
| 7777777phil wrote:
| Happening in the private sector too. Something like 10% of US
| companies are actually using AI productively, and 42% killed
| their GenAI pilots in 2024.
| devonkelley wrote:
| That 42% number is telling but not for the reason most people
| cite it. The gap between "impressive demo" and "production
| system that actually saves money" is enormous. Most of those
| killed pilots weren't bad ideas, they were bad execution. No
| feedback loops, no way to measure if the AI was actually doing
| the job correctly at scale, and no plan for what happens when
| it starts failing silently.
|
| The 10% that stuck probably just had better engineering
| discipline around it, not better AI.
| pu_pe wrote:
| European AI investment plans are always so timid. This article
| mentions a couple of investments on the order of $1.5-2.5 billion
| USD that their government says "would position the UK as a world
| leader in AI". Hard to imagine you can be a world leader in
| anything when investing two orders of magnitude less than your
| competitors.
| varispeed wrote:
| These "investments" are rubbish. Show either deliberate
| misunderstanding how economy works or incompetence. If someone
| invests PS100bn, what do you think they expect? The money to
| vanish or getting nice return? Yes, the scraps will go to interim
| workers, but at least PS200bn will be sucked out of the UK
| economy back to investors, likely not willing to pay taxes.
|
| If UK government wanted to properly invest in the AI, they would
| be developing chip fabs and embedding themselves in the supply
| chains.
|
| It's a perfect time to build DDR5 factory, if GPUs are too large
| undertaking.
| jdasdf wrote:
| >but at least PS200bn will be sucked out of the UK economy back
| to investors
|
| That's not how the economy works... Nothing gets "sucked out of
| the economy", and certainly not a productive investment that
| generated that income.
| varispeed wrote:
| The distinction you're missing is between economic activity
| and wealth retention. Foreign investment in UK data centres
| generates GDP (construction jobs, some ops roles) but the
| productive capital and its returns accrue to foreign
| shareholders. This is the classic GDP vs GNI gap - Ireland is
| the textbook example, enormous GDP inflated by
| multinationals, but GNI per capita significantly lower
| because profits repatriate.
|
| If a fund invests PS100bn expecting 15-20% IRR, they're
| extracting multiples of that over the asset lifetime. That's
| the whole point - they're not philanthropists. The UK tax
| take is thin because these structures are explicitly designed
| for tax efficiency.
|
| The deeper issue is where in the value chain the UK is
| positioning itself. Hosting someone else's compute is the
| low-margin end - it's being a warehouse. The high-margin
| positions are fabrication and supply chain. Taiwan, South
| Korea, and now the US via CHIPS Act understand this. They're
| not inviting hyperscalers to build data centres and calling
| it industrial strategy - they're building domestic fab
| capacity because that's where durable value and strategic
| leverage sit.
|
| The UK is offering itself as a site rather than building
| itself as a participant. Those are very different things.
| nickdothutton wrote:
| These big headline "UK investments" are always and without
| exception not what you might think they are. When you drill into
| them, which companies, what was bought, where was the profit
| realised, what actual _real_ R&D was funded? They balloons are
| easy to burst. No need to even get as far down the funnel as what
| products/services were brought to market, what was their
| adoption, and what shareholder value was created. I have seen
| almost 30 years of it now.
|
| Partly it's because politicians think every dollar (pound)
| "invested" is the same, whether it goes on bricks and mortar or
| silicon or software.
|
| UK has some of the highest priced electricity for industrial use
| on the planet. A result of deliberate policy choices. Who in
| their right mind would want to grow a vast datacentre estate
| there?
| Traster wrote:
| Given that the UK is structurally uncompetitive in industry
| because of extremely high energy costs, it would seem crazy to me
| to build a data centre here. Even if we did build plenty of data
| centres here, it's simply not a driver of employment. We used to
| have shops. Shops employed lots of people. Then we moved to out
| of town shopping centres, which were cheaper and employed fewer
| people. Then we moved to online food delivery which was more
| efficient and employed even fewer people. Now we're moving to
| data centres which are enormous and employ practically no one.
| You can inflate the numbers by 10x or 100x or 1000x but you're
| simply not going to get numbers comparable to a car production
| line or anything that's actually a big driver of employment.
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