European AI Firm Under Investigation for Alleged GPU Misuse and Tax Fraud

$568 million of GPUs allegedly misused for crypto mining caught in tax evasion and money laundering probe -- EU claims 10,000 Nvidia H100 units acquired by Northern Data may not have been used for AI

European authorities are investigating Northern Data AG over allegations of tax incentive fraud related to the purchase of $568 million worth of high-performance GPUs, according to Bloomberg. The criminal investigation aims to determine whether the company misrepresented its GPU usage and utilized the data center for cryptocurrency mining rather than performing AI-related computing. However, while it makes sense to procure 10,000 H100 GPUs at a discount, it does not make sense to use them for mining. A €100 million VAT fraud? In 2023, Northern Data reportedly purchased roughly 10,000 Nvidia H100 processors for €400 million to strengthen its presence in the AI compute market across Europe. Normally, the company should have paid around €100 million in value-added tax, but since Sweden encourages the development of AI companies, it got a rather massive tax break. But while these GPUs were reportedly designated for AI computing, prosecutors suspect they were used for crypto mining. Historically, Northern Data was engaged in crypto mining and purchased hundreds of thousands of gaming GPUs for this activity, but since this activity is no longer eligible for tax benefits in Sweden after a policy reversal in 2023, it made a pivot. The European Public Prosecutor's Office (EPPO) carried out coordinated enforcement actions in both Frankfurt and Boden. Four individuals were detained in connection with suspected VAT-related offenses totaling over €100 million. Additionally, a senior employee from Northern Data's Swedish operations was questioned as part of the probe. Prosecutors confirmed that the case focuses on three company subsidiaries active between 2021 and 2024. The charges being explored include tax evasion and money laundering. Investigators are reviewing the corporate and financial practices of Northern Data's Swedish units, assessing whether the company deliberately structured its operations to secure improper tax advantages. A spokesperson for the company declined to address the money laundering aspect when contacted for comment. Northern Data insists that its infrastructure is fully devoted to cloud computing, which implies usage by AI companies. H100 and cryptocurrency? The strangest aspect of the story is that it appears Northern Data is being accused of using dedicated AI GPUs for crypto mining, which would be a poor investment, to say the least. An H100 costs orders of magnitude more than gaming GPUs (and far more than ASICs), so its hashes per dollar are terrible even with cheap power. H100's strengths -- tensor cores, FP8/BF16, massive HBM3 bandwidth -- do not help most proof-of-work (PoW) algorithms, which are integer/bitwise heavy and do not use tensor cores. Ethereum, where memory bandwidth mattered, hasn't required powerful chips for mining since 2022. For Bitcoin, only SHA‑256 ASICs are viable these days, so GPUs are non‑starters for mining. While there are still GPU-minable coins, higher-end consumer graphics cards like Nvidia's GeForce RTX 50-series make much more sense than the H100, both because of upfront costs and because of the far better hash per Watt. While mining on H100 may make sense for extremely short‑term, opportunistic runs on a niche coin if one already owns idle H100 GPUs and has ultra‑cheap power, paying hundreds of thousands for H100 for such use cases is irrational. Follow Tom's Hardware on Google News, or add us as a preferred source, to get our up-to-date news, analysis, and reviews in your feeds. Make sure to click the Follow button!

European AI cloud company secured tax breaks on NVIDIA AI GPUs, used them for crypto mining

TL;DR: European prosecutors are investigating Northern Data for allegedly misusing $586 million worth of NVIDIA AI GPUs, claiming tax breaks for AI use while potentially mining cryptocurrency. The probe targets tax crimes and money laundering across three Swedish subsidiaries from 2021 to 2024, amid shifting Swedish crypto tax policies. A criminal investigation that saw raids of a European AI cloud company is focusing on whether the company used its $586 million worth of NVIDIA AI GPUs for crypto mining, after getting massive tax breaks on the funds to buy those AI chips. In a new report from Bloomberg, the report says that European prosecutors are looking into Northern Data and its purchase of GPUs for its site in northern Sweden. Authorities are investigating whether Northern Data, which is backed by stablecoin issuer Tether Holdings SA, obtained a tax break by claiming that the AI chips were being used for AI, when instead they were being used for cryptocurrency mining. A few years ago, Sweden embraced the idea of cryptocurrency mining, but turned that idea around in 2023 and removed tax incentives for companies that were establishing mining operations, leaving them in place for data centers. After that, Swedish tax authorities have been investigating several crypto miners for allegedly providing misleading information to benefit from tax incentives, according to sources of Bloomberg. A Northern Data spokesperson said: "Northern Data believes there is a misunderstanding of tax treatment of its GPU offering, which is solely dedicated for cloud computing, and the economic and legal structure of the company's legacy crypto mining operations". There has been a senior Northern Data employee in Sweden that was also interrogated. This particular case is looking into three of Northern Data's subsidiaries in Sweden between the years of 2021 and 2024, with investigators probing into the subsidiaries of tax crimes and money laundering, explains Jerker Asplung, a delegated prosecutor for EPPO. This isn't the first time that Northern Data has used NVIDIA AI GPUs for crypto mining, where the firm used the AI chips for crypto mining Ether until the token's blockchain went through its massive software update back in 2022 that rendered the chips unnecessary for that purpose. In 2023, the company spent about €400 million on buying 10,000 of NVIDIA's H100 AI GPUs to expand its European AI offering. Northern Data is majority-owned by Tether, which also invested in Rumble, with last month seeing Bloomberg report that Rumble was considering an offer to acquire Northern Data in an all-stock deal that would put its value at around $1.17 billion. Tether is also in discussions with investors to raise around $20 billion in a deal that would push the crypto firm into the highest ranks of the world's most valuable private companies. A spokesperson for Tether said: "Tether is not involved in the day-to-day management of this company and was not aware of any such investigations prior to these reports. This company is a small part of our overall portfolio of investments and has no impact or bearing on Tether's business or operations".

AI Firm Probed For Fraud Over a Massive €100M VAT Break; NVIDIA Chips Meant for AI Computing Allegedly Used in Crypto Mining

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. 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.