Well, you know how when you get the quest from Merle at level 20 to go to grizzleheim? Well, he also said that a part of the World tree fell from Wizard City to Grizzleheim. And in hall of valor, I saw different paintings of Bartleby himself and a gigantic painting of a Frost Giant fighting a Fire Dragon! Nidavelir might be the part of the World Tree that fell to Grizzleheim. And there are also fallen and broken parts in Hall of Valor which means that Nidavelir might have gotten damaged when it fell to Grizzleheim. This is just my theory and a pretty good one.