The bottleneck that survives - energy infra
It’s really hard to assess how many secondary compute leases there are & of they impact the market at large.
Turns out that having a centralized stablecoin issuer is actually more useful & safer. Who would have thought?
Great read, one of those pieces I wish I had written. I think the majpr takeaway is the role of the engine in data center financing. In aircraft ABS the engine's sheer cost makes it the determinative factor of the financing terms, just like GPUs in In AI data centers' with 2 main difference: 1. The duration of the residual value Engines lose value with use, and lessors collect maintenance reserves to cover it. GPUs lose value through obsolescence, and nobody reserves for that. Every flight a plane makes impacts the residual value of the remaining parts of the plane. Every few flights the lessor takes the plane for maintenace with expenses financed by the maintenance reserves the lessor collected. The lender’s collateral changes in value according to the engine cycles & the fixes that resetored some value that was lost. But the engine itself can serve the lessor for 25 years & be sold off later in a secondary market. GPU's OTOH don't jus go obsolete, it happens a lot faster on a 4-6 year time span. That implies the entire financing instrument for data centers is a short duration risk with more tailwind risk that depends on Nvidia, TPU or new SRAM. No one really knows what the value will be in 2 years of B200, let alone in 5 years. its all a guessing game. 2. GPU Engines impact revenues directly. The price of a flight is determined by market price alone, irrespective whether the flight from JFK to Heathrow has a GE GEnx-1B or a Rolls Royce Trent 1000. The price of the flight will be the same, regardless. No one knows what engine was on the plane they flew in & it has no impact on the price. Compute price is derived directly from which GPU is being rented out . Each chip performs differently & delivers a different number of tokens, but theres also a variance across data centers with the same GPU that can impact the number of tokens per hour available.
If the entire AI industry is vendor financing at both ends - Nvidia as the bank who invests in neoclouds & their suppliers cash, while the revenues are Anthropic convertibles then almost all the players in the crossfire who don’t have real revenues from other parties are in the crossfire waiting for the rugpull.
We’ve gone from late stage capitalism with big tech overlords to dukedoms that can just disregard the plebs. It’s crypto only in the open & we’re now asked to worship the demigod models.
The irony is that the sanctions system was stated in the 90s under Clinton & Rabin as a means to counter terrorism & NCW proliferation. Now try to explain to normies that no crypto or blockchain is a plausible solution maintaining a developed economy built on VC funding for startups, m&a & selling defense systems.
Omg it’s like we’re back to the 2015 debate about bring your own blockchain. To be clear - if a single party owns a blockchain, then it’s just a a fancy slow DB. The only justification for a blockchain is to share incentives & costs so that third parties can audit & verify transactions. The blockchain, not bitcoin narrative was killed by degens & scams but it proved that only when a lot of different parties have a stake in the underlying security of a blockchain can it be trusted not to be manipulated.