alt Hacker NewsThe providers on OpenRouter serving open models aren't "throwing money away", agreed.
But that's not the point I'm making. (or, it kind of is, but it's more high level than that).
They're running spot and preemptible GPU instances (60-80% cheaper than on-demand), paying wholesale industrial electricity rates, and running at multi-tenant utilisation densities that make your MacBook look like a bonfire. Of course they're not individually loss-making on inference, they're aggregating cheap commodity compute and skimming a margin, and on paper that's what makes it seem like a good idea, certainly not a loss leader right?
But zoom out a bit; the entire stack is swimming in VC money. OpenRouter itself just raised at a $1.3B valuation backed by a16z. The Chinese models that now account for 36% of all tokens routed through the platform (DeepSeek, Qwen) are priced the way they are because Beijing-adjacent capital has decided market share matters more than margin right now.
So yes, technically no single party is "throwing money away" on each token; they're just all simultaneously subsidising different parts of the stack for strategic reasons. The floor price you're seeing isn't a stable equilibrium, it's a pile of investor money that hasn't entirely finished burning yet.
> The floor price you're seeing isn't a stable equilibrium, it's a pile of investor money that hasn't entirely finished burning yet.
All that says is that it gets more expensive in the future as competitors exit the market and sustainability becomes important. That’s why Uber and Lyft were so cheap until they killed taxis. One major difference of course is that some models will remain largely good enough and the incremental cost of running will keep dropping to 0 over time since the hardware needed doesn’t get more expensive and is already purchased.