alt Hacker NewsAny data center that can remain profitable selling open source tokens at commodity prices will be fine. Any data center that relies on OpenAI/Anthropic level token prices and margins might be in trouble. After clearing their debts through bankruptcy, they'd likely be quite profitable selling open source tokens at commodity prices.
Replies
I think there's still some low-hanging fruit with thin clients and colocated-to-AI applications. I don't think the math for beefy personal computers is going to hold up, for most use cases.
Quite profitable at commodity prices? I don’t buy that. And all of them are building with debt / equity that expects high token prices?
If it costs you more to generate the tokens that the market is willing to pay for those tokens, then not even bankruptcy will save any of the costs invested in one of these datacenters.
If the cutting edge OpenAI token prices are $80 per 1M token, and the open source tokens are $1 per 1M token, that's a huge gap of "this will never be able to make money under any scenario if the bubble bursts" that will catch a lot of these new datacenters. No one will run a datacenter that costs $5 per 1M token to sell at $1 per 1M token even if the debts are cleared.
assuming demand remains elevated and growing, maybe. But spend on AI is pretty stratospheric right now... companies are already starting to clamp down on spend. This makes you really wonder if there will be sufficient demand at current commodity prices for eg; OSS models to justify all these data centers.
Eventually these models will get commoditized (we're already at the "good enough" stage for real work), then they will get turned into custom hardware and get 1000x faster, then that hardware will get commoditized (like DSPs) and they'll be everywhere and cost $1.