alt Hacker NewsThis is how all capital-intensive utilities operate. The marginal cost of using a little more power or tokens is easy to justify because you can at any point stop using more.
But the cost to add more power capacity is huge and highly variable. Just because oil is expensive today doesn’t mean the capex to pump more is justified.
Really what AI needs is large customers that will commit to large spend over the next 5-10 years. Without this AI companies are basically offering duration arbitrage of electricity. Not a good place to be; the finances will always look bad.
Unfortunately, the amount of capital required by the entire AI industry is enough that counterparty risk is now a concern.
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AI doomers have predicted 1095 of the last 0 AI bubble pops.
Everyone is using more and more tokens, everyone is complaining that providers lobotomize flag ship models because they don't have the capacity to serve everyone.
Then they turn around and compare it to the dark fiber bust or railways or whatever when in each of those the issue was the capacity being build that no one used.
It's been 2 years since I could buy a gpu for love or money. It's been one for ram.
My old rig is worth ~two~ three[0] times what I paid for it inflation adjusted.
[0] fuck me ram is rising again.
Anthropic and OpenAI are these customers, willing to buy the infrastructure. But they are running out of cash, too.