AI compute is not the new oil. Demand for oil is very inelastic: it's very difficult to increase the thermodynamic efficiency of the physical processes that convert oil into energy. AI compute efficiency, on the other hand, is improving exponentially. AI will end up being just slightly more expensive than the raw electricity required to produce it.
Data center demand right now has much more to do with private credit's demand for new deals, since the binge they went on around the pandemic led to the accumulation of a lot of bad debt and depreciating assets. Data centers are a tool for extracting money from insurance trusts and pension funds to prop up private credit and create debt-driven artificial "revenue" for the hyperscalers and Nvidia.
> AI will end up being just slightly more expensive than the raw electricity required to produce it.
AFAICT, this hasn't happened for any "cloud" compute company that has been in business for -say- at least five years. Unless your prediction is that roughly no one will use "cloud" "AI", I'm rating this prediction as "totally bogus". And if that is your prediction, then what you're saying is
Assuming that you're not doing anything that needs exotic system administrators, nearly all of the cost of computing when you own your own hardware is the power for that hardware.
which... unless you're buying used hardware, I don't think that's true, either. Hetzner quotes a max of 167.23 EUR/month for a full rack and what I think is 2400W of power, and lists the rate for Finnish power as 0.22 EUR per kWh. [0] If we assume that Hetzner's spending cap doesn't apply and we are forced to pay the full quoted rate for power in Finland, I think that works out to a bit under 4.6K EUR per year:
The last time I got quotes for most of a rack of server hardware was like a decade ago, and that pretty-bog-standard server hardware ran around 200K USD. If we assume a ten-year expected life [1], that hardware cost about 17K EUR per year. Assuming I haven't fucked up my math, [2][3] the cost of the hardware here is more than three times the cost of power.
Note that I'm using roughly decade-old hardware prices and allegedly-current electricity prices. If we used hardware prices from two years ago -or worse, from today- the hardware would cost far more per year.
[1] ...which I think is between two and three times longer than is standard to expect in the business world...
[2] ...it's very likely that I have! Corrections are definitely welcome.
[3] ...it's also possible that USians get gouged for server hardware and that it's like a quarter of the cost if you buy it in Finland. I expect that there's definitely a price difference, but I doubt that it's very large.
Yeah AI is electricity, not oil. It's boring but it's already true.
I'm building a side business and decided to go with open router because that's what AI is going to look like in the future. Just intelligence/$ everything else kind of not important.
Unless, they solve the issue of model output diversity and Claude becomes very different from ChatGPT
I think that's starting to happen. There's a new vibecoded project shown off here almost every day. YouTube has gotten a lot more entertainment rising above the slop. People are beginning to realise what AI can do for them.
Data center demand right now has much more to do with private credit's demand for new deals, since the binge they went on around the pandemic led to the accumulation of a lot of bad debt and depreciating assets. Data centers are a tool for extracting money from insurance trusts and pension funds to prop up private credit and create debt-driven artificial "revenue" for the hyperscalers and Nvidia.
AFAICT, this hasn't happened for any "cloud" compute company that has been in business for -say- at least five years. Unless your prediction is that roughly no one will use "cloud" "AI", I'm rating this prediction as "totally bogus". And if that is your prediction, then what you're saying is
which... unless you're buying used hardware, I don't think that's true, either. Hetzner quotes a max of 167.23 EUR/month for a full rack and what I think is 2400W of power, and lists the rate for Finnish power as 0.22 EUR per kWh. [0] If we assume that Hetzner's spending cap doesn't apply and we are forced to pay the full quoted rate for power in Finland, I think that works out to a bit under 4.6K EUR per year: The last time I got quotes for most of a rack of server hardware was like a decade ago, and that pretty-bog-standard server hardware ran around 200K USD. If we assume a ten-year expected life [1], that hardware cost about 17K EUR per year. Assuming I haven't fucked up my math, [2][3] the cost of the hardware here is more than three times the cost of power.Note that I'm using roughly decade-old hardware prices and allegedly-current electricity prices. If we used hardware prices from two years ago -or worse, from today- the hardware would cost far more per year.
[0] <https://www.hetzner.com/colocation/>
[1] ...which I think is between two and three times longer than is standard to expect in the business world...
[2] ...it's very likely that I have! Corrections are definitely welcome.
[3] ...it's also possible that USians get gouged for server hardware and that it's like a quarter of the cost if you buy it in Finland. I expect that there's definitely a price difference, but I doubt that it's very large.
I'm building a side business and decided to go with open router because that's what AI is going to look like in the future. Just intelligence/$ everything else kind of not important.
Unless, they solve the issue of model output diversity and Claude becomes very different from ChatGPT
Every other post on the News.YC frontpage has been about AI for the past few years. That means very little.
> YouTube has gotten a lot more entertainment rising above the slop.
Examples would be great.
corruption: checked
regulatory capture: in progress
Ya, the new oil.