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xAI is looking more like a datacentre REIT than a frontier lab

martinalderson.com

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Re: xAI is looking more like a datacentre REIT than a frontier lab

#401

Post by saulpw »

fluidcruft wrote: post #397
frognumber wrote: post #380

Earlier quoted context omitted.

It's very unclear to me. The key question is on direction of LLMs. Right now, LLMs are taking over human jobs. If the cost of silicon+power If this applies to SWEs, lawyers, business analysts, many research scientists, .... this situation could persist for a long, long time. While capital costs less than the inputs of labor (nominal food, housing, etc.), there is no need for labor. The key question is about continued…

What I don't understand is if nobody has jobs, who's paying the machines to do anything? So okay cool you don't need people to design and build cars. Who's going to buy the cars and where exactly are they finding money? But see also the "radiologists driving to work" meme for why I think tech in general is currently getting high off their own farts.

Rich people become the only consumers.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#402

Post by keynha »

9cb14c1ec0 wrote: post #25

So we know what they are renting these GPUs for. I'm really curious about the input costs of their power generation. Is there actually enough margin in these deals for xAI to cover their depreciation cost? Edit: from the footnotes: > Colossus actually runs largely on its own on-site gas turbines, which comes out even cheaper: at a simple-cycle heat rate of ~10,000 Btu/kWh and Henry Hub gas at ~$3.50/MMBtu, the fuel b…

[flagged]

Re: xAI is looking more like a datacentre REIT than a frontier lab

#403

Post by rolisz »

adjejmxbdjdn wrote: post #251
bko wrote: post #128

Earlier quoted context omitted.

Or, hear me out, maybe there's a compute shortage and xAI has compute and manages that well. There are no dark GPUs. Compute translates directly to money for these frontier labs. I think everyone is reading way too much into this. Sure there is some circular transactions that are sus, but this ain't it.

Compute is also a rapidly depreciating asset. I want to make a comparison with a car rental business and say that it would be like valuing Hertz entirely on the basis of the number of cars they own, as opposed to how many they rent out, but cars have a much longer depreciation period, if there are no customers they’re not costing you more money, unlike your computer which you are using for training and sucking up mas…

> if there are no customers they’re not costing you more money, unlike your computer which you are using for training

So are you using the computers or not? I'd argue that if you're using them for training, then it's not wasted capacity. And if you're not using them, then you can turn them off, so you're not sucking up energy.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#404

Post by nl »

RealityVoid wrote: post #376
nl wrote: post #309

Earlier quoted context omitted.

> Compute is also a rapidly depreciating asset. That's the default assumption but in the new GPU+Memory constrained age isn't true. Time on 4 year old H100 servers costs more now than when they were new (!!)

> That's the default assumption but in the new GPU+Memory constrained age isn't true. Is it an age or a temporary situation?

Memory is unlikely to drop in price before mid-2027 when new capacity starts to come online.

The GPU shortage looks to be even longer lived.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#405

Post by userbinator »

LearnYouALisp wrote: post #350
Dig1t wrote: post #265

Earlier quoted context omitted.

All that means is that there's a bottleneck at the data center layer. When he says "dark GPUs" he's saying that there are no dark DEPLOYED GPUs. This is a reference to the 1990's dot com bubble where internet infrastructure companies overbuilt network capacity, leading to the term "dark fiber". That was an indicator of a bubble because it showed that capacity was larger than demand. OP is saying that this is specific…

> ...GPUs are actually getting more valuable because demand is so great, something that basically never happens. Even older chips have become more valuable. Huh, anybody want to buy a GTX 680? Or even a formerly-SLI'd pair?

The retrocomputing community is driving up prices at that end of the market.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#406

Post by nl »

mikepurvis wrote: post #384
RealityVoid wrote: post #376

Earlier quoted context omitted.

> That's the default assumption but in the new GPU+Memory constrained age isn't true. Is it an age or a temporary situation?

Are current datacenter deployments structured in such a way that the memory can later be moved to newer GPU dies? Or is it all packaged together as on consumer graphics cards? I assumed the latter and therefore that the memory is depreciating along with the GPU cores it's soldered onto PCBs with. ... or is it a different argument being made, perhaps that depreciation for GPUs has slowed because rising demand will kee…

The argument is that all GPUs are currently appreciating (!!)

Google is still running 10 year old Tesla T4s at full capacity.

This is way beyond the expected lifetime.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#407

Post by Earw0rm »

paulhebert wrote: post #390
frognumber wrote: post #380

Earlier quoted context omitted.

It's very unclear to me. The key question is on direction of LLMs. Right now, LLMs are taking over human jobs. If the cost of silicon+power If this applies to SWEs, lawyers, business analysts, many research scientists, .... this situation could persist for a long, long time. While capital costs less than the inputs of labor (nominal food, housing, etc.), there is no need for labor. The key question is about continued…

> what rational reason is there to employ a human being? To maintain a functioning society and social contract? Is wanting low unemployment in our society not rational?

It's ethnically rational, and morally right.

However.

It's not rational relative to the short-term incentives of a typical corporation or investment vehicle. PE, VC, fund managers aren't paid to give a fuck about the social contract. Literally not in their job description.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#408

Post by 0xbadcafebee »

TSiege wrote: post #6

> And Google is a major shareholder in SpaceX, so they certainly have incentive to juice the valuation of the IPO. Google own 5-6% of the shares of SpaceX. SpaceX is seeking a valuation of $1.77T which means Google's shares would be worth $88.5B-$106.2B. I'm not a skeptic of AI/LLMs but this makes me deeply suspicious of these circular deals. What happens when the music stops?

When the music stops, all the AI companies fall, except Google. Google remains the world's largest advertiser and a cloud provider. They actually make money, own their own hardware, etc. They can survive a stock market bust and still come out victorious, because they still have a product people want to buy (ads). The rest don't.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#409

Post by 0xbadcafebee »

bko wrote: post #128
TSiege wrote: post #6

> And Google is a major shareholder in SpaceX, so they certainly have incentive to juice the valuation of the IPO. Google own 5-6% of the shares of SpaceX. SpaceX is seeking a valuation of $1.77T which means Google's shares would be worth $88.5B-$106.2B. I'm not a skeptic of AI/LLMs but this makes me deeply suspicious of these circular deals. What happens when the music stops?

Or, hear me out, maybe there's a compute shortage and xAI has compute and manages that well. There are no dark GPUs. Compute translates directly to money for these frontier labs. I think everyone is reading way too much into this. Sure there is some circular transactions that are sus, but this ain't it.

The compute is useless if nobody is left to pay for the compute, once all the AI companies die, from all that debt getting called in, once everyone realizes it's a scam. (AI isn't a scam, but the financial deals and promises of unrealistic recoupment are)

Re: xAI is looking more like a datacentre REIT than a frontier lab

#410

Post by blensor »

nl wrote: post #309
adjejmxbdjdn wrote: post #251

Earlier quoted context omitted.

Compute is also a rapidly depreciating asset. I want to make a comparison with a car rental business and say that it would be like valuing Hertz entirely on the basis of the number of cars they own, as opposed to how many they rent out, but cars have a much longer depreciation period, if there are no customers they’re not costing you more money, unlike your computer which you are using for training and sucking up mas…

> Compute is also a rapidly depreciating asset. That's the default assumption but in the new GPU+Memory constrained age isn't true. Time on 4 year old H100 servers costs more now than when they were new (!!)

I also feel that the GPU/NPU value does not lose money as fast anymore.

What I am wondering though is how long can you run such a system at basically full load without interruption before it starts to just physically degrade.

If I have a H100 and I let it run for 4 years at full throttle does it still have the same theoretical value as it had at the start or are the chips just burning out.

I think I remember that back when the cards used for crypto mining were sold en masse on ebay the advice was to stay away from them because they are more likely to fail?

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