> How different is this from rental car companies changing over their fleets?

New generations of GPUs leapfrog in efficiency (performance per watt) and vehicles don't? Cars don't get exponentially better every 2–3 years, meaning the second-hand market is alive and well. Some of us are quite happy driving older cars (two parked outside our home right now, both well over 100,000km driven).

If you have a datacentre with older hardware, and your competitor has the latest hardware, you face the same physical space constraints, same cooling and power bills as they do? Except they are "doing more" than you are...

Would we could call it "revenue per watt"?

Rental car companies aren’t offering rentals at deep discount to try to kickstart a market.

It would be much less of a deal if these companies were profitable and could cover the costs of renewing hardware, like car rental companies can.

I think it's a bit different because a rental car generates direct revenue that covers its cost. These GPU data centers are being used to train models (which themselves quickly become obsolete) and provide inference at a loss. Nothing in the current chain is profitable except selling the GPUs.

> the secondary market is still alive.

this is the crux. Will these data center cards, if a newer model came out with better efficiency, have a secondary market to sell to?

It could be that second hand ai hardware going into consumers' hands is how they offload it without huge losses.

"Just fine". Presumably you're not super-concerned with the energy costs? People who run data centres pretty much _have_ to be.

More than that. The equipment is depreciated on a 5 year schedule on the company balance sheet. It actually costs nothing to discard it.

I thought the same until I calculated that newer hardware consumes a few times less energy and for something running 24x7 that adds up quite a bit (I live in Europe, energy is quite expensive).

So my homelab equipment is just 5 years old and it will get replaced in 2-3 years with something even more power efficient.

Sample size of 1 though. It's like how I've had hard disks last a decade, but a 100 node Hadoop cluster had 3 die per week after a few years.

> normal servers have 7 year lifespans in many cases fwiw

Eight years if you use Hetzner servers!

Normal servers are rarely run flat-out. These GPUs are supposed to be run that way. So, yeah, age is going to be a problem, as will cooling.

I mean you could use training GPUs for inference right? That would be use case number 1 for a 8 * a100 box in a couple of years. It can also be used for non IO limited things like folding proteins or other 'scientific' use cases. Push comes to shove im sure an old A100 will run crysis.

Hugely unlikely.

Even if the power is free you still need a grid connection to move it to where you need it, and, guess what, the US grid is bursting at the seams. This is not just due to data center demand; it was struggling to cope with the transition away from coal well before that point.

You also can’t buy a gas turbine for love nor money at the moment, and they’re not ever going to be free.

If you plonked massive amounts of solar panels and batteries in the Nevada desert, that’s becoming cheap but it ain’t free, particularly as you’ll still need gas backup for a string of cloudy days.

If you think SMRs are going to be cheap I have a bridge to sell you, you’re also not going to build them right next to your data centre because the NRC won’t let you.

So that leaves fusion or geothermal. Geothermal is not presently “very cheap” and fusion power has not been demonstrated to work at any price.

Power consumption is only part of the equation. More efficient chips => less heat => lower cooling costs and/or higher compute density in the same space.

In-house hyperscaler stuff gets shredded, after every single piece of flash storage gets first drilled through and every hard drive gets bent by a hydraulic press. Then it goes into the usual e-waste recycling stream (ie. gets sent to poor countries where precious metals get extracted by people with a halved life expectancy).

Off-the-shelf enterprise gear has a chance to get a second life through remarketing channels, but much of it also gets shredded due to dumb corporate policies. There are stories of some companies refusing to offload a massive decom onto the second hand market as it would actually cause a crash. :)

It's a very efficient system, you see.

I used (relatively) ancient servers (5-10 years in age) because their performance is completely adequate; they just use slightly more power. As a plus it's easy to buy spare parts, and they run on DDR3, so I'm not paying the current "RAM tax". I generally get such a server, max out its RAM, max out its CPUs and put it to work.

Some is sold on the used market; some is destroyed. There are plenty of used V100 and A100 available now for example.

Definitely single thread performance and storage are the main reasons not to use an old server. A 6 year old server didn't have nvme drives, so SATA SSD at best. That's a major slow down if disk is important.

Aside from that there's no reason to not use a dual socket server from 5 years ago instead of a single socket server of today. Power and reliability maybe not as good.

+5-20% clockspeed at 5-25% lower voltages (which has been and continues to be the trend) add up quick from gen to gen, nevermind density or ipc gains.

> Sure, assuming the power cost reduction or capability increase justifies the expenditure. It's not clear that that will be the case.

Share price is a bigger consideration than any +/- differences[1] between expenditure vs productivity delta. GAAP allows some flexibility in how servers are depreciated, so depending on what the company wants to signal to shareholders (investing in infra for futur returns vs curtailing costs), it may make sense to shorten or lengthen depreciation time regardless of the actual TCOO keep/refresh cost comparisons.

1. Hypothetical scenario: a hardware refresh costs $80B, actual performance increase is only worth $8B, but the share price increases the value of org's holding of its own shares by $150B. As a CEO/CFO, which action would you recommend- without even considering your own bonus that's implicitly or explicitly tied to share price performance.

Demand/suppy economics is not so hypothetical.

Illustration numbers: AI demand premium = $150 hardware with $50 electricity. Normal demand = $50 hardware with $50 electricity. This is Nvidia margins @75% instead of 40%. CAPEX/OPEX is 70%/20% hardware/power instead of customary 50%/40%.

If bubble crashes, i.e. AI demand premium evaporates, we're back at $50 hardware and $50 electricity. Likely $50 hardware and $25 electricity if hardware improves. Nvdia back to 30-40% margins, operators on old hardware stuck with stranded assets.

The key thing to understand is current racks are sold at grossly inflated premiums right now, scarcity pricing/tax. If the current AI economic model doesn't work then fundmentally that premium goes away and subsequent build outs are going to be costplus/commodity pricing = capex discounted by non trivial amounts. Any breakthroughs in hardware, i.e. TPU compute efficiency would stack opex (power) savings. Maybe by year 8, first gen of data centers are still depreciated to $80 hardware + $50 power vs new center @ $50 hardware + $25 power. That old data center is a massive write-down because it will generate less revenue than it costs to amoritize.

A typical data centre is $2,500 per year per kW load (including overhead, hvac and so on).

If it costs $800,000 to replace the whole rack, then that would pay off in a year if it reduces 320 kW of consumption. Back when we ran servers, we wouldn't assume 100% utilisation but AI workloads do do that; normal server loads would be 10kW per rack and AI is closer to 100. So yeah, it's not hard to imagine power savings of 3.2 racks being worth it.

That's the thing though: a competitor with better power efficiency can undercut you and take your customers

BTC mining on GPUs haven't been profitable for a long time, it's mostly ASICs, GPUs can be used for some other altcoins which makes the potential market for used previous generation GPUs even smaller.

Mining bitcoin with a GPU hasn't been profitable in over a decade.

The rate of change is equal for all groups. The gaming market can be the most conservative since it’s just luxury.