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 massive amounts of energy, and those cars do maintain decent value even after they’re of little use to the car rental company, unlike the compute here.

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shdh 25 minutes ago | parent | next [-]

It is depreciating, but demand has been very high.

There's a reason old 3090's went from $600 in 2022 o to over $1K in 2026.

	▲	noosphr a minute ago \| parent [-]
		My local inference rig now costs three times what I bought it for. If I'd gotten the max ram I could at the time I would have made $10k after selling the excess to my current spec. How someone can look at an asset class thats appreciated an order of magnitude in the last two years and say it will depreciate in value when the tailwinds are even stronger now is beyond me.

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BoorishBears 35 minutes ago | parent | prev [-]

Compute is about to come an appreciating asset in the near-term, and it some ways it already is.

The frontier labs are shifting from pricing grounded in the price of compute, to pricing grounded in the intelligence provided, or more specifically the economic value of that intelligence downstream.

The margins on that allow them to pay a hefty premium on compute and still come out ahead.

As they buy more compute at high prices, they're also pricing out competition from cheaper models. It's already become materially more difficult to get compute to run open weight models at competitive prices as a result of frontier labs in the last year.