> Nvidia ships a new architecture roughly every year, and the competitive life of a given generation is plausibly two to three years, while hyperscalers depreciate the hardware over five to six
I keep seeing this take about how GPUs are going to lose value and yet somehow they don't? Why is it that A100s (released in 2020) are still in high demand and fetching high prices? E.g. RunPod is still charging $1.40-$1.60/hr for A100s and making money. Lambda Labs is charging $2.00-$2.80/hr for the same GPU.
The arguments I've heard around GPUs losing value is based on resale. So long as the first party can utilize or lease them at a high rate, it's not a risk. The idea is you don't know the environment they were used in or how hard they've been abused. The first party knows this, so long as they can continue to lease them without suffering anomalous failure rates the financials are OK.
The lingering question is something like "Coreweave declares bankruptcy, how do they liquidate all these GPUs?"
Nvidia still manufacture the A100. The argument I hear isn't only about computing power value of older gen GPUs but about their 3-5 life expectancy under continuous use.
When the AI Bubble Bursts, Who Will Be Left Holding the Bag?[0]
> A new paper [1] making a stir in the financial press spells out the dangers to which private equity-owned life insurance companies are exposed by private credit funds with large portfolios of loans to software and AI companies. It’s a complicated story that could have enormous consequences.
> Pranjal Drall and Andrew Granato, the report’s authors, argue that some of these insurance companies could become insolvent if these loans crash. And an unanticipated consequence of a 60-year-old rule that protects insurance company policy holders from losing all of their life insurance benefits or annuity payments could leave taxpayers holding the bag.
Paper:Private Credit's State Backstop: How Private Equity Socializes Risk Through Insurers [1]
“Conservatism consists of exactly one proposition, to wit: There must be in-groups whom the law protects but does not bind, alongside out-groups whom the law binds but does not protect.”
> Nvidia ships a new architecture roughly every year, and the competitive life of a given generation is plausibly two to three years, while hyperscalers depreciate the hardware over five to six
I keep seeing this take about how GPUs are going to lose value and yet somehow they don't? Why is it that A100s (released in 2020) are still in high demand and fetching high prices? E.g. RunPod is still charging $1.40-$1.60/hr for A100s and making money. Lambda Labs is charging $2.00-$2.80/hr for the same GPU.
The arguments I've heard around GPUs losing value is based on resale. So long as the first party can utilize or lease them at a high rate, it's not a risk. The idea is you don't know the environment they were used in or how hard they've been abused. The first party knows this, so long as they can continue to lease them without suffering anomalous failure rates the financials are OK.
The lingering question is something like "Coreweave declares bankruptcy, how do they liquidate all these GPUs?"
Nvidia still manufacture the A100. The argument I hear isn't only about computing power value of older gen GPUs but about their 3-5 life expectancy under continuous use.
apart from GPUs, what about memory?
The return of CDOs?
We do
Through the treasury's TGA if you count last week announcement to double the spending on bonds buyback program.
SURPRISE! Joe and Jane taxpayer. [2]
When the AI Bubble Bursts, Who Will Be Left Holding the Bag?[0]
> A new paper [1] making a stir in the financial press spells out the dangers to which private equity-owned life insurance companies are exposed by private credit funds with large portfolios of loans to software and AI companies. It’s a complicated story that could have enormous consequences.
> Pranjal Drall and Andrew Granato, the report’s authors, argue that some of these insurance companies could become insolvent if these loans crash. And an unanticipated consequence of a 60-year-old rule that protects insurance company policy holders from losing all of their life insurance benefits or annuity payments could leave taxpayers holding the bag.
Paper:Private Credit's State Backstop: How Private Equity Socializes Risk Through Insurers [1]
[0] https://cepr.net/publications/when-the-ai-bubble-bursts-who-...
[1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7152239
[2] Wilhoit's Law.
“Conservatism consists of exactly one proposition, to wit: There must be in-groups whom the law protects but does not bind, alongside out-groups whom the law binds but does not protect.”
https://pylimitics.net/wilhoits-law/
Safety net for the wealthy only. TARP, anyone?