Thread

1. bryanlarsen · 1790019810 · focus · HN ↗

   Any data center that can remain profitable selling open source tokens at commodity prices will be fine. Any data center that relies on OpenAI/Anthropic level token prices and margins might be in trouble. After clearing their debts through bankruptcy, they'd likely be quite profitable selling open source tokens at commodity prices.

   1. Apes · 1790020800 · focus · HN ↗

      If it costs you more to generate the tokens that the market is willing to pay for those tokens, then not even bankruptcy will save any of the costs invested in one of these datacenters.

      If the cutting edge OpenAI token prices are $80 per 1M token, and the open source tokens are $1 per 1M token, that's a huge gap of "this will never be able to make money under any scenario if the bubble bursts" that will catch a lot of these new datacenters. No one will run a datacenter that costs $5 per 1M token to sell at $1 per 1M token even if the debts are cleared.

      1. nostrademons · 1790022612 · focus · HN ↗

         The point being made here is that most of those costs are amortized capital costs, which get wiped in bankruptcy.

         That $5 per 1M token doesn't literally cost $5 per 1M token. It's more like they had to build a datacenter for $500M that can service 100T tokens over its lifetime. They did this by borrowing money on the capital markets, and now they have to pay interest to those bondholders, interest that they can recoup with their $80/1MT prices. But if it turns out they can't charge $80 and have to charge $1, they won't be able to make those interest payments. They enter bankruptcy, the court wipes the debt clean, and now they don't have to pay interest, only the actual operating costs, which may be more like 50c/1MT. The company gets recapitalized with the new owners being largely the bondholders, the existing equity holders get wiped out, and they can compete with the commodity producers now.

         1. Apes · 1790023340 · focus · HN ↗

            Datacenters aren't free to run.

            You have land taxes and or rent, building upkeep, staffing costs, electricity, water, hardware replacement costs.

            And new build DCs have blown all these costs through the roof justifying the decision because the price of compute is so high. When the prices come crashing down, the expenses will remain fixed where they are now.

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