Financial firms race to build a market for AI compute
AI compute is the new oil–and needs a new market
AI compute—the processing power churned out by advanced chips—has become the fuel of a technological revolution, and The Economist reports that financial firms in New York are racing to create tradable instruments around it. The piece traces how "compute" shifted from a verb to a noun, and argues that this scarce resource needs a proper market the way oil once did.
The word "compute", for instance, used to be regarded as a verb. Today even grammar pedants grudgingly accept it as a noun, referring to the processing power generated by advanced chips.
- vannevar
AI compute is not the new oil. Demand for oil is very inelastic: it's very difficult to increase the thermodynamic efficiency of the physical processes that convert oil into energy. AI compute efficiency, on the other hand, is improving exponentially. AI will end up being just slightly more expensive than the raw electricity required to produce it.
Data center demand right now has much more to do with private credit's demand for new deals, since the binge they went on around the pandemic led to the accumulation of a lot of bad debt and depreciating assets. Data centers are a tool for extracting money from insurance trusts and pension funds to prop up private credit and create debt-driven artificial "revenue" for the hyperscalers and Nvidia.
- nashashmi
More reasons for regulation.
AI companies, LLM makers, AI solution providers, and AI users should be inexcusably responsible for any and all harms caused by their misaligned automations across the chain. This alone will encourage self regulation and fix a broken industry that has too long prospered on fail fast and break things to be more considerate of their actions.
The second form of regulation should be on excessive energy consumption. The US Department of Energy needs to declare energy to be a vital human resource, and exorbitant uses for computing to be curtailed. Bidding on energy prices should be restricted to the excess markets where free market dictates price. And supply will reduce availability.
Long term, this will put the right kind of pressures and halting of demand. It will slow down investment in infrastructure and increase investment in research and development. It will prioritize efficient AI uses over low quality trial and error.
- jordemort
the new oil as in we’re going to make a bunch of products that are needlessly packaged with derivatives of it, leaving behind a toxic
mess that will take generations to clean up?
- DenisM
This caught my eye:
> Architect Financial Technologies, founded in 2023, offers futures in compute linked to the value of chips in America. The firm has also recently launched a platform where model-makers bid to provide “inference”—the useful output produced by an AI model in response to a prompt—rather than the underlying compute capacity.
I think the idea of selling inference is solid, but I’m not convinced Wall Street is going to be doing that. Superscalers are better positioned.
Inference will likely be priced by evals, specific for each workload.
- Avicebron
AI has to take us where We want to go before its compute can be considered on par with oil.