Hope it works out for them, but going into billions of debt with components that are almost obsolete as they leave the fab is certainly playing with fire.
That's kinda the point. Under normal circumstances, these would not be great collateral; but circumstances are not normal and enough people believe that these cards are valuable today and will remain valuable for a few years, to be willing to provide the loan.
In other words this is the COMPLETE OPPOSITE of "almost obsolete as they leave the fab"...
People that believe in the value of a product on an 18 month upgrade cycle willing to do a couple billion into debt on hardware - nevermind the place for that hardware to live - are unrealistic.
A100s are basically the standard. Most public models and finetunes you see going around were trained on A100s, and many ML papers still cite A100s.
Researchers, frameworks and stuff seem to be transitioning to the H100 just this year. Heck, I think it needs CUDA 12 for good utilization, and thats not even part of a stable PyTorch release yet.
This is the key point. A100s have been available since 2020 and still 3 years later it's almost impossible to find them available on a public cloud. Their utilization is maxed. Given most depreciation schedules are 3 or 4 years, that means these CoreWeave assets will be in-the-money with plenty of residual life once they're paid off.
I find it funny the way most journalists are depicting this story. This form of ABL is very common in infrastructure investing. Structured finance is a specialized field that allows debt investors to securitize the cash flows of a multi-year contract, especially when its a hyperscaler (most likely Microsoft). This is nothing new folks. Saying the "GPUs are collateral" is not the whole truth, it's the entire infrastructure and contracts surrounding them.
"Hope it works out for them, but going into billions of debt with components that are almost obsolete as they leave the fab is certainly playing with fire." That's the creditors' problem, not CoreWeave's problem.
Texas' draw is a combination of business-friendly tax law and (at the moment) one of the highest ratios of renewable power generation so a company that eats an enormous amount of power can still claim to be "green" or "carbon neutral" in marketing material while also paying very low peak hours consumption rates since a lot of that is solar and on the hottest days, you tend to get the highest output so rates stay low. Does it make sense if the grid falters for residential customers and they die of heat stroke? No, but it sure does look good on paper for the people that own a company as long as no one figures out the cause and effect relationship and gets too public about it.
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Threska - Friday, August 4, 2023 - link
Power of a monopoly. Great for them, not so great for those doing AI and HPC. Might explain why the biggest are making their own AI chips.PeachNCream - Friday, August 4, 2023 - link
Hope it works out for them, but going into billions of debt with components that are almost obsolete as they leave the fab is certainly playing with fire.name99 - Friday, August 4, 2023 - link
That's kinda the point. Under normal circumstances, these would not be great collateral; but circumstances are not normal and enough people believe that these cards are valuable today and will remain valuable for a few years, to be willing to provide the loan.In other words this is the COMPLETE OPPOSITE of "almost obsolete as they leave the fab"...
PeachNCream - Sunday, August 6, 2023 - link
People that believe in the value of a product on an 18 month upgrade cycle willing to do a couple billion into debt on hardware - nevermind the place for that hardware to live - are unrealistic.brucethemoose - Friday, August 4, 2023 - link
> almost obsolete as they leave the fabA100s are basically the standard. Most public models and finetunes you see going around were trained on A100s, and many ML papers still cite A100s.
Researchers, frameworks and stuff seem to be transitioning to the H100 just this year. Heck, I think it needs CUDA 12 for good utilization, and thats not even part of a stable PyTorch release yet.
FinancePerson - Wednesday, August 9, 2023 - link
This is the key point. A100s have been available since 2020 and still 3 years later it's almost impossible to find them available on a public cloud. Their utilization is maxed. Given most depreciation schedules are 3 or 4 years, that means these CoreWeave assets will be in-the-money with plenty of residual life once they're paid off.I find it funny the way most journalists are depicting this story. This form of ABL is very common in infrastructure investing. Structured finance is a specialized field that allows debt investors to securitize the cash flows of a multi-year contract, especially when its a hyperscaler (most likely Microsoft). This is nothing new folks. Saying the "GPUs are collateral" is not the whole truth, it's the entire infrastructure and contracts surrounding them.
waterdog - Saturday, August 5, 2023 - link
"Hope it works out for them, but going into billions of debt with components that are almost obsolete as they leave the fab is certainly playing with fire." That's the creditors' problem, not CoreWeave's problem.PeachNCream - Sunday, August 6, 2023 - link
Typical thinking of the indebted.boozed - Sunday, August 6, 2023 - link
To paraphrase Getty; if you owe the bank $2.3 billion, that's the _bank's_ problem.brucethemoose - Friday, August 4, 2023 - link
A rumor suggests Nvidia is cutting back Lovelace gaming GPU production to make more server GPUs.nandnandnand - Saturday, August 5, 2023 - link
It certainly makes sense. Sell GPUs to ungrateful gamers under MSRP, or sell $100,000 shovels to the gold miners?shabby - Monday, August 7, 2023 - link
That gold rush bubble will pop eventually.CoreLogicCom - Friday, August 4, 2023 - link
So, is it safe to say that nVidia is the Cyberdyne Systems we were warned about? ;-)mnemotronic - Friday, August 4, 2023 - link
_The company recently announced a $1.6 billion data center in Texas_Those GPUs generate a lot of heat. Fortunately they can take advantage of the cooler climate in Texas.
meacupla - Friday, August 4, 2023 - link
Texas, famous for not having preventable power outages in winter.PeachNCream - Saturday, August 5, 2023 - link
Texas' draw is a combination of business-friendly tax law and (at the moment) one of the highest ratios of renewable power generation so a company that eats an enormous amount of power can still claim to be "green" or "carbon neutral" in marketing material while also paying very low peak hours consumption rates since a lot of that is solar and on the hottest days, you tend to get the highest output so rates stay low. Does it make sense if the grid falters for residential customers and they die of heat stroke? No, but it sure does look good on paper for the people that own a company as long as no one figures out the cause and effect relationship and gets too public about it.andychow - Monday, August 7, 2023 - link
Wouldn't it be awesome if they went bankrupt and we could buy H100 servers for like $500 a pop?