A small GPU cluster may be hard to resell after its tenant fails

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 13:26

   think it gets solved, and like, obviously, we're biased about this, is we think that you need to make the collateral that the lender is lending against into something that's more valuable, rather than what they are currently lending against. So right now, people are lending against this GPU cluster, but that GPU cluster needs an operator. That operator is just as likely to blow up in the case in which you need them to sell that collateral. And so what we're trying to do is be the place that can make that collateral be something that's worthwhile. To do that, we have the whole operating capacity of a GPU cloud. So we operate GPU clusters, but we don't own the hardware. And because of that, we're not exposed to the same risk. And so we end up as a backup servicer to these folks um i don't know if you know what that does you know what the term

2. 14:09

   servicer means in this case um what does it mean it basically means that like we have the ability to operate the hardware um but we don't have the same exposure risk um that everyone else has right and so because of that um we get to offer um uh the like right to some gpus um as the collateral rather than the hardware itself and if you recoup that right to the gpus we can sell that right and we don't blow up right when you need us to sell it.

3. 14:38

   Right. So is this what Elon meant when he said there's going to be a lot of stranded compute? Yeah, so some of the ways that I think you could have stranded compute is there are a lot of new, what we would call neoclouds. There are a lot of new clouds. Everyone and their mother is trying to suddenly become a cloud because you just make a lot of money doing it. um however um they will get sold to companies that won't be able to grow because um sorry the new clouds are starting with smaller clusters they're starting starting with like a five megawatt deal um and they will sell that to somebody um who or they they will sell that to somebody who like looks like a less investment grade tenant or at least initially that was the plan, then you have to find an investment-grade tenant, which looks like Microsoft or Google

4. 15:34

   or Anthropic, these groups of people. Anthropic's almost investment-grade, I guess, or now is. And these people don't give a shit about your 5-megawatt cluster at all. Like, it's too small for you to care about. So what seems like it may happen is you get that 5-megawatt cluster. You sell it to someone who then blows up. You don't have the ability to sell that cluster to anybody else because your investment grade customer.

5. 16:00

   are, like, don't care about that small of compute. I think that's where you're going to get started, compute. Interesting. So what is SF Compute doing about this?