Power limits could leave 15 gigawatts of compute idle

Transcript

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

1. 25:29

   meanwhile back here on earth the markets reacted very sharply right nasdaq was down 5.5 percent the smp dropped more than four percent big semiconductor stops 12 percent NVIDIA 9.3 percent korea dropped six percent so uh people are really reassessing infrastructure spending regulatory uncertainty? And how do you navigate or price future returns? So this is going to force markets to distinguish between the unbelievable technological potential and the financial sustainability of the infrastructure. So enormous challenge. And here's the problem.

2. 26:07

   What happens if AI delivers these exponential benefits, but very disappointing returns to investors, right? Could you actually, this might force all the compute to get cheaper more quickly. So did you guys watch all the stock market returns? No idea. Salim, what are you talking about with stock market? What are we talking about here? Smooth sailing, right? It's been an uneventful week, like equities up and to the right. If you look at the NVIDIA and the hyperscalers, they started coming down a lot about four or five weeks before the election.

3. 26:47

   They've been on a straight slide. Then on election day, kind of a surprise pop and then a big drop. So a lot of this outcome was priced in before the election and then the rest of it got priced in on the last day or so. And essentially what they're pricing in is a slowdown of power generation and a slowdown of AI construction on things that were, you know, probably planned, maybe even budgeted, but not yet zoned and approved. I don't think there's much expectation that existing construction on approved projects is going to stop. I don't think even the governors of any state are saying that because, you know, you've got so much sunk cost and so many jobs at stake. I don't think anyone wants to stop those.

4. 27:31

   but I do think that the market just priced in, yeah, this is going to slow things down and give China a leg up and a chance to bypass America, and we've got to price that in. You know, the move to space, you're dead right, Alex. I mean, this definitely accelerates the move to the Dyson Swarm, but, you know, best case, that's a couple percent of all compute in two years. And then it's on an exponential, so it could really take off after that, but we all know that ASI is within that two-year timeline.

5. 28:00

   And so, like, yeah, there's a huge amount of global long-term outcome that's tied up in that two-year window that predates the Dyson Swarm. And so that has to get priced in to this, too. So there's a lot there. I think that, you know, the big AI foundation model companies immediately came out and said, look, I'm not going to slow down investment at all. You know, every chip is getting used. And the demand for the tokens is insane if you look at the S1 Fermanthropic.

6. 28:28

   I mean, the growth rate of use of AI is insatiable. So it's just a question of can you build the chips and can you put them in data centers and can you deliver the AI? And so, you know, the short-term effect might be more expensive AI for everybody and, you know, fewer breakthroughs that we were hoping for because you don't have enough online. I mean, Elon has been saying for a while that there's going to be about 15 gigawatts of idle compute capability that can't find a data center with liquid cooling to plug into.

7. 29:00

   And that's just tragic for humanity. I mean, the idea that there's the possibility of putting compute online that could cure a disease and it won't be online for another three years because it's just literally sitting in a warehouse without power. So that's a terrible outcome. It does feel like there's an export opportunity there. You know, there are a lot of constraints on exporting AI, but, you know, there have to be places around the world that say, oh, this is an opportunity for me to tap into that hydroelectric power all of a sudden or, you know, get something online that otherwise wouldn't have happened for lack of chip supply, which also brings me back to Canadian, by the way.

8. 29:35

   That's the most likely place. I talked to a bunch of a group of energy CEOs in Europe on this trip, and I encouraged them just go build every power generation you possibly can. and it's all going to be used. And it was weird. They didn't seem to be even looking at that before that conversation. Really? Yeah. Europe is so... buried in the local machinations of, oh, Germany was dependent on Russian gas.

9. 30:07

   We're trying to figure out how to get ships of LNG from North Africa, Algeria and Qatar. They're not looking at the bigger picture at all. It's kind of incredible. It is incredible. And it's a good case study to learn from because politics actually do matter at the end of the day. You can't just sort of say, oh, well, it's another day in democracy. Who cares? But if you look at what's happened in Europe, you know, there's a set of things where the government just isn't interfering, and those always go smoothly.

10. 30:35

    But then there's a set of things where the government has to proactively do something. It's a smaller set, but power generation happens to be one of them. And, like, look at what happens when the government is dysfunctional. There's no power. Well, then everything else grinds to a halt. And it's just a couple of points that just make the entire economy fail. There was one piece of good news. Apparently, one of the political parties in Spain, they've been planning to wind down their nuclear generation. And now they've decided, well, let's just keep it going for a few more years. And so that, at least, thank God, some level of common sense plugged in.