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Alex Selimov 2025-08-01 23:03:24 -04:00
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@ -27,6 +27,6 @@ I am not a vibe coder and don't think I will ever give in to the vibes. Even whe
## How does the economics of AI work? ## How does the economics of AI work?
From my very limited understanding, the fact that major AI companies are still requiring funding rounds indicates that AI is currently not profitable. That makes sense to me since ChatGPT and Claude are available for free even though inference is certainly not free. I think the significant portion of cost is due to model training. It seems like model training costs won't be stopping anytime soon as companies race towards general and then "super" intelligence. I'm not convinced either of those are a given. As a result either prices will have to increase or ads will be introduced to recuperate investor money. I'm also not sure how this applies to providers of open weight models. Those prices can seem more reasonable, but are those subsidized as well? Finally, the current datacenter power consumption for model training seems entirely unsustainable. If I recall correctly, Elon Musk is powering some of his datecenter with a constant flow of diesel fuel jnto generators. The scale of everything at the moment seems to border absurdity. I think we are in for a bumpy ride for the next few years as the impact of GenAI technology and infrastructure works itself out. From my very limited understanding, the fact that major AI companies are still requiring funding rounds indicates that AI is currently not profitable. That makes sense to me since ChatGPT and Claude are available for free even though inference is certainly not free. I think the significant portion of cost is due to model training. It seems like model training costs won't be stopping anytime soon as companies race towards general and then "super" intelligence. I'm not convinced either of those are a given. As a result either prices will have to increase or ads will be introduced to recuperate investor money. I'm also not sure how this applies to providers of open weight models. Those prices can seem more reasonable, but are those subsidized as well? Finally, the current datacenter power consumption for model training seems entirely unsustainable. If I recall correctly, Elon Musk is powering some of his datacenters with a constant flow of diesel fuel into generators because he can't get enough power from the power grid. The scale of everything at the moment seems to border absurdity. I think we are in for a bumpy ride for the next few years as the impact of GenAI technology and infrastructure works itself out.
Please let me know if I'm wrong about anything or with better predictions! Please let me know if I'm wrong about anything or with better predictions!