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The birth of the AI compute market - by Dave Friedman

davefriedman.substack.com · 1,239 words · saved by 2 readers

This is the first in a three-part series about the financialization of AI compute. In this post, I cover the various parties in the market for AI compute, and how they would benefit from a fully financialized market for AI compute. Subsequent posts will explain (i) why the people who will build this market will come from finance and trading backgrounds, and not technology backgrounds; and (ii) why investing in companies building out AI compute financialization is not a great VC-style investment. I have written before about the financialization of AI compute1. That is, turning the buying and selling of access to GPUs into a financial commodity that allows participants in the market to offload risk in the same way that, say, airlines hedge fuel costs. This is, understandably, somewhat foreign to many people in the AI community. I hope to explain one critical thing in this post: Why the various parties involved in buying and selling AI compute might be interested in its financialization.

This is the first in a three-part series about the financialization of AI compute. In this post, I cover the various parties in the market for AI compute, and how they would benefit from a fully financialized market for AI compute. Subsequent posts will explain (i) why the people who will build this market will come from finance and trading backgrounds, and not technology backgrounds; and (ii) why investing in companies building out AI compute financialization is not a great VC-style investment. I have written before about the financialization of AI compute1. That is, turning the buying and…

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