6 ms·

can you elaborate?

by gekoxyz 4mo ago

can you elaborate?

lumost 4mo ago
Napkin math on 5 year depreciation is 5.5 billion per year for 28 billion. However the 28 billion is cash upfront, spacex is probably paying 10-20% interest on the 28 billion for another 2-6 billion per year. So net you are looking at finance expenses of 7-11 billion per year. The electricity costs will be significant on top of that, but harder to get a solid read on. Net of everything, spacex may be getting a 14-28 percent yield before paying for electricity. After electricity/insurance/data/taxes/other expenses - I’d guess it’s anywhere between 0% and 7% yield. Odds are good that Anthropic abandons the deal before the depreciation schedule completes. Who is going to rent the GPUs then?
- bluecalm 4mo ago
  That assumes they are renting out the whole capacity. Have you seen anything suggesting that's the case?
  - tredre3 4mo ago
    Anthropic is renting the whole capacity (of one of the colossus), it was a big part of the announcement. https://finance.yahoo.com/news/anthropic-to-rent-all-ai-capacity-at-spacexs-colossus-data-center-180327774.html?guccounter=1 https://finance.yahoo.com/news/anthropic-to-rent-all-ai-capa... I don't know about Cursor.
    - bluecalm 4mo ago
      Yeah one of them but the costs in the calculation are for two of them.
- burnerRhodov3 4mo ago
  5.5 year depreciation is only on the chips. Power, networking, cabling, the actual construction of the building is probably closer to 60% of that number. Also, they are only renting out colosus 1 ($10B), not colosus II ($18B). So, it's 10B, with $4b of that being attributed to a 5 year depreciation. The rest of the facility probably has a depreciation of around 20 years, and you can easily swap out GPU's, TPU's, Trititum, Tesla's own GPU's, as they start failing, so the normal depreciation curve only "kinda applies here". There is no interest, as he was venture funded not debt funded. Electricity is coming from Nat Gas Turbines, so again even though you have a some depreciation on the equipment there, you are getting it for far below meter prices. So, from my math, he gets ROI on the chips in 3 months, and ROI on the entire facility in 9 months? That's literally the best investment of all time.
  - tonfa 4mo ago
    > Also, they are only renting out colosus 1 ($10B), not colosus II ($18B). The news from the S1 is that they're renting both (see OP).
    - burnerRhodov3 4mo ago
      yes, it says they will be paying for "additional capacity" at a reduced rate as it becomes availble in May and June. Essentially, they are using most of C2 for Grok5. That training run is coming to an End, and they will be leasing more capacity. So taht 1.25b per month will go up to around $1.5B-$2B per month as they finish grok 5. Edit: from cofounder of Anthropic: "will be scaling up on GB200 capacity in Colossus 2 throughout June." https://x.com/nottombrown/status/2057194829986300375 https://x.com/nottombrown/status/2057194829986300375 So the 1.25B is for c1, and the revenue will scale into c2. No idea how much scale, but c2 is almost double the compute? So potentially $3b a month, but probably closer to $2.5B since they get a discount.
  - kgwgk 4mo ago
    > There is no interest, as he was venture funded not debt funded. Who is "he"? SpaceX has $20bn of debt and $9bn in "other financing" corresponding to "obligations related to certain AI infrastructure assets recorded as failed sale-leaseback transactions."
    - burnerRhodov3 4mo ago
      Edit: Page 122 of the S-1. They are paying SOFR + 0.75%. So around 5.5% on the $20B. I'll keep the below for integrity sake: Well, i'm sure SpaceX bought Xai using some kind of prefered share/debt financing, but that's not to say that XAI had the original debt financing. We can never know what the exact details, and the exact financing is on this debt. Maybe it's tied to Elon's Tesla Shares, Maybe it's tied to a convertible, maybe it is actual "loans" from a bank. Even at $9b in debt, and you naivly assume they are paying 10% (Def not 20% as OP claimed), you are paying $900m a year, for the entirety of xAi. Including that in the calculations to rent out the entire compute is folly. Not only is 900M not directly attributed to c1, cause it's split between c1, c2 and all the training runs, but you can never verify the interest. And even then, one month of this deal pays for the whole year of interest expense. So go ahead and lower my estimate by 10%... doesn't make a difference.
- nl 4mo ago
  That depreciation it too high in practice. 5 year old H100s are now completed depreciated but are being rented out at higher rates than when they were new. > Who is going to rent the GPUs then? I'd LOVE a way to be on the other side of that bet. If only there was another way outside of buying into all the other Elon risks associated with SpaceX.
- chermi 4mo ago
  I am very skeptical that musk is 10-20% interest. I would guess closer to 5.

can you elaborate?

by gekoxyz 4mo ago

can you elaborate?

Napkin math on 5 year depreciation is 5.5 billion per year for 28 billion. However the 28 billion is cash upfront, spacex is probably paying 10-20% interest on the 28 billion for another 2-6 billion per year. So net you are looking at finance expenses of 7-11 billion per year. The electricity costs will be significant on top of that, but harder to get a solid read on. Net of everything, spacex may be getting a 14-28 percent yield before paying for electricity. After electricity/insurance/data/taxes/other expenses - I’d guess it’s anywhere between 0% and 7% yield. Odds are good that Anthropic abandons the deal before the depreciation schedule completes. Who is going to rent the GPUs then?

bluecalm 4mo ago
That assumes they are renting out the whole capacity. Have you seen anything suggesting that's the case?
- tredre3 4mo ago
  Anthropic is renting the whole capacity (of one of the colossus), it was a big part of the announcement. https://finance.yahoo.com/news/anthropic-to-rent-all-ai-capacity-at-spacexs-colossus-data-center-180327774.html?guccounter=1 https://finance.yahoo.com/news/anthropic-to-rent-all-ai-capa... I don't know about Cursor.
  - bluecalm 4mo ago
    Yeah one of them but the costs in the calculation are for two of them.
burnerRhodov3 4mo ago
5.5 year depreciation is only on the chips. Power, networking, cabling, the actual construction of the building is probably closer to 60% of that number. Also, they are only renting out colosus 1 ($10B), not colosus II ($18B). So, it's 10B, with $4b of that being attributed to a 5 year depreciation. The rest of the facility probably has a depreciation of around 20 years, and you can easily swap out GPU's, TPU's, Trititum, Tesla's own GPU's, as they start failing, so the normal depreciation curve only "kinda applies here". There is no interest, as he was venture funded not debt funded. Electricity is coming from Nat Gas Turbines, so again even though you have a some depreciation on the equipment there, you are getting it for far below meter prices. So, from my math, he gets ROI on the chips in 3 months, and ROI on the entire facility in 9 months? That's literally the best investment of all time.
- tonfa 4mo ago
  > Also, they are only renting out colosus 1 ($10B), not colosus II ($18B). The news from the S1 is that they're renting both (see OP).
  - burnerRhodov3 4mo ago
    yes, it says they will be paying for "additional capacity" at a reduced rate as it becomes availble in May and June. Essentially, they are using most of C2 for Grok5. That training run is coming to an End, and they will be leasing more capacity. So taht 1.25b per month will go up to around $1.5B-$2B per month as they finish grok 5. Edit: from cofounder of Anthropic: "will be scaling up on GB200 capacity in Colossus 2 throughout June." https://x.com/nottombrown/status/2057194829986300375 https://x.com/nottombrown/status/2057194829986300375 So the 1.25B is for c1, and the revenue will scale into c2. No idea how much scale, but c2 is almost double the compute? So potentially $3b a month, but probably closer to $2.5B since they get a discount.
- kgwgk 4mo ago
  > There is no interest, as he was venture funded not debt funded. Who is "he"? SpaceX has $20bn of debt and $9bn in "other financing" corresponding to "obligations related to certain AI infrastructure assets recorded as failed sale-leaseback transactions."
  - burnerRhodov3 4mo ago
    Edit: Page 122 of the S-1. They are paying SOFR + 0.75%. So around 5.5% on the $20B. I'll keep the below for integrity sake: Well, i'm sure SpaceX bought Xai using some kind of prefered share/debt financing, but that's not to say that XAI had the original debt financing. We can never know what the exact details, and the exact financing is on this debt. Maybe it's tied to Elon's Tesla Shares, Maybe it's tied to a convertible, maybe it is actual "loans" from a bank. Even at $9b in debt, and you naivly assume they are paying 10% (Def not 20% as OP claimed), you are paying $900m a year, for the entirety of xAi. Including that in the calculations to rent out the entire compute is folly. Not only is 900M not directly attributed to c1, cause it's split between c1, c2 and all the training runs, but you can never verify the interest. And even then, one month of this deal pays for the whole year of interest expense. So go ahead and lower my estimate by 10%... doesn't make a difference.
nl 4mo ago
That depreciation it too high in practice. 5 year old H100s are now completed depreciated but are being rented out at higher rates than when they were new. > Who is going to rent the GPUs then? I'd LOVE a way to be on the other side of that bet. If only there was another way outside of buying into all the other Elon risks associated with SpaceX.
chermi 4mo ago
I am very skeptical that musk is 10-20% interest. I would guess closer to 5.