<a href="https://www.theverge.com/ai-artificial-intelligence/822011/coreweave-debt-data-center-ai" rel="nofollow">The Verge article</a> about CoreWeave by Elizabeth Lopatto is amazing.<br><p>Let’s start with some very recent history. CoreWeave is a data center company that pivoted in 2022 from crypto. (In 2021, CoreWeave made its money by… mining Ethereum.) Essentially, CoreWeave is a landlord for compute: companies pay for the use of its server racks for AI projects.<br></p>...<br><p>CoreWeave chief executive officer Michael Intrator, a former hedge fund manager,<br></p>...<br><p>“They have to continue to borrow to pay interest on the last loan.”<br></p>So,<br>- CoreWeave sits at the center of the AI bubble;<br>- it used to be a crypto company and also gets its (electric) power from a Bitcoin mining company that makes no money and has CoreWeave as its only customer<br>- it's positioned itself as a rentier;<br>- its interest payments on previous loans exceed its revenue by a significant amount, so it's paying off loans with more loans and has already defaulted once;<br>- it has essentially two customers, Microsoft and NVIDIA;<br>- it has a loan from one of the actors implicated in the 2008 financial crash (Magnetar)<br>- it's run by a finance guy, not a tech person<br>- yet it's in the position of someone who takes out a new credit card to pay the interest on the previous credit card<br><br>Yeah. Looks like crypto, and crypto's Ponzi scheme way of thinking, has slimed its way into the "real" economy after all.<br><br>Oh and welcome back, global financial crash. We missed you. And eyyy, how you doing Enron long time no see:<br><p>CoreWeave isn’t alone in its complex finances. Meta took on debt, using a SPV, for its own data centers. Unlike CoreWeave’s SPVs, the Meta SPV stays off its balance sheet. Elon Musk’s xAI is reportedly pursuing its own SPV deal.<br></p>"Complex finances" are what companies engage in when there isn't any there there (SPVs were Enron's "financial innovation" too).<br><br>Peter Thiel pulling his investments out of NVIDIA makes far more sense after reading this. Looks wobbly.<br><p>It is perhaps time to discuss the enormous stock sales from CoreWeave’s management team. Before the company even went public, its founders sold almost half a billion dollars in shares. Then, insiders sold over $1 billion more immediately after the IPO lockup ended.<br></p>...<br><p>“It’s noteworthy that people who have a good view on that business are cashing out,” says Leevi Saari, a fellow at the AI Now Institute.<br></p>and of course<br><p>It makes a certain kind of cynical sense to view CoreWeave itself as, effectively, a special purpose vehicle for Nvidia.<br></p><a href="/tags/ai/" rel="tag">#AI</a> <a href="/tags/genai/" rel="tag">#GenAI</a> <a href="/tags/generativeai/" rel="tag">#GenerativeAI</a> <a href="/tags/aibubble/" rel="tag">#AIBubble</a> <a href="/tags/coreweave/" rel="tag">#CoreWeave</a> <a href="/tags/corescientific/" rel="tag">#CoreScientific</a> <a href="/tags/microsoft/" rel="tag">#Microsoft</a> <a href="/tags/nvidia/" rel="tag">#NVIDIA</a> <a href="/tags/crypto/" rel="tag">#crypto</a> <a href="/tags/grift/" rel="tag">#grift</a> <a href="/tags/casinoeconomy/" rel="tag">#CasinoEconomy</a><br>