(C) Alec Muffett's DropSafe blog.
Author Name: Alec Muffett
This story was originally published on allecmuffett.com. [1]
License: CC-BY-SA 3.0.[2]


Two thoughts on the Future of AI Regulation, Part 1: The Secondhand Market and the H100

2024-02-09 11:24:40+00:00

I used to work for a company called Sun Microsystems. We (“Sunnies”) loved the company, and still do so today – there are ex-employee forums on Facebook which still overflow with tales of company culture and innovation, filled with names that – some of which – are even more famous, today.

Sun died in/around 2009, for a variety of reasons, but probably the most critical of which was the 2007-08 financial crash. Some years previously the C-suite executives had hitched the company future to sales of “big iron” to Wall Street, and when that suddenly went away, Sun was caught by a double-whammy:

Sales of “big iron” like the Sun Enterprise 10000 (aka: E10k) immediately dried-up; the machines had been selling like hotcakes to investment banks, each with a price tag in the order of USD 1 million. It was a mark of status to have one of them — let alone a fleet — and they were used for everything from modelling nuclear explosions to real-time risk analysis and financial compliance. They were amongst the biggest and most powerful computers of their day. Because the buyers went bankrupt, these machines all ended-up in secondhand auction sales, at knockdown prices, and many were exported overseas in a “grey market” which simultaneously killed purchases in growth markets. The machines’ power and reliability meant that a sudden influx of ones at secondhand prices, cannibalised their own sales.

Now I am looking at the spate of recent articles about how Microsoft and Meta own half of the world’s H100 GPUs between them, and… I am not thinking about what would happen if one of those companies went bankrupt but rather: that amount of compute power will not go away, and at some point it, too, will end up on eBay

So all of those portentous discussions that we are seeing regarding Regulation of Foundation Models have only got a few years, perhaps a decade or so before all that H100 corpus becomes uneconomic (or bad ecological PR) to keep in comparison with <whatever comes next> and so it will get resold — or possibly destroyed by Government mandate to prevent the unwashed public coming into ownership of that much compute power — eventually permitting someone in a metaphorical garage to scrape the internet and train their own models from scratch.

But more on that in Part 2.
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[1] URL: https://alecmuffett.com/article/109128
[2] URL: https://creativecommons.org/licenses/by-sa/3.0/

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