Uniting Crypto and AI: The New Coordination Layer

• Transforming Lives and Workplaces: The Impact of Generative AI
• Challenges in Scaling AI Systems
• A Glance at Datacenter Revenues
• GPUs: The New Currency of AI
• Solution to the Compute Shortage: DePINs
• The Economical Advantage of DePIN Networks

Transforming Lives and Workplaces: The Impact of Generative AI

The advancements in generative artificial intelligence (AI) in the last year have started to revolutionize the way people conduct their daily life and professional occupations. Language models are being incorporated for the formulation of legal strategies in court proceedings, image diffusion models designed to enhance the work processes of premier entertainment firms, and significant strides in computer vision technology have facilitated the operation of autonomous vehicles on a large scale.

Challenges in Scaling AI Systems

It is widely recognized that the main barrier to growing these systems is the availability of computational resources. Over the course of 2023, the costs and wait times for spot instances of Nvidia's A100 and H100 chips have shown a steady increase, with chip production capacity unable to satisfy the rising demand. A combination of factors such as materials constraints, disruptions in the supply chain, amplified demand, geopolitical conflicts, and the extended production cycles involved in creating intricate GPUs, have culminated in a persistent scarcity of graphics cards. Furthermore, essential materials such as the advanced silicon used in GPU chips, specialized substrates for PCBs, and memory chips are also experiencing shortages due to the imbalance in supply and demand.

A Glance at Datacenter Revenues

In 2023, revenues attributed to AI workloads in datacenters were around $100 billion. The establishment of datacenters demands substantial initial capital investment for acquiring the land, along with sourcing electricity and commercial-grade hardware. The rising scale and complexity of AI models calls for increasing computation requirements, which is increasing at a rate much faster than supply, despite the cost per unit of computational performance decreasing every thirty months. This presents investors with an attractive opportunity; a massive shift in innovation that influences practically every business venture overnight, driven by a limited resource and surging demand, resulting in a spike in commodity prices. The 231.5% YTD returns of NVIDIA in the past year are a clear indication of this opportunity.

GPUs: The New Currency of AI

There is a rapid increase in the demand for AI as it is set to augment and replace workforces, boost productivity, and fundamentally alter the way businesses function. The existing demand is only a fraction of what is predicted for the future, implying that computational resources are the new oil.

Solution to the Compute Shortage: DePINs

A promising potential solution to the escalating shortage of computational resources is the utilization of un-tapped supply. Emerging onto the scene are a new form of crypto networks, termed Decentralized Physical Infrastructure Networks (DePINs). The global estimate for freely available consumer GPUs is 1.5 billion, with an additional six million datacenter GPUs deployed worldwide, beyond the hyperscalers like AWS, GCP, Azure, and Oracle. AI-focused DePINs such as the Render Network and IO.net have recently been able to address this issue by offering incentives to dormant GPU operators to contribute their resources to a shared network in exchange for rewards, and by establishing a decentralized networking layer representing disparate GPUs as clusters that AI developers can utilize.

The Economical Advantage of DePIN Networks

DePIN networks, besides generating new GPU supply, are substantially more affordable - sometimes up to 90% cheaper - than conventional cloud providers. DePIN networks achieve these savings by delegating GPU coordination and overhead to the blockchain, thus they can offer computation costs practically at cost, with negligible network coordination fees on top, to end users. With the number of GPUs, especially affordable ones, not being sufficient to meet the needs of every major corporation globally, DePINs are here to bridge this gap. GPUs are indeed the currency of AI, and DePINs are here to make them accessible.

Edited by Jonathan Stoker