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@FinanceLancelot Dude’s living in a parallel universe. Legend. 👏@elonmusk
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@ShanuMathew93 @DavidSacks Sacks just lured in crowd sourcing for an investment thesis. Brilliantly done. Credit where it’s due.
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1 GW AI data center economics are mostly a sensitivity table based on the assumptions you use.
Three revenue cases:
Low: ~$7B
(500k GPUs × 80% utilization × $2/GPU-hour × 8,760 hours)
Mid: ~$17B
(750k GPUs × 85% utilization × $3/GPU-hour × 8,760 hours)
High: ~$32B
(1M GPUs × 90% utilization × $4/GPU-hour × 8,760 hours)
Against ~$50B of capex, revenue payback looks like ~7 years, ~3 years, and ~1.6 years.
That framing is incomplete because the operating cost stack is large:
Power: ~$0.7–1.5B
(1M kW × 80–90% utilization × 8,760 hours × $0.08–0.15/kWh × 1.15–1.25 PUE)
Facilities operations: ~$0.2B
(1,000 MW × ~$175k/MW/year)
IT service and maintenance: ~$1.5–3.0B
(3–6% of $50B capex)
Labor, software, insurance, security, admin: ~$0.2–1.0B
(2–3% of revenue, case-dependent)
Depreciation: ~$6.5–8.0B
($15B GPUs/servers over ~4 years + $7.5B networking over ~6 years + $17.5B power/cooling over ~15 years + $10B shell over ~25 years)
That changes the payback math:
Low case: likely uneconomic. EBIT is minimal or negative after full cost burden.
Mid case: roughly ~8–10 years to EBIT payback.
High case: roughly ~3 years to EBIT payback, but only if GPU density, utilization, and rental pricing all hold near the bull-case end of the range.
The key variables have to include other factors beyond just power cost. They are GPU count per GW, realized rental price, sustained utilization, service burden, depreciation life, and refresh economics.
The main question is what happens in year five onward. A cluster still earning $3/GPU-hour has a very different return profile than one earning $0.50/GPU-hour after the next hardware cycle. We’ve seen demand and rental prices hold up, if they compress for whatever reason, the math changes very quick.
David Sacks@DavidSacks
Back-of-envelope numbers for 1 gigawatt data center: All-in Capex: ~$50 bn Enterprise revenue generated: ~$25-30 bn/year Electricity cost: $1-2 bn/year ~2 year payback. The boom is real.
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Back-of-envelope numbers for 1 gigawatt data center:
All-in Capex: ~$50 bn
Enterprise revenue generated: ~$25-30 bn/year
Electricity cost: $1-2 bn/year
~2 year payback.
The boom is real.
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The responses to this are a good reminder that a lot of anti-immigrant keyboard warriors have no idea what the law says.
“He had 20 years to become a citizen!” No. Thanks to country of origin caps, the wait time for Indians can be over *100 years*—just to get a green card. Many die waiting in line.
We tell people seeking the American Dream to come here “the right way,” and then we punish them for doing so.
Sam Peak 🇺🇸💡@SpeakSamuel
This H-1B worker has lived in the US for nearly 20 years and built a family here. His mom was dying in India. To visit her, he would need to wait months to book a consular appointment--with the soonest one available likely being scheduled one year out. He made the difficult choice of not visiting his dying mom because leaving without an appointment would mean separation from his children, job, and his other obligations. Much of the commentary around immigration focuses on how such bureaucratic burdens undermine immigrants’ ability to contribute and innovate. But we must remember that this red tape also prevents these people from being fully engaged with their own lives and meaningfully present in the lives of others. This matters too, and these seemingly non-economic problems will eventually translate into economic costs. If America is no longer a place where people feel empowered to be the best versions of themselves as they celebrate, struggle, and grieve, it ceases not just being the land of opportunity, but also the land of dignity and purpose. linkedin.com/posts/gautam-d…
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Shifting blame now? You pushed for it and cheered when the merger failed. Now thousands of jobs lost, colossal loss of investments, average person is in no better place, other airlines will probably scoop parts of Spirit assets at pennies on the dollar. You failed American people and only cared about your political agenda. You failed to see beyond your politics.
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Spiking fuel prices from Trump’s war was the nail in the coffin for twice-bankrupted Spirit airline.
FWIW, JetBlue merger failed because a judge, appointed by Ronald Reagan, said the deal was illegal.
Republicans are desperate to shift blame from higher costs hitting families.
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@SenWarren @JetBlue @SpiritAirlines @JusticeATR @USDOT Happy now?? What an absolute disgrace of a decision that was. @SenWarren
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I've warned for months that a @JetBlue-@SpiritAirlines merger would have led to fewer flights and higher fares.
@JusticeATR and @USDOT were right to stand up for consumers and fight against runaway airline consolidation.
This is a Biden win for flyers! apnews.com/article/jetblu…
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Joe Kernen comes close to having a coronary on air as Pete Buttigieg dogwalks him all over the Squawk Box studio about Trump's economic mismanagement and inflation
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@citizen_kau Idiotic take. Arnab repeating his nonsense views again. Appeasement politics, skewed mindset and corrupt journalism. Facts are lacking and this is more of rhetoric than a journalistic take on situation, history and politics combined.
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Arnab’s video going viral in Iran. For all the right reasons.
Never thought I’d live to see this day. 🥲
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Miami this weekend: Miami Open, MMW parties, Ultra, boat outings
NYC this weekend: No Kings parade
Lmaooooo
New York City Kopp@NYCkopp
No Kings. Too packed to move. New York City
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My friend is smarter than me. She worked with me at Morgan Stanley then did private equity before GSB before doing corporate jobs in Tech. She’s now chief of staff for an AI startup that recently got over $100mm of funding.
Her new boss is the COO who is a NYC finance guy. He hilariously cares about formatting. Don’t worry junior bankers, AI won’t take your job. Too much bad muscle memory in middle and senior mgmt focused on turning over decks to “add value.”
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@devahaz Next Pod episode @Jason will back paddle saying he actually always voted Democrat over 20 years and @chamath and @DavidSacks will deny they ever visited Mar-a-Lago
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A lot of indirect pricing is Capacity driven which is extremely understated because of US grid being decentralized (to a certain extent). Pure commodity cost and basis cost are drivers but the capacity costs lead pricing directionally and make it inversely correlated at time. Capacity structure varies by each ISO/RTO, effectively by what region of US you live in. Basically not a uniform across the country. PJM & NY ISO market more sophisticated in capacity structure while ERCOT (Texas) is not. Pricing stability wise it can go either way. Ever going debate about which structure is better. But as a commodity analyst, you got to pay attention to capacity markets.
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I now understand how electricity is priced better than 99% of people after watching this video
2 minutes well spent, watch this ex-Citadel simply explain the power market
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