4 ms·

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,

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 5mo 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 5mo 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 5mo 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 5mo 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.
  - kgwgk 5mo ago
    > We can never know what the exact details If only there was some SEC filing available disclosing additional information about the 6-months $20bn bridge loan which was on the news four weeks ago…
    - burnerRhodov3 5mo ago
      oh, nice! thanks for this. This confirms spaceX has $20B at a SOFR + 0.75%. So around 5%-5.5%. Found on page 122 of the S-1. I assume they will retire all debt with the $50B raised from the IPO, plus have $30B to... dominate with starship. If starship is around $100m per launch right now, they can launch 300 ships with the IPO. or 30,000T in orbit.
      - hvb2 5mo ago
        > If starship is around $100m per launch right now, they can launch 300 ships with the IPO. or 30,000T in orbit. Uh, starship is still a development program. There's 1 launch pad right now able to launch V3. No starship has flown with an actual live payload. The starlinks going out the PEZ dispenser are probably the only thing launching on it anytime soon. Basically, Starship launching thousands of tons to orbit isn't constrained by money but by time.
roryirvine 5mo ago
Generating your own electricity really isn't that much far below grid prices - you'd typically be looking at a central estimate of 15 years to get a return on investment for a large Combined Cooling and Power cogeneration setup. But, crucially, there's a huge level of uncertainty. You're making bets on the relative cost of nat gas and grid power, both of which have historically shown extreme volatility over that sort of timescale. The level of risk means that very few proposed schemes go ahead in full unless there's some other factor involved (lack of sufficient grid connectivity, availability of subsidies).
- burnerRhodov3 5mo ago
  > You're making bets on the relative cost of nat gas and grid power nat gas is extremely cheap to get options for, so no.. you are not.

tonfa 5mo 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 5mo 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 5mo 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 5mo 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.
- kgwgk 5mo ago
  > We can never know what the exact details If only there was some SEC filing available disclosing additional information about the 6-months $20bn bridge loan which was on the news four weeks ago…
  - burnerRhodov3 5mo ago
    oh, nice! thanks for this. This confirms spaceX has $20B at a SOFR + 0.75%. So around 5%-5.5%. Found on page 122 of the S-1. I assume they will retire all debt with the $50B raised from the IPO, plus have $30B to... dominate with starship. If starship is around $100m per launch right now, they can launch 300 ships with the IPO. or 30,000T in orbit.
    - hvb2 5mo ago
      > If starship is around $100m per launch right now, they can launch 300 ships with the IPO. or 30,000T in orbit. Uh, starship is still a development program. There's 1 launch pad right now able to launch V3. No starship has flown with an actual live payload. The starlinks going out the PEZ dispenser are probably the only thing launching on it anytime soon. Basically, Starship launching thousands of tons to orbit isn't constrained by money but by time.

roryirvine 5mo ago

Generating your own electricity really isn't that much far below grid prices - you'd typically be looking at a central estimate of 15 years to get a return on investment for a large Combined Cooling and Power cogeneration setup. But, crucially, there's a huge level of uncertainty. You're making bets on the relative cost of nat gas and grid power, both of which have historically shown extreme volatility over that sort of timescale. The level of risk means that very few proposed schemes go ahead in full unless there's some other factor involved (lack of sufficient grid connectivity, availability of subsidies).

burnerRhodov3 5mo ago
> You're making bets on the relative cost of nat gas and grid power nat gas is extremely cheap to get options for, so no.. you are not.