Neoclouds Pivot from Mining to AI, Growing Fast But Facing Profitability Hurdles
a16z Newsletter · rss · 2026-08-14
a16z analyzes how Neoclouds like CoreWeave are repurposing crypto mining infrastructure for AI compute, mirroring historical shifts from railroads to fiber. While their revenue growth outpaces early hyperscalers, massive Capex, depreciation, and interest costs threaten long-term profitability. Additionally, Databricks' 'Smart Router' demonstrated the potential to reduce average task costs by over 30% by dynamically routing queries to appropriate models.
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