AI compute is Bitcoin mining redux: middle-layer operators eat the depreciation
sebpaquet · x · 2026-10-25
A sharp analogy argues the AI compute business is Bitcoin mining replayed: better chips yearly, revenue per machine in permanent decline, margins competed down to electricity costs. Winners are chipmakers and cheap-power landlords while fleet operators absorb depreciation (Riot's filing shows cash profit per coin but GAAP losses). Last cycle's survivors — Core Scientific (now CoreWeave's landlord), IREN, Cipher, Hut 8 — chose to rent out power, never chips. And mining had an escape hatch AI lacks: the coin could pump, while inference only deflates.
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