Alright, let’s break down why this whole OpenAI situation is a five-alarm fire of pure, unadulterated bullshit. Sam Altman is running what is essentially the world’s most expensive and dangerous confidence game, and everyone in the media and tech world is just nodding along.
First, let’s talk about the sheer, mind-boggling scale of the promises. OpenAI, a company that is hemorrhaging cash, has committed to building 250 gigawatts of data center capacity by 2033. To put that in perspective, the entire global data center capacity right now is about 55GW. So Altman is promising to build almost five times the entire world’s current infrastructure in just eight years. The cost for this fantasy? Roughly $10 trillion. That is not a typo. That’s one-third of the entire US GDP. It’s a number so large it becomes meaningless, like a child saying they want a billion ice creams.
Now, let’s get into the immediate, short-term insanity. In the next year alone, to even begin fulfilling the deals they’ve announced with Broadcom, NVIDIA, and AMD, OpenAI needs to secure about $400 billion. Let that number sink in. That’s more than the total global venture capital raised in all of 2024. It’s more than five times what Amazon spent to build AWS. And they need this cash almost immediately because building a single gigawatt data center takes years and billions of dollars upfront. There’s also no evidence these data center projects have even broken ground, making the promised 2026 deployment dates a physical impossibility.
The financials are even more horrifying. OpenAI is burning money at a catastrophic rate of $6.7 billion on R&D in just six months, with a huge chunk of that spent on research for models they never even released. Their revenue is a fraction of their costs, and they’re on track to spend $40 billion on compute contracts alone. It’s a monstrosity that threatens to suck all the oxygen out of the Western financial system, requiring trillion-dollar annual investments that would eclipse global private equity deals.
The whole house of cards is built on blatant lies and market manipulation. Some verifiable lies include Altman claiming they magically acquired 1.7GW of capacity from nowhere (which is equivalent to all the data centers in the UK) and promising deployments in locations that don’t exist.
It’s a scam of historic proportions that will inevitably collapse and take the market down with it.
The fed will print magic money for them one way or another
The problem with AI is that you eventually run out of other people’s money
Think of how many kilometers of train infrastructure you could build for that kind of money.
1000 miles it seems
the weighted average of cost/miles is $383.36 million.
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Comrade Sam Altman had discovered the secret diary of comrade Stalin. Inside, the horrifying crimes of western society were detailed, and comrade Altman was convinced that the western imperialist powers must be destroyed. To this end, he led his organization towards taking over the western world. He used demons called “chatbots” to infect westerners with mental corruption. He forced the imperialist powers to spend precious resources into start building gargantuan monuments. Once these monuments are completed, the USA will be destroyed and communism will descend upon the world.
^^^
The above fanfic is less crazy than the reality that a scam of this scale is motivated by nothing more than a few people’s ego and hubris
I knew it was crazy, but these numbers still blew my mind. Thanks for the write up. I want to identify the contradictions at play.
So this could get very destructive. Destroying the real work and resources that go into stuff like building data centers and powering them. That’s because they aren’t needed to this extent to reproduce society. They also can’t deliver the promised profits. As an aside, the new data centers might still have utility, even after the bubble bursts. But not enough to be sufficiently profitable. And the consumed energy will definitely be lost.
The expected value can not be realized in exchange, because it doesn’t have enough use value. So it’s destroyed. This drains huge amounts of capital right out of circulation. Until it blows over, this will actually help stabilize capitalism immensely in the short term:
The need to destroy huge amounts of value in capitalism follows from the contradiction of the rising mass of capital. Every year, profit is generated and added to the mass of capital that needs profitable investment. It’s exponential and therefore impossible to sustain. That’s why this AI scam, just like the wars, is actually already helping to stabilize the system by destroying imense amounts of surplus value and taking it out of the cycle. This doesn’t prevent the crisis, but only delays it.
There is a second relevant contradiction, which could lead to a different kind of crisis: part of this is also about surplus capital being financialized and generating debt. This debt is a claim on future labor. A claim, that can not be fulfilled without increasing exploitation, because AI will not increase productivity as much as promised. The need to increase exploitation will accelerate the drive towards fascism and incentivize imperialism.
Well luckily the US is also fueling wars and military buildup right now, so it has plenty of space to destroy capital.
Combine that with a forcibly lowering of the accumulation rate via interest rate hikes. They are increasing the surplus rate through labor disciplining and reducing the size of the ruling/middle class by cutting segments out of it.
It is really is a perfect storm of capitalist crisis management that makes me agree that in the short term capitalism will be stabilised.
Though all it will take it a small potpuri or disasters (plague + hurricane + war) at the same time or one after another to smash the system to bits.
In a way, the AI race is starting to mirror the Cold War arms race. Back then, the US used its economic might to outspend the USSR on military tech, forcing Moscow to divert scarce resources from areas that improved the standard of living, such as light industry, towards the military.
From a strategic perspective, the US has no choice but to do what they’re doing. AI has the potential to provide predictive power to model things like the state of the global economy, to make correlations between events that would otherwise would not be found, to do automation, etc. Even if there’s a very small chance of the really outlandish promises of being true, they would be game changing.
In my opinion, the looming energy crisis is the real story here. The US power grid is already running on a razor’s edge with reserve margins sitting at a scary low 15%. As more data centres keep getting deployed, the emergency buffer for heat waves, unexpected outages, and so on, is about to get swallowed whole.
The problem is you can’t just wish new power plants into existence. Building new generation, whether it’s a gas plant, nuclear, or renewables with their storage needs, takes the better part of a decade and has gotten brutally expensive thanks to the trade war. So we’re about to see a classic supply and demand shock. A massive, constant, and inflexible new demand from AI data centers is going to slam into a power supply that can’t keep up. The inevitable result is that electricity prices are going to go parabolic for everyone, not just the tech companies.
As a result, we’ll see a cascading effect on the broader economy. First, grid stability becomes a national issue. Those rolling blackouts that were a regional problem in Texas or California could become a lot more common as the system gets overloaded. Second, and more dangerously, it torpedoes US manufacturing competitiveness. The US spent the last decade leveraging cheap energy to keep domestic manufacturing viable. Now, the US is about to have Europe’s problem, where prohibitively high energy costs make it unprofitable to run a factory. Essentially, whatever is left of the physical industrial base will have to be sacrificed to power the AI bubble, and the economic hangover is going to be brutal.
Yes, that’s a third contradiction, that could lead to crisis. The demand for natural resources rises exponentially on a finite planet and interacts with all the other simultaneous crisis you mentioned. If the system were to move to mitigate this third crisis tendency, there might still be room to increase energy production, by accelerating the destruction of nature even further. Or, just hypothetically, by increasing pressure on cartels to move monopoly prices (gas, oil) closer towards lower, competitive prices. But this is unlikely, because it would actually destabilize and increase splits in the capitalist class, even short term.
All in all, this decisive move with AI, towards something that destabilizes the system midterm can only happen, because it stabilizes short term. E.g. via destroying value.
There are hard physical limits on what the US can do here. It’s not just about lowering prices for gas or oil, it’s having the facilities to actually produce energy. This is a problem that has no solution in the short term. I get the impression that people in charge don’t understand the problem either, and they’re just assuming they’ll be able to deal with it when the time comes. Ultimately, I very much expect that the fundamentals of the system will become further eroded.
From a strategic perspective, the US has no choice but to do what they’re doing.
Yes, exactly, but I don’t think “the US” has agency enough to make that decision. Rather, the system is blindly moving towards the abyss because of uncaring forces driven by contradictions and the need to delay the crisis they inevitably cause. Or push them on other people, like Europe.
I’d argue that the agency is expressed in the federal government funnelling untold billions into this tech, and passing regulation friendly to these companies. The material conditions are the underlying driving factor of course, the decline of the US empire, the rise of China as a competitor, and so on, these are all tangible factors that influence the behavior of people within the system.
OpenAI Needs $400 Billion In The Next 12 Months
“Nice little country you’ve got here. Be a shame if its economy were to collapse.”
Yeah, me too. I gotta pay some shit and quick. I’ll take half if that’s what you got right know so just HMU.
That’s chump change, surely. Just generate it with AI, or have Nvidia invest in you so you can pay your debt to Nvidia.
If Altman were smart - in print and on social media he’d be singing Trump’s praises and saying stuff like OpenAI is vital for national security and a strong-and-powerful economy. That way when Altman says he needs a “temporary” bailout - he’s more likely to get one.
Oh they’re already deep into military contracts, and government funding is absolutely going to be how they stay afloat.
Ok now what do i do with my 401k? They won’t let me put it in gold!
bonds should be fine in theory, better than stocks and they’re more likely to get bailed out first
Thanks! Right now I’m 40% cash 60% bonds, made that decision last week. My roth IRA is all in gold though
I asked the same in a previous related thread and got this response: https://hexbear.net/comment/6573867
I’m in pretty much the same boat as you, I can only invest in like 10 different ETFs and none of them seem to exclude the bubble in any significant way
How the fuck is any of this supposed to even take 5x the global data center capacity like what is all that even supposed to be for?
AI booba
Sam Altman’s No IT Loads Refused Cash Dump
