Comment by razster
5 hours ago
From what I've read, albeit from Reddit, they're not planning to sell or shelve those racks, they're planning to destroy them due to the fact it will flood the market. They have no intention of letting others have them.
Who is "they"? Certainly we have some concentration of consumers of this hardware. Are you saying they'd rather destroy the hardware to protect their supplier's market rather than allow the secondary market to function as normal? Maybe this is written into contracts? We're in a very sad state of affairs if that's the case.
There is such demand for the GPUs, for example, it seems that they can pick the winners and demand they abide with terms.
Aren't servers depreciating assets owned by the company and tracked on the balance sheet?
If so, on a liquidation event, I'd imagine they'd have to be sold to compensate the shareholders.
Idk yes its meant to depreciate and perhaps is from an accounting perspective but all my computer hardware has been rapidly appreciating… My 8x RTX Pro 6000 cluster has easily doubled in value in the last 12 months.
There are a lot of companies that will buy your servers and lease them back to you.
A company can either generate a small new revenue stream from on-selling old gear, or they can pay to destroy and dispose of it.
Which option is a profit-oriented, not-totally-profitable AI outfit going to choose?
Well, if they were bought on credit, and must be returned when you go insolvent to the company that makes the chips, whose market - and therefore stock - would collapse in value should the market be flooded with used equipment, and said company already dealt with a similar situation in the past few years... I think the answer is obvious.
Liquidators aren't going to care about "the market", they will try and get in first and profit on on-selling equipment at a lucrative price.
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People seem confused here, but liquidation is very common. That's what private equity often does. It's also why debt collectors call non-stop, even if they are calling the wrong person (fuck you AI debt collectors!). They buy up the debt for pennies on the door and the original debt owner writes off a loss on their taxes. It's also the reason how I bought a Herman Miller for 40% retail.
It's very simple: some is better than none
I am not sure that it would be profitable to sell equipment that has been depreciated to 0$.
Clothing companies destroy unsold stock all the time.
Clothes are typically too cheap to liquidate. And how does Nike liquidate a Nike branded shirt. The buyer would need to remove the logo.
Clothing companies do typically put items on sale first. They'll even sell "at a loss"
Lots of precedent for that: In the EU WEEE has incentivized companies to crush working electronics rather than selling them, because it is way less bureaucracy to hand something to a certified recycler than it is to legally sell the stuff. And once something has been entered into the WEEE system as waste it's pretty much impossible to legally recover it: the recyclers are literally not allowed to simply pick working equipment out of the pile and sell it. Technically WEEE is supposed to enable reuse, but it's way easier and less bureaucracy to just crush stuff. The necessary per-item paperwork, testing and certification (it has to actually work, broken/non-working equipment cannot be removed from the WEEE system, because it is waste, legally) and logistics required for reuse exceed the residual value anyway.
That's why used enterprise/industrial electronics are way less common on EU eBay compared to other places, despite the industrial base being so large (or used to being so large). You can actually see when WEEE came into force because very little used T&M equipment entered circulation in the EU after the early 2000s.
Another factor is lease agreements, where companies don't buy equipment and the lessor "recycles" (i.e. crushes) the equipment to avoid creating a used/second hand market as an additional benefit.
The liquidators will squeeze every penny out. All that ram will hit someone who can take the chips out and repackage for consumers.
Huh. This is a crime against humanity. The planet is burning.
Eh. Destroying the racks is a waste of resources. Most of the metal components will be recycled. The boards scrapped for gold. The net positive is that many the data centers would shut down leading to a better balance overall.
An interesting downstream effect of hypothetical highly-effective robotic AI labour would bring is the ability to strip, sort and test e-waste down to the component level.