What up, y'all? Welcome back to Blockspace Live, presented by CleanSpark. It is Friday. You can feel the pull of the weekend. But first, we've got some news to chew through.
Today, we're gonna start off with our hash rate index update. And following that for our lead story, NVIDIA, Meta, Microsoft, a number of other companies sign an open letter in defense of open weight models.
The debate about whether or not the frontier models are going to get regulatorily protected might be over, Charlie. Following that, we've got a note on Galaxy's senior secured note.
The pricing for that just came out today, so we're gonna be going through the pacific- specifics after that. A data center's pulling out of Texas after it could not comply with new directives from its governor.
Texas, one of the best places for data centers, but the rules are changing, and if you do not change with them, you will not build in the state.
And to close today, we are going to be looking at some metrics from DI Metrics, data center infrastructure metrics.
Rental prices, stock prices, ugh, that one looks kinda ugly, moratoriums, and more at the end of the show. That's right.
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This show is brought to you by CleanSpark, NASDAQ listed ticker CLSK. More on CleanSpark later on in the show. So Colin, Jensen Huang, the CEO of NVIDIA, just tweeted for the first time.
And I've-- color me surprised that on the, like, AI platform that you're supposed to talk about AI on, Jensen hadn't ever tweeted.
But he did, and his first tweet was a big joint letter really bucking a lot of the narrative over the past two or three months. We'll go to that after we go to hash rate index update.
So I'll let you take this from here. Yeah, not too much going on. It seems like we're in this perpetual limbo. I guess that's kind of redundant. But we're in a limbo.
The metrics honestly have not changed very much since the last time we've done this update, and that's kind of been the case for the last, I mean, this whole year, honestly, Charlie.
Uh, besides some low points with regards to hash price. But hash price is sitting at $31.84 per petahash per day. This is your hash rate index update brought to you by Luxur's hash rate index.
Network hash rate sitting at 925. Recovered a little bit from our last update. Not too much, though. Uh, this is following a negative 95% difficulty adjustment.
The estimated difficulty adjustment with 91% of the current epoch cleared is just about half a percentage point, about point s- negative, uh, 0.6%. And there's not really much else going on, Charlie.
We're in the middle of four CP season in Texas, so we would expect hash rate to stagnate throughout the rest of the summer. In fact, we've basically gotten that besides a few relief rallies.
It's just a descending wedge on hash rate, man. If you look at, uh, if, if you look at where we are on the seven-day average for the last year, it, it's just going straight down, my man.
And we've said multiple times on this stream, it wouldn't shock either of us if hash rate, in fact, contracts this year, which is an incredibly rare thing.
I wanna say that there may only be one precedent for this in Bitcoin mining's history. I could be wrong. There may be no precedent. Um, but I wanna hedge myself there by saying this might have happened once before.
But I think that maybe we're, we're at a zeta hash at year-end, but it's really not looking good. Yeah. I'll actually point out that, like, uh, we don't look at this, the Luxur's live hash rate forward curve.
Pretty interesting here. Uh, hash rate is t- trading in contango for next month in August. So if you know what that means, you could maybe act on that. Probably related to curtailment across the United States. Yeah.
Contango for the coming month, but backwardation for the rest of the year accordingly. Which, uh, what, what is that saying? Or what i- what is it saying for the, um, six-month out contract?
What are we at all the way at the, uh- Six month out, that brings us to Septem- December. So hash rate at 29.5 per petahash, so down 7% from today. Which frankly- So pricing in very little hash rate growth. Yeah. Right.
Very little hash rate growth and very little price recovery. So [inhales] we- We'll have to keep an eye on it. Yeah. It's, uh, slim pickings out there- Yeah... for the faithful, the remnant- The remnant...
the, those of us who still have ASICs online. Yeah. The few of you. But, uh, let's talk about AI.
Jensen, as I said, uh, tweeted, and I'll just read it verbatim, quote, "For my first post, I'm sharing a letter NVIDIA signed on why open models matter." This is a joint letter featuring
Andreessen Horowitz, Box, Meta, Perplexity, Palantir, Mozilla, Mistral AI, that, the red-headed stepchild of, uh, European, uh Uh, AI, Dell, Microsoft, Hugging Face, Y Combinator, and others.
And what did the models, what did the, the letter say, Colin? 'Cause I'm gonna tag you in here. There were really four pillars to it, i- i- as far as I can really, uh, a- as far as I can tell from reading the letter.
And they're kind of the, the, they're the, you know, the poi- talking points that you would expect to hear. So the, the first pillar was, you know, we need to have these open weight models for the benefits of business.
To quote, and this is in the third paragraph, "Match the right model to the right job at the right cost.
Reserving frontier capability for genuine frontier problems and running efficient, specialized model everywhere else.
That discipline is what will make AI economically sustainable at its use, as its use scales into the billions of everyday tasks.
America wins the AI era by diffusing it into the workflows of factories, hospitals, farms, classrooms, and Main Street businesses." Think that's simple enough, and it makes a lot of sense.
Like, do you need to be running Fable to ask how to cook your lamb shank? Probably not. How good do you want, how good of a lamb shank you want, Colin, though?
Yeah, I mean, hey man, I'm just saying, Sonnet, pretty good job even on low effort.
So I, that to me makes a lot of sense, basically saying, look, there are going to be different tasks that are better suited for different models, and for some of the open weight ones where the task isn't necessarily super intensive,
you might just wanna run one of those instead of burning a bunch of tokens on Anthropic or on, or on Claude or on ChatGPT. The second pillar of the argument is competition.
This is something that we brought up on the stream recently when we were covering Kimi K3. I mean, I, I was talking about the government's,
you know, tentative and perhaps tepid response to Kimi K3, where Axios had this article saying that maybe the government's going to take actions against it. And one of my big pushbacks was actually, no.
You don't want that, because if you just ensconce the frontier models into a regulatory mode,
are we going to get any meaningful improvements if it's just the two top dogs basically vying for the top spot rather than having this external pressure from other models? And so on the competition front,
the open letter says, "Open weights create rivalry and spur innovation.
They strengthen competition, and competition, uh, open weights also strengthen competition, and competition is what keeps the gains of AI broadly shared rather than concentrated in a few hands."
Sounds kinda communist, Charlie. No, just kidding. Or sounds pro-freedom. Yeah. I mean, it's ultimately open market. That's why I joked. Yeah. Because it's, it is saying, look,
if you really want these frontier models to do amazing things and drive innovation, maybe some pressure from an, from a foreign government, or rather, excuse me, foreign actors, is, is what's necessary.
And then the final, uh, the final two benefits are business, uh, are, um, customer control, the idea that, you know, you want to make sure that or- that organizations, quote, "Invest in AI.
They want to know that they will not become locked into a single provider or lose the knowledge and capabilities they build over time.
Open weight models help provide that assurance by allowing organizations to control their own data, evaluate and adapt models to their own needs, and deploy them wherever their business requirements demand."
And this is something that you pointed out on the stream recently, Charlie, the idea of IP control. And it's one that Alex Karp of Palantir had this tirade on, uh, was it CNBC or was it Bloomberg?
It was CNBC, and this is why I brought, this is why I played it and brought it up at the time, because Palantir's a big, often a, you know, a boogeyman, uh, especially among our generation as the rebellion against flock cameras and the like, and Palantir and surveillance and state affiliated corporations building intelligence and weapons.
People don't like that.
But Alex went on CNBC on a rant, as he's want to do, and he basically made this case, which is we can't be privatizing and gating and creating not just a walled garden, but like a walled guarded, enforced, surveilled garden just for these, these frontier models.
Because otherwise, do you, do you want Dario and Sam Altman to, one of, one of them and their teams, to win the, the race and become basically the arbiters of what is truth and reality? And so the- Yeah... and, yeah.
Oh, sorry, just to cut in here.
And one of his like core arguments was they have businesses coming to Palantir that are saying, and I believe Palantir r- runs, um, something like an aggregator where you can choose different models.
Like they have a like institutional offering where you can plug into them and then you can choose between different models. It's like Open Router for corporations basically. Right. Right. Thank you.
I was struggling to remember Open Router.
So h- he's making this argument that they have customers coming to them all the time and saying, "Look, we are going to be using this thing to plug into proprietary data and analyzing proprietary data and workflows within our organization that we don't want competitors to have access to."
And what most people don't realize, it's similar to Facebook, you know, when people ask, "Well, you know, who's, who's the product?" Or, "What's the product?" Well, you're the product. Your data is the product.
You are the product.
Ultimately, that became the most valuable aspect of Facebook and Meta's universe is the fact that they have all of this proprietary data and individualized data on all of its users that they could then sell, package into marketing things, et cetera.
Same th- same thing here. If you're a business and you're using AI to flesh out a product or you're sharing proprietary information or intellectual property, the model is going to train on that later on.
It sucks up everything that you're putting into it, and it's used, using that to iterate and to improve itself.
So the idea here being if you have an open weight model that you can run in a closed environment on your own infrastructure, you don't have any risk of leakage in terms of IP and proprietary data.
Now, for a consumer, for an average person, that probably doesn't matter as much, so you're not thinking about that.
You know, you're not worried that, you know, whatever competitive edge you have for getting your, [chuckles] you know, for canning your tomatoes or pickling your cucumbers or your competitive edge for home renovation.
Like, that's ultimately not gonna really matter to you unless you're, you know, just like crazy neurodivergent or something. But for businesses, any of that getting out could be an existential threat to your business.
And I think this is actually probably in terms of next to competition, in terms of the clear benefits of open weight models, this to me for the business sector is probably the key selling point in keeping them open.
And the last point that I won't spend too much time on is security. [lip smack] Um, the letter says here, quote, "To be sure, open weight, open weights carry real and distinct risks.
Once released, the weights are beyond the original developer's control, and modified versions are difficult to trace or reverse. But the right response to this risk is not to prohibit open weights.
In a world where cybersecurity attackers use advanced AI, defenders need access to models with comparable capabilities so they can detect, simulate, and respond to emerging threats.
Open models broaden defense capabilities, increase transparency, and allow vulnerabilities to be discovered and remediated across many teams." Yeah, I have a number of thoughts. Let's see if I can elucidate them.
Um, one, it is notable among the signatories of this letter promoting open weights, Meta, Perplexity, Palantir. Let's see, Microsoft.
All of these companies are developing their own proprietary models they want to charge for. And, um, so this is a little bit...
This, this challenges the idea, uh, you might call it the fat, the fat model thesis, similar to your previous [chuckles] fat protocol or fat app thesis, where does the value accrue to the model itself?
Because in an open weight system, the value d- may not really accrue as much to the, to the model itself. Um, it certainly does need GPUs to run.
So this is, you know, obviously Jensen in pr- uh, pro this 'cause you won't see him writing that we need...
You don't see him signing a letter that we need diverse GPU manufacturers, but he will be one where he's like, "I want competition. All of you can compete against each other for my computers." To use my GPU.
[chuckles] To use my computers. But, but at the same time, uh, it, you know, Meta signing this, kind of interesting.
Zuckerberg's been a little bit more open source than people give him credit for, especially as it comes to like AR, VR, if you know the whole Oculus thing, and the developer platforms.
Don't pay attention to his privacy violations and, you know, the WhatsApp and Facebook, uh, you know, w- pretend, uh, you know, separation between the two companies.
But, but like you, you see in, in Microsoft as well, like, um, I think it's very notable that these companies are signing this, and it has...
It like, because there's the, it means there's disagreement among the industry of people who are building the models.
Um, maybe it's, uh, them feeling like they're left behind, that OpenAI and Anthropic have c- have gone, have accelerated too far ahead and they won't be able to catch up.
Maybe they're worried about those companies building some recursive, uh, self-improvement or achieving that at some point, and this is them trying to hamstring it. I don't think it's that.
I think it's, uh, that, that, uh, ev- that people are realizing that, uh, if any single person wins totally, it could and is, and is, and, and is protected by an entrenched, uh, bureaucracy and government, this could be very, very bad for everyone else.
So, um, this also does challenge the AI CapEx cycle thesis because if Anthropic and OpenAI are not able to protect their models, are they worth trillions and trillions of dollars?
That's kind of the story they've been telling everybody. Um, what does this mean? Uh, this could have big implications. However, I'll say this.
You know, there is the alternative scenario where Anthropic and OpenAI down the road are not worth nearly as much. They're not these $30 to $50 trillion companies that they, they hope to be.
Someone else is gonna buy that compute. The, the re- one thing is for certain, which is we need the compute.
So whether or not the CapEx comes at year 10, you know, in a 20-year lease deal with Anthropic as a, as a client on their end, maybe it's not Anthropic, maybe it's Meta or Microsoft buying that compute.
So I don't think this jep- jeopardizes the CapEx cycle thesis at a structural- Oh no, this is incredibly bullish for it, right? Very bullish, yeah.
And, and- So I was trying to build a, I was trying to build a point to saying like you could- Yeah... try to argue that, but I think it's just let there be compute, let there be competition. And, uh, yeah.
Yeah, I mean, and per, we've talked about this on the stream, but like per Jevons paradox, if Kimi K3 and these open weight models actually do lower the cost of compute, then that's just good for everyone.
That's good for consumers, it's good for the neo clouds in the sense that now they can have more work put in for less, for less input.
And going back to the signatories on this letter, you'll notice obviously like you said, n- none of the model designers are going to sign this.
But of course, the folks building the data centers and supplying the data centers with the heartbeat That keeps them running is gonna do that.
It's like imagine if overnight there was a new mining company that had machines that were 30% more efficient than Caterpillars or something. Well, of course, the company selling the raw materials,
Nvidia, and the company that owns and runs the mines, Meta, et cetera, are gonna be all for that, and they're gonna want the competition.
So there's nothing really that surprising in this in the sense that, of course, these companies are gonna come out in favor of it. There was--
The, the sentiment I got from in the replies to Jensen's tweet was, "Well, that kinda settles the issue."
And I think that's the thing to watch out for in w- with regards to whether or not the government actually does take regulatory action and tries to ban these models.
Jensen and all these other companies coming out in favor of them really does put some political weight behind the issue in favor of keeping them unmolested, right? So... Yeah. Um, we had this tweet earlier.
I haven't checked up with the market. It's been an hour and a half since this tweet, but, um, since then, Nevius, w- uh, White Fiber, Keel, CoreWeave, Applied Digital, and Iron all down.
Now, is that just because like of the market correction, or is this because those are the companies might-- who may have deals with, uh, the private models on the other end? Who knows?
But interesting to like check to see that, oh, uh, the-- a single letter, again, sound- signed by the entire industry with the exception of OpenAI and Anthropic, but a single tweet from Jensen does do this.
I think we're gonna go to the next data center company top of mind, Galaxy Digital. I'll toss this to you, Colin, after a word from our sponsor, Luxor.
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So we covered this, this earlier this week, but we now finally have pricing for the note, and this is Galaxy Digital pricing. It's 3.507 billion in secured notes for its Texas AI data center.
A lot to chew through with regards to the specifics of this note. [lip smack] I'll go through the key details really quickly before I get into some more of the specifics. So details of the note are as follows.
Again, 3.5 billion. Coupon is 9.875% fixed. Pretty high compared to some of the other Bitcoin miners that we've been covering. This is largely because CoreWeave is the tenant for this Helios site.
The note is for the second phase build of Helios. CoreWeave is not investment grade, so unlike other miners that we've seen like Cipher and TeraWulf that have investment grade backing,
Galaxy unable to lock that lower interest rate. More on that later. Maturity is August 1st, 2031. Seniority, senior secured. Project-level financing, this will not float up to the actual capital stack of Galaxy.
It is secured by the data center itself. Interest is semi-annual, February 1st and August 1st. First payment, February 1st, 2027. This is the interesting part. Amortization is only 4% per annum of the original principal.
Semi-annual, subject to adjustment. First payment at least 10 months after project completion. So interest will kick in before the principal begins to be paid down.
It's priced as of July 23rd, 2026, expected to close July 28th.
[lip smack] And the amortization piece is the thing that I really wanted to flag here because what's interesting about this is by the time the note matures, Charlie, based on the math that I ran with Claude, only 90% of this would be paid off.
Now, the reason for this, as far as I can divine, is that ultimately Galaxy Digital just wants to get some financing through the door so they can start building this out. The rate's pretty high.
It looks like they are banking on hopefully being able to refi at a lower rate in the future.
Maybe CoreWeave's credit profile improves, maybe their own credit profile improves, and they'll be able to access better terms.
But they're going to have to refinance this unless they just pay out-- pay down the entire thing when it matures in 2031. [lip smack] So I, I thought that was pretty notable. It's not necessarily rare.
Other notes that we've covered actually have similar bullets, as they call them, with regards to the fact that it'll have to be refinanced at a later date.
But paying down only 10% is actually on the more aggressive end with regards to how little of the actual note will be paid down by the time that this is, is, uh, has, has matured. And that means 1.5 billion in interest
against a note that retires roughly 420 million of principal o- o- over the five years that this takes place. That's, that's wild. I had not caught that as, as I was skimming through this story.
I mean, y- your point though, Colin, about like maybe anticipating CoreWeave being upgraded to investment grade at some point, like that is kind of the assumption.
Uh, it's the qu- it's the-- It's not said out loud that I can tell, but a lot of these deals are signed with pe- with tenants who like aren't-- who have-- You know, a lot of folks anticipate them going public and then the in- in- investment grades being assigned Uh, to them at a higher rating.
And I mean, look at, like CoreWeave is the, is in, is in the platinum tier, the only one in the platinum tier of the SemiAnalysis cloud provider rankings as of this past spring.
So, um, yeah, hard for me to have much insight to the feasibility of that. But a lot of people are banking on it, and if you, if you wanted to assume that, then this could be the move to admit- to make.
Yeah, and a few more notes on this.
I think part of the reason why not just CoreWeave's investment profile, but part of the reason why the terms weren't the best is because this is technically a greenfield for phase two, so there's just more risk here.
With, with some of the notes we've seen underwritten for current data centers for these Bitcoin miners turned AI plays, they've already had the construction taken part of the way, and then they finance the rest of it.
And so for this one, it appears to me that the, uh, the folks underwriting this loan are saying there's clearly more risk here, and we wanna see cash flows before we can get you down to a better rate.
And that's the other part of the refinancing story here. Once this facility is up and running, they already have phase one running at Helios. CoreWeave's operating in it.
Once phase two is up and running and they have revenue coming through, it'll be easier to get this rate down.
So I think on the face, when you look at how much interest they're gonna be paying and, uh, how little principal, and the fact that the note's still going to have 90% roughly left over by the time that it matures, it seems bad on the face.
But ultimately, this seems to be a clear indication that Galaxy is going to hold out for better financing once this thing's actually online.
So this is almost like a stopgap where you can get enough in the door to get it built, and then to pay down the rest of that note, you're gonna refinance it at a later date. So something to keep an eye on.
Uh, we'll definitely have an update sometime next week once this note closes with more information. All right. Let's go, let's stay in Texas for our next segment on Governor Greg Abbott.
Uh, before we do that, a word from our sponsor, CleanSpark. [gentle music] We are CleanSpark, America's Bitcoin miner, a publicly traded company with the largest operating hash rate,
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Learn more about the intersection of energy and Bitcoin at cleanspark.com. All right, so here's a doozy. In Texas, the most data center-friendly state, uh,
the governor of Texas just posted a memo celebrating the ending of a data center project in East Texas by one Diode Ventures.
Greg Abbott posted this on Facebook yesterday. "Proposed East Texas data center ends project admitting they fell short of the standards I have set.
Data centers must pay their own way, bring their own power, reuse their own water, reduce electricity costs for Texans, and protect Texas neighborhoods. Texans come first." Greg Abbott is up for re-election.
Is this, uh, a, uh, a pragmatic, uh, decision, or is this him, uh, vying for social, uh, for, for positive opinion? Um, let's dig into it. So,
uh, Diode Ventures notified Henderson County officials Wednesday that its proposed data center near Cedar Creek Lake did not meet Governor Abbott's executive directives and withdrew the proposal.
Diode is a Kansas-based developer, and it was going to be a 12-year project to build, consume five million gallons of lake water per day by year five. Um, and here's the kicker.
Would've sat in the middle of a developed subdivision and pulled from the Cedar Creek Lake, which supplies water to the Fort Worth area, which is already kinda low on water. Again, a lot of this centers around water.
There was huge opposition to this recently, um, 2,500 signatures, uh, demanding cancellation
and, uh, entirely volunteer-led coalition that doesn't seem-- we don't see any, like, indication of, like, massive, say, Chinese propaganda getting their fingers in this.
This could've been just kind of like a not very well thought out data center because Greg Abbott's, um, specific, uh, req- uh, requirements, uh, w- are that, uh,
that the, uh, that were made, uh, clear in June, on June 10th, in a June 10th directive to the Public Utilities Commission and ERCOT, uh,
were expectations that data centers ensure data centers interconnections will result in reduced residential electrical bills, require data centers to pay for their electrical infrastructure costs, and that no residential ratepayer is burdened by the costs, ensure that data centers add to Texas's electrical capacity, not just its demand, required that they be water efficient, like closed-looped, and not drain local water resources, and to reduce impact on local communities, noise setbacks, et cetera.
So,
uh, my take on just looking at the, the high level items of this deal here is that this data center might have been a little presumptuous, a little bit over their skis on where it was, how it was set up, 'cause, like 12 years to build this out, that's a lot.
Yeah, that's crazy. I think this may have been... I, you know, I don't wanna, I don't wanna diminish them too much, but no, nothing else.
Like, these, this te- this sounds kind of like a wacky deal that was put together, 'cause it doesn't align with the rest of what we're seeing from the- Yeah, what is this-... serious hyperscalers in the industry...
what are you, what are you doing? Are you, are you building the freaking steel refining plant to build the, the, the beams and the infrastructure? Yeah. I don't understand. Are you- I don't know.
It's just, it's just indicative of American industrial decline. I'm just kidding. I mean, it's indicative of something.
Maybe they're trying to crack alchemy so they can, you know, turn rocks into steel and, and silver for this build or something. 'Cause it, 12 years makes no sense.
Also, the water draw- Yeah, that's, that's three presidents from now [laughs] if you- Yeah. By that time, who knows? It could be a communist.
It'll, it'll be a, it'll, it'll be a J- [laughs] I mean, the zoomers can be presidents by then.
So- But, you know, the other thing too, Charlie, you probably, I think you touched on it, but five million gallons of water per day by the time that it's completed, that's crazy.
I mean, so they're using evaporative cooling. And that, that seems wrong to me, though. Like, that, that doesn't converge on any of the industry best standards. I don't know, is this a traditional data center?
Is this an actual HPC data center? The whole thing, obviously, optically looks really bad and, you know, maybe to your original point, is this pragmatic or a political move? Porque no los dos? Yeah.
So- Ul- ultimately, you know, everyone needs a sacrificial lamb every now and then to show that you're actually doing something to quell the masses' fears.
You know, the hoi polloi is clamoring about data centers sucking up all the water and driving up their energy costs. Yeah, well maybe- I would say-... maybe this one was going to do that. You know what's funny is this...
I, right, you know, it, it, it, it would be, um, five million gallons per day is, is quite a lot, especially for a regionally parched area in Texas, and you know,
uh, that, what I think's kind of hilarious about this is it's kind of a slap in the face of either political direction.
If you're one of the like Texas is pro-business and is always building things, then this seems to negate that, although I think that the objections are very understandable, and they're not meeting the new directives that PUC and ERCOT are putting out in order to protect ratepayers.
So clearly Abbott is showing that what he said about amending the rules is sticky in that they have, these new directives have teeth, right?
And it is also a slap in direction on the other way, where a lot of people on the left like to point to Texas as being this like hell state of no regulations, but clearly that's not the case.
In fact, I think with regards to the data center boom, you'd be really hard-pressed to find a state that's doing things better than Texas, not just with regards to furnishing new capacity, but being progressive about setting up safeguards and new regulations to make sure that the AI boom does not negatively impact citizens of the state.
Yeah, um, a couple more angles. Um, so on Dimetrics, uh, there is a, um, a political risk, uh, assignment to different counties across the United States.
Political rest, political risk for, like, data center development, moratoriums, like, et cetera. Are they business-friendly in general?
Um, this county, Henderson County, scored a zero currently as of the last, uh, updated run, and they just, uh, they j- basically just through political, uh, organization got this thing killed.
So, uh, what is... Yeah, so what are you baking in the risk when we... What, like, what is the risk you're baking in, uh, when, uh, to- towards execution?
'Cause, like, again, the whole narrative this past spring and this summer has been, uh, you can get your transformers. You can, you can actually get your megawatts. You just have to wait. Are you gonna get your permits?
And that's the big question. I think this is also al- um, relevant kind of on the back of the, uh, of the ERCOT Batch Zero and the new ERCOT changes. So, um, uh,
in that June 10th letter that Governor Abbott wrote to, uh, public utility chair, uh, count- public utility council chairman Gleason, um, and ERCOT's CEO, uh, ordered the PUC to make data centers fully fund the electrical service serving them so costs don't hit residential ratepayers, and it required the joint PUC-ERCOT memo by July 17th, which we talked about here,
and it also includes a hard deadline for the PUC to initiate action reducing residential transmission costs by July 31st, so next week.
And so, uh, the PUC, uh, with the new batch interconnection process, uh, approved on June 18th, um, which has, by the way, some 438 gigawatts or 90 [laughs] almost like 90% of all data centers, uh, the Batch Zero became effective July 11th, and the utility submission package is due to ERCOT by the 24th, so today.
Um, the Batch Zero applicants find out next month if they're in, and the final transmission plan comes in fall of 2027. Also, that's when Batch One opens.
If you're not familiar, kind of these things are approved in batches, so this is why we all wait with bated breath to find out who is in the batch, who gets their stuff approved.
So, um, notably, Colin, Batch Zero comes around earnings week. So we will be see- we could be seeing some interesting fireworks as Batch Zero- Some make or break moments...
the, um, Batch Zero drops, and does it align with these quarterly earnings estimates? Does it, does it, does someone get, uh, rugged or, or whatever? So, you know, interesting to keep your eyes on that.
That's all I have for this. Colin, unless you have- Yeah, I'll just piggyback on your point about regional risk.
I think that the moratoriums are one thing, obviously, and if you are trying to build in a state with one of those, and so far New York's the only one that's passed one on the state level, I believe.
Usually most of these are regional, local within the states. You're clearly not gonna get anything done, but what this is showing is
the risk extends out to new regulations, right, and new directives and new permitting for these things, and if you're not staying up to date with that, then you're going to fall behind.
You know, I would read this less as s- Texas is becoming hostile towards business and more Texas is putting the guardrails up that should be there.
Especially, I think the most important part of the PUC's new rules, the idea that data centers are gonna have to front transmission costs, and also grid upgrades and maintenance specifically.
That is huge, and I think that will go a long way towards quelling some of the fears and proving that, you know, you can have your cake and eat it too with this huge CapEx boom as long as you devise the proper regulations.
I'm sure a lot of the companies don't like it, but at the risk of sounding like a socialist or something, what's another few hundred million dollars here, guys, when you're pouring hundreds of billions into this?
Obviously it's going to increase the cost of building these data centers, but I don't really know if there's a better way to go about it. The fact of the matter is the data centers can't really,
they can't really push back against this. They need power.
That's the bottleneck, and so if it's a seller's market for energy, you're gonna have to do what the utility needs you to do in terms of funding that transmission and funding the maintenance if you wanna get in the door.
So... Yeah. I view this as Texas wisening up.
Uh, without diving too much into this specific deal, sounds to me like they made the right decision, so, you know, chalk one up for Charlie being pro the anti data center folks.
[laughs] Um, let it, let it be known that I actually th- you know, my first, my first take is that I kind of, kind of get this one. Think that You've been a double agent this entire time.
I'm a triple agent, Ev- I don't even know my own, I don't know where I am I'm gonna send you a Fidel Castro hat to wear on the stream. Yeah, exactly. [laughs] Um,
hey, look, our, our, our rivers would still be dirty without the EPA. That's all I'm saying. Uh, so before we break up this show because the co-hosts disagree, we're gonna [laughs]
we go to the DiMetrics, uh, section to cap off this episode. We're gonna hear from our sponsor, Ligos.
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All right, Charlie, a little DiMetrics data center infrastructure metrics corner here to end the show.
And I wanted to just pull up some data points that I think illustrate some of the things that we've been talking about today, um, or on the show throughout the week, or rather kind of speak to some of the trends that we're seeing out in the market.
Specifically, people are worried about rental rates, Charlie. With Kimi coming out, with, with Meta saying that they are going to kind of have their own NeoCloud play, do NeoClouds even need to exist anymore?
Well, the fact of the matter is rental rates are not coming down, my guy, and B200 rental rates, if you look at the three-month, are absolutely blowing up.
Let's see, uh, three months ago, they were at about $5.13 per hour. Now they're up to $7.35 per hour, and even the older Nvidia models are also seeing some gains. H200s up on the last three mon- three months from 3 point
8- or $3.81 per hour to $4.35 per hour. H100's up from $2.47 to $2.86. And even A100s, the S9s of the GPU market,
have gone from... Well, actually, I believe, I can't read this. This is not very granular. Yeah, 86 cents to 94 cents per hour. The
appetite for compute has not shown any signs of slowing despite what the market is saying. So I have some other angles on this, Colin.
I'm br- I'm glad you brought GPU rental rates up because these are the contracted rental rates for the GPUs.
Let's contrast this with the contracted offtakes, like the long-term agreements, like the CoreWeave meta, um, the Iron Microsoft deals, um,
using the DiMetrics MP- MCP server, which we can't like show on here 'cause it doesn't produce a dashboard on the site.
I kinda, I use Fable to kinda scope what is, what are the actual values of the offtake agreements and, and how do they differentiate from the re- from the, uh, like, the rental rates?
And what's interesting is, and maybe this is a way- maybe everybody else knew this but me, the, uh, there's actually kind of a, a convergence around basically $2 per GPU hour for, especially for the BT- V200s, um, across the board.
Look at that. And that contra- that's, uh, the V200s at the highest- And that's for specifically for contracted set terms over, like, five years... contracted set terms over time.
So we have, like, the secondary market of rental, renting these, and then we have, like, a long-term contract market, which is interestingly ar- all kind of around, like, the low 200s.
Um, and these are inferred prices based upon Dimetrix, like, uh, inferred, uh, contracted rates, so it, again, these are, like, not fully standardized, so we kinda have to do some, uh, inference [laughs] if you will.
Um, but, uh, if you were to look at the, uh [clears throat] let's just take a look at, um, three OpenAI agreements totaled roughly 22.4 billion all in. Uh, those agreements would imply a price of $2.16 to $2.17
for GPU hour. Um, iron Microsoft, that $9.7 billion deal, 200 megawatts at l- uh, $2.10. Iron Nvidia, which is 3.4 billion air-cooled Blackwells at $1.94.
So, like, it's interesting that, um, all, you know, these rental rates are kind of all in lockstep, despite them being signed with different service providers.
Um, you have, uh, a lot of different parties and different terms, different locations too. There is, like, an actual long-term contracted, uh, revenue model. Uh, I'm curious what drives that.
If you gave me a little more time talking to some finance bros and other folks, we could probably figure that out. But
kinda little interesting tidbit that I, that I was able to pull Yeah, and it makes sense to me with regards to if you think about locking in revenue certainty, you're gonna have lower rates than on-demand cer- uh, on-demand
rental rates for that compute. You know, it reminds me of, in some cases, to use a Bitcoin mining analogy here. If you look at forward rates for Luxur's forwards, if you're locking in six months, you're going to get...
I mean, if you f- if you play it right, you might actually end up getting more than spot hash price, but more often than not, you take a haircut because you're getting guaranteed revenue for the however many one, two, three, four, five, six months of the contracted term.
And to me, it makes sense that you'd see something similar here, where you're smoothing out any sort of volatility.
You have the revenue certainty, and because it's such a large purchase, like anything buying in bulk, it's going to be a little bit less than what you're seeing for spot prices at any given time.
And maybe it tells a different story too for the marketplaces. If you're short compute and you need some, the demand is so large that you're gonna be paying a pretty hefty premium for that on-demand computation,
rather than if you had a contract, you know, drawn out over three, four, five years. That was good context, Charlie.
And just for reference there, the MCP that Charlie's referencing is the Dimetrix MCP, so if you get a Dimetrix subscription, you can use that MCP to pull all of the Dimetrix database data into your models directly.
So if you want to pore through Dimetrix, that's great. There's a lot of data sets to go through, but you can also just pull from all the data that it's showing on the dashboard locally within your LLM model of choice.
Really great feature. It's really leveled up our research for the stream. Yeah. Uh, you can get a link to Dimetrix in this video and stream description. Also, uh, we are part, we are proud to partner with Dimetrix.
And, um, just like Dimetrix and Nvidia and Jensen Huang, uh, a little bit of an open question how to pronounce this, so let us know what you think [laughs] in the chat.
Yeah, comment below with whether or not you think D-I-metrix or die-metrix makes the most sense. Exactly.
Perhaps die-metrix, and we could, we could pivot it on a, it's, it's in reference to the chip die, uh, for silicon or whatever. I don't know.
Uh, Colin, I think that's all the insights I have that I can bring to the table, unless you've got some other- I just wanted to pull up one thing here for the moratorium map. The moratorium map has this great time lapse.
When the data, the data collection starts in January 2023, there were three moratoriums across the entirety of the US. Play that tape through to today, Charlie. We have 346,
and the vast majority of those came this year. So we're, if we go into 2025, you get a few popping up, but as we leave the year, we're still under 100. Then they just explode this year.
We added, like, 200-plus so far this year as data center pushback and the CapEx cycle accelerate. So I thought that was kind of interesting. I, I was gonna maybe pull up... I'll just do this just to,
just to show how many, uh, different features there are here. I wanna just show really quickly some of the changes in the, uh, PowerShell landscape and the Neocloud landscape with regards to pricing.
'Cause the market has taken a hit. It's bounced a little bit, but if we look at the monthly here for Neoclouds, they're down 17.2%.
We have a little bit of a relief rally this week, but as you mentioned, Charlie, earlier in the stream, they're starting to dip down again Uh, they're, they're starting to taper.
Uh, they have been as we've been recording. And the powered shells, quite frankly, are not doing that much better. If we look at the monthly here, they're down roughly 14%.
And last I checked, the hyperscalers in the index on DI metrics were about, I think s- 9% down on the month. So are the bears finally right? Stay tuned. We'll know soon.
I do think that earnings season will be very telling. 'Cause I mean, Google just came out with 82%, what was it? 82% revenue growth for their cloud business in one quarter. Yeah. It was something insane. It was huge.
But, and yet- And-... they're still, and yet they're still, uh, not a... [laughs] And yet they're, uh, what was it? They're, uh, their cash, their cash flow or, has, uh, gone negative.
[laughs] Yeah, for the first time in the company's history. So their cashflow went negative, they had an 82% increase to cloud revenue, and their stock is down 9% in the last five days.
Well, on top of, I mean, on top of that, like I don't know if you've been watching, but their, their latest model, Gemini 3.5 Flash, is very underwhelming.
All the benchmarks put it like very low, uh, a m- it's the lowest of the top tier models. And, uh, it's wild 'cause they have, they poured so much into it. And I don't really see them hiring any of the- And-...
the superstars of the, of the, of the AI world. Uh, it makes me wonder, like is Google, is this, is this the, the beginning of the end of, of Google? Or is this like the, the decline for them?
The, the company which has defined my entire life in, in technology is, uh- I wonder if you're starting to see that reflecting in the stock price, or at least the fear of that, right? Yeah.
And that cloud revenue, just a quick correction, it's 82% quarter over quarter would be nuts. [laughs] That was year over year. Still, super strong growth there.
Their AI model, Gemini, is not really cutting it compared to the two premier frontier models.
And they're burning through cash, and you're starting to see signals from the street that people don't really like where this story is heading, and maybe there's some fatigue with regards to how much buyer enthusiasm there is.
All that being said though, I think this earnings season will be crucial for gauging like how much longer do we have in this crazy euphoric market. 'Cause even Google can beat estimates for their cloud business,
and operating income can triple, but they're still down almost 10% over the last week. Yeah. So wild times. IBM down 20% in a day. Google trending down.
Um, the, it's, it's like the incumbents, man, which, hey, this is great. You know, revo- industrial revolution, uh, upended a lot of things if, uh... So we could, maybe we'll see that. Maybe we'll see that.
You just gotta, I, it's, you know, Polymarkets are open for who your next, your next tech overlord's going to be. Is it gonna be Dario? Is it gonna be Mario? Is it gonna be Sam? Who knows?
Um, on that note, thank you for listening to Block Space Live. Comes to your feed every single weekday at 1:00 PM Eastern.
We are Compute's daily show featuring quick hits on AI, data centers, markets, and emerging technology. This show is brought to you by CleanSpark, NASDAQ listed ticker CLSK. I'm Charlie. I'm Colin.
And I will see you on Monday. [upbeat outro music]