Can Collateralized Chip Obligations be far behind?
From the San Francisco Business Times, October 23:
San Francisco-based Crusoe Energy Systems raised $200 million in debt to buy Nvidia GPUs
The massive explosion in AI or large language models has driven up demand for computing power and graphics processing units (GPUs).
This has led to some startups taking on massive amounts of debt to invest in attaining these highly valuable GPUs in deals often backed by GPUs they already own.
The latest example is Crusoe Energy Systems LLC, a San Francisco startup working on eco-friendly ways to power cloud computing centers. The company raised $200 million in debt for the purchase of GPUs from Upper90, a VC firm specializing in asset-backed debt deals.
Crusoe also announced that it had significantly increased its computing capacity thanks to previous purchases of NVIDIA H100 and A100 Tensor Core GPUs. The company had raised $350 million in a series C equity round last year led by G2 Venture Partners.
So the startup used its existing hoard of GPUs as collateral to get debt to purchase even more GPUs. Such is the state of the computer economy that despite historically high interest rates taking on this amount of debt is seen as prudent in order to purchase this much-sought-after hardware.
"We are very familiar as a business with doing asset-backed financing," said Chase Lochmiller, CEO and co-founder of Crusoe. "When you look at things like our power generation infrastructure, a lot of that was financed through asset-backed loans where we have a two megawatt reciprocating engine that serves as collateral for a debt facility that we have with Generate Capital, which is headquartered in San Francisco as well."....
....MUCH MORE
We like the San Francisco Business Times.
Except when they make me think I am becoming an old woman, living on memories and flashbacks:
June 11, 2019Securitise Everything: Debits, Credits, Whatev
Yesterday FT Alphaville had three posts:
What a debut securitisation tells us about fintechThat grabbed my eye but rather than sticking to the topics at hand my mind wandered to Carl Icahn's time at Trans World Airlines.
Is Lufthansa an e-money issuer?
Can air miles points be securitised?
Old Carl had bought the storied carrier with unsecured junk bonds and famously proceeded to mortgage everything he could including one "senior secured" issue backed by collateral that included spare light bulbs for the planes. The TWA light bulb bonds.
TWA went broke, I don't know what became of the light bulbs, but combined with reminiscences of the copper trading glory days of 15 years ago I thought, "Uh oh":
That's Vasili Maksimov's "Everything is in the past" (1889), which the Russian State Tretyakov Gallery describes as:
.... "Everything is in the past" , where the artist shows us one of the slowly disappearing "nests of the gentry", tackling the themes of a elegaic country estate life, senility and irreversibility of time.....Yikes, I am not ready for samovars and knitting needles. "Hello fellow kids, what is new with blockchain?"
Although, come to think of it, maybe some tea would be nice.
