Want to Short the AI Boom? She Wants to Give You a Way to Bet on ‘Compute’ Prices
Carmen Li and CME Group are launching financial products to let investors bet on the price of computing power.
Reported by The Wall Street Journal Tech · context written by Hushread
In brief
- Carmen Li, founder of Silicon Data, is partnering with CME Group to launch compute derivatives.
- These financial products allow investors to bet on or hedge against changes in the price of computing power.
- The move aims to create a market for 'compute' similar to those for oil or gold.
- This comes as demand for computing power rises rapidly due to the artificial intelligence boom.
- The new derivatives will give investors and tech companies a way to manage risks tied to compute costs.
What happened
Carmen Li, founder of Silicon Data, is working with CME Group to launch new financial products called compute derivatives. These derivatives will let investors and companies bet on or protect themselves against changes in the price of computing power.
Why it matters
The price of computing power has become a major concern for technology companies, especially as artificial intelligence applications require more resources. By creating a market for compute derivatives, investors and businesses can manage risks and potentially stabilize costs in a rapidly changing industry.
How we got here
Demand for computing power has surged with the growth of artificial intelligence and data-heavy applications. Until now, there has not been a standardized way to hedge against fluctuations in compute prices, unlike established markets for commodities such as oil or gold.
What happens next
If the compute derivatives market gains traction, it could become a new tool for tech companies and investors to manage exposure to computing costs. Watch for how widely these products are adopted and whether they influence pricing in the broader tech industry.