Why Smarter AI Models Could Drive Up Compute Prices 10x
Source
dwarkesh.com
Author
Dwarkesh Patel
Date
Why it matters
If better models make compute more expensive rather than cheaper, the cheap-tokenThe chunk of text a model reads and writes in — roughly three-quarters of a word — and the unit AI usage is billed in.Full definition → assumption behind most AI agentAn AI system that doesn't just answer once but works toward a goal in a loop — taking actions, reading the results, and deciding what to do next.Full definition → designs breaks. The argument is worth testing against your own inferenceRunning a trained model to get answers — the phase where AI is actually used, as opposed to trained.Full definition → budget and retry-heavy loops.
Terms in this piece · Glossary
inference — Running a trained model to get answers — the phase where AI is actually used, as opposed to trained.
token — The chunk of text a model reads and writes in — roughly three-quarters of a word — and the unit AI usage is billed in.
AI agent — An AI system that doesn't just answer once but works toward a goal in a loop — taking actions, reading the results, and deciding what to do next.
