- The author argues that AI inference is not as costly as commonly claimed, using H100 GPU pricing and DeepSeek R1 architecture as a baseline.
- Input processing is extremely cheap (~$0.003 per million tokens) compared to output generation (~$3 per million tokens) due to sequential decode phase.
- This cost asymmetry makes heavy-input, low-output use cases (e.g., coding assistants) highly profitable, with consumer plans showing 5-6x markup and developer plans up to 20x.
- API business enjoys gross margins of 80-95% based on current pricing vs. actual compute costs.
- The author warns against exaggerating costs to discourage competition, drawing parallels to cloud computing history.