Amazon is moving deeper into the AI arms race with the release of Trainium 3, a chip designed to compete with Nvidia’s dominant GPU hardware.
The new chips, available through Amazon Web Services (AWS), promise four times the drive speed of the previous version, while maintaining the same power footprint. The move will put the tech giant in competition with Google and Nvidia as the rush for infrastructure intensifies.
Each cluster of Amazon’s new “UltraServers” can run up to 144 Trainium 3 chips, positioning them to handle large-scale language model training and other computationally heavy tasks. The launch is part of Amazon’s broader efforts to expand its AI infrastructure and reduce its reliance on others.
Amazon’s efforts, coupled with Google’s dominance in the race for AI models, where it now has an 87% chance of getting the best by the end of the year, have reportedly seen OpenAI’s Sam Altman declare a ‘code red’.
AI and crypto
However, building more AI servers creates a problem that few tech giants can solve on their own: finding enough power and space. This is where crypto miners, who already have large operational data centers, step in, using some of their hardware to participate in and profit from the AI arms race.
Amid the arms race and after the 2024 Bitcoin halving, which cut block rewards in half, several large mining companies have begun to shift their energy-intensive operations toward AI-ready facilities. Companies like Core Scientific, CleanSpark, and Bitfarms are now seen less as Bitcoin bets and more as utility providers for hyperscalers.
Bitcoin mining company turned neocloud IREN (IREN) soared last month after signing a $9.7 billion AI cloud deal with Microsoft (MSFT). Similarly, TeraWulf (WULF) signed a $9.5 billion AI infrastructure joint venture with Google-backed Fluidstack.
These companies control gigawatts of electrical capacity, with existing infrastructure ready for AI clusters that require advanced cooling and stable grid connections.
Risk of bubble?
Still, pivoting comes with risks.
Miners are borrowing heavily to adapt their sites for AI workloads, and as investors are wary of the pace and scale of costs behind the “AI business,” correlated risk assets (such as tech stocks and cryptocurrencies) are under pressure.
Bitcoin is down more than 17% over the past 30 days, while the broader CoinDesk 20 Index (CD20) has lost 19.3% of its value over the same period. The tech-heavy NASDAQ 100 index is down about 1.5% over the past month, having recently recovered from a drop of more than 7% during the period.
Analysts have warned that the AI infrastructure boom resembles past bubbles. OpenAI, for example, has committed to investing trillions in infrastructure spending, funds for which it has yet to raise.
Much of the capital involved in the AI arms race is recycled by the same players, selling AI chips or cloud services. If demand for AI slows, Bain & Co. projects a shortfall of up to $800 billion for these companies, which would need $2 trillion in combined annual revenue by 2030 to fund the computing power needed to meet projected demand.
If demand for AI computing slows, these hybrid operations could face the same liquidity crisis that hit the crypto sector in 2022. Such a hit would likely affect the entire market, causing risky assets to decline significantly.
For now, however, miners are betting their business future on a new type of gold rush powered by GPUs, not ASICs.
