The push to create a futures market for AI compute
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There's an effort underway to create a futures market for AI compute — the processing capacity needed to train and run AI models — akin to how investors buy and sell commodities like oil or grain.
Why it matters: A compute futures market would bring more transparency, new ways to manage volatility and even more investment into what's quickly becoming a critical part of the economy.
The big picture: Futures markets allow companies to hedge against swings in prices. If you're an airline, you can buy oil futures to manage costs. A farmer might sell soybean futures to hedge against declines in price.
- Historically, creating a more transparent market for a commodity has unlocked more investments. Plenty of traders and investors in oil and soybeans never own the underlying asset.
The latest: The exchange operator CME Group said Tuesday that it plans to launch two compute futures contracts on Oct. 5, "pending regulatory review." The group is working with Silicon Data, a company that publishes indexes tracking compute pricing.
- Each futures contract would represent a month's worth of rent for the Nvidia H100 or its newer Nvidia Blackwell B200, per the release.
- The idea is to turn compute into a "standardized, tradable commodity," Pete Keavey, global head of energy and environmental products at CME Group, said in the release.
State of play: Another company, New York-based OneChronos, is also working on a compute futures marketplace and is awaiting approval from federal regulators.
- The company expects it to be operational this year, CEO Kelly Littlepage tells Axios.
Reality check: The big problem with treating AI compute like a commodity is that it simply is not like a commodity, Littlepage says. A bar of gold is basically like any other bar of gold, but compute is different.
- "Just from an Econ 101 stance, it actually fails every measure of being a commodity since it's not fungible. It's not storable. It's not transportable. There's actually nothing about it that you would consider a commodity."
Zoom in: The startup's futures market is using what's known as "combinatorial" auctions to deal with the issue. And it's working with Paul Milgrom, an economist who developed a similar system to auction wireless spectrum — and won a Nobel Prize for his work.
Between the lines: The big players in the AI market have been talking about compute as an "investable asset class" — literally the title of the Nvidia CEO's post Monday night about the $500 billion financing deal he's ginned up with six major financial firms.
- At the Milken investor conference in May, BlackRock CEO Larry Fink had a similar pitch: "I actually believe a new asset class will be buying futures of compute," he said. "We just don't have enough compute power right now."
The bottom line: AI compute is fast becoming the metaphorical currency of our time. Now, the race is on to make it more like a literal currency.
Editor's note: This story has been corrected to reflect how a farmer might use soybean futures.
