We are missing the fact that they have created their GPU's that are now just 4-5 years behind. And considering it's China, which does everything-hardware at insane scale, and efficiency, my guess is that they are at step-1 now... gain market share at loss, and at the same time, gradually, start plugging their in-house cards to power these models to gauge their performance on real workloads.

Once they cross a certain threshold, nVidia can say goodbye to it's monopolisitic profit margins of over 70%.

GPU infra capex is the biggest spend for the inference providers as of now, power, second biggest.

China has already cracked the power part, they are now close to cracking the GPU part.

Didn’t the DeepSeek team release a paper documenting inference improvements that showed they were still making a profit even under heavy discount? Why would it be impossible for them to make a profit now, with a new model and more research?

Before DeepSeek, no one sold cheap tokens anyways and then DS showed the profit margins.

they might have trained the model with fancy optimisations that only they can unlock

> So their strategy now is to try get as much raw content for their inference. You're being "paid", via discount, for your use

There is an implicit social contract, and for many it might work out well:

We use your data to improve the model. You get to use the improved model for affordable prices and (the important part): you get _the model_.

From Antropics own report:

"DeepSeek

Scale: Over 150,000 exchanges"

Doesn't sound like much of distilling. Maybe they are runnung benchmarks?