New nonprofit backed by crypto billionaire scores AI chips worth $500M

Image Credits: Hiroshi Watanabe / Getty Images

It’s peculiar that a blockchain billionaire—rather than one of the typical Big Tech suspects—is providing the processing power required to create generative artificial intelligence.

Yesterday, it was made public that Jed McCaleb, co-founder of the aerospace business Vast and the blockchain startups Stellar, Ripple, and Mt Gox, had established a 501(c)(3) charity organization and bought 24,000 Nvidia H100 GPUs to construct data centers that will rent capacity to artificial intelligence projects.

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Startups Imbue and Character are already using the GPU cluster, which is among the largest in the world and is believed to be worth half a billion dollars. Eric Park, the CEO of Voltage Park, a recently established company tasked with operating and maintaining the data centers, asserts that artificial intelligence is being used for testing AI models.

“The objective was to provide access to startups, scale-ups, and research organizations that are presently obstructed from this domain because of restrictive agreements, limited GPU availability, and high acquisition thresholds, enabling them to obtain the essential resources required for innovation,” Park explained in an email interview with TechCrunch. “We’re keeping in touch with industry people to learn about their needs, and we’re utilizing that information to guide the development of our remaining clusters so that as many customers as possible can benefit from them.”

GPU-based hardware is widely relied upon by most firms when training models, incredibly generative AI models such as ChatGPT and Stable Diffusion. Due to their capacity for many simultaneous calculations, GPUs are an excellent choice for training and supporting the most advanced AI available today.

However, there aren’t enough chips for everyone. Microsoft cautioned in a summer earnings report that there is a severe scarcity of server hardware required to operate AI, which might cause service outages. Furthermore, it’s said that some of Nvidia’s top-performing AI GPUs won’t be available until 2024.

“There is a severe shortage of cutting-edge computing,” stated Park. “I talk to businesses of all sorts, from startups to scale-ups to large laboratories, and almost all tell me they can’t acquire enough H100s to train their models. AI innovation is being severely hampered by a further challenge faced by startups and scale-ups, who cannot sign the lengthy contracts many clouds require to access these chips.

When Voltage Park was founded, it had a pretty peculiar layout. McCaleb established the Navigation Fund, a nonprofit organization to whose endowment he donated. Then, despite its purported nonprofit status, the Navigation Fund bought the H100s above and gave ownership of the GPUs to Voltage Park. This for-profit company is formally a subsidiary of the Navigation Fund by paying “full sales and use taxes.”

An email from a Navigation Fund representative to TechCrunch stated, “Navigation’s board determined that a for-profit subsidiary would be better able to set up specialized operations to manage a cluster of this scale.” To do that, they established Voltage Park, and as part of the original cash investment, they transferred ownership of the GPUs. There was a sound strategic rationale behind this action. A subsidiary could more effectively explore the market potential associated with state-of-the-art computing, allowing the Navigation Fund to concentrate solely on its objectives and charitable grant-making.

The spokesman continued by saying that neither Voltage Park nor Navigation Fund, which are based in Brooklyn, New York, and are managed by different executive teams with independent boards of directors, are owned, operated, or profitable to McCaleb. Even if McCaleb’s donation was immediately regifted to Voltage Park by the nonprofit recipient, there is presumably a sizable tax benefit.

Not all of the Navigation Fund’s projects will be like Voltage Park. According to the spokeswoman, it is a “long-term” nonprofit foundation to assist “organizations, activists, advocates and entrepreneurs.” It has interests in several areas, such as open science, criminal justice reform, farm animal welfare, climate change, and AI safety.

But before it takes on any of those projects, the Navigation Fund still has some work. It doesn’t seem officially registered as a nonprofit yet; last week, TechCrunch asked an expert to search Charity Navigator and GuideStar, two industry-standard databases, for the Navigation Fund. The expert was unable to locate a listing. Furthermore, David Coman-Hidy, the president of the Navigation Fund, started his job in August.

Not that it implies improper behavior. The Navigation Fund may have all its paperwork organized and submitted; the IRS has just not gotten around to processing it yet.

According to the spokesperson, a portion of Voltage Park’s earnings will support the Navigation Fund’s charitable endeavors regardless of the Fund’s tax status.

The entire cluster of Voltage Park is unavailable. However, as the end of the year approaches, it will be available in three states: Texas, Virginia, and Washington, if everything goes as planned. According to Park, both short-term leases and hourly billing options will be available for the “significant portion” of space that will be set aside for early-stage startups and developers.

Park said, “We founded Voltage Park to help make sure a wide range of companies have a seat at the [AI] table.” Our goal is to lower the barrier to entry in machine learning so that a larger audience can benefit from it. Currently, we provide bare-metal machine learning training infrastructure. This could involve adding new services to our infrastructure. Since this industry is still in its infancy, we will adjust as it grows and matures.

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