AI AIn't It.

At least, not right now.

Yesterday, I got sidetracked by some truly grotesque AI. I decided to promote that image to the blog logo - it captures my feelings about several tech trends of the 2020s surprisingly well¹.

I’m just going to come out and say it: modern tech is built on hype, not value. I honestly could write about this for hours², but I’m going to stick with the blog’s unofficial motto³ and keep things brief.

We’ll work our way up to AI. Let’s start with something simpler.

In 2022, Logan Paul bought a single Pokemon card for $5.3 MM.

AI Generated: pokemon card

You might recall that, during COVID, things like Pokemon cards and sports cards had a real moment. This article illustrates the reasons fairly well:

• People were bored at home and had stacks of old cards lying around.

• Most cards are inexpensive, so it’s easy to start a collection.

• Social media made rare finds marketable and seemingly ubiquitous.

• Government stimulus and social distancing meant that people had an excess of disposable income.

This was the perfect environment for speculation: people were no longer buying cards based on their inherent worth but under the assumption that they could later be sold for more.

Frankly, speculation was a marker of the era. Just look at Dogecoin - in 2021, online communities were insistent that they would bring it “to the Moon” ($1 per Doge). They only made it to 70 cents before the thing crashed.

Unsurprisingly, Logan Paul’s Pokemon card purchase was in itself a stunt to promote his Liquid Marketplace, which sold “shares” of his most valuable Pokemon cards as NFTs.

What do Pokemon cards, Dogecoin, and NFTs all have in common? They are fucking useless⁴. I think most people agree on this. Now, where our opinions may diverge is that I believe crypto in general is fucking useless.

AI Generated: a group of excited crypto bros

The only sector crypto has revolutionized is fraud. Per one of my favorite websites, about $75 billion (and counting) has been stolen, mostly from everyday people who believed swindlers like the guys at FTX and the Celsius Network.

Visa can process 24,000 payments in a second. Ethereum can process 20. Bitcoin can process 7.

Globally, Bitcoin mining consumes over 90 terawatt hours a year. Visa consumed 740,000 gigajoules last year. Here’s a simple way to look at it - for each Bitcoin transaction in 2023, you could use the same energy to process 385,000 Visa transactions.

So why is a single Bitcoin worth $60,000? It’s not exactly close to being the currency of the future. In fact, I would argue it is only slightly less useless than a Pokemon card, and equally prone to hype and speculation. Bitcoin does have the advantage of being truly scarce - the power required to mine one is substantial enough to create a huge barrier to entry. You can think of its price as (in part) capturing all of the investment which went into its production.

Now that we’re past COVID, meme trading and speculation is so passé. 2024 is all about semiconductors and recession fears, baby!

AI Generated: nvidia printing money

Ready for the hottest take yet? AI is pretty fucking useless, too.

AI articles suck. AI music sucks (and is destroying the music industry). AI pictures suck (just look at this article’s gorgeous images).

I recently spoke to a vendor for a product that uses AI to interpret and summarize real estate documents, like contracts or marketing materials. I did not find the summaries to be especially impressive. The program was accurate, but it was like having a fifth grader research a project on Wikipedia. You can tell that the program’s copying down things it doesn’t understand.

A number of companies are working on AI to write legal documents. Pretty soon, computers will be writing and reading contracts, and there might be some pretty funky things that fly under the radar. Rather than Terminator’s SkyNet initiating a nuclear holocaust, maybe the AI apocalypse will just be the collapse of our legal system.

AI’s more useful utilities, like interpreting messy data, are ruined by technological bloat, where programs are being trained for all kinds of uses that are going to flop.⁵ You think that Bitcoin’s power consumption was crazy? Wait until you see what AI data centers use.⁶

Whether or not it’s efficient, whether or not it works, the world’s biggest spenders have already decided that AI is the future: between April and June, $24 billion was invested in AI startups, not to mention the billions more spent by companies like Microsoft. What’s sad is that so much of this is driven by FOMO.

Tech companies are willing to spend because they don’t want to be left out of the profits. Investors seem to think that, if they hype AI up enough, people will “realize” its value and pay accordingly.

Sounds kind of speculative.⁷

1. Meanwhile, my new profile photo is the beef stew. Equally fitting - the only thing that can rival my cynicism is my love for food.

2. If you’ve been on the receiving end of the yapping, I’m genuinely sorry.

3. Brevity is the soul of wit - Polonius, Hamlet.

4. I guess you could buy Dallas Mavericks gear with doge for a while, but that was sadly before they had any real buzz from the Luka/Kyrie tandem.

5. I spoke to a guy at a networking event who pitched me on his AI acting coach. It would process all of the greats and teach its students how to reach that level. He was, unfortunately, dead serious.

6. Here’s a hint - it will be approaching 10% of the US’s total energy by 2030.

7. I realize this isn’t super brief, but I covered a lot! Cut me some slack.