Conrad: CoreWeave's debt-financed long-term contract model is optimal for GPUs
Evan Conrad · SF Compute: Commoditizing Compute · Apr 11, 2025 · at 4:48
Evan Conrad, co-founder of SF Compute, analyzes the underlying financial structure and business model of CoreWeave.
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“So that means that the best way to make money in GPUs was to do basically exactly what CoreWeave did which is go out and sign only long-term contracts, pretty much ignore the bottom end of the market completely, and then maximize your long-term contracts with customers who are who don't have credit risk, who won't sue you if or are unlikely to sue you for, like, frivolous reasons, And then because they don't have credit risk and they won't sue you for frivolous reasons, you can go back to your lender and you can say, look, this is a really low risk situation for us to do. You should give me prime, like prime interest rate. You should give me the lowest cost of capital you possibly can. And when you do that, you just like make tons of money.”
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