Compute Resources Are Non-Fungible, But Can They Become a Commodity?

CoreWeave co-founder Brannin McBee argues that compute resources cannot become a commodity like gold because they are not uniform. Even the same H100 can have different Goodput (actual effective output) and MFU (Model-Flop Utilization) depending on the cloud provider.

However, looking at examples from energy markets (natural gas, electricity), commodity markets don't necessarily require complete uniformity. The key is establishing a standardized Reference (benchmark price) and separately pricing the Basis—the differences arising from location or quality.

The current compute market has not yet reached the stage of 'full commoditization' for the following reasons:

• Physical/spec dimension: Largely standardized through DGX specs, etc.
• Operational dimension: Differences exist in Goodput, failure recovery, and software stack
• Contractual dimension: Differences exist based on SLA, priority, usage period, and scale

Ultimately, McBee's argument doesn't mean that market formation is impossible, but rather explains what factors will be reflected in pricing as Basis once a market does form. This serves as the grounds for why companies like CoreWeave are valued not as simple utility companies, but as differentiated operators deserving of a high multiple.