The Commoner

Tuesday, October 20, 2026

Sup, freaks.

Amazon's own executives say AI took it free cash flow negative. Bitcoin miners have seen this movie before.

WHAT TO EXPECT IN THIS NEWSLETTER

• I walk through why Amazon's AI spending has it free cash flow negative with GPUs waiting on power. Miners lived this in 2021, and the debt is what hurt.
• USAA goes dark for the second time in a month, and BlackRock files for a bitcoin fund that holds no bitcoin.
• Washington bans DeepSeek from federal agencies while Chinese models take eight of OpenRouter's top 10.
• Flock cameras went up without a vote, and Canada's money supply nearly doubled in a decade.
• Plug your agent into TFTC's free MCP server, and Mostro ships v0.20.0.

Marty's Bent

No Hedge on Earth

Your Uncle Marty has been stewing on something since the weekend. We're in the middle of an AI slowdown. I don't think that's really up for debate anymore. Don't believe me? Look at what Amazon's own executives are saying behind closed doors. At an internal AWS meeting in September, the cloud unit's CFO had a joke for the executive running much of Amazon's AI buildout. "You've taken us free cash flow negative as a company, so congratulations." Business Insider got the recording. He didn't dispute it. Amazon is spending $220 billion this year, and the executive on the receiving end of the joke expects free cash flow to stay negative for "the next couple of years or so."

The same reporting has Amazon taking delivery of about $5 billion worth of Nvidia GB300 racks in August and roughly $3 billion more every month "for the foreseeable future." Some of those racks went to warehouses because the data centers they were meant for didn't have the power to turn them on. One AWS supply chain team had no "clear forecasted path" to get its racks installed, according to an internal email. Amazon says staging hardware near sites is "best business practice" and disputes that the company as a whole lacks a plan. Fair enough. But its own AI infrastructure chief says "the forecast is changing on a daily basis." That's not the sound of a company with a firm grip on the wheel.

Put that next to what we covered yesterday. Anthropic's revenue is still growing, but more slowly than it was, right as it heads toward an IPO. And then go back and listen to what Dario Amodei told Dwarkesh Patel in February. A clip of it made the rounds this weekend without a date on it, so to be clear, this is eight months old. If revenue grows 10x a year, you have to buy compute years in advance. If he bought a trillion dollars a year of compute and revenue came in at $800 billion, "there's no force on earth, there's no hedge on earth that could stop me from going bankrupt." If he's off by a year, or growth comes in at 5x instead of 10x, "then you go bankrupt." He was explaining why Anthropic doesn't buy that much. With growth slowing, that answer matters a lot more now than it did in February.

So what kind of slowdown is this? That's what is yet to be determined. Is this the end of the bubble, a dot-com style blowup where the market finally realizes the revenue is never coming? Or is it what Jordi Visser has described on our show many times over the last year, a bear market inside a bull market, a nasty correction inside a longer-term structural bull run?

I lean toward Jordi. But some of this feels very familiar to anyone who has spent time around bitcoin mining.

GPUs sitting in warehouses waiting for power is something bitcoin miners lived through in 2021. Price and hashrate were ripping. The large miners were placing futures orders with Bitmain and MicroBT for machines that wouldn't be delivered for nine months to a year. In December 2021, Marathon signed a deal with Bitmain for 78,000 S19 XPs, $879 million worth, to be delivered in monthly batches from July through December 2022, with 35% of the whole order paid up front. Then the machines started showing up before the energy infrastructure did. Some sat in warehouses. By July 2022, Marathon had nearly 30,000 machines installed in Texas waiting on a hosting site that kept pushing back the day it would be energized.

What really hurt miners in that era wasn't the waiting. It was the debt. A lot of those machines were bought with loans collateralized by the machines themselves. When the price of bitcoin turned in 2022, the price of the ASICs securing that debt fell right along with it. Hashrate Index has the newest generation of machines falling from $101 per terahash to less than $15 over the course of 2022, a drop of roughly 85%. The collateral evaporated and the lenders came calling. Stronghold handed back about 26,200 miners to NYDIG and another lender to wipe out $67 million of debt. Iris Energy's lender demanded roughly $108 million from two of its equipment financing vehicles. Core Scientific filed for bankruptcy that December. Leverage felt like genius right up until it didn't.

There is a ton of GPU-collateralized debt out there right now. CoreWeave alone has announced $14.2 billion in loan facilities this year backed by its chips and customer contracts. Iris Energy, now IREN, just took $2.4 billion from Blue Owl to buy Nvidia GPUs. Same company, new collateral. Credit markets are already flinching. Last week the cost of insuring CoreWeave's debt against default hit distress levels.

I'd love to see what the loan-to-value ratios on those loans look like today. For the most part, they aren't public. Here's one detail that is. CoreWeave's August facility is roughly five-year debt against customer contracts that average about three years, so the lenders are betting those contracts get renewed. That's the part of this I'd be watching most closely.

That said, it's not apples to apples, and I'm not going to pretend it is. An ASIC is tightly correlated to the price of bitcoin. It's a physical option on how much bitcoin that machine can produce, and when the price falls, so does the value of the option. A GPU isn't tied to the price of a digital bearer asset. Its value is tied to demand for compute. And demand for compute is still rising. Pablo Marti shared a Deutsche Bank chart this weekend showing Meta's new Muse app with more than two million daily active users in the US about five weeks after launch, running ahead of ChatGPT's pace over the same stretch. Meta has billions of people to push it to, so take the comparison with a grain of salt. But people are using these things. Overall AI adoption is still relatively low, so there's a lot of room for that demand to grow. Even Amazon, in the same meeting where the CFO was cracking jokes about cash flow, said it still expects demand to exceed its capacity in 2027.

The bigger question is whether we can get the energy infrastructure built out fast enough to plug all of these GPUs in. Amazon has 44 gigawatts of data center capacity under development across 16 states, more than double Google, Meta and Microsoft, according to Cleanview Research estimates cited by BI. It also has an internal dashboard called "Secured Power at Risk" to track what could go wrong with it.

Ed Zitron, who flagged the BI piece, estimates that roughly half of all AI chip sales, $200 billion to $300 billion or more, are sitting in warehouses. That's his own estimate. BI didn't put a number on it, and I doubt it's anywhere near 50%. But I'd imagine a material amount of GPUs are sitting on the sidelines waiting to be plugged in, and that is reason for caution. Zitron sees no value in any of this, which is insane to me. AI is an incredible way to increase productivity. We've seen it firsthand here at TFTC. You can believe AI is one of the most important technologies of our lifetime and still believe plenty of people are going to lose their shirts building it out.

So the question isn't whether AI is real. It's which players in this buildout took on too much risk and put the cart before the horse. Dario said as much himself in February. "Some of the other companies have not written down the spreadsheet," he told Dwarkesh. "They're just doing stuff because it sounds cool." Amazon's infrastructure chief says AWS tries to spend at the "last responsible moment," but the race for chips and power has pushed it to take ownership of racks earlier and spend cash sooner. Is that really surprising though? When money has been this cheap for this long, nobody has to write down the spreadsheet. Opportunity costs get papered over, everyone races for the same chips and power, and waiting starts to look like losing. That's how you end up with racks in a warehouse.

Contrast that with bitcoin. Nobody at the Fed is going to bail out a miner that bought too many machines on credit. The difficulty adjustment doesn't care how big your order with Bitmain was. Roughly every two weeks the network recalibrates to the hashrate that actually shows up, the miners who overextended get flushed out, and the ones who managed their risk keep producing blocks. A system controlled by no one that enforces discipline on everyone who participates in it. That's why the miners that survived 2022 were the ones that didn't lever up against hardware tied to a price they couldn't control.

I'd like to know who the risk-averse, calculated players in AI are right now. The ones who had the risk management skills to foresee a slowdown like this. My hope is that they exist, and that they're the ones left standing when the dust settles. We'll be following this closely.

Be aware, freaks.

SIGNAL

USAA goes dark for the second time in a month

Starting around 6 p.m. ET Saturday, Downdetector flagged a surge of problem reports at USAA, the bank and insurer built for military families. Members reported declined debit cards, failed transfers and balances that hadn't updated since Friday. We couldn't find a public explanation from USAA as of Tuesday morning. It's the second disruption in a month. On September 18, members were locked out of the app for an hour or two, which a USAA spokesperson blamed on an "intermittent authentication issue."

There's no evidence anyone's money is gone, and the collapse posts going around X are hype. But USAA's bank has operated under an OCC cease-and-desist order since December 2024 that cites unsafe or unsound practices in, among other things, information technology, and limits its ability to add new products and services. When your balance lives in somebody else's database, a weekend IT failure is the difference between buying groceries and getting declined at the register. Bitcoin you hold yourself doesn't need a bank's servers to be up.

BlackRock files for a bitcoin fund that holds no bitcoin

BlackRock filed Monday for the iShares Bitcoin Managed Protection ETF, ticker PBIT. The filing says plainly that the fund "does not invest directly in bitcoin or bitcoin exchange-traded products." It holds three overlapping tranches of call spreads on IBIT plus fixed income, offering upside "up to an approximate limit" while setting an initial maximum loss of roughly 10% per tranche, a floor the fund has broad discretion to move. Fees haven't been filled in and it isn't trading yet.

The same day, Strategy disclosed it bought 267 bitcoin for $22.1 million last week and spent $193.1 million buying back its STRC preferred stock. Its board raised the buyback program from $2 billion to $3 billion. On Monday's show, Parker Lewis argued the ETFs were a trade, not an adoption wave. Wall Street keeps building new ways to own bitcoin without owning bitcoin. That's fine if you want a trade. If you want the asset, hold the asset.

Washington bans DeepSeek. Developers pick it anyway.

The Department of Homeland Security's order excluding DeepSeek from federal civilian agencies hits the Federal Register today. It bars DeepSeek from procurement and orders agencies to remove "all DeepSeek and DeepSeek-affiliate products, and third-party products and services developed using DeepSeek implementations." That last clause is the one to watch. It reaches anything built on DeepSeek, not just the app. It covers federal civilian systems, not you.

Meanwhile, developers are voting with their tokens. On OpenRouter's weekly rankings as of Monday night, the most used model was DeepSeek V4.1 Flash, and eight of the top 10 came from Chinese labs. Claude Opus 5.5 and GPT-6 Luna were the only American models in the top 10. OpenRouter skews toward developers hunting for cheap tokens, so it isn't the whole market. But cheap open weights are winning on price, and banning software by lineage is a precedent worth watching. An open-weight model running on your own hardware doesn't need anyone's permission.

Flock cameras went up without a vote

An NBC News investigation published Monday found that police departments and local officials have bought Flock Safety's license plate cameras through contracts priced just below the thresholds that require approval from elected officials, and through deals that skipped competitive bidding. In dozens of communities, residents and their representatives never voted on whether to install them.

That's how a surveillance network gets built. Not with a vote, but with a purchase order priced to slip under the line. Every plate read is logged, timestamped and searchable, and the people being tracked never got a say. It's the same control stack as KYC and age verification, pointed at your car. If you want a say, show up to your city council and ask what has been bought in your name.

Canada's money supply nearly doubled in a decade

Lukas Ekwueme's chart making the rounds this weekend said no developed economy is printing like Canada, which doubles its "monetary base" roughly every eight years. The chart is actually M2, broad money, not the monetary base, and eight years only holds on the average going back to the late 1960s. But the Bank of Canada's own data doesn't need exaggerating. Canada's M2 hit C$2.86 trillion in August, up 94% from August 2016. U.S. M2 grew about 80% over the same stretch, per the Fed's data.

The "no developed economy" part doesn't hold either. Over the last 12 months, U.S. M2 actually grew faster, 5.7% versus 4.5% in Canada. Both are debasing. A Canadian dollar saved in 2016 now competes with almost twice as many. Bitcoin's supply schedule hasn't changed since 2009.

⚡ FREEDOM TECH CORNER

DATA SNAPSHOT

Spot price, block height and hashrate estimate: October 20, 2026, 10:44 a.m. ET. Bitcoin Lab daily series: October 19, 2026. U.S. spot ETF flows: October 19, 2026.

Sources: Kraken spot quote, mempool.space block height and hashrate, Bitcoin Lab daily metrics, and TFTC ETF flows. Daily metrics use the provider’s October 19 observation, not live intraday estimates.

Talk tomorrow, freaks.

Marty Bent · TFTC · Nostr

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