Aethir Co-Founder Mark Rydon on the Rise of Decentralized Compute and the Challenge of US-China Geopolitics

Aethir, a decentralized Graphics Processing Units (GPUs) network, initially focused on cloud gaming. However, co-founder Mark Rydon reveals that the company's attention has shifted towards artificial intelligence (AI). This pivot is driven by soaring demand for compute power in AI, which is increasing the value of GPUs and highlighting a clash between U.S.-China geopolitics.

Founded in 2022, Aethir is a prominent protocol in the Decentralized Physical Infrastructure (DePIN) space, thanks to its real-world utility. DePIN protocols are networks where people collaborate to offer a service in exchange for a token.

Over the past year, the DePIN space has experienced rapid growth, with CoinGecko reporting a $33 billion market cap for DePIN coins. A diverse range of DePINs has emerged, covering nearly every vertical imaginable, from flight tracking data to mapping.

Aethir is a key project in decentralized compute, demonstrating the capability of distributed computing to power AI alongside large, centralized data centers.

GPUs were initially used exclusively for gaming, with companies like Nvidia and AMD competing to produce more powerful GPU chips. The goal was to enhance the fidelity and resolution of virtual worlds for gamers.

However, around 2006, researchers at Nvidia discovered an additional strength of GPUs: parallel computing. This capability, which enhances graphics, was also found to be effective in crunching massive amounts of data and could accelerate traditional computing workloads.

This series is brought to you by Consensus Hong Kong. Come and experience the most influential event in Web3 and Digital Assets, Feb.18-20. Register today and save 15% with the code CoinDesk15.

But this was 2006, and verticals like AI were not yet on anyone's radar. As a result, Nvidia continued to trade for less than $1.

Fast forward to today, and Nvidia is competing with Apple for the title of the world's most valuable company. In recent years, GPUs have become the driving force behind the AI revolution, powering everything from generative AI models to advanced machine learning algorithms.

Like the journey of Nvidia and GPUs, Aethir began by offering idle GPUs from data centers to bolster cloud gaming platforms. However, as co-founder Mark Rydon explained in an interview with CoinDesk, the company realized that the real money was in AI.

"We started Aethir within a gaming context," said Rydon. "But we quickly realized that the enterprise-capable GPU cloud we were building had massive relevance to AI sectors. AI runtime customers will pay a lot more than gamers, and the demand for compute in AI is just incredible."

TrendForce, a market research firm, estimates the value of the AI server industry to be $205 billion, which is particularly impressive considering that they estimate the value of servers, as a whole, to be just over $300 billion.

Aethir operates as a marketplace for GPU compute, offering idle GPUs to businesses that require on-demand capacity without the overhead of owning or maintaining their own hardware.

This is especially significant for researchers outside of prestigious institutions, as it provides them with access to computing power without the massive capital expense of purchasing their own infrastructure.

“This is the most expensive compute that there’s ever been, and if you’re not efficient in managing that compute, it’s a huge capital drain,” explained Rydon during an interview on the sidelines of Devcon in Bangkok last November. "Our decentralized approach allows us to scale into regions…that need compute the most but can least afford it."

Given Nvidia's leadership in the AI space, Chinese researchers are eager to obtain access to these ultra-powerful chips, which are generations ahead of what is available domestically.

However, geopolitics have intervened. The U.S. Department of Commerce has prohibited the sale of Nvidia's most advanced chips, such as the H100, to China in an effort to keep Beijing one step behind.

According to a report by the Wall Street Journal in August 2024, Chinese firms were bypassing U.S. export controls by renting decentralized GPU computing power abroad through companies like Aethir.

“We don’t accept high performance computing [requests] from places like China. You can’t if you have H100s," said Rydon. "They’re not meant to be in China. We geofence and don’t allow that compute to onboard.”

Despite the push towards decentralization in Web3, Rydon emphasizes that Aethir is not fully permissionless.

"This is necessary for $100 million deals to happen,” said Rydon.

A Web2 layer is required to track service agreements that outline the performance and reliability standards for enterprise clients and to conduct Know Your Customer (KYC) processes, which verify the identities of participants to ensure regulatory compliance.

"I don’