Chips scarce, power ample. Rental rates high and rising. Dispersion low, because everyone is short the same thing. Curve backwardated.
2023 to early 2024Chips available, capital abundant, capacity floods. Rates fall hard and operator margin compresses. Dispersion widens as weaker operators discount to fill racks. Curve in contango.
2024 to early 2026Megawatts and long-lead electrical equipment scarce. Rates firm. Dispersion very high by geography rather than by operator. Curve flat to backwardated in constrained regions.
The current regimeEverything available, demand or efficiency disappoints. Rates fall through weaker operators’ cash cost. Credit stress forces price cuts, lowering residuals and widening spreads. Reflexive.
The tail scenarioThe constraint migrated from silicon to capital to power inside thirty months. Each migration repriced the curve before the spot index moved, which is why the regime is voted formally each month rather than inferred from price.
| Layer | Lead Time | What The Firm Tracks | Why It Leads | Cadence |
|---|---|---|---|---|
| Fabrication | 12 to 36 months | Packaging allocation, high bandwidth memory output, accelerator lead times | Sets the ceiling on how many GPUs can exist | Quarterly |
| Electrification | 9 to 30 months | Interconnection queues, signed versus energized MW, transformer and turbine backlogs | Chips without megawatts are inventory | Monthly |
| Shell delivery | 6 to 18 months | MW under construction, pre-leasing, vacancy, liquid-cooling retrofit capacity | Pre-leasing above 90 percent signals tightness | Quarterly |
| Installed base | 3 to 12 months | Disclosed useful lives, resale prices, next-generation ship volumes | Governs the largest component of the index | Monthly |
| Demand | 0 to 6 months | Token expenditure, model releases, training absorption, capital expenditure guidance | Training pulls capacity weeks before announcements | Weekly |
| Financing | 0 to 3 months | Neocloud spreads, advance rates, GPU-backed securitization terms, maturities | Reflexive: stress forces price cuts | Weekly |
Layers one to three are supply formation, where operator fluency is a lawful advantage when it is built from public queue data, filings and industry sources, and never from any counterparty’s confidential information.
The index level is a joint statement about useful life and operator margin. The indicator solves for the life the rental index is actually pricing, and compares it to the life lenders and accountants have funded. The divergence is tradeable in the deferred strip and billable as an independent mark.
The index minus the full cash and capital cost stack, tracked as a spread. Compression toward zero signals that marginal supply is about to exit, which is the earliest reliable read on the end of a capital-constrained regime.
Rental revenue per MW of facility load, set against the annual wholesale power cost for the same MW. The ratio is what converts an interconnection queue position into a compute view, and it is the bridge between the power desk and the compute desk.
| Observation | Regime Implication | Invalidation |
|---|---|---|
| Signed interconnection rises while energized MW is flat | Supply arrives later than consensus, extending the power-constrained regime | Energization pulls forward |
| Disclosed lives extend while resale prices fall | Funded life is shorter than disclosed, so the index floor is higher | Resale prices stabilize |
| The compute crack nears operator cash cost | Marginal supply exits and the capital-constrained regime is ending | Costs rose rather than price falling |
| Neocloud spreads widen 150bp with demand unchanged | Reflexive credit stress and forced discounting | Spreads widen on rates, not credit |
| Token spend accelerates while the index stays flat | Absorption is running ahead of the curve | Mix shifts to cheaper inference silicon |
Every regime call is registered with the observation that reverses it before the position is taken, and a triggered invalidation test closes the position regardless of the mark. This is the auditable core of the research function.
SEC filings and exhibits, including credit agreements. Earnings calls, investor presentations and press releases. Licensed market data: index feeds, exchange reports and credit pricing. Public dockets, including interconnection queues, the Federal Register and exchange notices. Subscription research on capacity and hardware pricing. Secondary hardware marketplaces and published rate cards. General domain expertise in how the physical stack prices.
Anything learned through a principal’s employment, board or advisory roles. Any counterparty’s non-public capacity, pricing, offtake or energization plans. Pre-release allocation, product or export control information. Any information under a non-disclosure agreement, in any direction. Expert network calls with employees of any company in the signal map. Any position in securities or options of any monitored company.
| Control | How It Works | Evidence Produced |
|---|---|---|
| Source attribution | Every signal carries a document identifier, date and retrieval timestamp | A sourced evidence trail per position |
| Restricted list | Kept by compliance; names enter on employment, board or counterparty exposure | A versioned list with entry and exit dates |
| Pre-clearance | Every trade pre-cleared by compliance, independent of the portfolio manager | A clearance record per trade |
| Information barrier | No employment or board information enters research or trading | Quarterly signed attestations |
| Automated provenance | Agents log every document ingested; no provenance, no entry | A machine-generated audit log |
Daily: index prints, curve marks, the crack spread, and a position and risk report to the risk function. Weekly: the demand and financing layers, including the token index, credit spreads, new-issue terms and an OTC print monitor. Monthly: the regime committee, with a formal vote, written invalidation tests and a position mandate. Quarterly: supply formation and a full model refresh.
An investment committee approves the regime call and position mandate, meeting monthly and on any invalidation trigger. An independent risk function owns limits and kill authority and reports separately from the portfolio manager. Compliance owns the restricted list, pre-clearance and the information barrier. A third-party administrator and an annual audit are in place from inception.
Execution agents hold queue position across contracts and maturities inside a participation cap and never cross under pressure. Research agents monitor queue dockets, credit exhibits, transcripts, rulebook amendments and hardware listings, and produce evidence rather than conclusions. There is no autonomous risk-taking and no agent-initiated position change: every action is logged and reviewable, which makes the layer easier to diligence than a discretionary process.
Infrastructure before capital. Allocators diligence process, segregation of duties and the provider stack before they diligence returns. A record under third-party administration with an independent risk function is worth several times a spreadsheet record, so the cost of running it from inception is carried from the start. The same platform prices every structuring mandate.
The indicator computation, the signal sheets and the position expressions are made available to qualified counterparties under a confidentiality agreement.
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