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01 / 05
AI Models Went from $100 Million to $5 Million Then to $30 in Seven Days

Blog Post | Computing

AI Models Went from $100 Million to $5 Million Then to $30 in Seven Days

What a week for innovation.

Summary: The rapid decline in AI model costs is reshaping the field, with UC Berkeley researchers replicating DeepSeek’s $5 million AI for just $30 in a matter of days. They demonstrated that cutting-edge AI development no longer requires massive budgets—only the right approach. This breakthrough highlights how disruptive innovation is accelerating at an unprecedented pace, making technology more accessible than ever before.


We noted recently that DeepSeek had created an artificial intelligence (AI) model for around $5 million that matched the performance of OpenAI’s $100 million model. Now we learn that a research team at the University of California, Berkeley (UC Berkeley) has reportedly re-created the core technology behind DeepSeek for just $30.

According to Brian Roemmele, UC Berkeley PhD candidate Jiayi Pan and his team replicated DeepSeek R1-Zero’s reinforcement learning capabilities using a compact language model called TinyZero. This open-source reinforcement learning engine utilizes the self-play learning paradigm, originally pioneered by DeepMind in the development of AlphaZero, to achieve mastery of the games of chess, shogi, and go.

The stunningly low cost of this replication underscores a growing trend: While tech giants pour vast sums into AI development, open-source and independent researchers are proving that high-performance AI can be built at a fraction of the cost. In fact, TinyZero is freely available for download on GitHub.

The TinyZero program achieved DeepSeek-level performance by renting two H200 Nvidia chips for under five hours at just $6.40 per hour.

XYZ Labs notes,

Their success in implementing sophisticated reasoning capabilities in small language models marks a significant democratization of AI research. . . . Richard Sutton, the father of reinforcement learning, would likely find vindication in these results. They align with his vision of continuous learning as the key to AI advancement, demonstrating that sophisticated AI capabilities can emerge from relatively simple systems given the right learning framework. . . . This work from a Chinese AI research company may well mark a turning point in AI development, proving that groundbreaking advances don’t require massive resources—just clever thinking and the right approach.

To put this breakthrough in perspective, the telegraph reduced the time it took the Pony Express to deliver a message from St. Joseph, Missouri, to Sacramento, California, by 99.93 percent—from 10 days to 10 minutes. Pan’s $30 TinyZero program slashed the cost of DeepSeek’s $5 million model by 99.9994 percent. For the price of a single DeepSeek model, you can build 166,667 TinyZero models.

Disruptive innovation is disrupting disruptive innovation. Clayton Christensen, originator of the “disruptive innovation” theory, would be pleased. Meanwhile, the $500 billion Stargate AI infrastructure initiative, announced 10 days ago, already looks obsolete. Human intelligence continues to discover ever more efficient ways of teaching AI how to learn. Hang on—this revolution is just beginning.

Find more of Gale’s work at his Substack, Gale Winds.

IEEE Spectrum | Computing

Better Hardware Could Turn Zeros Into AI Heroes

“When it comes to AI models, size matters.

Even though some artificial-intelligence experts warn that scaling up large language models (LLMs) is hitting diminishing performance returns, companies are still coming out with ever larger AI tools. Meta’s latest Llama release had a staggering 2 trillion parameters that define the model.

As models grow in size, their capabilities increase. But so do the energy demands and the time it takes to run the models, which increases their carbon footprint. To mitigate these issues, people have turned to smaller, less capable models and using lower-precision numbers whenever possible for the model parameters.

But there is another path that may retain a staggeringly large model’s high performance while reducing the time it takes to run an energy footprint. This approach involves befriending the zeros inside large AI models.

For many models, most of the parameters—the weights and activations—are actually zero, or so close to zero that they could be treated as such without losing accuracy. This quality is known as sparsity. Sparsity offers a significant opportunity for computational savings: Instead of wasting time and energy adding or multiplying zeros, these calculations could simply be skipped; rather than storing lots of zeros in memory, one need only store the nonzero parameters.

Unfortunately, today’s popular hardware, like multicore CPUs and GPUs, do not naturally take full advantage of sparsity. To fully leverage sparsity, researchers and engineers need to rethink and re-architect each piece of the design stack, including the hardware, low-level firmware, and application software.

In our research group at Stanford University, we have developed the first (to our knowledge) piece of hardware that’s capable of calculating all kinds of sparse and traditional workloads efficiently. The energy savings varied widely over the workloads, but on average our chip consumed one-seventieth the energy of a CPU, and performed the computation on average eight times as fast. To do this, we had to engineer the hardware, low-level firmware, and software from the ground up to take advantage of sparsity. We hope this is just the beginning of hardware and model development that will allow for more energy-efficient AI.”

From IEEE Spectrum.

Ramp | Adoption of Technology

Business AI Adoption Crossed 50 Percent in March

“Ramp AI Index shows business AI adoption crossed 50% for the first time in March, reaching 50.4% of businesses. A year ago, it was 35%. Half of businesses on Ramp now pay for AI.

Anthropic continued its surge, growing from 24.4% to 30.6% of businesses — a 6.3-percentage-point gain, surpassing last month’s record monthly gain.”

From Ramp.

City Journal | Computing

The Surprising Heart of the Data-Center Boom

“The heart of the data-center boom, in America and globally, is an otherwise quiet and affluent bedroom community in Northern Virginia: Loudoun County. Communities like Loudoun are supposed to be bastions of Not In My Backyard opposition to development, not the front line of a new industrial revolution.

Yet data centers have proved an extraordinary boon for Loudoun residents; they now generate nearly half the county’s tax revenue. Thanks to them, Loudoun enjoys smooth roads, lavish schools, and low tax rates for homeowners. Even as opposition to data centers grows, Loudoun’s experience shows what can happen when governments embrace growth.”

From City Journal.

Nature | Computing

Breakthrough Computer-Chip Tech Could Help Meet AI Demand

“A powerful light source bigger than a London double-decker bus has set a record: it can create structures on a silicon wafer that are just 8 nanometres (nm) wide. Those are thought to be the smallest ever made in a single step by a commericial chip-patterning system. According to the system’s manufacturer, it could be used to make computer chips patterned with 2.9 times more transistors than chips produced with the previous generation of the light sources used for this purpose.”

From Nature.