In my previous post about blockchain and cryptocurrency, I discussed why I thought Tesla was making such a substantial investment in Bitcoin and allowing the cryptocurrency to be used for car purchases in the future. The balance of its revenue stream, which comes from selling surplus Renewable Energy Credits (RECs), will dry up in the next several years as competing automakers can produce their own Zero-Emission Vehicles (ZEVs) and build up their own RECs with states that require them.
Allowing its customers to purchase vehicles entirely or partially with Bitcoin is potentially one way of differentiating Tesla from other auto manufacturers. But this in and of itself is not a sustainable business strategy.
Perhaps Elon Musk has another, even wilder business plan for Tesla over the long-term -- a plan just as crazy ambitious as building giant reusable space rockets that can land on their tails.
Your solar roof: The ultimate idle money game
Besides cars, Tesla's other significant business involves solar panels, solar roofs, and batteries. The batteries are used in their cars and provide power storage for their residential solar systems, sold as the Tesla Powerwall.
In most states where residential solar is installed, surplus energy from the arrays can be fed back into the grid where the local power company will "net meter" or prorate a customer's electric bill based on what they generate into or draw from the system. Based on a customer's consumption and how much a solar system produces, there will be a surplus or a deficit.
Powerwalls can store that surplus energy and power various things in your home, including air conditioners, and charge your Tesla EV.
But suppose Tesla added a capability to its on-premises solar energy/battery energy management computer built into its inverter system or the Powerwall that would give it GPUs for mining cryptocurrencies? These are already connected to home Wi-Fi. They have a management app, so upgrading it with Wi-Fi 6 and attaching it to a cryptocurrency network and an easy-to-use mobile app for cryptocurrency account management would be an achievable systems integration effort for Tesla, given the company's considerable engineering resources.
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It would then be possible for your home to become the ultimate idle money-producing game --- you would generate actual Bitcoins with the surplus energy your solar system makes. That might be more lucrative than getting the net metering discount from your power company, which is not incentivized to be price competitive with your solar system's energy output, as most of these companies are paying Time-Of-Use (TOU) pricing for your power generation.
If you have a large enough solar array and you live in a state with plenty of sunshine -- and assuming Tesla comes up with an easily expandable, modular design (perhaps even as an add-on product for Powerwall) -- you could add a whole chain of these GPUs to your solar computer and make a decent amount of crypto.
That makes the prospect of installing solar in your home a lot more attractive if you figure the Tesla roof, on average, will cost $50,000 to $75,000, not counting government tax incentives.
All Tesla needs is a simple app interface to point and click which cryptos you want to mine, API integration with a currency exchange for cash conversion, and, presto, everyone with a solar roof is in the crypto business.
Why Tesla and GPUs
To execute this plan, Tesla would need a power-efficient GPU that requires minimal cooling (perhaps fanless, or even water-cooled). If these GPUs are colocated with the Inverter/Powerwall, they would have to operate in environments that could get as hot as inside a garage during summer months or inside a housing mounted on the outside of your home, unless they are physically networked and placed inside the house and tied into the Inverter or Powerwall's power distribution system.
Where would Tesla get such a thing? And why would the company suddenly decide to do this? The idea to use GPUs to mine cryptocurrency when its products are idle during a charge phase or generating surplus energy almost certainly arose during the development of its cars' autonomous driving feature and benchmarking the onboard computing hardware's capabilities.
In 2019, the company held an Autonomy Investor Day and claimed that it had switched from NVIDIA GPUs in its vehicles to chips of its own design in the model S, X, and Model 3 cars. At the time, the company's director of silicon engineering, Peter Bannon, stated:
So here's the design that we finished. You can see that it's dominated by the 32 megabytes of SRAM. There's big banks on the left and right and the center bottom, and then all the computing is done in the upper middle. Every single clock, we read 256 bytes of activation data out of the SRAM array, 128 bytes of weight data out of the SRAM array, and we combine it in a 96 by 96 small add array, which performs 9,000 multiply/adds per clock. At 2 gigahertz, that's a total of 3.6 -- 36.8 TeraOPS.
We had a goal to stay under 100 watts. This is measured data from cars driving around running a full autopilot stack. We're dissipating 72 watts, which is a little bit more power than the previous design, but with the dramatic improvement in performance, it's still a pretty good answer. Of that 72 watts, about 15 watts is being consumed running the neural networks.
In terms of costs, the silicon cost of this solution is about 80% of what we were paying before. So we are saving money by switching to this solution. And in terms of performance, we took the narrow camera neural network, which I've been talking about that has 35 billion operations in it, we ran it on the old hardware in a loop as quick as possible and we delivered 110 frames per second. And we took the same data, the same network, compiled it for hardware for the new FSD computer, and using all 4 accelerators, we can get 2,300 frames per second processed, so a factor of 21.
In 2021, the GPU used in Tesla's latest vehicles is even more ambitious. The newest Model S (and, supposedly, the X) EVs uses a custom AMD RDNA 2 GPU with 10 teraflops of computing power, which puts it on par with some of the most powerful console gaming systems on the market like the Sony PS5. With an onboard system like this, you wouldn't even need a GPU-equipped Powerwall; when the vehicle is being charged, it could be used to generate cryptocurrency as well.
The business opportunity
So, Tesla certainly has plenty of experience with GPUs, but can it use them as a key differentiator from other automakers and solar technology companies like Enphase Energy, Samsung, LG, and Panasonic, the current market leaders in the solar space?
While sleeker and more tightly integrated, Tesla's solar roof is more expensive than competing solutions, and that's been hampering adoption. Its solar roof solution is currently only more competitive in scenarios where an entire roof has to be replaced.
Having a roof that generates income for the consumer when using surplus energy could be a significant selling point, mainly if a substantial portion of the cryptocurrency income could be applied to the financed cost of the solar panels or the payments on a Tesla vehicle. If it brings down the equivalent price of a Model S from $75,000 to $65,000 throughout a five-year finance term, or a $50,000 Model 3 to $40,000, that's a good incentive. It also makes a payoff of a $70,000 roof that much quicker of a return on investment, even if the GPU piece adds a few thousand dollars to the purchase price.
Tesla could also pro-rate the expense of the roofs (and the vehicles) by effectively leasing the GPUs' space in each home (or at commercial business where the roofs or solar cells are installed) and keep the balance of the crypto income for themselves.
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And if you bought that vehicle or that roof or panels in cash? That vehicle's GPU or the solar roof GPU stack (assuming you can add several just as you can with multiple Powerwalls) should be building assets for you that increase in value. Tesla shouldn't get to keep any of it.
However, instead of using the cryptocurrency generated by the systems to pay off fiat currency-based financing, it is more likely that it could be used to build up "credits" in an escrowed account Tesla would honor toward future purchases. Tesla itself would keep the cryptocurrency income, like Bitcoin, Dogecoin, or whatever instrument the GPUs generate -- but the consumer would have loyalty points accumulated. If a new car costs 100,000 loyalty points, and over five years, your roof and your vehicle generate 30,000, that could be used towards your next vehicle purchase -- locking you into that ecosystem.
Is Tesla going to differentiate from other solar and auto manufacturers by using automotive and solar energy compute GPUs to generate cryptocurrency? Talk Back and Let Me Know.