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As the general crypto market starts the week in the red, the AI sector is facing a particularly grey Monday morning. The AI token basket on CoinGecko fell 12%, while the CoinDesk 20 is down 5%.
Node AI has cratered more than 23% while Aethir has slipped over 11%. Meanwhile, Bitcoin has dropped slightly over 6% to the $99K range.
Much of this market upset stems from DeepSeek, a new AI model introduced on Hugging Face. Developed with just $6 million and minimal GPU resources (compared to ChatGPT's $157 billion valuation), DeepSeek vastly outperforms and undercuts the likes of leading AI giant, OpenAI. DeepSeek’s ability to run on mobile devices further underscores its efficiency.
Wow DeepSeek R1 version 1.5B runs perfectly locally on my phone 😳
So you can have a model that outperforms GPT-4o and Claude 3.5 Sonnet on math in your pocket.
Mind-blowing pic.twitter.com/0J3uLXI6ZR
DeepSeek is powered by the DeepSeek-V3 model, which its creators say "tops the leaderboard among open-source models and rivals the most advanced closed-source models globally."
According to app data research firm Sensor Tower, DeepSeek has surged in popularity in the US since its release on 10 January and currently sits at the #1 spot in Apple's App Store.
The firm behind DeepSeek is a small startup based in Hangzhou, founded in 2023 by High-flyer, billionaire Liang Wenfeng's hedge fund. Its AI engine is believed to be powered by Nvidia's H800 chips for training and its team comprises Chinese AI experts and PhD grads from ByteDance and Tencent.
As AI becomes an increasingly hot sector, much of the crypto industry is becoming drawn towards it. Last week, the venture capital arm of Binance, once known as Binance Labs announced it is rebranding as YZi Labs to shift from a purely crypto-focused mandate to an ambitious strategy encompassing AI, biotechnology, and Web3 innovations.
“By venturing into new horizons in AI and biotech, while staying rooted in our Web3 foundations, we aim to push the boundaries of innovation and create lasting value for society,” explained Ella Zhang, the founding head of Binance LAbs.
Meanwhile, crypto miner Riot Platforms announced it is shifting its focus away from Bitcoin to AI in an effort to maximize its unused power. Riot revealed last week that it is exploring the potential of utilizing approximately 600 megawatts (MW) of unused power capacity for AI and high-performance computing (HPC) applications.
Riot has subsequently paused its Phase II Bitcoin mining expansion at its Corsicana site, which was originally expected to add another 600 MW of mining capacity.