DeepSeek’s launch changed the AI landscape. While it did record more downloads than OpenAI's ChatGPT a week after its release, it also spurred the creation of the Stargate Project. A day after the DeepSeek-R1 release, President Trump announced the $500 billion Stargate Project which would position the US as a leader in AI innovation. A joint venture with OpenAI, SoftBank, and other corporations, Stargate will create jobs, re-industrialize the country, and provide strategic capability to protect national security, the announcement read.
Like most of President Trump's executive orders, this was received with mixed feelings. With some X (formerly Twitter) users claiming it's a ruse to control aspects of our lives.
A few weeks later, China announced its AI program—a $138 billion (1 trillion Yuan) initiative to support tech start-ups and new technologies. Most saw it as a direct response to the Stargate Project.
DeepSeek vs Other AI Models: The Race to Cost Efficiency
DeepSeek-R1 was designed at a fraction of what it cost to build other AI models. Per a detailed research paper published by the developers, the Chinese firm deployed various tech tricks to cut down the cost and time needed to build the chatbot. It cost only $6 million in raw computing data. In comparison to other AI models like Meta’s, it is about one-tenth of what was spent by the tech giant.
Compared to OpenAI and other AI models, DeepSeek has shown better results while also requiring less time and money to train. In the aforementioned research paper, DeepSeek leveraged four innovations—Reinforcement learning, Reward Engineering, Distillation, and Emergent behavior network. They also altered the learning approach by:
- Reducing the amount of junk information disseminated to users
- Processing at a phrase level rather than as individual words
- Built-in specialized agents.
By combining these learning approaches, the search processing speed increased by a dozen times while the processing cost was reduced by 95%. Basically, this means that with DeepSeek, achieving results requires 20 times less hardware.
Amid the hype, DeepSeek triggered a plethora of alarms in the United States, with some reporting that OpenAI’s Sam Altman has called for its ban.
Statistics from Nasdaq show that a week after its release, tech stocks dropped by 3.4%, with Nvidia stock declining by a staggering 17% (a $589 billion loss in market cap).
A Bubble Burst for Hardware Companies in AI
Seems like DeepSeek is more than just a threat to the US, it is a bubble burst for hardware companies in AI, as it is proof that less infrastructure is needed for building in AI than we previously thought. It will act as a catalyst for the new wave of competition where new leaders armed with improved efficiency and lower operational costs will emerge.
DeepSeek could spur the much-needed paradigm shift from a hardware anecdote to a software one. We could witness a takeover in the coming years as more companies actively enter the GPU manufacturing market. Furthermore, we could also see a switch beyond GPUs to efficient software systems.
Is DeepSeek Positive for the Crypto Market?
DeepSeek’s cost disruption, technical advancement despite restrictions, unprecedented global usage, business model threat, and location raise alarms in the US. Some X users expect actions from the US government, citing the Huawei case as an example of America’s fierce commitment to be at the vanguard of technological advancements at all costs.
With stock prices plummeting because of this AI chatbot, is the crypto market next? Are there any positives of DeepSeek to the crypto industry?
Cryptocurrencies were built on the principles of decentralization powered by blockchain technology. DeepSeek, as an open-source AI solution, aligns with that vision. Its AI models and source code are publicly available for anyone to distribute or modify, promoting collaboration and innovation in the AI landscape. Similar to how blockchain empowered developers to build on its source code, DeepSeek provides an AI framework where users can seamlessly integrate and leverage its LLM. In a short time, we could witness the first set of AI agents based on DeepSeek.
The AI landscape is ridiculously expensive, LLMs require huge investments running into billions of dollars. The exorbitant operational cost has deterred developers from building AI-powered trading agents to offer better trading decisions and eliminate existing industry problems. DeepSeek's open-source model introduces a cost-effective approach. Unlike existing AI models, it engages different experts for different tasks, guaranteeing efficiency and lower costs. Due to reduced overhead costs, DeepSeek will drive competition, enabling the influx of advanced AI-based crypto solutions. It will also increase the number of AI projects in the trillion-dollar market. Currently, a few AI-powered crypto projects with model training capabilities have integrated DeepSeek.
Once proven to be sustainable, DeepSeek’s cost-effective model will dispel the financial burdens of building and launching AI-based crypto projects, enabling AI-optimized tools, on-chain intelligence, AI-powered trading assistants, and AI-driven DeFi resources.
Bullish for the Crypto Market
DeepSeek opens a blue ocean for start-ups in the cryptocurrency market. Most importantly, it is bullish for the market and will drive competition on a global scale, promoting decentralization and collaboration—two standout principles of blockchain technology and the cryptocurrency industry.
With AI and crypto still in its early stages, we can be certain of unrivaled advancements in the future.