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AI doomsayers blamed in OpenAI’s undoing

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Boardroom blunders that drove out OpenAI chief executive Sam Altman and have employees threatening to join him at Microsoft are a reminder that no matter how powerful artificial intelligence is, it is in the hands of people who make mistakes
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OpenAI has gone from ruling the world of artificial intelligence with ChatGPT to chaos, its chief executive ousted seemingly for advancing too fast and too far with the risky technology.

The exit of Sam Altman set in motion a series of events that saw the upstart company’s biggest investor, Microsoft, swoop in to hire the toppled CEO and begin a process of building an OpenAI clone in the Redmond, Washington-based tech giant.

In some ways the looming result to the weekend saga is hardly a surprise, with many wondering how the board members could be naive enough to think they could win the duel with the Microsoft-backed Altman.

Microsoft pumped over $10 billion into OpenAI earlier this year to the point that critics, including ultra-wealthy entrepreneur Elon Musk, said the hot startup was owned by the Windows software maker in all but name.

“Microsoft is providing vast amounts of money and computational power and some of that of course ends up having some influence,” said Brendan Dolan-Gavitt, an associate professor at New York University.

Silicon Valley was left aghast by the Friday firing of tech celebrity Altman, with the investor community, and entirety of OpenAI’s own staff, furious that the four-person board got in the way of building the AI age.

“We are not happy about it. We want stability here,” said Ryan Steelberg, CEO of Veritone, a company that helps firms develop artificial intelligence.

Instead of OpenAI becoming the new Apple or Google, the harsh critics see a deeply troubled startup that fell victim to the pearl-clutching of an incompetent board that was divorced from reality.

“We reached this point because minuscule risks have been hysterically amplified by the exotic thinking of sci-fi mindsets, and clickbait journalism from the press,” said veteran venture capitalist Vinod Khosla, an early investor in OpenAI.

– ‘Fallible people’ –

But other observers less concerned with turning AI into big bucks warned that the drama in San Francisco meant that something so vital shouldn’t be left in the hands of the inexperienced or the profit driven.

“This is an important reminder that as brilliant as the designers of tech like AI — scientists or engineers — are, they are still just fallible people,” said Paul Barrett, deputy director of the NYU Stern Center for Business and Human Rights.

“That is why it is important not to just defer to them on a technology that everyone agrees has significant risks even as it promises tremendous benefits,” he added.

Gary Marcus, a respected AI expert, said OpenAI’s civil war “highlights the fact that we can’t really trust the companies to self-regulate AI where even their own internal governance can be deeply conflicted.”

Government regulation, notably by the tougher-minded European Union, was needed more than ever, he added.

OpenAI was actually created in 2015 with the goal of being a counterweight to Google, which was by far the leader in developing AI technologies that mimic the operations of the human brain.

Though nothing is known for sure, assumptions are rife that Altman’s increased efforts to monetize the company’s leading GPT-4 model, all while keeping its inner functioning a secret, was becoming problematic for the company’s board.

Already, several senior staff at OpenAI deserted the enterprise to build Anthropic.AI over concerns that Altman was moving ahead too recklessly.

– ‘OpenAI is done’ –

Many are shocked that the board had the power it did, or were naive enough to think they could actually use it.

Three of those board members are thought to have connections to the effective altruism movement, which frets over the risks of AI, but that critics say is cut from reality.

Whatever their beliefs, by Monday the board were overseeing a company in name only, with virtually the whole staff committed to a pledge of seeing them go or quitting the firm for Altman’s project at Microsoft.

“Unless OpenAI can block those departures, OpenAI is pretty much done at this point,” analyst Rob Enderle told AFP.

This could mean a history-making victory for Microsoft, which has already seen its share price reach record levels over its ties to OpenAI.

“This is like the best possible scenario for them, and the OpenAI board I am sure is kicking itself. They were clearly detached from reality,” said Carolina Milanesi, analyst at Creative Strategies.

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Sam Bankman-Fried appeals fraud conviction, 25-year jail term

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Fallen crypto wunderkind Sam Bankman-Fried has formally appealed his conviction and sentence
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Fallen cryptocurrency wunderkind Sam Bankman-Fried has appealed his federal conviction and 25-year jail sentence in a sweeping fraud case, according to a legal filing made public Thursday.

News of the appeal comes two weeks after US District Court Judge Lewis Kaplan set the prison term and ordered Bankman-Fried, known as “SBF,” to pay $11 billion in forfeiture.

Bankman-Fried had soared to the top of the crypto world, becoming a billionaire before age 30 and turning FTX, a small start-up he cofounded in 2019, into the world’s second largest exchange platform.

But in November 2022, Bankman-Fried’s breakneck rise came crashing down, with a deluge of customer withdrawals and revelations that billions of dollars had been illegally moved from FTX to Bankman-Fried’s personal hedge fund, Alameda Research.

He was convicted by a federal jury in New York in November 2023 on seven counts of fraud, embezzlement and criminal conspiracy. 

During last month’s sentencing hearing, Bankman-Fried expressed regret about the firm’s demise, which also affected many colleagues.

“It haunts me every day,” he said. “I made a series of bad decisions.”

But the judge said Bankman-Fried had not fully accepted responsibility.

Bankman-Fried said “mistakes were made, but never a word of remorse for the commission of a terrible crime,” said Kaplan, who characterized the violations as “brazen” and called out SBF for his “exceptional flexibility” towards the truth.

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Corporate climate pledge weakened by carbon offsets move

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Critics say offsets give corporations a free pass to keep polluting without cleaning-up their act
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The world’s main benchmark for vetting corporate climate action has been accused by its own staff of “greenwashing” after allowing businesses to use carbon credits to offset pollution from their value chains.

The ruling by the Science-Based Targets Initiative (SBTi) was slammed as a “coup” on Thursday and has sparked a revolt by staff who want the decision reversed and the non-profit’s CEO and board to resign.

Experts say it could irreversibly damage the credibility of the SBTi, which is partnered with the UN Global Compact and WWF, and is the gold standard for assessing the net zero plans of big business.

An internal letter sent to SBTi leadership, and seen by AFP, said the board’s decision was taken without adequate consultation, defied science, and “resulted in significant harm to our organisation’s reputation and viability.

“We stand ready to support any efforts aimed at ensuring that the SBTi does not become a greenwashing platform where decisions are unduly influenced by lobbyists, driven by potential conflicts of interest and poor adherence to existing governance procedures,” read the letter to SBTi’s CEO and Board of Trustees.

“In the event that our concerns are not addressed, SBTi staff will have no choice but to take further action,” it added, without elaborating on what that would mean.

It was signed by staff from “the Target Validation Team, Target Operations Team, the Technical Department, Communications, Impact and IT, and multiple department heads.”

Comment has been sought from SBTi and the We Mean Business Coalition, one of its main partners. 

– ‘Extremely serious’ –

On April 9, SBTi issued a statement rolling back its previous opposition to the use of carbon credits to offset Scope 3 emissions. 

These occur in the value chain, and represents the lion’s share of the carbon footprints — in some cases more than 90 percent — of most companies.

Carbon credits are generated by projects that reduce or avoid emissions — like renewable energy, tree planting and forest protection — and sold to companies wanting to offset pollution from their activities.

But critics say offsets give corporations a free pass to keep polluting without cleaning-up their act, and their usage to make claims of “carbon neutrality” has become increasingly contentious.

Gilles Dufrasne from Carbon Market Watch, who sits on the technical advisory group to SBTi, said allowing their usage by companies represented a “fundamental U-turn on SBTi policy so far”.

“It is pretty much a coup from the board,” he told AFP, adding at least one member of the advisory group had resigned in protest.

“It’s extremely serious, I’ve never seen anything like it.”

Verification by SBTi allows companies to say their climate plans align with science and the goals of the Paris agreement to limit global warming.

More than 4,000 companies and financial institutions have sought to have their net zero claims verified by SBTi, the nonprofit said.

Dufrasne said the decision was “extremely damaging” to corporate climate responsibility because it sent a signal that companies could just pay someone else if they can’t meet their own targets.

“I’m not sure if SBTi’s credibility can survive this,” he said.

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Bitcoin miners face survival test in ‘halving’

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The bitcoin 'halving' happens every four years
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Miners of bitcoin will soon face a halving of the reward for operating the most popular cryptocurrency, in a pivotal event that is a test of survival, industry commentators say.

The halving, held every four years and next due this month, exposes the weakest mining companies and individuals because it slashes their main source of income, according to experts.

Bitcoin is created as a reward when computers solve complex puzzles to decide which miner wins the privilege to validate the block and receive the reward, in a costly process using vast amounts of energy.

That reward has been fixed for the last four years at 6.25 bitcoins per new block, and is expected to drop to 3.125 bitcoins later this month. The new reward will total more than $210,000 according to Wednesday’s price level.

“The block reward halving tends to ‘shake-out’ the weaker mining operations,” Simon Peters, analyst for trading company eToro, told AFP.

“Unfortunately for some, with the lower block reward received it no longer becomes profitable to mine bitcoin and the operation shuts down or gets acquired by a larger rival.”

– ‘Downward spiral’ for some –

Since the last halving in May 2020, the digital unit has enjoyed a record-breaking run.

That streak continued this year propelled by moves toward greater trading accessibility and the looming halving — which is aimed at limiting the number of bitcoin in circulation.

Bitcoin peaked last month at an all-time pinnacle of just over $73,797 and this has partly offset the impending reward shortfall for the mining community.

Yet diminishing returns could stop miners from investing in the latest and quickest computer technology — and they could even pause operations as galloping costs outweigh earnings.

Peters warned this could spell “a downward spiral” for some miners whose activities become uncompetitive.

“Their probability of mining a block reduces due to having less computational resources,” he added.

“If there is a significant drop in the bitcoin price post-halving then lower margins can be greatly exacerbated.”

Bitcoin mining firm Hut 8 Corp announced in March that it would cease operations at its Drumheller facility in Alberta, Canada, partly blaming excessive energy costs.

– Race for performance –

In order to remain competitive, titans of the crypto sector are racing to cut costs, invest in efficient machines and deploy cheaper and greener energy sources to both cool and power their enormous banks of bitcoin-mining computers.

“The big things that we’ve done is we’ve been increasing our fleet efficiency,” said Taylor Monnig, head of mining operations at CleanSpark.

The US firm bought 160,000 new “Bitmain S21” computers which “are currently the most efficient machines available” and will replace older-generation technology, he told AFP.

CleanSpark has also developed a passive cooling system to further reduce its energy bill.

Canadian competitor Bitfarms claims to derive 80 percent of its power from hydroelectricity and plans further expansion.

Hydroelectric energy is “not only green but also sustainable economically in terms of its price”, said Bitfarms chief mining officer Ben Gagnon.

– Consolidation –

High costs have also powered consolidation in the sector, with some mining firms buying stakes in rivals — and even merging like when Hut 8 and Bitcoin Corp combined late last year.

The new group, Hut 8 Corp, has mining operations but has also diversified its income streams to cover fixed costs, selling services to host and operate mining facilities.

Another sector heavyweight, Marathon Digital, has accumulated a war chest totalling $1.5 billion according to its latest accounts, to help fund potential acquisitions that need turning around in order to ramp up capacity.

“We are able to look at opportunities,” Marathon chief growth officer Adam Swick told AFP.

“If there might be sites that are struggling, if there’s a site with an attractive electricity pricing that just has an older generation machines that might not be as efficient… that might be an opportunity for Marathon to come in, buy the site, and upgrade the machines. And then suddenly it’s an attractive site.”

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