The "$5.6 million lie"... The full story behind the biggest strategic deception in technology history! How did the "dragon" survive with just a scratch on Nvidia? 🇨🇳🇺🇸🕵️♂️
The world woke up to a financial earthquake, wiping out $58.9 billion in value from "Nvidia" in a single day. The cause? A rumor claiming that China (DeepSeek) broke the technology monopoly with a model costing only $5.6 million.
Today, we reveal this number was not a "miracle," but a finely crafted accounting trap.
Here's the full breakdown of what happened behind the scenes, and why professional analysts believe China remains technologically "choked," and what occurred was a re-pricing of reality, not a change in it. 🧠📉
1. True cost: From $5.6 million to $1.6 billion! (The Hidden Cost Structure) 💸🏗️
The number China promoted (5.6 million dollars) is the marginal cost of electricity and server operation for a single final training cycle.
But a report from (SemiAnalysis) revealed the hidden true bill:
Infrastructure: DeepSeek actually spent approximately $1.6 billion to build its capabilities.
Secret inventory: Founder "Liang Wenfeng" confirmed owning a massive stockpile of 10,000 NVIDIA A100 chips purchased and stored before sanctions in 2022.
Hidden funding: The parent company (High-Flyer), a quantitative trading fund, has injected over $137 million into infrastructure since 2021.
Analogy: It's like calculating the cost of a "pill" based only on the chemical ingredients (cents), ignoring the billions spent on labs, research, and factories to produce it!
2. The darkest secret: Huawei chips' failure in training (The Huawei Failure) 🇨🇳🚫
This piece of information overlooked by everyone is the most important from an investment standpoint.
In August 2025, after months of attempts with a Huawei engineering team at DeepSeek's facilities, the R2 model training project on Huawei Ascend 910C chips was halted.
Technical reason: The issue isn't speed, but "die-to-die bandwidth" between chips. Huawei chips suffer from communication bottlenecks that make them 10 to 20 times slower than NVIDIA in transferring data between units, causing training instability and failure at scale.
Result: DeepSeek was forced to revert to using NVIDIA chips (legal H20 or smuggled A100).
Meaning: U.S. sanctions have succeeded. China can run models (Inference) using its own chips, but it cannot perform frontier model training without NVIDIA.
3. Smart money's reaction: Jevons Paradox 🐂💡
While small investors sold, major funds (like Bridgewater and Renaissance) smartly repositioned themselves.
Paradox: When technology (AI) becomes cheaper and more efficient, demand doesn't decrease—it explodes.
Reasoning models: Models like (R1 and o1) consume 100 times more computing power because they "think" before responding.
Big players' spending: Amazon raised its 2025 capital expenditure to $125 billion, and Meta to $72 billion. The giants know efficiency means broader usage, thus greater demand for NVIDIA chips. That's why NVIDIA's market value later broke through the $5 trillion barrier.
4. Human cost: "Outsourcing" of thinking (Cognitive Fracture) 🧠📉
The report touches on a dark side beyond money. A study from the Swiss Business School proved a strong negative correlation (-0.68) between AI usage and critical thinking.
Cognitive offloading: Humans have started stopping thinking and relying entirely on machines.
Risk: Young people are most affected. We're building superintelligent AI, while the human generation loses the ability to engage in deep analysis.
5. "Abliteration": The black hole in regulation 🔓🔥
A technological movement called "Abliteration" (removal of constraints) has emerged.
Mechanism: Researchers discovered the "refusal direction" in model equations. With a simple tweak, a model's ethics and safety constraints can be removed in just a few hours.
Result: AI models are now completely uncontrolled—refusing no request (whether political or criminal)—and spreading beyond the control of any government or company. This is the "fifth model" that cannot be regulated.
Strategic takeaway:
What happened at the beginning of 2026 was not the "end of American dominance," but a reminder that China excels in "asymmetric warfare" through information.
Reality says: NVIDIA's infrastructure remains the "oxygen" of global AI, and U.S. sanctions are effective in choking China's training capabilities... at least for now.
Your portfolio question:
Are your investment decisions based on misleading news headlines? Or do you dive into technical details to see where "smart money" is going?
Share your thoughts on these shocking facts.. 👇🌍
