Chinese firms access Nvidia H100 chips via overseas compute rental platforms
Chinese AI companies reportedly obtained access to restricted Nvidia H100 chips by renting compute capacity from overseas decentralised platforms that use blockchain and cryptocurrency to obscure transaction participants' identities. The US Department of Commerce stated it is investigating the practice, though lawyers said the arrangement does not violate export controls.
What happened
According to reporting by the Wall Street Journal on 26 August 2024, Derek Aw, a former bitcoin miner, secured funding from investors in Dubai and the US to purchase over 300 servers containing Nvidia H100 chips at a data centre in Brisbane, Australia. Within three weeks, these servers began processing AI algorithms for a company in Beijing.
Chinese AI companies obtain compute access through decentralised GPU platforms using blockchain-based smart contracts that allow payment via cryptocurrency, enabling participants to identify each other only by alphanumeric sequences. Derek Aw stated he may not know buyers' true identities because Chinese AI firms often conduct transactions through subsidiaries in Singapore and elsewhere.
A former Shanghai AI startup employee, Joseph Tse, disclosed that after his former employer could not rent compute capacity from Amazon Web Services, it switched to a decentralised GPU service with over 400 Nvidia H100-equipped servers at a data centre in California to train AI models.
Reported impact
US Senator John Kennedy stated in a July 2024 Senate committee hearing that the Commerce Department was allowing Chinese users to exploit loopholes in chip export controls. The Commerce Department's assistant secretary for export administration responded that the department was closely tracking illegal procurement networks and that 'this is what we're fighting.'
Index analysis
Legal experts stated that neither the buyers and sellers of compute capacity nor intermediaries violated any law, as US export controls target chip and equipment exports but do not restrict Chinese companies or their foreign subsidiaries from accessing US cloud services using Nvidia AI chips.
US cloud service providers including Amazon Web Services, Microsoft Azure and Google Cloud do investigate customer backgrounds, making it difficult for some Chinese customers to obtain the most advanced compute capacity. Decentralised platforms offer higher anonymity but carry elevated risk, as blockchain flaws could result in code and data theft, and accountability is unclear.
Governance controls
The US Commerce Department issued a rule in January 2024 intended to prevent malicious foreign entities from using US cloud computing services for large-scale AI model training. US cloud service providers argued the rule would not prevent misuse and could damage customer trust and weaken competitiveness.
Nvidia declined to comment on the reporting and stated it complies with US export controls and expects its partners to do the same.
Classification
Sources and evidence
This record was researched and written by the Index, based on the following original reporting.