How a Safewaterline number is made, and what it is not

1. Status of a number

Each figure carries one of four statuses. The status says where it came from and how much to trust it.

Status	Meaning	Example
listing	A public price read from a provider's page on a date, quoted and linked. The on demand rate is the 90 day median of these.	H100 at $2.99 an hour on a pricing page
model	A Safewaterline estimate from stated parameters, reproducible from the script.	H100 fair value at 48 months
comp	An observed sale, auction or broker print, with date and channel. None published yet.	a lot of 256 H100 sold at auction
filings	Read from a public SEC filing, with the verbatim quote checked against the document.	a facility size in an 8-K exhibit

A number with no status is not published. "verify" marks a desk estimate that is waiting on a document, such as a street price waiting on an invoice.

2. Residual value

Fair value at age a months is the present value of the net cash a unit can earn over the rest of its physical life, plus salvage, capped at a share of replacement cost. It is an income approach. It will be replaced by a market approach, comp by comp, as the desk sells units.

Parameter	Value	Why
Hours per month	730	calendar hours; utilisation is applied separately
Discount rate	14% a year	what a lender asks of an unsecured GPU cash flow in 2026 private credit
Physical life	96 months	8 years from first volume shipment, the longest life a lender would count
Salvage	3% of new price	parts, memory and scrap at end of life
Replacement cap	92% of new price	a used unit never prices above a new one less a dealer's margin
Rental decline	16 to 22% a year, per model	the fall in the on demand rate as newer parts ship; higher for AMD and Blackwell, lower for Ampere which has already fallen
Utilisation	60 to 80% at launch, decaying to 30 to 40%	exponential decay with a 36 month constant; a fleet fills early and empties as it ages
Operating cost per GPU hour	$0.35 to $0.80, per model	power at 1.3 PUE and $0.08/kWh, colocation, network, remote hands; set per model by its board power
New price	$10,000 to $45,000, per model	2026 street price per board, status verify until invoices are on file

The formula, per month t from age a to the end of life:

net(t) = max(0, rate₀ · (1 − decline)^((t−a)/12) · util(t) − opex) · 730
value(a) = Σ net(t) / (1+r)^(t−a+1) + salvage / (1+r)^(life−a), capped at 0.92 · new price.

The rate starts from today's licensed on demand rate for every age. That means the curve answers "what is a unit of this age worth today", not "what was it worth when it was that age". The curve shifts when the rental input shifts.

3. Recovery and advance

Figure	Value	Why
Orderly liquidation value	82% of fair value	90 days, broker channel, buyer pays freight; the haircut covers commission, testing and time
Forced liquidation value	62% of fair value	30 days, auction channel, as is; the haircut the desk has seen in distressed GPU lots in 2025 and 2026
Advance	85% of orderly value	the asset based lending convention; shown also as a share of fair value, rounded down to 5%, which gives 65%

The two haircuts are the first parameters the comps will replace. Each published comp will record the channel, the days to sale and the spread to the model price on that date.

4. The rental input

The on demand rate per model is the Safewaterline on-demand rate: the median of every public listing for that model dated within the 90 days before the as-of date. A listing is a price read from a provider's own pricing page, an archived copy of it, or a published survey, with the date, the quote and the link kept. When the window holds no listing, the last one is carried forward and the months since it are shown. Every listing behind a rate is on the portal.

5. The risk score

Four factors, 25 points each, 100 is safest. The desk sets each score at a quarterly review and publishes the reason beside it. A score describes a class of asset or fleet, never a borrower.

1. Obsolescence. How fast the next generation cuts this asset's earning power. Evidence: generations behind, rental rate trend, software support.
2. Resale depth. Buyers, channels and spread to model price within 90 days. Evidence: published comps, broker inventory, auction results.
3. Enforcement. Finding, seizing, moving and selling the asset after a default. Evidence: serialisation, site access rights, rack scale coupling, jurisdiction.
4. Counterparty. Who pays the borrower, on what tenor, and whether that contract travels with the asset. Evidence: contract tenor, assignment clauses, offtaker credit.

Bands: A 80 to 100, B 60 to 79, C 40 to 59, D below 40. The band maps to the advance table on the credit desk.

6. The register

The register is read from SEC EDGAR by software that fills one row per facility and attaches the verbatim quote for every cell. A quote that cannot be found in the filing downgrades the cell to absent. Rows that cannot be verified sit in a review queue and are not shown. Duplicate rows for amendments are folded under the original. The full register, the monthly certificate builder and the regbook are at the lienbook link on the Register panel.

7. Limits

• No comps yet. Every value is a model. The curve becomes a benchmark when the comp column fills.
• The model ignores the capacity contract. A unit under a 36 month contract with an investment grade offtaker is worth more than the curve says. That is the desk's job, not the index's.
• One rate per model. Region, SLA, cluster size and interconnect all move the real rate.
• Rack scale systems, NVL72 and later, are not priced per GPU on the open market. The B200 and B300 curves are the weakest on the page.
• No robot, equipment or ship curves. Those classes have a framework and a risk score only.

8. Change log

Date	Version	Change
2026-10-28	v0.1	First publication. Six GPU models, income model, two liquidation haircuts, risk score framework, register snapshot.