AI Token Basket Drops 12% as New Model DeepSeek Introduced on Hugging Face

As the general crypto market starts the week in the red, the AI sector is facing a particularly grey Monday morning. The AI token basket on CoinGecko fell 12%

A new AI model on the market, DeepSeek, has surged in popularity in the US since its release on 10 January, and currently sits at the #1 spot in Apple's App Store, according to app data research firm Sensor Tower.

DeepSeek is a large multi-modal model trained by a small Hangzhou-based startup founded in 2023 by High-flyer, billionaire Liang Wenfeng's hedge fund. Its AI engine is powered by Nvidia's H800 chips for training and its team comprises Chinese AI experts and PhD grads from ByteDance and Tencent.

The model, which is available for free on Hugging Face, was created with just $6 million and minimal GPU resources (compared to, say, ChatGPT's $157 billion valuation), and yet DeepSeek vastly outperforms the likes of leading AI giant, OpenAI.

DeepSeek’s ability to run on mobile devices further underscores its efficiency.

Wow DeepSeek R1 version 1.5B runs perfectly locally on my phone ?So you can have a model that outperforms GPT-4o and Claude 3.5 Sonnet on math in your pocket.

DeepSeek is powered by the DeepSeek-V3 model, which its creators say "tops the leaderboard among open-source models and rivals the most advanced closed-source models globally."

DeepSeek's Surprising Success Story

DeepSeek has taken the US by storm, surging in popularity and quickly becoming one of the top-grossing apps in the country. The model's success is due in part to its impressive capabilities, which users have praised for being superior to other AI models on the market.

DeepSeek is also able to run on mobile devices, thanks to its efficient design, which further contributes to its popularity among users.

As a result of DeepSeek's success, crypto and Web3 companies are now flocking to partner with the model's creators. Last week, the venture capital arm of Binance, once known as Binance Labs, announced it is rebranding as YZi Labs to shift from a purely crypto-focused mandate to an ambitious strategy encompassing AI, biotechnology, and Web3 innovations.

“By venturing into new horizons in AI and biotech, while staying rooted in our Web3 foundations, we aim to push the boundaries of innovation and create lasting value for society,” explained Ella Zhang, the founding head of Binance LAbs.

Meanwhile, crypto miner Riot Platforms announced it is shifting its focus away from Bitcoin to AI in an effort to maximize its unused power. Riot revealed last week that it is exploring the potential of utilizing approximately 600 megawatts (MW) of unused power capacity for AI and high-performance computing (HPC) applications.

Riot has subsequently paused its Phase II Bitcoin mining expansion at its Corsicana site, which was originally expected to add another 600 MW of mining capacity.