An analysis of running a $20,000 local AI rig with approximately $200 per month in electricity costs shows that it takes about 27 months to become cheaper than a flat $200 monthly hosted subscription.
- The crossover point where the local hardware becomes the financially superior option is over two years after purchase.
- Before this period, the user is strictly worse off due to the high upfront capital expenditure.
- Sunk cost fallacy often leads users to perceive ongoing electricity costs as free once the hardware is paid off.
- The calculation excludes depreciation, potential resale value loss, opportunity cost of capital, and maintenance time.
- Including these additional factors pushes the actual breakeven point even further out than 27 months.
The author notes that while local setups may not be the cheapest option purely on cost, they offer benefits like privacy and offline access that subscriptions do not.