In the high-stakes world of generative AI, OpenAI wears the crown. With a valuation that reportedly flirts with the half-a-trillion-dollar mark, the company is the undisputed king of the boom. But beneath the palace floors, there’s a frantic sound—the sound of a furnace burning through cash at an alarming, almost comical rate.

Despite its triumphant public-facing image, the financial reality of running the world’s most advanced AI models is staggering. According to recent filings, the ChatGPT maker lost a whopping $12 billion last quarter alone. This isn’t just a rounding error; it’s a balance sheet hemorrhage.

Yet, this figure seems to only encourage the company’s colossal ambition. OpenAI is reportedly looking to spend well over $1 trillion over the next several years on chip manufacturing and infrastructure. This kind of spending stokes persistent, nagging fears over an AI bubble so vast it could potentially wipe out the entire US economy if it were to burst.

And the new poster child for this unsustainable burn rate? The company’s headline-grabbing AI video generator, Sora.

The $15 million-a-day problem

Sora, which debuted in late September to a mix of awe and terror, is an economic black hole. The app—which is still only available to a minuscule number of early users but is already being used to spew a disturbing quantity of largely meaningless AI slop onto the web—is likely costing the company an astronomical amount of money.

According to estimates reported by Forbes, Sora could already be costing the firm $5 billion a year, or roughly $15 million per day, just to run.

To understand why, you have to look at the “sticker shock” of a single creation. Cantor Fitzgerald analyst Deepak Mathivanan broke it down for Forbes, estimating that a single ten-second clip could cost OpenAI roughly $1.30 in compute power.

That may not sound like much, but consider the scale. If just one million users generated their 30 free clips a day, the daily cost would eclipse $39 million.

The cost is so high because generating video is exponentially more resource-intensive than text. A tool like ChatGPT, which already requires vast server farms and resources, is just crunching language tokens. Sora is being asked to render coherent, high-definition video frames from scratch, a task that demands a voracious amount of processing power.

Even OpenAI’s own team admits the numbers don’t work. In an October 30 tweet, Sora’s lead, Bill Peebles, was candid, stating that the “economics are currently completely unsustainable.“

While Forbes notes that these estimates rely on “several moving targets“—like the fluctuating prices of AI chips, potential efficiency gains, and the number of users—the bottom line is inescapable: it is staggeringly expensive to run a large-scale video-generating app.

The “classic internet playbook”

So, why launch it?

In a blog post in early October, OpenAI CEO Sam Altman admitted that the company rolled out the app without a sound financial plan to recoup the enormous costs. It’s a strategy that has Silicon Valley veterans nodding in recognition.

“It’s a classic internet playbook to not focus on the costs initially so much as building an audience and building an engagement,” financial group Mizuho analyst Lloyd Walmsley told Forbes. “We’ve seen time and again, these companies can figure out ways to monetize this engagement.“

That monetization phase is already beginning. Late last month, OpenAI started tightening the belt, limiting users to 30 free videos per day. Beyond that, it’s starting to charge $4 for roughly ten additional videos.

But even that free daily limit is living on borrowed time.

“Eventually we will need to bring the free gens down to accommodate growth (we won’t have enough [graphics processing units] to do it otherwise!),” Peebles tweeted. “But we’ll be transparent as it happens.”

He signed off with a message that felt both celebratory and ominous: “In the meantime, enjoy the crazy usage limits.”

Slop, copyrights, and other fires

Apart from blowing billions on a service that is, for now, primarily polluting the internet with slop memes, OpenAI has plenty of other Sora-related fires to put out.

For one, the company is actively drawing the ire of rightsholders. The model’s uncanny ability to replicate distinct artistic styles has creators and studios crying foul. Last week, a group representing major Japanese publishers—including Studio Ghibli, Bandai Namco, and Square Enix—sent a letter to OpenAI demanding that it stop using their copyrighted content to train the video-generating AI tool.

This legal jeopardy highlights the core tension of Sora: its massive cost is being subsidized by scraping the internet for proprietary data, which in turn creates a service that has, thus far, proven most adept at cultural vandalism.

In short, Sora is only the tip of the iceberg of OpenAI’s alarming financial situation. As the company continues to spend tens of billions of dollars on fire, it’s under major pressure to justify its spending.

And at the end of the day, it’s all to generate clips of SpongeBob SquarePants cooking meth and Mister Rogers going on expletive-filled rants.