Does the debt outrun the chip?

The mismatch

The tenors in the filed deals are getting longer. CoreWeave's DDTL 4.0 runs six years. Lambda Compute I runs about 6.6 years. IREN's Hardware 3 facility runs 5.5 years. CoreWeave's DDTL 5.5 has debt of about five years against customer contracts that average about three.

American Compute’s June 2026 residual-value report recommends ranges rather than a single depreciation curve. These are underwriting assumptions rather than promises of resale proceeds. A long-dated loan needs repayment cash flows that remain credible under weaker collateral values. Read the publisher’s methodology.

Resale and rental measures answer different questions. American Compute’s October 2026 Rack Report puts its broad GPU resale index at 75 against an H1 2025 base of 100, down 22.1% year on year. GetDeploying’s H100 comparison showed a median on-demand rate of US$3.80 per GPU-hour when checked on 25 October 2026. These measures cover different populations and neither establishes recovery proceeds for a particular financed cluster. Resale-index source · Rental comparison and methodology.

How the structures deal with it

• Amortise to the contract, not the asset. Lambda's term loan B amortises over about 4.4 years to match the useful life of the hardware. Most investment-grade GPU facilities pay down substantially within the contract term, so the balloon at maturity is small.
• Test value, not just cash. IREN's facility requires a prepayment if loan to cost exceeds 65%. That is the GPU version of the loan to value test in an aircraft loan.
• Rely on the contract. Where an investment-grade customer has committed to pay for the full term, as in the Microsoft-backed facilities, the residual value of the chip becomes a second line of defence rather than the first.

What aircraft finance can teach GPU lenders

1. Agree on how the asset is valued. Aircraft lenders rely on independent appraisers working to recognised standards, with base value and current market value defined in the documents. GPU finance has no equivalent standard yet. Facilities that define how value is measured, by whom and how often, will avoid disputes when a loan to value test is close.

2. Reserve for the refresh. Airlines pay maintenance reserves so that the asset returns in a known condition. The GPU equivalent is a refresh reserve or a cash sweep that builds up as the hardware ages, so the borrower can replace or upgrade chips without new money from the lenders.

3. Write the LTV test properly. Aircraft facilities set out what happens when value falls: a cure period, a top-up in cash or extra collateral, then prepayment. GPU facilities that only have a prepayment trigger give the borrower no room to cure.

4. Remember there is no Cape Town for chips. This is the point that does not carry over. Aircraft lenders have the Cape Town Convention and, in the US, section 1110 of the Bankruptcy Code. These give a creditor a clear international registry and a fast route to get the asset back if the lessee becomes insolvent. There is nothing like that for GPUs. A server rack sitting in a third-party data centre is subject to the local law of security, the landlord's rights and the insolvency regime where it sits.

What that means under English law

For a UK-situated GPU fleet, lenders should look at four questions. Can they take a fixed charge over identified equipment, with enough control to keep the charge fixed rather than floating? Has the charge been registered at Companies House within 21 days, failing which it is void against an administrator or liquidator (Companies Act 2006, s.859H)? How does the moratorium in administration (Insolvency Act 1986, Schedule B1, paragraph 43) limit their ability to enforce? And can the customer or the data centre provider terminate their contracts on insolvency, given the restriction on ipso facto clauses in section 233B of the Insolvency Act 1986, introduced by the Corporate Insolvency and Governance Act 2020?

None of these is new to asset finance lawyers. What is new is applying them to an asset that may be worth a third of its cost in eighteen months, sitting in a building owned by someone else. The GPU security guide compares the position in eleven countries.

The answer

Does the debt outrun the chip? In the best facilities, no: they amortise quickly, test value and lean on a strong contract. In weaker structures, yes, and the gap is being filled by optimism about the secondary market. The lesson from aircraft finance is that the asset is only as good as the lender's ability to value it, control it and take it back. On all three, GPU finance still has work to do.