Introduction

Computational infrastructure evolved dramatically over the past few decades, moving away from proprietary on-premises systems and embracing the advent of cloud computing. This paradigm shift has enabled more scalable and flexible resource management for enterprises across the globe in a wide variety of industries, also reducing capital expenditure as a result.

However, the centralization of cloud services introduced challenges like vendor lock-in or data sovereignty issues. Recently, Decentralized Physical Infrastructure Networks (DePIN) emerged as a solution. By distributing computing and storage across independent nodes, they challenge traditional cloud providers with a more resilient, cost-effective, and censorship-resistance business model.

Reducing Capital Expenditure Through Decentralization

Traditionally, enterprises had to invest heavily in physical hardware, which was costly to purchase, maintain, and scale, particularly for smaller businesses. In contrast, the decentralized nature of DePIN reduces dependence on centralized intermediaries, aligning incentives and minimizing bureaucratic overhead by using blockchains as a single source of truth.

Figure 1: The Virtuous Cycle of Public Cloud

Source – Microsoft

The rise of cloud computing marked a shift from capital expenditure (CapEx) to operational expenditure (OpEx), democratizing access to computing resources and enabling rapid scaling for new businesses. This shift created a virtuous cycle for cloud providers, allowing them to reinvest in infrastructure, expand services, and attract more customers. As more enterprises migrated to the cloud, the demand for cloud services started to increase exponentially as a result of network effects. Today, nearly two decades after the launch of Amazon Web Services (AWS), we are still witnessing the long tail of cloud adoption, with many organizations continuing to transition to cloud-based architectures.