This week, a topic that has been circulating in Silicon Valley surged into the limelight: AI tokens as remuneration.

The concept is quite clear — instead of providing engineers solely with salaries, equity, and bonuses, companies would additionally offer them a budget of AI tokens, the computational units that drive tools such as Claude, ChatGPT, and Gemini. These can be utilized to operate agents, automate tasks, and process code. The argument is that enhanced access to computing resources increases engineers’ productivity, and that more efficient engineers hold greater value. This is seen as an investment in the individual that possesses them.

Jensen Huang, the leather-jacket-clad CEO of Nvidia, seemed to ignite everyone’s interest when he proposed during the company’s annual GTC event earlier this week that engineers should receive about half of their base salary again — in tokens. According to his calculations, his leading personnel may expend around $250,000 annually in AI compute. He termed it a recruitment strategy and forecasted that it would become customary throughout Silicon Valley.

It is somewhat ambiguous where the concept was initially conceived. Tomasz Tunguz, a notable VC in the Bay Area who operates Theory Ventures with a focus on AI, data, and SaaS startups — and whose insights into data have earned him a dedicated audience over time — was discussing this back in mid-February, stating that tech startups were already incorporating inference costs as a “fourth component to engineering remuneration.” Utilizing information from the compensation tracking platform Levels.fyi, he estimated a top-quartile software engineer’s salary at $375,000. Add $100,000 in tokens and you arrive at $475,000 total compensation — meaning around one dollar in five is now allocated to compute.

This is no accident. Agentic AI has gained significant traction, and the launch of OpenClaw in late January hastened the dialogue considerably. OpenClaw is an open-source AI assistant intended to function continuously — processing tasks, generating sub-agents, and managing a to-do list while its user is asleep. It’s part of a wider shift towards “agentic” AI, referring to systems that take sequences of actions independently over time rather than merely responding to prompts.

As a result, token usage has skyrocketed. Where an individual writing an essay might utilize 10,000 tokens in an afternoon, an engineer managing a fleet of agents can expend millions in a single day — automatically, in the background, without typing anything.

By this weekend, the New York Times compiled an insightful examination of the so-called tokenmaxxing phenomenon, discovering that engineers at firms like Meta and OpenAI are engaging in competition on internal leaderboards tracking token usage. Generous token allocations are discreetly emerging as a standard job benefit, akin to dental insurance or complimentary lunch of previous times. One Ericsson engineer in Stockholm informed the Times that he likely spends more on Claude than he earns in salary, although his employer covers the costs.

Perhaps tokens will indeed establish themselves as the fourth element of engineering remuneration. However, engineers may wish to proceed with caution before accepting this as an unequivocal victory. Increased tokens could imply greater power initially, but with the rapid pace of change, it doesn’t automatically ensure enhanced job stability. One factor is that a substantial token allocation brings with it large expectations. If a company is effectively subsidizing a second engineer’s compute resources on your behalf, the underlying pressure is to achieve results at double the rate (or more).

Moreover, a more complex issue arises: when a company’s token expenditure per employee approaches or surpasses that employee’s salary, the financial rationale for headcount begins to shift in perspective for its finance team. If the compute performs the tasks, the question of how many humans need to be coordinating it becomes increasingly unavoidable.

Jamaal Glenn, a Stanford MBA and former VC turned CFO in financial services based on the East Coast, similarly highlights that what may appear as a benefit can be a strategic approach for companies to exaggerate the perceived value of a compensation package without raising cash or equity — the elements that genuinely accumulate for an employee over time. Your token budget doesn’t vest. It doesn’t increase in value. It doesn’t factor into your forthcoming offer negotiations the way a base salary or equity award does. If companies succeed in normalizing tokens as part of pay, they might find it simpler to maintain flat cash compensation while pointing to an expanding compute budget as proof of investment in their staff.

That’s advantageous for the company. Whether it benefits the engineer hinges on queries most engineers still lack sufficient information to tackle.