By Micky Irons, founder of Mickai.
Ask a finance director what they own after five years of a cloud AI subscription, and watch the pause. The honest answer is nothing. Not a model, not a weight file, not a line of the substrate that processed a single invoice. They own a stack of paid invoices and a renewal notice. The capability that ran their business evaporates the moment the direct debit fails, and every improvement they funded with their own usage data quietly compounds on someone else's balance sheet.
This is not an accounting curiosity. It is the central question of whether artificial intelligence is something a business has or something a business merely rents. The answer changes everything downstream: how the asset is valued, how it is taxed, how it is defended in an audit, and whether it survives a vendor going dark, raising prices, or rewriting its terms on a Tuesday.
An asset is something you can carry forward
The dullest line in accounting is also the most powerful. An asset is a resource the business controls, from which future economic benefit is expected to flow. A model you own and run on your own hardware fits that definition cleanly. It sits on the books. It has a cost, a useful life, and a residual value. The finance director sets the depreciation schedule, not a vendor's pricing committee.
A subscription fits a different definition entirely. It is an operating expense, consumed in the period it is paid for, buying nothing the business can carry into next year. There is no asset to capitalise, no value to depreciate, no holding to defend. You spend the money, the year ends, and you start again at zero. Repeat that for a decade and you have funded a capability you will never own.
The distinction between depreciating a capital asset and absorbing a perpetual operating expense is the difference between building equity in a house and paying rent on it forever. Both keep you dry. Only one leaves you with something at the end.
The smith does not rent the ingot. He forges it, and what cools on the anvil is his to keep.
The depreciation schedule is the whole point
When you own the model, depreciation stops being something done to you and becomes something you do. You set the useful life. You choose straight line or reducing balance. You match the write-down to the real economic rhythm of the asset, faster in the early years when the architecture moves quickly, slower as a specialised model settles into a stable role.
This is ordinary capital discipline, the same logic a manufacturer applies to a press or a fleet operator applies to a lorry. The machine has a cost on the day it is commissioned. It earns its keep across a defined life. It carries a residual value you can plan around. None of this is exotic. It is simply what owning a productive asset has always meant, applied at last to the intelligence that now runs the business.
A subscription offers none of these levers. You cannot accelerate a write-down on a thing you do not hold. You cannot defer one. You cannot plan a residual on a capability that returns to the vendor the instant you stop paying. The schedule is theirs, and it ends in nothing.
A subscription is rent on intelligence. An owned model is intelligence you can put on the balance sheet, depreciate on your own terms, and still hold something real at the end of its life.
The black box the auditor cannot ignore
Here is where most ownership arguments stop, and where the real one begins. Owning a model is necessary but not sufficient. An auditor cannot value an asset they cannot inspect. If the model is a black box, even one you happen to own, its place on the balance sheet is contestable. How was it valued. What does it actually do. Can you prove the version running today is the version you capitalised last year. Can you show what it decided, and why, on the day it mattered.
A model that cannot answer those questions is an asset in name only. The auditor will discount it, qualify it, or refuse to recognise it. The finance director carries a number on the books they cannot fully defend. That is not ownership. That is a liability wearing an asset's clothes.
What turns a holding into a documented holding
The thing that resolves this is not a better licence or a friendlier vendor. It is a record. A model becomes a valuable, defensible, depreciable asset at the precise moment its behaviour becomes documented, replayable, and provable to a third party. The record is what converts a capability into a holding the auditor can value, the tax authority can recognise, and the board can defend.
Every ingot carries its serial. The stamp on the metal matches the line on the ledger, and the match is the asset.
The serial mark on the ingot
This is the part of the Mickai Sovereign Intelligence Operating System (SIOS) that I care about most, because it is the part that turns ownership from a slogan into a balance-sheet entry. Inside the SIOS, every consequential action is sealed into an Open Audit Record. The record is signed under FIPS 204 ML-DSA-65, the post-quantum signature standard, so the seal holds even against the cryptographic threats now on the horizon.
Think of it as the serial mark hammered into the ingot the moment it leaves the forge. The model did a thing. The action is stamped, dated, and signed. The version is named. The inputs and the outcome are sealed. And the record is replayable: an auditor can reconstruct what happened, confirm the signature, and satisfy themselves that the asset behaved as documented. The forge does not just produce the metal. It catalogues every piece on the ledger beside the anvil.
A sealed, replayable audit record is what lets a finance director write a number against a depreciating AI asset and defend it without flinching. It is the documentation that makes the holding a holding.
What the record actually buys you
The practical consequences of a sealed audit record run straight through the work an auditor and a finance team actually do.
- Valuation: the asset is no longer a guess. Its version, behaviour, and history are documented and signed, so it can be assessed on evidence rather than vendor assertion.
- Depreciation: a known, versioned, inspectable asset has a defensible useful life, which means a defensible write-down schedule the auditor will sign off.
- Audit defence: when a regulator or auditor asks what the model decided and why, the answer is a replayable record under a post-quantum signature, not a shrug.
- Continuity: because the model and its records live on your own hardware, fully offline-capable, the asset does not vanish when a vendor changes terms or disappears.
- Tax position: a recognised, depreciating capital asset opens capital treatment a perpetual operating expense can never reach.
None of these are available to a subscription, at any price, because a subscription is consumption, and consumption leaves no record you control and no asset you keep.
A holding, not a hope. Each model catalogued, signed, and laid in order on a ledger the auditor can read.
Sovereignty is the precondition, not the slogan
None of this works if the model lives somewhere you cannot reach. The whole argument rests on the asset and its records sitting on the operator's own hardware. That is why the Mickai SIOS runs fifty specialised brains locally, fully offline-capable, each one a model the operator controls rather than calls. The audit records are sealed on that same hardware. The asset and its provenance live together, under one roof, in the operator's hands.
This is what sovereignty means in accounting terms, stripped of any romance. It means the asset cannot be repossessed by a change of pricing. It means the documentation cannot be deleted by a vendor's retention policy. It means that when the finance director points at a line on the balance sheet, the thing it refers to is physically present, inspectable, and theirs. You cannot depreciate a server farm you have never seen, governed by a contract that can change under you. You can depreciate a machine in your own building, running a model you forged, recording every action it takes.
The cost most subscriptions quietly bury
There is a second cost to renting that rarely reaches the balance sheet and should. Every interaction with a cloud model is a contribution. Your queries, your corrections, your domain-specific edge cases, the hard-won patterns of your own business, all of it flows into the improvement of a capability you will never own. You are paying to train your replacement, and the training data is your own operational life.
An owned model inverts this completely. The usage improves the asset on your books. The corrections you make refine a holding you control. The compounding works for you instead of against you, and the value accrues to the entity that paid for it. Over a decade, that difference is not a rounding error. It is the gap between an appreciating capability and a deepening dependency.
Why we built the substrate this way
I will be direct about the engine underneath. The Mickai SIOS sits on 101 filed UK patent applications, around 2,234 claims, covering the substrate that makes owned, audited, sovereign intelligence practical. Pantheon, our sovereign Bitcoin-anchored Layer 1, anchors the trust layer beneath it, and we are opening a 30 million pound PAN token round to scale the substrate further.
But the patents and the token round are not the argument. The argument is the one a finance director can test in an afternoon. Can you put your AI on the balance sheet. Can you depreciate it on a schedule you control. Can your auditor inspect, value, and defend it. Can you prove what it decided on the day a regulator asks. If the answer is no, you are renting, whatever the contract calls it. If the answer is yes, you own an asset, and the difference will show up in every year-end for as long as the business runs.
The work is done when the metal is stamped and the ledger is written. What is forged and recorded is owned.
The schedule you control
Depreciation is a quiet privilege. It says the thing you bought was real enough to wear down, valuable enough to write down, and yours enough to plan around. A subscription denies you that privilege forever, because there was never an asset to depreciate, only a payment to repeat.
So forge the model. Stamp it. Catalogue it on a ledger your auditor can read. Then set its schedule yourself. That is the whole difference between intelligence you rent and intelligence you own, and it is the only version that still belongs to you when the smith banks the fire.
Written by Micky Irons. Originally published at https://mickai.co.uk/articles/the-depreciation-schedule-for-a-model-you-own. More from Micky Irons and Mickai at mickai.co.uk.
