They are running at capacity for free users. They will be able to afford much higher capacity with MS money, and probably stop providing the service for free soon.

The APIs requests for the text-davinci-003 model released around the same time as ChatGPT also frequently fail with 503 errors.

One request costs about 1 cent to process? Is that what Altman is saying?

They have as many frre users as they are willing to pay for to present a free demo; rest assured that the fee for paid users is more than sufficient to pay for whatever capacity they need.

they aren't running out of capacity, they just can't afford 100k+ a day in compute. Number of users who will pay will be much less so I doubt they will have problems

They create the need by building limitations on the free tier.