For this story, I will cover the importance of power in the ‘electrification of everything’ era. We will examine the collision of 4 S-Curves and what it means for our future. Our study will also encompass AI and data centers.
Then, I will get into some modeling around the energy storage business. I did a white paper about six months ago about how I believe the Megapack business - alone - is worth a trillion dollars worldwide.
Well, those numbers just got a lot bigger with the crazy news.
We have got to start with macro stuff because a big part of investing is to play where the puck is going to be.
The Chinese are electrifying at a ten percentage point per decade faster than the world. This is nine times faster than the rest of the world. The question is, are the Chinese wrong in what they are doing? No.
A recent study shows that the more energy a nation has, the more GDP per capita it has. It is a direct correlation. In the old days, oil and gas drove energy.
In the modern days, it is the ‘electrification of everything’ - everything!
The rise of artificial intelligence is now turbocharging demand for bigger data centers, transforming the landscape even more and taxing the region's energy grids.
For seven years, the biggest piece of FUD was that EVs would never succeed because the grid could not handle the load.
That was complete BS because there is a lot more demand coming and it is not from EVs!
Morgan Stanley recently supplied a report on data center power, estimating that we will need 150 million electric vehicles worth of power by 2030.
Much of this also dovetails into Bitcoin miners and why they are in so much demand.
They do not care about the Bitcoin ASIC miners, but they want the megawatts to process AI. Everything is colliding together really quickly. This is coming fit, fast, and furious.
Of course, Elon Musk is trying something different. They have built these 6 massive super cooling fans and I have been to this ginormous factory.
Of course - as Elon jokingly says - we are nothing without our fans.
If you own a data center, you will be very rich!
Currently, these 7,000 data centers use the same amount of power as the whole country of Italy.
Note: The FUD against Bitcoin for the longest time was that it uses the same amount of energy as Iceland in power.
By 2034, they are forecasted to use as much power as used by 1.4 billion people in India today.
Data centers are at another level in terms of power consumption in comparison to Bitcoin.
Renewables are crucial and Ireland has the most renewable data centers.
This might be why big companies like Facebook and Google have big data centers there. As we move forward, it will also be key to use a lot of renewable power to support these data centers.
Hence, solar power serves as a reactor in the sky but the dilemma is how to bring that power in and store it.
In this image, you can see the electricity production by source in the US.
Note there has been no new power generation since 2007. The US grid needs huge investments as people are scrambling for megawatt hours.
Electricity is the new oil!
Currently, most electric power comes from gas, which has to change. Therefore, many companies are positioning themselves in nuclear power, solar power, wind power, etc. Of course, they will also need something to store all of it.
Texas is an absolute powerhouse, which is why we see a lot of Bitcoin miners there and why Tesla is building a big factory there.
Electricity is key for everything going forward.
It is hard to believe that 70 days ago, Tesla stock was $140, and now it is headed to $250.
I always say risk happens fast, but what happened? What catalyst propelled the stock so much?
Well, it could be the
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