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- Banananomics: Nuclear Fusion And The AI Energy Crunch
Banananomics: Nuclear Fusion And The AI Energy Crunch
Your between the lines of macroeconomic trends and disruptions.
Your between the lines of macroeconomic trends and disruptions.
Nuclear Fusion And The AI Energy Crunch
AI and Cryptocurrency will double data center energy consumption by 2026.
Inputs that matter: "You would be talking about the size of a country like the Netherlands regarding electricity consumption," Dutch scientist Alex De Vries told the BBC.
ChatGPT alone uses half a million kilowatt-hours per day.
Mish Talk reports, "Global electricity demand is expected to rise faster over the next three years, growing by an average of 3.4% annually through 2026."
"By 2025, global nuclear generation is forecast to exceed its previous record set in 2021."
The opportunity: "I think we still don't appreciate the energy needs of this technology," Sam Altman, CEO of OpenAI, said at a public appearance in Davos.
Tom's Hardware states, "An IEA Electricity 2024 report warns that ChatGPT requests cost nearly ten times more than a Google search in power."
Altman declares that we need an energy breakthrough such as fusion.
Reuters reports, "The United States and Japan announced a joint partnership on Wednesday to accelerate the development and commercialization of nuclear fusion."
TechCrunch details that Proxima Fusion, the first spin-out from the lauded Max Planck Institute for Plasma Physics (IPP), raised €20 million ($21.7 million) in a seed round to begin building its first generation of fusion power plants.
Another fusion startup, Helion Energy, raised a $500 million Series E two years ago, led by Sam Altman.
Zoom in: The UN 2030 agenda aims for net zero emissions, but the New Yorker asks, "How can the world reach zero if it keeps inventing new ways to consume energy?"
The Independent explains that nuclear fusion is described as the "holy grail" of clean energy, providing near-limitless energy by mimicking the natural reactions that occur within the Sun.
Between the lines: The new approach to fusion is only possible because AI can simulate the behavior of the plasma, thus bringing the prospect of viable nuclear fusion nearer, Dr. Francesco Sciortino, co-founder and CEO of Proxima Fusion, told TechCrunch.
In fusion, you use hydrogen and helium, two light elements that, when combined, form an atom weighing less than the original atoms.
Follow the money: Sam Altman has invested $375 million in Helion Energy.
According to The Independent, "Last year, the company became the first in the world to secure a purchase agreement for nuclear fusion energy after Microsoft made it part of their plan to transition to clean energy sources by the end of the decade."
"This first fusion power plant, for which the feasibility is being assessed in Chelan (County), will produce electricity that will go to the grid; (energy company) Constellation will serve as the Power Marketer for Helion's first customer, Microsoft," explains Jessie Barton, Helion communications director.
Cocoa's Long-Term Trend
Cocoa prices rose to new all-time highs on Thursday and have been climbing since January.
Inputs that matter: Due to extreme shortages, there are growing concerns that West African cocoa suppliers may default on supply contracts.
Ghana is the largest producer of cocoa in the world.
Bloomberg reports that the Ghana Cocoa Board is negotiating with significant cocoa traders to postpone the delivery of at least 150,000 MT of cocoa until next season due to a lack of beans.
The opportunity: Blue Line Futures Chief Market Strategist Phillip Streible explains that cocoa price increases are "a combination of things that won't get resolved anytime soon."
According to Bloomberg, the disappointing harvests from the Ivory Coast have attracted new investment to ramp up cocoa production in Brazil, the previous world leader.
Zoom in: The International Cocoa Organization (ICCO) is an intergovernmental organization comprising cocoa-producing and cocoa-consuming countries.
The London-based ICCO was created in 1973 after the first United Nations International Cocoa Conference, which created an international agreement for the commodity trade.
The current agreement has been in effect since 2012.
As Brazil increases production with the support of other BRICS nations, a new ICCO agreement may be reached soon.
Between the lines: Godiva's parent, London-based Plaids Foods Chief Executive Officer Salman Amin, describes ongoing "geopolitical disruptions" creating broader supply chain challenges and says the company is looking at ways to manage them and hedge risks.
Yahoo! Finance reports, "Cocoa prices have more than doubled this year, surpassing $10,000 a ton."
"The rally has been driven by a third year of shortages of cocoa beans from West Africa, the world's top growing region, as climate change and crop disease ravage trees."
Follow the money: Barchart details, "A negative factor for cocoa was last week's action by the Ivory Coast government to boost farm-gate prices for cocoa producers by 50% for mid-crop beans."
"Smaller cocoa exports from Nigeria, the world's fifth largest cocoa producer, are bullish for prices after Nigeria's Feb cocoa exports fell -18% y/y to 26,103 MT."
"As these two leading producing countries supply about two-thirds of global cocoa beans, any change in their production tends to have a significant impact on the cocoa market," the ICCO said.
Death By Mortgage Or Tiny House
According to Mortgage News Daily, the average 30-year fixed mortgage rate hit 7.29 percent on Wednesday, the highest reading since November.
Inputs that matter: This increase reflects the concern that the Federal Reserve will delay much-anticipated interest rate cuts forecasted in 2023.
"Mortgage rates have been drifting higher for most of the year due to sustained inflation and the reevaluation of the Federal Reserve's monetary policy path," said Sam Khater, Freddie Mac's chief economist to CNN.
Mortgage rates track the benchmark yield on the 10-year US Treasury note, which moves in anticipation of the Fed's decisions.
MarketWatch reports, "Oil appears to play a major role in this week's rise of the benchmark 10-year Treasury yield."
"Much of that move is due to rising oil prices, a factor to which the breakevens are particularly responsive," noted John Velis, an Americas macro strategist for BNY Mellon.
The opportunity: Yahoo! Finance reports, "The average sales price for houses sold in the country was $492,300, as of the fourth quarter of last year."
Amazon sells a 19 x 20-foot home that is ready for power and water for less than $20,000.
This move is reminiscent of the Sears mail-order homes available from 1908 to 1942, in which they sold tens of thousands.
Zoom in: Yahoo! Finance declares that a slowdown in home prices is expected during 2024.
This is due to rising interest rates, an increase in supply, and a decrease in demand.
Between the lines: Somewhere between buying a home alone and a tiny house is the new "buying with friends" option.
Fox Business reports, "Kristina Modares and Stephanie Douglass are co-founders of Open House in Austin, Texas. They work to help people purchase their first home — with friends."
When first-time home buyers face large mortgage payments, buying a home with a group of friends reduces the burden.
"People are shocked about buying with friends, but I think it will be normal in the next five years," Modares predicted.
Follow the money: Mortgage rates and construction costs are tightly connected with oil prices.
Federal Reserve Bank Chair Jerome Powell expressed concern about inflation with the rising oil price and is expected to forgo the June rate cuts.
In addition, part of the home value peak is a result of inflation and is expected to remain.
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Todd Moses (CEO)