Key Points:
- AI, Bitcoin mining, and data centers are rapidly increasing electricity demand.
- Renewable energy sources alone can’t meet the growing energy needs.
- Companies like Microsoft are investing in nuclear power to address future power shortages.
- Also: Smart money is starting to look ahead to 2025’s biggest winners and has named “the Next Nvidia” to profit.
Doug and Lee discuss the skyrocketing demand for electricity driven by AI, data centers, and Bitcoin mining. The International Energy Agency (IEA) predicts that AI electricity usage by 2026 will match Japan’s total electricity consumption, which seems incredible but underscores the growing energy needs. They highlight how companies like Microsoft Corp. (NASDAQ: MSFT) are partnering with utility providers, such as Constellation, to explore alternative energy sources like geothermal and even reviving old nuclear reactors. The conversation emphasizes the importance of utilities having spare capacity to meet these increasing demands, as those at full capacity might struggle with the rising competition for electricity.
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Edited Video Transcript:
One of the things that we’ve seen recently, very recently, is that AI and Bitcoin mining, to a lesser extent, have driven the demand for energy, particularly electricity, through the roof.
The energy agency, the IEA, recently said that AI electricity use in two thousand twenty-six will be the same as total electricity use in Japan.
OK, it’s astonishing.
OK, so I don’t I know that that’s true, but I don’t believe it.
It’s like it’s so insane.
It’s true, but it’s for crazy people.
Well, and I think you’re leaving out and you’re exactly right.
But add into that mix data centers.
The sheer amount of power that is required to run mountains of servers in data centers and servers that are utilizing AI chips and all that.
But I mean, between the three of those, exponential growth of electricity has skyrocketed, and that’s not going to be accomplished by solar panels.
That’s not going to be accomplished by turbine wind farms off the East Coast.
That’s not going to accomplish any of that because the demands are so big, and we know one company that’s going all in.
Yeah, so I want to prove your point for a second.
There was an article in the Wall Street Journal today about Microsoft going around looking for geothermal place, you know, where is there a geyser like Yellowstone?
Maybe there’s something there we can use.
Nuclear, these new small SMRs.
Yeah, people are still afraid of nuclear which means it’s harder to introduce.
I think if you’re if you’re in the electricity business right now you’re in a good business what do you think.
I think you’re in great business and Microsoft you know has huddled up with constellation which is one of the biggest energy providers in the country.
And constellation is going to turn back on one of the reactors at three mile island now for our younger viewers, Three Mile Island was the last and only major nuclear disaster in the United States in nineteen seventy-nine.
And it was a Chernobyl type issue where one of the main reactors totally melted down.
And, um, the other one, the other reactor is the one that Microsoft is talking to Constellation about.
It did not melt down and it was fine.
It was shut down in twenty-nineteen just because they weren’t making any money on it.
You know, and Microsoft just literally said, look, we will work with you to fire that baby back up because we need power.
And that’s just one company on one nuclear reactor.
So what does that tell you about demand?
Well, I think if you’re smart and you shop these utilities and ask yourself, among other things, who might have spare capacity to see the utility stocks that sort of.
I think are more risky in a lot of ways are the ones where the capacity they’re at full capacity, they can’t do it right.
Right.
And this is why they are going to face political firestorms.
There’s going to be competition for electricity.
Rates are going to go up.
I don’t like the utilities where they are literally at full capacity and the capex to increase capacity is in the billions of dollars.
What I do like is guys like Constellation where they’re saying, look, we have alternatives so that we can go to these AI companies.
We can offer them something.
And that means that Constellation makes a lot of extra money.
Well, and again, you know, Microsoft’s concern is making sure Azure, you know, which is their competition to AWS, has adequate power.
And there’s clearly a threat.
Now, there was a recent meeting in New York City, I think it was in the Rainbow Room of all places, where they went to discuss what?
Discuss the reimplementation of nuclear power in the United States of America.
And at this juncture, it’s something Europe’s going to have to do because they’re going to have to do it because they don’t have power.
And since the pipeline got blown up, I don’t know if we’ve ever had complete answers on that, but they’re going to get forced into it.
And we’re going to get forced into it as well because corporate usage is going to just exponentially explode with data centers and AI and Bitcoin mining.
And yeah, companies that aren’t looking to the future and are out of capacity, they’re not going to gain it by adding batteries to store or things of that nature.
They need to produce more power.
Yeah.
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