Buffett vs. Bitcoin

Bigger than HBO’s “Electric Money” documentary October 08, 2024 [WEBSITE]( | [UNSUBSCRIBE]( The untold reason Buffett hates Bitcoin. Buffett vs. Bitcoin By Chris Campbell CHRIS CAMPBELL Dear Reader, Get ready for HBO’s “Electric Money”—Bitcoin’s secrets will be exposed tonight. Apparently. Just in case it doesn’t live up to the hype… Allow me to tell you a story that probably WON’T make it to the documentary. It’s the real reason Warren Buffett hates Bitcoin. Credit where it’s due: I learned this story last week while talking to a digital wildcatter at the [Amplify 2024 summit](. Bitcoin Ate His Lunch The story goes like this… In 2021, following Winter Storm Uri, Berkshire Hathaway proposed dropping $10 billion to build gas-powered peaker plants across Texas. What’s a peaker plant, you ask? In short, they’re backup plants that charge a HUGE premium to run. Despite their inefficiencies, peaker plants have historically been used to stabilize the grid in emergencies or high-demand periods. Of course, Buffett is no fool. Peaker plants are cash cows. The margins are ginormous. While an average megawatt hour costs $40, peaker plants can cost up to $5,000 per megawatt hour. Peaker plants only kick in when there’s no other option, which means they have a captive market willing to pay a premium. It’s a business model built on scarcity, and as long as they’re needed, people have to foot the bill. (While some blamed Bitcoin miners for the high costs of electricity during Texas’ peak demand, it was really the peaker plants who set the price.) AND, the kicker: they often make money no matter what. Some markets provide capacity payments to peaker plants simply for being available as a backup, regardless of whether they are actually called to operate. Buffett wanted to fund ten of these cash-spewing factories in Texas. But then something happened that most people didn’t expect: China Banned Bitcoin Mining As you probably know, ERCOT, or the Electric Reliability Council of Texas, manages Texas’s electric grid, ensuring power supply meets demand. After Uri, ERCOT’s leadership was overhauled, with a new CEO brought in to help prevent similar disasters in the future. His name was Brad Jones. Brad came in at an interesting time. Texas was watching massive amounts of Bitcoin miners moving their rigs from China and setting up shop. And, with a little nudge from the industry, Brad had a lightbulb moment: Screw the peaker plants. Instead of signing on for expensive plants that would mostly sit idle, Jones doubled down on this fresh Bitcoin mining wave as part of a demand response strategy. And… it worked. Even as weather events got worse, Texas stayed lit up. No blackouts, no emergency spending. In fact, Jones publicly credited Bitcoin miners for stabilizing the grid and giving renewables a place to thrive. His big revelation was that Bitcoin mining could act as a flexible, controllable load on the grid. Unlike peaker plants… Bitcoin miners can quickly adjust their power usage based on grid demand. They can consume excess energy during off-peak times, helping to balance supply, and then shut down instantly when demand spikes, freeing up electricity for other users. This ability meant that Bitcoin miners could stabilize the grid without the massive costs associated with peaker plants. In other words… Bitcoin mining offered a smarter, more adaptable alternative, which led him to pivot ERCOT’s strategy away from expensive peaker plants. (Sorry, Buffett!) Tomorrow, we’re going to talk about one Bitcoin mining company I discovered last week at the conference. It’s public. It’s lesser-known. And, by many accounts, it’s undervalued. Stay tuned. THAT SAID… while it has potential, it’s probably NOT going to be the biggest opportunity of 2024 in emerging tech. For that, I urge you to check out our own Ray Blanco’s prediction for Tesla Day, coming this Thursday, October 10. According to Ray, one small company could enter its “banana zone” when Musk takes the stage. [Click here for all the details]( before it’s too late. And don’t forget to check out Davis Wilson’s piece below. Until tomorrow, Chris Campbell For Altucher Confidential MASSIVE New AI Prediction Just Issued Elon Musk will take the stage at Telsa’s investor event on October 10, where he is expected to reveal his biggest plans for Tesla’s future. We believe that one tiny AI stock will not only be absolutely critical to these plans but could also be the most important AI stock to the future of the markets AND your personal wealth. [Go here to learn how to get the ticker details ASAP.]( OpenAI COO Says Buy NVDA By Davis Wilson DAVIS WILSON If you’re looking to buy Nvidia, don’t just research Nvidia. Research the whole industry. - Check its competitors like AMD and Qualcomm. - See what its supplier TSMC is saying. - Pay close attention to its customers like Meta Platforms, Microsoft, and Alphabet. Of course, Nvidia’s unique financials, guidance, and management commentary is important. But you’ll likely find plenty more relevant information to your buy/sell decision from external factors – like competitors, suppliers, and customers. I mention this because the Chief Operating Officer of OpenAI just gave a rare interview on CNBC. His name is Brad Lightcap. What he said spiked Nvidia’s stock price 3% yesterday and the stock is continuing to move higher another 3-4% today as I write this. To give you a sense of the significance here, Nvidia’s market cap gained $223 billion in these last two trading days, or roughly the size of McDonald's. Here’s what he said: Lightcap: “We think we’re going to end up needing a lot more [compute power].” Interviewer: “Ultimately, it’s like a boundless need for compute?” Lightcap: “Well certainly we’re optimistic.” Interviewer: “Even with the new models, even though they’re efficient, they still consume even more [compute power]?” Lightcap: “You can throw arbitrary amounts of compute at these models and they just get smarter. And they can think harder, they can solve harder problems, and we’re just at the beginning of that paradigm.” Interviewer: “$6.6 billion [in recent fundraising] comes in, where do you use it? Lightcap: “It’s going to be primarily compute. That’s going to be the biggest input to these models working.” If you recall, I wrote about the [“three pillars” of AI]( two weeks ago. Those pillars are compute, algorithms, and data. Compute refers to the hardware and infrastructure created by companies like Nvidia. Algorithms are the mathematical models or methods that AI systems use to analyze data. OpenAI fits into this bucket. The third pillar is data. AI systems rely on vast amounts of data to learn patterns, make predictions, and continuously improve their performance. OpenAI’s COO just reiterated that the demand for compute (supplied primarily by Nvidia) is not stopping anytime soon. In fact, they’ll likely spend the majority of their $6.6 billion in recent fundraising on AI chips. Add Lightcap’s comments to the list of other tech execs saying the same thing: Microsoft’s CFO announced the company is going to spend more money next year versus this year to build out its AI capabilities. (They spent $19 billion just last quarter.) Amazon’s CFO is projecting higher spending on AI development in the second half of the year versus the first half. (Total expenditures was $30.5 billion in the first half.) Alphabet CEO Sundar Pichai recently said he’d rather over-invest in AI versus under-invest and risk falling behind on this generational technology. And Meta’s CFO recently increased its projected AI spend by billions of dollars. If you’re researching Nvidia and don’t look externally for insights, you likely would not know these quotes exist. In my opinion, however, these quotes are the best reason to own the stock. Remember this next time you’re evaluating any stock to buy/sell. Of course, you can also just stick with us here at Altucher Confidential where we do the work for you. Regards, Davis Wilson For Altucher Confidential Rate this email Like Dislike Thanks for rating this content! Looks like something went wrong. Please try to rate again. [REMINDER] Regarding Your Altucher’s Investment Network Subscription! I wanted to check in and make sure you’re still satisfied with your subscription to Altucher’s Investment Network. I ask because I still have yet to hear back from you regarding [this MASSIVE upgrade offer.]( By this time tomorrow, you could be enjoying an entirely new level of service – but only if you take action immediately. To see how to claim your subscription upgrade, [click here now.]( ☰ ⊗ [UPDATE PREFERENCES]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your Altucher Confidential e-mail subscription and associated external offers sent from Altucher Confidential, feel free to [click here,]( or manage your newsletter preferences [here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@altucherconfidential.com. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized financial advice. We allow the editors of our publications to recommend securities that they own themselves. However, our policy prohibits editors from exiting a personal trade while the recommendation to subscribers is open. In no circumstance may an editor sell a security before subscribers have a fair opportunity to exit. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. All other employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Altucher Confidential is committed to protecting and respecting your privacy. We do not rent or share your email address. Please read our [Privacy Statement.]( If you are having trouble receiving your Altucher Confidential subscription, you can ensure its arrival in your mailbox by [whitelisting Altucher Confidential.](