What AI Needs Now
“All of the Above” — What AI Needs Now
Last year we described AI as “the monster that ate the power grid” — but will it really end up consuming 99% of all electricity generation?
That would starve every other industry of the power they need — to say nothing of our homes.
But spend enough time on social media, and that’s the claim you’ll see attributed to former Google CEO Eric Schmidt.
It seems Congress has finally gotten around to holding hearings about an urgent matter we first raised in January of 2024 — the prodigious demands that AI data centers will make on the U.S. power grid.
The grid was under strain even before AI burst into public consciousness in November 2022 with the release of ChatGPT 3.5.
Throughout the 2010s, utility operators were shutting down coal and nuclear plants — and they weren’t bringing nearly enough wind and solar capacity online to take up the slack.
All those “green” regulations and “renewable” mandates came back to bite hard in incidents like the Texas winter blackout of early 2021. (Europeans also paid a price for the same lunacy, as we saw this week with the nationwide blackouts in Spain and Portugal.)
Last month, the powerful House Energy and Commerce Committee invited Schmidt among others to testify about AI’s electricity demands.
To be clear, we’ve gone back and forth over the transcript and nowhere did Schmidt forecast AI might suck up 99% of all power generation. Beware of what you read from slop accounts on X.
What Schmidt did say, however, was nearly as alarming.
For instance: “People are planning 10 gigawatt data centers now... An average nuclear power plant in the United States is one gigawatt. How many nuclear power plants can we make in one year while we're planning this 10-gigawatt data center? It gives you a sense of how big this crisis is.”
Or this: “Data centers will require an additional 29 gigawatts of power by 2027 and 67 more gigawatts by 2030. Gives you a sense of the scale that we're talking. These things are industrial at a scale I have never seen in my life in the terms of energy planning.”
And Schmidt is no newbie to the issue of data centers and power consumption. His time as executive chairman of Google and its parent company Alphabet in the 2010s coincided with a huge buildout of data centers to accommodate new big-bandwidth uses — video streaming, high-end gaming, crypto mining.
Schmidt didn’t emphasize this point, but we will: Building new power plants doesn’t happen with a snap of the fingers.
Even under the best of circumstances, the permitting process for a new natural gas-fired power plant takes over a year. Often it takes several years. Nuclear, of course, takes far longer.
Figure on a typical timeline of 18 months and the process begins tomorrow. The fact remains data centers are being built faster than power plants.
In that case, you’re looking at the scenario we spun last summer — there’s simply not enough juice to go around.
Homeowners and businesses alike would be dealing with AI-induced blackouts. Either that, or the data centers would have to power down for hours or days at a time.
Schmidt’s solution? He’s one of the people who opt for “all of the above” when it comes to available power-generation sources.
“What we need from you,” he told the assembled congress members, “is we need the energy in all forms, renewable, non-renewable, whatever. It needs to be there, and it needs to be there quickly.”
Schmidt might well get his wish straight from President Trump. No congressional action required.
The issue is absolutely on Trump’s radar. During a conversation with Elon Musk last summer, he said, "You are going to need enormous amounts of electricity, nearly double what we currently generate for the entire nation, if you can believe it."
The accuracy of the claim isn’t the point. The point is that the president recognizes the problem — and the time crunch.
He sees red tape that needs to be cut — to wit, all those “clean energy” mandates along with restrictions on drilling and mining.
What’s more, it all comes back to the “American birthright” thesis of Paradigm’s macroeconomics authority Jim Rickards. There’s a $150 trillion trove of mineral wealth lying beneath millions and millions of acres of federally owned land.
Team Trump is keen to tap into it — in no small part because of how that bounty can help power AI. Not just the natural gas and uranium and coal to supply power plants — but also the copper, nickel, chromium and other metals essential for the grid’s smooth operation.
And as we’ve been telling you all week, Jim believes Trump will take the next essential step in this process tomorrow — giving you the chance to accelerate your gains from America’s $150 trillion mineral riches.
Time’s a-wasting if you want your shot at three new official recommendations, each with the potential to 10x your money. Give Jim’s latest briefing a look right here — before it’s too late to act.
About Those Ukrainian Minerals…
As impressive as the mineral bounty of the “American birthright” is… the mineral bounty of Ukraine will almost surely be a bust.
As perhaps you’ve heard, U.S. and Ukrainian officials signed a deal last night in which Washington will gain access to some of Ukraine’s natural resources.
The deal comes two months after the epic shout-down at the White House between Trump and Ukraine’s President Zelenskyy.
The New York Times is not wrong when it says, “The Trump administration did not immediately provide details about the agreement, and it was not clear what it meant for the future of U.S. military support for Ukraine.”
A more pithy hot take comes from the frequently insightful “Armchair Warlord” account on X…
All the problems with this deal that we cited here in February remain.
The most valuable Ukrainian minerals — the so-called rare earth elements — lie mostly under territory that Moscow will control in a postwar settlement. Otherwise, Ukraine has mostly coal and iron ore — both of which exist in abundance throughout much of the planet.
At the same time, the deal amplifies the risk that Ukraine becomes Trump’s war. Trump is staring down what Jim Rickards calls a “Vietnam moment” — analogous to Richard Nixon choosing to carry on Lyndon Johnson’s war for five more years.
Barring some unexpected development, informed observers we follow (like Daniel L. Davis at the Defense Priorities think tank) say the war looks set to grind on indefinitely until Moscow achieves its aims — not territorial conquest as much as the total destruction of the Ukrainian army.
The Worst Is Over (Maybe)
The worst might be over for the stock market — at least for a while.
When we left you yesterday, Mr. Market was bummed by the first-quarter GDP numbers. But by day’s end, the S&P 500 scratched out a tiny gain, closing at 5,569. This morning it’s up a solid 1.3% to 5,642.
As a refresher from yesterday, 5,563 marks the midpoint between the index’s all-time high set on Feb. 19… and the most recent low set on April 8.
If the S&P can end the week comfortably over 5,563, that might well clear the way for the index to reclaim those February highs and continue rallying from there.
That said, the April job numbers are due tomorrow. Expectations among Wall Street economists are low — a meager 130,000 new jobs for the month. Stay tuned…
Helping drive the rally today are solid quarterly numbers from two of the “Magnificent 7” stocks.
Sales at Facebook parent Meta grew 16% — and CEO Mark Zuckerberg is blowing off the risk that the knock-on effects of tariffs will put a dent in his company’s advertising revenue. Wall Street is buying what he’s selling, pushing META up 6% on the day.
Meanwhile, Microsoft reported big growth on both the top and bottom lines; MSFT shares are up over 9% at last check.
Apple and Amazon report their numbers after the closing bell today. AAPL is hanging tough — basically flat on the day — after a federal judge slammed the company for violating an antitrust ruling, even referring the case to prosecutors for criminal contempt.
The big story in the commodity complex is crude — trying to pick itself up off the floor after yesterday’s pummeling.
As we write, a barrel of West Texas Intermediate fetches $58.90 — up from yesterday, but still under $60. Apart from the worst of the tariff scare last month, we haven’t seen sub-$60 oil since early 2021.
“I simply don’t understand how we can have two hot wars happening simultaneously, a trade war between the world’s two biggest superpowers and a weak — and getting weaker — dollar, with oil falling out of bed,” writes Sean Ring in today’s Rude Awakening.
His best guess? The tariff-driven disruptions to the supply chain that we mentioned both yesterday and Monday. Looking at the charts, Sean says oil’s downside target is an eye-watering $40.72.
Gold got whacked after we hit “send” on yesterday’s edition. It’s down $100 in less than 24 hours, the bid now $3,218.
If it makes you feel any better, that was a record high three weeks ago. Get used to these $100-or-more intraday moves, both up and down.
Silver’s retreat continues — now $32.29.
Bitcoin just crested the $97,000 mark for the first time since February. Intriguing…
Great Moments in Free Speech
It’s not quite true that the Texas House of Representatives just voted to criminalize memes — but the backlash to House Bill 366 is both understandable and valid.
Supposedly the measure aims to require more transparency for political ads in the AI era. As The Texas Tribune describes it, the bill requires ads “to include disclosures if the image, audio, or video recording used were substantially altered.” Violators face up to a year in jail and a $4,000 fine.
Sponsored by former House Speaker Dade Phelan (R-Beaumont), the measure passed with a bipartisan supermajority of 106-39.
“Public backlash has been fierce,” reports the RIftTV website, “with many calling the bill a response to Phelan’s personal grievances over mocking memes.”
Critics who watched the debate on the House floor see a slippery slope, such as this First Amendment attorney who says the bill effectively criminalizes satire and parody.
A handful of constitutional conservatives in the House cast dissenting votes. “We have an electorate that is informed and we already have platforms where people can talk,” said Rep. Andy Hopper (R-Decatur). “It is not the role of government to sit there and be a nanny state police force to decide.”
The only upside we can report here is that the bill’s fate in the Texas Senate is uncertain…
Surcharges
On the subject of Amazon’s aborted effort to break out the effects of tariffs when listing prices — an effort quickly squashed under pressure from the Trump administration — a reader writes…
“I am wondering if this is the first time something like this has been floated and/or done.
“Didn't some companies begin to show the ACA (Obamacare) surcharge on their receipts? Thus showing how much the ACA was adding to the cost of the product or service. I believe that was also met with hostility from the Obama administration, and many of the companies removed that line from their receipts.
“I wanted to run it by the 5 and get your thoughts. Is this issue something new or just a case of ‘who is in office’?
“Always love the insight from the 5! Keep up the great work!”
Dave responds: You have a good memory. From our voluminous archives comes this item we mentioned in 2023…
That’s a Los Angeles restaurant, tacking on a 4% surcharge for employees’ health insurance. The restaurant owner got roasted on social media, but he said he was hardly alone.
Under the Affordable Care Act of 2010, small businesses with 50 or more full-time equivalent employees must offer health coverage. Employer premiums have soared in recent years, owing to the fact the American health care system is a crony-capitalist cartel.
So yes, there you go, an Obamacare surcharge.
In addition, there are many instances of restaurants and other service businesses tacking on surcharges when states jack up the minimum wage.
Back to the Amazon incident: Key players in the shipping/logistics biz like Flexport CEO Ryan Petersen think AMZN shouldn’t have backed down so quickly…
Hmmm…
Best regards,
Dave Gonigam
Managing editor, Paradigm Pressroom's 5 Bullets
