Power Play: Investing In Energy For Innovation

Power Play: Investing In Energy For Innovation

23 Apr, 2024 | Market Insight


Power Play: Investing In Energy For Innovation

Date: 24/4/2024

As technology strides forward, the world’s energy demands have skyrocketed, with artificial intelligence (AI) at the forefront of this surge. This escalation poses significant challenges and opportunities—an area we have recently begun to delve into.

The rise in energy requirements extends well beyond AI. Data centres are vital for powering our digital landscape, cryptocurrency mining operations require massive amounts of juice, and the widespread adoption of electric vehicles contributes to the exponential growth in electricity demand.

Technological Drivers of Increased Energy Demand

Data Centres and AI

The excitement surrounding generative AI and its advanced digital capabilities comes with significant hardware demands. This need for extensive data processing to generate human-like speech, text, images, and videos has escalated the demand for data centres on top of the already steep rise in cloud computing needs.

Electric Vehicles

The global shift toward electric vehicles (EVs) is placing unprecedented pressure on energy grids. As EV adoption accelerates, the demand necessitates robust charging infrastructure. This infrastructure must be capable of supporting numerous, often simultaneous, charging sessions that require substantial electrical power.

Cryptocurrency Mining

Cryptocurrency mining is also a notably power-intensive process. Mining operations, which secure and verify transactions across blockchain networks, require substantial computational power and, consequently, vast amounts of electricity.

Addressing the Limitations of Aging Energy Infrastructures

It is evident that the current energy infrastructure is significantly challenged in accommodating the rapid rise in demand driven by new technologies.

Investment Opportunities in Energy Infrastructure

The rising electricity demand could potentially unveil numerous growth opportunities for discerning investors.

The TAMIM Takeaway

As we navigate the complexities of an increasingly electrified world, the heightened demand for energy underscores the significance of improving infrastructure and increasing supply to meet evolving needs.

Disclaimer: ExxonMobil (NYSE: XOM), Google (NASDAQ: GOOG) and Microsoft’s (NASDAQ: MSFT) are currently held in TAMIM portfolios.