• The real reason China is blocking crypto…
  • Tesla is making the energy grid more resilient…
  • Nothing will stop the self-driving trend…

Dear Reader,

Talk about a bad idea…

In March, U.S. doughnut chain Krispy Kreme announced that it wanted to “show our support for those who choose to get vaccinated.” The popular chain started giving out a free glazed doughnut to anyone who could prove that they had been vaccinated for COVID-19.

Better yet, no purchase is required at all. Anyone with proof of vaccination can come back every day through the end of 2021 to receive a free doughnut. The company has already given away more than 1.5 million doughnuts.

The company further stated that it “is finding ways to be sweet.”

A doughnut and a good cup of coffee sound pretty nice, right? So why is this such a terrible idea?

Other than being 65 years or older with multiple comorbidities, the number one condition linked to severe illness or death related to COVID-19 is obesity.

This is a well-known fact that sadly isn’t discussed much at all by the medical community or public health experts – at least not publicly.

The other fact is that doughnuts are bad for our bodies. A year ago, I was 50 pounds overweight and pre-diabetic. I felt good and exercised regularly. But I was very unhealthy. 

As I wrote in The Bleeding Edge yesterday, I had to make some radical changes to my lifestyle and consumption in an effort to get healthy again.

Regular intake of the kinds of ingredients in Krispy Kreme doughnuts will result in disease, inflammation, obesity, a terribly weakened immune system, and, ultimately, an early death.

I wouldn’t want that for anyone. That’s why I think the stunt is so ridiculous. It was clearly driven by public relations. And it was solely meant to drive more foot traffic into the stores.

It worked brilliantly. The media soaked it up rather than reporting on the obesity epidemic… or the actual published research related to COVID-19.

I chose not to write about this in March. I didn’t want to drive any more foot traffic from my subscribers. And I certainly didn’t want to encourage an unhealthy habit like a free doughnut a day for the rest of the year.

And in the back of my mind, I kept thinking that there must be something else to the story. There had to be another business driver…

And now we know that there was… Krispy Kreme was gearing up for its own initial public offering (IPO). Its ticker will be appropriate: DNUT. I’m not kidding.

Just this morning, Krispy Kreme filed its registration statement for the IPO with the Securities and Exchange Commission (SEC). It’s real, and it’s the reason that the company was trying to be “sweet.”

And because of the SEC filing – not the doughnut filling – we can see the impact that the free doughnuts had on the company’s revenue. 

Krispy Kreme reported a 23% increase in revenue in the first quarter of this year compared to last year. We can be confident that the second quarter numbers will be strong year over year as well. 

The backers behind Krispy Kreme found a way to goose the numbers in order to show strength heading into the IPO.

The company used to be public, went bankrupt around 2005, and was purchased by private equity back in 2016. After five years of cleanup and restructuring, the private equity team is ready to take the company public again. 

I haven’t reviewed the numbers or the business yet, so I don’t have an opinion about the IPO.

It’s important to remember that valuation, company strategy, product positioning, market growth and trends, and the financial health of the company are the key factors that we should use in determining if a company is a good investment or not. 

And buying shares in a company just because their doughnuts taste good is not a smart way to make an investment.

Decisions like that will almost certainly lead to bad financial health and – in this case – physical health. 

We made it to summer… Here’s to being healthy.

Now let’s turn to today’s insights…

China is removing the competition…

China recently banned financial institutions and payment companies from providing services related to cryptocurrencies. This joins the country’s current four-year ban on cryptocurrency trading and initial coin offerings (ICOs).

This impacts any form of registration, trading, clearing, and settlement of crypto transactions, as well as any financial institution providing a custody or trust service.

But China didn’t stop there. It also went a step further and included crypto mining operations.

The news hit the industry hard, especially because it was released in the middle of the recent drop in price for bitcoin and just about every cryptocurrency.

China’s government claims it simply wants to stamp out speculation. That way, the capital of its citizens won’t get swept up into the cryptocurrency trend.

Many in the industry and media see China’s actions as broadly negative.

I see something different, however…

That’s because one of the main risks of bitcoin is the threat of a “51% attack.” This happens when an individual or colluding group of miners control 51% of the mining power. Because they have a majority, they could literally change transactions on the blockchain.

And with the recent developments out of China, the chances of this kind of attack are now reduced.

That’s because more than 65% of the world’s mining power is in China. Getting rid of this concentration improves the network’s health in the long term. It also improves the likelihood of a decentralized network.

And while this is great for bitcoin, it’s also good for other blockchains. It will likely make all blockchain networks more decentralized. This is a healthy development for the industry.

But here’s what I find even more interesting… Why now?

China could have taken this stance two years ago when it first put its foot down against cryptocurrency exchanges and ICOs. Instead, it is doubling down on its stance by eliminating any cryptocurrency-oriented business in the country.

I believe this has to do with China getting ready to launch its digital yuan – the DCEP. That makes this ban perfectly logical. It eliminates any perceived competition to its state project.

We already know China is expanding, testing, and getting ready to launch its central bank-backed digital currency on a large scale.

So it makes sense to remove currencies that might limit its success as a reserve currency of the world.

China’s central bank digital currency is getting closer to deployment. The country is setting the stage for it to see widespread use.

And once it launches, it will light a fire for other countries to speed up their programs over the coming years, including the U.S. That’s why I’ve presented on the coming financial reset.

This will remain a fast-moving and eventful space. We’ll keep tabs on it in the months to come.

Tesla is advancing the electricity grid…

Tesla announced it has now installed over 200,000 Powerwalls, and it continues to work through a multi-quarter backlog of orders.

That means Powerwall installations will continue to soar in the coming months.

These Powerwalls are large lithium-ion batteries installed either inside or outside our homes. Their main purpose is to store power – ideally, that generated from a Tesla solar roof.

Each one can hold up to 13.5 kilowatt-hours (kWh). That’s enough power to last almost the entire day for a typical home.

What’s interesting here is these Powerwalls can also come in handy for the power grid and act as mini-power plants.

That’s because in addition to storing energy from solar panels, these Powerwalls can draw energy from the grid when demand is low and electricity is at its cheapest.

This means in moments of blackouts or brownouts, a household can rely on its own energy from Powerwalls. With several of these units stacked next to one another, you can get enough energy to sustain a home through a multiday blackout.

Graphic of Powerwall Charging

Source: Tesla

What’s more, these Powerwalls can actually send energy back into the grid. Energy can move in either direction.

To see such demand for these Powerwalls is incredible. The more that are installed, the more resilient the electrical grid and storage infrastructure become.

Energy can be on tap at almost any time in any home. And this kind of distributed energy storage infrastructure can actually help make electrical utility networks more resilient.

So Powerwalls and similar products are a trend likely to accelerate nationwide. If we couple this with solar energy-generating rooftops, we can have a material impact in clean energy production. And we can also enable a more resilient and powerful electrical grid.

Driverless cars are at an inflection point…

Let’s end the day with a note from an advocacy group that wants to keep human drivers in cars.  This probably won’t come as a surprise either…

The American Federation of Labor and Congress of Industrial Organizations (AFL–CIO) is the largest federation of unions in the U.S. And we recently learned that the president of its Transportation Trades Department is addressing Congress.

He believes Congress should require autonomous vehicles to have a human operator in the event of an emergency. The AFL–CIO also claims the technology is placing millions of jobs at risk.

Those are strong words. And many might feel this is a roadblock for the autonomous driving industry.

But I see it differently…

This is a signal that the technology is reaching an inflection point. Otherwise, there would be no need for such a group to take a public stand. The technology is getting close to being widely deployed. The perceived “threat” is imminent.

Yet it’s not something that will happen overnight. It’ll unfold over the next decade at varying rates across the world.

Each municipality, city, state, and country will adopt self-driving technology at its own speed.

And with its deployment, a whole range of new jobs will surface. These will be jobs that pay more and are of higher value.

For example, consider a delivery person. This is a tough job.

Workers lift and set down packages all day long in varying conditions and environments. They are highly prone to injury over time.

With autonomous vehicles, a delivery worker could instead maintain the vehicles or robots that will ultimately perform those tasks. The person now has less risk of injury and likely earns a higher wage. This also reduces the burden of health care costs on society, and it improves deliveries.

This is just one example of how workers can adjust. There will likely be dozens of new jobs we can’t even fathom right now.

This kind of reaction has happened over and over again over the last few decades as a response to the uncertainty that new technological developments will bring. It’s a sign that the technology is here and advancing rapidly.

Whenever I see advocacy groups like this attempt to slow down innovation, it reminds me of when mechanized looms were introduced to the British workplace in 1779.

Initially, the workers feared them… and destroyed them in response.

However, the technology never went away, and it persists to this day. And partly thanks to the modern-day loom, that industry is now worth over $2.4 trillion and employs more than 75 million workers worldwide.

Autonomous driving technology will be no different. So this latest policy position is a signal that we are at an inflection point for the industry.

The technology and companies developing it are on the bleeding edge of innovation. It’s a trend we’re looking to profit from by taking positions early on – before these innovations become part of our everyday lives.

Go right here to learn some of my top recommendations in this space.

Regards,

Jeff Brown
Editor, The Bleeding Edge

P.S. If you haven’t caught up with my recent Emergency Briefing yet, now is the time. For a brief period, I’m making the replay available online.

There, I share about a beaten-down sector that has had more than its fair share of bad headlines… sending investors fleeing.

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