- Will Amazon kill our local internet provider?
- How will power companies handle rising EV demand?
- My thoughts on fusion startups…
Dear Reader,
Just this morning, something important happened…
Expert financial analyst Jason Bodner and I unveiled a big announcement that I don’t want anyone to miss.
It involves something called “outlier investments”… which is the space where Jason has truly excelled. These are a few rare investments that end up making the majority of the stock market’s gains.
Jason can identify these outliers using his proprietary stock-picking system, which he crafted with experience he gained during his two decades on Wall Street. In fact, recommendations in his portfolio right now are as high as 261%, 432%, and even 772%.
I’ve had an eye on Jason’s work for three years now. His system is excellent, and it works on every sector of the stock market. So I encourage everyone to go right here for all the details on our announcement.
I promise it will be worth your time.
Now let’s turn to our mailbag questions. Remember, if you have a question you’d like answered next week, be sure you submit it right here.
Amazon is going head-to-head with SpaceX…
Let’s begin with a question on Amazon as an internet provider:
Hi Jeff,
What are your thoughts and investment ideas related to Amazon’s StarNet? Is that going to kill all local internet providers, as Amazon appears to want to provide it for a very low fee if not free? Of course, mining user data pays more than whatever fee it’s worth.
In addition, how’s Starlink’s role playing in this arena? Looking forward to hearing from you. Thanks for your continued commitment to helping average Americans reach our financial goals.
– Adwen Y.
Hi, Adwen, and thanks for writing in. While I’m not familiar with the name StarNet, I recently wrote in The Bleeding Edge about Amazon’s ambitions as an internet provider.
Amazon has been keeping quiet for a while, but there have been some developments in this area. The company’s goal with its “Project Kuiper” – named for the Kuiper belt in our solar system beyond Neptune – is to develop a space-based broadband internet service with over 3,200 geostationary satellites in low Earth orbit. These satellites connect to Earth-based receivers that provide internet access.
Ultimately, I foresee this as a way for Amazon to ensure new and existing consumers will have reasonable internet service so they can buy more products on Amazon.
Amazon will generate more sales this way. And given the target number of satellites, Amazon will be targeting only specific geographic areas where it has a presence with its e-commerce business.
That differs from the goal of Starlink, which we have also covered here in The Bleeding Edge. The difference is that Starlink seeks to blanket the Earth with tens of thousands of satellites to provide universal internet access.
I’m excited to see both of these services because they will provide better internet access to those living in rural areas who might only have internet over a phone line. But I don’t think either service will be a major threat to our current internet providers.
Here’s why…
Satellite internet technology has downsides. First, it won’t give us the 1 gigabit per second (Gbps) speeds that are possible with our 5G networks. And latency (delay) will also be longer than the single millisecond of 5G.
For example, Starlink advertises that its users can expect speeds between 50 megabits per second (Mbps) and 150 Mbps with latency between 20 and 40 milliseconds. Starlink is indicating that its speeds will improve as its space-based network is upgraded.
Amazon’s prototype reported speeds up to 400 Mbps last December, but it’s too early to say for sure what its final performance will be. And that’s still far less than what we can experience using 5G.
And here’s a key point that just about everyone misses. Satellite-based internet services don’t scale well. Once they have too many users accessing the network through the same satellite, the performance significantly drops.
So even if the stated speed might be 300 Mbps, in reality the “normal” speeds are dramatically lower. A satellite-based internet company cannot guarantee high-speed network performance.
And for a related reason, all satellite internet services that I have seen have a data cap, which limits users to a certain number of gigabits of data a month. And the caps tend not to be that high. That poses a problem for anyone who enjoys streaming lots of video…
And the final downside to satellite internet is cost. I recently put my name down on Starlink’s service for when it becomes available near me so I can test it out.
But the satellite and hardware alone cost $499 at present. And the service is $99 per month. That’s not cheap. It’s much more expensive than a land-based internet service provider.
Ultimately, these services will be aimed primarily at people who live in rural areas without access to a decent internet service provider right now. If these projects are successful, they will give people in rural areas two great options for internet access.
As for everyone else, in a few years’ time, many people will see an upgrade to their broadband internet services from our current infrastructure. They’ll receive either fiber to the home or a fixed 5G wireless broadband service. And both are capable of delivering 1 Gbps speeds at near-zero latency. I can’t wait.
Can clean energy fuel electric cars?
Next, a reader wants to know more about clean energy needs going forward:
Jeff, I do enjoy your topics and investment knowledge and recommendations. So much so, I’m retiring early from a 32-year career in the power generation field.
My career has been with the traditional base-loaded coal, natural gas, and oil-fired generation. It’s been a reliable and dependable source of energy for the last 60 years. With the recent issues with the Texas power grid, which has an isolated ERCOT [Electric Reliability Council of Texas] system within its own state borders, it is apparent that the 28% green generation failed under the cold temperatures that the state has recently encountered.
With the lack of traditional fossil generation to take up the loss of the green solar and wind generation during the winter spell, how will we accommodate the need for all of the electric automobiles across the country that will require charging when the domestic auto industry makes that switch by 2025?
That generation is not available today to charge that future electric demand. How will the auto industry address this need? Thanks.
– Mark S.
Hi, Mark, and thanks for writing in. I’m thrilled to hear you’ve had so much success while following my work. Congratulations on your retirement!
I have a bunch of friends in Texas that were impacted by cold temperatures. There was clearly some remarkably bad policy making with regards to guaranteeing the critical baseload power that the people of Texas need to survive and stay safe in inclement weather.
As for your question… First, there’s some nuance regarding the capabilities of clean energy, particularly regarding the situation in Texas.
The state could have – and probably should have – built out additional baseload power generation, most likely with natural gas, to have additional capacity on hand for the kind of cold weather we have seen.
But that wouldn’t have necessarily solved the problem.
A lack of winterization procedures – insulation, heaters, de-icing equipment, and so on – led to the breakdown. The storm also knocked out Texas’ natural gas and coal energy supply. This indicates that it was a widespread maintenance issue and not something specific to clean energy.
And you are absolutely correct. The power grids in the U.S., and most of those around the world, are not built out to support a transportation infrastructure that has half or more of the cars as electric vehicles. The whole system would need to be upgraded to support that massive transition.
Right now, most of the energy production for electric vehicles (EVs) still comes from sources like natural gas, coal, nuclear fission (which produces radioactive waste), and hydroelectric dams that harm freshwater ecosystems.
And the lithium-ion batteries for EVs (nearly all of which are produced in China) are produced almost entirely with energy from coal-based power plants. It is a very dirty process.
One scientist estimates that our EVs need to be driven for at least 40,000–60,000 miles before we have offset all of the carbon used to produce the car and its batteries. And that doesn’t even take into account the carbon-based electricity that is fueling the EVs.
EVs aren’t “green” as we’re led to believe. If we really want to make clean energy a reality in the U.S., we still have a lot of work to do. So even if we shift to electric vehicles, it doesn’t mean fossil fuel energy production will disappear overnight.
To solve this problem, it will take decades. New power generation plants will have to be built, preferably using nuclear fusion or third- and fourth- generation fission plants. This will allow us to eliminate the use of fossil fuels. And the entire power grid will have to be upgraded to support all of the additional power transmission requirements.
I don’t think we need to worry about EVs overwhelming our electric grid, though. There may be isolated incidents in badly managed states like California.
But overall, the transition will happen over extended periods of time. The transition from internal combustion engines to electric vehicles will occur over the next couple of decades.
Even if car manufacturers are required to switch to only EVs, which is happening in Japan, that doesn’t mean all consumers will immediately go out and replace their cars.
Instead, adoption will occur gradually as people buy new cars over the coming years. That will give us time to build out new, truly clean electric infrastructure to sufficient levels that will support the new electric cars hitting the road. And hopefully, the EVs and the batteries will also be produced with clean energy.
And I’m particularly excited about one form of clean energy production capable of handling this change, which I discuss in the following mailbag question.
Thanks again for writing in.
This is definitely staying on my radar…
Let’s conclude with a question about nuclear fusion technology:
Hello, Jeff!
Thank you for your great articles, which apart from the investing side, are fascinating and often start me off reading on my own to find out more! I was looking at fusion last week coincidentally.
What are your thoughts about Commonwealth Fusion Systems and other fusion startups? Would love to see more of this on your radar! Thank you again. Stay well.
– Anissa T.
Hello, Anissa. I’m so glad to hear you’re enjoying my research.
You’re not alone in finding nuclear fusion fascinating. This is one of readers’ favorite topics here at The Bleeding Edge.
For any new readers, nuclear fusion is very different from nuclear fission technology. Nuclear fusion replicates the power of the Sun. It is 100% clean energy that can produce power 24 hours per day… some forms of which produce no radiation or nuclear waste of any kind.
This is the “clean energy” technology I am most excited about. In fact, I’ve predicted we will have nuclear fusion technology ready for use in less than five years. After that, it will be a race to mass commercialization.
And one of the private companies working on this technology is Commonwealth Fusion Systems, like you mentioned. Longtime readers might recognize that name.
Commonwealth was recently spun out of MIT’s Plasma Science and Fusion Center. It is focused on a particular kind of fusion reactor called a tokamak reactor. We can think of this as a compact version of the massive tokamak reactor being built in Europe by the nuclear fusion research and engineering megaproject ITER (International Thermonuclear Experimental Reactor).
We covered Commonwealth back in July 2020 when it announced its plans for achieving net-energy production using its fusion reactor by 2025. That means limitless energy: the energy output is greater than the energy required to run the reactor.
And last October, the company shared its plans to produce cheaper, more compact models of its reactor. And that would enable it to build many of these devices rather than just one massive and expensive one. That means these reactors could be the stepping-stone to a robust, decentralized electric grid.
So I’m very excited to see where Commonwealth goes from here. It is one of the most promising projects right now. General Fusion is another company based in Burnaby, British Columbia that has its own novel design.
And TAE Technologies – another private company working in this space – is doing incredibly promising work. In TAE’s case, it believes it can produce net energy production even sooner in 2024.
So the race is on… and there will be new entrants. This is a multitrillion dollar industry in the making. The rewards are too great for there not to be incredible innovation and technological advancement in this space.
And I’ll be sure to keep all my readers updated on any news, especially if one of these companies becomes an investment target in the future.
That’s all we have time for this week. If you have a question for a future mailbag, you can send it to me right here.
Have a good weekend.
Regards,
Jeff Brown
Editor, The Bleeding Edge
Like what you’re reading? Send your thoughts to [email protected].