‘The Coming Clean Energy Tsunami’

Friday, 9 October 2020
Melbourne, Australia
By James Woodburn

I hope you’re enjoying our Beyond Oil conversations so far.

We continue them a little later today with a special guest from London, which also involves a big announcement I want to make.

I think you’ll like it (hopefully!).

But first, something to update you on…

While you slept a significant development in the crypto market occurred

Overnight, this story broke.

Now, check it out yourself by all means. But the short of it is that Square, the payments company helmed by Jack Dorsey, the CEO of Twitter, moved 1% of the firm’s total assets into bitcoin.

Why is this significant?

Well, not so much as a price catalyst, although bitcoin has jumped from US$10,500 to US$10,900.

More important is what it means

After I read this story, I got Ryan Dinse, editor of Extreme Crypto Trader, straight on the phone. He followed up with his thoughts via email:

Well you’ve got to think about it like this. On the face of it, this is just one company out of millions and millions of companies in the world. And they’ve made the decision at a corporate level to move 1% of their treasury holdings, which is US$50m, into bitcoin.

But this is company is Square. It’s the payments processor for hundreds of thousands of businesses around the world. So they’ve now got the know-how for other companies to do that.

What may follow now is that other companies may look at what Square is doing — because that’s a big name — and will be thinking about doing something similar themselves.

So think about that…what happens if and when a lot of companies around the world start putting just 1% of their treasury holdings into Bitcoin?

There are only 21 million bitcoin. Suddenly, you could be looking at a mad rush.

No-one wants to be the first to do something like that, because it seems too risky. But once someone like Square does it, suddenly all these CEOs and CFOs everywhere start to think, “well, maybe this isn’t so crazy”.

So why is it a big deal?

Not because it’s $50m. That’s a drop in the ocean in the bitcoin market. But it’s the example is now shown the potential snowball effect it will have as others follow suit

Imagine you get more and more companies doing that. And then you think about the level of countries doing it. Which I believe is already happening behind the scenes anyway. Countries like Turkey, which has already seen the value of its currency plummet.

Do they start to think if big companies in western countries are moving into Bitcoin, why don’t we? It would an undestroyable source of capital.

So, a lot of people are waking up today and wondering what it means. I reckon in 12 months from now people will look on today as a change a in the psyche and yet another pivotal moment in the adoption of bitcoin and crypto.’

At the tail end of 2017 and early 2018, the crypto market bubble topped. Then for the next two years the crypto market went through what’s become known as ‘the crypto winter’.

All the punters that were only in it for a quick buck got shaken out. But the story never went away. Those in the know — guys like Ryan — stuck it out. He’s been helping his readers through this ‘winter’, which by all accounts, looks to be now moving into ‘spring’.

Ryan believes we’re in the early stages of a new crypto cycle. We’ll have more to report later this year on what Ryan’s been working on in this space.

But it’s not unconnected to the developments happening in the energy markets, either.

Which brings me back round to our conversations this week…

From the ‘decentralisation of money’…to the ‘decentralisation of energy’

As one reader and listener, Tom, writes into The Insider from Cue, WA…

Hi Woody

I live on a cattle station 700 Kms north of Perth, WA, and 400 kms from the sea.

Vehicles apart, everything here is solar and battery powered. Houses, workshops, pumps, electric fences, monitoring devices. Sometime soon hopefully vehicles when they get round to four wheel drives.

While we would love to have a bit more cloud and rain, what we do have is ample sunlight’ As does much of Australia. I agree that energy storage will not just turn the tide against fossil energy, but become a tsunami overwhelming it.

Am keen to join your “show”. Perhaps “The Coming Clean Energy Tsunami”?

Regards

Tom

The Clean Energy Tsunami

Why didn’t I think of that?

Tom, be careful…you might find yourself a new job.

But I was discussing this with one of our longtime researchers the other day. Back in 2010 we published a big report called ‘Revolution in the Desert’. Perhaps some of you remember it.

That report investigated the changes taking place inside the oil industry. More specifically, how the development of fracking was enabling the US to once again become a net oil exporter…and it also explored the companies using that technology in Australia.

But where that was a development inside the oil industry…what we are talking about and discussing today is a revolution taking place in the entire global energy industry.

This really could be a ‘revolution in the desert’.

You can almost picture Lang Hancock in his Cessna back in the mid-‘60s flying over the vast desert plains in WA and seeing the sprawling red rust rock…hinting at the enormous iron ore deposit we would discover just underneath.

What would you see in 50 years’ time looking out of the window of that same Cessna?

Miles upon miles of solar panels the size of cricket ovals converting the sun’s energy into power?

Who knows.

But while a powerful image, it’s worth remembering none of this will happen with the click of a finger.

As this thoughtful email from Barry points out:

You mention “.. a world beyond oil..”. For Australia, our defence is becoming a much more serious issue. Our national defence is going to be dependent on liquid hydrocarbons for many decades to come — think vehicles, tanks, transports etc; think ships of all types (small nuclear reactors appear logical!); fighters, reconnaissance aircraft, helicopters, etc.

Defence of property: — e.g. bush firefighting aircraft are not likely to be renewable energy powered for some time.

These issues raise the question as to how much oil refining capacity will Australia need for the next 50 years? (assuming we can obtain the crude somewhere, somehow).

Thanks for the provoking ideas that you and the contributors make.’

As Greg said on Wednesday, we are under no illusions. Energy transitions take time and investment. And not all capital will be allocated properly or efficiently.

So you can be sure we are looking at this trend with a level head…and with our eyes open.

The trend is clear though. And you clearly want to know more. We’ve had so many emails in response to this, which is great. What’s even greater is that you understand that we are not pontificating.

We’ve no interest in that. Our interests lie in identifying the investment opportunities in this trend.

From all your emails, it seems you agree. We’ve had questions asking about the viability of battery storage, the capability and opportunities in hydrogen and questions about nuclear, too.

I’m hoping to do as much as we can to explore all these areas, and give you some ideas, too. And anything we miss or don’t cover deep enough…we’ll do our best to get to it.

It’s clear that this is a trend that many of you are thinking about though. And some just needed a jolt.

As Roderick writes…

Dear Woody,

Thank you for your writings in The Insider.

I really hadn’t put much thought into renewables investing but having just read your letter I realise just how important Clean Energy will be in the future of all investors.

I had no idea how advanced Australia was in this industry. Having moved to Tasmania nearly a quarter of a century ago, I have just gotten used to having Hydro power and a few Wind Farms as well, not enough but we are getting there. So clean energy really hasn’t been on my radar. An extreme oversight, that you have now remedied.

I think that the timing of your news of a Clean Energy is extremely well timed and I look forward to getting the details as soon as you have them.

You won’t have long to wait, Roderick.

My next conversation gets released a little later today, around 2pm I think. I’m talking to a guy called Kit, who’s based in the UK.

And that convo comes with a very exciting announcement.

Keep your eyes peeled.

Cheers,
Woody