Beyond Carnaval: The challenges of AI adoption for the Energy Sector
Concise reflections, digests, and highlights of the week's significant news within Brazil's investment and innovation landscape.
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IN TODAY'S BEYOND CARNAVAL:
The insurgent increase in energy use for AI
Parallels of energy consumption & tech advancements through history
What's the best way into energy generation for new tech?
As artificial intelligence (AI) continues to revolutionize various industries, its rapid growth brings significant energy consumption challenges. The computational power required for AI operations, especially in data centers, has surged, leading to increased electricity demand and environmental concerns.
This issue is crucial, as AI's benefits must be balanced with sustainable energy practices. This essay explores how the energy sector can prepare for and adapt to AI's rising consumption, drawing parallels from historical technological advancements and examining government initiatives in the U.S., China, Europe, and Brazil to mitigate the environmental impact.
The Impact of AI on Energy Consumption
It's no secret that I've been advocating for infrastructure above software for the past 2 years or so - since I wrote the piece "Software ate the world, but already spat it out".
To strengthen the case for infrastructure, we know that GPUs consume 4x more energy than CPUs, so we'll have to rethink how energy generation and distribution will be able to stand AI's growth.
For the year 2030, we can expect U.S. data centers to consume almost double the energy they consume today. That is only 6 years from now, and AI computing capacity is expanding faster and faster, with shorter cycles each time a new thing is launched.
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The Impact of AI on Energy Consumption
There is nothing new about energy consumption being caused by new tech adoption. I looked for parallels in history that would help paint a brighter picture - and avoid being a doomsday prepper like I used to be.
The Industrial Revolution
Between 1700 and 1900 the coal production spiked as the available railway miles grew. Looking at research, we found out that:
"From 1700 to 1750 production increased by 50% and nearly another 100% by 1800. During the later years of the first revolution, as steam power really took a firm grip, this rate of increase soared to 500% by 1850." - ThoughtCo.
The Industrial Revolution
The same occurred at the end of the 19th century when the electrification of society started happening. We saw a notable spike in machinery production, starting in the 1920s and expanding quickly - special mention to industrial machinery in the 1940s and a shier spike in the 1960s for home appliances.
The World Wide Web
The same happened with the expansion of digitalization. But are we ready for the next step?
Are we ready to do what it takes?
Probably. History repeats itself over and over. Looking at this study from Oxford we realize that energy consumption in benefit of tech advancements is a major economic driver:
"After 1750 cities located within 25 km of a coalfield grew roughly twice as fast as those further away: by 74% as opposed to 33% in the late eighteenth century, by 111% as opposed to 57% in the early nineteenth, by 123% as opposed to 88% in the late nineteenth, and by 721% as opposed to 293% over the 150 years as a whole." - Oxford Academy.
What matters is choosing the energy sources that will be the most sustainable in the long run. Microsoft must've understood something we still fail to: that nuclear energy may be the most scalable, cheap energy source.
Are we ready to have the conversation about nuclear energy as I previously suggested here?
A merger between Auren Energia and AES Brasil rocked the news last week, making the combined companies the 3rd biggest energy generator in Brazil. Analysts are worried about the synergies between the two companies.
Suzano (B3: SUZB3) shows interest in buying American competitor International Paper (IP). Investors question the transaction. Given the difference in size, Suzano would have to use a lot of debt to go through with the acquisition.
The golden age for credit: JBS launches credit letters to finance regenerative livestock project. The operation is structured by Vox Capital, a renowned Venture Capital firm for impact investing. Vox Capital is a manager to CVC funds from firms such as Copel (top 10 utility in Brazil), Banco do Brasil, and others.
Brazilian diplomatic relations with the U.S. are starting to get closer again. A U.S. aircraft carrier that measures 3 soccer fields (Brazilian metric system) did a military exercise in Rio de Janeiro this week. Is this a U.S. response to China being Brazil's biggest trade partner?
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Every Thursday 06:09 am (BR time), the Beyond Carnaval newsletter offers concise reflections, digests, and highlights of the week's significant news within Brazil's investment and innovation landscape.
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