Everybody's Betting on the Wrong Energy Source

Dear Reader,

This is Dylan Jovine with Behind the Markets.

Happy Wednesday. Welcome to July. We've made it to another July together.

Today I want to talk about something that puts our competitive position in sharp relief.

China just released an open source model that's apparently caught up to Anthropic's advanced Mythos model, which caused quite a stir two months ago when it came out.

That model could look at any application and unmask security flaws across banking, insurance, energy, even nuclear power plants. Basically a gift to every hacker on the planet.

China's catching up to that fast.

This is a national security race. I'd say that even ahead of being an investor.

I'd go broke tomorrow and give away every dollar I have if it meant America stayed great for another 250 years for my kids and my grandkids.

That wouldn't even be a hard decision. I'd walk around like a monk if I had to.

The country that grabs the technology lead gets an advantage that compounds for generations.

Look at what happened after the Industrial Revolution.

We grabbed that lead and it put us in an unassailable position for over a century.

The Five-Layer Cake, Again

You can't think about our competitive position against China without thinking about the AI stack. Chips at one layer. Infrastructure — data centers, AI factories — at another. Models like Claude, ChatGPT, Grok, Gemini above that. And the application layer at the top, which is where we're heading now with agents and tools that actually make these models do things for us.

But underneath all of it, the real foundation, is energy.

Every great technology revolution in history has also been an energy revolution. Coal for railroads. Gasoline for cars. Rockefeller didn't become the richest man in the world by accident — he was positioned at the foundation of the automobile age before cars even existed.

Everybody's Looking in the Wrong Direction

Everybody I talk to is pitching nuclear. Nuclear reactors, nuclear reactors, nuclear reactors. And look, I get the appeal. But it hasn't gotten off the ground, and the cost is genuinely insane.

We just put out a report on what I think is the real dark horse here: geothermal.

Here's why. Geothermal is clean — far fewer CO2 emissions than coal or natural gas, and modern plants run as a closed loop with close to zero emissions. It's reliable base load power, the heat from the center of the Earth doesn't care about weather, sunlight, or wind. It has a small land footprint compared to solar or wind farms producing the same output. And it has a long operational lifespan with low running costs, because the fuel is free and it never fluctuates in price the way oil and gas do.

The Math Tells the Story

A few months back, someone tried pitching me on a company straddling both a lithium mine and a nuclear reactor.

I asked him, "What about geothermal?"

He told me nuclear was the way to go. I didn't push back at the time. I should have.

Here's the math I wish I'd shown him. A good geothermal site runs $4,000 to $5,000 per kilowatt. A real-world nuclear build runs closer to $8,000 per kilowatt. A 50 megawatt geothermal plant costs $200 to $500 million and can be built in stages as you go. A single nuclear reactor costs $14 billion and locks you in for seven to ten years with no flexibility. Vogtle ran two times over budget and came in late. That's the nuclear track record.

Geothermal is cheaper to build and cheaper to run over time. I genuinely don't understand why this isn't the obvious answer.

Even Washington Knows It

Energy Secretary Chris Wright is about as tied to geothermal as any energy secretary could possibly be. He's the former CEO of Liberty Energy, made real investments in geothermal, and has lived this industry from the inside. The guy's a believer. He's even got his own little Make America Geothermal play on the MAGA name.

Every time nuclear comes up, the permits get stuck in the mud and the costs spiral. Meanwhile geothermal sits there quietly being clean, reliable, and cheap, and almost nobody's talking about it.

I don't think the juice is worth the squeeze on nuclear hype. I think geothermal is one of the least discussed and most important stories in the entire energy layer of this stack.

Welcome to July. Have a wonderful day.

“The Buck Stops Here,”