Chris Curl,
Editor
May 2, 2024
In his annual Chairman’s Letter to Investors, BlackRock CEO Larry Fink made a notable shift in tone by omitting direct references to environmental, social, and governance (ESG) factors, a significant pivot from previous communications.
Instead, Fink focused on the concept of "energy pragmatism," advocating for a balanced approach to energy transition and energy security. This stance comes in response to conservative criticism and recent financial moves against BlackRock, such as Florida and Texas withdrawing billions in investments due to the company's ESG advocacy.
Despite these setbacks, BlackRock saw its managed assets increase by 16% to $10 trillion in 2023, aided by significant investments into climate funds.
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Fink's letter hinted at a strategic realignment, emphasizing stakeholder capitalism and sustainable investing without explicitly using the politicized term "ESG." He argued for a pragmatic mix of renewable and traditional energy sources to ensure energy security and meet the growing demands, particularly referencing Texas’ energy needs.
This approach seeks to reconcile the pressures of decarbonization with the practicalities of current energy reliance, potentially easing conservative concerns while maintaining a commitment to climate investment strategies.
Fink realizes that without abundant, clean, baseload power, none of the goals envisioned by ESG can be realized, nor can society continue to function.
This change in stance mirrors his about-face on Bitcoin last year. It didn’t take long for him to change his tune on the digital asset. In less than a year it went from Bitcoin being “an index of money laundering” to “digital gold.”
And mining this “digital gold” requires massive amounts of electricity. So does artificial intelligence (AI).
Fink knows this, and is positioning Blackrock to profit massively from both.
In a recent gathering at the World Economic Forum in Riyadh, the conversation turned towards the burgeoning field of AI and its profound implications on global energy consumption and infrastructure. Addressing an audience of global leaders and innovators, Fink underscored the significant energy demands AI technology necessitates.
According to Fink, the rapid advancement and incorporation of AI technologies into everyday life and business operations spotlight a critical concern: the source and sustainability of the power required to fuel this digital evolution.
“The amount of power that's needed to use AI has a huge impact on society. Where's that power going to come from? Are we going to take it off the grid? What does it mean for elevated energy prices?”
Despite these challenges, Fink and others see a silver lining. The increased demand for energy and infrastructure to support AI development is heralded as a significant investment opportunity. Many industry leaders agreed with this necessity for enhanced infrastructure not just as a challenge but as an opportunity ripe for exploration and investment.
The dialogue also ventured into the sector of renewable energy, with mentions of the International Energy Agency's projections that data centers' total electricity consumption could surpass the 1,000 terawatt hours mark by 2026, echoing the power demand of countries like Japan. Such projections bring to light the vital role of regulatory updates and technological refinements in curbing the energy appetite of data centers and AI technologies at large.
The fact is, none of the advancements envisioned by the proponents of AI are possible without this cheap abundant power. Where will it come from?
Likely nuclear. It’s the cleanest and most efficient form of baseload power available and I think it’s why people like Larry Fink are softening their stance on ESG. They know nuclear energy is essential for the future whether it be AI or crypto.
Nick Hodge has long-realized this reality and has been positioning his readers to profit from key uranium plays. In fact, he thinks the current uranium bull market has a long way to go.
Check out his newest recommendation here.
Keep coming back,
Chris Curl
Editor, Daily Profit Cycle