Dana Blankenhorn

The Electric Car Revolution

It amazes me how many people still underestimate the electric vehicle revolution.

The chip shortage means there’s not much product in 2021. The Trump counter-revolution is tamping down demand. Millions drive their gas guzzlers like oil was King. They sit at drive-throughs rather than get vaccinated. They go racing in the streets. A 16 year old ran over 6 cyclists in Texas while rolling coal.

That won’t stop change. The irony is that self-driving isn’t even the revolution.

Electric motors are simple to make, just two parts. They can be made in any size. A generator is just an electric motor running in reverse, turning mechanical power (as from a windmill) into electricity. You can make an electric motor small enough to run a watch. They’re also nearly twice as efficient as motors using fossil fuel.

The Inflation Opportunity

A lot of people are complaining about inflation right now.

In our technology age, this is nonsense.

Consider energy prices. Oil and gas prices are rising fast. But this creates an enormous incentive for anyone building solar panels or wind turbines. It blows through political objections to their installation. It brings capital to start-ups with new ideas that will dramatically increase harvesting efficiency. Harvesting energy, and increasing efficiency in our use of electricity, drive down demand and, thus, prices. The end of oil is one of the decade’s great opportunities and now is the time to seize it.

Electrify My World

When we moved to our current house in 1983, the heavy rail MARTA station next door seemed futuristic. Between 1983 and 2020 my wife took the train to work nearly every day, while I worked from home.

Today MARTA and the urban design it was meant to serve are obsolete.

Electric motors can be made in any size. Batteries are more efficient and cheaper. The cloud means warehouses can break bulk for less than physical stores. The pandemic let my wife recapture 3 hours each day, for chores and for living. She’s not giving that time back.

Work can happen anywhere. The world I wrote about 30 years ago in my book A Guide to Field Computing has arrived. An iPad can do the work of a PC, a phone, and a TV, plus it’s rugged enough for use in a manufacturing plant or warehouse.

What the Futurists Got Wrong

Futurists anticipated a lot of important things. They imagined space before we got there. They saw the environmental disaster of this century from a long way away.

But there are two things they got very, very wrong. Computing and resources.

Look at Star Trek. The communicators and tricorders used in the 1960s version of the show were primitive by early 21^st century standards. As one cartoon put it, “all it does is make phone calls?”

I don’t know of a single SciFi author of any renown who saw Moore’s Law coming. Most defined progress through manufacturing automation, which only improves arithmetically. Even those seeing improvements in computing didn’t see how Moore’s Law would take off in every direction computing touched. They didn’t see the iPhone and didn’t see the cloud.

William Gibson came closest. In Neuromancer he imagined something called “cyberspace.” But it was strangely primitive next to the modern Internet. He has since watched throughout his career as history caught up with him. His later novels seemed to take place in the present. His latest, Agency, is alt-history.

As wrong as futurists were on computing, they’re even more wrong on resources. Most writers, like Allen Steele, saw today’s Near Space era as a battle for resources. We would be running out of heavy metals, the thinking went, and ways to generate electricity. We would need to mine the asteroids.

SPACs Deliver Fortunes Without Results

I’ve been noodling on the SPAC problem for months now, wondering what’s wrong with them. Only recently has the answer come to me.

Special Purpose Acquisition Companies (SPACs) are designed to take private companies public before they’re ready for the public market. That is, the SPAC buys what’s basically a venture company, then sells stock in the venture to the public.

SPACs don’t have profits or even sales to justify their valuations. What they have is the sponsor’s word, and the CEO’s presentation. These are carefully stage-managed, as though public investors were buying into a venture fund. Of course, small investors can’t buy into venture funds. We’re not accredited. We can’t guarantee that if the venture goes bust, we won’t be hurt. That’s what being accredited means. 

The True Cost of Bitcoin

If America’s enemies wanted to bury this country under energy costs, it could do worse than to have invented Bitcoin.

Greed has made Bitcoin the world’s energy sink. Bitcoin uses as much energy as the country of Argentina. Most of this new Bitcoin is being produced in China, leaving most of the country dependent on coal. It’s not just China being hurt. A Bitcoin miner in Montana, a former patent troll, is keeping a local coal-fired power plant operating. 

The waste doesn’t stop there. It costs about $25 million of electricity per day to run the Bitcoin network.  The current estimate for Bitcoin energy consumption this year is over 100 Terawatts.  And it’s not just Bitcoin. Every cryptocurrency is an energy hog. 

Some cryptocoin advocates, like Ethereum inventor Vitalik Buterin, admit the truth. He wants to change Ethereum’s algorithm so it uses less electricity.

But Buterin is in the minority. Most Bitcoin advocates claim what I just wrote is a myth. It’s supposed to use a lot of energy, at first, they claim. The existing transaction networks also use energy. Bitcoin’s use will drop once it replaces every other currency. Oh, and if you’re using hydropower or “excess” power from otherwise unused sources, what’s the harm? 

This is bullshit. Bitcoin isn’t a currency. Currency values remain relatively stable during a trade, otherwise they’re useless. Bitcoin is an asset, a global index of fear and greed.

Whip Deflation Now

While most people my age remain scarred by the inflation of the 1970s, I’ve long known something they didn’t.

Deflation is the problem.

Technology is naturally deflationary. Moore’s Law, the idea that chips could get better and better faster and faster, also means more output of everything, for less money.

We’ve seen this with every recession of my career. In the 1980s, computing cut warehouse space and distribution jobs. After the dot-bomb of 2000, it came for middle management. After the Great Recession cab drivers, hoteliers and retailers were thrown on the fire.

The pandemic has squeezed 10 years of technology change into one, as business has been forced to adapt. A lot of these changes are permanent because they cut costs.

Most knowledge workers will never return to their offices. Schools and colleges are being forced to use online resources to increase efficiency. Malls may never re-open, replaced by online shops. Ghost kitchens cut the size of restaurants. Fintech is replacing banks and brokers with apps. Semi-autonomous cars don’t need drivers. Electric cars don’t need oil.

Efficiency piles on efficiency. Even credit card processing carries technology debt. Bank and brokerage settlements can be replaced by apps, value replaced by digital stablecoins, everything can be done on the cloud.

Range Anxiety

Wall Street doesn’t know this, but the electric car market is in deep trouble. 

The problem is “range anxiety.” Zoom in on this map to see where we are now. The problem is acute, even in California.

Today, most electrics are used close to home. You buy a 240-volt plug, you snuggle the car up close, and you recharge it at night, just as you do your phone. Fine if you have a house. But not everyone lives in a house.

Some apartments have opened charging stations in their garages, and there are lots of on-street 120-volt and 240-volt “free charging” places. But you can’t scale the business that way. Free chargers quickly get full as electrics cease being a curiosity. And how long are you going to give electricity away? Third (and perhaps most important) wall current takes all night to deliver a fill-up. Most stations today are delivering wall current.

The Downside of Energy Abundance

The first half of the last decade was marked by an energy gold rush.

Fracking made the USA energy independent for the first time in decades. Outside its impact on the environment, the boom was short-lived.

By 2014 demand was beating supply, and the boom has now turned to dust.

It wasn’t solar and wind power that killed the boom. It was efficiency and technology. LEDs require a lot less power than fluorescent bulbs. Intelligence added to warehouses and stores reduces the need still further. Insulation means you need less electricity for heating. New appliances are more energy efficient. The cloud is super-efficient, and the excess energy can be recycled. Laptop technology means this took less power to write than it would have then.

The oilpatch did its bit to kill the boom, too. There are now huge oilfields off South America and Africa that we didn’t know about before. The eastern Mediterranean gas fields have made Israel independent of Arab energy. Things like fracking and boiling the Alberta tar sands aren’t just environmentally destructive. They’re economically worthless.

All these things have put a thumb down on energy prices. That thumb is getting bigger over time. As I predicted in 2010 (based on Department of Energy research) we have now achieved “crossover,” the point where renewable energy costs less to exploit than fossil fuels. It’s hard today to justify a new natural gas plant. Soon, solar will cost less than gas fired in an existing burner.

The result is going to be another energy boom, this time a renewable energy boom.

But this one, too, has a sell-by date.

Resources and the New Era: What the Best Futurists Got Wrong

This coming year represents the start of a new era.

It’s an era defined by technology, as much as the previous era was defined by resources.

I’ve written here many times that the gating factor for technology is human capital. The more trained, empowered, and willing human minds you can bring to bear, the more you can grow. Contrast this to the resource era, where the key to growth was control, over the land and what lay on or beneath it.

The politics of 2020 were defined by the clash of these two economies. It was expressed throughout the culture. But the market made its verdict clear, and it was a true landslide.