Category: Knowledge

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Energy hungry data centre power solution

AI data centre

The use of nuclear reactors for data centres is a controversial and complex topic that has both advantages and disadvantages

Nuclear reactors can provide a reliable, stable, and carbon-free source of electricity for power-hungry data centres, which are essential for the operation of various applications, such as artificial intelligence (AI).

Grid overload

Nuclear reactors can also reduce the dependence on the existing grid, which may be vulnerable to blackouts, fluctuations, or cyberattacks. On the other hand, nuclear reactors require a high initial investment, as well as strict safety and regulatory standards. Nuclear reactors also pose potential risks of radiation, waste disposal, and proliferation. Moreover, nuclear reactors may not be suitable for all locations, as they may face public opposition, environmental concerns, or geopolitical issues.

Small Modular Reactor (SMR)

One of the possible solutions to these challenges is to use small modular reactors (SMRs), which are advanced reactors with about a third of the power generation of a traditional, large nuclear plant. SMRs are designed to be more flexible, scalable, and cost-effective than conventional reactors, as they can be built off-site and transported to the desired location. SMRs can also be integrated with renewable energy sources, such as solar or wind, to create a hybrid system that can balance the power demand and supply.

However, the technology of SMRs is still in its early stages of development and deployment, and there are currently no data centres in the world that use built-in nuclear reactors. Therefore, it remains to be seen whether nuclear reactors will become a common or viable option for future data centres. The decision to use nuclear reactors for data centres should be based on a careful evaluation of the benefits and risks, as well as the alternatives and trade-offs, of each specific case.

It has been calculated that a ‘norma’ data centre (whatever that is), needs 32 megawatts of power flowing into the building. For an AI data centre, it’s closer to 80 megawatts.

AI systems are using all this extra electricity simply because they are doing so much more processing than standard computing. They are chewing through far more data.

As AI continues to develop, so too will the power requirement needed to run these monsters.

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OpenAI unveils new AI software that lets you create realistic video by typing a descriptive sentence

Video

The new AI tool from OpenAI named Sora, can generate realistic videos from text prompts.

OpenAI has developed a new AI tool named Sora that can generate highly detailed videos of up to 60 seconds from descriptive text prompts.

The tool has raised concerns about its potential misuse, particularly in the creation of deepfakes and disinformation.

On the other hand, it is a remarkable achievement in the current AI arena and created in such a short space of time.

OpenAI has stated that it is working with experts in areas like misinformation, hateful content, and bias, who are testing Sora.

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Gold demand hit record highs in 2023

Gold bar

Gold demand hit record highs in 2023 on the back of persistent geopolitical tensions and continued weakness in some world economies, particularly China according to the World Gold Council.

Total gold demand stood at 4,899 tons in 2023 compared to 4,741 tons in 2022.  Gold purchases from central banks led to last year’s surge, with purchases exceeding 1,000 tons for two consecutive years. 

Prices reached an all-time high of around $2,135 an ounce in December 2023 as central banks and retail buyers increased their gold investments.

Carats at Costco

Buyers have many outlets from which to make their gold purchases. Costco recently reported selling over $100 million worth of gold bars in the final quarter of December 2023. Weird to think that we can now buy carats with carrots.

Gold bars for sale at Costco

Gold demand in 2024?

According to some analysts’ gold purchases this year are unlikely to meet 2023 levels, but a fall in inflation could prevent a drastic drop in demand.

When inflation drops significantly, consumers will start to feel ‘better-off’, and this could mitigate some of the drop in demand.

Gold carat

A Gold carat is a unit used to measure the purity of gold, with a carat representing 1/24th part of the whole.

Pure gold is 24 carats, meaning that it is 100% gold with no other metals added. However, gold used for jewellery and other applications is rarely pure, and its purity is measured in carats to determine its value.

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Not so FINE at HSBC – £57.4m fine for depositor protection system failings

Bank system failings.

HSBC fined £57.4m by the Bank of England for ‘serious failings’ to protect customer deposits.

The bank failed to accurately identify deposits eligible for the UK’s Financial Services Compensation Scheme, the Bank’s Prudential Regulation Authority (PRA) announced.

HSBC was fined by the Bank of England’s Prudential Regulation Authority (PRA) for failing to properly implement the depositor protection rules, which are meant to safeguard customer deposits in case of a bank collapse. 

Serious concerns

The PRA said the failings were ‘serious‘ and ‘materially undermined the firm’s readiness for resolution’. HSBC reportedly said it was pleased to have resolved the ‘historic matter’ and cooperated with the investigation. The ‘failings’ occurred between 2015 and 2022. The fine is the second highest to date imposed by the regulator.

Protected up to £85,000 per person per institution

Under the scheme, customer deposits are protected up to the value of £85,000.

Under depositor protection rules, banks must have systems and controls in place to make sure that financial information is logged correctly. This information is needed if the FSCS has to make payments to customers upon a bank collapse.

However, the PRA said HSBC Bank incorrectly marked 99% of its eligible beneficiary deposits as ‘ineligible’ for FSCS protection.

Unfortunately this episode doesn’t give me much faith in the banking system that is supposed to protect the ‘saver’. At least the PRA discovered the failings.

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Neuralink implants brain tech device in human for the first time

Brain tech implant

Elon Musk’s neurotech startup Neuralink implanted its device in a human for the first time on Sunday 28th January 2024, and the patient is ‘recovering well,‘ the entrepreneur said in a post on X, on Monday 29th January 2024.

The company is developing a brain implant that aims to help patients with severe paralysis control external technologies using only neural signals.

Neuralink began recruiting patients for its first in-human clinical trial in the autumn after it received approval from the U.S. Food and Drug Administration to conduct the study back in May 2023, according to a blog post.

Musk, in an X post on Monday 29th January 2024 said that Neuralink’s first product is called Telepathy.

If the technology functions well, patients with severe degenerative diseases such as motor neurone disease could someday use the implant to communicate or access social media by moving cursors and typing with their minds.

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World’s largest sovereign wealth fund announces record $213 billion profit

Fund manager

Norway’s giant sovereign wealth fund reported record profit of 2.22 trillion kroner ($213 billion) in 2023, supported by returns on its investments in technology stocks.

Despite high inflation and geopolitical unrest, the equity market in 2023 was strong, compared to a very weak year in 2022. It follows a record loss of 1.64 trillion Norwegian kroner for the whole of 2022, which the fund attributed to ‘very unusual’ market conditions at the time.

Norway’s sovereign wealth fund on Tuesday 30th January 2024 reported a record profit of 2.22 trillion kroner ($213 billion) in 2023, supported by robust returns on its investments in technology stocks.

Government Pension Fund Global

The ‘Government Pension Fund Global’, one of the world’s largest investors, reportedly said the fund marked its highest return in kroner ever, with the fund’s return on investment last year coming in at 16% for the year.

Norway’s sovereign wealth fund, the world’s largest, was established in the 1990s to invest the surplus revenues of the country’s oil and gas sector. To date, the fund has put money in more than 8,500 companies in 70 countries around the world.

See wealth fund rankings table here

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What is Quiet Luxury?

Quiet Luxury

Quiet luxury is a fashion trend that emphasizes understated elegance, timeless style, and high-quality materials.

It is the opposite of flashy logos, loud colors, and fast fashion. Quiet luxury is about investing in pieces that are durable, versatile, and refined. 

Some examples of quiet luxury brands are Hermes, Prada-owned Miu Miu, Brunello Cucinelli, Compagnie Financière Richemont and Swatch Group, The Row, Totême, Tove and LVMH. Quiet luxury is also influenced by social changes, popular culture, and economic factors. It reflects a desire for simplicity, sophistication, and sustainability in a seemingly never-ending chaotic world.

Quiet luxury was one of last year’s biggest viral fashion trends, but unlike other short-lived fads on TikTok or Instagram, this one has made its way into investor portfolios and shown lucrative returns.

Luxury stocks have long been regarded by some as an effective hedge against inflation.

LVMH success – one way to invest in luxury

LVMH shares jumped more than 8% on Friday 26th January 2024, after the world’s largest luxury group posted higher-than-expected sales for 2023 and raised its annual dividend.

The owner of Louis Vuitton, Moët & Chandon and Hennessy, as well as brands including Givenchy, Bulgari and Sephora, on Thursday night 25th January 2024 reported sales amounting to 86.15 billion euros ($93.34 billion) for 2023, forecasts. This equated to a 13% growth from the previous year.

The result was boosted in particular by 14% annual growth in the critical fashion and leather goods sector, along with 11% growth in perfumes and cosmetics. Wines and spirits meanwhile posted a 4% decline.

Bernard Arnault is one of the top 10 wealthiest people in the world.

Is there room in your portfolio for a luxury brand?

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Stephen Hawking organised a time travel party in 2009

Time travel

A time travel party organised by Stephen Hawking in 2009.

This was an experiment that Hawking conducted to test the possibility of backward time travel. He invited people from the future to attend a reception at his university, but he did not send out the invitations until after the party. He hoped that someone from the future would find the invitation and use a wormhole time machine to come back and prove that time travel is possible.

However, no one showed up at his party. He said that he liked simple experiments and champagne. He also said that he had experimental evidence that time travel is not possible. He explained that warping space and time could trigger a bolt of radiation that would destroy the spaceship and maybe the space-time itself.

Is time travel to the future possible?

Based on the current scientific understanding, time travel to the past seems to be very unlikely, if not impossible. There are many paradoxes and inconsistencies that arise from the idea of changing the past.

Time travel
Stephen Hawking organised a time travel party in 2009

Time travel to the future, however, may be possible, but only in a limited sense. According to the theory of relativity, time passes at different rates depending on the speed and gravity of the observer. This means that someone who travels very fast or near a massive object could experience less time than someone who stays still or far away from the mass.

Time dilation

This is called time dilation, and it has been experimentally confirmed. However, this does not allow the traveller to return to their original time, as they would have aged less than the rest of the world.

So, in summary, time travel is unlikely, but it is acknowledged that there are some intriguing possibilities and mysteries that remain to be explored.

Never say never!

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A new powerful AI is coming but the techies have no clue as to what it will look like

AGI

That’s reassuring then, and they are creating it

Leaders at some of the world’s leading artificial intelligence (AI) companies are expecting a form of AI on a par with, or even exceeding human intelligence to arrive sometime in the near future. But what it will eventually look like and how it will be applied are unknown.

Artificial General Intelligence or AGI is coming soon

Leaders from OpenAI, Microsoft and Google’s DeepMind, and many other major tech companies debated the risks and opportunities presented by AI at the World Economic Forum in Davos, Switzerland in January 2024.

AI has become the talk of ‘town’ around the world through 2023, mainly due to the success of ChatGPT, OpenAI’s popular generative AI chatbot, brought to us by Microsoft. Generative AI tools, like ChatGPT, are powered large language models, algorithms trained on vast quantities of data, but are not AGI.

Executives at some of the world’s leading artificial intelligence companies see ‘artificial general intelligence,’ or AGI, a hypothesized form of AI with intelligence on a par or better than humans. This prospect is both exciting and worrying.

Concern

AI and AGI have created concern among governments, corporations and public consultation groups worldwide, owing to the risks around the lack of transparency of AI systems; social manipulation through computer algorithms; job losses due to increased automation; surveillance; and data privacy and worse… the lack of human control!

Extinction event possible

Many industry leaders in technology have warned that AI could lead to an ‘extinction-level’ event where machines become so powerful they get out of control and wipe out humanity.

A new powerful AI is coming but the techies have no clue as to what it will look like

Several prominent technology leaders, including Elon Musk and Steve Wozniak for example, have called for a pause in AI development, stating that a moratorium would be beneficial in allowing society to catch up.

Turing test

AI chatbots like ChatGPT have passed the Turing test, a test called the ‘imitation game,’ which was developed by British computer scientist Alan Turing to determine whether someone is communicating with a machine and a human. The one big area where AI is lacking is common sense.

It has been reported on many occasions, that the tech world is taking steps to ensure that the AI race doesn’t lead to a ‘Hiroshima moment.‘

Will AGI be created in the image of humans?

Let’s hope not.

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Polluting coal users and renewable producers

Coal fired power

The highest coal using countries in the world

  • China, which consumes over half of the global coal demand and produces over 4 billion tonnes of coal per year.
  • India, which consumes about 14% of the global coal demand and produces over 900 million tonnes of coal per year.
  • The United States, which consumes about 9% of the global coal demand and produces over 600 million tonnes of coal per year.
  • Japan, which consumes about 3% of the global coal demand but imports most of its coal.

These countries accounted for about 82% of the global coal production in 2021 according to 2021 data set. China alone produced more than half of the world’s coal, followed by India with nearly 10%.

Global coal use in 2023 hits few high

Global coal use in 2023 has hit a record high, surpassing 8.5 billion tons for the first time, on the back of strong demand in countries like India and China, said IEA. These countries are the world’s largest consumers of the dirtiest fossil fuel, and continued modernization puts their energy consumption on a rapid growth trajectory.

China

China and India’s growing economies will continue to fuel demand for coal even as they set ambitious renewable energy targets, according to experts.

While China is the world’s largest energy consumer, India is ranked third globally, and both countries are the top consumers of coal as they strive to fuel economic growth. 

China’s share of global electricity consumption, 60% of which is coal, is set to jump to one-third by 2025, compared with a quarter in 2015, according to projections by energy watchdog International Energy Agency (IEA).

Global coal usage in 2023 hit a record high, surpassing 8.5 billion tons for the first time, on the back of strong demand in emerging and developing countries such as India and China, IEA noted in a recent report. 

China’s electricity sector has been in the throes of a clean revolution over the past few years, with an almost five-fold growth in wind and solar generation since 2015. As a result, the share of coal generation has fallen by 17 percentage points, from 78% in 2000 to 61% in 2022. 

China has suffered from drought in recent years, which reduced hydroelectric power generation in its southern provinces. To maintain the necessary power output, the country had to turn to coal. 

United States

By contrast, U.S., which is the world’s second largest consumer of coal, has seen a decrease in its usage of the fuel. According to the Institute for Energy Economics and Financial Analysis, the amount of coal that the superpower consumes each day recorded a 62% drop from 2.8 million to 1.1 million tons a day.

75% of India’s power is derived via coal-fired plants. Coal accounts for 61% of China’s power generation, even though the country is recognized as the indisputable leader in renewable energy expansion. It has been adding new projects to the grid almost as fast as the rest of the world combined in 2022 and has ambitions of becoming carbon neutral by 2060.

Annual average capacity additions by country and region, 2016-2023

See IEA report

India’s coal production rose to 893 million tons during the financial year ending March 2023, jumping nearly 15% from a year earlier. China’s raw coal production in 2023 went up by 2.9% compared with the same period in 2022.

There are no signs of a slowdown, with the IEA saying coal consumption in India and Southeast Asia is projected to grow significantly.

Coal won’t go!

But the lack of reliability of renewables means coal has still very much been a critical fallback option for the two countries.

Top five coal producing countries in the world

  • China: 4,126.0 million tonnes
  • India: 762.0 million tonnes
  • Indonesia: 614.0 million tonnes
  • United States: 523.8 million tonnes
  • Australia: 467.1 million tonnes

Five of the Greenest energy producers in the world

  • Sweden
  • Norway
  • Denmark
  • Finland
  • Switzerland

The greenest were based on these five criteria: carbon emissions, energy transition, green society, clean innovation, and climate policy.

Top countries by renewable energy production

  • China: 2,271.9 TWh (28.2% of total electricity)
  • United States: 804.8 TWh (20.5% of total electricity)
  • Brazil: 491.9 TWh (83.3% of total electricity)
  • Canada: 433.6 TWh (66.9% of total electricity)
  • India: 303.5 TWh (24.5% of total electricity)

Note: three of the world’s worst offenders of fossil fuel use are also in the top five for energy production by renewables – China, U.S. and India.

So, are things changing slowly?

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Oxfam report says world’s five richest men have more than doubled their wealth in 3 years

Wealth

The world’s five richest men have increased their combined fortune from $405 billion in March 2020 to $869 billion in November 2023, according to a report from Oxfam.

Wealth increased at a rate of $14 million per hour for 5 people

A report by the charity highlighted the wealth of Tesla CEO Elon Musk, LVMH boss Bernard Arnault and family, Amazon founder Jeff Bezos, Oracle founder Larry Ellison, and investor Warren Buffett.

Oxfam is calling for restrictions on ‘corporate power’ to reduce the massive inequality between the super-rich and the rest of society. Two of the suggestions to correct the inequality is through capping CEO pay and introducing taxes on permanent wealth and excess profits.

This report was released to coincide with the Davos meeting as the rich and wealthy business leaders and bankers gather.

Oxfam says

  • Fortunes of five richest men have shot up by 114% since 2020.
  • Oxfam predicts the world could have its first-ever trillionaire in just a decade while it would take more than two centuries to end poverty. 
  • A billionaire is running or the principal shareholder of 7 out of 10 of the world’s biggest corporations.
  • 148 top corporations made $1.8 trillion in profits, 52% up on 3-year average, and dished out huge payouts to rich shareholders while hundreds of millions faced cuts in real-term pay.
  • Oxfam urges a new era of public action, including public services, corporate regulation, breaking up monopolies and enacting permanent wealth and excess profit taxes.

Full report here

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Crypto firms introduce risk assessments and finance tests in response to strict new rules in UK

Cryptocurrency

New rules and risk assessments for UK Crypto traders

Coinbase and Gemini, for example, are among cryptocurrency exchanges that now require U.K. users to fill out risk assessments. These questionnaires are designed to test their financial knowledge.

The measures are a response to new rules in the UK. The rules require crypto companies to clearly inform users of the risks involved in trading cryptocurrencies. If a customer fails to successfully complete the requests, they will be prevented from trading with their crypto account.

Risk warning

Crypto.com, Coinbase, Gemini and other cryptocurrency exchanges are warning UK users that they’ll need to complete investment questionnaires. Thes are aimed at testing their financial knowledge before being allowed to trade.

The companies have told UK users they are required to complete a declaration about what type of investor they are. Traders are required to respond to a set of questions on financial services to permit use of their platforms.

Clients’ declaration

In the client’s declaration section, users are asked to select their investor profile. A trader is directed to inform the company of their financial status.

Questions such as: are you a high-net-worth customer earning above £100,000 per annum or with a net worth of more than £250,000? Or, are you a ‘restricted investor’ who won’t invest more than 10% of their assets. If clients do not complete the requests, they are prevented from trading crypto related products.

The financial questionnaires, require users to respond to numerous questions about the range of products available. They want the client to fully understand the potential volatility of crypto assets.

Strict rules to protect the retail trader

Since the UK passed the Financial Services and Markets Act, companies that offer crypto assets and certain types of digital currency, known as stablecoins, are now covered by UK law.

These are the same rules as those that govern traditional financial services and are aimed at protecting the retail trader.

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SEC finally approves Bitcoin ETF

Bitcoin ETF approval

After years of regulatory rejection, the U.S. Securities and Exchange Commission on Wednesday 10th January 2024 finally approved the Bitcoin EFT.

It has approved what are known as ‘spot’ Bitcoin Exchange-Traded Funds (ETFs), which can be purchased by anyone from pension funds to retail investors. This now means that some of the biggest asset managers in the world, including BlackRock and Fidelity can trade a crypto related ETF.

Now, instead of using a crypto asset exchange such as Binance, Coinbase or Kraken to purchase and hold a token like Bitcoin, traders can now trade a ‘spot’ Bitcoin ETF for direct exposure to the digital asset market.

It may also mean that investors could pay lower fees than they would if they bought the digital currency from a crypto exchange directly.

Basically, it is now cheaper than ever to buy Bitcoin – but is this positive for the long-term?

Crypto fans can now invest in Exchange-Traded Funds (ETFs) – but what exactly are they?

A Bitcoin ETF allows investors to buy a product that tracks the price of Bitcoin through the same method they already use to buy stocks and other existing products. This also reduces additional worry of managing their crypto related holdings, which typically involves maintaining a cryptocurrency wallet and a safe storage system to safeguard that investment.

But what exactly is an ETF?

ETFs are holdings or portfolios that allow investors to ‘bet’ on multiple assets, without having to buy any themselves. Traded on stock exchanges like shares, their value depends on how the overall portfolio performs in real time.

An ETF could comprise a combination of gold and silver bullion, for example, or a mixture of shares in both big technology and energy companies. Some ETFs already contain Bitcoin indirectly – but a spot Bitcoin ETF will buy the cryptocurrency directly, ‘on the spot’, at its current live price, throughout the trading day.

Bitcoin, the first cryptocurrency

Based on an idea by someone called, Satoshi Nakamoto, Bitcoin was the first cryptocurrency and remains the most valuable and famous to-date. Its price is often seen as a barometer for the whole industry of thousands of other coins (altcoins), tokens and products built on the same blockchain technology.

Art illustration of Bitcoin blockchain

And with an influx of new money, many expect a surge in interest in cryptocurrency technology in general.

How will the decision affect cryptocurrency adoption and is this decentralisation as originally intended?

Some say this decision shows the existing ‘old financial school’ establishment is finally taking Bitcoin seriously, at least as a speculative asset. For those who consider Bitcoin legitimate ‘digital gold’, what better proof could there be than the biggest wealth-management institutions flocking to buy, and now overseen by regulators?

Others say cryptocurrency is about rejecting traditional financial systems in favour of a decentralised, people-powered alternative. And investment bankers buying Bitcoin just to get rich on U.S. dollars is not what Satoshi Nakamoto had in mind.

But judging from the chatter on social media, the prevailing sentiment is expecting the new cash injection will make existing Bitcoin investors and owners rich.

What are the risks to future investors?

It is possible to lose all of your investment

The price of Bitcoin can change rapidly and often without warning or explanation – it is a volatile asset. So investors will need to be aware when investing in ETFs linked to a digital coin.

Art illustration of Bitcoin trading

But ETFs are often sold as high-risk, high-reward products anyway. It is EXTREMELY high risk – don’t do it if you don’t understand it and even if you do, or think you do – BE CAREFUL! These products can rip the shirt off your back!

Cyber-crime risk

Another potential risk is cyber-crime. Bitcoin and other cryptocurrencies have been the subject of huge and costly attacks that have seen crypto companies drained of sometimes hundreds of millions of dollars overnight. And if the likes of Blackrock become major holders of Bitcoin, their cyber-security will be tested in ways never before. Let’s hope their security systems are extremely robust.

Cost of mining coins

Another downside is the heavy cost to the environment is that Bitcoin use a massive number of powerful computers around the world, to process transactions on the blockchain ledger and to create coins – this is known as mining.

Renewable energy use is growing – but it remains to be seen how investment companies will tackle the environmental cost of Bitcoin.

Be careful

ETFs are here now – but BE CAREFUL when entering a Bitcoin related ETF trade or investment, or any type of ETF for that matter. If it goes wrong, you will lose your money, and quickly.

Your money is at HIGH risk!

Bitcoin chart as at 12pm January 11th 2024

Bitcoin chart as at 12pm January 11th 2024
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The Fed in December 2023 saw rate cuts likely in 2024, but that path is uncertain

Fed

Federal Reserve officials in December concluded that interest rate cuts are likely in 2024, though they appeared to provide little in the way of when that might occur, according to minutes from the meeting released Wednesday 3rd January 2024.

FOMC meeting minutes

The rate-setting Federal Open Market Committee (FOMC) agreed to keep its rate steady in a range between 5.25% and 5.5%. Members indicated they expect 0.75% cut by the end of 2024.

Uncertainty

However, the meeting summary noted a high level of uncertainty over how, or even if, that will happen. Markets have reacted negatively to this news.

The minutes noted an unusually elevated degree of uncertainty about the policy path. Several members said it might be necessary to keep the funds rate at an elevated level if inflation doesn’t cooperate, and others noted the potential for additional increases.

But, despite this cautionary tone from Fed officials, markets expect the central bank to cut rates in 2024.

Dot plot

The dot plot of individual members’ indications released following the meeting showed that members expect cuts over the coming three years. This will bring borrow back to the 2% desired target.

The minutes indicated that clear progress had been made against inflation, with a six-month measure of personal consumption expenditures even indicating that the inflation rate has edged below the Fed’s 2% target.

FOMC Dot plot projections through 2026

However, the document also noted that progress has been uneven across sectors, with energy and core goods moving lower but core services still moving higher.

The Dot plot – what is it?

The dot plot, in relation to the FED or FOMC, is a chart that shows the projections of the Federal Reserve Board members and Federal Reserve Bank presidents for the federal funds rate, which is the interest rate that U.S. banks charge each other for overnight loans. 

The dot plot is updated four times a year, after each FOMC meeting, and reflects the individual views of the policymakers on the appropriate level of the federal funds rate for the current year, the next few years, and the longer run.

The graph (dot plot) can help markets and the general public understand the Fed’s monetary policy stance and expectations for the future path of interest rates.

However, the dot plot is not a policy commitment or a forecast, but rather a snapshot of the opinions of the FOMC participants at a given point in time. The dot plot can change over time as new information and economic conditions develop.

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Wind power is being wasted adding £40 to household energy bills, according to think tank

Wind turbine and battery

Wasted wind power will add £40 to the average UK household’s electricity bill in 2023, according to a think tank.

That figure could increase to £150 in 2026, Carbon Tracker has estimated.

When it is very windy, the grid cannot handle the extra power generated. So, wind farms are paid to switch off and gas-powered stations are paid to fire up. The cost is passed on to consumers.

The government said major reforms will halve the time it takes to build energy networks to cope with extra wind power. Energy regulator Ofgem announced new rules in November 2023, which it said would speed up grid connections.

Bottleneck

Most of the UK’s offshore wind farms are in England. Dogger Bank, off the coast of Yorkshire is the largest in the world. Meanwhile, around half of onshore wind farms are in Scotland but most electricity is used in south-east England.

Carbon Tracker said the main problem in getting electricity to where it is needed is a bottleneck in transmission.

Wind curtailment

The practice of switching off wind farms and ramping up power stations is known as wind curtailment. This cost is passed on to consumers, it said. Carbon Tracker researches the impact of climate change on financial markets. It said since the start of 2023, wind curtailment payments cost £590m, adding £40 to the average consumer bill.

It warned the costs were set to increase adding £180 per year to bills by 2030. Wind farms are being built faster than the power cabling needed to carry the electricity.

Cable issue

‘The problem is, there are not enough cables. The logical solution would be to build more grid infrastructure,‘ said an analyst at Carbon Tracker. ‘It’s not even that expensive,’ he added, compared with mounting wind curtailment costs.

Industry group RenewableUK reportedly said that grid constraints, ‘reflect a chronic lack of investment in the grid.’

‘We need to move from a grid which is wasteful, to one that’s fit for purpose as fast as possible.’

However, historically it has taken between 10 and 15 years for new transmission cables to be approved.

Maybe more battery storage plants around the UK would help reduce the bottlenecks? As renewable power continues to expand, this would enable the extra power to be stored to use later.

This would be better than firing up antiquated fossil fuel power plants.

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New HMRC UK tax rules for online sellers

Tax

Are you selling online and making a little extra income?

Well, if you are, as from 1st January 2024 you will now fall foul of UK tax rules if you do not declare the income generated from these sales.

Companies like Etsy, eBay, Vinted, Airbnb etc. are obliged to collect and share details of such transactions with the tax authorities. That will allow HMRC to zero in on anyone who should be declaring the extra income but isn’t.

While HMRC was already able to request information from UK-based online operators, from the start of this year there are new rules that the UK has signed up to in cooperation with the OECD – Organisation for Economic Cooperation and Development, as part of a global effort to clamp down on tax evasion.

New rules

The new rules require digital platforms to report the income sellers are getting through their site on a regular basis.

It will apply to sales of goods such as second-hand clothes and items that have been handcrafted, but also services such as: food delivery, taxi hire, freelance work and accommodation lets or even renting out your driveway for parking.

Rule summary

  • Online sellers already paying tax do not need to alter what they are already doing.
  • Individuals have a £1,000 tax-free allowance for money made through property.
  • There is also a £1,000 allowance for trading income – for example, if you offer tutoring or gardening, or if you are selling new or second-hand items online.
  • People earning below those thresholds may not have to fill in a tax return, but should keep records in case they are asked for them.

The information will be shared between countries that have signed up to the OECD tax rules.

The UK government said the new rules would help it ‘bear down on tax evasion’, as sellers on digital platforms would now be treated more like traditional businesses.

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UK house prices 1.8% lower in 2023, says Nationwide

House prices down in 2023 says Nationwide

House prices have ended the year 1.8% lower in the UK, according to Nationwide Building Society

The Nationwide forecasts no growth or a further fall in 2024.

The lender said the average house price across the UK was £257,443 in December 2023. This was flat compared to November 2023 but down compared to December 2022.

The lender reportedly said that consumer confidence ‘remains weak’, despite some mortgage rates falling in anticipation for Bank of England (BoE) to cut borrowing costs in the months ahead.

The number of housing transactions has been running at around 10% below pre-Covid levels, Nationwide reported. The fall was more pronounced for those buying a house using a mortgage – down 20% compared to before the pandemic.

However, the volume of cash deals continues to run above the levels recorded before Covid hit.

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What is deflation?

Deflation

Deflation is an economic phenomenon characterized by a general decline in prices for goods and services. It occurs when the inflation rate falls below 0%, resulting in a negative inflation rate. 

This means that the purchasing power of currency increases over time, allowing you to buy more with the same amount of money. It can be as damaging to the economy as inflation.

Consumer and Asset Prices: During deflation, both consumer and asset prices decrease, which might seem like a good thing because it increases the purchasing power.

Economic Impact: However, deflation can be harmful to the economy. It often signals an impending recession or hard economic times. If people expect prices to fall further, they may delay purchases, hoping to buy later at a lower price. This leads to reduced spending, which can cause producers to earn less, potentially leading to unemployment and higher interest rates.

Measurement: Deflation is measured using economic indicators like the Consumer Price Index (CPI), which tracks the prices of commonly purchased goods and services. When the CPI shows that prices are lower than in a previous period, the economy is experiencing deflation.

Causes: The main causes of deflation include a decrease in demand or an increase in supply. A decline in aggregate demand can lead to lower prices if supply remains unchanged. Conversely, an increase in supply can also cause prices to drop if demand does not increase accordingly.

It’s important to note that deflation is different from disinflation. Disinflation refers to a slowdown in the rate of inflation, where prices are still rising but at a slower pace than before.

Deflation can have complex effects on an economy, and while it may benefit consumers in the short term, it can lead to broader economic challenges.

Deflation, friend or foe?

Deflation, often perceived as a relief during times of high prices, is a complex economic condition that presents both benefits and challenges. It is defined by a general decrease in the price level of goods and services, leading to an increase in the real value of money. This means consumers can buy more for less, but this apparent advantage masks the potential dangers lurking beneath the surface.

The immediate effect of deflation is an increase in consumer purchasing power. As prices drop, money buys more, which can be particularly beneficial for individuals on fixed incomes. However, this boon is short-lived if deflation persists. Consumers, anticipating further price drops, may postpone purchases, leading to a decrease in consumer spending, the lifeblood of any economy. This reduction in demand can force businesses to lower prices further, creating a vicious cycle that’s hard to break.

Deflation can lead to a reduction in demand and can force businesses to lower prices, creating a vicious cycle that’s difficult to break.

Moreover, deflation can exacerbate debt burdens. As prices and revenues fall, the real value of debt increases, making it more challenging for borrowers to repay their obligations. This can lead to increased loan defaults and financial instability. For businesses, falling prices mean reduced profit margins, leading to cost-cutting measures such as layoffs, reduced investment, and even bankruptcy.

Causes

The causes of deflation are multifaceted, often stemming from a decrease in aggregate demand or an oversupply of goods. Technological advancements, while boosting productivity, can also contribute to deflation by lowering production costs and increasing supply faster than demand. Additionally, a strong currency can make imports cheaper, contributing to lower prices domestically.

Tools

Central banks and governments typically combat deflation with monetary and fiscal policies aimed at stimulating demand. Lowering interest rates, increasing government spending, and quantitative easing are common strategies employed to inject money into the economy and encourage spending.

While deflation can initially seem like a welcome development, its long-term effects can be detrimental to economic health. It is a delicate balance that policymakers must navigate carefully to ensure stability and growth in the economy.

During this period of inflationary pressure, no country is beyond the grasp of deflation.

A message for governments and central banks around the world – don’t push too hard!

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EU agrees deal on AI regulation

AI rules

European Union officials have reached a provisional deal on the world’s first comprehensive laws to regulate the use of artificial intelligence (AI).

The EU agreed guidelines around AI in systems like ChatGPT and facial recognition.

The European Parliament will vote on the AI Act proposals early next year, but any legislation will not take effect until 2025 at the earliest. The U.S., UK and China are all rushing to publish their own guidelines.

Safeguards

The proposals include safeguards on the use of AI within the EU as well as limitations on its adoption into law.

European Commission President Ursula von der Leyen said the AI Act would help the development of technology that does not threaten people’s safety and rights. Consumers would have the right to launch complaints and fines could be imposed for violations.

Unique framework

In a social media post, she said it was a ‘unique legal framework for the development of AI you can trust’.

The European Parliament defines AI as software that can ‘for a given set of human-defined objectives, generate outputs such as content, predictions, recommendations or decisions influencing the environments they interact with.’

This is a significant step towards ensuring that AI development and deployment are aligned with ethical standards and respect for human rights.

Will the EU, UK, U.S., China and other countries AI rules conflict?

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Central banks and geopolitics could keep gold demand hot in 2024, World Gold Council says

Gold

World Gold Council

The two most significant events for gold demand in 2023 were the collapse of Silicon Valley Bank and the Hamas attack on Israel, the World Gold Council (WGC) said, estimating that geopolitics added between 3% and 6% to gold’s performance over the year.

The WGC estimated that central bank demand added 10% or more to gold’s performance in 2023 and said even if 2024 does not reach the same heights, above-trend buying should still offer an extra boost to gold prices.

The precious metal broke through $2,100 per ounce on Monday 4th December 2023 in intra-day trading, before moderating slightly. Spot gold prices were hovering at around $2,030 per ounce Friday 8th December 2023.

Gold price year to date chart

What is the World Gold Council

The World Gold Council (WGC) is a market development organization for the gold industry. It works across all parts of the industry, from gold mining to investment, with the aim of stimulating and sustaining demand for gold. The council sets standards, strengthens markets, and shapes the global conversation about gold. It was established to promote the use of and demand for gold through marketing, research, and lobbying. 

The council includes 33 members, many of which are gold mining companies.

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World’s richest 1% create carbon emissions equal to the poorest 66%

Carbon output

That’s a shocking headline

The world’s richest 1% of people are responsible for around the same percentage of global carbon emissions as the 5 billion people who represent the 66% poorest, according to a report published by Oxfam.

In the report he wealthiest 10% were responsible for 50% of global emissions, it found, while the bottom 50% were responsible for just 8%.

The top 1% represents 77 million people and is defined in the report as having an estimated income threshold of $140,000 per year, and an average income of $310,000.

The report states that personal consumption varies depending on factors such as location, use of renewable energy and transport where the very wealthiest contribute significantly more due to the use of private jets and yachts.

It also includes between 50% and 70% of emissions by the 1% coming through investments in companies, measured by taking firms’ reported emissions and distributing that proportionate to shareholder ownership of those firms by the 1%.

See report here.

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Is there a water crisis looming and could BIG Tech make things worse?

Thirsty data centre

Water is a precious Earth resource. It is becoming increasingly scarce due to climate change, population growth, pollution and waste. Without water we are nothing.

According to some sources, Big Tech and AI are contributing to the water crisis by using large amounts of water to cool their data systems and AI computations.

Researchers estimate that Microsoft used 1.7 billion gallons of water for AI alone in 2022, a 34% increase from 2021. Google also reported a 20% increase in water usage, mostly due to its AI work. One of the most water-intensive AI models is ChatGPT, which is estimated to use half a litre of water for every series of prompts.

These numbers are alarming, considering that water is a finite and vital resource for humans and ecosystems.

ChatGPT is estimated to use the equivalent of one 16-ounce bottle of water (approx’ half a litre) for every 20-50 queries according to a study by Shaolei Ren, an associate professor of electrical and computer engineering at the University of California.

BIG Tech aware of environmental impact

Some tech companies are aware of the environmental impact of their AI activities and are trying to find ways to reduce their water consumption and carbon footprint. For example, Microsoft has pledged to become water positive, carbon negative, and waste-free by 2030. 

Is there a water crisis looming and could BIG Tech make things worse?

Google has also set a goal to operate on 24/7 carbon-free energy by 2030. OpenAI, the creator of ChatGPT, has stated that it is working on improving the efficiency of its AI models. Some possible solutions include using renewable energy sources, developing better algorithms and hardware, and locating data centres in colder climates.

Too much

Some argue that Big Tech and AI are using too much water, and that they should be regulated. They should be held accountable for their environmental impact.

Others may contend that Big Tech and AI are providing valuable services and innovations and they are taking steps to mitigate their water usage and become more sustainable.

Chatbots and AI share a thirst for water
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Iceberg A23-A is on the move

Iceberg

Iceberg A23-A is the world’s biggest iceberg that has been stuck to the ocean floor for more than 30 years.

Scientists believe the A23-A’s breakaway from Antarctica was a natural occurrence, but say it provides a stark reminder of the potentially disastrous implications as global sea levels rise.

It split away from the Antarctic coastline in 1986 and became an ice island in the Weddell Sea. It is about 4,000 sq km (1,500 sq miles) in area, which is more than twice the size of Greater London, and 400m (1,312 ft) thick, which is taller than the London Shard.

On the move

Recently, it has started to move at a faster pace and is now about to leave the Antarctic waters. Scientists believe it has lost its grip on the sea floor and is being pushed by winds and currents. It is likely to follow the path of other icebergs from the Weddell Sea and head towards the South Atlantic, where it will eventually melt and break apart.

Map of Antartica showing Weddell Sea

A23-A Iceberg moving through the Weddell Sea

Ecosystem

Icebergs are important for the ocean ecosystem, as they carry fresh water and nutrients that support marine life. They also affect the climate, as they reflect sunlight and cool the air. Iceberg A23-A is a remarkable natural phenomenon that has been observed for decades by researchers and satellites.

This is not happening because of climate change – it is a natural process of nature.

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Virgin transatlantic flight to make history using 100% green fuels

Virgin 100% biofuel transatlantic flight

The first transatlantic flight using 100% sustainable aviation fuel (SAF) is scheduled to take off on Tuesday, 28th November 2023. 

UK Government funded project

The flight is operated by Virgin Atlantic and will fly from London’s Heathrow to New York’s JFK airport. The flight is part of a UK government-funded project to demonstrate the feasibility and benefits of using SAF as an alternative to conventional jet fuel. SAF can reduce carbon emissions by over 70% compared to fossil jet fuel. 

The flight will also use biochar credits to offset any remaining emissions and achieve net zero.

Biochar is the lightweight black residue, made of carbon and ashes, remaining after the pyrolysis of biomass, and is a form of charcoal.

Support

The flight is supported by a consortium of companies, including Boeing, Rolls-Royce, BP, Imperial College London, University of Sheffield, Rocky Mountain Institute, and ICF. The transatlantic flight has received a permit to fly from the UK Civil Aviation Authority, after undergoing technical assessments and ground testing. 

The flight will use a Boeing 787 Dreamliner powered by Rolls-Royce Trent 1000 engines. The SAF used will be made primarily from waste oils and fats, such as used cooking oil.

The flight is expected to be a historic milestone for the aviation industry, as it will showcase the potential of SAF to decarbonise aviation and create a greener future. SAF could also create a UK industry with an annual turnover of £2.4 billion by 2040 and support up to 5,200 UK jobs by 2035.

First transatlantic flight to use 100% SAF

The flight is not the first transatlantic flight to use SAF, but it is the first to use 100% SAF. In 2019, Gulfstream flew a G600 aircraft from Georgia to the UK using a 30/70 blend of SAF and jet fuel. 

The Virgin Atlantic flight will be the first to use pure SAF on a commercial airliner.

Update 29th November 2023 – History made

The first transatlantic flight by a large passenger aeroplane, fueled by ‘greener fuel’ was a success. Operated by Virgin Atlantic, it flew from London’s Heathrow to New York’s JFK airport.

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Flying taxi company receives EU approval for its electric jets

Flying taxi

Lilium is a German start-up that is developed a five-seater electric jet that can take off and land vertically. It is a flying taxi.

The company aims to offer sustainable, high-speed air mobility through its aircraft, vertiports and digital service. Lilium successfully tested its prototype in 2019 and 2021 and plans to launch its services in multiple cities by 2025. 

eVTOL market

Lilium is one of the leading companies in the emerging eVTOL market, which faces challenges such as regulation, infrastructure, safety and public opinion. Lilium claims that its jet is faster, quieter and more efficient than its competitors, and that it can travel up to 300 km in just 60 minutes.

Lilium has been granted EU approval to design and operate its electric vertical takeoff and landing vehicles globally.

Lilium is a German start-up that is developed a five-seater electric jet that can take off and land vertically.

It’s a key milestone for the industry. Lilium has been working for several years to get such vehicles ready for commercial market.

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Who’s now in charge at Binance?

Crypto

Binance is still open for business and is now being run by, Richard Teng. But who is the new boss of Binance?

Mr Teng, from Singapore joined Binance just over two years ago as the chief executive of the Singapore business. That was the year when Binance came under a Justice Department investigation, and as regulatory scrutiny of the company and Zhao intensified. Richard Teng was rapidly climbing the ranks in the background.

He only stayed in his original position as the Singapore CEO for five months, according to his LinkedIn page, before he was promoted to regional head of Europe, Asia and the Middle East and North Africa in April 2023.

Mr Teng later moved to become head of regional markets in May 2023 before he was appointed to the top job on Tuesday 21st November 2023.

In announcing his successor, Mr Zhao called Mr Teng a ‘highly qualified leader‘, adding that ‘with over three decades of financial services and regulatory experience, he will navigate the company through its next period of growth’.

Traditional financial background

Prior to joining Binance, Mr Teng worked in the more traditional financial sectors as a director of corporate finance at the Monetary Authority of Singapore (MAS) and a chief regulatory officer of the Singapore Exchange (SGX). He then moved on to the become chief executive of the Abu Dhabi Global Market (ADGM), an international financial centre in the United Arab Emirates, where he stayed for six years. The ADGM regulates the trading of digital assets.

In a statement on Wednesday 22nd November 2023, Mr Teng said he was honoured to take this position, adding that he would focus on reassuring Binance’s 150 million users about ‘the financial strength, security and safety of the company’.

Despite this, Mr Teng has reiterated that Binance is ‘here to stay‘, adding that company’s foundation stands ‘stronger than ever’.