Expanding US Rare Earths Supply Chain

Key Concepts

• Rare Earth Minerals: Essential components for consumer electronics and advancements in AI.
• Energy Supply Chain: A well-developed sector in the US, crucial for maintaining air dominance and enabling low-cost electricity production.
• AI (Artificial Intelligence): Driven by data and electricity, requiring significant infrastructure development.
• Electricity as the New Oil: The concept that electricity will become the primary driver of the future economy, similar to oil's historical significance.
• Critical Enablers: Companies and infrastructure that facilitate the development and growth of AI.
• Data Centers: Facilities that house computing infrastructure, essential for AI operations.
• Bitcoin Miners: Companies transitioning from cryptocurrency mining to data center operations due to their existing electricity infrastructure.
• Infrastructure: The foundational elements supporting AI, including data storage, network switches, electricity generation, cabling, and servers.
• Tour to Say Our Infrastructure Active ETF: An investment product designed to provide exposure to the companies enabling AI development.

Summary

The Strategic Importance of Rare Earth Minerals and the Evolution of Supply Chains

The discussion begins by highlighting the significance of a recent deal between the President and Australia concerning rare earth minerals. Rob emphasizes that a robust rare earth mineral supply chain is crucial for the US, not only for consumer electronics but also for the broader evolution of technology, including AI. He draws a parallel to the energy supply chain, noting that the US, as the world's largest energy producer, benefits from its well-developed energy infrastructure, particularly its abundant natural gas reserves, which enable low-cost electricity production and maintain its "air dominance." The argument is made that the rare earth supply chain needs to develop in a similar, well-structured fashion.

AI's Foundation: Data and Electricity, and the Utility Sector's Transformation

The conversation then shifts to the burgeoning impact of AI. Rob asserts that at the core of all AI advancements are two fundamental elements: data and electricity. He explains that his investment strategy focuses on these "critical enablers" and the infrastructure that supports AI's growth. The next decade is characterized as the "age of electricity," with electricity poised to become the "new oil." The US's ability to produce low-cost electricity is seen as key to maintaining its global AI dominance.

A Bloomberg report is cited, titled "Air Boom Transforms Utilities from Haven to Soaring Growth Stocks," which indicates that the utility sector has seen a more than 40% increase, making it the third-best performing group in the S&P 500. This surge is attributed, in part, to the increasing demand for electricity driven by AI.

Real-World Applications: Data Centers and the Transformation of Bitcoin Miners

The practical implications of this electricity demand are illustrated with the example of "My Backyard Energy" in Kansas City, Missouri. This company is projected to increase its growth rate by nearly 50% due to the influx of new AI data centers in the area. This trend is not isolated to Kansas City but is occurring nationwide.

A particularly interesting development highlighted is the transformation of Bitcoin miners into data center operators. Rob explains that these companies already possess the necessary electricity infrastructure, allowing them to pivot their business models and become data center providers. This transition is leading to significant valuation uplifts for companies like Riot Platforms.

Expanding the Investment Thesis: Beyond Energy to Infrastructure Enablers

While Rob's initial focus was on energy infrastructure and production to capitalize on the AI boom, his investment strategy has broadened. He explains that this expansion into companies more classically associated with servers, such as Dell, was prompted by the belief that AI represents the future economy.

He argues that what is often "underrepresented in investor portfolios" are the "enablers" and the "infrastructure" that facilitate AI development. This includes a wide range of components such as:

• Data storage devices
• Network switches
• Electricity generation
• Cabling
• Servers

Rob emphasizes that this underlying infrastructure is the fundamental bedrock for the future of AI. To provide investors with a way to access these critical enablers, he has helped create the "Tour to Say Our Infrastructure Active ETF."

Conclusion: Investing in the Foundational Infrastructure of AI

The core takeaway is that the rapid advancement of AI is fundamentally reliant on robust data and electricity infrastructure. The US is strategically positioned to lead in this domain due to its energy production capabilities. The investment thesis has evolved from solely focusing on energy to encompassing the broader ecosystem of companies that build, power, and support AI, recognizing these "critical enablers" as essential for future economic growth.