It will be IMPOSSIBLE to run a modern civilization without AGIs. Is your country's AGI strategy ready for what's coming? 🤔
Everyone's watching the AI chips race. But what if the REAL power play is happening elsewhere? There's a critical bottleneck most experts are completely missing, and China may have already secured checkmate in the race against America.
I asked Casey Handmer what this means for global power dynamics.
His answer?
Watch on YouTube; listen on Apple Podcasts or Spotify.
Episode Summary:
While everyone obsesses over AI chips and compute power, the REAL bottleneck in the AGI race is energy. China knows this. America is just waking up. In this deep-dive conversation, Casey Handmer, Founder of Terraform Industries and former NASA JPL engineer, reveals why the US-China AI competition will be won or lost on energy infrastructure, not algorithms. We explore the $500 billion Stargate project, the future of synthetic fuels produced from sunlight and air, and why India could become the third AI superpower if it plays its cards right.
Why This Matters:
The AGI race isn't about who has the best models; it's about who can power them. This conversation cuts through the hype to reveal the real infrastructure challenges facing artificial general intelligence development.
About Casey Handmer:
Casey is revolutionizing energy production through Terraform Industries, which creates synthetic fuel using only sunlight, air, and innovative engineering. His unique perspective bridges space exploration, AI infrastructure, and the geopolitics of AGI development.
Timestamps:
00:00 AIR Bites (Precap)
01:40 The Real Bottleneck in the AI Race Isn’t Compute
03:10 Inside Stargate: The $500B Project Powering AGI
04:29 Terraform’s Photosynthesis Machine: Fuel from Sunlight and Air
07:02 Water Myths in Energy: Why Desalination Isn’t the Problem
09:36 Can India Become the Third AI Superpower?
13:29 From Mars to Mainframes: How Terraform Fuels Both
13:46 The Future of Energy: Solar Power and Regulations
15:31 Solar vs Synthetic Fuels: What Data Centers Really Need
17:49 Why Solar Regulation Is Broken (and How to Fix It)
20:07 Energy = Wealth: The Harsh Truth About Global Power
22:53 If AI Mobilized a Manhattan Project, How Fast Could We Scale?
24:33 Do We Have Enough Land for 100% Solar Earth?
25:57 Japan’s Energy Scarcity and Solar Redemption
29:08 Why Space-Based Solar Power Makes No Sense
29:48 Batteries Are Killing Transmission Lines
31:05 Supply Elasticity Walls in Energy Infrastructure
34:15 Data Centers Will Need Their Own Power Plants
36:38 Will Quantum Computing Save Us From the Energy Crisis?
39:08 My 2027 Prediction: The AI Grid Will Flip
44:10 How to Get Rich in Ideas: Advice for Young Physicists
50:18 Why Casey Says Yes to Podcasts
51:28 Outro
Transcript:
Aashka Patel (00:04)
hello and welcome to On AIR with Aashka thank you so much for joining us, Casey. Let’s dive right into the questions.
every AI lab is racing to build AGI. But here’s what nobody is discussing. Mark Zuckerberg says the real bottleneck isn’t in compute, it’s energy. Hyperscalers are planning 5 gigawatt or more data centers, and the US grid can’t deliver it. Meanwhile, China manufactures 80 % of world solar panels and refines 70 % of global lithium.
required for the batteries. So if abundant energy is the foundation of the AI race, why doesn’t China just win by default?
Casey Handmer (00:41)
Yeah, I’m optimistic. think that obviously many, different components are required for AGI, but the bottleneck at this point does not appear to be solar module supply, for example. You could make some comments about US regulatory constraints on solar deployment or on GPU availability or software development. I think particularly in terms of AGI development,
most of the available headroom is just in software.
Aashka Patel (01:07)
Okay, so putting the export controls on chips and everything can still make US win this race?
Casey Handmer (01:13)
I mean, there are some export controls on the various chips. don’t think that’s going to be, it’s going to result in a durable advantage. I think it’ll help in the short term. But I think ultimately the data centers are being primarily built in the United States for a reason.
Aashka Patel (01:30)
Okay, So any recent updates on the Stargate project that you have? Like what’s going on there?
Casey Handmer (01:36)
Yeah, I mean, I don’t know very much about it. It is interesting to me that essentially private capital in the United States, is spending something like 10 Manhattan projects worth of wealth on this over the next few years. Yeah, so the entire Manhattan project was about $30 billion. And that required, that was to build a nuclear bomb.
Aashka Patel (01:48)
Half a trillion almost,
Casey Handmer (02:01)
for the first time, but it also required the construction from scratch of like what are now two or three or four major national laboratories, the invention of entire branches of physics and machining and a bunch of other stuff like that had to be invented from scratch. The scale was mind boggling. About half a million people worked on the Manhattan Project in total. Although I think the greatest number is about 120,000 at any one time. So just a really enormous project done obviously in the 1940s in the condition of wartime. And then this compute scale up.
It’s a little bit different in the sense that it’s...
I feel like there’s a lot less diversity in terms of the raw machinery that’s required. It’s like racks plus power plus racks plus power. yeah, obviously there’s tremendous resources being poured into this. And I think justifiably.
Aashka Patel (02:49)
yeah, yeah, makes sense. Let’s come back to the Stargate conversation once we have the Terraform story’s built. So, Terraform Industries makes cheap synthetic fuel from sunlight and air. For our listeners, can you briefly explain the process that you quote as photosynthesis on an industrial scale that produces synthetic natural gas?
Casey Handmer (03:11)
Yeah, sure. mean, plants use sunlight and air to grow their bodies. The wood in a tree came out of the air. It didn’t come out of the ground. essentially, the way humanity gets its energy is by burning fuels in air. And wood is quite combustible. And so essentially, inspired by that process, many people over the centuries have tried to make a synthetic version of the same process, making
perhaps more useful fuels than wood like natural gas or gasoline or kerosene or jet fuel or whatever. The challenge actually for more than 100 years has not been technical so much as economic. That is, there are many ways of getting these chemicals in the easiest way currently known is to drill a hole in the ground. But at the same time, solar is getting cheaper and cheaper over time. And so we’ve got to push that forward.
Yeah, so essentially what Terraform does is we have a machine that intermediates intermittent and free natural resources like air and sunlight and water and then this kind of off-tape market that requires predictable volumes of predictably high quality and enormous volumes of natural gas or fuels or other materials that then form the basis of our entire supply chain.
So it’s hard to think about this, when you look at a finished product, pretty much everything began as rocks, you know, at some point. So yeah, that’s what we’re working on. In terms of how it works, there are about 400 different ways of doing this. We had to pick one. The approach that we took was to build an electrolyzer to make hydrogen out of water, a direct air capture system to take CO2 out of the air.
It’s a bit like a leaf on a tree. And
then a chemical reactor that combines CO2 and hydrogen to make methane.
Aashka Patel (04:50)
Yeah, got it, So currently it’s just methane or like any other plans to expand the natural gas production.
Casey Handmer (05:00)
Well, methane is natural gas. having figured out how to do this, it now seems that there’s a bunch of adjacent step-up opportunities in other areas that are also in primary materials, also very energy intensive, also have a climate kind of aspect to them, also have a national sovereignty aspect to them that we are very well positioned to come and address now. So that’s kind of the step two for us.
Aashka Patel (05:09)
Mm-hmm.
Got it, got it. So you mentioned the use of water in the terraformer, the machine that you are using to make this cheap synthetic fuel. So is that fresh water or do you purify salt water and then use it? How does that work? Because that can be a limiting resource, right? OK, OK. OK.
Casey Handmer (05:40)
Yeah, we can actually get it out of the air. Well, not, no, not really, not really. So if you,
think about how much water you need to grow an acre of crops to eat, or to grow an acre of biomass to burn versus the amount of water you need to synthesize the equivalent amount of fuel, it’s like, it’s not even in the same ballpark. And then water is actually, it’s not that scarce. There are some places that it...
Aashka Patel (05:49)
Mm-hmm.
Mm-hmm.
The fresh water would be here, right?
Casey Handmer (06:08)
Well, yes
and no. If we live in a world where we can synthesize synthetic fuel, then we live in a world where we can desalinate essentially arbitrary volume supporter. And it is, it’s very bizarre to me to acknowledge that we live in a world where for 10 years now, you know, lot of the,
the environmentalist discussion has been about like, you know, the putative water scarcity of data centers or farming alfalfa or something. When almost all the places that meaningful numbers of humans live are very close to the coast, the coast is defined by the presence of an ocean that is literally made of water. And the energy required to separate the salt from that water is absolutely trivial in comparison to the energy required to synthesize fuel. So just to give you a concrete example, in...
In one day, one terraformer makes the equivalent of about one barrel of oil, which is about 150 liters of fuel. But if we were condensing water out of the air, then it would be about 150 cubic meters of water. And if we are desalinating it using standard desalinization technology, it’s about 100, I’m going to mess this up. It’s 150,000, so it’s 100,000 times more than 150 liters, which is 10,000 times 1.5.
which is 15,000 cubic meters. So volume for volume, you’re making 100,000 times more liquid water than liquid fuel. So any place that’s like, no, water’s has to be a place that’s like either Mongolia, so like impossibly far from the ocean, or Somalia, so like really bad governance, no functioning law and order, or a place where they just decide that they’d rather have their hair shirt than just go and build a desalinization system.
that can produce essentially infinite water. Israel’s been doing this for 50 years. So it’s not some mystery how this works. Most of the Middle East depends on desalinization, actually.
Aashka Patel (07:55)
Hmm, got it. Makes sense, makes sense. So, since we were talking about solar and you have been bullish on solar, right, like infinite amount of energy source that we have. India has world’s third largest solar capacity, scaling without regulatory paralysis choking the US and Europe. And India has abundant sunlight and a massive STEM workforce.
So if India wanted to become the third superpower in the AI energy race, what’s one critical move it must make now? Like more solar panel manufacturing or something else?
Casey Handmer (08:32)
Well, that’s a good question, isn’t it? I feel like India’s industrial policy has always been around the promotion of national champions and the preservation of autarkic manufacturing capacity in the purpose of national sovereignty. So India is justifiably proud of its ability to produce a lot of the technology that it needs internally. And there’s no reason it shouldn’t. has an enormous population and many, many brilliant people and highly educated. And yet at the same time,
We all know that India has a number of reasonably unique peculiarities as far as its economy go as well. But I think, you know, I’m not the first person to say this, but it is certainly the case that in the coming decades, as in the past, when there are the countries that have nuclear weapons, they have absolute sovereignty and the ones that don’t, or say that the companies that have nuclear submarines equipped with nuclear weapons on rockets, for example, are kind of the...
the elephants in the room and the rest don’t. There’ll be the countries that have their own AGI under their own legal control and the ones that have to use the foreign AGI. And we’ve already seen what a horrific degradation of European national sovereignty or like, you know, almost regional sovereignty has occurred as a result of their inability to produce web technology that can compete with the United States. And...
in general, a handful of exceptions, but in general. And just what an appallingly low wattage response to that was the formation of a bunch of like UK quangos that run around like essentially engaged in piracy, trying to shake down the US tech giants for money. When like every dollar paid in fines or disputed or whatever is a dollar that’s not being spent.
in the UK or in the EU building a meaningful competitor to Google. It’s not that hard. You could literally vibe code it today. And the same thing will happen in the future, which is like, OK, well, it’s now impossible to run modern civilization without computers. It pretty soon will be impossible to run a modern civilization without AGI’s basically intermediating every single step. Are those AGI’s under the control of your geopolitical adversary? Are they able to turn them off? Are they able to confuse your political systems?
through manipulation of information and fundamental systems. you know, I think a lot of countries, France and the UK and the United States and China, obviously included, have realized that, you know, if their ancestors made the effort to put nuclear missiles on submarines 50 years ago, now is the time to put an AGI within their own borders. The problem is, this is a race that is defined by your ability to
to attract the very best in both liquid capital and human capital. And when it comes to this, the United States is just richer, right? And it just has most of the really bright AI engineers, not all of them, but a lot of them. And that helps. same thing in second world war. Germany, first step, step one in conquering the world was to convince all the really bright people to immigrate to United States. How did that go for them? Not so well. For India’s perspective,
My understanding is that India’s indigenous ability to fabricate chips is not sufficiently competitive. But that aside, I think all the other pieces could exist within India’s borders. And if they want to have absolute digital sovereignty in the future, they’d need to get their act together on chips pretty quickly. And it’s not that hard in the grand scheme of things.
Aashka Patel (11:32)
Not comparable,
Yeah, yeah, makes
sense. So you have connected this Terraformer technology to Mars industrialization and this Stargate project.
Like what’s the actual connection between synthetic fuels and both Mars and next-generation AI infrastructure?
Casey Handmer (12:06)
Yeah, I mean, I think I don’t think I’ve ever written about Stargate, but I’ve written a lot about Starship. So star various things. Okay. Mars industrialization. So just to clarify this for your listeners, Stargate is a large AI data center project that’s being constructed in Texas. And Starship is a large rocket launch project being constructed in Texas. Mars industrialization.
Aashka Patel (12:10)
Yeah, Starships. Yeah.
Casey Handmer (12:29)
This is just kind of a hobby project, yeah, just trying to... Sorry?
Aashka Patel (12:29)
Elon is, yeah, you are a fan of Elon,
You are a fan of Elon, right? Like in a lot of, yeah, yeah, yeah, yeah.
Casey Handmer (12:38)
Yeah, I think it’s very difficult to operate in this area and not be.
I think it’s one of those things where to the kind of average disinterested participant or whatever, what SpaceX does is quite extraordinary. But if you actually have any insight into just how hard it is and just how extraordinary what they do is, you’re like, it’s an anomaly in the matrix. It’s very strange. It’s very, it’s as close as we’ll ever see in our lifetimes to something that feels magical.
Right? In a tangible way.
Mars industrialization. We, one day humans will live on Mars, maybe in our lifetimes. When they do, they will need to ultimately develop supply chain on the surface of Mars to make things. And that means they have to convert rocks into stuff. So metals, fuels, oxygen, gases, water, you name it. The good news is Mars is covered in rocks. plenty of rocks.
The bad news is that there is no developed existing supply chain for any of it at all whatsoever. So you have to do it from scratch. this was the thought experiment that I initially used to try and understand how this was done. And then that ultimately led me to the insight that it would possible to do it on Earth as well, and very difficult but possible. So that’s what we’re working on here.
Aashka Patel (13:52)
Got it, got it. So, would you rather sell the Terraformer to data centers or to traditional energy companies? I know that as per a TechCrunch article, you have been selling to traditional energy companies
Casey Handmer (14:05)
Yeah.
So humanity uses a number of different energy sources, including various forms of electricity, various forms of chemical energy, including oil and gas and food, obviously, and coal. And then we use that for different purposes. So sometimes we use electricity directly. Sometimes we use electricity to make heat. Sometimes we just use the chemical forms of energy to make heat or some other kind of end product. Generally speaking, I think that if your end use is electricity, you’re better off
starting with electricity and staying as electricity. So that avoids the interconversion penalties. So you can start with solar power, charge a battery, and then run a data center. Problem solved. Okay.
So I don’t think it’s very necessary to put a terraformer and making synthetic natural gas in as part of this data center, presupposing that you have the gas infrastructure to consume that gas anyway and storage and so on. It’s just not really worth it. So instead, you say, well, we make natural gas and we pipe it into the existing distribution network, which exists everywhere because gas comes from all over the world. It’s found in all kinds of random places. It’s used in all kinds of places.
And sure, some of that gas gets taken out of the network and gets burned to make electricity in gas turbine power plants. But you and I both know that in 20 years time, those are going to be pretty much out of business. So, you know, that’s kind of a growing industry feeding a dying industry. The growth part of natural gas consumption is in other parts of the economy, I think. Yeah, so I think the Terraformer Mark 1 is for making synthetic natural gas for, you know,
very boring traditional utility distribution, everyday uses, heating, cooling, cooking, chemical processes. And I think the greatest use of, the greatest source of growth for natural gas consumption will be aviation, actually.
Aashka Patel (15:38)
Every day.
I saw your video with like the castle one that you have created recently, hard reset or something. The third use case of the synthetic fuels was into this jets and everything. Yeah, makes sense.
Casey Handmer (16:01)
Yeah, yeah.
Aashka Patel (16:09)
So coming back to the Stargate project, my favorite. first of all, for the audience, the Texas site of the Stargate project. It’s just one of the sites. Alone will consume 1.2 gigawatts of electricity, same amount of power required to run a million American homes. And the budget is almost half a trillion dollars.
And you have said that US environmental regulations are actively killing solar deployment. So, what’s the one regulation you would like to kill first so that like this energy consumption and everything can be done on solar?
Casey Handmer (16:45)
Yeah, I mean, this is less of a problem in Texas, but some states and the federal, and actually a lot of this has been changed just in the last year. So like part of the Department of Government Efficiency work in the United States, basically revised 50 years of regulations that had been added to an existing law that had made that law work a lot less well, particularly for these projects. But the fundamental error I think is made here is that
the environmental protection regulations that were put in place in about 1970. And for good reason. They presuppose that anything you want to do to the land is bad for that land in terms of industrial development. When actually I think there’s an argument to be made that solar is like actually net positive, if not neutral. But it still results, the net outcome is the same, which is that it takes years to permit it because you have to go through the same process as if you were just building an oil refinery or something which definitely does have like long-term negative impacts on land.
My proposal would be what’s called a categorical exclusion. And there are categorical exclusions for other types of technology, actually ironically including oil and gas production because it’s so important to our economy, that you should be basically exempted from having to go through the environmental impact analysis process. The problem is that pretty much all the existing players benefit quite a lot from that process because it’s so expensive that they all make good money out of it. So this is...
Aashka Patel (17:46)
Yeah.
Casey Handmer (18:01)
this kind of perverse incentive structure set up around it. Anyway, I think there are many good think pieces out there on what we could do about that. But yeah, it’s absolutely crazy to me that the United States would do anything policy-wise or any country for that matter to inhibit the deployment of solar panels because they’re so much cheaper than any other form of energy and so much less environmentally impactful.
Aashka Patel (18:24)
Yes.
Casey Handmer (18:26)
And
the key to your children being rich is to make sure they have cheap energy. There’s no such thing as a rich, low energy country. There’s no such thing. Literally, like if you have energy abundance, like heaps and heaps of oil or something, or historically like Egypt, like I’m talking the ancient world, Egypt had energy abundance because they had the Nile River and they had predictable grain harvest every year. were like, know, net surplus grain producers for thousands and thousands and thousands of years.
then you can basically do anything governance-wise and be fabulously rich. And if you have energy poverty, even with the best case governance, you will still be pretty poor. So just to kind of give you a concrete example there, Japan has energy poverty. They have to import a lot. They’re well governed, I think. Very advanced industrial nation.
Aashka Patel (19:12)
Yeah,
Hmm.
Casey Handmer (19:20)
And the GDP has been stagnant for 30 something years. It’s roughly equivalent to what the US was in like 1970. So, so they’re literally two generations of human development poorer than the United States because they don’t have energy. And the United States is, I wouldn’t say poorly governed so much as barely governed. And, and Texas is one of the richest, richest places on earth because of oil. Shame about the climate. Okay.
Aashka Patel (19:45)
Makes sense.
Hehehehe
Casey Handmer (19:49)
The good thing about solar is that everyone has solar. Unless you’re Iceland, everyone has solar. So, particularly... I’m sorry?
Aashka Patel (19:53)
Yeah, intermittent but yeah, they do have.
Intermittently available, like some days available, some days not, but like of course every place on earth has solar
Casey Handmer (20:05)
Yeah, intermittency is a bit of a blown, think. Sure, with wind power, sometimes it just won’t blow for a long time, but the Earth is not going to stop turning. So every day the sun is going to come up. And some days it’s cloudy and some days it’s not, but even when it’s cloudy, you can still read a book. So there’s still a lot of light bouncing around. Maybe not as much as on a sunny day. In winter, the days are shorter. In some of the days, longer. But most humans live pretty close to the equator, where that doesn’t make a huge difference. so the response to this, the way you fix this problem is you
you just build more solar. And then in summer, your solar is fabulously cheap and in winter it’s a bit more expensive. And that’s how you, you meter the, kind of meter the offset there. But like this idea that intermittency is not the same as unreliable, right? We have good weather prediction. We know exactly how much solar we’re going to get in three days. So, it’s very easy for us to say, well, we’ll charge up the batteries now or not. And this can be all done autonomously. Tesla has had a version of this called auto bidder for like 10 years.
Aashka Patel (21:01)
Yes, the value, yeah.
Casey Handmer (21:02)
basically manages its batteries to maximize value production. Yeah,
and then batteries are just like monotonically increasing, right? You just keep on building and connecting, building and connecting, and it just makes the grid better and better.
Aashka Patel (21:13)
Yeah. Yes.
So, I recently watched Bill Gates documentary on Netflix claiming the current direct air capture or like carbon capture can only handle historical emissions, not the ongoing ones that we are emitting right now. So, with Terraform’s technology, if we mobilize like the Manhattan Project, what’s the fastest timeline to industrial scale?
Casey Handmer (21:39)
Yeah, it’s a good question. I haven’t seen that documentary and I don’t understand exactly what Bill’s getting at there. If you mobilized like Manhattan Project, it’d like 10 years. There’s a lot of work to be done. But the key thing to realize is that the whole point of this exercise is you shouldn’t require massive government subsidies to get to scale. You should be able to show positive unit economics at relatively modest scale and then...
Aashka Patel (21:51)
10 years.
Casey Handmer (22:06)
that itself directs the massive capital flow in your direction. And then that is what gets you massive scale because at end of the day, the government can spend a lot of money on stuff, but it doesn’t necessarily, like the only thing that will really move the needle sustainably is positive unit economics. It’s making money, generating value. Can AI help us achieve that goal faster? Yes. It’s very helpful for research, but I think actually be more helpful long-term in creating a lot more prosperity, creating a lot more.
Because AI can help us with research, can help us with coordination, it can help us operate more efficiently. But AI in the economy in general creates more wealth and more demand for services like ours. it’s obviously a series of massive waves of economic growth kind of converging and all we have to do is keep our head above water and we’ll be fine.
Aashka Patel (22:53)
Yeah, yeah, yeah, makes sense. So,
Okay, so you have had a white paper, right, in that you quoted that
the solar will require 2 billion acres of land. So, do you think 2 billion acres of land is available or possible to have solar panels on like currently?
Casey Handmer (23:13)
Yeah.
Aashka Patel (23:14)
like how can you explain the stats basically
Casey Handmer (23:19)
Yeah, so in terms of land use, something like 1 % of land on earth is heavily populated by cities, 99 % is not. About 20%, depending on the continent, about 20 % is engaged in agriculture and farming, and maybe another 20 % in forestry, and then the balance is like deserts and mountains and swamps and things. And the solar panels don’t have to go on the...
on the prime agricultural land, but the total amount of solar that you need to power every man, woman and child on earth with US levels of energy wealth is like maybe one or 2 % of the total land on the earth. you could say, well, deserts are 35%. We’ll take, well, of that 6 % of the desert and we’re done. That’s very, reasonable to me. It’s like, it’s less than a 10th of the amount of land we spend on agriculture.
in
order to roughly 10x our energy wealth. This does not seem like a heavy lift to me. So we talked about Japan a minute ago. Japan has been acutely sensitive to their oil scarcity for more than a century. By some accounts, the reason for the Japanese attack at Pearl Harbor provocation was the US
enforcing an oil export embargo against Japan. And then, of course, the Japanese war effort fell apart in 1944 and 1945 because the US was able to project power across the Pacific Ocean and to detect the importation of oil from Sumatra, One of the carriers was lost at Midway because it was fueled with crude oil rather than refined oil, which was much more volatile.
because it still had the lighter petroleum liquids in it and they volatilized into the Hangar Bay and then exploded. So, similar story for the Nazis as well. So, you know, we’ve spoken to a number of potential partners in Japan over the years and at some point I said, well, we’ve run the math on how much solar you would need to produce all the oil and gas that Japan could ever want within its own borders, you know, within the borders of the home islands.
And my interlocutor kind of did a double take. Because forever that’s been an impossible dream. Japan is a volcanic island arc nation. It’s mostly basaltic rocks. It doesn’t have meaningful volumes of any ores, really. It has to import essentially all its rocks. And now we’re saying, I guess it has plenty of carbonates. But everyone has plenty of carbonates.
Aashka Patel (25:57)
Mm.
Casey Handmer (25:57)
Now we’re saying like, oh well, Japan is actually also about two thirds forested. Basically no one lives in these mountainous forested regions. We’re saying, well, you can put solar panels on the south facing ridges or you can put wind turbines or whatever. You need to generate 10 terawatts of power or something. I can’t remember the exact number, but it’s all very doable with their own technology, with their own factories within their own borders. And then they no longer have to care about the fact that all their oil comes from the Middle East.
Aashka Patel (26:04)
Yeah.
Casey Handmer (26:26)
for example. Okay.
That’s a big deal. And that actually applies to the number of countries on earth that are advanced developed countries that have enough oil within their own borders to supply their own needs is the United States. That’s it. Everyone else lost the lottery.
Right?
Aashka Patel (26:48)
Yeah, yeah, yeah, makes sense. you are saying that the land is enough for the solar panels, earth has enough land, then why? Okay, okay.
Casey Handmer (26:56)
Yep. yeah, easily. There’s only one exception actually. It’s the United Kingdom. Yeah.
So the United Kingdom’s population is so high relative to a solar resource that it couldn’t do it. We could do some, but it couldn’t do all within their own borders. They’d have to rely on wind power. Fortunately, they have some of the best wind resource in the entire world. So they can still do it. But the thing is, when it comes to exploiting that wind resource, they’re going to have to internalize their own wind.
turbine production capacity, because wind is going to lose the battle pretty much everywhere else. But UK will have to build their own wind.
Aashka Patel (27:28)
Yeah, yeah, So yeah, so why are there efforts of putting solar stations in the space and everything? you are saying that the land on Earth is enough for the solar panels? I think Caltech, your college itself, has one project, space solar stations.
Casey Handmer (27:43)
Yeah.
Space-based solar power. I think space-based solar power makes sense for powering satellites that operate in space. That’s why the space station has solar panels attached to it. But for beaming down to the Earth, doesn’t make sense to me. Never has. It seems like a really bad way of getting power.
Aashka Patel (28:10)
Casey, you have argued batteries will cannibalize transmission infrastructure because of this high utilization. So at what price point per kilowatt hour of storage does it become economically insane to build high voltage transmission lines instead of just deploying batteries?
Casey Handmer (28:29)
that happened like five years ago.
Yeah, and like, so it’s kind of a funny thing that like certain elements within the United States have been trying to build lots of transmission lines and they’ve complained about the regulatory problems, in particular around a law called eminent domain, which allows you to take private land to build stuff, preventing it.
But in this case, it’s actually saved us. The United States has not built very much transmission infrastructure in last five years. but like economically speaking, they should have built none. So we kind of, we kind of got lucky on that front. Yeah. No, I mean, I don’t know. Like I read the math on a blog post years ago. It’s like at 500 bucks per kilowatt hour or something. It’s, no longer makes sense to do long distance transmission lines. But the thing is, it’s not, it’s not even about like a specific number. It’s mostly just about like looking at the cost curves.
And like Euclid established that non-parallel lines cross eventually. like, it’s not even all that. It’s like 2,600 year old math proves that this should not be done.
Aashka Patel (29:25)
Hmm. Yeah, yeah, makes sense. So, you have predicted we will hit supply elasticity walls soon, whether in gas turbines, transformers or the grid itself, which breaks first. And what does that moment look like for an AI company trying to bring a new cluster online in 2026?
Casey Handmer (29:47)
That’s a good question.
So I think the question is, what is the rate limiting step from the perspective of the data center developer?
Aashka Patel (29:54)
Yeah.
Casey Handmer (29:54)
Yeah, so there’s a kind of a peculiar dynamic occurring on that front right now where a bunch of data center developers believed that they had secured grid supply. There was kind of a land rush for the last remaining grid supply. And having done that, the grid operators then realized that they wouldn’t have enough power to support the data centers all the time. And so they basically unilaterally have now unilaterally imposed.
throttling conditions on the data centers. This is a big headache for the data centers because they want to operate all the time. But it’s a solvable problem with batteries. So what happens is they put in an order with any of 20 or 30 different battery suppliers. And they just basically upgrade the UPSs at the facility to handle, instead of like a 30 minute outage, to handle like a two day outage or something. And this, it would be very extravagant to do that.
In any other system, but the GPUs cost so much money and not operating them cost so much money You just got to run them. So that’s all batteries as far as gas goes. That’s if you’re building your own power plant. I Mean X AI went and bought a gas turbine from overseas dismantled it and shipped it to the United States. So like I feel like There aren’t that many more times you can run tricks like that So I would expect that that You know, like we don’t make zero gas turbines. We continue to make them every year but
But in terms of their ability of those industries to scale up quickly and how much of the risk they’re willing to assume, given that the AI bubble might burst, seems kind of low. So I’d say in the next couple of years, we’ll see. It’s kind of a funny thing because the AI developers have been talking a big game about power procurement for a long time. And it just seems to me that they never quite...
Like whatever you’re hearing reported is probably a year or two behind what is actually happening on the ground. So until very recently, they’re all very much talking about small modular nuclear reactors as their power plants, right? Despite the fact that like, by the time they were talking about it, everyone actually involved with the coal face knew that this was not gonna work out, at least in the short term. And so they went and got all the grid connections and so on. But yeah, as far as the supply wall goes, all that really refers to is...
We saw the same things during COVID that like...
By default, you assume that your supply curve is actually a straight line. Locally, it is, but it’s not obviously over a long enough distance. So sooner or later, you get to a point where the curve starts to slope up pretty steeply. And the question is, how far away is that? And I think it’s actually pretty damn close for turbines.
Aashka Patel (32:35)
So that’s where these, no, but you were not in support of using these synthetic fuels for data centers, right? Like when I asked you, yeah, yeah. So drilling will remain the only option because currently for data centers, it’s heavily reliant on the natural gas production itself, like electricity from natural gas, right?
Casey Handmer (32:43)
No, I don’t think it’s a idea.
Yeah, I mean, we’re seeing colossus to, for example, built with the captive power plant. Now this doesn’t surprise me. Historically speaking, like you mentioned one gigawatt is a large number earlier. It’s like enough for a million homes or something. Not in summer, that’s for sure. Maybe like 50,000 homes in summer, because they all run air conditioning here. But it seems like a lot of power until you say, okay, well, what are the single facilities in our existing economy that consume insane amounts of power?
Aashka Patel (32:58)
majorly.
Casey Handmer (33:26)
And there things like aluminum production plants, for example, where just the power consumption is just catastrophically enormously high. It’s fabulous. It’s a lot of fun, right? And so what typically happens is if you have an aluminum plant, it’ll have its own captive power plant, right? And it may be the case that a nearby town also gets to tap in and use some of the power. But powering the plant uses 90 % of the power in powering the entire town.
that maybe provides some of the workers for the plant is like 10 % of the power. And that’s the kind of situation you’re seeing here. yeah, mean, the United States has very well developed gas transmission infrastructure. And so it’s relatively easy to, if you can procure a power plant to plug it in and then power your system. So we’re seeing that a few more times and particularly in Texas, has, parts of Texas have a lot of natural gas as well. Texas just has everything, man. Well, it doesn’t.
Aashka Patel (34:17)
Yeah, Halliburton does everything right in Texas.
Casey Handmer (34:18)
It has a lot of carbonates, I’ll it that way. I wouldn’t say it has like
super productive agricultural soil or something. But yeah, Texas is a pretty fabulous place. Okay, where were we? No, what I’m saying is in the limit data centers will have to be powered by solar, solar and batteries. It’s pretty clear. Like we’re running analysis. Actually my computer is crunching in analysis in this right now as we speak.
Aashka Patel (34:42)
Okay.
Casey Handmer (34:42)
Yeah, I ran it overnight and then I accidentally rerun it. So now I’m rerunning it again. Yeah, it’s quite fun. And so the million dollar question there is like, how much uptime do I actually need for my data center, for example?
Aashka Patel (34:53)
Yeah, the batteries, right? Yeah.
Yeah. Let’s move on to the next question.
your whole thesis is that AI will need massive amounts of power. But what if quantum computing flips that? What if we suddenly get 100x more compute for 10x less energy? Does that break your solar story?
Casey Handmer (35:16)
No, because that would presuppose that we’re able to saturate demand for computing, and that’s evidently not the case. I don’t know anyone who ever said, no, my data center is too big. Like, no, my computer is too fast. It’s never happened. It literally never happened.
I think it’s also worth pointing out that as far as quantum computing goes, there’s been a lot of promises and very little delivery. There’s been a lot of money and lot of effort poured into this for decades. And we’re not even at the point yet where we’re ready to set up a fab, which makes like the equivalent of the 4004 quantum computing processor or the 6502 or something. So like very primitive pre X86 architecture CPU for quantum computing. And even if we did...
what would we use it for different things than we use regular computers? Quantum computing right now is so fabulously expensive and losing so badly relative to boring old silicon computing on a cost curve basis that you could maybe only justify it for a handful of very particular things, which like AI have actually largely solved already. So for example, for a long time, it was thought that we’d need quantum computers to fully understand protein folding.
Aashka Patel (36:31)
Yeah, I thought it would happen.
Casey Handmer (36:31)
and then alpha-fold went and solved it.
yeah. And I’m sure if you want to do factorization of large numbers or something, then there’s a case to be made for quantum computing. But it’s very much a niche corner case. It kind of allows you to perform operations with the wave function itself rather than the square of the wave function, which is what everything else does. But it doesn’t, I don’t know.
I’m, my wife wrote a book on quantum computing once. And yeah, it’s, it’s, it’s about using the quantum computing system as a five, five qubit system, which is small enough that you can actually completely simulate it on like a toothbrush if you really want to. Yeah. So I, so I think that quantum computing is going to like magically somehow actually like a lot of the power demand for an existing data center is just in cooling, right? And quantum computers.
Aashka Patel (36:57)
okay. What’s new?
Casey Handmer (37:18)
as they’re designing to operate at cryogenic temperatures. So if anything, you would expect to see an increase in power demand. Okay, anyway, onwards.
Aashka Patel (37:23)
Yeah, yeah, makes sense, makes sense.
Yeah. So, if you were to make one bet, not a wish, but a genuine prediction, what will be the biggest surprise about AI energy infrastructure when we have the same conversation in 2027? in two years?
Casey Handmer (37:43)
it’s not that far away. I would say that some of the things that I go on about, which are still seen as...
Aashka Patel (37:44)
Yeah, that is why.
Casey Handmer (37:50)
still seen as somewhat controversial or something, will no longer be controversial. So for example, the idea that the AI data centers would become the center of gravity of electricity production and consumption, and that instead of the discussion being around PJM unilaterally imposing, we’re going to cut you off if we’re running out of power because our human consumers are more important than our AI consumers, even though economically speaking, the human consumers are much less important.
Aashka Patel (38:12)
Yeah.
Casey Handmer (38:17)
the discussion will be around PJM negotiating with their local compute cluster for access to their excess power. Because like, just in my neighborhood, I think in a given year, we’re lucky if we have 99 % uptime in my neighborhood, right? So at home. So we have like blackouts totaling 72 hours a year or something like that, which is kind of frustrating. But for an AI data center, you probably want to have like at least one or nine, if not two more nines of uptime. So.
What that means is the AI data center will have solar plus batteries. It’ll have excess power most of the time. That is effectively just, they’re not even using it. It’s just sitting there. So they’ll be able to sell that to be good neighbors, I think. But yeah, that whole discussion is, I don’t think it’s been widely understood yet that like, there probably won’t be independent power generation merchants in the future. There’ll be captive power plants for highly energy demanding.
systems, whether they’re data centers or synthetic fuel plants, and that they will become the default merchant of power for legacy grid users.
Aashka Patel (39:17)
Hmm. Yeah. So have you heard stories of like people’s utility bills going up because they have a data center nearby Like why is it so?
Casey Handmer (39:28)
yeah, I’ve heard these stories. I think they’re
mostly crap. I don’t think they’re true. I mean, like people’s people’s utility bills have gone up. And
Aashka Patel (39:35)
Three times I heard that
Casey Handmer (39:37)
Yeah, I mean, there’s a lot of articles doing the rounds here, but not everything that’s published in a newspaper is true. Okay. It’s going to shock you to learn that. What’s actually happening is, I think there’s an argument to be made that if you had to baseline inflation on one metric, it should be energy prices, right? And all the rest, you can have this big basket or whatever, but like, what’s really happened in the United States, at least, is that the US dollar has devalued by about 40 % over the last six years.
And, yeah, fortunately there’s been quite a bit of economic growth in the background. Whereas for other Western countries that have also seen hyperinflation, they have not had commensurate economic growth and now they’re in a real pickle. but, but yeah, basically like your, utility bill now is higher because your money’s worth less. And if you’re on fixed income because you’re a retiree or something, then you’re in deep trouble. Right. It’s a big, big problem. like,
It makes me quite angry because we’re a very sophisticated civilization and like all the different aspects of this story are just failures. They’re failures, right? The first is it should not be that hard to make energy cheaper over time. We’ve known how to do it 50 years, right? We’ve just chosen not to. Secondly, it should not be that hard to not have like massively inflationary government spending, right? It just requires us to not spend like print money and spend it on dumb stuff, but we do it anyway. Okay. And thirdly,
Aashka Patel (40:59)
Hehehehehe
Casey Handmer (41:00)
The fact that we have retirees on fixed income is a dire indictment of the fact that we spend $50 billion a year on the National Institute of Health and we still haven’t figured out aging, like human aging. Like the fundamental problem is not that like Mrs. Mulberry can’t afford her power. The fundamental problem is that Mrs. Mulberry got old and she should never have gotten old in the first place. She should have basically been healthy and vigorous for essentially indefinitely. And this is a technology that for whatever reason, the US with all its wealth and power and the rest of the country, of the world with all its wealth and power.
Aashka Patel (41:08)
Hmm, yeah, big problem.
Casey Handmer (41:30)
has put peanuts into over the years trying to solve. We’ll spend 10s of billions of dollars a year on cancer treatment and we’ll spend maybe a couple million dollars on like, what can we do to make these mice live longer? It’s bizarre to me. It really changes your perspective when you realize that almost all the diseases that are currently bankrupting healthcare systems all around the world are not diseases that like young people get. They’re diseases of old age. They are, are
Aashka Patel (41:55)
yeah.
Casey Handmer (41:55)
downstream
of a core problem, which is that if you build a society that’s rich enough that a meaningful number of people survive their childhood and survive their middle-aged years, then they all become old and their care all becomes expensive and they all basically decline and get sick and die. And that’s very expensive. So I know it’s kind of bit of pyramid scheme situation. And the only way out, and this is the case in India as much as anywhere else,
where we’re collapsing birth rates, the only way out is to radically extend human life through advanced medicine.
Aashka Patel (42:30)
Yeah, yeah, makes sense. Yeah, so you call yourself a recovering physicist. You saw brilliant people in academia solving hard problems are highly underpaid. So now you are building terraform. money is a big reason And you get to solve the hard problem. So for young physicists or engineers watching this who are intellectually hungry,
Casey Handmer (42:37)
hehe
Aashka Patel (42:54)
but also want to build wealth, what’s your advice and what problems should they focus on in this AI age?
Casey Handmer (43:03)
It’s a good question. I mean, I didn’t leave academia and go and start a company so I could get rich. Just to be clear, I could earn much more money doing something different. Well, that’s not strictly true, actually. I’ll be honest about that. I’m well off. I have nothing to complain about. Financially speaking, I’m well off.
Aashka Patel (43:11)
No, no, Yeah, but yeah, you quoted that a lot of physicists end up in academia,
Okay.
Okay.
Casey Handmer (43:28)
But the sort of wealth that I sought by starting a company was not financial wealth. I could go and work at Google for much more money than I currently earn. I could go and work at an AI lab for much more money than I currently earn. Why am I doing this and paying myself such a meager salary? It’s because I’m becoming rich in something that you cannot buy and you cannot earn at most companies. It’s an experience of running your own show and creating opportunity for other people and building wealth and trying to do something that’s very, very difficult.
And if it’s your thing, there’s no other way of getting it. OK.
What’s my advice to people who want to build wealth? Buy index funds. Quite frankly, not investment advice, but the number of people I know, particularly if we don’t figure out aging, who just assume that like they’re going to retire at 65, you need to be compounding wealth in a way that is, you know, at least comparable to the broader market. And it turns out that they kind of long-term, I think Warren Buffett has done extremely well by making extremely long-term bets on good businesses and just compounding.
Aashka Patel (44:25)
Yeah, at compounding.
Casey Handmer (44:28)
compounding, compounding, compounding. And you probably in general are not smart enough or interested enough to like pick good stocks. mean, once in a while you can bet on something just for the fun of it. I’ve done that a few times. got very lucky once. Lost almost everything every other time, right? It’s gambling. But if you buy index funds, then you’re basically taking a position on the future health of the economy. And that’s a correlated outcome as well, right? So like, if in 50 years time, the United States for me is a richer place than it is now, then my index funds will be doing well and I’ll be well off. And if the United States has collapsed,
Aashka Patel (44:43)
Okay, yeah.
Casey Handmer (44:58)
then it’s not like putting a bunch of cash in a bank account would have helped anyway. Okay, what’s my advice? I recently wrote a blog post on how to improve your resume if you’re a recovering JPLer or NASA person who’s kind of on the cusp of being laid off. It’s really important to focus on how your skills generate value that is legible for the end customer.
and not assume that just because you’re there, they’ll see you’re brilliant and give you money. And a good exercise to move in that direction is to practice using the AI tools, understand how they work, understand how to get good work out of them, and write a resume and write some blogs. But writing blogs is fabulously underrated. Generally speaking,
Aashka Patel (45:40)
And good quality
blogs are also rare, right? These days like with AI generated content being bombarded.
Casey Handmer (45:47)
yeah, yeah, yeah.
Don’t try and pass off AI slop as your own work. That’s a kiss of death. You’ve got to write something from the heart about something you’re passionate about that really shows you’ve thought deeply about it. It creates a durable proof of work that you’re not just like posting 140 characters on some random subject. It also creates a proof that you’ve been thinking about a subject for many, many years. It also helps educate people. It also gets fed into the LLMs and makes them smarter. It also means the LLMs know who you are, which could come in handy someday. You never know.
But
it also forces you to think more clearly about what you’re doing and trying to communicate it and some of the stuff that I’m working on is so out there and so hard to comprehend even for me who works on it every single day that like if I look at my first blog post on the subject it’s miserable but I left them up there because it’s a record of progress I guess. I do very occasionally edit things if I find a mistake or something but I don’t take down blog posts because I no longer...
because I’m no longer proud of them or something. I think it’s just part of the production function. You’ve got to keep on making them. Yeah, that’s right. Publish on the internet. mean, not that long ago, it was basically impossible to get your words out there. You’d have to find a publisher who printed on paper and put it in a library and someone has to read it. That’s not the case anymore. What a world we live in. Yeah, write some blog posts. Do the research. Make them interesting.
Aashka Patel (46:56)
Yeah. That’s a great advice. And just like the AI companies are not moving their old models out of the market, you shouldn’t move your old blog posts out of the market. Just keep them and show a natural progression of you getting smarter, smarter, smarter. So are there any specific skills for a physicist or an engineer that you think today they should learn?
it will compound over the years,
Casey Handmer (47:27)
I don’t know. I don’t think I’m well qualified to give career advice. I would say don’t try and validate my mistakes by repeating them, obviously. I’ve gotten very lucky. I’ve gotten very lucky. I found physics to be a very productive jumping off point for my intellectual growth and exploration, but obviously it isn’t for everyone. I think it’s very versatile. I think that in general, if you want to work in a technical sphere, you’ve got to be obsessive about hoovering up just all the information you can possibly find.
Aashka Patel (47:37)
Okay, okay, that’s good enough otherwise.
Mm-hmm.
Casey Handmer (47:56)
in any configuration you can possibly find it. You can ask people questions. Here’s the thing about writing. Why it’s valuable. For every hundred people on the internet, only one of them will even write a little bit. Like, you know, reply to a post or something. And for every hundred people that even write a little bit, only one of them will write anything of any length. So if you actually take the trouble to write like 10 half-decent blog posts, you are already in the .01 % in terms of total intellectual activity on the internet.
Which is one of the reasons why the AIs are so crazy, because almost by definition anyone who goes to the trouble of writing a million words on the internet is a crazy person. Sometimes productively crazy, but still crazy. So yeah, that’s... But it’s a good crowd to be part of.
Aashka Patel (48:28)
Yeah.
productively.
Yeah, yeah. One last question before we let you go. So, just a personal question, like you are so busy, but yet you take time to do so many podcasts, like while doing the research for this podcast, I had to like go through a lot of them. So, how do you take time out and like why and how you manage to do this?
Casey Handmer (49:00)
I don’t do every podcast, but...
Aashka Patel (49:01)
No, like a lot like as
compared to the other guests like there was a lot of content available on how Casey Hand mer things. So, yeah, how do you manage?
Casey Handmer (49:11)
Yeah, well it’s part of communication. It
feels like work, but it’s pretty easy. It’s good practice. But I don’t do that many. mean, like, again, it accumulates. On my website, I have a list of every podcast I’ve done, and they are maybe 25 over the last 10 years or something. So on average, that’s only one every couple of months. So it’s not that many. I probably write many more blog posts. Yeah, definitely. I’ve written hundreds of blog posts at this point, so.
Aashka Patel (49:31)
Yeah. Yeah.
Yeah, yeah. So thank you so much, Casey. It was nice talking to you. I hope you had fun too. So thank you so much. And let me stop the recording.
