6 Interesting Asides (with Charts)
Free Post: data centers; fastest growing food; fading Europe; electric India; gambling problems; and a BTC forecast to dream about
data center binge (reprise)
fastest growing food
what a nation’s codebase says about its future
electric India
gambling and consumer credit
a bitcoin prediction for the stars
👉👉👉Reminder to sign up for the Weekly Recap only, if daily emails is too much. Find me on twitter, for more fun. Free post today, so just keeping it easy-breezy.
Data Center binging (reprise)
First, just a coda to yesterday’s post about transformers.
Somehow I missed it, but Bloomberg has a nice visualization on the remarkable growth of data center spend:
Construction spending on data centers has gone from ~$8B to $30B in ~4 years.
Unsurprisingly, data centers represent the largest category shift, by far:
60% yoy increase in data center construction spend.
Point is, Data Centers (and AI more broadly) are the capital cycle now, and that’s still very much the case. Better find more transformers, asap.
It’s neat that census started breaking out data center construction dollars as a separate category.
OK, now onto the main of event of interesting asides . . .
Land of plenty
If you had to guess, what would you say is the fastest growing food sector in the world?
The answer is fish-farming:
Aquaculture is the fastest growing food sector in the world, and surpassed wild catch back in 2013.
I can’t really say precisely why I find this neat. I suppose it’s a testament to entrepreneurial ingenuity, but also further confirmation that we live in a post-Malthusian world.
We can make a lot of food, when we put our minds to it.
Fading Europe, developer edition
Github released a whole bunch of data, and one chart in particular stood out.
Take a look at the Top 10 developer communities over the past 5 years:
The UK and Germany both lost a step, and France was bounced from the Top 10 by Indonesia.
There may be a more banal explanation for this, but “writing lots of code” is definitely a list you want to be on. That every major European nation (except for Russia) lost a step is just another small testament to the once great continent’s fade.
By contrast, that Indonesia rocketed into the #8 spot, with an economy that’s slightly more than half the size of France’s (albeit a population ~4X larger), is a testament to well-placed priorities of an ascendant nation.
India electrified
Here’s another marvel from the developing world.
Rural India is now almost fully electric:
It took ~40 years for rural India to go from ~15% electrified to 99% electrified.
That’s some pretty impressive “state capacity.”1 Kerosene is now basically obsolete as a primary energy source, as a result.
As tenured readers know, Random Walk is bullish on India, longer-term. It’s got a growing population, and despite some remarkable achievements in connecting its people to the global economy, there’s still plenty of low-hanging fruit left to pick.
India is also a “social media native” culture, which is interesting for other reasons.
Missing stars and gambling woes
The NBA has a missing stars problem.
Missed games due to injury are tracking higher than before:
Through 10 games, star players have already missed 83 games in total.
Obviously, 10 games isn’t enough to declare a trend, but “stars getting hurt” has been a thing for a while. Or really, “stars being cautious with their injuries” has been a thing for a while.
It’s a hard problem to solve, given (a) the fat tail risk of chronic injury; and (b) the value of being healthy come playoffs time. Random Walk doesn’t know the answer, just that it’s a familiar problem, during an otherwise peak era for NBA basketball.2
The real reason to bring it up is that
recently offered a round-up of takes and research titled “The online sports gambling experiment has failed.” The argument is that despite strong ‘libertarian’ inclinations, the evidence is that gambling leads to enough harm, that it’s not worth it.There’s a lot in there, but one thing that jumped out is some research on “consumer distress” following the introduction of online sports betting.
The claim is that online gambling caused all of the following to increase amongst consumers:
bankruptcies;
auto delinquencies; and
collections
As Mr. Mowshowitz summarizes:
a 28% increase in bankruptcies is far more than I would have predicted. The typical adult bankruptcy rate is about 0.16%, so this would mean about 4bps (0.04%)/year of additional bankruptcies, or an over 1% additional chance a typical person goes bankrupt during their lifetime . . . That suggests that for every $70k in net sportsbook gross profits from regular gamblers [based on ~$7B annual betting losses for normal gamblers], someone filed for bankruptcy.
Trading ~$70K of entertainment profit for a socially expensive bankruptcy, seems like a bad trade.
Without getting too far down the “is it worth it?” path, one aspect of the research jumped out:3
Credit card delinquencies are inversely related to the introduction of sports gambling.
So, while bankruptcies, etc. all got worse when gambling was launched in state, credit card delinquencies got better?
Makes no sense.
The researchers notice it too, and suggest that perhaps declining credit card delinquencies reflects proactive measures by the credit card issuers. In other words, issuers identify the gamblers quickly, and then cut them off from more credit. That’s certainly possible—and credit card issuers do react pretty quickly to cohort performance.
If you squint closely at the chart, you can even notice a slight increase in distress before the decrease:
There’s a slight 0.1% increase in credit card delinquency for the gambling states, before a substantial decrease.
While it’s a pretty tiny effect, the fact that the relationship inverts so visibly afterwards suggests that perhaps there’s something to be said for very nimble credit card companies.
Bitcoin guru to the stars
Sometimes financial acumen comes from where you least expect it:
On September 3, famous Bulls also-ran, Scottie Pippen, called his Bitcoin shot. From his dream. But still.
$BTC was a mere ~$59K back then:
Crypto has added “~$30K” in the two months since Scottie’s vision.
The inflows to BTC are real for the most part and have picked up steam since the election:
Coinshares via Daily Chartbook
But the truth is that inflows to crypto have appeared pretty strong all year.
Is it a speculative asset? And inflation hedge? Both? Neither?
Idk, and no one else does either, but I liked the Scottie prediction.
Previously, on Random Walk
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I suppose I don’t really know how challenging it is to undertake rural electrification, but it sure seems impressive.
My one complaint is that it would be nice to see other strategies besides “hitting lots of 3’s.” I think an amazing rule change to experiment with would be adding a premium for dunks.
In general, I think we’re probably somewhat under-indexed to the consideration that “just because we can do something, doesn’t mean that it’s good for us.” We’ve tended to conflate questions of whether something is permitted v. whether something is good, and those are not the same question. The willingness to do things that are not good for us, if given the opportunity, is obvious to any parent.
Seems like every 2 or 3 weeks there's an announcement of a new data center in Ohio.
As for gambling, make it go back to just horse racing, Vegas, and Jersey, with community groups allowed "Vegas Nights". Or at least put down pro athletes like seriously injured horses; I lost $2,000, but maybe the Browns will have more chances to luck into a better quarterback.....