Energy and Minerals: The Physical Bottlenecks to Innovation

Silicon Valley has long conceptualized technology progress through different stacks, with each layer becoming a tollbooth once it emerged as the throughput limiter. We’ve seen this cycle play out repeatedly: NVIDIA with GPUs at the hardware layer, OpenAI at the model layer, ScaleAI at the data layer. Each bottleneck produced trillion-dollar opportunities when it became indispensable to scaling the layer above it.

But we are now entering a new era where the bottlenecks no longer reside in software abstractions, but in physical constraints. The core rate-limiters of the 21st century are megawatts, molecules, and minerals. These cannot be solved with code or algorithms alone but require advances in infrastructure, manufacturing, and resource supply chains.

Energy, not compute will be the #1 bottleneck to AI progress.”

– Mark Zuckerberg (on Dwarkesh Podcast)

The math behind this rationale is staggering: Datacenter electricity consumption is expected to double to 945 TWh by 2030, more than the entire power consumption of Japan today. From a new capacity perspective, U.S. firms proposed 134 GW of new data center buildout, which equates to over 3.5 million metric tons of on-site copper, before accounting for transmission and distribution. Coupled with reindustrialization, mass electrification, and national security concerns, energy and critical minerals are at a global inflection point that creates a compelling opportunity for venture-scale returns.

AI datacenters are a high-profile example, but the problem is system-wide. Mass electrification of transport, reindustrialization, defense modernization, and the green transition are colliding in the same grid. Power availability, not algorithms, will define the frontier of what’s possible — from training GPT-6 to manufacturing EV fleets at scale.

Every frontier industry — from batteries and semiconductors to satellites and hypersonics — depends on metals. Copper, lithium, nickel, rare earths, and high-purity silicon have become the new “protocols of progress.” Without solving mining, refining, and recycling, we cannot scale any future-facing industry.

At the same time, geopolitical competition is accelerating demand for resilient supply chains. The bottlenecks in rare earths, uranium, and advanced materials aren’t just commercial — they’re defense imperatives. The U.S. is reprioritizing industrial capacity as a security asset, reshaping both investment opportunity and exit potential.

Rare earth metals are the most important DoD issue in the White House right now.”

— CEO of IQT (VC firm for US Intelligence Community)

The Energy & Strategic Minerals Syndicate invests in these new bottlenecks and tollbooths, the layers of megawatts, metals, and materials that underpin the scalability and profitability of AI and reindustrialization.

The New Arms Race

For most of economic history, aggregate GDP largely tracked population and labor participation: more people meant more output. As AI agents and robotic automation augment and substitute real human labor, this constraint shifts from population to energy capacity. Intelligence at scale becomes a function of reliable, low-cost electricity and the efficiency at which we convert kilowatt-hours into compute. That, in turn, pulls critical mineral supply chains to center stage:

• Copper for cabling and motors,
• Electrical steel for transformers
• High-purity silicon for chips and solar
• Rare-earth magnets for drives and cooling, and
• Lithium, nickel, manganese, cobalt, and graphite for batteries, storage, and power conditioning.

We are now entering a new arms race for megawatts and metals, and China is off to a significant head start. While U.S. power projects wait in regulatory limbo for licensing, permitting, and connection to the grid, China added over 6x the solar capacity of the U.S. in 2024. It also has 29 nuclear reactors under construction, while the U.S. has zero after Vogtle-4 entered commercial service in April 2024. Down a layer from power, China is the dominant refiner, with 70% average market share for 19 of 20 strategic minerals. It also handles 90% of rare-earth processing and produces +10x more crude steel than the U.S.

Policy Tailwinds

China has demonstrated a willingness to use its dominance to weaponize rare earth elements, critical minerals, and indirectly, power, for political gain. In 2010, it halted rare earth element shipments to Japan during a maritime dispute. In 2023, Beijing put gallium and germanium under an export-license regime and added permit requirements on key graphite grades used in chips and EV anodes. In 2025, it tightened the screws again, adding export-license requirements on a multitude of medium and heavy rare earths in response to Trump’s tariffs, slashing magnet exports 74% and forcing temporary production stops at Ford’s Chicago plant and other sites.

In response, the U.S. has moved on several fronts. In January 2025, it declared a national energy emergency, directing agencies to speed approvals and use emergency tools to stabilize power and fuel. In March, it ordered immediate measures to increase mineral production, placing priority projects on the federal permitting dashboard and opening financing under the Defense Production Act. In April, it ordered a national-security review of reliance on imported processed minerals and set a program to map, lease, and develop offshore and seabed resources while scaling domestic processing. In May, it authorized privately funded advanced nuclear reactors at federal sites serving national-security and AI loads, plus created a fuel bank with at least 20 metric tons of high-assay, low-enriched uranium.

The orders are clear. Securing domestic energy and mineral production is a top priority, and our Energy & Strategic Minerals Syndicate is backing founders who rise to the challenge.

Key Trends We’re Watching

Conclusion

The next great wave of innovation will not be bottlenecked by code, but by the physical world that powers it. The capacity to generate, move, and store energy — and the ability to mine, refine, and recycle the minerals that make that possible — will define the limits of global progress. In the same way that GPUs unlocked the AI revolution, the infrastructure of megawatts and materials will unlock the next.

At this inflection point, energy and minerals are not just commodities; they are strategic leverage points that determine who leads in intelligence, industry, and security. Nations that secure these supply chains will define the technological frontier for decades to come.

The Energy & Strategic Minerals Syndicate exists to back the founders building those foundations — the companies transforming the physical constraints of today into the trillion-dollar opportunities of tomorrow. By investing in the tollbooths of energy and material scalability, we are not just fueling the AI economy; we are financing the infrastructure of the future.

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