A 160-Year-Old Coal Lesson Says AI’s Power Problem Is About to Get Worse
Washington, D.C., Oct. 18, 2026 (GLOBE NEWSWIRE) -- In 1865, a British economist noticed something strange. Steam engines had gotten far more efficient. They needed less coal to do the same work. So Britain should have burned less coal.
It burned more. A lot more. Cheaper power meant people found new ways to use it.
Economists still call it the Jevons paradox. And it may be playing out again with AI.
That’s the backdrop for a new free presentation from tech analyst James Altucher. He calls power “AI’s biggest bottleneck.” And he believes Elon Musk has a plan to get around it.
Cheaper Doesn’t Mean Less
The easy bet is that better chips and smarter software will fix AI’s power problem on their own.
But history suggests otherwise. Make AI cheap enough and it shows up everywhere. In every app. Every business. Every factory, car and gadget. Each task uses less power. But there are so many more tasks that the total keeps climbing.
Cheaper AI means more AI. More AI means more computers. More computers means more power.
Altucher sees demand heading in the same direction. “Our power needs continue to increase as the AI industry grows,” he says. He calls AI “our generation’s railroad, oil, electricity, and internet... All rolled into ONE industry.”
Why Musk Is Playing a Different Game
That’s where Musk comes in.
Altucher says Musk is running “the exact same playbook from John D Rockefeller.” The playbook is vertical integration: control every part of the supply chain. Musk already has the rockets, the satellites and the AI. And he recently announced plans to build his own chips at a giant factory he calls Terafab.
Power is the hardest piece. Altucher’s answer is space. He points to a SpaceX filing with the FCC that lays out plans to run AI data centers in orbit, powered by the sun. According to Altucher, the plan shows Musk “wants to create more computing power than every data center on earth combined.”
If cheaper AI keeps pushing demand higher, a plan built at that scale starts to make sense.
The Opportunity Beneath the Efficiency Story
Altucher says SpaceX isn’t the whole story. The supplier behind it is what he calls “the KEY to it all.”
His presentation centers on one small company he believes powers the “nervous system” of Musk’s network: “the system that beams billions of data points every second to servers back on Earth.”
And as demand for AI grows, Altucher says, so does this company. He says it’s “on pace to double its chip output over the next two years.”
Lay it out end to end and the chain is simple. Cheaper AI means more AI. More AI means more computers. More computers means more power, more networking and more hardware.
The least flashy links in that chain are easy to miss. “Fortunes hide in the places 99% of people scroll right past,” Altucher says.
About This Presentation
James Altucher has spent decades in AI, from research labs to Wall Street. In his newest free presentation, he turns that experience to Elon Musk. He explains why he believes Musk’s AI strategy is really an infrastructure play, what the SpaceX filing shows and which small company he thinks the plan relies on. Watch it on demand here.
About James Altucher
James Altucher has managed hedge funds and spent three decades at the highest levels of Wall Street. He was writing about NVIDIA in 2008 and SpaceX in 2012, years before either became a mainstream investment. He has appeared on CNBC and Fox Business. Few analysts can claim the same mix of hands-on technology and Wall Street experience.