Disruptions & Derivatives
“Compute is the new oil. Like every commodity before it, it needs a real derivatives market,” Tarek Mansour, CEO of Kalshi
Editor’s Note: This note was bumped up, given recent developments; a second primer
- on NeoClouds / GPU Datacenters - has been uploaded & will be freely available for a limited time.
CRUDE.
First-thing-first → on oil.
Petroleum & LNG transport challenges are a boon for refining margins.
Just three commodity vessels passed the Strait of Hormuz yesterday, the fewest (daily) since May.
Simultaneously, the Ukrainian drone campaign against Russian shipping is growing - 12 ships were hit, including an LNG transporter & an oil tanker.
Unsurprisingly, the refining market has reacted:
As gas winter gas storage in Europe looks to be challenging, petroleum reserve stocks remain low, and crude/LNG transport disruptions trend in the wrong direction, the expectation should be that US Independents & Refiners have an excellent H2 ‘26 -
COMPUTE.
Demand continues to outpace supply.
Specifically, for the latest Nvidia GPUs.
Therefore, compute rental prices are going up.
Given the uncertainty surrounding where demand lands, and the certainty of the debt capital required to build currently planned GPU datacenters, the development of a derivatives market for hedging is both natural & necessary.
In practice, similar to the US LNG export market, the hedging function has been absorbed by large, investment grade counterparties in the form of long-term contracts.
On that note, two days ago, Kalshi announced the launch of Compute Forward Curves.
Given the shear volume of project finance debt against the build-out of GPU datacenters (1.5% of US GDP in Q1) - with a highly volatile underlying asset - quickly building a mature derivatives markets is imperative to bridging the gap between the stable cash flows debt financing requires & the volatile spot price of GPUs -
OTHER.
Jim Chanos has been posting about NeoClouds; we’ve found it a bit strange, as there’s no shortage of data available to get to the bottom of the economics
Wrote a few thoughts on that topic, here
As it relates to energy, creating a forecast for Frontier Lab demand & GPU supply are likely the leading indicators for marginal electricity & gas buyers over the next two years
And it’s never been easier to leverage LLMs - as a tool - to conduct that analysis -
WOW you are finally back! Hope it is more regular again.... rock on