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Scott Bessent Confirmed as Treasury Secretary

DeepSeek Shakes AI Chip Market and Tech Giants Bypass Grid for Power

CRYPTO
Scott Bessent Confirmed as Treasury Secretary

Hedge fund billionaire Scott Bessent has been confirmed by the Senate as Treasury Secretary in President Donald Trump’s administration, securing a 68-29 vote. While crypto isn't Bessent's main focus, Trump has directed the Treasury to prioritize digital asset policies. At his confirmation hearing, Bessent expressed opposition to a U.S.-issued central bank digital currency (CBDC), aligning with crypto advocates.

Bessent will oversee initiatives to reshape U.S. crypto regulations, participating in a working group tasked with delivering a strategy within six months. His department must also submit a report on regulatory changes within two months, emphasizing Trump’s push for a pro-crypto framework.

Known as a digital assets enthusiast, Bessent has invested personally in bitcoin ETFs, though he liquidated those holdings upon nomination. At Treasury, he will manage enforcement actions on crypto-related financial crimes, sanctions, and oversee the dismantling of his predecessor’s crypto policies under the Biden administration.

TECH
DeepSeek Shakes AI Chip Market

Nvidia’s $3 trillion valuation took a major hit, with shares dropping 17% and wiping out $600 billion in value. The selloff followed news of Chinese AI startup DeepSeek unveiling advanced, cost-efficient AI models trained on significantly fewer GPUs. Investors are now re-evaluating the AI chip market's dynamics.

DeepSeek used older Nvidia A100 GPUs and export-compliant H800 chips, far fewer than U.S. companies like Elon Musk’s Xai, which runs on 100,000 H100 GPUs. Yet, its R1 model, a rival to OpenAI’s reasoning AI, is so efficient it runs on laptops, challenging Nvidia’s dominance. Critics argue U.S. export restrictions inadvertently spurred China’s innovation.

However, Nvidia may still benefit from rising AI adoption due to Jevons Paradox, where efficiency drives higher demand. Despite competition, Nvidia retains an edge in GPUs for training and inference, supported by its CUDA ecosystem. Questions remain about DeepSeek’s GPU claims, suggesting Nvidia's position might not be as dire as feared.

FINANCE
Tech Giants Bypass Grid for Power

Tech giants like Amazon are pursuing direct deals with power plants to fuel energy-intensive data centers, bypassing the slow and costly grid connection process. This raises concerns about fairness, as it diverts power to higher-paying customers and excludes them from grid maintenance costs, potentially increasing costs for others.

Amazon Web Services (AWS) has proposed a "behind the meter" deal with the Susquehanna nuclear plant in Pennsylvania, which would supply up to 40% of the plant’s capacity to a nearby data center. The Federal Energy Regulatory Commission (FERC) rejected the deal on procedural grounds but is reviewing its broader implications.

Critics argue such deals could destabilize energy markets and unfairly burden regular customers, while proponents highlight benefits like bypassing transmission bottlenecks and supporting cleaner energy. FERC’s decision on this precedent-setting case will impact the growing demand for direct energy deals as data centers expand to support AI and cloud computing.

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.