Finance butts heads with physics as data center delay worries loom

In our 2026 predictions, I lobbed the point that 2026 will likely see multiple AI/HPC data center delays. Supply chain snags, raw material/component shortages, and export controls could converge in such a way that this becomes endemic to the data center sector. A number of capital allocators have touched on this, including Sequoia, who wrote a clear-eyed analysis of some of the supply chain risks facing builds in the new year. - link

OUR TAKE: In Q4 2025, silver went parabolic as the market confronted a deficit of physical supply. Silver is a critical component for busbars, semiconductors, and other data center components.

This was probably the first “oh s***” moment — at least for the lay investor — of the material shortage that data center operators are facing (or maybe they noticed the skyrocketing price of memory first, as we noted in a prior letter).

And let’s not forget reports in Q4 2025 that data centers have been buying jet engines to skip interconnection queues and speed up their time to market.

There’s barely enough power to go around, and increasingly, there’s barely enough of anything to feed the machine.

A number of other headwinds converging against the sector:

• China has instituted export controls on a laundry list of critical minerals, including gallium (used in PSUs, networking gear), germanium (fiber optics), graphite (lithium ion batteries, heat spreaders), tungsten/molybdenum (semiconductors), silver (busbars, semiconductors, switch gears) — you get the point.

• Fiber optic cables — the most critical networking component for HPC data centers — are in increasingly shorter supply, with one producer saying consumers may soon see dotcom-era lead times (~1 year, vs a 2-3 months normally).

• Last year, Samsung — among others — started allocating resources away from SSD hardware (for retail computing needs) toward high-bandwidth memory (HBM) hardware for data centers. Now, Samsung is sounding the alarm that — surprise! — there’s not enough memory for Joe Blow or Data Center Don.

The list goes on, but we’ll stop there.

The threat of these shortages is just starting to creep into the Overton Window. But how dire are they?

2025 earnings season is coming up, so any delays in data center buildouts will tell us if the creep has become a pounce.

If I were a banking analyst cleared for Q&A with your favorite neocloud/powershell AI play, I would ask if the company has critical material inventories secured for their near-term buildouts.

You can throw money at a problem, but you can’t fight physics.

-CMH

Zcash core developers resign en masse 

The entire Electric Coin Company team behind Zcash resigned collectively, citing untenable conditions created by the board of the nonprofit, Bootstrap, in a dispute over mission and governance. The developers immediately formed a new for-profit startup called cashZ, reaffirming their commitment to scaling Zcash technology while arguing nonprofits cannot achieve mass adoption. - link

OUR TAKE: So, let me get this straight: a privacy coin has a company behind it, and that company has a physical street address, and the developers quit because they didn’t like how the board was acting?

Yes that’s simplifying it, but the Bitcoin maxi in me comes out whenever I see self-described competing blockchains to Bitcoin that have “governance” problems.

Let me take a few more pot shots: Can you actually build unstoppable money when your development team reports to a 501c3 board?

Even Zooko, the Zcash guy (and cofounder) isn’t siding with his own former company, the Electric Coin Company.

Former ECC CEO Josh Swihart says “we’re starting a new company to keep building ‘unstoppable money’” but conspicuously hasn’t announced whether that’s Zcash, although it’s implied it is not.

ZEC immediately dropped ~15% on the announcement to $395.

Okay now some whitepilling. If Zcash is unstoppable money, then the core development team mass resigning shouldn’t affect it long term.

I must also point out that Zcash does have a long history of cryptographic innovations, such as the famous trusted setup ceremony and, more recently, Halo 2 zk-SNARK implementation.

I’m a sucker for privacy coin narratives, so I enjoyed the resurgence of privacy-pilled users on the timeline. No doubt many will move on once the hype fades, but events like these tend to activate a new cohort of privacy activists.

Hope the Zcash KOLs are going to be fine (they always are).

-CBS

MSCI retains Strategy in indices, keeps door open for other bitcoin treasuries

MSCI announced on Tuesday that it will not exclude bitcoin treasury companies from its global indices. The decision allows Strategy (NASDAQ: MSTR) to maintain its position in the benchmark equity indices, while also keeping the door open for other bitcoin treasury companies that meet requirements. - link

Florida lawmaker files bill to establish strategic bitcoin reserve

Florida House Member John Snyder filed a bill on Tuesday to create a state-managed bitcoin reserve framed as a bulwark against inflation. House Bill 1039 proposes the Florida Strategic Cryptocurrency Reserve as a special fund held separately from the State Treasury. - link

Hut 8 awaits zoning approval for $5B data center project in Illinois 

Hut 8 (NASDAQ: HUT) is awaiting zoning approval for a 500 MW data center in Logan County, Illinois, estimating it will spend anywhere from $4 to $5 billion on the proposed project. - link 

Cipher Mining taps bitcoin veterans to lead policy, strategic AI initiatives

Cipher Mining (NASDAQ: CIFR) appointed Lee Bratcher as head of policy and government affairs and Drew Armstrong as head of strategic initiatives on Tuesday. - link