Dear Reader,
It was bound to happen.
The Nobel Prize in Chemistry was just awarded to two scientists for research on CRISPR genetic editing technology.
As a reminder, CRISPR is a method of using a guide RNA and a specific enzyme to “edit” a genome. The guide RNA can target precise locations in our DNA and then edit them with the help of an enzyme.
It can be used to cut out, insert, or replace sections of DNA to correct mutations that cause disease. And it is one of the most revolutionary technologies the world has ever seen… one whose remarkable capabilities we are only just beginning to harness.
Emmanuelle Charpentier of the Max Planck Unit for the Science of Pathogens and Jennifer Doudna of the University of California Berkeley were named for their work with CRISPR as applied to prokaryotes (bacteria and archaea).
Yet there were two surprises with the announcement.
The first was the timing of the award. The initial paper that Charpentier and Doudna wrote on CRISPR with respect to bacteria was only published in 2012. And there has yet to be a single, Food and Drug Administration (FDA)-approved therapy using CRISPR technology. The most advanced clinical trials are still in Phase 1.
And while I am extremely bullish on the therapeutic developments in this space, it would have been logical to wait on the Nobel Prize until the technology was at least proven in clinical trials. In this way, the award seems very premature.
But the other oddity regarding the announcement is that Feng Zhang was not also named for the Nobel Prize. Many in the scientific community were expecting that to be the case.
While Charpentier and Doudna were focused on CRISPR as applied to bacteria, Zhang’s research was focused on using CRISPR as applied to eukaryotes – plants, animals, and humans.
In fact, Zhang’s research while at the Broad Institute of MIT and Harvard resulted in intellectual property that has been determined to have priority twice in the U.S. and once in Europe for the foundational patents associated with CRISPR technology.
At a minimum, his work is equally as important as that of the other two scientists.
And ironically, almost all of the research and work in the biotech field on CRISPR is focused on applying the technology to eukaryotes, which is based on Zhang’s work.
Hopefully, Zhang’s recognition will follow in the future, after the first wave of CRISPR-based therapies cure human diseases that had no previous cure or therapy.
Until then, the world will benefit from the brilliant work of all three scientists in ways that few understand.
These are advances like the end of genetically caused human disease, crops that are naturally pest- and drought-resistant, and the ability to “grow” organs in animals to then transplant to humans… just to name a few.
We have so much to be excited about.
Now let’s turn to today’s insights…
We’ll start with an interesting development in the world of quantum computing today.
An early stage company called IonQ just announced that it has the most advanced quantum computer in the world. This is a company that I have been tracking closely. It was spun out of the University of Maryland and Duke University back in 2015.
IonQ’s quantum computer has “only” 32 qubits. That’s less than Google’s 53-qubit system that demonstrated quantum supremacy last year.
But IonQ isn’t basing its claim on qubits. Instead, it’s going by a metric called quantum volume.
Quantum volume is a metric that IBM came up with. It factors in several aspects of a quantum computer, including the number of qubits, the number of errors in the system, and the amount of “crosstalk” (i.e., how the desired action unintentionally affects other qubits) in the system.
Basically, quantum volume measures both computing power and accuracy.
We talked about this when Honeywell provided details on its quantum computer back in June. Honeywell announced that its computer was twice as powerful as IBM’s with a quantum volume of 64.
Well, IonQ just blew that out of the water. Its quantum volume is over four million. We’ve gone from 64 to over four million in just over three months. That shows us how rapidly quantum computing is progressing.
What’s unique about IonQ’s approach is that it uses a trapped-ion method for its quantum computer.
That is exactly what it sounds like. IonQ traps a series of atoms in the quantum computer and uses them for computations as the atoms change in orientation.
The trapped-ion approach stands in contrast to the superconducting approach used by Google and Rigetti. The primary advantage of using trapped ions is that they have very high fidelity, or very low error rates. That’s the secret to IonQ’s latest quantum computer.
This is incredible technology. The fact that IonQ can isolate individual atoms and trap them for computing purposes is mind-blowing. After all, atoms are the most basic form of matter. They are so small that we can’t even determine where they are at any given time with 100% certainty.
Along with this announcement, IonQ CEO Peter Chapman made some bold predictions.
He thinks that IonQ can double the number of qubits in its quantum computer every eight months for the foreseeable future. And he predicts that IonQ’s quantum computer will be able to outperform classical supercomputers in just two years.
It was just a few years ago that the quantum computing industry was plodding along with very few interesting developments. But since last year, we are now seeing exponential growth in quantum computing technology.
This is a technology that will catch most by surprise. We are going to see some major breakthroughs in this space in 2021.
A massive venture capital (VC) raise in Europe just caught my eye. A company called Northvolt recently raised $600 million in an early stage VC round on September 29.
With this raise, the company has now pulled in nearly $3.7 billion since its founding in 2016. That’s an incredible amount of capital to put to work in such a short period of time.
Anytime we see so much money pouring into such a young company, we must ask, “What’s going on here?”
And if we look at who is backing Northvolt, we see some big-name players.
The venture capital arms of the large European automotive companies like Volkswagen and BMW are piling in. And major investment firms like Goldman Sachs and Baillie Gifford are big investors as well.
Why so much focus on this one company?
Well, it turns out that the European carmakers are scrambling to secure a supply of high-quality lithium-ion batteries for the burgeoning electric vehicle (EV) trend. And that’s where Northvolt comes in.
Northvolt aspires to be a major producer of lithium-ion batteries in Europe. Its goal is to reach 150 gigawatt hours of annual production capacity by 2030. At that scale, Northvolt could make batteries for nearly 1.5 million EVs per year.
What’s more – Northvolt is working on technology that will allow it to extract the rare metals from old batteries to be used in new batteries. It’s a battery recycling program of sorts.
So the major European carmakers are showering Northvolt with money, hoping to speed up its progress. And it’s all in a mad dash to catch up with Tesla.
Tesla has been aggressively expanding its production capacity. In fact, it recently announced that it was opening a factory in Berlin to produce both cars and lithium-ion batteries.
And to the surprise of many, Tesla is already building its factory in record time. The announcement was only a few weeks ago, and Tesla is already putting a roof on parts of the factory.
As a result, Tesla is on track to have the production capacity to produce about 1.6 million EVs (including batteries) by the end of next year.
And its goal is to have enough capacity to produce 20 million EVs per year by 2030. That target came out of Tesla’s annual Battery Day, which we talked about last week.
And the thing about Tesla is that it doesn’t share its battery technology with anyone else. The batteries it makes are for Tesla EVs exclusively. That’s one of Tesla’s largest competitive advantages.
So the European carmakers know their backs are against the wall right now. They are already way behind Tesla on bleeding-edge electric vehicle technology and EV market share, and that gap will only widen unless they can secure a major supply of annual battery production.
That’s why Northvolt is being peppered with capital right now. The future of the historic European carmakers is in its hands.
Both the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have been clamping down on the blockchain industry over the last two years. And the latest move involves a major player in the space.
The CFTC charged the key executives at BitMEX with operating an illegal derivatives exchange and violating anti-money laundering (AML) laws. As a result, one BitMEX executive has already been arrested in Massachusetts. And key founder Arthur Hayes is apparently “at large.”
This is big news.
BitMEX is a digital asset exchange that provides a key derivatives trading platform for the industry. Derivatives are highly leveraged financial instruments whose value is directly tied to an underlying asset.
At BitMEX, much of the derivative trading was geared toward Bitcoin. BitMEX allowed traders to lever up 100-to-1 with Bitcoin derivatives. This amplified the gains and losses by 100 times.
But derivatives aren’t just for speculation. They also allow investors to hedge other positions against downside risk. And they provide a key source of liquidity in the industry.
So BitMEX has been very important to the growth of digital assets and cryptocurrency trading.
However, BitMEX was structured specifically to avoid U.S. regulations.
The company is based in Hong Kong. And it has been closed to U.S. customers… at least on the surface. Traders in the U.S. got around this by using virtual private networks (VPNs) to make it look like they were accessing the platform from another country.
According to the CFTC, BitMEX knew this was happening but made no effort to stop it. And the CFTC charge claims that BitMEX was knowingly serving over 85,000 U.S. customers without complying with U.S. Know Your Customer (KYC) and AML regulations.
These are serious allegations. The BitMEX executives will be in serious trouble if they stick.
And this news is not good for the blockchain/cryptocurrency industry either. BitMEX provided a lot of value in the space. And it never looks good if a major player is caught skirting regulations. That can potentially result in stricter regulations that might further push investment in the blockchain industry offshore.
But what’s most striking here is that what BitMEX is accused of doing absolutely pales in comparison to what the big banks were just caught doing.
As we discussed last week, banks like JPMorgan Chase, Citigroup, Bank of America, Deutsche Bank, HSBC, and Standard Chartered engaged in more than $2 trillion in suspicious transactions between 1999 and 2017.
Crimes include money laundering for North Korea and the Taliban, facilitating fraud at a Malaysian sovereign wealth fund, and manipulating global financial markets.
In fact, JPMorgan Chase just agreed to a $1 billion settlement with the U.S. Department of Justice (DOJ) and the CFTC for a scheme in which it was “spoofing” the precious metals markets at the expense of other investors. Spoofing is an illegal form of market manipulation intended to create the belief there is a large demand to buy or sell a certain asset.
Yet not a single executive at any of these big banks has been charged with a crime. What gives?
Clearly, there’s a big discrepancy between how the regulators treat the big banks and how they treat the nascent blockchain industry. I wonder why?
Regards,
Jeff Brown
Editor, The Bleeding Edge
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The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
