Mind Crunches #29: An Almanack for 2025
Anticipate the unlikely. The unbelievable has become commonplace. Accelerate
🐉 Catch Me If You Can
In one of my previous posts, I shared my State Capacity Theory of Everything which in a nutshell describes a worldview that all aspects of daily life are downstream to the capacity of modern states and institutions to build and deliver results. One way that State Capacity manifests is at various Manufacturing and Energy indicators. Below, I am sharing a few charts that most accurately depict the world power status at the moment and why the West needs to act fast if we ever want to catch up with China.
There are energy and manufacturing policy experts that can deep dive on these numbers better than I can but one thing is clear. China is leading, by all measures, in manufacturing capacity, EV car production and export and green energy. And of course these charts have multiple spillover effects in geopolitics. It’s evident that China is raising production in militarily useful manufacturing industries like autos, batteries, electronics, chemicals, ships, aircraft, drones, and foundational semiconductors. This doesn’t just raise Chinese production — it also creates a flood of overcapacity that spills out into global markets and forces American and European companies out of the market. By creating overcapacity, China is forcibly deindustrializing every single one of its geopolitical rivals.
Also, it seems that China is rapidly catching up in AI despite chip export controls. In a nutshell, the Chip wars are inefficient and just create headlines. We need more CHIPS and Science Acts and not trying to hold China back because apparently it’s not working. (this is China’s latest OS AI model, DeepSeek V3)
🚀US Next-Gen State Capacity
One of my core beliefs (or subconsciously wishes) is that US has woken up to this reality and is already acting fast. Terms like Dynamism, Progress and State Capacity are becoming super popular and there is currently a culture/vibes that has the potential to form into a Good Bubble that will serve as a self-fulfilling prophecy igniting innovation both in policy and tech. The ingredients will be:
Pro-tech and pro-innovation administration. Stupid things like extensive AI regulation, Wells notices to crypto companies and crypto debanking will be things of the past.
An amazing combination and intersection of AI + Defense + Bio + Nuclear + Crypto + ZK technologies.
Constant progress and innovation on AI with lighter, smaller, better models. Technically, o3 is AGI. Also, it’s likely that there is no wall.
AI is only just beginning. Only 5% of American companies are using AI for products/services which means that technically, AI has still no significant impact to the US economy. Accelerate!
In 2025, we will witness a major breakthrough in cancer medicine. The recipe will be a combo of advancements in mRNA and LLMs predicting the molecular markers that stimulate the immune system into action.
ZK is trust automation at industrial scale. ZK will enable cross-platform and interoperable innovations in AI, Bio and infuse more trust between citizens and Government. Don’t trust, verify.
Defense tech is cool and cutting-edge again.
USD stablecoins is probably the most important financial innovation expanding US soft power globally despite the fact we are moving to an isolation-first world.
Think tanks focusing on optimizing government agencies and minimizing bureaucracy. My favorite one is Niskasen’s “The How We Need Now”
Democrats returning back to normalcy and Abundance agendas with thinkers like Yglesias and Klein.
Tech progress isn’t enough to take us out of stagnation. We need to build a new culture that will favor and promote innovation, experimentation and acceleration. There are already many voices making the case for a new culture (or even theology).
It’s very likely that 2025 will be the year that charter cities will reach mainstream level of awareness and we will see more experiments in the US. Trump has already publicly talked about “freedom cities” and Esmeralda was apparently a big success. Remember Casey Handmer’s post about a terraformed West.
Trump wanting to buy Greenland makes absolute sense.
On a personal level, I am deeply inspired by how Crypto can modernize State Capacity. I have long argued that Crypto needs to become more extrovert and join forces with other powerful tech. It’s time that Crypto takes itself seriously and moves to its next phase of influencing the world. Some of the things that excite me are:
Unstoppable and decentralized markets about everything aka Next-Gen Capitalism
Decentralized, verified and collective AI
Crypto-enabled distributed energy markets favoring grid defection
Citizen-owned verifiable credentials
Stablecoin-led foreign policy
Prediction Market infused policymaking
Government data processes optimization
Banking millions of unbanked individuals and lifting poor economies through better flow and settlement of remittances
📌 Meditations, Predictions & Mind Crunches
🧠Artificial Intelligence
The most important areas of innovation for LLMs in 2025 will be better and/or infinite memory and optimizations in test to time compute. I also expect different architectures to start picking up pace. Transformers are amazing but not a one size fits all solution.
Bio and Evolutionary Psychology will inspire more AI innovation. CoT LLMs show reduced performance when they overthink. Emotional RAG is showing great potential. Evolved Universal Transformer Memory is super interesting. Michael Levin Ubiquitous Intelligence thesis picks up traction.
AI is moving to a barbell situation with very powerful small and extra-large models.
Stats to ponder: With $6M you can train a frontier model.
Does human intelligence matter in the age of AI? Ilya doesn’t think so if prompting persists, which I think it will, then Intelligence will be correlated with good prompting.
Do you still think AI performance benchmarks still matter? The joke is on you.
Sovereign AI supercomputers: Italian energy giant, Eni, fires up €100mn supercomputer in race to find oil and gas reservoirs. Eni’s new machine, HPC6, will be switched on in the small Italian town of Ferrera Erbognone, population 1,140
Sakana, one of my favorite AI Labs, is using AI to look for artificial life. John von Neumann would be proud.
I have long argued that AI hallucinations are a good thing and an amazing unlock for product innovation and medicine breakthroughs.
The AI spillover effects in small, rural economies: Electricians is the hottest job right now.
⛓Crypto
Major banks and financial organizations will build real stuff onchain (not pilots). Validiums will be the key.
It’s crazy -and archaic- that traditional markets don’t operate 24/7. This will change in 2025 with instant blockchain settlement.
Ubiquitous stablecoins.
ZK will get mainstream attention by Big Tech.
Cross-border payments will be real time settled and this will boost local economies through remittances.
Proof of personhood/citizenship will start merging with SSO solutions.
Crypto will single-handedly take LATAM to its next phase by banking the 26% of local population that still doesn’t have an account. The signal is already out there. In 2021, 6% more people in LATAM had a bank account than in 2014 - double the % of global increase.
Argentina will win. And crypto will be a core pillar of its success. At ZKsync, we already empower Buenos Aires citizens having their government identities/documents onchain.
⚡Energy
Intermittent solar will change the world and very few people are optimizing for it.
Energy storage for the electrical grid is the fastest growing energy tech with 80GW will be added in 2025, an 8x increase from 2021. Why?
Many solar/wind powers are intermittent and big batteries attached to the grid solve the problem
Batteries become super cheap due to China manufacturing capacity
Big Tech AI won’t be permitted to use coal
Every company will be an energy company through PPAs and SMRs but we will still have to optimize grid connections (it currently takes years). Big Tech will build their own off-grid electricity generation at the sites of their data centers.
Energy DePINs will enable massive grid defection and unstoppable markets for distributed energy resources.
Stats to ponder: 50% of all VC activity in Africa in 2024 went to green energy.
🌍General
Things I have been thinking about:
Has any country, except from China, actually prepared for the Era of Drones?
Narrative economics and Bubbles as a vehicle for Progress and how we can programmatically engineer more Bubbles. I have been deeply influenced by Hobart’s book.
What is the unlocked potential of GLP-1 drugs? Can we think of them as psychological, rather than chemical, prompts to the collective intelligence of cells?
The convergence of Crypto and X. Crypto must be the first ever industry that lives and breaths inside a single social network and is apparently influenced by the product features of X like short attention span and signaling. Would Crypto be different if X wasn’t the predominant platform where all Crypto VCs and builders were hanging out?
It will never cease to amaze me that we built AI models using human brain as the model architecture and now we use AI to better learn how our brain and body works. ESM Cambrian is amazing.
Knowing the election results doesn’t mean you know how the markets will react. Jane Street learnt its lesson in 2016.
Long Now Foundation (of which I am a proud member) enters its second quarter century and has a new Board President.
On the risks of “mirror life”. Fascinating.
Things that excite me: Gov tech innovation.
Two really good reads on the slow death of Intel. Here on how boards can kill a company and here why Intel terribly needs somewhere to integrate if they want to survive.
Companies that excite me: Physical Intelligence
I will never stop sharing Lux LP memos.
27 insights from 3 years of Bismarck Brief. It doesn’t get better than this.
Gavin Leech on the 24 scientific breakthroughs of 2024. So many things to be truly excited about and in awe of.
A great read on how animals are actually vehicles of amazing biotechnology innovation that we have been relying on for centuries and how biotechnology is not independent from the natural world – it’s enmeshed within it.
Emad not very optimistic about the effect of o3 in the global economy.
Ilya Sutskever’s famous talk about the Data wall.
There is a lot of talk about Founder mode but very few people comment on how non-founders can operate in such a mode. At the end of the day, most people are not founders. These are my thoughts and pretty much how I operate at work.
Nobody knows anything about AI. Don’t take career advice from anyone especially those who are willing to give you some.
If there’s ONE advice that I’d give you is to purchase a premium Replit plan and play with the Replit Agent. You can literally build anything you want with zero coding skills.
Most very successful people are innately super-energetic. Simple as that.
The great Eli Dourado on why we are stagnating.
Startup idea: an AI-enabled Kindle where you can ask questions about interesting excerpts, produce podcasts based on all the book notes you saved, generate images for phrases you loved. Every e-book comes with a super mini LLM finetuned to the author’s work and every new edition comes with popular prompt guides.
Recommended Blog: Alex Komoroske on tech and organizational culture
Recommended Book: The NVIDIA Way - Tae Kim
Recommended Podcast: Satya Nadella on BG2
Quote: “It was the best of times. It was the worst of times.” Charles Dickens
✨Wishing you and your loved ones good health and prosperity in 2025. May next year be filled with joy 🙏
Great synopsis for my synapses. "Poor Vassilis' Almanack" was the perfect end to the year!