By Andrey Dashkov, analyst, Casey Research
The world is awash with mobile traffic.
The amount of data floating between people’s smartphones, laptops, and data centers across the world is growing at a speed we’ve never seen before.
So much so that even the traffic spike produced by the COVID pandemic – when millions of people had nothing to do but stream TV shows – seems quaint now.
For example, since 2020, the total traffic produced by the world’s devices and services more than doubled.
And by 2030, it will spike more than 30 times, according to Cisco.
5G is one of the key drivers of this growth.
And in a moment, I’ll show you how to invest in this trend. (Hint: it has nothing to do with tech stocks.)
5G Is Transforming the Internet
As a refresher, 5G is a huge upgrade from the current, state-of-the-art fourth generation (or 4G) technology.
First, 5G triggers a huge increase in speed. It can deliver up to 10 times more speed than the most advanced 4G networks. As video platforms like Netflix and YouTube grow more popular with smartphone users, faster services become even more critical.
Second, 5G improves latency. Latency is the time required for a piece of data to reach its destination.
For example, email has lower latency than a telegraph message. The receiver gets the message instantly. With 5G, latency can improve by a factor of 50 – from 50 milliseconds to just one.
This will make interactions between connected gadgets as close to real-time as possible. That will be critical for some technologies like self-driving cars, which need an instant exchange of information with servers.
All told, 5G capital expenditure (or capex) could go as high as $1.1 trillion between 2020 and 2025.
However, there’s a catch to all this that few people know about… but it’s one that opens up new opportunities to profit.
5G Needs Lithium-Powered Batteries
Here’s the thing: 5G connectivity is not possible on the existing 4G cellular network.
It needs new “base stations,” or transmitters.
Yet, these 5G base stations are more power-hungry than the previous versions. And we’ll need more of them to cover the same area because, even though 5G connection is faster, the signal itself is weaker. So you need more towers for a 5G network to work.
More 5G units that consume more power means higher power demand from the telecom industry.
That power demand is set to skyrocket within several years. The Economist predicts that the 5G ecosystem will need 160% more power within the decade.
And the most important part? These new base stations use lithium-ion batteries.
Estimates point to a 15x increase in power demand for these lithium-powered stations, from 10 gigawatt hours (GWh) in 2020 to 155.4 GWh in 2025.
That’s more than a 1,450% growth.
You may be wondering, “Why lithium?”
Lithium-ion batteries have double the life span of the batteries used in 4G, and they can deliver up to five times more discharge than the lead-acid batteries used in the previous-generation base stations. In other words, they have higher energy density, longer service life, and can go through more charge-discharge cycles than lead-acid batteries.
With lithium being a big part of the new battery technology used in 5G stations, this metal’s price will skyrocket as 5G takes off.
Tomorrow, I will do a deep dive into how lithium is poised to continue rising higher.
Not only will I explain the various reasons contributing to lithium’s rally, but I will also show you how to profit from this trend.
But for now, if you want some easy exposure, consider the Global X Lithium & Battery Tech ETF (LIT). It holds several lithium miners and battery producers. As lithium demand grows, this exchange-traded fund (ETF) should climb higher.
Stay tuned for more about where to put your money in lithium.
Analyst, Casey Research