The superconductor conundrum

Is this, rather than AI, the next big thing?

If you’re a science nerd like us at ORCA, you’ve probably heard of the drama around the possible discovery of a room temperature superconductor. Considering potentially world-changing consequences of such a discovery, investors might start entertaining themselves around this drama, too.

At Oraclum Capital, we love to follow the cutting edge breakthroughs in science and technology, brainstorm how this might impact markets, and subsequently how to position.

Here is what our Chief Quant, Dejan Vinkovic, a physics PhD with a postdoc from IAS (yes, that institute from the Oppenheimer movie), has to say about the whole story:

Why is this such a big deal?

Superconductors are materials with an almost magical property - they conduct electricity without resistance. Think for a moment how much your daily life depends on electrical devices and infrastructure that brings electricity to those devices. All those devices and infrastructure suffer from inefficiencies because lots of energy is lost due to the resistance to electricity flow. For example, this is why your computer and smart phone get warm when you use them.

Imagine now that there is a material that would remove this resistance. EVERYTHING would change! Devices would become more efficient, faster, and cheaper. Electrical power would be transported without losses. Even better, you can trap electric current in superconducting storages because there is no resistance to the current and it can flow in a loop forever. Superconductors also float on magnets, which means maglev trains. There is a whole number of applications that would change the world in a new industrial revolution.

How do we know this would happen? Because all these properties are already used in real life superconducting devices. If you had medical imaging of your body in an MRI machine, you benefited already from the application of superconductors as sources of strong magnetic fields.

There is only one problem: the current superconductors require extremely low temperatures to exhibit this property. This means cooling with liquid nitrogen or even colder. No surprise then that finding a superconductor that would work under normal human temperatures and pressures has been a wet dream of physicists for decades. But progress is slow. Even worse, there are many cases of false claims and data manipulation, which has created an atmosphere of distrust and scepticism whenever some breakthrough discovery is claimed.

And yet, on July 22 two research papers appeared on the open-access archive website arXiv.org claiming a shocking discovery of the material they call LK-99 that:

a) shows superconductivity even above the boiling temperature of water,
b) under normal atmospheric pressure, and
c) its synthesis is quite simple.

The weird thing was that the Korean team behind the discovery are essentially no-name scientists. They received a patent in March for this material, and, most importantly, they show instructions on how to make the material. The science community reacted with deep scepticism, to say politely, but... what if? What if this is true? Who would dare to miss the opportunity to reproduce the measurements and confirm the discovery?

The show already started! There is probably no single lab in the world with the ability to make this material that is not pursuing this goal right now. Even better, the relationship between the scientists behind the discovery is full of additional drama worthy of a blockbuster movie if this comes out as a true discovery. And an instant Nobel prize, of course.

So far, there are issues with replication of the original study, so we will wait and see if this discovery can indeed be confirmed and track the companies that will be at the forefront of applying this incredible (too good to be true?) discovery. Even if true, it could still take years for this discovery to reach commercial application, but the potential is so immense, even early entry into companies invested in this technology would be a good idea. Thus far, from publicly listed companies Samsung seems to be leading the testing space. Others are mostly startups. We’ll keep an eye on all of them.

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