Power, Latency, and the Things That Don’t Move Quickly
Dear Partners,
Over the years I’ve noticed that most investment mistakes don’t come from misunderstanding businesses. They come from misunderstanding what matters in a business. People spend an enormous amount of time debating products, markets, and narratives, and far less time thinking about the things that are difficult to change.
That imbalance usually shows up in the price.
Technology is a good example. It looks dynamic, fast-moving, and endlessly exciting. But much of what people call technology today is surprisingly modular. Compute can be purchased. Servers can be financed. Software can be copied. Over time, those things tend to earn something close to the cost of capital.
What behaves very differently are the constraints underneath. Power is local. Permits are slow. Grids are political. Distance still matters. Latency obeys physics. These things don’t care about quarterly earnings calls.
Two of our holdings illustrate this better than most, even though they’re rarely discussed in the same breath.
One is Iris Energy (IREN). The other is Duos Technologies (DUOT). On the surface, they look like very different animals. One is associated with bitcoin and high-performance computing. The other with machine vision and edge infrastructure. But that surface view misses the point.
What IREN really owns is not mining rigs or AI servers. It owns long-duration access to cheap, renewable power, secured at scale, in places where that power would otherwise be underutilised. Bitcoin mining was simply the first sensible way to monetise that position. High-performance computing is the second. Neither is the foundation.
That’s why I’ve never thought of Iris’s evolution as a pivot. Nothing fundamental changed. The company didn’t suddenly acquire a new advantage. The world simply began to value something Iris already had.
The balance sheet mattered here in a quiet way. No debt meant no clock. And no clock meant time. When you remove time pressure, volatility becomes a nuisance instead of a threat. That’s an underappreciated form of optionality.
Duos operates on a similar logic, just in a different dimension. Most people encounter Duos through its vision systems and AI software. That’s understandable, because software is easy to talk about. But again, the deeper advantage isn’t the application. It’s where the application runs.
Latency is a constraint every bit as real as power. In a lot of industrial and safety-critical settings, you can’t ship data halfway across the country and wait for an answer. Milliseconds matter. Sometimes failure simply isn’t an option. Hyperscale data centres are very good at many things, but they’re not especially good at being close.
Duos is quietly building edge infrastructure in places where proximity is essential and alternatives are poor. The vision software makes sense because the edge exists, not the other way around. The software is how the position is monetised. The position itself is physical.
In both cases, what’s really happening is simple. These businesses own bottlenecks that others have no choice but to rent. Most competitors pay market prices for power or proximity. IREN and Duos internalise those costs at structural discounts. Over time, that difference compounds, even if it’s not obvious at the beginning.
Markets tend to miss this because they’re very good at pricing what’s visible today and not very good at pricing what will be necessary tomorrow. Capacity that isn’t fully utilised looks inefficient. Capital intensity looks risky. Optionality that hasn’t shown up in revenue yet is easy to ignore.
That’s usually when the opportunity exists.
A skeptic could argue that scale will eventually solve these problems. Maybe. But scale doesn’t repeal physics, and it doesn’t make permitting faster. Power grids remain local. Distance still creates latency. Centralisation fixes some issues and creates others.
Another skeptic might say this all depends on demand continuing to grow. That’s fair. But neither of these businesses depends on a single rosy future. They’ve already earned money in less accommodating environments. Bitcoin mining wasn’t hypothetical. Rail inspection isn’t speculative. These aren’t stories waiting for belief.
I often think this style of investing resembles farming more than forecasting. The land matters more than the crop. Crops change. Seasons change. Prices change. Good land stays good land. Most people spend their time arguing about yields. The real work happens earlier, quietly, in choosing where to stand.
By the time the field looks attractive, it’s usually already owned.
I don’t think of IREN or Duos as technology bets. I think of them as ownership of things that don’t move quickly in a world that increasingly wants everything at once. Power isn’t getting less constrained. Latency isn’t becoming irrelevant. As those pressures build, the quiet owners of bottlenecks tend to do fine without needing to explain themselves too often.
That’s the kind of position I’m comfortable holding.
With patience and discipline,
Neel Khokhani