Tech media reports are centering on a new potential source of lithium discovered on the Nevada-Oregon border, at the McDermitt caldera, a volcanic site in the mountains west of the town of McDermitt. A “caldera” is a large, bowl-shaped depression that forms when a volcano erupts or collapses, and the ground above an emptied magma chamber sinks. This caldera is estimated to hold around 20 and 40 million metric tons of material worth a total of $1.5 trillion on the market.
The Crater
Here’s how scientists are describing the origin of this unprecedented repository of heavy elements: aeons ago (so to speak), a volcano chamber collapsed, forming a crater that miner-rich water washed into. The eventual result is sheets of lithium-rich clay 100 feet wide.
That means that a site like this could lessen U.S. dependence on international trading partners for the lithium which goes into so many batteries for everything that runs on stored power, whether from the grid, from renewables, or from other sources. Despite domestic sites like the Silver Peak Mine in Nevada, the U.S. has sourced this element for lithium-ion batteries from beyond its shores (this chart shows China and Singapore as the largest suppliers.)
The AI Angle
Why does this matter for the rapidly growing AI industry?
Because part of the power demand for AI data centers and edge applications has to do with stored power.
“The artificial intelligence revolution is reshaping energy demand in ways few investors anticipated,” reports Shane Neagle at Investing.com. “Lithium, once viewed primarily through the lens of electric vehicle adoption, is emerging as a critical enabler of AI infrastructure. Data centers powering AI systems require massive amounts of uninterrupted energy, and lithium-based battery storage systems are becoming essential for grid stability.”
Neagle elaborates:
The intersection of artificial intelligence and lithium demand represents a fundamental shift in how investors should evaluate this commodity. AI data centers are becoming some of the most power-hungry facilities ever constructed, with a single hyperscale AI center drawing more electricity than a small town.
“As AI models grow larger and agentic AI systems proliferate into everything from search engines to robotics, the need for reliable, uninterrupted power has become paramount,” he writes. “This has created unprecedented demand for battery energy storage systems that can maintain operations during grid instability, demand spikes, or outages.”
So the emergence of new lithium sources plays into the domestic production of batteries that will hold power for our new LLM friends, as we see artificial general intelligence arrive.
The Battle over Rare Earth Magnets
Certain types of rare earth metals (like neodymium, samarium, dysprosium) can be used to create rare earth magnets that support the functionality of a wide range of devices, from headphones to electric vehicles, as well as hard drives and SSD actuators, drones and RC motors, wind turbine generators, and cordless power tools and robotics. That’s a hefty list, and since China has control of 90% of these elements, it’s considered a big geopolitical win for the middle Kingdom. Some even suggest that the dominance in rare earth magnets led to U.S. capitulation in recent trade battles.
But with the discovery of the McDermitt caldera, the question emerges: can the U.S. pivot toward lithium as an alternative?
Sure enough, it turns out that you can build batteries with lithium instead of rare earth elements, although the rare earth magnets are necessary for motors:
“Rare earths play an important part in the sustainability of electric vehicles (EVs),” writes Jeff Shapard at Battery Power Tips. “While there are sustainability challenges related to EV batteries, rare earths are not used in lithium-ion batteries. They are necessary for the magnets that form the main propulsion motors. The batteries mostly rely on lithium and cobalt (not rare earths). At the same time, the magnets in the motors need neodymium or samarium and can also require terbium and dysprosium; all are rare earth elements. The most common rare-earth magnets are the neodymium-iron-boron (NdFeB) and samarium cobalt (SmCo).”
So new U.S. lithium deposits could at least ease demand for sourcing the battery materials.
Powering AI
This also coincides with a big trend toward smaller, more decentralized AI engines on personal devices. We have test projects like Meta’s Ray-Bans, and the return to edge computing after a massive sea change toward the cloud. The reality is that we can now run advanced LLMs on small endpoints, and don’t need to crunch the data in central repositories. So we may need more small lithium-ion batteries for decentralized networks.
Those are some things to think about as we move into the Christmas season of a year that has seen AI blossom in unexpected ways. What will be in our stockings? Stay tuned.
