Artificial Bloom
Rare earths, short sellers, and Chinese competition
“The more you do, the more attrition you experience.” – Ashton Eaton
As a logical sequence, our interest in Bloom Energy’s solid oxide fuel cell (SOFC) technology makes perfect sense. Natural gas is a core theme of these pages, and its potential to fuel America’s artificial-intelligence (AI) efforts is, by now, self-evident. The stampede in demand to convert abundant US gas supplies to electricity has led to a shortage of the machines needed to do it efficiently, creating a multi-year backlog for difficult-to-manufacture gas turbines. This sparked an urgent search for alternative architectures that circumvent the traditional process altogether, and into this lucrative void stepped Bloom Energy.
As we described in last November’s “Taleb’s Law,” Bloom Energy’s SOFCs induce natural gas and air to interact with different sides of specialized solid ceramic materials at high temperatures, and a subsequent series of chemical processes converts the gas into a clean stream of electricity and CO2. Although the technology was previously considered too expensive for anything beyond niche applications, nothing papers over an economic challenge or two like a good mania.
While our treatment of Bloom Energy was mostly positive, we did note how peculiar it was that the company claimed its supply chain had essentially no China-related risk despite its heavy reliance on rare earth metals. We are no longer alone in our skepticism, as that curiosity was the basis of a full-blown short report last week that sent the company’s shares materially lower:
“Bloom Energy Corp. shares fell as much as 12% on Wednesday after short seller Hunterbrook published a report challenging the company’s statements about its supply chain and production capacity. The report focused on Bloom Energy’s reliance on scandium, a rare earth element used in the company’s fuel cells. Hunterbrook said the company depends on Chinese scandium despite repeated statements from Bloom’s CEO since February 2025 claiming the company has ‘no China supply chain’ and is ‘not dependent on China for scandium.’
Hunterbrook said it traced four China-linked routes into Bloom’s supply chain using global trade data, Chinese corporate filings, and satellite imagery. A sales representative from Hunan Oriental Scandium, which claims over 50% of the global market for fuel-cell-grade scandium oxide, told Hunterbrook the company is ‘BE’s largest supplier of scandium,’ according to the report.”
In its report, Hunterbrook argues that to meet the aggressive growth plans baked into the stock’s valuation, the company would need multiples of the current global scandium supply just for its own needs, leaving nothing to satisfy demand from the military defense sector. In essence, Hunterbrook’s case is that Bloom Energy’s growth plans are thus impossible to achieve, and China, which nearly monopolizes global scandium oxide production, holds a sword over its future. The company was quick to reject the accusations outright in a brief 8-K filed with the Securities and Exchange Commission (SEC), which pointed investors to a blog post explaining how it sources scandium. This is from the SEC filing:
“As to the claims regarding scandium oxide in the Report, we reject the conclusions. We have sufficient supply of scandium oxide to meet our current fuel cell demand and backlog, and our supply is not dependent on China. We are also not dependent on China to scale scandium oxide to meet future demand growth. We have clear visibility into our supply chain to support production of 25GW of fuel cells per year, and we will continue to expand this capacity.”
The fate of single-company stocks is not normally our focus, but given the centrality of the technologies at issue, Bloom Energy is worthy of a return look. Which side holds the better argument, and how will things play out from here? It’s more complicated than it might seem.