Snap Earnings and CNN+ Shutting Down

some pretty big backers on Wall Street. Will tell you who they are. And Netflix shares keep plunging. Now CNN plus announcing it's shutting down. Is it a sign that streaming has peaked? We'll talk about that. I want to stick with snap now, the company reporting sales following short of estimate, saying advertisers pulled back on spending in the days following Russia's invasion of Ukraine. Rohan called Carni of MTM partners with us now to discuss here is that it?

I think they are giving us a lot of numbers. They're saying what happened before three, what happened through March thirty one, what's happening through April, and I think what they're trying to tell us is things got a little bit worse during March, but that they are not getting more worse. They're definitely a leg down from what they

expected them themselves to be. But I think you're quarter to date data seems to indicate that they are not getting more words, and the guidance for two Q they at least this is the story that they want us to hear is we are expecting more worse strength and hence we are a little bit more conservative. So that's where the stock went down twenty up five because of the this narrative that seems to be sticking with investors. So is this a story that's going to repeat itself

with Twitter earnings? With Meta? Again, every company has their own flavor of advertisers that they work with. What is incrementally slightly more negative for companies that work with brand advertisers. Snap is calling that out here that brand advertisers were much slower during March and they pulled back very quickly. And if you look at um Facebook versus Twitter versus Pinterest, I think Twitter is the one that overskews towards brand advertisers.

So if what Snap is telling is really applicable to everybody else, then Twitter is probably the one that is going to see more negative brands, and Facebook and p Interest may not as much. Meantime, Twitter has a lot of other drama to deal with, and I know you also cover Twitter. What do you think about Elon Musk as a buyer? Do you like this? I think there are just a lot of hurdles, logistical, financial diligions, and just the overall uh kind of how he gets the

board to approve this current offer. I think I think this is going to be a drama. It's going to be a ping pong match over the next collar three, six, nine months. I don't see a very clear and very immediate resolution in my opinion. I think that there is just there are too many variables. Macro environment is weakening, so probably Elon Musk may have second thoughts as we see the earnings kind of unfold. So does that make Twitter a dangerous or risky stack to own right now?

Given what we're hearing from Snap right now, if brand advertisers are pulling back because of not just Ukraine, but just the confluence of all the macro headwinds we are seeing, interest rate hikes, inflation, supply chain uncertainty. Europe may have some issues. European consumer brand advertisers may have some issues. So I think, yeah, Twitter is the one that is going to probably face more issues, and we'll learn that

over the next week or so. In this STAB story, do you also see some of the problems Netflix is facing people leaving their homes, not sitting on the couch all day, getting out and not you know, sitting there on their phone watching Netflix or hanging out on Snapchat. I think so, isn't that there is obviously a consumer

behavior shift. We we did, the pendulum of consumer behavior did shift extremely to all these internet stocks and all these Internet companies, and now we're seeing the pendulum swing way far away. People are sitting on flights, sitting on cruises, and just sitting away from their iPads and iPhones. So I feel at some point, once we get back to the new normal, we should see resumption of consumer behavior.

But until then, I think all these UH companies that rely on engagement in front of your iPad, engagement in front of your iPhone are going to see pockets of weakness. UH in Netflix again is also probably at the mercy of this vertical video shift that we are seeing across Internet. TikTok, Snapped has its spotlight, Instagram has its reels, YouTube has its short So there is this shift towards short form video ad supported video, and plus there's the pendulum shifting

away from out of home kind of consumption. So they are in a slight air pocket. Hopefully they recover. I wonder how much competition you think snapas seeing from TikTok in particular, given you know similar audiences and that we don't have as much visibility into TikTok's results. Um, like, how much is it? Is it really TikTok alone that's taking a bite here? Um, TikTok is definitely taking a bite from across the overall advertising ecosystem. It's not it's

not too small to be ignored right now. It is it is a much bigger force to reckon with both from engagement and time spent on TikTok, as well as advertiser kind of share of wallet perspective. I feel when we talk to a lot of ad agencies, TikTok is probably positioning itself as a linear TV sort of brand advertiser friend lee um advertising engagement platform, so it is more closer to you, Pube and a little bit further

away from Snap is what they're currently positioning. But again I think TikTok is definitely something that is going to start to mount it as they scale up. Still very early days, all right, Rod called Carney MK M partners, Thank you so much. Lots to digest. Another story we continue to watch meantime, Florida's Republican controlled legislator later has passed a measure to strip Disney of special privileges in the state. This escalates a feud between Governor Ronda Santis

and the entertainment giant. The legislation could lead to the dissolution of the Really Creek Improvement District, where Disney has been allowed to carry out its own municipal functions on its own. It was already approved by the Senate, now goes to the Santis for his signature. Elon Musk appears to be getting closer to making his attempt to own Twitter a reality. Bloomberg has learned Musk is now vetting

potential investors. For more on it all, I'm joined by bloombergs Michelle Davis, who reports on M and A for US and David Kirpatrick, founder of Teconomy. So, Michelle, what's the latest on how much funding Musk has actually pulled together at this point. Yeah, so, I mean you said it, it seems like he is serious about this. Today he issued a filing that said he has raised forty six

point five billion dollars of financing. Five billion dollars of that is debt um some of its lb O debt, you know, from banks that's going to be in the form of junk bonds and loans, and then uh, part of that is also a margin loan that basically is you know alone secured by his own Tesla shares. And then the other half was twenty one billion of equity financing. That's just him basically promising that he's going to contribute equity to the to the offer um. And so right

now he's can be canvassing investors. You know, he doesn't have one billion dollars, but he at the ready he has about three billion. And so over the coming days what he's gonna be doing is talking to equity investors and kind of you know, vetting them to figure out who he wants to participate in the bid with him. David The fact that we're even talking about whether or not Elon Musk is serious about a forty three billion dollar bid he already said he planned to make is

so ironic. I mean, the numbers here are just huge. How do you expect this all to continue to unfold? Well? If I knew how it was going to continue to unfold, uh, I would be unusual, because I don't think anybody, even Elon Musk, really knows how it's likely to unfold. In fact, I was talking today to a very very veteran investor and I asked him what he thought, and he said, well, it depends on how Musk feels that day. If he feels good, he'll do it. If he doesn't feel good,

he probably won't do it. I mean, that's pretty the much of the world we're in, where the world's richest man is incredibly whimsical and unpredictable and and silly, and I sort of revel in that, but it's not easy to protect what comes next. So, Michelle, who are these investors who are willing to get into bed with somebody who is unpredictable on any given day. So there's still a lot that we don't know. But what we do know is that there are twelve banks that have agreed

to contribute the debt financing. We're in Stanley, you know, has the biggest share of that. I think they're agreeing to put up four five point five billion dollars of debt. And then you know it's the City Groups, Well, Bank of America, Barclay's, those kinds of big international banks. On the equity side, we know that Apollo is thinking about helping him. It's unclear what form that would take, but up until you know, right now, we still don't know

who else it's. It's gonna it's gonna materialize over the coming days, is what we're told. So, David, what do you imagine Jack Dorsey is thinking here? He's been rather crick picked, like initially supportive than he himself, um tweeting about the dysfunction of Twitter's own board where you know who side is Jack on? Well, he voted for the poison pill. The company confirmed that. So we know that he's cautious about this deal. As a manager and as a steward of his own shares and the company that

he co founded. My guess is that he's generally sympathetic to Musk and a lot of the things that Musk says he would love to see happen if they were really possible, although not to completely abandon moderation, which is one of the things that Musk seems to be implying or saying that he might do. He doesn't say that straight out, but it sounds like he's interested in reducing moderation.

But one thing that Jack did last week was he tweeted cryptically everybody stop and hug Now what does that mean? Does that mean the people the board of Twitter should hug Elon Musk or or vice versa, or you know, that does suggest that probably he thinks a negotiated resolution as possible. But again we are reading tea leaves here is Michelle, is there a potential for some sort of

negotiated resolution? What might that look like? Yeah? Definitely. You know, when I've been talking to lawyers and bankers who are experts in this matter, they have been saying that every hostile bid always ends up as a friendly bid if it does turn into an actual deal. And so, you know, for this to work for Elon Musk, he needs the board to remove the poison pill, because even if he gets a tunder offer done like it's a deal would

be contingent on them removing that. So I do think for this to work, And and now he's shown that, you know, he is serious about this, this offer, it is going to have to turn into something friendly. One other thing that I thought was interesting about today's amended filing was that he said his offer is no longer contingent on a due diligence. So that means basically, we don't need to look you know, we don't need to look into your books. Um, we could do a deal tomorrow.

We have the financing here, let's let's just do it. Um. So yeah, David, you know, having covered social networking for so long, including the earliest days of Facebook, do you think that I mean that Twitter could could change in a good way under Elon Musk's leadership, you know, like, do you like the idea of open sourcing the algorithm for example? That I do think is a good idea, probably depending on how it was implemented. I think the idea of giving users more control over how they experience

these social networks is a good idea. Um. But even you know your either boss or a longtime colleague, Matt Winkler today or just week, wrote a piece about how what a brilliant manager Elon Musk is. He was talking primarily about Tesla, but look, you can't really bet against Elon Musk as a business decision maker. That would be very risky. Uh. It could be that he's willing with his own money to invest even more in algorithms, AI other technology that might make managing Twitter better or easier.

I like his tweet today that he could get rid of the bots and um and authenticate all users. I think that's a very good idea that would actually make Twitter more like Facebook, because Facebook was always intended to be an authenticated social network. You use your real name. Now we know that isn't in fact what has happened entirely, but it's still the general design. I would like to see Twitter go in that direction. Uh, Michelle, he's personally

pledged twenty one billion of his own equity. How much of that do you think if a deal happens he'd actually spend it? All probably comes down to who he is able to convince to, you know, sign on to provide equity. So at this point, if he needed to do it tomorrow, he could do three billion, unless he sold a bunch of his his Tesla stock Um and so yeah, it really depends on you know, who decides to come on and what their conditions are for for

joining him. I think another thing that's notable about this whole situation is, up until today, you know, there are some people who I don't think took this very seriously because there was a question around, you know, how he

didn't have the financing. Now that he does. I think one thing that we're definitely keeping an eye on is does a sudden in motion, you know, chain of events, where as we've talked about before, you know, a potential White Knight comes in to try to make an offer for Twitter, you know, to kind of save them from Elon Musk. Me there could have been you know, some on the sidelines who weren't taking it seriously. But now that they see that Musk has the money, we might

see them emerge. Michelle Davis, Bloomberg, David Kirkpatrick of Teconomy. We will continue to watch how this all continues to unfold. Thank you. Let's get back to this week's top story, and that of course, is Netflix. Three days after losing subscribers for the first time in a decade, shares falling even further down almost four on the day, extending a

massive sell off. I want to bring in Bloomberg Jerry Smith for more on this, and Jerry, the big question is is this just a blip, is this a netfli X thing, or is this the streaming business at its peak? Yeah? I think that's what all the investors and media companies want to know right now. Um. You know, not only did Netflix is stock the client after this, but um, you know, Warner Brothers, Discovery and other media companies that have made big, big bets on streaming also saw their

shares fall. And I think investors are wondering if Netflix is now starting to hit its head on the ceiling of how many subscribers there are in the streaming business, So what does that mean for Disney? Plus what does that mean for HBO Max? Um, you know, these are the entire media industry really transformed its business and went all in on streaming because Netflix was so successful. If Netflix is starting to hit a wall, um, you know,

that's bad news for everybody. Bill Ackman, one of the largest shareholders Pershing Square, dumped their entire stake three point one million shares. I mean, is there any relief in sight here. Well, Netflix says that the you know, COVID sort of obscured their business. Um, they did really well during COVID. Everyone was stuck at home and and now that COVID is starting to end, they're saying there's other

factors that are causing the subscriber decline. They point to things like a hundred million people who are sharing other passwords and if they can get more of those people to start paying, Um, you know, there's a lot of things that Netflix says it could do. And they're also introducing a lower cost ad supported service, which is very interesting.

Netflix had long said they would never have advertising, and now they're talking about a cheaper service interned with ads, and that's really an acknowledgement that they can't just keep raising prices, but if they want to keep growing, there's a part of the market that wants a cheaper service. Now, on the other side, they're CNN Plus abruptly getting shut

down less than a month after launch. I actually had a chance to shoot down with Andrew Morris, who really launched this service s VP at CNN, and here's what he had to say to me. Just a few weeks ago. The beauty of a subscription service is if you create something of value, people will paying. We are so confident that we're building something of such value that that people are going to be willing to give a give up one cup of coffee a month to pay for this service. So, Jerry,

what happened? Why didn't Discovery give it more of a chance? Well, I think this is largely a story about two media companies that had different strategies and streaming CNN's parents. Up until a couple weeks ago, Warner Media felt that CNN

could exist as a standalone streaming service. David Zaslav, who's going to who is the CEO now of Warner Brothers Discovery, the combined company, has been saying for several weeks that the you know, their strategy is going to be one big streaming service that competes around the world with Netflix, And that really was a sign that CNN Plus did not fit into David Zaslov's vision. Now, streaming news is

something that no one's really cracked. I've heard a couple of analysts say over the last couple of days that Flix needs streaming news and sports. Is that something that CNN and other streaming services are still going to need if they really want to rack up more subscribers. Well, I mean that was really what was so interesting about CNN Plus. Nobody had really tried to have a streaming service that people have to pay for, um, for news.

And now you know the fact that uh, you know, Warner Brothers Discovery has pulled the plug on this so quickly. I think we still don't know what the market is, what the appetite is for streaming service that you have to pay for, a lot of TV networks have streaming services, but they're all free. Um. You know, there were some numbers that came out about CNN Plus as early subscribers, but it was still early. It was only a few

weeks into the launch. And you know, for now we are left wondering just how popular kind of streaming service for news really be. All Right, A story will continue to follow Bloomberg's Jerry Smith thank you. Meantime, another news, Cheryl Sandberg, meta CEO, reportedly pressured a British newspaper and

not to publish a story about her then boyfriend. According to The Wall Street Journal, on two occasions, Samberg contacted the digital edition of the daily mail regarding reporting on Activision CEO Bobby Kodek and a restraining order taken out by his former girlfriend. Samberg and Kdek reportedly worked with Facebook and Activision employees on this matter. Facebook is said to have begun a review of her actions. Octa has concluded its investigation of a security breach, saying the impact

was far smaller than it could have been. The January hack lasted for just twenty five minutes, according to the company and the hackers, which Bloomberg learned included a sixteen year old in England, had control of a single workstation from a third party vendor. Just two customer systems were breached, far fewer than the three hundred sixty six they initially thought. I'm joined out by Frederick Karsti is the co founder and c o O of Octa, also out with a brand new book Zero to I p o over one

trillion dollars of actionable advice from the world's most successful entrepreneurs. Frederick, thank you so much for joining us. Thanks. So, we're gonna get to the hack, but I'll talk about the book first. Um, there are a lot of books out there about entrepreneurship. You say, they don't give you what you need when you're really in the trenches. What do

they not have that your book does well? I think one of the things for an entrepreneur is these books that are out there today, they just try and lionize what happened to other folks, and they walk through their lives and what happened and how they build their businesses and personally. What we're trying to do is demystify what

happens in entrepreneurship. We're trying to get advice from the best entrepreneurs in the world, gathering all that advice in one place, and it's basically the field guide that I wish I had had when we started Actor thirteen years ago. You open with a story about Octor revenue flatlining. You're going into a board meeting, you think you're going to get fired and that the company is done. Instead, Ben Horowitz, one of your investors, calls you and instead of firing you,

he gives you some advice. What did he tell you that enables you to turn the company around. That's a great example of some of the actionable advice that I think too often doesn't get shared with entrepreneurs. Entrepreneurs think that everything is a perfect journey, and when they look from the outside, all these companies are destined for glory. As you said in octr, revenue basically flatlined, and Ben

called and said a couple of things. He said, first of all, you need to get help, and you need to hire leaders who have done this kind of thing before. And second of all, he said, you need to keep the main thing the main thing. In our case, it was focusing on the right go to market segment and pivoting too much large organizations that actually have serious identity

management opportunities and problems. So it's Octus five year anniversary actually this month, I believe, and it's been an incredible ride. Sheriffs have gone way up more recently that they've come a bit down from their peak. What is the hardest lesson you've learned in the five years since going public? I think keeping a view on where you're going in the long term and reminding employees that we're building something that's important in a big market that matters too many people.

So if you pay attention too much to this stock on a day to day basis, you might feel as though you're not sure you're focused on the right things. But if you take the long view, look, we're in markets that are worth eighty billion dollars, the companies a billion and a half in revenue, growing fifty year over year, and we've set very clear benchmarks for FY twenty six of four billion dollars of revenue with FCF margins. If you keep a good view on that long term perspective,

I think we're going to be in great shape. I'm sure you've learned a few lessons from the hack, and Todd, your CEO and co founder, was recently on the show to talk about what happened. Take a quick listen to what he had to say. We are a trusted brand and that trust has been damaged, and we do take accountability for all the mistakes we've made, and we have made mistakes, and one of them, as you mentioned, is the communication was not as clear as it should have been.

What's the lesson here, Well, there's a number of lessons. First of all, as the global leader and I identity, we realize now and appreciate what critical infrastructure Octave is for our customers. And look, we take all security events very seriously. Uh, there's two things I want to clarify. First of all, the Octave service was not breached. Second all, the Octo product did what it was supposed to do uh and actually prevented a major breach from happening. There's

a number of things that we've learned here. I think, first of all, from a technology perspective, we need to take make sure that our third party partners are held accountable to the same standards we are. And then secondly,

we have to improve communication. Look, we're a trusted brand, as Todd said, and our customers rely on us for communication and trust when it comes to the platform what we say and how we communicate with them, and that's paramount So great learning opportunity for us, and things will certainly do better in the future. How much harder will security and identity management be in Web three? And what is octaves play there? Yeah? Well Web three obviously is exciting.

It's a combination of both decentralization and modern advanced technology. Look, I think frankly identity could be a game chain. You're on the blockchain, think about you and as consumers information like health and credit, These are things that we should own and make sure the right people have access, not entrust them the third party credit agencies who have breaches like we saw a couple of years ago. The challenge and the opportunity and Web three of course, is this

is not just cutting edge technology. This is bleeding edge technology, and we really have to move it forward becoming before it becomes mainstream. Elon Musk making a play for Twitter, what do you think? I think it's very exciting as an entrepreneur. I mean Elon Musk's track record stands for itself. I think this is an undervalued asset in Twitter, you compared to Facebook Meta, which is a graph of the

people you know. It's important, but Twitter has a lot more critical information and what you care about, what you can follow now. I do think he's shaking things up clearly. I think there's an opportunity for that board to be born involved in governance. But I think this might be

Elon's Rupert Murdoch moment. If you think back to seventy six when Rupert Murdoch bought The New York Post, it gave that first voice into broad media and communications, and I think that's what you're seeing right now with the interesting though he's unpredictable on any given day, does that concern you. It looks at the end of the day, Twitter is a huge megaphone form. I mean he has eighty two million followers. Uh, it's clearly an underperforming asset.

S MP five hundred has outperformed the Twitter stock over the last decade by a factor of two to one. And Fran think there's a lot he could do with the business. If you separate out that technology business from the media part, you open source who can have access to that information. The question of moderation goes away. Let the capital markets decide how much moderation people want on

their version of Twitter. Well in and not unlike Elon Musk, you actually have another company that's focused on the brain, focused on curing brain disease. Can you talk to us a little bit about this. Yes, it's a great company called horofilis uh that we have forty five folks based here in San Francisco. We are focused on AI empowered neuro therapeutics, trying to cure central nervous system disease. Two major ones that we have breakthroughs on all Timers and

Rhett syndrome that are going into the clinic soon. And it's something I'm very excited about interesting. Well, thanks so much for joining us and telling us about that and your new book zero to I p O available. Thank you very much, Thank you. Time for our crypto report now Bitcoin jumping briefly past and up since the beginning of the week, but still staying in that tight range. Our crypto contributor Snali Bossik here now for more not moving,

not moving, Shinali? Why not moving so much friction, Emily, when you take a look at it, we're back to where we really started the week again pretty much. We were back down to forty eight hundreds, so a little higher than where we ended Monday, but back to where

we were pretty much last week. I mean, we haven't moved at all in Booklyn, but I want to chase meals because there's some long term trends here about how people are using bitcoin that are worth taking a look at, and that settlements bitcoins surpass Visa in the amount it's been settling, with more than thirteen trillion dollars on chain, and a lot of that is due to the work

on Layer two protocols. So it's worth taking a look into how the bitcoin and its networks are changing and facilitating more payments because that's going to be the adoption that drives the price later on. Alright, Hanalie, thank you, stick with us. I want to bring in our next guest, Kathleen Brightman, co founder and CEO of the blockchain based smart contract platform TESOS. Kathleen, wouldn't make the fact that we're not seeing a lot of movement here in crypto markets.

It's really trading along with with traditional equities. You know, what does that have to say about the future of cryptocurrency. Well, definitely, rupture is one of the main narratives that people have been saying for many years, which is that bitcoin is kind of this anti correlated asset or uncrrelated asset to traditional equity work. It's, um, we've seen that's on the case. We've also seen some things that we're um, you know, unexpected, Uh,

especially at the beginning of the pandemic. I'm curious, Kathleen, what you think about the conversation around bitcoin versus etherium as everybody waits for the merge and the idea of proof of steak and what that might do to change how people interact with blockchain here. Yeah, so there's a lot of things in that question. Um, I mean basically, uh, Bitcoin and ethereum secure themselves through a mechanism called proof

of work. UM. We just come into scrutiny as the technology has got more popular because in effect, what it does UM is it consumes energy in order to secure the blockchain. UM. Proof of steak networks do not do this, and you know, they've been looked at since people have realized that bitcoin is very energy. Can sometive as an alternative UM, but there isn't one that's as popular as

bitcoiner ethereum UM. The theorium of course has an advertising itself as imminently transitioning to proof of steak, since it does in fourteen, but it has failed to do so to date. So it's been a big debate, Like you know, basically, do you value this technology enough to UM hold your nose and accept that it UM I guess consumes of energy and most instances, or do you want to go

to alternatives like tessos which don't uses energy consumption? Yeah, and how do you think about that in terms of not just energy consumption, Kathleen, but in terms of transferring assets. There's been so much conversation this year about Lightning network, for example, on the ability to fill the facilitate payments over bitcoin. But we've had a conversation internally it's like you can do that more simply without another layer on ethereum.

So where does Tasa's plan to that conversation. Yes, so I think tessos U addresses a problem that both bitquin and Ethereum have been unable to solve, which is it has a formal governance mechanism for ratifying and instantiating upgrades to the protocol. So it happens on the flight, happen seamlessly. In fact, it's happened nine times without any drug, mostly

adding to the technological capability of the blockchain itself. UM. So I think, you know, basically for this tough to scale effectively, you need to have a formal governance mechanism that actually instances upgrades in a meaningful fashion. Um. That's the way it would work if you we're thinking about this happening, you know, the order of millions or not billions of participants. Um. And I think Teslas is the only block teain that really addresses this issue of stasis

uh in in the code base. And so that's why I think it's you know, obviously the future um. But but bit Quin and Ethereum to date have had a lot of promising a lot of under delivering in terms

of technical technical I guess instantiations. We've seen limitations of that over the last year or so, when Ethereum has fallen under scrutiny for having a large energy energy consumption, but has still failed to upgrade itself to the proof of state version that it's been promising since as four team Kathleen Tesla is the second only two Ethereum and Twitter and f T discussions in the art world. And I'm curious what you think about the prospect of Elon

Musk owning Twitter UM. I mean, it's certainly pound for pound in terms of entertainment value. Has not disappointed UM, as is Elon's want um. I think, you know, basically Tessa's right now feels like Greenach Village in the nineteen sixties. All the cool kids are hanging out there and minting a lot of art. Um. It's just a matter of

time where people see it. Uh. And Twitter has been an excellent forum for discussion about this in in the cryptocurrency space, where you know, basically the project gets a lot of airtime that it wouldn't otherwise because of these discussions in the forum that's created. UM. So I'm in for the thunderdome elon Musk version of Twitter where you

likely censorship doesn't happen. I don't know. I don't know what his great bus UM, but it certainly has kept me on the site in terms of entertainment value in Matt Lavina Matt Levine articles so good. I mean, I wonder interesting, I want, yes, I wonder also, you know, what is the future of communicating about crypto? Is it some Twitter discord mash up here? I mean, ultimately, there there seems to be some need or want for a

more social communication aspect to cryptocurrencies, above and beyond just payments. Yeah, I think UM. I think a lot of these projects that are trying to do social alternatives on a blockchain or something like that have been mostly reactions from right wing people who have been largely banned on Twitter. UM. And you know the problem with that is that they often say very odious things. So I do think there's like a sort of uncensored version of the web that

is very promising. I do think that UM, once it stops being championed by repugnant people of that most of the place society doesn't really quite like. Um, you know, it'll it'll actually take off. Fascinating. Kathleen Brightman, co founder and CEO of the blockchain based smart contract platform tesos, along with our own Shinnali BOSSI lots of food for

thought there. Thanks. Crusoe Energy Systems, a cryptocompany taking waste gas from oil fields and harnessing it to power bitcoin mining, just announced three million dollars in new equity funding, providing new capital to accelerate their mission to align the future of computing with the future of the climate. I want to bring in Crusoe CEO and co founder Chase lock Miller now for more on this. Thank you so much

for being here. So this is gas that would otherwise not be used, right, being used to power bitcoin mining. How does it work? That's correct. So what happens in the oil field is there's something called flaring. It's one of the largest mission sources from oil production. What happens is an oil company will draw an oil well and

one of the byproducts of that is natural gas. And if they don't have access to a pipeline, the best most economic thing for them to do is just lighted on fire, and when they do that, they end up actually venting quite a bit of the methane in the atmosphere. And methane is a very potent greenhouse gas. It traps eighty two and a half times more heat in the atmosphere than c O two, and so it creates this massive waste with no beneficial use, and everybody kind of

loses in the situation. So how do you then use

it to power bitcoin mining? Sure? So Crusoe developed a technology called digital flare mitigation where we build, operate, and manage these mobile modular data centers that we deploy into the oil field and we co locate on site with the sites that would be flaring, and now instead of the gas being flared, it feeds into the digital flare mitigation systems to create low cost computing infrastructure to power digital currency mining, high performance computing GPU, uh GPU r GP,

cloud computing product and things like artificial intelligence research. You're running a pilot program using excess natural gas from x on in North Dakota. How's that going? We actually can't comment on the relationship with x on UM. It's it's uh yeah, it's just no comment on that for time being, but can you tell us a little bit more about the process. I mean, certainly if you can rack up

big partners, this could be quite powerful. Sure. So flaring is a global problem, and the World Bank has this initiative to end routine flaring. Today, there's about fourteen billion cubic feet today that get flared with no beneficial use. To put it in context of like if we could capture all of that gas and harness it for computing, we could actually power the whole Bitcoin network eight times over. So you know, it's a very very large waist. UM.

It's enough to power all of Sub Saharan Africa. UM. So you know, it's a very very significant amount of wasted gas globally. UH. Today we operate in in the bach In in in North Dakota as well as Colorado and Wyoming. But with this additional financing, we're planning to expand into markets like the Permian Basin in Texas, the Vaca Marta down in Argentina, um, places like Abu Dhabi and Oman in the Middle East where flaring, you know,

has been a persistent challenge for many decades. So longer term, what are the opportunities. You see two as you say, align the future of computing to the future of the climate. Sure, So Cruso's core mission is to align the future of computing with the future of the climate. What does that mean, UM? For us, that means building large scale climate aligned computing infrastructure to solve the world's most energy intensive computing problems. And like you know, digital currency mining is a great

example artificial intelligence research high performance computing UM. And if you look at many estimates, they sort of project that the global power can sump from computing is going to exceed ten pc in the near term. And Crusoe's focus is trying to enable humanity to be able to benefit from all of those computing lead innovations that are gonna come about from that without having to suffer the environmental consequences of sourcing that power in a non climate align capacity.

So let's say this doesn't happen. Is bitcoin mining on a path to significantly hurt the climate? Uh? Well, I mean our focus is trying to, uh, you know, ensure that that doesn't happen. So we but how you know, given the way it's happening now, and there are plenty of people who have you know, raised alarm about how bitcoin is created? Um, you know, just how much is

the way that it happens now hurting the climate? So I think bitcoin mining is an industry is actually one of the cleanest power sourcing industries in the world by many estimates. It's you know, fifty six of the total power powering the bitcoin network is sourced in a climate align renewable UH, you know, a mission reducing way UM like digital flair mitigation UH. And you compare that to you know, the standard grid that's you know, that's you know, multiples of of what the what the u S grid

for instance, UM is powered from our renewable perspective. So if you can harness all of this, then you could probably power many more things than bitcoin mining, right correct? So what else? So we've recently launched the Crusoe Cloud UM, which is a high performance GPU cloud service that's focused on delivering low cost and UH low impact computing solutions

for people focused on AI research. We're working with amazing research universities like m I T to help researchers there discovery mysteries of the universe UM in a way that UH doesn't impact the climate and can doesn't impact their pocketbook too much. All right, well, we'll be following the latest developments. Keep us posted on your progress. Thank you so much, Thanks so much for having Emily, for joining us. CRUSOE CEO and co founder Chase lock Miller. And that

does it for this edition of Bloomberg Technology. We're gonna be right back here tomorrow. Don't forget to check out our podcast. You can find it anywhere you get your podcasts, your Bloomberg Tech daily news Roundup. I'm Emily Chang in San Francisco. This is Bloomberg