Speaker 1: This is Bloomberg Crypto Daily Bloomberghart Podcast, and I'm Stacy
Speaker 1: Marie Ishmael, Managing editor of Crypto for Bloomberg News. It's Friday,
Speaker 1: November four. It's been yet another pretty interesting week in crypto.
Speaker 1: Now that Elon Musk is at the helm of Twitter.
Speaker 1: What do his plans for the social media company have
Speaker 1: in store for digital assets? Why is dogecoin rallying? And
Speaker 1: what's the outlook for crypto earnings? This quota here to
Speaker 1: help me break down the news. We have Bloomberg Crypto
Speaker 1: Deputy Editor Beth Williams. This meme coin that Elon Musk
Speaker 1: loves has sword, and the feeling is that maybe he'll
Speaker 1: allow that to be used for payments on Twitter, so
Speaker 1: that would gain it some credibility and relevancy. And Senior
Speaker 1: editor Dave lid Uh, this is a market of expectations,
Speaker 1: and without expectations that it's gonna rise or you can
Speaker 1: drive the excitement about it, it has basically stalled. Beth, Dave,
Speaker 1: welcome back to the show. Hi glad to be here.
Speaker 1: So this is one of those a lot of stuff
Speaker 1: happening in earnings weeks, and so Dave, I'm going to
Speaker 1: start with you, So let's let's talk about micro strategy.
Speaker 1: The last time we talked about them, they were going
Speaker 1: through a fairly significant, shall we say, leadership shuffle, and
Speaker 1: this is their first earnings since then. What were the
Speaker 1: top lines. Top line was that they had a loss
Speaker 1: on it. There was some speculation that they would have
Speaker 1: a profit. It was a small loss, but it was
Speaker 1: still loss. And last quarter they could have they blamed
Speaker 1: it or well, the actual reason was for an impairment
Speaker 1: charge they had to take for their big quote holdings.
Speaker 1: They had a very small one this quarter, but the
Speaker 1: real issue was their revenue from the two biggest um
Speaker 1: businesses actually went down on it, So they have other
Speaker 1: issues to address. Maybe that's one of the reasons that
Speaker 1: Michael Sailor is now focusing on their quote bitcoin strategy now.
Speaker 1: As a reminder, when you say micro strategies other businesses,
Speaker 1: they're not actually a bitcoin company now. They're an enterprise
Speaker 1: software company founded by Sailor and a few college buddies
Speaker 1: used to do things for like McDonald's and some interesting
Speaker 1: point of sales business. That's been a lot of residual
Speaker 1: revenue over the years. But as he stated, we either
Speaker 1: had to grow or change strategies, and he chose to
Speaker 1: diversify into into crypto. So micro Strategy is just one
Speaker 1: of the companies that reported earnings this week. Folks have
Speaker 1: been really looking to see what happens with coin Based
Speaker 1: as a que obviously the only publicly traded crypto exchange
Speaker 1: in the US. But another big theme both of our
Speaker 1: coverage and I think just of like what people are
Speaker 1: paying attention to the markets generally, is about crypto minors.
Speaker 1: It doesn't look good for bitcoin miners right now, No,
Speaker 1: it doesn't. Argo came out the other day and said, hey,
Speaker 1: we may have to shut down after some funding had
Speaker 1: tried to arrange through stock sale felt through. And that
Speaker 1: followed the announcement from Corse Scientific, who is one of
Speaker 1: the largest bitcoin miners, saying hey, we may go out
Speaker 1: of bankruptcy because we may run out of money pretty soon.
Speaker 1: So the crypto winner is started hit home. With all
Speaker 1: these companies. You can see now whether it's the miners
Speaker 1: um whether them, or even the likes of coin Base,
Speaker 1: which we'll see a decline of revenue from both their
Speaker 1: institution and retail customers of estimates, which is pretty astanding
Speaker 1: when you think about it. It is. I mean, when
Speaker 1: you say, you know, Core Scientific, one of the largest
Speaker 1: bitcoin miners listed in the US, their shares have fallen
Speaker 1: nearly like a hundred percent this year, which is kind
Speaker 1: of mind boggling for sure, but it's also way more
Speaker 1: than the actual decline in the price of bitcoin. You know,
Speaker 1: our colleague David Pan has written, shall we say, extensively
Speaker 1: about the challenges facing various bitcoin miners. They've gone through
Speaker 1: winters before. Is the expectation that there's going to be
Speaker 1: consolidation in the industry, Is it that some of them
Speaker 1: are going to kind of survive, possibly change business models.
Speaker 1: It just strikes me as really unusual that somebody would
Speaker 1: actually invoke the B word bankruptcy in a filing when
Speaker 1: that's something that companies really tend to try to avoid
Speaker 1: at all costs. You're probably gonna see both on it.
Speaker 1: The biggest salivation they'll be winners losers. Companies will go away.
Speaker 1: They have a real symbiotic relationship with the market. You
Speaker 1: can't really have bitcoin without the minor and vice versa.
Speaker 1: But for the investors who bought crypto minors as an
Speaker 1: equity diversification, now they're getting real lesson and how traditional
Speaker 1: finance works. In a bankruptcy, more times than not, the
Speaker 1: equity investors are wiped out. You're no longer tracking the
Speaker 1: price of bitcoin. You're really at the mercy of the
Speaker 1: courts at some point, and that just dividing the assets
Speaker 1: among the creditors and their subordinate The equity holders are
Speaker 1: subordinate to the creditors, right that point, to um what
Speaker 1: you're seeing when when you see that this arc of
Speaker 1: companies going under, you're starting to see the rise of
Speaker 1: more distressed investors getting into bitcoin mining two or trying
Speaker 1: to pick up investments on the cheap, another sign of distress.
Speaker 1: You know, Beth's interesting that you mentioned that we we
Speaker 1: had an office move recently, and you know, the moving
Speaker 1: goal itself fit to put the crypto team right next
Speaker 1: to the credits and distressed team, which was a sort
Speaker 1: of a like an accident, the quirk of desk availability.
Speaker 1: But it's been really helpful because we're working with those
Speaker 1: folks so often. One thing that you know, we've we've
Speaker 1: started to see to your point, is not just the
Speaker 1: distress investors, but also the like the lawyers and the
Speaker 1: restructuring advisors, who are some of the folks whose names
Speaker 1: are very tradify, who have popped up in crypto in
Speaker 1: recent weeks. Names in in UH lawyers are Yeah, like
Speaker 1: we just published a couple of days ago that Paul
Speaker 1: Hastings and Moelis are both emerging in this particular space. Yes,
Speaker 1: and uh, Paul Hastings has been involved with defending some
Speaker 1: being the lawyer for some of the executive Celsius as
Speaker 1: well as Core Scientific. Now an advisor go where where
Speaker 1: the where the movement is and right now the movement
Speaker 1: in crypto is distress. So you're seeing bankruptcy lawyers sort
Speaker 1: of learning trying to carve space there where they can,
Speaker 1: in some cases having to actually bone up on the industry.
Speaker 1: And it's sort of charted territory between the voyage of
Speaker 1: digital bankruptcy, the Celsius bankruptcy, and now these potential bankruptcies
Speaker 1: with mining um sort of what do you do in
Speaker 1: the in the digital assets space when we're talking bankruptcy
Speaker 1: and also in the case, you know, separate from mining,
Speaker 1: where you're talking about issues where where some of the
Speaker 1: creditors are customers with crypto stuck you know, in limbo.
Speaker 1: Right right to Dave's point, it's sort of where in
Speaker 1: the ranking are you? If everybody is coming after these
Speaker 1: these kinds of assets, there's a different kind of distress
Speaker 1: that's mostly affecting Media's with A, which is all about
Speaker 1: Elon Moss having bought with A after revolutionizing the space
Speaker 1: race and electric cars, the world's richest man is now
Speaker 1: promising a Twitter makeover, the multi billionaire bloviated firing off
Speaker 1: a tweet saying he's buying the platform to quoting now
Speaker 1: help humanity. People having many an opinion about everything to
Speaker 1: do with will you pay eight dollars a month to
Speaker 1: be verified? To what does him becoming CEO mean for crypto?
Speaker 1: We are crypto podcast, so we're not going to talk
Speaker 1: about verification here, but Beth, you've been working with the
Speaker 1: various reports, including our colleague Hanna Miller, who's a regular
Speaker 1: on the show, about what Elon Musk might mean for
Speaker 1: crypto Twitter. What are some of those toplines? Well, crypto
Speaker 1: Twitter is a big part of crypto. The crypto community
Speaker 1: is very attached to Twitter, telling their messages, pumping, dumping sometimes,
Speaker 1: but they also have a sort of a ethos about
Speaker 1: decentralization and perhaps crypto could be an avenue for a
Speaker 1: social media platform like Twitter, sort of democratizing the social
Speaker 1: media platform, letting people decide the kind of moderation, like
Speaker 1: from a base level, from the grassroots level, how they
Speaker 1: want the platform to be run. And Musk has sort
Speaker 1: of danced around. He's been sort of coy about his
Speaker 1: willingness to sort of go there, and so I think
Speaker 1: there's a lot of expectation amongst some of the crypto
Speaker 1: world that he will try to go there. One way
Speaker 1: of seeing that is is this rally in doge coin
Speaker 1: when we say Raleigh and douge coin, where is doge trading?
Speaker 1: Is trading at less than fifteen cents, So let's just um,
Speaker 1: let's be clear temper that a little bit. Technically it's rallied.
Speaker 1: But this meme coin that Elon Musk loves has sword,
Speaker 1: and the feeling is that maybe he'll allow that to
Speaker 1: be used for payments on Twitter, so that would gain
Speaker 1: it some credibility and relevancy. People are basing their doge
Speaker 1: enthusiasm on like an emoji, right, Like somebody asked you
Speaker 1: lot of question, like my guy, what are you doing
Speaker 1: about doge? And he was like eyes emoji and what
Speaker 1: does that even mean? He tweeted a picture of a
Speaker 1: shiba you know, with a Twitter t shirt on, so
Speaker 1: you know, make of that what you will. But other
Speaker 1: more serious developments by Nance, which is a huge exchange.
Speaker 1: Crypto Exchange has invested five million in Elon Musk's Twitter
Speaker 1: and said that it's developed a team to sort of
Speaker 1: look at ways to use blockchain technology to help with
Speaker 1: the issue of bots, which has been this issue. These
Speaker 1: bots that flood accounts are you know, flood the network
Speaker 1: scams and etcetera. And maybe blockchain technology or n f
Speaker 1: t s could be used to sort of mitigate that somewhat. Again,
Speaker 1: like Elon Musk isn't very interesting character, he's got a
Speaker 1: lot of money, He's got a lot of thoughts. Crypto
Speaker 1: you know it is hoping that some of those thoughts
Speaker 1: may help to to boost the industry. From from an
Speaker 1: idealistic standpoint, and then others who are more speculative think,
Speaker 1: you know, I'm gonna buy does now because it's going
Speaker 1: to become the you know, the currency of Twitter. So
Speaker 1: we'll see. Indeed, we'll be right back with more of
Speaker 1: the week's top crypto stories with Bloomberg editors Beth Williams
Speaker 1: and Dave Lipta, Let's talk about something that's trading at
Speaker 1: a dollar, i e. The U. S. Dollar. One of
Speaker 1: the I suppose counterintuitive things about crypto as a market
Speaker 1: over the past several months has been how much it's
Speaker 1: been a Fed story. And you know, there's no expectation. Well,
Speaker 1: I'm sure there's at least a few economists who somehow
Speaker 1: miraculously think the FED is going to cut rates um,
Speaker 1: but the broad reasonable expectation is that they're going to
Speaker 1: be in an you know, increasing interest rate environment for
Speaker 1: the foreseeable future. Dave, what does that mean for bitcoin,
Speaker 1: which had been sold as this inflation hedge and does
Speaker 1: not seem to be performing in any way that suggests
Speaker 1: that's true. Well, it's it's been evident for a while now.
Speaker 1: It's it's kind of stuck in the water to crash
Speaker 1: in the spring early summer. It's trended around twenty thousand,
Speaker 1: and this is a market of expectations, and without expectations
Speaker 1: that it's gonna rise or you can drive the excitement
Speaker 1: about it, it has is basically stalled. And and and
Speaker 1: then the main reason is the FED has readjusted expectations
Speaker 1: for risk, so there's no longer free money in the
Speaker 1: system or zero p sent money on it, and now
Speaker 1: there's a cost of speculation on it. So people are
Speaker 1: raining in that speculation in the absence of either the
Speaker 1: Fed ceasing to raise interest rates or cutting interest rates,
Speaker 1: and they're being some kind of gigantic hype cycle about
Speaker 1: anything other than douge. What are some of the analysts
Speaker 1: expectations that you've seen for like what's next for crypto?
Speaker 1: I mean, folks are looking into you know, you're seeing
Speaker 1: more activity in some of the old coins. There's a
Speaker 1: lot of conversation right now around like what's next for defy.
Speaker 1: Various countries, the latest being Zimbabwe are starting to talk
Speaker 1: about well maybe we'll just get into our own digital currencies.
Speaker 1: What are some of those kinds of trends. The biggest
Speaker 1: trend you hear, really even from the maximalist in the
Speaker 1: bitcoin world, is that the institutions have are still hanging
Speaker 1: in there on it. They've poured a lot of money
Speaker 1: into development, whether it's through VC money or some of
Speaker 1: the more better known major banks through development that type
Speaker 1: of thing, whether it's JP Morgan on its own coin,
Speaker 1: Jamie diamond saying bitcoin is trash, but we see the
Speaker 1: technologists potential payment reel. So that's the incentive for a
Speaker 1: lot of folks to stay in and say, Okay, the
Speaker 1: institutions are coming back, but it seems we're back at
Speaker 1: the test mode period rather than an acceleration stage again
Speaker 1: on it, and it's wait and see. Is is very
Speaker 1: difficult when you're highly leveraged. Exactly. I was in a
Speaker 1: meeting recently with you know, folks who work in and
Speaker 1: around payments and processing, and one of the things that
Speaker 1: they were saying ing is exactly your point one. They're
Speaker 1: taking an experimental approach. They're gonna they're gonna see what's working.
Speaker 1: But too they're starting to really separate things like you know,
Speaker 1: crypto as asset class investments, opportunity, speculative risk reward from
Speaker 1: possibilities for payments, whether stable coins or just like using
Speaker 1: the blockchain for you know, instantaneous settlements or whatever those
Speaker 1: things are. And it does seem like, you know, the
Speaker 1: phrase of the week is like bitcoin is boring, But
Speaker 1: it does seem like right now people are starting to
Speaker 1: ask deeper questions around Okay, what else is there? Whether
Speaker 1: they find interesting answers to those questions, is I guess something.
Speaker 1: We'll have to talk about the on the show, so
Speaker 1: we'll see. But just as a a kind of a
Speaker 1: closing thought, in your previous life, you were an editor
Speaker 1: on Opinion, and the opinion to you at Bloomberg has
Speaker 1: a lot of feelings about many things to do with crypto.
Speaker 1: What should folks be reading if they're interested in the
Speaker 1: opinion side's view of what's happening in this asset class Well,
Speaker 1: of course you can't mention Bloomberg Opinion without mentioning Matt Levine,
Speaker 1: who just published a covery cover issue of Business Week
Speaker 1: on crypto. But also for some very interesting insights that
Speaker 1: go beyond just you know, just your basic you know,
Speaker 1: crypto criticisms, but go a little deeper. Leonel Laurent Parmey Olson,
Speaker 1: we have Aaron Brown who's an investor as well as
Speaker 1: opinion writer. All have really nice of deep thoughts about
Speaker 1: the industry, how it fits into the broader financial system,
Speaker 1: and and the questions to ask about it and potential
Speaker 1: solutions that it provides. Email us if you've already finished
Speaker 1: the Matt Levin CRYPTOSU. I know there's a handful of
Speaker 1: you that have not been doing any other work, and
Speaker 1: I'm just reading that cover to cover. We'd love to
Speaker 1: get your feedback. Crypto Bloomberg dot net. You can find
Speaker 1: more of Beth and Dave's work on the Bloomberg Terminal,
Speaker 1: on Bloomberg dot com and on Twitter. Beth is b
Speaker 1: Willie Lou That's b w I L l I l
Speaker 1: I O U M. Dave is d Lita. That's d
Speaker 1: l I E d t k A. Beth also edits
Speaker 1: the Bloomberg Crypto newsletter that we publish on Tuesdays and Thursday,
Speaker 1: so do subscribe to that as well. On the next
Speaker 1: episode of Bloomberg Crypto, it's no secret that an industry
Speaker 1: that popularized the phrase when lambo might have a thing
Speaker 1: for fast cause. But can crypto companies really afford to
Speaker 1: keep splashing out millions of dollars on Formula one sponsorships?
Speaker 1: Right now? This is Bloomberg Crypto, a daily podcast from
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Speaker 1: or wherever you get your podcasts. Send us your comments, questions,
Speaker 1: or suggestions for the show to Crypto at Bloomberg dot
Speaker 1: net or find us on Twitter. We're at Crypto. The
Speaker 1: supervising producer of Bloomberg Crypto is Vicky Verka Lena. Our
Speaker 1: senior producer is Janet Babin. Our producers are Mohammed Faruk
Speaker 1: and Sharon Barriro. Our associate producers are Ty Butler and
Speaker 1: Moses on Them. Desta wonder At is our engineer. Original
Speaker 1: music by Leo Sidron. I'm Stacy, Marie Ishmael. Have a
Speaker 1: great weekend.