BALI, Indonesia — Rishi Sunak will invite Xi Jinping to collaborate more closely on global challenges in the first meeting between a British prime minister and Chinese president in nearly five years.
Sunak and Xi will hold a bilateral meeting Wednesday on the margins of the G20 leaders’ summit in Bali.
Ahead of the meeting — confirmed only 24 hours before it was due to take place — Downing Street insisted it was “clear-eyed in how we approach our relationship with China.”
The prime minister’s spokesman said there was a need “for China and the U.K. to establish a frank and constructive relationship,” but stressed that “the challenges posed by China are systemic” and “long-term.”
The two leaders are likely to discuss the war in Ukraine, energy security and climate change among other issues, No. 10 said.
Theresa May was the last prime minister to meet Xi, during a visit to Beijing in January 2018, at a time when Downing Street was still referring to the “golden era” of relations supposedly ushered in by David Cameron and George Osborne.
U.K.-China relations have worsened in the wake of China’s crackdown on democratic freedoms in Hong Kong, the oppression of the Uyghur Muslim minority of Xinjiang province, and concerns about the security implications of allowing Chinese companies to build critical national infrastructure in the U.K.
News of the meeting comes after Sunak softened his language on China and suggested he was abandoning plans to declare the country a “threat” as part of a major review of British foreign policy.
In response to questioning from POLITICO during the trip, Sunak described China as “a systemic challenge” but stressed that dialogue with Beijing was essential to tackling global challenges such as climate change.
Speaking to Sky News Tuesday, the PM said: “I think our approach to China is one that is very similar to our allies, whether that’s America, Australia and Canada — all countries that I’m talking about exactly this issue with while we’re here at the G20 summit.”
Sunak’s spokesman said Tuesday that the prime minister would “obviously raise the human rights record with President Xi” at the meeting.
But he added: “Equally, none of the issues that we are discussing at the G20 — be it the global economy, Ukraine, climate change, global health — none of them can be addressed without coordinated action by the world’s major economies, and of course that includes China.”
Xi has already held bilateral talks with various leaders during the summit | Kevin Frayer/Getty Images
Xi has already held bilateral talks with U.S. President Joe Biden, French President Emmanuel Macron and Australian Prime Minister Anthony Albanese among other leaders during the summit.
In addition to the talks with Xi, Sunak will also hold meetings with Biden, Albanese, Indian Prime Minister Narendra Modi, Japanese Prime Minister Fumio Kishida and Indonesian President Joko Widodo.
Iain Duncan Smith, the former Tory leader and co-chair of the Inter-Parliamentary Alliance on China, warned that the U.K. was “drifting into appeasement” with Xi.
“I am worried that the present prime minister, when he meets Xi Jinping, will be perceived as weak because it now looks like we’re drifting into appeasement with China, which is a disaster as it was in the 1930s and so it will be now,” he said. “They’re a threat to our values, they’re a threat to economic stability.”
Bob Seely, another Tory MP and member of the Inter-Parliamentary Alliance on China, added: “We need to talk to nations, especially those that may challenge our values and stability, but it is dangerous to normalize relations when they are not normal.”
But Alicia Kearns, chair of the Commons foreign affairs select committee and a member of the China Research Group, welcomed Sunak’s meeting with Xi. “It is important they meet to prevent miscalculations,” she said. “We cannot simply cut off China, we must work to create the space for dialogue, challenge and cooperation.”
More than 1 million barrels a day of Russian oil exports are set to be upended by Western sanctions expected to come into force within weeks, shipments Moscow will struggle to redirect elsewhere which threatens to further tighten global energy markets, the International Energy Agency said Tuesday.
Russian crude oil exports, including to the European Union, were largely unchanged last month, despite the prospect of an imminent EU ban on Russian crude oil imports and a separate plan to cap prices for Russian crude oil sales, the Paris-based agency said in a monthly report.
Russian exports to the EU were 1.5 million barrels a day in October, of which 1.1 million barrels a day will be halted when the bloc’s ban comes into effect on December 5, the IEA said.
It was unclear how much of those supplies Russia would be able to redirect to customers elsewhere in the world, the IEA said. India, China and Turkey have snapped up discounted Russian crude shipments, but buying from those nations has stabilized in recent months, the IEA said. Meanwhile, the volume would be too large for the remaining nations to absorb, the agency said.
The warning comes as the IEA predicted additional demand this year and next would come from China as the nation slowly eases its Covid-19 lockdown measures–though global demand growth will be sluggish as economies are expected to struggle.
The agency upped its 2022 global oil demand forecasts by 170,000 barrels a day to 99.8 million barrels a day. For 2023, the IEA raised its oil demand forecasts by 130,000 barrels a day to 101.4 million barrels a day.
Russia’s declining oil output will drag on global supplies which will grow at an anemic rate next year, failing to keep pace with growing oil demand. The IEA said global oil supplies would rise to 100.7 million barrels a day in 2023, 100,000 barrels a day more than it was forecasting last month, but still 700,000 barrels a day short of the world’s expected appetite for oil CL.1, -0.85%
Newswise — Hydrogen-powered trains on track to decarbonize the rail industry.
As the United States shifts away from fossil fuel burning cars and trucks, scientists at the U.S. Department of Energy’s (DOE) Argonne National Laboratory and Oak Ridge National Laboratory (ORNL) are exploring options for another form of transportation: trains. The research focuses on zero carbon hydrogen and other low-carbon fuels as viable alternatives to diesel for the rail industry.
Both laboratories have entered into cooperative research and development agreements with Wabtec, a leading manufacturer of freight locomotives. The Argonne and Wabtec agreement also includes Convergent Science, a software developer. The project will run for four years.
Researchers from the multidisciplinary team kicked off the project and celebrated the installation of rail technology company Wabtec’s single cylinder dual-fuel locomotive engine in the National Transportation Research Center, a DOE-designated user facility located at ORNL, during a Nov. 9 event.
“While hydrogen has been used in light-duty combustion engines, it is still a very new area of research in railway applications.” — Muhsin Ameen, Argonne senior research scientist
Hydrogen as fuel has many advantages, but locomotive engines must be modified to ensure safe, efficient and clean operation. The team will develop hardware and control strategies for the engine, which will run on hydrogen and diesel fuel to demonstrate the viability of using alternative fuels.
“We are excited to be a part of this collaboration because it addresses the need to decarbonize the rail industry by advancing hydrogen engine technology for both current and future locomotives,” said Josh Pihl, an ORNL distinguished researcher and group leader for applied catalysis and emissions research. “It is also a perfect example of how a DOE-funded collaboration between industry and national laboratories can accelerate the development and commercialization of technologies to help reduce carbon emissions from transportation.”
Pihl said the project aligns with the goals of DOE’s Vehicle Technologies Office to use low-carbon fuels in hard-to-electrify transportation sectors. While electrifying vehicles is an effective strategy in reducing carbon emissions from some parts of the transportation sector, railways are considered more difficult because of the high cost of building a single coordinated electrified rail system across North America. Each year, the North American rail fleet emits approximately 87.6 billion pounds of carbon dioxide, a major driver of climate change.
Researchers are exploring the potential of hydrogen combustion engine technology in the rail industry, said Muhsin Ameen, Argonne senior research scientist. Hydrogen is an energy carrier that can be produced from clean energy sources such as solar and wind power. Scientists have studied hydrogen-powered vehicles for decades.
“To reduce carbon dioxide emissions to net zero by 2050, we must make dramatic improvements in energy efficiency and emissions in the overall transportation system, including railways,” said Ameen. “Hydrogen has been used in light-duty combustion engines. However, hydrogen is a newer area of research in railway applications.”
The research team is developing combustion technology to power the next generation of trains with up to 100% hydrogen and other low-carbon fuels. The team’s goal is to design train engines that will deliver the same power, range and cost-effectiveness as current diesel technology.
“This collaboration with Argonne and Oak Ridge national laboratories with DOE support will advance the development of hydrogen technology within Wabtec’s existing industry-leading platforms for medium-speed engines. Railroads will be able to greatly reduce emissions and operating costs while maintaining commonality within their current fleet of trains,” said James Gamble, vice president of Engine & Power Solutions Technology at Wabtec.
In the project’s first phase, the ORNL team will work on hardware changes for retrofitting locomotives. Their goal is to reduce CO2 emissions from the roughly 25,000 locomotives already in use in North America. Locomotives have a service life of more than 30 years, so replacing the entire fleet would take decades.
During the second phase of the project, Argonne will leverage more than a decade of experience in modeling hydrogen injection and combustion to create a modeling framework to study combustion and emission control technologies used in hydrogen combustion engines. Experts in fuel injection, kinetics and combustion modeling, design optimization, high performance computing and machine learning will take the project from start to finish.
At the same time, ORNL and Wabtec will continue to alter the engine hardware to increase the amount of hydrogen that can be used. The team aims to completely replace diesel with hydrogen or low-carbon fuels in new locomotives.
Scientists are using Argonne’s high performance computers to develop simulation software. This tool will help predict the behavior of combustion engines as operating conditions change and hardware is modified. Simulations help researchers understand the combustion process, which drives engine efficiency and reduces emissions.
Each diesel-powered locomotive that is converted to a zero- or low-carbon energy source is anticipated to save up to 5.6 million pounds of carbon dioxide per year.
Along with Ameen, the Argonne team includes group leader and principal research scientist Riccardo Scarcelli, postdoctoral fellow Samuel Kamouz and principal engine research scientist Christopher Powell.
In addition to Pihl, the ORNL team includes research engineers Dean Edwards and Eric Nafziger and research mechanic Steve Whitted.
The project is funded by the Vehicle Technologies Office under DOE’s Office of Energy Efficiency and Renewable Energy and Wabtec. In-kind contributions are provided by Wabtec and Convergent Science. The U.S. Department of Transportation Federal Railroad Administration is also funding related research on safe use of hydrogen in locomotive engines.
Wabtec Corporation (NYSE: WAB) is focused on creating transportation solutions that move and improve the world. The company is a leading global provider of equipment, systems, digital solutions and value-added services for the freight and transit rail industries, as well as the mining, marine and industrial markets. Wabtec has been a leader in the rail industry for over 150 years and has a vision to achieve a zero-emission rail system in the U.S. and worldwide. Visit Wabtec’s website at: www.wabteccorp.com.
UT-Battelle manages ORNL for the Department of Energy’s Office of Science, the single largest supporter of basic research in the physical sciences in the United States. The Office of Science is working to address some of the most pressing challenges of our time. For more information, please visit energy.gov/science.
Argonne National Laboratory seeks solutions to pressing national problems in science and technology. The nation’s first national laboratory, Argonne conducts leading-edge basic and applied scientific research in virtually every scientific discipline. Argonne researchers work closely with researchers from hundreds of companies, universities, and federal, state and municipal agencies to help them solve their specific problems, advance America’s scientific leadership and prepare the nation for a better future. With employees from more than 60 nations, Argonne is managed by UChicago Argonne, LLC for the U.S. Department of Energy’s Office of Science.
The U.S. Department of Energy’s Office of Science is the single largest supporter of basic research in the physical sciences in the United States and is working to address some of the most pressing challenges of our time. For more information, visit https://energy.gov/science.
Indonesian Finance Minister Sri Mulyani (C front) attends the G20 Finance Ministers Meeting in Nusa Dua, on Indonesia’s resort island of Bali, on July 16, 2022.
SONNY TUMBELAKA | POOL | AFP via Getty Images
World leaders are kicking off a meeting Tuesday on the holiday island of Bali, Indonesia as the global economy grapples with a looming recession, central banks’ jumbo rate hikes and historically high inflation.
The annual meeting of leaders from the world’s major economies, known as the Group of 20 nations, is also taking place as Russia’s war in Ukraine drags on and relations between Washington and Beijing remain tense.
The gathering of officials that represent more than 80% of global GDP and 75% of exports worldwide marks the 17th meeting since the the platform kicked off after the Asian financial crisis in 1999 as a meeting for finance ministry officials and central bank leaders.
Nineteen countries and one economic region, the European Union, will attend this year’s two-day G-20 meeting.
This year’s in-person attendee list has been in the spotlight as Russian President Vladimir Putin continues his unprovoked war in Ukraine.
Putin will not be attending the summit and will instead be represented by Foreign Minister Sergey Lavrov, who walked out of a G-20 foreign minister meeting in July as his global counterparts called for an end to the war in Ukraine. Reuters reported Putin may join virtually.
U.S. President Joe Biden is also scheduled to hold a bilateral meeting with his Chinese counterpart Xi Jinping ahead of the G-20.
Other attendees include newly appointed U.K. Prime Minister Rishi Sunak and Saudi Arabia’s crown prince and de facto leader Mohammed bin Salman, who recently led an OPEC+ initiative to cut oil production by 2 million barrels per day to shore up prices.
Not much progress is expected from Biden and Xi’s meeting, according to Andrew Staples, Asia Pacific director of Economist Impact, the policy and insights arm of The Economist Group.
“Expectations are not very high,” he told CNBC’s Martin Soong, adding that ongoing geopolitical tensions are dragging down global growth. He highlighted China’s stance on the war in Ukraine as one of many signs of eroding relations between the U.S. and China.
“There’s a lot of concern for the business community globally that these geopolitical tensions is impacting negatively … we have in Ukraine, which China has been unfortunately been somewhat ambivalent about when it comes to President Putin, is really damaging the global economy,” he said.
“Finding some floor to this relationship — which is what Biden is looking to do — will be a positive, not only for the business community but for the global economic sentiment as well,” he said.
Russia’s latest move to constantly flip its stance on the United Nations-led Black Sea Grain initiative is “likely to overshadow all other negotiations in Bali,” Laura von Daniels, head of the Americas research at the German Institute for International and Security Affairs, said in a Council on Foreign Relations report.
The agreement, reached earlier this year, sought to ease Russia’s naval blockade and reopen key Ukrainian ports to deliver crops through a humanitarian corridor in the Black Sea. It expires on Nov. 19.
“To agree would not cost Russia anything,” said von Daniels. “It would, though, allow both Xi and Putin — as leaders of authoritarian states — to be applauded on the world stage for providing food security.”
The meeting takes place as a vast majority of the world reopens borders and lifts Covid-related restrictions — leaning into the post-pandemic era with its slogan, “Recover Together, Recover Stronger.”
Members agreed that “policy stimulus needs to be withdrawn appropriately during the recovery,” the Indonesia G-20 Presidency said in a July note released ahead of the meeting. It referred to a survey of member states that it conducted.
It said the potential for longer-lasting impact from the coronavirus pandemic on global growth would be a key topic of the meetings taking place in November.
“Risks stemming from supply disruption, rising inflation, and weak investment are the top three risks to be addressed urgently in relation to scarring from the pandemic,” it said, highlighting the need for global cooperation including the gradual reopening of borders to support revival of trade.
“We’ve all got some version of an inflation problem and rising interest rates as well, so the whole world has an interest in making progress here,” Australia Treasurer Jim Chalmers told CNBC’s Martin Soong. “Conditions are high risk and they are volatile,” he said.
Democrats are projected to retain their hold on the U.S. Senate after winning a key race in Nevada, giving President Joe Biden’s party control of at least one chamber of Congress for the next two years.
The Associated Press called Nevada’s Senate race for Democratic incumbent Catherine Cortez Masto over Republican challenger Adam Laxalt, giving Democrats a 50-seat count in the chamber. With Vice President Kamala Harris’s tie-breaking vote, and the chamber’s two independents causing with Democrats, Democrats will keep control.
The House of Representatives, meanwhile, remained undecided late Saturday but with Republicans still favored. The GOP has 211 seats to Democrats’ 203, with 218 needed for a majority. Political handicappers give Democrats just a slim chance for retaining control of the House.
Should Republicans win control of the House, the GOP is expected to deliver a check on Biden’s policy priorities, such as by potentially using a debt-ceiling showdown to force spending cuts.
But holding the Senate gives Biden some advantages, as GOP control could have meant roadblocks for his cabinet picks or other officials, as well as limiting his capacity to shape the federal judiciary.
Democrats have had a grip on the House since the 2018 midterms. They’ve run the Senate for two years, with Vice President Harris’s constitutional role as Senate president positioning her to cast tiebreaking votes. Each party has a chance to pick up an extra vote after a Dec. 6 runoff in Georgia between Democratic Sen. Raphael Warnock and Republican challenger Herschel Walker.
The House switching to red from blue would fit the historical pattern in which a first-term president’s party tends to lose congressional ground in the midterms.
Analysts had said voters in October and November appeared increasingly focused on issues on which Republicans have claimed high ground such as the prices of gasoline RB00, +2.45%
and other essentials, at the expense of such Democratic Party agenda items as climate change and abortion and voting rights.
Exit polls suggested that Republicans performed worse than expected because many Democrats and independents voted partly to show their disapproval of former President Donald Trump — and those voters were energized by the Supreme Court’s June decision that overturned Roe v. Wade.
In this photo illustration, the FTX website is seen on a computer on November 10, 2022 in Atlanta, Georgia. Binance, the world’s largest cryptocurrency firm, agreed to acquire FTX, another large cryptocurrency exchange, in a rushed sale in order to prevent a liquidity crisis, which is known as the “Lehman Moment” in the crypto industry.
Michael M. Santiago | Getty Images
John Ray, FTX’s new CEO and chief restructuring officer, said the bankrupt crypto exchange is “in the process of removing trading and withdrawal functionality” and it is “moving as many digital assets as can be identified to a new cold wallet custodian,” according to a statement tweeted by the company’s general counsel, Ryne Miller.
The suspected hack was announced by an admin in FTX’s Telegram Channel, according to blockchain analytics firm Elliptic and was followed by a tweet from Miller indicating that the wallet movements were abnormal.
Elliptic found that stablecoins and other tokens are being rapidly converted to ether and dai on decentralized exchanges, a technique the firm says is commonly used by hackers in order to prevent their haul from being seized.
“The way that these assets have been moved is highly suspicious,” said Tom Robinson, Elliptic’s chief scientist. “Very similar transaction patterns have been seen with large-scale thefts in the past — whereby the stolen assets are quickly swapped at decentralized exchanges, in order to avoid seizure.”
The new FTX chief said the exchange is coordinating with law enforcement and relevant regulators about the breach and that it was making “every effort” to secure all assets globally.
Miller, FTX’s general counsel, said the decision to push digital assets into cold storage was meant “to mitigate damage upon observing unauthorized transactions.”
People who choose to hold their own cryptocurrency can store it “hot,” “cold,” or some combination of the two. A hot wallet is connected to the internet and allows owners relatively easy access to their coins so that they can access and spend their crypto, whereas cold storage generally refers to crypto stored on wallets whose private keys are not connected to the internet. The trade-off for convenience with hot storage is potential exposure to bad actors.
— CNBC’s Rohan Goswami contributed to this report.
A local resident of the Sitio el Zapotal community in El Zapote canton, El Salvador, turns on the tap to fill his sink to collect the water he will need for the day. A total of 10,000 people have benefited from the five solar-powered community water projects in El Salvador since 2010. CREDIT: Edgardo Ayala/IPS
by Edgardo Ayala (suchitoto, el salvador)
Inter Press Service
SUCHITOTO, El Salvador, Nov 11 (IPS) – Several community-run water projects powered by solar energy have improved the quality of life of thousands of rural families in areas that were the scene of heavy fighting during El Salvador’s civil war in the 1980s.
The families now have running water, thanks to a collective effort launched when the war ended in 1992, after they returned to their former homes, which they had fled years earlier because of the intense fighting.
The largest of these community water systems driven by solar power is located in the canton of El Zapote, Suchitoto municipality, in the central Salvadoran department of Cuscatlán.
“The first step was to come together and buy this place to drill the well, do tests and build the tank, and we had a lot of help from other organizations that supported us,” Ángela Pineda, president of the Zapote-Platanares Community-Rural Association for Water, Health and the Environment, told IPS.
The association is a “junta de agua” or water board, which are community organizations that bring water to remote areas of El Salvador where the government does not have the capacity to supply it, such as the one installed in the canton of El Zapote.
There are an estimated 2,500 water boards in the country, providing service to 25 percent of the population, or some 1.6 million people. The vast majority of them operate with energy from the national power grid.
But five of the boards, located in the vicinity of Suchitoto, obtained financial support from organizations such as Companion Communities Development Alternatives (CoCoDA), based in Indianapolis, Indiana, for taking a technological leap towards operating with solar energy.
“The advantage is that the systems are powered by clean, renewable energies that do not pollute the environment,” Karilyn Vides, director of operations in El Salvador for the U.S.-based CoCoDA, told IPS.
Four previous projects of this type, supported since 2010 by CoCoDA, were small, with less than 10 solar panels. But the one mounted in the canton of El Zapote was planned to be equipped with 96 panels, when it was conceived in 2021.
It was inaugurated in June 2022, although it had been operating since 2004, with hydropower from the national grid.
This effort benefits more than 2,500 families settled around Suchitoto and on the slopes of Guazapa mountain which during the 12-year civil war was a stronghold of the then guerrilla Farabundo Marti National Liberation Front (FMLN), now a political party that governed the country between 2009 and 2019.
However, when including the four other small solar water projects, plus five that continue to operate with electricity from the national grid, all financially supported by CoCoDA after the end of the war, the total number of beneficiaries climbs to 10,000 people.
El Salvador’s bloody armed conflict left some 75,000 people dead and more than 8,000 missing. between 1980 and 1992.
Sam Bankman-Fried’s cryptocurrency exchange FTX has filed for Chapter 11 bankruptcy protection in the U.S., according to a company statement posted on Twitter. Bankman-Fried has also stepped down as CEO and has been succeeded by John J. Ray III, though the outgoing chief will stay on to assist with the transition.
Approximately 130 additional affiliated companies are part of the proceedings, including Alameda Research, Bankman-Fried’s crypto trading firm, and FTX.us, the company’s U.S. subsidiary.
In the 23-page bankruptcy filing obtained by CNBC, FTX indicates it has more than 100,000 creditors, assets in the range of $10 billion to $50 billion, as well as liabilities in the range of $10 billion to $50 billion. Bankman-Fried also indicated he wishes to appoint Stephen Neal as the firm’s new chairman of the board.
CNBC reached out to Adam Landis, founding partner of Landis Rath & Cobb LLP, who filed the Chapter 11 proceedings on behalf of FTX. CNBC did not immediately hear back to our request for comment.
“The immediate relief of Chapter 11 is appropriate to provide the FTX Group the opportunity to assess its situation and develop a process to maximize recoveries for stakeholders,” said the new FTX chief, Ray.
“The FTX Group has valuable assets that can only be effectively administered in an organized, joint process. I want to ensure every employee, customer, creditor, contract party, stockholder, investor, governmental authority and other stakeholder that we are going to conduct this effort with diligence, thoroughness and transparency,” continued Ray.
He added that stakeholders should understand that events have been fast moving, that the new team is engaged only recently and that they should review the materials filed on the docket of the proceedings over the coming days for more information.
It caps off a tumultuous week for one of the biggest names in the sector.
In the space of days, FTX went from a $32 billion valuation to bankruptcy as liquidity dried up, customers demanded withdrawals and rival exchange Binance ripped up its nonbinding agreement to buy the company. FTX founder Bankman-Fried admitted on Thursday that he “f—ed up.”
Anthony Scaramucci, founder of SkyBridge Capital and short-time Trump communications director, flew to the Bahamas this week to help Bankman-Fried as an investor and friend. When Scaramucci got there, he says, it appeared beyond the point of a simple liquidity rescue. He said he didn’t see evidence of this mishandling when he and other investors first screened FTX as a potential business partner.
“Duped I guess is the right word, but I am very disappointed because I do like Sam,” Scaramucci said Friday morning on CNBC’s “Squawk Box.” “I don’t know what happened because I was not an insider at FTX.”
An FTX spokesperson did not immediately respond to CNBC’s request for comment on this story, including on Scaramucci’s remarks.
In a short period of time, FTX expanded into non-crypto elements of life, such as pop culture. For example, in the past Super Bowl, it aired a commercial featuring comedian Larry David, in which David turned down an opportunity to invest in crypto. “Ehh, I don’t think so. And I’m never wrong about this stuff. Never.”
GameStop is winding down its partnership with FTX, according to people familiar with the matter. Under the agreement, announced in September, GameStop sold FTX gift cards in select stores and while FTX promoted the retailer on its exchange.
The winding down of business agreements, like the one with GameStop, will likely continue following the FTX bankruptcy filing.
The Chapter 11 proceedings exclude the following subsidiaries: LedgerX LLC, FTX Digital Markets Ltd., FTX Australia Pty Ltd., and FTX Express Pay Ltd.
— CNBC’s Jack Stebbins and Lillian Rizzo contributed to this report.
President Joe Biden addressed the U.N. climate summit Friday with his Democratic party having survived a projected Republican “red wave” in the midterm elections — and in doing so protecting at least the bulk of a landmark climate-change spending law he signed this year.
Biden addressed the U.N.’s Conference of the Parties (COP27) climate summit in Egypt on his way to Bali, Indonesia, for the Group of 20 meeting and a planned sit-down with China’s Xi Jinping.
In August, Biden signed the largest U.S. investment in fighting climate change ever, the Inflation Reduction Act (IRA). That puts him on stronger footing on the global stage than at last year’s COP26 gathering in Scotland, when American commitments to carbon reduction weren’t backed by law.
Four themes color Biden’s trip: Russia’s war in Ukraine, escalating trade and security tensions with China, the potential for a global recession in the coming months and the existential problem of climate change.
“The climate crisis is about human security, economic security, environmental security, national security and the very life of the planet,” Biden said in his address to the summit.
Biden apologized to the group for the U.S. pulling out of the Paris Climate Accord — and its global-warming limit of 1.5 degrees Celsius (equivalent to 2.7 degrees Fahrenheit) — which the country did briefly under President Donald Trump. In a remark that garnered speech-pausing applause from the audience, Biden said the U.S. commitment to the global effort, struck in Paris in 2015 and reaffirmed each year, is apparent in the climate-focused IRA.
Biden also highlighted a proposal that would require large federal contractors to develop carbon-reduction targets and disclose their greenhouse gas emissions, by which the administration hopes to use the federal government’s purchasing power to slow the impacts on climate from the private sector and bolster vulnerable supply chains.
“As the world’s largest customer, with more than $650 billion in spending last year, the United States government is putting our money where our mouth is to strengthen accountability for climate risk and resilience,” he said.
Talks with China still loom
Biden’s other task is to convince the summit participants of the U.S. commitment to engage with China, not only on trade and security matters, but also as part of an alliance between the world’s two top polluters to deliver on their carbon-reduction plans and show measurable progress. The U.S. has said it can reach net-zero emissions by 2050; China’s target date is 2060. Both countries have said they can show progress as soon as 2030, but some observers say time may be running out to hit that marker.
At the start of the COP27 summit, U.N. chief Antonio Guterres called for a historic agreement — or “climate solidarity pact” — between developed and emerging economies. The flagship climate conference runs Nov. 6-18.
The U.S. and China, the world’s two largest economies and top greenhouse-gas emitters, “have a particular responsibility to join efforts to make this pact a reality,” Guterres said earlier this week.
A domestic-policy win
Biden used Democrats’ better-than-projected midterm-election results as an opportunity to reassure the world that the U.S. is committed to doing its part to address threats to the planet as a whole, including climate change.
“If the United States tomorrow were to, quote, withdraw from the world, a lot of things would change around the world. A whole lot would change,” Biden said in remarks at a press conference on Nov. 9, the day after the election.
The IRA’s $375 billion commitment to climate efforts, including manufacturing and purchasing incentives for electric vehicles GM, +3.47%
Current and former Biden climate officials told the Associated Press that the IRA was crafted in a way that will make it difficult for a future Republican Congress or president to reverse it. That’s in part because of the law’s tax incentives, which are the sort of low-tax strategies normally favored by Republicans, and because much of the advancing green technology would bring jobs to strongly Republican states.
Republicans won’t have a veto-proof majority in the new Congress, even if the GOP ends up with an advantage of a few seats. And even if a Republican wins the White House in 2024, the tax credits will be in place and will already be spurring industry, said Samantha Gross, head of climate and energy studies at the centrist Brookings Institution.
“It’s a lot of tax credits and goodies that make it hard to repeal,” Gross said.
At the climate negotiations in Egypt, Biden’s special climate envoy, John Kerry, said, “Most of what we’re doing cannot be changed by anyone else who comes to Washington, because most of what we do is in the private sector. The marketplace has made its decision to do what we need to do.”
Still, it won’t be all smooth sailing for Biden. Republicans, who as of Friday were close to clinching a modest advantage in the House (control of the Senate will likely hinge on a runoff election in Georgia), have said they will work to repeal parts of the law and advance their own climate and energy bill. They have accused Biden of contributing to rising energy prices by blocking more drilling of U.S. fossil fuels CL00, +2.76%.
Those fossil fuels are the major contributor to climate change.
While Biden may be moving slower than Republicans would like when it comes to permitting, he has in fact called for more oil drilling to help calm energy markets during the Russia-Ukraine crisis and has even chastised profitable oil companies for not releasing more product. It’s a narrow line for the president to walk and in doing so, he has raised the ire of some environmental groups.
Still, Biden argues there is scope for both near-term emergency energy policies and a long-term commitment to the transition from oil and gas.
“Russia’s war only enhances the urgency of the need to transition the world off its dependence on fossil fuels,” Biden said Friday. “[N]o action can be taken without a nation understanding that it can’t use energy as a weapon and hold the global economy hostage.”
Outside the U.S., there are also concerns that rising energy costs and a looming recession could dampen resolve to transition to cleaner energy. Germany has dipped back into heavy-polluting coal markets to ensure it has enough power for the cold winter ahead.
Methane remains a target
Efforts are under way at the COP27 summit to keep attention on methane, a more intense but shorter-lasting greenhouse gas than carbon emissions.
On Friday, the Biden administration detailed what it calls a “super-emitter response program” that would require oil and natural-gas NG00, -4.63%
operators to respond to credible third-party reports of high-volume methane leaks.
With an updated methane initiative, proposed Environmental Protection Agency rules first floated last year now target all drilling sites, including smaller wells.
The EPA estimates that in 2030, the proposal would reduce methane from covered fossil-fuel sources by 87% from 2005 levels.
The U.S. government also released a new draft report this year about how climate change is affecting America. The report determined that over the past 50 years, the U.S. has warmed 68% faster than the planet as a whole.
Since 1970, the continental U.S. has experienced 2.5 degrees Fahrenheit of warming, well above the average for the planet, according to a draft of the National Climate Assessment, which is the U.S. government’s definitive report on the effects of climate change and represents a range of federal agencies.
The effects of human-caused climate change on the United States “are already far-reaching and worsening,” the draft report says, but every added amount of warming that can be avoided or delayed will reduce harmful effects.
An attendee wears a “Will Work for NFTs” shirt during the CoinDesk 2022 Consensus Festival in Austin, Texas, US, on Thursday, June 9, 2022. The festival showcases all sides of the blockchain, crypto, NFT, and Web 3 ecosystems, and their wide-reaching effect on commerce, culture, and communities.
Jordan Vonderhaar | Bloomberg | Getty Images
A year ago this week, investors were describing bitcoin as the future of money and ethereum as the world’s most important developer tool. Non-fungible tokens were exploding, Coinbase was trading at a record and the NBA’s Miami Heat was just into its first full season in the newly renamed FTX Arena.
As it turns out, that was peak crypto.
In the 12 months since bitcoin topped out at over $68,000, the two largest digital currencies have lost three-quarters of their value, collapsing alongside the riskiest tech stocks. The industry, once valued at roughly $3 trillion, now sits at around $900 billion.
Rather than acting as a hedge against inflation, which is near a 40-year high, bitcoin has proven to be another speculative asset that bubbles up when the evangelists are behind it and plunges when enthusiasm melts and investors get scared.
And the $135 million that FTX spent last year for a 19-year deal with the Heat? The crypto exchange with the naming rights is poised to land in the history books alongside another brand that once had its logo on a sports facility: Enron.
In a blink this week, FTX sank from a $32 billion valuation to the brink of bankruptcy as liquidity dried up, customers demanded withdrawals and rival exchange Binance ripped up its nonbinding agreement to buy the company. FTX founder Sam Bankman-Fried admitted on Thursday that he “f—ed up.”
“Looking back now, the excitement and prices of assets were clearly getting ahead of themselves and trading far above any fundamental value,” said Katie Talati, director of research at Arca, an investment firm focused on digital assets. “As the downturn was so fast and violent, many have proclaimed that digital assets are dead.”
Whether crypto is forever doomed or will eventually rebound, as Talati expects, the 2022 bloodbath exposed the industry’s many flaws and served as a reminder to investors and the public why financial regulation exists. Bankruptcies have come fast and furious since midyear, leaving clients with crypto accounts unable to access their funds, and in some cases scrapping to retrieve pennies on the dollar.
If this is indeed the future of finance, it’s looking rather bleak.
Crypto was supposed to bring transparency. Transactions on the blockchain could all be tracked. We didn’t need centralized institutions — banks — because we had digital ledgers to serve as the single source of truth.
That narrative is gone.
“Speaking for the bitcoiners, we feel like we’re trapped in a dysfunctional relationship with crypto and we want out,” said Michael Saylor, executive chairman of MicroStrategy, a technology company that owns 130,000 bitcoins. “The industry needs to grow up and the regulators are coming into this space. The future of the industry is registered digital assets traded on regulated exchanges, where everyone has the investor protections they need.”
Saylor was speaking on CNBC’s “Squawk on the Street” as FTX’s demise roiled the crypto market. Bitcoin sank to a two-year low this week, before bouncing back on Thursday. Ethereum also tanked, and solana, another popular coin used by developers and touted by Bankman-Fried, fell by more than half.
Equities tied to crypto suffered, too. Crypto exchange Coinbase tumbled 20% over two days, while Robinhood, the trading app that counts Bankman-Fried as one of its biggest investors, fell by 30% during the same period.
There was already plenty of pain to go around. Last week, Coinbase reported a revenue plunge of more than 50% in the third quarter from a year earlier, and a loss of $545 million. In June, the crypto exchange slashed 18% of its workforce.
“We are actively updating and evaluating our scenario plans and prepared to reduce operating expenses further if market conditions worsen,” Alesia Haas, Coinbase’s finance chief, said on the Nov. 3 earnings call.
The downdraft started in late 2021. That’s when inflation rates started to spike and sparked concern that the Federal Reserve would begin hiking borrowing costs when the calendar turned. Bitcoin tumbled 19% in December, as investors rotated into assets deemed safer in a tumultuous economy.
The sell-off continued in January, with bitcoin falling 17% and ethereum plummeting 26%. David Marcus, former head of crypto at Facebook parent Meta, used a phrase that would soon enter the lexicon.
“It’s during crypto winters that the best entrepreneurs build the better companies,” Marcus wrote in a Jan. 24 tweet. “This is the time again to focus on solving real problems vs. pumping tokens.”
The crypto winter didn’t actually hit for a few months. The markets even briefly stabilized. Then, in May, stablecoins became officially unstable.
A stablecoin is a type of digital currency designed to maintain a 1-to-1 peg with the U.S. dollar, acting as a sort of bank account for the crypto economy and offering a sound store of value, as opposed to the volatility experienced in bitcoin and other digital currencies.
When TerraUSD, or UST, and its sister token called luna dove below the $1 mark, a different kind of panic set in. The peg had been broken. Confidence evaporated. More than $40 billion in wealth was wiped out in luna’s collapse. Suddenly it was as if nothing in crypto was safe.
The leading crypto currencies cratered, with bitcoin dropping 16% in a single week, putting it down by more than half from its peak six months earlier. On the macro front, inflation had shown no sign of easing, and the central bank remained committed to raising rates as much as would be required to slow the increase in consumer prices.
In June, the bottom fell out.
Lending platform Celsius paused withdrawals because of “extreme market conditions.” Binance also halted withdrawals, while crypto lender BlockFi slashed 20% of its workforce after more than quintupling since the end of 2020.
Prominent crypto hedge fund Three Arrows Capital, or 3AC, defaulted on a loan worth more than $670 million, and FTX signed a deal giving it the option to buy BlockFi at a fraction of the company’s last private valuation.
Bitcoin had its worst month on record in June, losing roughly 38% of its value. Ether plummeted by more than 40%.
Then came the bankruptcies.
Singapore-based 3AC filed for bankruptcy protection in July, just months after disclosing that it had $10 billion in assets. The firm’s risky strategy involved borrowing money from across the industry and then turning around and investing that capital in other, often nascent, crypto projects.
After 3AC fell, crypto brokerage Voyager Digital wasn’t far behind. That’s because 3AC’s massive default was on a loan from Voyager.
“We strongly believe in the future of the industry but the prolonged volatility in the crypto markets, and the default of Three Arrows Capital, require us to take this decisive action,” Voyager CEO Stephen Ehrlich said at the time.
Next was Celsius, which filed for Chapter 11 protection in mid-July. The company had been paying customers interest of up to 17% to store their crypto on the platform. It would lend those assets to counterparties willing to pay sky-high rates. The structure came crashing down as liquidity dried up.
Meanwhile, Bankman-Fried was making himself out to be an industry savior. The 30-year-old living in the Bahamas was poised to pick up the carnage and consolidate the industry, claiming FTX was in better position than its peers because it stashed away cash, kept overhead low and avoided lending. With a net worth that on paper had swelled to $17 billion, he personally bought a 7.6% stake in Robinhood.
SBF, as he’s known, was dubbed by some as “the JPMorgan of crypto.” He told CNBC’s Kate Rooney in September that the company had in the neighborhood of $1 billion to spend on bailouts if the right opportunities emerged to keep key players afloat.
“It’s not going to be good for anyone long term if we have real pain, if we have real blowouts, and it’s not fair to customers and it’s not going to be good for regulation. It’s not going to be good for anything,” Bankman-Fried said. “From a longer-term perspective, that’s what was important for the ecosystem, it’s what was important for customers and it’s what was important for people to be able to operate in the ecosystem without being terrified that unknown unknowns were going to blow them up somehow.”
It’s almost as if Bankman-Fried was describing his own fate.
FTX’s lightning-fast descent began this past weekend after Binance CEO Changpeng Zhao tweeted that his company was selling the last of its FTT tokens, the native currency of FTX. That followed an article on CoinDesk, pointing out that Alameda Research, Bankman-Fried’s hedge fund, held an outsized amount of FTT on its balance sheet.
Not only did Zhao’s public pronouncement cause a plunge in the price of FTT, it led FTX customers to hit the exits. Bankman-Fried said in a tweet Thursday that FTX clients on Sunday demanded roughly $5 billion of withdrawals, which he called “the largest by a huge margin.” Lacking the reserves to cover the virtual bank run, FTX turned to Zhao for help.
Binance announced a nonbinding agreement to acquire FTX on Tuesday, in a deal that would’ve been so catastrophic for FTX that equity investors were expecting to be wiped out. But Binance reversed course a day later, saying that FTX’s “issues are beyond our control or ability to help.”
Bankman-Fried has since been scrambling for billions of dollars in an effort to stay out of bankruptcy. He says he’s also been working to maintain liquidity so clients can get their money out.
Venture firm Sequoia Capital, which first backed FTX in 2021 at an $18 billion valuation, said it was marking its $213.5 million investment in FTX “down to 0.” Multicoin Capital, a crypto investment firm, told limited partners on Tuesday that while it was able to retrieve about one-quarter of its assets from FTX, the funds still stranded there represented 15.6% of the fund’s assets, and there’s no guarantee it will all be recouped.
Additionally, Multicoin said it’s taking a hit because its largest position is in solana, which was tumbling in value because it “was generally considered to be within SBF’s sphere of influence.” The firm said it’s sticking to its thesis and looking for assets that can “outperform market beta across market cycles.”
“We are not short term or momentum traders, and we do not operate on short time horizons,” Multicoin said. “Although this situation is painful, we are going to remain focused on our strategy.”
It won’t be easy.
Ryan Gilbert, founder of fintech venture firm Launchpad Capital, said the crypto world is facing a crisis of confidence after the FTX implosion. While it was already a tumultuous year for crypto, Gilbert said Bankman-Friedman was a trusted leader who was comfortable representing the industry on Capitol Hill.
In a market without a central bank, an insurer or any institutional protections, trust is paramount.
“It’s a question of, can trust exist at all in this industry at this stage of the game?” Gilbert said in an interview Thursday. “To a large extent the concept of trust is as bankrupt as some of these companies.”
Binance is backing out of its plans to acquire FTX, the company said Wednesday, leaving Sam Bankman-Fried’s crypto empire on the verge of collapse.
The reversal comes one day after Binance CEO Changpeng Zhao announced that the world’s largest cryptocurrency firm had reached a non-binding deal to buy FTX’s non-U.S. businesses for an undisclosed amount, rescuing the company from a liquidity crisis. Earlier this year, FTX was valued at $32 billion by private investors.
“In the beginning, our hope was to be able to support FTX’s customers to provide liquidity,” Binance said in a tweet on Wednesday. “But the issues are beyond our control or ability to help.”
On Monday night, facing a liquidity crunch, Bankman-Fried was scrambling to raise money from venture capitalists and other investors before he went to Binance, according to sources with knowledge of the matter. Zhao initially agreed to step in, but his company quickly changed course, citing reports of “mishandled customer funds and alleged U.S. agency investigations.”
It’s unclear who is next in line to buy the beleaguered crypto exchange. Bankman-Fried told investors that the company is facing a shortfall of up to $8 billion from withdrawal requests and needs emergency funding, according to a person familiar with the matter.
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The disintegration of the Binance-FTX deal is the latest chapter in a shocking collapse that’s rocked the crypto world this week. Bankman-Fried tried to reassure investors just on Monday that the company’s assets were fine. But after Binance’s Zhao said publicly that his company was selling its holdings in FTX’s native token FTT, the selloff was on, and FTX could do nothing to stop it.
One of Silicon Valley’s most prominent VC firms, Sequoia Capital, sank $210 million into the company, according to reporter Eric Newcomer. FTX was telling investors recently that its operating income in 2022 was projected to drop to $144 million this year, down from $338 million in 2021, while revenue was projected to rise to $1.1 billion from $1 billion last year, Newcomer reports.
Bankman-Fried said on Tuesday that customers had demanded withdrawals to the tune of $6 billion. He also deleted tweets from the prior day indicating that FTX had enough assets to cover clients’ holdings.
Zhao told Binance employees in a memo earlier on Wednesday that he “did not master plan” the collapse of FTX. He said FTX going down is “not good for anyone in the industry” and employees should not “view it as a win for us.”
He also told them not to trade FTT tokens while this ordeal unfolds.
“If you have a bag, you have a bag,” he wrote. “DO NOT buy or sell.”
FTT had already lost 80% of its value between Monday and Tuesday, falling to $5 and wiping out more than $2 billion in a day. It fell by more than half on Wednesday to around $2.30, shrinking the total value of circulating tokens to roughly $308 million.
Cryptocurrencies have plummeted amid the deal turmoil, with bitcoin falling 15% on Wednesday after a 13% drop on Tuesday. It’s trading below $16,000 for the first time since November 2020. Ether, meanwhile, has plunged more than 30% over the past two days and is close to falling below $1,000.
Here’s the company’s full statement:
“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com.
In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.
Every time a major player in an industry fails, retail consumers will suffer. We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market.
As regulatory frameworks are developed and as the industry continues to evolve toward greater decentralization, the ecosystem will grow stronger.”
Correction: FTX was telling investors its operating income was projected to drop to $144 million this year, down from $338 million in 2021.
Newswise — Chirality is the breaking of reflection and inversion symmetries. Simply put, it is when an object’s mirror images cannot be superimposed over each other. A common example are your two hands—while mirror images of each other, they can never overlap. Chirality appears at all levels in nature and is ubiquitous. In addition to static chirality, chirality can also occur due to dynamic motion including rotation. With this in mind, we can distinguish true and false chirality. A system is truly chiral if, when translating, space inversion does not equate to time reversal combined with a proper spatial rotation.
Phonons are quanta (or small packets) of energy associated with the vibration of atoms in a crystal lattice. Recently, phonons with chiral properties have been theorized and experimentally discovered in two-dimensional (2D) materials such as tungsten diselenide. The discovered chiral phonons are rotating—yet not propagating—atomic motions. But, truly chiral phonons would be atomic motions that are both rotating and propagating, and these have never been observed in three-dimensional (3D) bulk systems.
Now, a team of researchers led by scientists from Tokyo Institute of Technology (Tokyo Tech) have identified truly chiral phonons, both theoretically and experimentally. The team, led by Professor Takuya Satoh of the Department of Physics at Tokyo Tech, observed the chiral phonons in cinnabar (α-HgS). This was achieved using a combination of first-principles calculations and an experimental technique called circularly polarized Raman scattering. “Chiral structures can be probed using chiral techniques. So, using circularly polarized light, which has its own handedness (i.e., right-handed or left-handedness), is critical. Dynamic chiral structures can be mapped using pseudo-angular momentum (PAM). Pseudo-momentum and PAM originate from the phase factors acquired by discrete translation and rotation symmetry operations, respectively,” explains Professor Satoh.
The researchers’ novel experimental approach also allowed them to probe the fundamental traits of PAM. They found that the law of the conservation of PAM—one of the key laws of physics—holds between circularly polarized photons and chiral phonons. “Our work also provides an optical method to identify the handedness of chiral materials using PAM. Namely, we can determine the handedness of materials with better resolution than x-ray diffraction (XRD) can achieve. Moreover, XRD requires a large-enough crystal, is invasive, and can be destructive. Circularly polarized Raman scattering, on the other hand, allowed us to determine the chirality of structures XRD could not, in a non-contact and non-destructive manner,” concludes Professor Satoh.
This study is the first to identify truly chiral phonons in 3D materials, which are clearly distinct from those seen previously in 2D hexagonal systems. The learnings gained here could drive new research into developing ways for transferring the PAM from photons to electron spins via propagating chiral phonons in future devices. Furthermore, this approach enables the determination of the true chirality of a crystal in an improved manner, providing a new critical tool for experimentalists’ and researchers.
A lithium-ion battery photographed at a Volkswagen facility in Germany. Lithium-ion batteries are crucial components in electric vehicles.
Jan Woitas | Picture Alliance | Getty Images
LONDON — A facility described as the U.K.’s “first large-scale lithium refinery” will be located in the north of England, with those behind the project hoping its output will hit roughly 50,000 metric tons each year once up and running.
On Monday, a statement released by Green Lithium on the website of the London Stock Exchange said construction of the £600 million (around $687 million) project was expected to last three years, with commissioning slated for 2025.
The refinery will be based at Teesport, a major port on Teesside. Green Lithium said its product would “go into the supply chain for lithium-ion batteries, energy storage, grid stabilisation and EV batteries.”
Alongside its use in cell phones, computers, tablets and a host of other gadgets synonymous with modern life, lithium — which some have dubbed “white gold” — is crucial to the batteries that power electric vehicles.
The U.K. wants to stop the sale of new diesel and gasoline cars and vans by 2030. It will require, from 2035, all new cars and vans to have zero tailpipe emissions. The European Union, which the U.K. left on Jan. 31, 2020, is pursuing similar targets.
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With demand for lithium rising, European economies are attempting to shore up their own supplies and reduce dependency on other parts of the world.
In a translation of her State of the Union speech last month, European Commission President Ursula von der Leyen said “lithium and rare earths will soon be more important than oil and gas.”
As well as addressing security of supply, von der Leyen, who switched between several languages during her speech, also stressed the importance of processing.
“Today, China controls the global processing industry,” she said. “Almost 90% … of rare earth[s] and 60% of lithium are processed in China.”
“So we will identify strategic projects all along the supply chain, from extracting to refining, from processing to recycling,” she added. “And we will build up strategic reserves where supply is at risk.”
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Back in the U.K., Business Secretary Grant Shapps said Green Lithium’s refinery would “deliver more than 1,000 jobs during its construction and 250 long-term, high-skill jobs for local people when in operation.”
“It is also allowing us to move quickly to secure our supply chains of critical minerals, as we know that geopolitical threats and global events beyond our control can severely impact the supply of key components that could delay the rollout of electric vehicles in the UK,” he added.
The news about Green Lithium comes after Britishvolt, another firm looking to establish a foothold in the electric vehicle sector, said it had secured short-term funding that would enable it to stave off administration for the time being. The company said its employees had also agreed to a pay cut for November.
The fears of Tesla (TSLA) – Get Free Report shareholders and fans are confirmed.
Elon Musk, the CEO of the famous manufacturer of premium electric vehicles, is paying a hefty price for his acquisition of Twitter (TWTR) – Get Free Report.
And unsurprisingly, Tesla is paying the price. The billionaire has just sold 19.5 million shares of Tesla for a total amount of $3.95 billion, according to regulatory documents filed on November 8 in the evening.
The sale was completed in 38 transactions on November 4, 7 and 8, just days after the Twitter acquisition was completed. The tech tycoon had taken control of the social network on October 27 after a six-month battle marked by twists and turns and a stop in the courts.
The documents thus confirm the speculations that have been circulating in recent days. According to these rumors not commented on by Musk, he was going to have to sell Tesla shares to shore the deal.
“Musk sold $4 billion of stock according Form 4’s filed,” said Wedbush analyst Dan Ives. “The Twitter deal remains an albatross in many ways but it looks like the Musk stock sale worries now should be done. Tesla stock down big since Twitter deal. Frustrating situation for all.”
Exodus of Advertisers
Twitter cost Musk too much, $44 billion. The billionaire is in debt of about $13 billion which is secured against his remaining stake in Tesla as part of the leveraged buyout. Since his takeover on Oct. 27, he has been trying to find sources of revenue for the social network.
The problem is that he will have to dig deeper than that because the company is losing $4 million a day, according to the billionaire. One after another, advertisers are suspending the promotion of their products and services on the platform for fear it will become a “hellscape” under Musk, who defines himself as a “free speech absolutist.”
Advertising accounts for more than 91% of Twitter’s revenue.
Gene Munster, managing partner at Loup Funds, warned on November 7 that Musk could be forced to sell additional Tesla shares if advertisers continue to leave Twitter.
“They have a month here to kind of kitchen sink things and get people to reset with what their products are and get advertisers to understand what their content moderation is,” Munster told CNBC on Nov. 7. “If that yields the current environment, he’s gonna have to sell shares.”
‘Avoid an Emergency Sale’
This is the third time Musk has sold Tesla stock this year. He sold over $8 billion worth of shares in the electric vehicle maker in April and sold nearly $7 billion worth of Tesla shares in August to fund the deal.
In August, he had indicated, during an exchange on Twitter with a shareholder and fan of Tesla, that he had sold his shares to avoid having to do so urgently in case he was forced to acquire. He also said he wouldn’t sell any more Tesla shares, at least this year. At the time, the technoking had withdrawn its purchase offer from the table but had to put it back on October 4 a few days before the start of a trial which did not look good for him.
It is therefore a huge about-face on the part of the billionaire, whose essential fortune is based on his shares in Tesla and his aerospace company SpaceX.
“@elonmusk are you done selling?” the Twitter user asked him on August 9.
“Yes,” Musk responded. “In the (hopefully unlikely) event that Twitter forces this deal to close *and* some equity partners don’t come through, it is important to avoid an emergency sale of Tesla stock.”
At the end of the Nov. 7 trading session, Tesla shares fell to their lowest level in 52 weeks, at $186.75
Tesla shares are down 15% since Musk finalized the Twitter deal on Oct. 27. Since Musk announced his bid on April 25, Tesla shares have lost a total of 43% of their value to $191.30. This represents a drop in market value of approximately $454 billion.
Tesla, which was until now the sixth largest company in the world in terms of market capitalization, was overtaken on Nov. 7 by Berkshire Hathaway (BRK.A) – Get Free Report, the holding company of legendary investor Warren Buffett.
The more Musk is involved in Twitter, the more Tesla sinks in the stock market. The billionaire said on Nov. 4, at the Baron Investment Conference, that his workload had shot up from “78 hours a week to probably 120” since he purchased Twitter.
Over the long term, Munster believes that the Twitter acquisition isn’t going to be a particular problem for Tesla, which has a roadmap filled with products like the Semi truck on Dec. 1, the highly anticipated Cybertruck in mid-2023, robotaxis in 2024 and the human robot Optimus in 2023.
“Musk purchasing Twitter means very little to the future of Tesla and SpaceX,” Munster wrote in a research note last month. “He will continue to give the bulk of his energy and time to both companies.”
Newswise — Yanliang Zhang, associate professor of aerospace and mechanical engineering at the University of Notre Dame, and collaborators Alexander Dowling and Tengfei Luo have developed a machine-learning assisted superfast new way to create high-performance, energy-saving thermoelectric devices.
The novel process uses intense pulsed light to sinter thermoelectric material in less than a second (conventional sintering in thermal ovens can take hours). The team sped up this method of turning nanoparticle inks into flexible devices by using machine learning to determine the optimum conditions for the ultrafast but complex sintering process.
The achievement was just published in the journal Energy and Environmental Science.
Flexible thermoelectric devices offer great opportunities for direct conversion of waste heat into electricity as well as solid-state refrigeration, Zhang said. They have additional benefits as power sources and cooling devices — they don’t emit greenhouse gases, and they are durable and quiet since they don’t have moving parts.
Despite their potential broad impact in energy and environmental sustainability, thermoelectric devices have not achieved large-scale application because of the lack of a method for fast and cost-effective automated manufacturing. Machine-learning-assisted ultrafast flash sintering now will make it possible to produce high-performance, eco-friendly devices much faster and at far lower cost.
“The results can be applied to powering everything from wearable personal devices, to sensors and electronics, to industry Internet of Things,” Zhang said.
“The successful integration of photonic flash processing and machine learning can be generalized to highly scalable and low-cost manufacturing of a broad range of energy and electronic materials.”
Zhang is principal investigator of the Advanced Manufacturing and Energy Lab at Notre Dame. Dowling, assistant professor of chemical and biomolecular engineering, and Luo, the Dorini Family Professor for Energy Studies — both experts in machine learning — contributed to this research, along with doctoral student Mortaza Saeidi-Javash (now assistant professor at California State Long Beach), doctoral student Ke Wang and postdoctoral associate Minxiang Zeng (now assistant professor at Texas Tech University).
Global investment firm KKR and Vedanta Group’s arm Serentica Renewables have decided to create a new energy platform that would help large industrial clients decarbonise their businesses. The investment firm is expected to pump in a whopping $400 million in the platform. Standard Chartered Bank will act as the sole financial advisor to Serentica for this transaction.
Pratik Agarwal, Director of Serentica Renewables, said that the company is happy to have a like-minded strategic partner in KKR, which believes in its model of sustainable development. “This investment will allow us to leap ahead in our vision of decarbonizing large energy-intensive industries and help in reversing climate change.”
Agarwal said this transaction is among the largest industrial decarbonisation investments in India to date and carries forward the global decarbonization agenda, which is the focus at COP27.
Serentica Renewables is wholly owned by Twinstar Overseas Limited (TSOL), which has controlling stakes in Sterlite Power Transmission Limited and Sterlite Technologies Limited. Both are held by Anil Agarwal family’s Volcan Investments.
Hardik Shah, Partner at KKR, said that the investment in Serentica reflects KKR’s confidence in India’s renewable sector and its commitment to advancing the energy transition in India. “With Serentica, we look to support these companies in their decarbonisation objectives. We are delighted to back Serentica through this latest strategic partnership and are excited to develop Serentica into a leading decabonisation platform that can contribute meaningfully to the energy transition requirements that lie ahead of us.”
An official statement said that since 2011, KKR has deployed over $15 billion in equity globally to invest in renewable assets, such as solar and wind, which have an operational power generation capacity of 23 GW, as of December 31, 2021.
This is for the second time that KKR has teamed up with Sterlite Power Transmission. Earlier, it had invested in IndiGrid Investment Managers Ltd, an InvIT launched by Sterlite.
Serentica currently has entered into three long-term PPAs and is in the process of developing 1,500 MW of solar and wind power projects across various states including Karnataka, Rajasthan, and Maharashtra. Serentica’s medium-term goal is to install 5,000 MW of carbon-free generation capacity coupled with different storage technologies and supply over 16 billion units of clean energy annually and displace 20 million tonnes of CO2 emissions.
SHARM EL-SHEIKH, Egypt — Climate change talks have long been stymied over demands for transfers of billions of dollars — on Monday, French President Emmanuel Macron backed a new push for the conversation to be measured in trillions.
Speaking at the COP27 climate summit in Sharm El-Sheikh, Egypt, Macron gave his support to elements of a plan outlined by Barbados’ Prime Minister Mia Mottley that seeks to overhaul the way climate finance flows to the countries that most need it.
He called for a “huge shock of concessional financing,” suspension of debt for disaster-struck countries and putting the International Monetary Fund (IMF) on notice.
It was a speech that signaled a shift in tone that developing countries have been long been pushing for.
During the first day of official speeches, leader after leader from wealthy countries highlighted the need to demonstrate “solidarity” with developing countries after a year in which calamitous disasters and a bubbling debt crisis helped reshape the often contentious conversation about climate finance.
“It’s the right thing to do,” said U.K. Prime Minister Rishi Sunak.
Money is a central focus of this year’s climate talks given the widening gap between what has been pledged and what is needed. It extends from everything from clean energy transitions to hardening countries’ defenses against climate impacts to potential payments for irreparable climate damages.
In September, Barbados issued the world’s first pandemic and natural disaster bond. “The time has come for the introduction of natural disaster-pandemic clauses in our debt instruments,” Mottley said.
“God forbid, if we are hit tomorrow, we unlock 18 percent of GDP over the next two years, because what we do is effectively put a pause on all of our debt,” she said.
Macron called for the rules of the IMF, the World Bank and other major lenders to be changed to makeclauses that halt debt repayments in the event of a disaster far more common.
“What you’re asking of us in terms of debt reimbursement and guarantees, when we are affected by a climate shock, when we are a victim of a climate accident, to some degree, there must be a suspension of those conditions,” said the French president.
Broken promises
While the need for finance to spur the transition to clean energy across the world and guard against the ravages of climate change is already stretching into trillions, the U.N. climate system remains stuck on a broken decade-old promise from rich countries. They pledged to deliver $100 billion a year in climate finance by 2020, but that’s not likely to happen until next year.
As climate impacts have grown more extreme and prolific, appeals for new and more innovative forms of finance have escalated. Ballooning debt in the wake of the pandemic has heightened those calls, with dozens of vulnerable countries threatening a debt strike in the lead-up to COP27.
Mottley has been a champion of elevating the debt crisis facing nations like her own and highlighting how it adds to climate inequities. The plan she outlined in September hinges on debt relief, increased finance, and new mechanisms for post-disaster recovery, like bonds.
The Barbados leader’s call to arms and Macron’s heavyweight backing brought a new reality and scale to the financial discussion.
Mottley has pushed for the IMF’s special drawing rights to be put toward helping climate-vulnerable nations recover and respond to climate impacts. That could be used to help unlock far more money from the private sector — $500 billion from the IMF could result in $5 trillion in investments, she said Monday.
The challenge is getting shareholders in those financial institutions to agree to reforms.
Officials in the U.S., Germany and other major economies have pushed for an overhaul of the way multilateral development banks lend to allow them to extend more climate finance. U.S. Treasury Secretary Janet Yellen has called on the World Bank to draft a roadmap by the end of the year that could then be used to drive reform efforts at other development banks.
On Monday, Macron went further, saying that by next spring, global financial institutions would need to devise ways to “come up with concrete solutions to activate these innovative financing solutions and to help us to provide access to new liquidities.”
He paid tribute to Mottley’s “force of character” and said the two leaders — one who commands an economy 600 times larger than the other — had agreed to form a group of “wise minds” to develop suggestions for the overhaul of the international financial system.
But one Mottley suggestion that Macron swerved was her call for fossil fuel companies to pay a levy on their profits into a fund for disaster-hit countries.
“How do companies make $200 billion in profits in the last three months and not expect to contribute at least 10 cents on every dollar of profit to a loss and damage fund?” she asked.
Oil hasn’t yet climbed back to $100 per barrel, but options traders are increasingly setting their sights on another target—$200. The most actively traded
Brent crude
options contract on Thursday was an option to buy Brent at $200 in March 2023.
About half of the contracts to buy oil at that price appeared to be placed by one buyer who spent about $810,000 on the options, according to Robert Yawger, the director of energy futures at Mizuho Securities USA. But that buyer isn’t the only person making a bet that oil prices will hit $200, along with other bullish bets on where oil goes in 2023. “There have been people dipping their toes into those higher [options strike prices] over the last couple of days,” Yawger said.
Delegates landing in Egypt’s Red Sea resort of Sharm El-Sheikh for U.N. climate talks this week are a global elite bent on tearing down national borders, stripping away individual freedoms and condemning working people to a life of poverty.
That dark view is held by a range of far-right or populist parties — among them Donald Trump’s Republicans, who are seeking to retake control in Tuesday’s U.S. midterm elections. Some of these radicals are rampaging through elections in Europe while others, such as Brazil’s President Jair Bolsonaro last week, have been defeated only narrowly.
Republican and Trump acolyte Lauren Boebert derides the environmentalist agenda as “America last;” Britain’s Brexit-backing Home Secretary Suella Braverman says the country is in thrall to a “tofu-eating wokerati;” and in Spain, senior figures in the far-right Vox party dismiss the U.N.’s climate agenda as “cultural Marxism.”
Right-wingers of various strains around the world have co-opted climate change into their culture war. The fact this is happening in countries that produce a large share of global greenhouse gas emissions has alarmed some green advocates.
“Reactionary populism is now the biggest obstacle to tackling climate change,” wrote three climate leaders, including Brazil’s former Environment Minister Izabella Teixeira, in a recent commentary.
In the U.S., Republicans are eyeing a return to power in one or both houses of Congress in Tuesday’s midterm elections. Many at the COP27 talks will be reliving the first week of the U.N. climate conference in Morocco six years ago when Trump’s election struck the climate movement like a hurricane.
A Republican surge would gnaw at the fragile confidence that has built around global climate efforts since President Joe Biden’s election, raising the specter of a second Trump term and perhaps the withdrawal — again — of the U.S. from the landmark 2015 Paris climate deal.
“I don’t want to think about that,” said Teixeira’s co-author Laurence Tubiana, a former French diplomat who led the design of the Paris Agreement and who now leads the European Climate Foundation.
Some on the American right are pushing a more conciliatory message than others. “Republicans have solutions to reduce world emissions while providing affordable, reliable, and clean energy to our allies across the globe,” said Utah Congressman John Curtis, who will lead a delegation from his party to COP27.
Tubiana and others in the environmental movement are trying to put on a brave face. They argue Republicans won’t want to tamper too much with Biden’s behemoth Inflation Reduction Act, which contains measures to promote clean energy.
“You might see railing against it, and I’m sure there’ll be lots of political talk and rhetoric, but I don’t expect that would be a focus for the Republicans,” said Nat Keohane, president of the Center for Climate and Energy Solutions, a green NGO based in Arlington, Virginia. Nevertheless, if Republicans take both houses, “we certainly won’t make any progress,” Keohane said.
Trump’s first term and the presidency of Brazil’s Bolsonaro — which ended in a narrow defeat in last month’s election — now look like the opening skirmishes in a struggle in which the planet’s stability is at stake.
In parts of Europe, the right present their policies as sympathetic to the risks of climate change while dismissing internationally sanctioned action as sinister elitism that threatens their voters’ prosperity.
“The Sweden Democrats are not climate deniers, whatever that means,” Swedish far-right leader Jimmie Åkesson told a crowd days before a September election that saw his party win big. But Sweden’s current climate plans, Åkesson said, were “100 percent symbolic” rather than meaningful. “All that leads to is that we get poorer, that our lives get worse.”
This is the gibbet on which the far right are hanging environmentalism: depicting them as the witting or unwitting cavalry of global elites.
“We consider it to be a globalist movement that intends to end all borders, intends to end our freedom, intends to end our freedom for our identities,” Javier Cortés, president of the Seville chapter of Spain’s far-right Vox party, said in an interview with POLITICO. “We are not in favor of CO2 emissions. On the contrary, we want to respect the environment. All we are saying is that the European Union has to clarify that it wants to sell us a climate religion in which we cannot emit CO2, while we make our industries disappear from Europe and we need to buy from China.”
To describe this as climate denial — a common but often inaccurate charge — would be to miss the point that this is now just another front in the culture wars.
Online disinformation about the last U.N. climate talks was largely focused on the hypocrisy and elitism of those attending, according to research from the Institute for Strategic Dialogue (ISD). The main spreaders weren’t websites and figures traditionally associated with climate denial, but culture war celebrities such as psychologist Jordan Peterson, Rebel Media’s Ezra Levant and Dilbert cartoonist Scott Adams.
Populist attacks on globalism “rely on a well-funded transnational network,” said Tubiana. “It warrants serious scrutiny.”
But while economic interests may be powering parts of the movement, there is also a sense of political opportunism at work. Huge changes to the economy will be needed to lower emissions at the speed dictated by U.N.-brokered global climate goals. There will be winners and losers — and the losers may gravitate toward populists pledging to take up their cause.
“Far-right organizations are recognizing this as a potentially lucrative topic that they can win votes or support on,” said Balsa Lubarda, head of the ideology research unit at the Centre for Analysis of the Radical Right.
Loving the losers
The far right’s focus on the losers has been “turbo charged” by the energy crisis, said Jennie King, head of civic action and education at ISD, which populists have wrongly argued is the fault of green policy. The European Parliament’s coalition of far-right parties has grown and capitalized on the energy crisis by joining with center-right parties to vote down environmental legislation.
Sweden’s Prime Minister Ulf Kristersson — newly elected with Åkesson’s support — aims to dilute the country’s ambitions for cutting some greenhouse gas emissions, a move center-right Liberal Environment Minister Romina Pourmokhtari justified in familiar terms: “That is a reaction to the reality people are facing.” And in Britain, Brexit leader Nigel Farage retooled his campaign to become an anti-net zero mouthpiece.
Italian Prime Minister Giorgia Meloni says she wants to reclaim environmentalism for the right | Vincenzo Pinto/AFP via Getty Images
Strains of right-wing ecology may also mean that not all groups are actively hostile to the climate agenda, said Lubarda. Italy’s new Prime Minister Giorgia Meloni is a huge fan of the books of J.R.R. Tolkien, which center on the Shire, an idealized bucolic homeland. Meloni says she wants to reclaim environmentalism for the right, but the protection of national economic interests still comes first.
“There is no more convinced ecologist than a conservative, but what distinguishes us from a certain ideological environmentalism is that we want to defend nature with man inside,” she said in her inaugural speech to parliament last month.
While Meloni has announced that she will attend COP27, she has also renamed the Ministry for the Ecological Transition the Ministry for Environment and Energy Security. The governing program of her Brothers of Italy party includes a section on climate change, but it strongly emphasizes the need to protect industry.
It’s this broad sense of demotion and delay that alarms those who are watching these ideas grow in stature among populists on the right. They say that while it may not sound like climate denial, the result is effectively the same.
“You can say that you are climate friends,” said Belgian Socialist MEP Marie Arena. “But in the act, you are not at all. You are business friends first.”
Jacopo Barragazzi, Charlie Duxbury and Zack Colman contributed to this report.
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Aerial view of the seafront Manara district near downtown Beirut.
Bilwander | Getty Images
When Georgio Abou Gebrael first heard about bitcoin in 2016, it sounded like a scam.
But by 2019, as Lebanon plunged into a financial crisis following decades of expensive wars and bad spending decisions, a decentralized and borderless digital currency operating outside the reach of bankers and politicians sounded a lot like salvation.
Gebrael was an architect living in his hometown of Beit Mery, a village eleven miles due east of Beirut. He had lost his job and needed to figure out another way to quickly get ahold of cash. In the spring of 2020, Gebrael says, the banks were closed and locals were barred from withdrawing money from their accounts. Receiving cash via international wire transfer wasn’t a great option either, since these services would take U.S. dollars from the sender and give Lebanese pounds to the recipient at a much lower rate than market value, according to the 27-year-old.
“I would lose around half of the value,” explained Gebrael of the experience. “That’s why I was looking at bitcoin – it was a good way to get money from abroad.”
Gebrael discovered a subreddit dedicated to connecting freelancers with employers willing to pay in bitcoin. The architect’s first job was to film a short commercial for a company that sold tires. Gebrael was paid $5 in bitcoin. Despite the tiny amount, he was hooked.
Georgio Abou Gebrael filmed a short commercial for a company that sells tires, in exchange for $5 worth of bitcoin.
Georgio Abou Gebrael
Today, half of Gebrael’s income is from freelance work, 90% of which is paid in bitcoin. The other half comes from a U.S. dollar-denominated salary paid by his new architecture firm. Beyond being a convenient way to earn a living, bitcoin has also become his bank.
“When I get paid from my architecture job, I withdraw all my money,” continued Gebrael. He then uses that cash to buy small amounts of bitcoin every Saturday. The rest he keeps as spending money for daily needs and home renovations.
Gebrael isn’t alone in seeking alternative ways to earn, save, and spend money in Lebanon – a country whose banking system is fundamentally broken after decades of mismanagement. The local currency has lost more than 95% of its value since Aug. 2019, the minimum wage has effectively plummeted from $450 to $17 a month, pensions are virtually worthless, Lebanon’s triple-digit inflation rate is expected to be second only to Sudan this year, and bank account balances are just numbers on paper.
“Not everyone believes that the banks are bankrupt, but the reality is that they are,” said Ray Hindi, CEO of a Zurich-based management firm dedicated to digital assets.
“The situation hasn’t really changed since 2019. Banks limited withdrawals, and those deposits became IOUs. You could have taken out your money with a 15% haircut, then 35%, and today, we’re at 85%,” continued Hindi, who was born and raised in Lebanon before leaving at the age of 19.
“Still, people look at their bank statements and believe that they’re going to be made whole at some point,” he said.
Despite losing nearly all of their savings and pension, Gebrael’s parents – both of whom are career government employees – are holding out hope that the existing financial system will rightsize at some point. In the meantime, Gebrael is covering the difference.
Others have lost faith in the monetary system altogether. Enter cryptocurrency.
CNBC spoke with multiple locals, many of whom consider cryptocurrencies a lifeline for survival. Some are mining for digital tokens as their sole source of income while they hunt for a job. Others arrange clandestine meetings via Telegram to swap the stablecoin tether for U.S. dollars in order to buy groceries. Although the form that crypto adoption takes varies depending upon the person and the circumstances, nearly all of these locals craved a connection to money that actually makes sense.
“Bitcoin has really given us hope,” Gebrael said. “I was born in my village, I’ve lived here my whole life, and bitcoin has helped me to stay here.”
Bettmann | Lebanon League of Progress | Getty Images
Between the end of the second World War and the start of Lebanon’s civil war in 1975, Beirut was in its golden age, earning it the title of “the Paris of the Middle East.” The world’s elite flocked to the Lebanese capital, which boasted a sizable Francophone population, Mediterranean seaside cafes, and a banking sector known for its resilience and emphasis on secrecy.
Even after the brutal 15-year civil war ended in 1990, Lebanon competed with offshore banking jurisdictions such as Switzerland and the Cayman Islands as an ideal destination for the rich to park their cash. Lebanese banks offered both a certain degree of anonymity and interest rates ranging from highs of 15% to 31% on U.S. dollars, according to one estimate shared by Dan Azzi, an economist and former CEO of the Lebanese subsidiary of Standard Chartered Bank. In return, Lebanon drew in the foreign currencies that it so desperately needed to re-stock its coffers after the civil war.
There were strings attached. Some banks, for example, had a lock-up window of three years and steep minimum balance requirements. But for a while, the system worked pretty well for everyone involved. The banks got an influx of cash, depositors saw their balances swiftly grow, and the government went on an undisciplined spending spree with the money it borrowed from the banks. The mirage of easy money was further reinforced by the government putting some of that borrowed cash towardmaintaining a fixed exchange rate for deposit inflows at an overvalued peg.
Tourism and international aid, plus foreign direct investment from oil-rich Gulf states, also went a long way toward shoring up the balance sheet of the central bank, Banque du Liban. The country’s brain drain and the subsequent boom in remittance payments sent home by the Lebanese diaspora injected dollars as well.
World Bank data shows remittances as a percentage of gross domestic product peaked at more than 26% in 2004, though it stayed high through the 2008 global financial crisis. Those payments, however, began to slow through the 2010s amid unrest throughout the region, and the growing prominence of Hezbollah – an Iranian-backed, Shiite political party and militant group – in Lebanon alienated some of the country’s biggest donors.
To try to stave off a total economic meltdown, in 2016, central bank chief Riad Salameh, an ex-Merrill Lynch banker who had been on the job since the early 1990s, decided to dial up banking incentives. People willing to deposit U.S. dollarsearned astronomical interest on their money, which proved especially compelling at a time when returns elsewhere in the world were relatively underwhelming. El Chamaa tells CNBC that those who deposited U.S. dollars and then converted those dollars to Lebanese lira earned the highest interest.
The era of easy money fell off a cliff in October 2019, when the government proposed a flurry of taxation on everything from gas, to tobacco, to WhatsApp calls. People took to the streets in what became known as the October 17 Revolution.
As the masses revolted, the government defaulted on its sovereign debt for the first time ever in early 2020, just as the Covid pandemic took hold around the world. Making a terrible situation worse, in Aug. 2020, an explosion of a stockpile of ammonium nitrate stored at the port in Beirut – blamed on gross government negligence – killed more than 200 people and cost the city billions of dollars in damages.
Anti-government protesters take part in a demonstration against the political elites and the government, in Beirut, Lebanon, on August 8, 2020 after the massive explosion at the Port of Beirut.
STR | NurPhoto via Getty Images
The banks, spooked by all the chaos, first limited withdrawals and then shut their doors entirely as much of the world descended into lockdown. Hyperinflation took root. The local currency, which had a peg of 1,500 Lebanese pounds to $1 for 25 years, began to rapidly depreciate. The street rate is now around 40,000 pounds to $1.
“You need a backpack to go for lunch with a group of people,” explained Hindi.
After re-opening, the banks refused to keep up with this extreme depreciation, and offered much lower exchange rates for U.S. dollars than they were worth on the open market. So money in the bank was suddenly worth much less.
Azzi dubbed this new form of money “lollars,” referring to U.S. dollars deposited into the Lebanese banking system before 2019. Today, withdrawals of lollars are capped, and each lollar is paid out at a rate worth about 15% of its actual value, according to estimates from multiple locals and experts living across Lebanon.
Meanwhile, banks still offer the full market-rate exchange rate for U.S. dollars deposited after 2019. These are now known colloquially as “fresh dollars.”
For many Lebanese, this was the point at which money just stopped making sense.
“I send actual dollars from my dollar account in Switzerland to my dad’s Lebanese account,” Hindi told CNBC. “They count as fresh dollars because it came from abroad, but of course, my dad is running counterparty risk with the bank.”
Mohamad El Chamaa, a 27-year-old Beirut-based journalist at L’Orient Today tells CNBC that when the bank began instituting these restrictions, he had $3,000 in his savings account from odd jobs he did in grad school.
“One of my life’s regrets was not withdrawing my money in full before the crisis hit,” said El Chamaa, who is studying for a Masters in Urban Planning at the American University of Beirut. “I could see the writing on the wall, because the bank started charging me a small percentage for every dollar withdrawal I made a month before the crisis hit, which I thought was kind of odd.”
El Chamaa says that he has since grown accustomed to withdrawing money from his bank account at a “bad rate” of 10% to 15% of its original worth, but “there is no way in hell” he would ever deposit cash in a Lebanese bank ever again. Instead, he keeps what remains of his life savings in cash and just uses his bank account to pay for his iCloud service and music streaming account.
Currency exchange dealer in Lebanon shows a U.S. dollar and Lebanese lira as the value of the country’s currency against the USD continues to plunge.
Houssam Shbaro | Anadolu Agency | Getty Images
Access to his account is spotty. The banks closed again in September, and there are daily nationwide power cuts, which translate to limited ATM access.
“It gets worse over time, but the fundamentals have been bad since 2019. They haven’t changed that much,” said Hindi.
The World Bank says Lebanon’s economic and financial crisis is among the worst it’s seen anywhere on the planet since the 1850s. The United Nations estimates that 78% of the Lebanese population has now fallen below the poverty line.
Goldman Sachs analysts estimate losses at the local banks are around $65 billion to $70 billion – a figure that is four times the country’s entire GDP. Fitch projects inflation rising to 178% this year – worse than in both Venezuela and Zimbabwe – and there are conflicting messages from the government’s top brass as to whether the country is officially bankrupt.
The International Monetary Fund is in talks with Lebanon to put a big bandaid over the whole mess. The global lender is considering extending a $3 billion lifeline – with a lot of conditions attached. Meanwhile, there is a power vacuum as Parliament keeps trying and failing to elect a president.
Demonstrator looks on as Lebanese policemen stand guard outside the Central Bank in Dec. 2018.
A little over two years ago, Ahmad Abu Daher and his friend began mining ether with three machines running on hydroelectric power in Zaarouriyeh, a town 30 miles south of Beirut in the Chouf Mountains.
At the time, ethereum — the blockchain underpinning the ether token — operated on a proof-of-work model, in which miners around the world would run high-powered computers that crunched math equations in order to validate transactions and simultaneously create new tokens. This is how the bitcoin network is still secured today.
The process requires expensive equipment, some technical know-how, and a lot of electricity. Because miners at scale compete in a low-margin industry, where their only variable cost is energy, they are driven to migrate to the world’s cheapest sources of power.
Abu Daher taps into a hydropower project which harnesses electricity from the 90-mile Litani River that cuts across southern Lebanon. He says he is getting 20 hours a day of electricity at old pre-inflationary rates.
“So basically, we are paying very cheap electricity, and we are getting fresh dollars through mining,” continued Abu Daher.
Ahmad Abu Daher and his friend began mining ether with three machines running on hydroelectric power in Zaarouriyeh, a town 30 miles south of Beirut in the Chouf Mountains. Abu Daher has since scaled his business to thousands of machines spread across Lebanon.
Ahmad Abu Daher
When 22-year-old Abu Daher saw that his mining venture was profitable, he and his friend expanded the operation.
They built their own farm with rigs acquired at fire sale prices from miners in China and began re-selling and repairing mining equipment for others. They also started to host rigs for people living across Lebanon, who needed stable money but lacked the technical expertise, as well as the access to cheap and steady electricity — a highly coveted commodity in a country with crippling electricity blackouts. Abu Daher also has customers outside of Lebanon, in Syria, Turkey, France, and the United Kingdom.
It has been 26 months since they first set up shop, and business is thriving, according to Abu Daher. He says that he had profits of $20,000 in September — half from mining, half from selling machines and trading in crypto.
The government, facing electrical shortages, is trying to crack down.
In Jan., police raided a small crypto mining farm in the hydro-powered town of Jezzine, seizing and dismantling mining rigs in the process. Soon after, the Litani River Authority, which oversees the country’s hydroelectric sites, reportedly said that “energy intensive cryptomining” was “straining its resources and draining electricity.”
AntMiner L3++ miners running at one of Ahmad Abu Daher’s crypto farms in Mghayriyeh in the Chouf Mountains.
Ahmad Abu Daher
“We had some meetings with the police, and we don’t have any problems with them, because we are taking legal electricity, and we are not affecting the infrastructure,” he said.
Whereas Abu Daher says that he has set up a meter that officially tracks how much energy his machines have consumed, other miners have allegedly hitched their rigs to the grid illegally and are not paying for power.
“Basically, a lot of other persons are having some issues, because they are not paying for electricity, and they are affecting the infrastructure,” he said.
Rawad El Hajj, a 27-year-old with a marketing degree, found out about Abu Daher’s mining operation three years ago through his brother.
“We started because there is not enough work in Lebanon,” El Hajj said of his motivation to jump into mining.
El Hajj, who lives south of the capital in a city called Barja, began small, purchasing two miners to start.
“Then every month, we started to go bigger and bigger,” El Hajj told CNBC.
Rawad El Hajj, a 27-year-old with a marketing degree, tells CNBC that his 11 machines mine for litecoin and dogecoin.
Rawad El Hajj
Because of the distance to Abu Daher’s farms, El Hajj pays to outsource the work of hosting and maintaining the rigs. He tells CNBC that his 11 machines mine for litecoin and dogecoin, which collectively bring in the equivalent of about .02 bitcoin a month, or $426.
It’s a similar story for Salah Al Zaatare, an architect living 20 minutes south of El Hajj in the coastal city of Sidon. Al Zaatare tells CNBC that he began mining dogecoin and litecoin in March of this year to augment his income. He now has 10 machines that he keeps with Abu Daher. Al Zaatare’s machines are newer models so he pulls in more than El Hajj — about $8,500 a month.
Al Zaatare pulled all of his money out of the bank before the crisis hit in 2019, and he held onto that cash until deciding to invest his life savings into mining equipment last year.
“I got into it, because I think it will become a good investment for the future,” Al Zaatare told CNBC.
Official government data shows that just 3% of those earning a living in Lebanon are paid in a foreign currency such as the U.S. dollar, so mining offers a rare opportunity to get ahold of fresh dollars.
“If you can get the machine, and you get the power, you get the money,” said Nicholas Shafer, a University of Oxford academic studying Lebanon’s crypto mining industry.
Abu Daher, who graduated from the American University of Beirut six months ago, has also been experimenting with other ways to get more use out of crypto mining. As part of his year-end project at university, he designed a system to harness the heat from the miners as a means to keep homes and hospitals warm during the winter months.
But mining crypto tokens to earn a living is not for everybody.
Gebrael considered it, but ultimately, the cost of buying gear, plus paying for electricity, cooling, and maintenance seemed like a roundabout way of getting what he wanted.
“It’s easier to just buy bitcoin,” he said.
AntMiner L3++ miners running at one of Ahmad Abu Daher’s crypto farms in his village of Zaarouriyeh.
When Gebrael needs cash to pay for groceries and other basics, he first uses a service called FixedFloat to swap some of the bitcoin he has earned through his freelance work for tether (also known as USDT), a stablecoin that is pegged to the U.S. dollar. After that, he goes to one of two Telegram groups to arrange a trade of tether for U.S. dollars. While tether does not offer the same potential for appreciation as other cryptocurrencies, it represents something more important: a currency that Lebanese still trust.
Each week, Gebrael finds someone willing to make the swap, and they set up an in-person meeting. Because he is often making the trade with a stranger, Gebrael typically chooses public spaces, like a coffee shop, or the ground floor of a residential building.
“One time I was scared because it was at night and the person I contacted asked me to go up to their apartment,” Gebrael said of one hand-off. “I asked them to come meet me on the street, and it all went fine. I try to stay as safe as possible.”
These kinds of backchannels have become a critical lifeline to fresh dollars, which are vital in Lebanon’s mostly-cash economy.
“It’s easy here to get cash from crypto,” said El Hajj of his experience. “There’s a lot of guys that exchange USDT for cash.”
Exchanges over the Telegram group that Gebrael uses range from $30 to trades in the hundreds of thousands of dollars.
In addition to Telegram, a network of over-the-counter traders specialize in swapping several different types of fiat currencies for cryptocurrencies. The model bears resemblance to the centuries-old hawala system – which facilitates cross-border transactions via a sophisticated network of money exchangers and personal contacts.
Lebanese anti-government protesters seal an ATM with tape in Beirut during a rally against the banking system on November 11, 2019.
Patrick Baz | AFP | Getty Images
Abu Daher offers exchange services in tandem with his mining business, and charges a 1% commission fee to both of the parties participating in the trade.
“We started by selling and buying USDT because the amount of demand on USDT is very high,” said Abu Daher, who added that he was “shocked” at the flood of inbounds for his service.
Some people are tinkering with covering their daily expenses in tether directly to avoid either paying commissions to crypto exchangers — or having to go through the motions of setting up an informal trade with a stranger.
A man stands outside a currency exchange booth in the Lebanese capital on October 1, 2019.
Joseph Eid | AFP | Getty Images
Even though accepting crypto as a payment method is prohibited under Lebanese law,businesses are actively advertising that they accept crypto payments on Instagram and other social media platforms.
“The use of USDT is widespread. There’s a lot of coffee shops, restaurants, and electronics stores that accept USDT as a payment, so that’s convenient if I need to spend not in fiat, but from my bitcoin savings,” explained Gebrael. “The government has much bigger problems right now than to worry about some stores accepting cryptocurrency.”
Local businesses in the Chouf region have also begun to accept crypto payments amid the rise of mining farms, according to El Chamaa. In Sidon, the 26-year-old owner of a restaurant called Jawad Snack says that around 30% of his transactions are in crypto, according to written comments translated by Abu Daher and shared with CNBC via WhatsApp.
“It’s better for me to accept tether or U.S. dollars due to the huge inflation in the Lebanese lira,” continued the owner, who added that once he is paid in tether, he cashes it out to fiat through a trader in the black market. He says he typically uses Abu Daher for this, since he lives the closest.
Abu Daher uses tether to pay for imported machines, but he still has to cover a lot of his expenses in the Lebanese lira (electricity, internet fees, and rent), as well as in U.S. dollars (cooling systems and security systems).
Some hotels and tourism agencies accept tether, as does at least one auto mechanic living in Sidon.
Detailed administrative and political vector map of Lebanon.
Getty Images
Indeed, new research from blockchain data firm Chainalysis shows that Lebanon’s crypto transaction volume is up about 120%, year-over-year, and it ranks second only to Turkey in terms of the volume of cryptocurrency received among countries in the Middle East and North Africa. (Globally, it’s in 56th place in peer-to-peer trading volume.)
Access to a smartphone is critical, too. Although officialstatistics show that internet penetration in Lebanon is around 80%, the country’s debilitating power cuts disrupt internet service. But the country’s telecom networks operate their own power generators to keep running continuously.
“We are putting our money in our phones. That is the easiest way,” said Abu Daher.
A Lebanese woman stands next to her empty refrigerator in her apartment in the port city of Tripoli, north of Beirut, on June 17, 2020.
In 2017, Marcel Younes was working as a marketing manager with Pfizer in Beirut when he tried to get rich by getting into bitcoin.
A pharmacist by training, Younes soon strayed from tracking price charts and instead became engrossed by the economic theory underpinning digital currencies like bitcoin.
As he continued his studies, he noticed a lot of similarities between Lebanon, Venezuela, and Argentina.
“I panicked and withdrew all my money from the bank,” said Younes, who added that he emptied his account in mid-2019 — just a couple months before banks locked people out of their accounts. “I was paranoid thanks to bitcoin.”
Younes tells CNBC that he initially moved 15% of his money into bitcoin, and he kept the remaining balance in cash. Today, 70% of his cash is in bitcoin.
“I was actually telling everyone to do the same in my family, like, please try to withdraw some money, and don’t keep it in the bank,” said Younes.
“But no one really believes a pharmacist — a person who is not related to our banking system,” said Younes.
Graffiti reading “VIRUS” and “THIEF” covers the facade of a fortified local branch of the Bank of Beirut in the Lebanese capital on May 18, 2020.
Patrick Baz | AFP | Getty Images
Younes, who was born in Poland but moved to Lebanon with his family in 1998, tells CNBC that most of his family works in the banking system in Lebanon.
“They always believe that everything is fine with the banking system, so you get this confidence that everything is alright,” he said.
Within months, his family was wiped out.
His father-in-law, who is 75 years old and retired years ago, had safeguarded his entire net worth in the bank.
“My family, like every single family member in Lebanon, got really hurt by the whole devaluation and currency crisis,” said Younes.
A by-product of the spiraling currency has been the erosion of earning power.
“My aunt, for example, she’s a teacher. Right now, her salary is $50 per month. My father, who’s a doctor with over 30 years of experience, his salary is around $500 a month,” explained Younes. “It happened gradually, because every few months, we have a small devaluation, and it all culminated in a 95% devaluation of the Lebanese lira.”
Younes has since founded Bitcoin du Liban (a play on the name of Lebanon’s central bank, Banque du Liban), a group with a mission to help close the knowledge gap on bitcoin in Lebanon through in-person meetings, online tutorials, and chats via the organization’s Telegram group.
A man holding a smartphone shows a screen grab taken from a video of an armed depositor gesturing at employees of a local bank in Beirut after he stormed the branch and held employees and customers as hostages. The man, who entered the bank carrying a machine gun and gasoline, demanded to be handed over part of his deposited money, which amounts to $209,000.
Marwan Naamani | Picture Alliance | Getty Images
Multiple sources tell CNBC that people across the country are afraid to put their money in the banks or store it in cash at home because of the risk of theft. Alex Gladstein, chief strategy officer for the Human Rights Foundation, says these kinds of situations are one clear value proposition for bitcoin.
In bitcoin, one of the mantras is — “not your keys, not your coins” — meaning that rightful ownership of tokens comes through the custody of the passwords that enable the crypto to be moved out of the wallet.
“If you had your money in the bank in Lebanon, it’s all gone. Who knows how much of it you will ever see again. Meanwhile, bitcoin rises and falls in the global market, but if you self-custody your bitcoin, you always have it as an asset, and you can use it as you see fit and send it anywhere in the world,” explained Gladstein. “It has superpowers compared to fiat currency.”
There are a lot of ways to store crypto coins. Online exchanges like Coinbase, Binance, and PayPal will custody tokens for users. Abu Daher, for example, keeps 100% of his cash in online crypto wallets on Binance and KuCoin, as does Al Zaatare, who says that he saves his bitcoin on Binance.
More tech-savvy users sometimes cut out the middleman and hold their crypto cash on personally owned hardware wallets. Gebrael, for example, prefers the autonomy and security that he derives from self-custody of his bitcoin. He tells CNBC that he keeps all of his bitcoin in cold storage on a thumb drive-sized device called a Trezor hardware wallet.
A person holds a cryptocurrency hardware wallet.
Geoffroy Van Der Hasselt | AFP | Getty Images
Beyond the added security of holding his own keys and disconnecting his wallet from the internet, Gebrael says the appeal of cold storage has a lot to do with the fact that he doesn’t have to connect his personal identity to his bitcoin. He added that the anonymity offered by self-custody helps protect him from being caught in the crosshairs of government-issued sanctions. Gebrael cited the example of the Canadian government blacklisting all crypto exchange wallets connected to the truckers participating in the ‘Freedom Convoy’ protests.
Gebrael says he also doesn’t like the user experience of centralized digital asset exchanges like Binance and Coinbase “with all their flashy charts.”
“It’s like one huge casino, and they want you to gamble your money,” said Gebrael.
Lebanon has six bitcoin ATMs — one in Aamchit and five in Beirut, according to metrics offered by coinatmradar.com. But those who spoke with CNBC for this story say that the optimal on-ramps to accessing bitcoin are either earning it (through mining or paid work), or buying it with tether.
A worker uses a mobile phone torchlight to illuminate his cutting space at the fish market, where portable emergency lighting runs due to a power cut, in Beirut, Lebanon, on Wednesday, Sept. 8, 2021.
Francesca Volpi | Bloomberg | Getty Images
When asked how reliable it is to safeguard wealth in an inherently volatile asset like bitcoin — which is down more than 70% in the last year — Younes says that “it’s a matter of perception.”
“If you go back to two, three years ago, it was $3,500,” said Younes, who added that he isn’t really concerned about the price of bitcoin.
When Younes first bought bitcoin, it was trading at about $20,000, so as of today, he tells CNBC that he hasn’t made any money. But investing his cash into the world’s largest cryptocurrency also has to do with the fact that he wants to bet on a new monetary system.
“Bitcoin offers a system that is uncorruptible; a system that is basically permissionless and censorship-resistant,” he said. “No one can really devalue bitcoin due to its monetary policy, which is 21 million bitcoin.”
Ultimately, money is a human belief system. For some in Lebanon, it has been a lifeline, for others, it’s a passing fad.
El Chamaa hasn’t turned to crypto, and he stands by the decision, even after spending time reporting on the ground at Abu Daher’s crypto mines.
“If you look at what bitcoin and ethereum are worth today, I mean, it’s worth a fraction of what it was a year ago. So I’m kind of glad I didn’t get into it,” said El Chamaa.
“Warren Buffett is basically saying that it doesn’t have an intrinsic value and just passing it on to the next person and helping to make a profit off of that doesn’t make any sense. So I’m a bit skeptical,” he said.
