>> from the heart of where innovation, money, and power collide, in silicon valley and beyond, this is "bloomberg technology" with emily chang. emily: the company warns lower trading activity could be ahead.

we will dip into the first earnings report as a public company. and the engineer widely recognized as the inventor of etherium joins us for an extended interview about it theory him versus bitcoin. we will get to that and more, but first let's get a look at the markets. >> it was a risk off session in the market. it all had to do with the fed starting to signal the tapering they were expecting to happen could come as soon as december. you can see it behind me, the money didn't even go into big tech which serves as a haven, it was complete risk off today. i want to show you what that means for chinese stocks.

you talk about u.s. tech, chinese tech, a lot of the sentiment is that people buy the dips. you can see in the right side of the screen, you did see buying the debt. some money going into china. you can see the regulatory scrutiny. those funds are just not going, it looks like they lost some of those bidders. when i talk about risk off day, there is one sector doing fairly well in trading. you had the electric vehicle etf green for most of the session instruct contact -- contrast to the rest of the sector. the fed tapering with spooking all investors. >> robinhood debut earnings, the main takeaway is the crypto surge. the stock down 5.6% after hours.

with the market is looking at is the guidance for the coming quarter. the company says that seasonal headwinds result in lower revenue for the third quarter. something they say is industrywide. the world's 12th largest company, the biggest u.s. chipmaker is up. it fell initially. topline growth is 68%. not as good as the prior quarter. we know that nvidia said it was constrained by the global supply shortage in chips. saying it is proved more problematic than they thought to get the deal across the line, but it is still confident that it will get done. other than that, strength in gaming, that is what has caused the big orange line outperform the s&p 500. a real outperformance in nvidia and that is convincing the

market that the graphics chips, the ai based data center gaming is the way to go. emily: we're going to dig further into those nvidia results. data centers, gaming, automotive. looming over the results, the question of whether it's going to buy arm. on to bring in my guest to start with the topline strong numbers, strong forecast. what are your headline takeaways? >> nvidia clearly is playing a role in cloud computing and ai gaming. the challenge for investors at this point is the multiple -- the expected earnings growth for the next three years is only around 23% to 25%. it is looking a little expensive as a stock at this point.

i also face some headwinds. investors are counting on the arm deal going through created there are a lot of reasons to question the likelihood starting with the fact that arm provides a blueprint for so many chips around the economy around the world. particularly, chips blueprints that are being used by a lot of nvidia customers like google, microsoft, facebook and apple. as nvidia gets control of arm, a lot of those companies are going to start to worry that they may not get those blueprints in a timely fashion and it might curtail competition particularly in high-end chips where some of their customers are developing competing chips for the space in ai and other advanced applications. that's a lot of expectation built into nvidia that should make investors cautious. plus, you have cryptocurrency mining where there has been a big change in the technology of it theory him validation. -- etherium validation.

emily: what should or could we expect nvidia's role in crypto mining or the lack thereof to be? >> the challenge in crypto mining is that it has been very expensive. the energy requirements of small countries. that has to change in order for crypto to continue to be used and used more often or more frequent transactions. we know the technology has to improve. the changes ethereum is making is going to lessen the requirement for minors. -- miners. that could be one reason why the expected growth in earnings is moving downward from what they just recently experienced to the 23% to 25% range.

if you look at the multiple on the stock, that should give investors pause about continuing to own it. emily: arm is taking a lot from the outside. it is taking longer than they expected. not everyone else in the industry is on board with this. do you think that is problematic? >> i really do. google, microsoft, facebook has to be putting up a big fight putting up strong arguments that you don't want one company, one producer of chips to control the development of blueprints that so many other companies use to develop their own chips. it is really very anticompetitive if a company like nvidia were to gain control of that. you can never tell how these evaluations will go. when you have some any countries that need to get on board, it seems like it's going to be

challenging for this deal to get through. emily: if it doesn't happen, how bad is that for nvidia? >> it's hard to tell how much of that is in the current stock price. i think it would take the shares down. emily: what are your biggest concerns for the current quarter , we are still talking about the chip shortage, it could be to the end of the year for some kind of chips or to next year for other kinds of chips, that's what i'm hearing. >> the chip shortage is going to run well into 2022. that is going to affect the

entire industry. on the one hand, that constrains how much they can grow, how much they can sell based on capacity. on the other hand, it stretches out this time when chip growth and profit growth will run ahead of normal. the semi conductors have flattened out over the last few months, but this creates good opportunities. we like qualcomm, broadcom, there are a lot of places where investors can see that there are attractive valuations and that shortage is going to stretch the end of 2022 and that creates a longer runway for earnings growth to be running ahead of normal. i think the cycle is went to -- i think it is going to elongate because of the shortage is. emily: thank you so much. coming up, we're going to stick with earnings and look at robinhood's first quarter report since going public. we will break down the numbers next. later, we will hear from my fascinating interview with the ethereum creator. that's on the latest edition of bloomberg studio 1.0. could we soon see the end of

ethereum mining? >> there would not be anymore mining. the energy consumption would go down by a factor of more than 1000. it would go from being a big problem did not a problem at all. ♪

emily: paypal will stop charging late fees allowing customers to split purchases into small payments. it has exploded in the united states especially under -- among younger customers. the service has been used to make $3.5 billion in purchases. robinhood made more money from crypto trading in the second quarter than it did from options and equities trading combined. the brokerage bringing in $233 million in crypto trading revenue. let's bring in sonali basak. let's start with the crypto numbers. the ceo told us crypto would become a bigger part of the business, but this big?

>> it happened quickly and for it to surpass equities in this fashion so quickly, it was really eye-popping for the company in a single quarter. on the flipside, that decline in the money they were making from equities particularly in what they call transaction-based revenue, otherwise known as the money they make for payment for order flow is another concerning part of that equation. as they shipped more toward crypto, what happens to their user base? how many first-time users become regular daytrading stock traders versus members of the crypto community demanding products like wallets. emily: meantime, they warned about the current quarter. is this alarming, to be expected? >> they say it is seasonal, but it is concerning to investors.

how much lower does a go? what do they mean by seasonality? are they worried about other market activity? there's a lot of people in the market warning about a drawdown of as much as 20%. these warnings come from all over the place. does it mean that they can rebound strongly coming after it? these are all unanswered questions for robinhood. is this a longer shift toward their other products? options and crypto? these are unanswered questions and still concerning to see the drop off. emily: let's dig into payment for order flow. that's how they make the majority of their money. >> they typically make about 80% , a little bit under that. it is still a big part of their revenue as excited as most people are about the crypto trading. right now, there is not true

update on how that might change. we know that robinhood said they would consider other options if there was a real regulatory threat to that business. there has not been real movement on that front. until there is more certainty, that could be a headwind for them and pressure to diversify away from them. they did see a jump when it came to transaction-based revenues for options. the decline in equities trading is a big? . when it comes to payment for order flow, we have known that those numbers would be lower. does it state much lower? given that it is 80% of their revenue, do they have a plan to diversify meaningfully beyond that? emily: we will continue to follow the headlines as they roll out of the call. thank you so much for that update. meantime, tencent has warned investors of more curves on the tech sector.

it reported its slowest pace of quarterly revenue in years. it underscores the impact of beijing's crackdown especially on the industry which has been a major source of ad revenue. another area, the gaming business. a managing director spoke to us earlier about his outlook for tencent. >> tencent listed investment is about half in china internet and that has fallen by about 10% since the end of the quarter that they just reported. alongside that, they have about thousand enter capital investments, many of which are expected to be monetized by taking them public on exchanges such as in the u.s. clearly, the route to monetization the tencent is built up is going to be difficult if not completely blocked in the near term.

monetizing this extra assets, we put a conglomerate discount on them because if you went to sell these in other companies, the stock prices would crash. partly because the ability to directly monetize these is very difficult. what you are putting up there on the chart shows you the business is split between gaming, fintech, and cloud services and advertising. the social network services were especially disappointing which are the content services. those had tough comps and they are going to be increasing galatians on the types of content the chinese companies can provide to chinese consumers. emily: is there a good way in or world for someone to event -- invest in china at this point?

>> right now as far as we can see, there is too much overall uncertainty across the entire sector to confidently say we can bottom fish the stocks. we have seen multiple attempts at people trying to make a call. again, oftentimes because they are somewhat self-interested. the reality is that we are still seeing these regulations unfold and unlike regulation in the west where there will be long legal battles and rights to appeal, and china these regulations are likely to be enforced swiftly and harshly as you can see with the penalties imposed on alibaba and others to date. >> are you saying that chinese tech stocks are un-investable until we get more clarity? >> for many of the chinese tech stocks, you can probably put jd.com to one side because it is a traditional online retailer, but for many of the tech stocks, don't know the rules of the road they're going to have to follow.

to give investors certainty to understand what impact on their business will be. we also don't know the wider environment that these companies will be operating in. will they get approvals for games that they want to lunch in the market? this was something that if you go back to the chart from 2018, the stock shifted sideways for a year because they were unable to get approvals for new games. emily: that was richard kramer. coming up, we will get insight into what apple plans to release this fall. games for salesforce, software company has become so popular among hedge funds that 14 of them have more than 5% of their disclosed equity investment in the stock. compare that to their peers with an average of only 3%.

three hedge funds owning 5%, take a closer look at that. this is bloomberg. ♪

>> on this week's episode of power on, what you should expect from the new iphone and other device lunches happening later this year. it apple is planning four new iphones upgrading the existing screen sizes on the regular phones and the existing other screen sizes on the pro phones. the other upgrades will be -- this year, the biggest change

will be to the area at the top of the display. apple will be shrinking that. otherwise, the new iphones will focus on a faster processor, a speedier frame rate display on the pro phones as well as new camera features. for the pro phones, apple is planning a new higher-quality video format. that will make it much easier for video editors to get the most out of their footage recorded on an iphone. for consumers, apple is planning to new features. one is called cinematic video. it's basically portrait mode for video. that means when you take a video of an object, it will appear sharp at the forefront and glory at the background. that makes a cool effect and now, it will translate to video. the other new feature is called photographic style. that will use ai to improve the colors, highlights, shadows, and other elements using artificial

intelligence. apple is expecting another blockbuster sales time. the suppliers will build 90 million units. that means it is really expecting good feedback and strong sales. apple typically announces its new models in september and you can expect multiple lunches over the balance of 2021. what about the other devices? you should expect the first revamp to the air pod's. a new design and a new case that makes the new entry-level air pots similar to the airport pro which includes improved audio technology and shorter stems of a look smaller when sticking out of your ear. you can also expect a revamp i've had many with a larger display and similar bezels. there is also went to be new apple watches. they will be redesigned with flatter displays and faster

processors. lastly, what a lot of people are looking forward to our the first high-end macbook pro updates in several years including new processors, revamped design, and a charger system. emily: sign up for his weekly newsletter at bloomberg.com. t-mobile says over 40 million customer records were impacted in a cyberattack. some information came from past or perspective customers who had applied for credit. t-mobile is offering those affected two years of identity protection services. coming up, we talk about the growing space economy and a

renewed partnership with google. we will have that conversation about the great beyond next. this is bloomberg. ♪ (announcer) back pain hurts,

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>> welcome back to "bloomberg technology." i am emily chang in san francisco. ed ludlow has been listening in on the nvidia call. ed: they have acknowledged it is taking longer to work with regulators than they expected. they are still confident the deal will go ahead. they have registered complaints but look at the share price.

everything has rose. it initially felt when the numbers first hit. they're talking about fraud based demand and cloud. what was interesting was crypto chips do not expect that to be a meaningful contribution going forward. let's focus on the arms deal. the shares have done so well over the last 12 months, when the deal was first on the table, it was a cash deal worth $40 billion. because the stock has gone up so much, we are now at a more than $50 billion deal. you have some on wall street saying why spend that money for a little bit of incremental revenue? this is something you have to ask these guys going forward when we have those on the show. at the end of the day, investors have been pouring money into the stock. the blue and white line, the s&p 500 is just massive outperformance based on nvidia selling the virtues of their graphics checks. yes chips. they are really winning those

battles, taking market share from others like intel. >> absolute. thank you so much. this year has marked a turning point in the race to space. not only have -- not only have we seen billionaires propel what could have become paid passengers to space, planet operates the largest fleet of observational satellites. they announced their renewed partnership with google, shifting attention to the cloud. joining us to talk about the announcement and more, let's talk about this google partnership. what exactly does it mean? >> hysterically, we have been powering your maps. this will easily process our data at scale.

this will reap the benefits of our data and google's cloud computing. it is a win win win. we get to sell our dinner with their computer. >> there is so much competition in the satellite industry right now. that is the biggest shift underpinning this. it is about the transport and data sets that enable our economy to be smart and more efficient.

these data sets have huge value. the transportation data allows things like telemedicine and teleducation. efficient monitoring of fishing and stopping illegal deforestation. the enabling of smarter decisions and civil government and so on and so forth. it is really connected with the economy.

emily: you have been a partner of spacex. what is the timeline and the ark of how this will play out. >> we have been delighted with this. 80 something satellites. we actually enabled for lunches per year. this will produce better and better data sets. roughly the same cost.

increased data per dollar is going up of the past. that is 100 times the nearest competitor. emily: when i look at the night sky with my children, i see satellites before i see stars. a very different experience to what i had as a child. will: this is a concern. we should care about the night

sky. it is a human thing to look up and see the stars. there are things to be done. they are trying to do some things that darken this. suddenly, the astronomers are quite upset because every time there trying to take a long exposure with their telescopes, they have a street from the satellite across the field of view which is really upsetting them right now. as you say, for children that grow up right now, you want to see them being able to see the dark night sky. the satellites you are able to see after dusk and before dawn, they have a really dark side. we have been trying to ensure that those around the world can have a clean night sky without too many satellites.

>> news agencies, you have a relationship with the government of afghanistan, providing data for climate and peace negotiations. will that continue under the taliban? >> we provide a lot of data to different players around the world. we have been working with the government of afghanistan. we save lots of people's lives over the last year in afghanistan but this transition will not allow that particular effort to continue but we will and are providing data to a number of agencies like the u.n., ngo's, news media to shed light on what is going on. to assist in relief operation and the transportation of people out of the country right now. we have long-standing relations

with human rights organizations that subsequently -- we help the afghanistan government with a variety of things. we won't be working with the taliban but we will continue to work with the ngo's in and on the ground there. >> you are planning to go public this year. how is this going to accelerate the planet's mission? >> we are excited to be going public. planet is ready to go public. we have a scaled satellite fleet. this is the largest earth imaging fleet in human history.

we felt it was the right time to go public. we evaluated the different options. we decided this back process was a good one and we are announcing that we will go public. we did that just a few weeks ago. we have seen quite an elevation of interest in our data. that is the exit out of covid. what do you do if you want to measure your esg goals of your company? you have to measure things like supply chains. this google partnership, none of the sustainable parts is in supply chain management. this helps companies -- what do you do as a country if you're trying to do sustainability? you have to measure your mission. we hope to help the sustainability and transition.

emily: great to have you here, will marshall. coming up, more businesses beginning to require proof of vaccination. how is it working question mark i will speak with palmyra about a digital vaccine card,. this is bloomberg. ♪

emily: here in the u.s., the biden administration will start

offering booster shots on separate 20th two all vaccinated adults. this is a big expansion to a program devoted to those with weakened immune systems. the u.s. is expected to administer about 100 million seen boosters in the coming months. >> to end this pandemic, we have to protect the american people and we have to continue to do more and more to vaccinate the world. both are critical. we are already proving we can protect our own people here at home as we help others. emily: getting people vaccinated maybe one issue but proving it is another issue. restaurants in new york are requiring people to show proof of the covid vaccine. the question is how people will quickly verify that status. a digital vaccine card is being worked on. here to talk about how it all works is paul meyer. the biden administration, multiple states dismissive of the idea of a vaccine passport. was that the wrong call?

>> there has been a huge groundswell of momentum. california adopted the standard to make these digital smart health. walmart and cvs are already making them available. 150 million americans should be able to get access. emily: you're working with tech companies, walgreens, cvs, talk to us about what kind of progress you expect to make. how important do you think this will be?

>> i think it is very important because we are seeing venues of other countries requiring proof of vaccination. i don't think it will happen everywhere but we are seeing schools, employers, cars in san francisco requiring proof of vaccination. this becomes a scalable way. california made this technology available. you can download a digital copy of your vaccination record with

a qr code which you can then scan or upload and again, new york has done the same. it is real, many more states are following suit. emily: you announced a partnership with samsung to securely store their proof of vaccination. is apple next? >> ios 15 is coming in september. in a couple of weeks, apple will provide support. google already provided support through google pay. if you have a samsung lc phone, you can store this smartphone that's nation record. you can use our alternate health record platform to be able to access those smart health card and save them to your samsung pay wall.

emily: an important initiative. we will be watching how it rolls out. paul meyer, thank you so much. coming up, the engineer best known as the inventor of ethereum. will ethereum eclipse bitcoin and even facebook and twitter? we will find out. some of the attractions included in the service are the haunted mansion and big thunder mountain railroad. two favorites. this is bloomberg. ♪

emily: he is the engineer widely recognized as the inventor of

ethereum. he is my guest on the latest edition of bloomberg studio 1.0. we talked about the threat to legacy companies like facebook and twitter and if we could soon see the end of a theory him mining. take a listen as i ask for his thoughts on well-known crypto skeptics like jamie dimon and warren buffett and more. >> a lot of them have been wrong already. we expected at least some of them to be watching the cryptocurrency fail and go down to zero and not get anymore interest completed. even today, they have already been far more successful than any of them expected. i can see how people in traditional finance, at least some of them can be inclined to not see the value of auction based finance entirely.

emily: one of them is jack dorsey. jack dorsey recently announced square is creating a new business focused on decentralized financial services. based on bitcoin, using bitcoin. what have you learned about that -- about jack dorsey's plans? does sound like he is building something kind of like a theory him? >> i am skeptical about decentralized finance on top of bitcoin. the difference between bitcoin and ethereum is that on cerium, there is native functionality that allows you to essentially directly put it theory him -- ethereum best assets on this. then there are arbitrary conditions of any kind that can govern how those assets get released. bitcoin does not have that

functionality. jack is going to have to essentially create his own system that enforces those rules and then the bitcoin lawyers -- bitcoin will have to be owned by jack or the participants in the system. it looks similar but it all ends up being something with a much weaker trust model. this is the whole reason why ethereum started as an independent system in the first place. there are technical limits to your ability to graft new functionality onto a system that is not powerful enough to support that new functionality. emily: mark zuckerberg is also making big moves find the meta-verse. what do you make of them wading into this decentralized world? could they replicate some of the same problems we see in facebook and twitter today?

>> mark is clearly trying to figure out what the next stage after the internet is and actually get into it and created -- create it before the world goes in some different direction and facebook is left in the dust and becomes one of these previous generation old world companies. we have seen facebook try to get into the crypto space. in the end, libra did end up being possibly the wrong approach. the problem someone like facebook has is a lot of people miss trust them. i know they tried really hard to create something that is in consortium with all of these different industry participants. even that was not enough. there was a huge mistrust of a lot of them. with the meta-verse idea, the thing that happened during the

pandemic is that we very quickly switched from a world where the physical world was -- the internet was this new add-on where the internet is the center of people's experiences. we are spending most of our time in a virtual world and the question is what level of quality that virtual world has. >> theory him in five years and 10 years, where is it? -- ethereum in five years or 10 years, where is it? >> running the universe, hopefully we will see where it goes. >> people are placing their bets. what is your prediction for bitcoin? does it replace the dollar? does it exist in 50 years? a lot of investors are choosing to hold both bitcoin and ethereum or one and the other -- one or the other.

>> there are things that the dollar provides like price stability for example. bitcoin is not going to provide that. even in a theoretical world where the u.s. dollar collapses, even then, i think bitcoin will not be able to provide the level of stability that users and businesses expect to be able to set prices and -- in. at the same time, i think cryptocurrency could still have a very powerful and important draw along existing currencies. emily: you can catch much for -- much more of my fascinating conversation with the creator of ethereum. that doesn't for this edition of bloomberg technology. make sure to join us tomorrow.

i am emily chang, this is bloomberg. ♪

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