NAACP files intent to sue Elon Musk's xAI company over supercomputer air pollution
MEMPHIS, Tenn. — The NAACP filed an intent to sue Elon Musk's artificial intelligence company xAI on Tuesday over concerns about air pollution generated by a supercomputer near predominantly Black communities in Memphis.
The xAI data center began operating last year, powered by pollution-emitting gas turbines, without first applying for a permit. Officials have said an exemption allowed them to operate for up to 364 days without a permit, but Southern Environmental Law Center attorney Patrick Anderson said at a news conference that there is no such exemption for turbines — and that regardless, it has now been more than 364 days.
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CNBC
19 minutes ago
- CNBC
Musk's xAI on track to raise $5 billion in fresh debt, following modest demand
Elon Musk's xAI is on track to close on a $5 billion debt raise led by Morgan Stanley, despite tepid investor demand, according to two people familiar with the matter. The $5 billion debt sale, which includes a floating-rate term loan, a fixed-rate loan and secured bonds, will be allocated to investors on Wednesday, the two people said, asking not to be identified because the deal is private. xAI did not immediately respond to a request for comment while Morgan Stanley declined. The xAI offering, which was reported on June 2 as Musk and U.S. President Donald Trump traded barbs over social media, did not receive overwhelming interest from high-yield and leveraged loan investors, said five people briefed on the deal. The floating-rate loan will be offered with an interest rate of 700 basis points over the Secured Overnight Financing Rate, a benchmark rate used to price bond deals, while the fixed-rate loan and secured notes will pay a yield of roughly 12%, the two people said. The average yield-to-maturity on high-yield bonds closed Monday at 7.6%, according to the ICE BofA High Yield Index .MERH0A0. Musk's AI company has to pay significantly more since xAI and its debt are not yet rated, giving investors little visibility into the company's finances and higher risk. Three bond investors who were offered the debt told Reuters they declined to invest. One of these investors noted that xAI has not yet turned a profit and the debt is not rated. They were especially reticent given Musk's track record when he financed his $44 billion acquisition of social media giant X, known at the time as Twitter, in 2022. The banks that loaned him $13 billion to close the deal were forced to hold that debt on their balance sheets for two years because they could not offload it. While the debt sold in full and on time, it received modest demand from investors, all five people said. Investors submitted orders for roughly 1.5 times the amount of debt available, according to the first two people briefed on the deal. Most similar junk bond deals have typically attracted orders for 2.5 to 3 times the loans and bonds being offered, the people said. Unlike Musk's debt deal when he acquired Twitter, Morgan Stanley did not guarantee how much it would sell or commit its own capital to the deal, in what is called a "best efforts" transaction, according to one person familiar with the terms. In the Twitter acquisition, the banks ended up making money on the debt, selling it with little-to-no discount months after Trump won the White House and Musk's influence in Washington grew. Apart from selling debt, xAI has also been in talks to raise about $20 billion in equity, valuing the company at more than $120 billion, with some investors placing valuations as high as $200 billion, Reuters reported last week.
CNN
37 minutes ago
- CNN
Senate passes first-of-its-kind cryptocurrency legislation
The Senate passed first-of-its-kind bipartisan cryptocurrency legislation, called the GENIUS Act, after months of negotiations and weeks of back-and-forth between Democratic and Republican backers. The final tally was 68-30, with 18 Democrats voting yes, and two Republicans voting no. The bill now moves to the House for consideration. House Majority Whip Tom Emmer has called for the chamber's Financial Services Committee to advance stablecoin legislation by the end of July. The GENIUS Act aims to regulate stablecoin, a specific type of cryptocurrency that is tied to the US dollar. Despite bipartisan senators working on this bill for months, and general agreement across the Capitol that stablecoin regulation is necessary, the legislation has become a flashpoint for Democratic concerns with President Donald Trump's own cryptocurrency dealings. Sen. Elizabeth Warren, the top Democrat on the Senate Banking Committee, has consistently warned that the bill does not place sufficient guardrails on stablecoin, and alleged that the GENIUS Act would 'supercharge' corruption. Democratic Sen. Chris Murphy of Connecticut has agreed that the bill needs stricter ethics guidelines, telling CNN's Dana Bash previously, 'If Congress passes a bill in the next few weeks that exempts the president of the United States from the ethics requirements around the issuance of cryptocurrency, then, yes, we will have no one to blame but ourselves for this, at least this, specific kind of corruption.' However, GOP Sen. Bill Hagerty, one of the lead co-sponsors of the bill, has insisted that 'this legislation is agnostic as to company, it's agnostic as to person.' 'This is simply about putting the United States of America on the best digital payments path that it possibly could be on,' the Tennessee Republican told reporters at the Capitol in May. 'This is about a payments currency, and it's about consumer protection, and it's about dollar dominance and Treasury dominance – that's all it's about. And there are a lot of superfluous questions going around but I think we've done a good job of answering those.' The Senate originally failed to advance the package after Democrats withheld their support due to concerns over Trump's cryptocurrency deals. Further bipartisan negotiations resulted in a new amendment draft that garnered enough support among Democrats to move the package forward.
Forbes
39 minutes ago
- Forbes
The Y Combinator Question And Is Silicon Valley's Kingmaker Playing A Different Game In The AI Era?
Sign with logos for Google and the Google owned video streaming service YouTube at the Googleplex, ... More the Silicon Valley headquarters of search engine and technology company Google Inc in Mountain View, California, April 14, 2018. (Photo by Smith Collection/Gado/Getty Images) The YC demo day numbers present a fascinating puzzle. Y Combinator's first ever Spring 2025 batch at their new HQ showcased 141 startups with an average weekly revenue growth of 12%, marking another impressive milestone for the accelerator that gave the world Airbnb, Stripe, and Dropbox. More than 18000 startups applied, and at the 0.8% accept rate, the prestige and hype seem to be at the all time high .Yet these metrics show a more intriguing question that has venture capitalists and industry observers scratching their heads. According to a recent debate on LinkedIn, since 2018 and fundamental changes the rules of artificial intelligence, thirty-seven companies have achieved unicorn status in the generative AI space. The curious fact? Zero went through Y Combinator. Some investors are debating the value of the YC badge premium, reflected in the valuation and its multiple. At first glance, this seems like a damning indictment. YC invests in approximately five hundred startups annually, with nearly ninety percent of recent cohorts being GenAI companies. Yet their unicorn count in this space remains conspicuously absent. But what if this apparent failure actually reveals something more sophisticated about YC's long-term strategy? The most immediate explanation lies in the fundamental economics of the AI revolution. Infrastructure plays in generative AI require massive capital outlays that dwarf traditional software startups. When foundation model development demands one hundred million dollars or more in computational resources, YC's standard investment amounts become challenging to scale to unicorn status through traditional pathways. OpenAI's billion-dollar funding rounds and Anthropic's multi-billion dollar war chest have created an entirely new category of competition. But this capital intensity might actually validate YC's approach rather than undermine it. While others chase the expensive infrastructure plays, YC may be positioning itself for the inevitable wave of application-layer innovations that will follow. History suggests that the most sustainable value creation often occurs not in the foundational technologies themselves, but in the creative applications built on top of them. The internet's biggest winners weren't the infrastructure providers, but companies like Amazon and Google that leveraged existing infrastructure in novel ways. YC's apparent focus on AI application companies might reflect a sophisticated understanding of technology adoption cycles. The current GenAI unicorns are primarily infrastructure and foundation model companies—impressive technical achievements, but potentially vulnerable to commoditization as the technology matures. The Spring 2025 batch revealed interesting patterns: companies building "Cursor for X" applications, vertical AI solutions for specific industries, and novel consumer AI experiences. While these may seem less ambitious than training new foundation models, they could represent the real long-term value creation opportunities in AI. Consider that Microsoft's massive investment in OpenAI has generated more value through integration with existing products like Office and Azure than OpenAI has captured independently. The application layer may prove to be where the most durable competitive advantages emerge. YC's investment timing might be more strategic than it appears. The accelerator is known for entering markets before they become obviously attractive to larger investors. Their absence from the current crop of GenAI unicorns could signal that they view the current wave as overvalued infrastructure plays rather than sustainable business models. The companies achieving unicorn status in GenAI today are doing so primarily on potential rather than proven business fundamentals. Many face uncertain unit economics, regulatory challenges, and intense competition from well-funded incumbents. YC's focus on companies with demonstrated revenue growth and clear paths to profitability might prove prescient as the market matures. The accelerator's emphasis on weekly growth metrics, while sometimes criticized as short-term thinking, could actually provide better risk-adjusted returns than the massive bets being placed on unproven AI infrastructure companies. Perhaps most intriguingly, YC's approach might reflect a belief in AI democratization rather than concentration. While current GenAI unicorns represent centralized, capital-intensive approaches to AI, YC's portfolio companies seem to be building tools that make AI accessible to smaller businesses and individual creators. This democratization thesis aligns with YC's historical pattern of betting on technologies that empower individuals and small businesses rather than reinforcing existing power structures. The real AI revolution might not be in building bigger models, but in making AI capabilities accessible to everyone. The rise of companies building AI development tools, specialized vertical applications, and consumer-focused AI experiences suggests YC might be positioning for a future where AI capability is distributed rather than concentrated in a few large foundation model providers. YC's absence from current GenAI unicorns might reflect a longer investment horizon than the market currently appreciates. The accelerator has historically succeeded by identifying sustainable business models rather than chasing technological trends. Their current AI investments might be targeting the second or third wave of AI innovation rather than the first. The most successful technology investors often appear to be "missing out" during peak hype cycles, only to emerge with superior returns as markets mature and fundamentals matter more than speculation. YC's cautious approach to infrastructure-heavy AI plays might prove to be shrewd risk management rather than strategic blindness. Furthermore, the three-month accelerator program might be perfectly suited for AI application companies that can iterate quickly and validate market demand, even if it's inadequate for companies requiring years of research and development. While YC hasn't produced GenAI unicorns, their portfolio companies are generating impressive revenue growth and solving real customer problems. The Spring 2025 batch's 12% weekly growth rate suggests that practical AI applications might offer more predictable returns than moonshot infrastructure investments. The accelerator's focus on revenue-generating AI companies, rather than pure research plays, might reflect a sophisticated understanding of what creates lasting value in technology markets. Companies that can demonstrate clear customer demand and sustainable unit economics often outperform those built on technological prowess alone. This approach also provides more diversified risk exposure. Rather than making massive bets on a few infrastructure companies that could be disrupted by new research breakthroughs, YC is building a portfolio of application companies that can adapt to changing technological foundations. The absence of YC companies among current GenAI unicorns raises broader questions about how innovation emerges and scales in different technology cycles. Perhaps the current wave of GenAI unicorns represents an anomaly rather than the new normal—companies that achieved massive valuations based on technical capability during a period of abundant capital and speculative enthusiasm. As the market matures and focuses more on sustainable business models, YC's emphasis on practical applications and proven revenue generation might prove to be the winning strategy. The real test won't be who achieved unicorn status first, but who builds lasting, profitable businesses that create genuine value for customers. Ultimately, the success of YC's AI strategy will be measured not by participation in the current unicorn race, but by the long-term performance of their portfolio companies. If the current GenAI unicorns prove to be overvalued infrastructure plays with questionable business models, YC's focus on practical applications could generate superior returns. The Spring 2025 batch's strong revenue growth metrics suggest that YC's AI companies are building real businesses with paying customers rather than pursuing valuation-driven strategies - despite the fact that 70% applied with $0 revenue, and nearly half had only an idea. This focus on fundamentals might seem unexciting compared to billion-dollar foundation model funding rounds, but it could prove to be the more sustainable approach. The accelerator's track record suggests they excel at identifying business models that can scale efficiently rather than technologies that generate headlines. Their current AI portfolio might be optimized for long-term value creation rather than short-term valuation maximization. YC's approach might reflect strategic patience rather than strategic confusion. The accelerator has consistently succeeded by entering markets at optimal times rather than being first movers. Their absence from the current GenAI unicorn wave could indicate they're waiting for better entry points or more attractive business models to emerge. The history of technology adoption suggests that the most valuable companies often emerge in the second or third waves of innovation, after the initial infrastructure has been built and market needs become clearer. YC's current AI investments might be positioning for this later wave rather than trying to compete with well-funded infrastructure plays. This patience could prove particularly valuable if the current GenAI market experiences a correction or consolidation. Companies with strong fundamentals and efficient capital structures might be better positioned to survive market downturns than highly valued infrastructure plays with uncertain business models. Whether YC's AI strategy proves brilliant or misguided remains to be seen. The accelerator's absence from current GenAI unicorns could represent either a missed opportunity or sophisticated market timing. The answer will depend on how the AI market evolves and whether sustainable business models emerge from the current wave of infrastructure investment. What's clear is that YC continues to attract strong founders and generate impressive portfolio company metrics. The Spring 2025 batch's performance suggests that their approach is creating real value, even if it's not generating the headline-grabbing valuations of foundation model companies. The ultimate test will be whether YC's focus on practical AI applications and sustainable business models generates better risk-adjusted returns than the massive infrastructure bets being made elsewhere in the market. Only time will tell if Silicon Valley's kingmaker is missing the AI revolution or positioning for its next phase. As the AI landscape continues to evolve, YC's strategy might prove to be exactly what the market needs: a focus on building real businesses that solve actual problems, rather than chasing technological breakthroughs with uncertain commercial applications. The proof, as they say, will be in the pudding.
