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Jack Dorsey, Bill Gates And At Least 75 Other Billionaires Donating To Pandemic Relief

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A small percentage of the world’s richest people have publicly disclosed financial gifts to help fight COVID-19. Others are using their money to help support their own companies.


As the coronavirus pandemic sweeps across the globe, billionaires are donating to the fight against it—with some giving more than others. Since mid-March, Forbes has been tracking how much this ultra-rich set has been donating to COVID-19 causes. While most of the world’s 2,095 billionaires have yet to give, or won’t disclose how much they’ve spent, at least 77 of them have reached into their wallets. Of those, 54 have disclosed at least part of their giving while another 23, such as Alibaba’s Joseph Tsai, gave unspecified amounts of cash or provided assistance in the form of medical supplies or equipment that Forbes was unable to value.

Of these billionaires, Jack Dorsey has emerged as the most generous giver so far, after announcing on April 7 that he was moving $1 billion of his Square stock—about a quarter of his $3.9 billion net worth—into an LLC to support COVID-19 relief efforts and other causes. It’s unclear how much of this $1 billion will go toward the coronavirus pandemic (so far he has given out about $5 million combined to four organizations), but even if it ends up being just 20% of his pledge, he will still have far outspent his peers. The second-largest pledge comes from Bill Gates and his wife Melinda, whose foundation has committed $255 million, much of it to be spent on vaccines, treatment and diagnostic development. Indian tech magnate Azim Premji comes in third, planning to give $132 million to humanitarian aid and health interventions to curb the spread of COVID-19.

Donald Trump, America’s first billionaire president, also makes Forbes’  roundup, following a $100,000 donation—one quarter of his salary—to the Department of Health and Human Services. The check represents 0.005% of his $2.1 billion net worth. 

One Oklahoma billionaire who has committed $10 million so far was critical of President Trump, not because of his paltry gift but because of his administration’s response thus far. “It’s unfortunate that private charity has to assume the role of primary safety net and even supply chain and logistics manager because of the failure of government to perform its function,” said George Kaiser.

Here are the billionaires who disclosed gifts, sorted by contribution amount and then measured by gift as percentage of their net worth. (It does not include the 30-plus billionaires, including Ralph Lauren and Mukesh Ambani, whose companies have given aid or who have promised to use personal funds to help their companies weather the storm.)

Billionaire Contributions To Pandemic Relief

Some of the figures above are pledges. Net worth and giving data was last updated April 27, 2020.

Table: Forbes  Get the dataCreated with Datawrapper

Hayley C. Cuccinello, Forbes Staff, Billionaires

Billionaires

Inside Kylie Jenner’s Web Of Lies—And Why She’s No Longer A Billionaire

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Earlier this year, Kylie Jenner sold half of her cosmetics company in one of the greatest celebrity cash outs of all time. But the deal’s fine print reveals that she has been inflating the size and success of her business. For years.

More than a decade into their fame, the Kardashian-Jenners tend to induce eye-rolls and sighs among jaded media consumers. But when it comes to their wealth, even critics of reality TV’s first family are intrigued; the Kardashian-Jenner machine—and the cash it generates—has been the subject of articles, podcasts, even books. But no one cares more about the topic than the family itself, which has spent years fighting Forbes for higher spots on our annual wealth and celebrity earnings lists.

So when the youngest of the clan, Kylie Jenner, sold 51% of her Kylie Cosmetics to beauty giant Coty in a deal valued at $1.2 billion this January, it was a watershed moment for the family. One of the greatest celebrity cashouts of all time, the transaction seemed to confirm what Kylie had been saying all along and what Forbes had declared in March 2019: that Kylie Jenner was, indeed, a billionaire—at least before the coronavirus.

When we visited Kylie Jenner in 2018, she claimed her cosmetics company was on track to sell more than $300 million in makeup that year. In reality? It only did $125 million. 

JAMEL TOPPIN FOR FORBES

“Kylie is a modern-day icon, with an incredible sense of the beauty consumer,” Coty chairman Peter Harf gushed when announcing the acquisition in November.

But in the deal’s fine print, a less flattering truth emerged. Filings released by publicly traded Coty over the past six months lay bare one of the family’s best-kept secrets: Kylie’s business is significantly smaller, and less profitable, than the family has spent years leading the cosmetics industry and media outlets, including Forbes, to believe.

Of course white lies, omissions and outright fabrications are to be expected from the family that perfected—then monetized—the concept of “famous for being famous.” But, similar to Donald Trump’s decades-long obsession with his net worth, the unusual lengths to which the Jenners have been willing to go—including inviting Forbes into their mansions and CPA’s offices, and even creating tax returns that were likely forged—reveals just how desperate some of the ultra-rich are to look even richer.

“It’s fair to say that everything the Kardashian-Jenner family does is oversized,” says Stephanie Wissink, an equity analyst covering consumer products at Jefferies. “To stay on-brand, it needs to be bigger than it is.”

Based on this new information—plus the impact of COVID-19 on beauty stocks and consumer spending—Forbes now thinks that Kylie Jenner, even after pocketing an estimated $340 million after tax from the sale, is not a billionaire.


As with other Kardashian ventures, Kylie’s business began as a way to cash in on a minor scandal. The youngest of the family, she spent more than a year denying tabloid speculation that she was using lip filler injections before eventually finally fessing up to it in May 2015. Far from embarrassed about being caught in a lie, she—and her shrewd mother, Kris—seized it as a marketing opportunity.

With $250,000 of her earnings from modeling, endorsements and Keeping Up With The Kardashians appearances, Kylie launched her first batch of 15,000 lip kits, consisting of a lip liner and matching lipstick, in November 2015. Thanks to clever Instagram marketing, the $29 kits were gone in less than a minute. “Before I even refreshed the page, everything was sold out,” she later told Forbes.

NEW YORK, NY – MAY 08: (L-R) Talent Manager, Jenner Communications, Kris Jenner, Model Kendall Jenner, Founder, Kylie Cosmetics Kylie Jenner, Founder, The Business of Fashion Imran Amed and Founder and CEO, KKW Kim Kardashian attends an intimate dinner hosted by The Business of Fashion to celebrate its latest special print edition ‘The Age of Influence’ at Peachy’s/Chinese Tuxedo on May 8, 2018 in New York City. (Photo by Dimitrios Kambouris/Getty Images for The Business of Fashion)

By the end of 2016, Kylie had dozens of new products and a reputation as a skyrocketing new entrant in the cosmetics industry. A few months after her sister Kim Kardashian West scored Forbes cover in July 2016, Jenner publicists began a campaign to “get a Forbes cover for Kylie.” Revenues were $400 million over the business’ first 18 months, they said, with a personal take-home of $250 million for Kylie. Pressed for proof, they opened up their books. During meetings at Kris Jenner’s palatial Hidden Hills, Calif. estate and the family accountant’s office nearby, Forbes was shown tax returns detailing $307 million in 2016 revenues and personal income of more than $110 million for Kylie that year. It would have been enough to put her at number two on the Celebrity 100 list, behind Taylor Swift, the accountant was quick to point out. But the documents, despite looking authentic and bearing Kylie Jenner’s signature, weren’t exactly convincing since the story they told, of ecommerce brand Kylie Cosmetics growing from nothing to $300 million in sales in a single year, was hard to believe.

After speaking with a handful of analysts and industry experts who also found the Jenners’ claims implausible, we settled on a more reasonable estimate for our 2017 Celebrity 100 list: $41 million in overall earnings for Kylie, good for the No. 59 spot. Kris was “so frustrated,” the Jenners’ PR flack shot back. “We’ve done so much.”

Two months later, a story appeared in WWD, a trade publication known as “the bible of fashion,” using the exact numbers the Jenners first tried to give Forbes. “There has been raging speculation about the size of her business, with guesstimates ranging from $50 million up to $300 million,” the story reads. “Well, here’s the bad news for more-established beauty players: Jenner’s surpassed the higher figure with ease. Kylie Cosmetics actually has done $420 million in retail sales—in just 18 months—Kris Jenner revealed…” It was the first time the Jenners publicly disclosed the size of the business, the story boasted—“and they provided WWD with documentation.”

That sky-high revenue number—repeated everywhere from People to CNBC and Fortune—took hold. By the summer of 2018, when Forbes set out to calculate Kylie’s net worth for our list of the richest self-made women, the industry’s opinion of Kylie’s business had shifted. Those huge revenues were “totally possible,” said one analyst, adding that she had heard similar numbers herself. Another suggested revenues were around $350 million. The estimates kept climbing. Revenues were $400 million, according to a Piper Jaffray research note in 2018. An Oppenheimer report projected sales would top $700 million by 2020.

Jenner on the August 31, 2018 issue of Forbes.  FORBES

The Jenners offered us their own number: 2017 revenues were up 7%, they said, to $330 million. “No other influencer has ever gotten to the volume or had the rabid fans and consistency that Kylie has had for the last two and a half years,” an executive at ecommerce platform Shopify, which manages Kylie’s online store, told Forbes at the time. Based on her rapid success—certified by industry sources plus those 2016 tax returns—Kylie appeared on the cover of Forbes magazine in July 2018, ranking 27th on our listing of the richest self-made women. At age 20, she was worth $900 million, we estimated, and would soon become the youngest self-made billionaire ever.

“Thank you for this article and the recognition,” Kylie Instagrammed. Kim Kardashian West tweeted her congratulations—twice. “I am SO proud,” Kris Jenner wrote, finally pleased.

The next month Kylie celebrated her 21st birthday at West Hollywood nightclub Delilah, in a Barbie-themed blowout complete with a pink ball pit, performances by Travis Scott and Dave Chappelle—and bartenders in black t-shirts with Kylie’s Forbes cover printed on them, her face plastered next to the words “America’s Women Billionaires.” By early the next year, she officially crossed the ten-digit threshold.


Any doubts that Kylie wasn’t a billionaire were seemingly erased in November 2019, when $8.6 billion (revenues) Coty announced it was snapping up 51% of Kylie Cosmetics for $600 million, effectively valuing the business at about $1.2 billion. The deal gave the struggling, 116-year-old Coty a hip, social media-savvy brand to help turn around its sagging balance sheet. It gave Kylie a major chance at expansion, plus a boatload of cash and apparently clear proof of her billionaire status.

In a call with stock analysts, Coty’s chief financial officer heralded the deal as “a compelling financial equation” that would help “make Coty a modern, growing and profitable beauty payer.” The analysts were immediately skeptical. It looked like Coty was paying way too much for a celebrity brand that could prove to be just a fad, one charged. Another asked how Coty could be sure Kylie will remain committed to promoting the business in the years to come. 

Then there were Kylie’s financials. Revenues over a 12-month period preceding the deal: $177 million according to the Coty presentation—far lower than the published estimates at the time. More problematic, Coty said that sales were up 40% from 2018, meaning the business only generated about $125 million that year, nowhere near the $360 million the Jenners had led Forbes to believe. Kylie’s skincare line, which launched in May 2019, did $100 million in revenues in its first month and a half, Kylie’s reps told us. The filings show the line was actually “on track” to finish the year with just $25 million in sales.

“I think everybody was surprised,” says Wissink, the Jefferies analyst, who was on the call. “The negative that came out of that announcement was that the business was a lot smaller than everybody had expected.”

So much smaller in fact, that there’s virtually no way the numbers the Jenners were peddling in earlier years could be true either. If Kylie Cosmetics did $125 million in sales in 2018, how could it have done $307 million in 2016 (as the company’s supposed tax returns state) or $330 million in 2017?

NEW YORK, NY – NOVEMBER 18: Kylie Cosmetics are displayed at Ulta beauty on November 18, 2019 in New York City. Kylie Cosmetics has sold a controlling stake to Coty Inc for a reported $600 Million. Coty Inc plans to buy 51% and the controlling share of Kylie Cosmetics, valuing it at $1.2 billion. Kylie Jenner will remain the public face of the brand. (Photo by David Dee Delgado/Getty Images)

One explanation: Kylie’s business quietly fell by more than half in a single year. If so, Coty paid up for a “high-growth” brand that is actually a much smaller business than it was just a few years ago. (Coty would not answer any questions about Kylie Cosmetics for this story.) Data from ecommerce firm Rakuten, which tracks a select number of receipts, suggests there was a 62% decline in Kylie’s online sales between 2016 and 2018.

Still, virtually every industry expert polled by Forbes thinks the business couldn’t have collapsed by so much so quickly. “It seems unlikely that much revenue could have evaporated overnight,” says Evercore analyst Omar Saad. “There doesn’t seem to be any evidence the business has cratered,” adds cosmetics veteran Jeffrey Ten, who has led companies like Note Cosmetics, Nyx and Calvin Klein Beauty. “If so, why would Coty buy it?”

More likely: The business was never that big to begin with, and the Jenners have lied about it every year since 2016—including having their accountant draft tax returns with false numbers—to help juice Forbes’ estimates of Kylie’s earnings and net worth. While we can’t prove that those documents were fake (though it’s likely), it’s clear that Kylie’s camp has been lying.

There’s also the issue of profit: Forbes had been estimating that her business, which has little overhead, was notching 44% net margins. But Coty’s filings indicate that Kylie’s profits are likely lower than we figured, since her EBITDA margin—which factors in some, but not all, of her expenses—is only around 25%.

SANTA MONICA, CALIFORNIA – FEBRUARY 28: Kris Jenner arrives at the Los Angeles Ballet Gala 2020 at The Broad Stage on February 28, 2020 in Santa Monica, California. (Photo by Kevin Winter/Getty Images)

For years the Jenners insisted that all of those profits went directly to Kylie because she owned the business outright. But Coty’s purchase agreement specifically lists a “KMJ 2018 Irrevocable Trust,” controlled by Kristen M. Jenner, as owning a profit interest in Kylie Cosmetics. Upon the sale, the document says the trust would get a capital, or ownership, interest in the company. The Jenners initially told Forbes that the trust holds money Kylie Jenner earned before she turned 18 and that Kylie is its beneficiary. But the trust appears to have been created well after Kylie turned 18, and the Jenners declined to offer any proof to back up their claims. Given the lack of clarity—and the history of lies—we’re erring on the side of caution and assuming that the trust belongs to Kris Jenner. That means Kylie Jenner owns an estimated 44.1% of Kylie Cosmetics, rather than 49%.

“You have to remember they are in the entertainment business,” says Ten. “Everything in entertainment has to be exaggerated to get attention.”


Taking all this new information into account and factoring in the pandemic, Forbes has recalculated Kylie’s net worth and concluded that she is not a billionaire. A more realistic accounting of her personal fortune puts it at just under $900 million, despite the headlines surrounding the Coty deal that seemed to confirm her billionaire status. More than a third of that is the estimated $340 million in post-tax cash she would have pocketed from selling a majority of her company. The rest is made up of revised earnings based on her business’ smaller size and a more conservative estimate of its profitability, plus the value of her remaining share of Kylie Cosmetics—which is not only smaller than the Jenners led us to believe but is also worth less now than it was when the deal was announced in November, given the economic effects of the coronavirus.

Coty’s share price has fallen more than 60% since the deal was struck, and even better-performing competitors like Ulta Beauty and Estee Lauder are still down single digits. Add that to the fact that Wall Street tends to think Coty paid too much to begin with and there is no way to realistically peg Kylie’s net worth above a billion—despite her massive cashout. 

As usual, we asked the Jenners for input on our numbers. But pressed for answers on the many discrepancies, the typically chatty family did something out of character: They stopped answering our questions.

Chase Peterson-Withorn, Forbes Staff, Billionaires and Madeline Berg, Forbes Staff, Media.

Additional reporting by Chloe Sorvino.

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The World’s 25 Richest Billionaires Have Gained Nearly $255 Billion In Just Two Months

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THE CHANGING FORTUNES OF THE WORLD’S RICHEST

The super rich are a whole lot richer than they were two months ago. Twenty five of the wealthiest people on Forbes’ list of the world’s billionaires are worth a whopping $255 billion more than when the U.S. stock market hit a mid-pandemic low on March 23. 

Together these 25 folks–Forbes looked at just those on the list with fortunes tied to public stocks–are worth nearly $1.5 trillion, which is about 16% of the total wealth held by the world’s billionaires.

Facebook CEO Mark Zuckerberg is the biggest dollar gainer among this rarified group. Facebook shares surged nearly 60% over the past two months, hitting a record high on Friday May 22.  Investors responded positively to the Wednesday debut of Shops, Facebook’s effort to host digital storefronts for small business owners. Zuckerberg, now worth $86.5 billion, has become the fourth-richest person in the world, up from the No. 7 richest on Forbes’ 2020 list of the World’s Billionaires, published in early April. The 36-year-old is now richer than Warren Buffett, Inditex founder Amancio Ortega and Oracle cofounder Larry Ellison.

The second-largest gainer in dollar terms is also the world’s richest man, Amazon founder and CEO Jeff Bezos. Shares of the ecommerce giant have continued on a tear amid increased demand since coronavirus shuttered physical retailers. Amazon stock is up 29% since March 23. As of the end of the day Friday, Bezos was worth $146.9 billion, up $30 billion and 26% since March 23. 

The biggest percentage gainer is Colin Zheng Huang, the founder of China’s second largest online marketplace (behind Alibaba), Pinduoduo. Boosted by the firm’s social shopping model, in which users share purchases with friends and family, and an aggressive campaign offering subsidized deals to consumers, Pinduoduo’s shares have nearly doubled since March 23, and Huang, its 40-year-old founder and CEO, has added $17.9 billion to his fortune; he’s now China’s third-richest person, worth $35.6 billion.

Colin Huang, chief executive officer and founder of Pinduoduo, poses for a photograph at the company’s office in Shanghai, China, on Friday, Feb. 24, 2017. Pinduoduo, or PDD, is a kind of Facebook-Groupon mashup that Huang believes could revolutionize e-commerce. Photographer: Qilai Shen/Bloomberg via Getty Images

Another notable gainer: Mukesh Ambani, who became Asia’s richest person in April after Facebook announced a $5.7 billion investment into Mumbai-based Reliance Jio, a telecom subsidiary of the sprawling conglomerate founded by Ambani’s late father. The company has since raised loads more, including $1.5 billion from private equity giant KKR on Friday and $750 million from investment firm Silver Lake earlier this month. All told, the firm has raked in $10 billion of fresh capital in less than one month. Ambani is now worth $52.7 billion, up nearly $20 billion since the market trough. 

Billionaires with net worths tied to stakes in technology companies have led the way for gains amid the pandemic. The tech-heavy Nasdaq composite index turned positive for the year earlier this month, and it’s up 37% since March 23. The S&P 500 and Dow Jones, meanwhile, are up about 31% each–still down roughly 10% and 15% for the year, respectively. 

FAYETTEVILLE, AR – JUNE 1: Members of the Walton family (L-R) Rob, Alice and Jim speak during the annual Walmart shareholders meeting event on June 1, 2018 in Fayetteville, Arkansas. The shareholders week brings thousands of shareholders and associates from around the world to meet at the company’s global headquarters. (Photo by Rick T. Wilking/Getty Images)

Not a single top 25 fortune has fallen since March 23. The fortunes of JimAlice and Robert Walton, for example, grew the least percentage-wise, but they’re still up $3.6 billion each. Walmart shares hit an all-time high in mid-April after the first round of stimulus checks made their way to American bank accounts, and they’ve managed to stay near their peak. On Tuesday, the firm reported quarterly revenue that surged almost 10% to $134.6 billion, boosted by a 74% increase in online sales. Combined, the three billionaire Walmart heirs are worth close to $165 billion.

The figures stand in stark contrast to those at the other end of the wealth spectrum. In the U.S. total unemployment claims have risen to 39 million since mid-March, affecting about a quarter of the U.S. labor force.


HERE’S HOW MUCH THE WORLD’S 25 RICHEST BILLIONAIRES HAVE GAINED OVER THE PAST TWO MONTHS.

The net worth change is from Monday, March 23, to Friday, May 22.

1 | JEFF BEZOS

NET WORTH | $146.9 BILLION, UP $29.9 BILLION

COUNTRY | UNITED STATES

SOURCE OF WEALTH | AMAZON

25 September 2019, US: Jeff Bezos, head of Amazon, can be seen on the fringes of the company’s novelties event. Photo: Andrej Sokolow/dpa (Photo by Andrej Sokolow/picture alliance via Getty Images)

2 | BILL GATES

NET WORTH | $106.5 BILLION, UP $11.9 BILLION

COUNTRY | UNITED STATES

SOURCE OF WEALTH | MICROSOFT


3 | BERNARD ARNAULT

NET WORTH | $94.1 BILLION, UP $12.8 BILLION

COUNTRY | FRANCE

SOURCE OF WEALTH | LVMH


4 | MARK ZUCKERBERG

NET WORTH | $86.5 BILLION, UP $31.4 BILLION

COUNTRY | UNITED STATES

SOURCE OF WEALTH | FACEBOOK


5 | WARREN BUFFETT

NET WORTH | $69.2 BILLION, UP $6 BILLION

COUNTRY | UNITED STATES

SOURCE OF WEALTH | BERKSHIRE HATHAWAY


6 | LARRY ELLISON

NET WORTH | $66.4 BILLION, UP $10.4 BILLION

COUNTRY | UNITED STATES

SOURCE OF WEALTH | SOFTWARE


7 | STEVE BALLMER

NET WORTH | $65.4 BILLION, UP $14 BILLION

COUNTRY | UNITED STATES

SOURCE OF WEALTH | MICROSOFT


8 | LARRY PAGE

NET WORTH | $63.6 BILLION, UP $14.2 BILLION

COUNTRY | UNITED STATES

SOURCE OF WEALTH | GOOGLE


9 | SERGEY BRIN

NET WORTH | $61.3 BILLION, UP $13.7 BILLION

COUNTRY | UNITED STATES

SOURCE OF WEALTH | GOOGLE


10 | AMANCIO ORTEGA

NET WORTH | $60.5 BILLION, UP $5.2 BILLION

COUNTRY | SPAIN

SOURCE OF WEALTH | ZARA


11 | JIM WALTON

NET WORTH | $55.2 BILLION, UP $3.6 BILLION

COUNTRY | UNITED STATES

SOURCE OF WEALTH | WALMART


12 | ALICE WALTON

NET WORTH | $55 BILLION, UP $3.6 BILLION

COUNTRY | UNITED STATES

SOURCE OF WEALTH | WALMART

PHOTOGRAPH BY TIM PANNELL/THE FORBES COLLECTION

13 | ROB WALTON

NET WORTH | $54.8 BILLION, UP $3.6 BILLION

COUNTRY | UNITED STATES

SOURCE OF WEALTH | WALMART



14 | FRANCOISE BETTENCOURT MEYERS

NET WORTH | $54.2 BILLION, UP $6.4 BILLION

COUNTRY | FRANCE

SOURCE OF WEALTH | L’OREAL


15 | MUKESH AMBANI

NET WORTH | $52.7 BILLION, UP $19.9 BILLION

COUNTRY | INDIA

SOURCE OF WEALTH | OIL & GAS, PETROCHEMICALS

Mukesh D. Ambani, chairman of Reliance Industries Ltd., attends the World Economic Forum India Economic Summit 2011 in Mumbai, India, on Sunday, Nov. 13, 2011. The annual summit shifted to the country’s financial capital this year after being held in Delhi for 26 years. Photographer: Adeel Halim/Bloomberg via Getty Images

16 | CARLOS SLIM HELU

NET WORTH | $51.2 BILLION, UP $4.2 BILLION

COUNTRY | MEXICO

SOURCE OF WEALTH | TELECOM


17 | MACKENZIE BEZOS

NET WORTH | $47.8 BILLION, UP $10.4 BILLION

COUNTRY | UNITED STATES

SOURCE OF WEALTH | AMAZON


18 | MA HUATENG

NET WORTH | $46.4 BILLION, UP $6.8 BILLION

COUNTRY | CHINA

SOURCE OF WEALTH | INTERNET MEDIA


19 | JACK MA
NET WORTH | $41.3 BILLION, UP $3 BILLION
COUNTRY | CHINA
SOURCE OF WEALTH | E-COMMERCE


20 | PHIL KNIGHT
NET WORTH | $37.7 BILLION, UP $9.9 BILLION
COUNTRY | UNITED STATES
SOURCE OF WEALTH | NIKE

SUN VALLEY, ID – JULY 14: Phil Knight, co-founder and chairman emeritus of Nike, attends the fourth day of the annual Allen & Company Sun Valley Conference, July 14, 2017 in Sun Valley, Idaho. Every July, some of the world’s most wealthy and powerful businesspeople from the media, finance, technology and political spheres converge at the Sun Valley Resort for the exclusive weeklong conference. (Photo by Drew Angerer/Getty Images)

21 | ELON MUSK

NET WORTH | $36.7 BILLION, UP $9.5 BILLION

COUNTRY | UNITED STATES

SOURCE OF WEALTH | TESLA MOTORS, SPACEX


22 | COLIN ZHENG HUANG

NET WORTH | $35.6 BILLION, UP $17.9 BILLION

COUNTRY | CHINA

SOURCE OF WEALTH | E-COMMERCE


23 | FRANCOIS PINAULT

NET WORTH | $31.8 BILLION, UP $2.1 BILLION

COUNTRY | FRANCE

SOURCE OF WEALTH | LUXURY GOODS


24 | SHELDON ADELSON

NET WORTH | $30.7 BILLION, UP $1.4 BILLION

COUNTRY | UNITED STATES

SOURCE OF WEALTH | CASINOS


25 | MICHAEL DELL

NET WORTH | $28.3 BILLION, UP $3.5 BILLION

COUNTRY | UNITED STATES

SOURCE OF WEALTH | DELL COMPUTERS


Jonathan Ponciano, Forbes Staff, Billionaires

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How This Billionaire-Backed Crypto Startup Gets Paid To Not Mine Bitcoin

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It’s everyone’s dream to get paid to do nothing. Bitcoin miner Layer1 is turning that dream into reality — having figured out how to make money even when its machines are turned off. 

Layer1 is a cryptocurrency startup backed by the likes of billionaire Peter Thiel. In recent months, out in the hardscrabble land of west Texas, the company has been busy erecting steel boxes (think shipping containers) stuffed chockablock with high-end processors submerged inside cooling baths of mineral oil. Why west Texas? Beause thanks to a glut of natural gas and a forest of wind turbines, power there is among the cheapest in the world — which is what you need for crypto. 

“Mining Bitcoin is about converting electricity into money,” says Alex Liegl, CEO and co-founder. By this fall Layer1 will have dozens of these boxes churning around the clock to transform 100 megawatts into a stream of Bitcoin. Liegl says their average cost of production is about $1,000 per coin — equating to a 90% profit margin at current BTC price of $9,100. 

So it’s odd how excited Liegl is about the prospect of having to shut down his Bitcoin miners this summer. 

Already this year west Texas has seen a string of 100-degree days. But the real heat and humidity don’t hit until August, which is when the Texas power grid strains under the load of every air conditioning unit in the state going full blast. During an intense week in 2019, wholesale electricity prices in the grid region managed by the Electricity Reliability Council of Texas (ERCOT) soared from about $120 per megawatthour to peak out at $9,000 per mwh. It was only the third time in history that Texas power hit that level. And although the peak pricing only lasted an hour or so, that’s enough to generate big profits. Analyst Hugh Wynne at research outfit SSR figures that Texas power generators make about 15% of annual revenues during the peak 1% of hours (whereas in more temperate California grid generators only get 3% of revs from the top 1%).

Turns out that running a phalanx of Bitcoin miners is a great way to arbitrage those peaks. Layer1 has entered into so-called “demand response” contracts whereby at a minute’s notice they will shut down all their machines and instead allow their 100 mw load to flow onto the grid. “We act as an insurance underwriter for the energy grid,” says Liegl, 27. “If there is an insufficiency of supply we can shut down.” The best part, they get paid whether a grid emergeny occurs or not. Just for their willingness to shut in Bitcoin production, Layer1 collects an annual premium equating to $19 per megawatthour of their expected power demand — or about $17 million. Given Layer1’s roughly $25 per mwh long-term contracted costs, this gets their all-in power price down 75% to less than 1 cent per kwh (just 10% of what residential customers pay). 

It may seem like grid operators are paying Layer1 a lot for something that might not even happen, especially with coronavirus reducing electricity demand, but it makes total sense, says Ed Hirs, a lecturer in energy economics at the University of Houston and research fellow at consultancy BDO: “It’s a lot cheaper option than building a whole new power plant or battery system just to keep it on standby.” 

And although this may be a new concept for cryptocurrency miners, it’s been done before. Two decades ago industrialist Charles Hurwitz bought up power-hogging aluminum smelters in the Pacific Northwest and made more money reselling electricity than making metal. “It used to be called load management,” says Dan Delurey, a consultant with Wedgemere Group. “In old commercial buildings you might still find telephone wires connected to air conditioning systems so that grid operators could send a signal to shut off.” More recently we’ve seen companies install radio-based devices to control hot water heaters and lighting systems. Indeed, grid management is a hot enough area that in 2017 Italy’s power giant Enel bought Boston-based Enernoc for $250 million and Itron ITRI bought Comverge for $100 million. What’s emerged are entities, like Layer1, that Delurey calls the “prosumer” — producing consumer. 

As for Layer1, Liegl says his next step is to vertically integrate into financial products, including Bitcoin derivatives and more. “We are building an in-house energy trading division to leverage this into being a virtual power plant.” 

His message to any pikers still trying to mine cryptocurrencies from their bedroom PC or even via cloud services: “I can’t think of something more irrational at this point. It’s like if I wanted to dig a hole in my backyard and try to get oil out of the ground.” 

Christopher Helman, Forbes Staff, Energy

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