Within the design of the Kaiju, the Precursors engineered Kaiju blood to become reactive to rare earth metals. Weaponized within the body of the Kaiju, its blood would be strong enough to destroy an environment with those metals present. Kaiju blood is highly explosive as a result. Despite its destructive nature, Kaiju blood can be repurposed as a type of fuel.
After the end of the Kaiju War, Dr. Hermann Gottlieb of the Pan Pacific Defense Corps discovered that exposing Kaiju blood to rare earth metals produced an explosive reaction, which he intended to utilize as a propellant or fuel. Hermann Gottlieb approached his colleague Newton Geiszler about developing practical uses for it, but Newton rejected cooperating with him.
Following the attack committed by the Drone Hybrids, Herman realized that the Kaiju were converging on Mount Fuji, intending to expose the Mega-Kaiju’s blood to the rare earth metals inside it, causing a catastrophic explosion which would spread toxic gas and pyroclastic material all around the world, destroying all life and terraforming the Earth to suit the needs of the Precursors. Herman theorized this was always the ultimate plan of the Precursors.
After Newton's betrayal and the emergence of three Kaiju, Hermann realized the intention of the Precursors and with the help of Liwen Shao’s corporation, he used Kaiju blood to create booster rockets to get the remaining Jaegers to MegaTokyo. Later, the final remaining rocket was welded to Gipsy Avenger’s right hand, using it as a blunt instrument to crush the Mega-Kaiju and prevent it from jumping into Mt. Fuji.