Q4 2021 Core Scientific Inc Earnings Call
Yes.
Okay.
Good afternoon, ladies and gentlemen, and welcome to Core Scientific's full fiscal year 2021 earnings.
Good afternoon, ladies and gentlemen, and welcome to core scientific full FISC.
Full year 2021 earnings call. This is Steven Gitlin Senior Vice President of Investor Relations for core scientific at this time all participants are in a listen only mode. We will conduct a question and answer session. After managements remarks.
This is Stephen Kittlin, Senior Vice President of Investor Relations for Core Scientist.
Steevenen Hitlin: At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session after management's remarks. As a reminder, this conference is
As a reminder, this conference is being recorded for replay purposes before we begin. Please note that on this call certain information presented contains forward looking statements within the meaning of the private Securities Litigation Reform Act of $19 95.
Steevenen Hitlin: Before we begin, please note that on this call, certain information presented contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Steevenen Hitlin: Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain words such as believe, anticipate, expect, estimate, intend, project, plan, or words or phrases with similar meaning.
Forward looking statements include without limitation any statement that may predict forecast indicate or imply future results performance or achievements and may contain words, such as believe anticipate expect estimate intend project plan or words or phrases with similar meeting.
Steevenen Hitlin: Forward-looking statements are based on current expectations, forecasts, and assumptions that involve risks and uncertainties, including but not limited to economic, competitive, governmental, and technological factors outside of our control that may cause our business strategy or actual results to differ materially from the forward-looking statements.
We're looking statements are based on current expectations forecasts and assumptions that involve risks and uncertainties, including but not limited to economic competitive governmental and technological factors outside of our control that may cause our business strategy or actual results to differ materially from the forward looking statements for further information on these risks we incur.
Steevenen Hitlin: We encourage you to review the risk factors discussed in Core Scientific's definitive proxy statement filed with the SEC on January 3, 2022.
Bridge you to review the risk factors discussed in core scientific defense definitive proxy statement filed with the SEC on January <unk> 2022, and other subsequent filings we filed with the SEC from time to time, including our annual report on Form 10-K for the year ended December 31, 2021, and our current report on.
Steevenen Hitlin: and other subsequent filings we file with the SEC from time to time, including our annual report on Form 10K for the year ended December 31, 2021, and our current report on Form 8K filed on January 24, 2022. As such, discussion may be updated or amended from time to time in our subsequent filing with the SEC.
Form 8-K filed on January 24, 2022, as such discussion may be updated or amended from time to time in our subsequent filings with the SEC. Our remarks today contain references to various non-GAAP financial measures, including adjusted EBITDA, which should not be viewed as a substitute for comparable measures presented in U S. GAAP.
Steevenen Hitlin: Our remarks today contain references to various non- GAAP financial measures, including adjusted EBITDA, which should not be viewed as a substitute for comparable measures presented in US GAAP. For a reconciliation of such measures to their most comparable US GAAP measures, please refer to our earnings release.
For a reconciliation of such measures to their most comparable U S. GAAP measures. Please refer to our earnings release. This afternoon. We also furnished a slide presentation with our earnings release and posted the presentation on our website at core scientific dot com in the events and presentations section of the investors section of our website the COO.
Steevenen Hitlin: This afternoon we also furnished a slide presentation with our earnings release and posted the presentation on our website at CoreScientific.com in the Events and Presentations section of the Investors section of our website.
Steevenen Hitlin: The content of this conference call contains time-sensitive information that is accurate only as of today, March 29, 2020.
Content of this conference call contains time sensitive information that is accurately accurate only as of today March 29, 2022. The company undertakes no obligation to make any revision to any forward looking statements contained in our remarks today or to update them to reflect the events or circumstances occurring after this conference call Joy.
Steevenen Hitlin: The company undertakes no obligation to make any revision to any forward-looking statements contained in our remarks today or to update them to reflect the events or circumstances occurring after this conference.
Steevenen Hitlin: Joining me today from Core Scientific, our Chief Executive Officer, Mr. Mike Levitt, and Chief Financial Officer, Mr. Michael Truffin. We will now begin with remarks from Mike Levitt. Mike? Thank you, Steve. On behalf of the more than 250 employees at our company, we want to thank all of you for listening into our very first earnings call and we want to welcome you to our call. Our team has built a rapidly growing and profitable business.
Joining me today from core scientific our Chief Executive Officer, Mr. Mike Leavitt and Chief Financial Officer, Mr. Michael Truth that we will now begin with remarks from Mike <unk>.
Mike. Thank you Steve on behalf of the more than 250 employees at our company. We want to thank all of you for listening into our very first earnings call and why don't we want to welcome you to our call. Our team has built a rapidly growing and profitable business.
Mike Levon: We're laser focused on executing our plan and on delivering results. We take a very long-term approach to our business and although we've been developing large-scale blockchain infrastructure for over five years now,
We are laser focused on executing our plan and on delivering results. We take a very long term approach to our business and although we've been developing large scale blockchain infrastructure for over five years now.
Mike Levon: We believe that we're still in the early days of our industry's development.
We believe that we are still in the early days of our industry's development.
Mike Levon: Our key messages today are our financial results are strong.
Our key messages today are our financial results are strong.
Mike Levon: We've developed market leading scale in those short five years and we're well positioned to achieve our objective.
We've developed market leading scale in those short five years, and we're well positioned to achieve our objectives.
Mike Levon: We've organized our remarks today around a few topics, who we are and what we do.
We've organized our remarks today around a few topics, who we are and what we do.
Mike Levon: our performance and core scientific's outlook.
Our performance and core scientific's outlook at.
Mike Levon: At the conclusion of my remarks, we will be happy to take your question.
At the conclusion of my remarks, we will be happy to take your questions.
Mike Levon: Over the course of today's presentation, I will refer to the earnings presentation Steve mentioned that we have posted to the events and presentations page located in the investor section of our website, CoreScientific.com.
Over the course of today's presentation I'll refer to the earnings presentation, Steve mentioned that we have posted to the events and presentations page located in the investors section of our website core scientific dot com.
Of course scientific is a financial technology company focused on developing and managing the infrastructure for our rapidly evolving financial system, we mined digital assets for our own account, we host and operate miners for our customers.
Mike Levon: Core Scientific is a financial technology company focused on developing and managing the infrastructure for our rapidly evolving financial system. We mine digital assets for our own account, we host and operate miners for our customers, and we develop blockchain technology-based financial products.
And we develop blockchain technology based financial products.
Mike Levon: We mine more bitcoins and host more miners than does any other publicly traded company in the United States.
We mined more bitcoin and host more miners than does any other publicly traded company in the United States.
Mike Levon: In 2021, we mined more than 5,700 Bitcoins for our own account, the most Bitcoins ever mined in a year by a publicly traded U.S. company.
In 2020 , one we mined more than 5700 bitcoins for our own account.
The most bitcoin ever mine in a year by a publicly traded U S company.
Mike Levon: In the first two months of 2022, we produced more than 2,000 bitcoins. At that pace, we will more than double our 2021 production.
In the first two months of 2022, we produced more than 2000 bitcoins at that pace, we will more than double our 2021 production.
Mike Levon: We held more than 7,000 Bitcoins in our accounts as of the end of February .
We held more than 7000 bitcoins in our accounts as of the end of February .
Mike Levon: The infrastructure, operations, and proprietary software management system we developed supports both our self-mining and hosting operations.
The infrastructure operations and proprietary software management system, we developed supports both our self mining and hosting operations as of the end of February we operated seven seven X a hash of computing capacity for our hosting customers.
Mike Levon: As of the end of February , we operated 7.7x a hash of computing capacity for our hosting customers.
Mike Levon: Our balanced self-mining and hosting business model provides a steady US dollar revenue stream and cash flow from hosting through multi-year contracts with our customers and upside exposure to Bitcoin price appreciation from our self-mining activities.
Our balanced self mining and hosting business model provides a steady U S dollar revenue stream and cash flow from hosting through multiyear contracts with our customers and upside exposure to bitcoin price appreciation from our self mining activities.
We own our infrastructure.
Our facilities include five data centers with additional centers in development, we prefer to locate our data centers in opportunity zones in proximate to non or low carbon emitting power sources, such as hydroelectric wind solar or nuclear.
Mike Levon: Our facilities include five data centers with additional centers in development. We prefer to locate our data centers in opportunity zones in proximity to non- or low-carbon emitting power sources such as hydroelectric, wind, solar, or nuclear.
Yeah.
Mike Levon: Our data centers are geographically dispersed to mitigate risk. A map showing the location of our facilities is on slide six of the presentation.
Our data centers are geographically dispersed to mitigate risk.
Map showing the location of our facilities is on slide six of the presentation.
Mike Levon: As I mentioned, we are a technology-focused company. We developed a proprietary software management system called MINDR to monitor and manage the computers in our facilities. MINDR flags computers performing outside of specified parameters so we can power cycle them automatically or dispatch an on-site technician to investigate further.
As I mentioned, we are a technology focused company, we developed a proprietary software management system called Minder to monitor and manage the computers in our facilities Minder flags computers performing outside of specified parameters. So we can power cycled them automatically or dispatch an onsite technician.
To investigate further.
Mike Levon: The combination of minder, our proprietary engineered facility designs, and our trained technicians results in high miner uptime, maximizing productivity of our self-mining and hosting miners.
The combination of Minder, our proprietary engineered facility designs and are trained technicians resulted in high minor uptime maximizing productivity of our self mining and hosting miners.
Mike Levon: Our MINDR software, when combined with our other technologies, also gives us the ability to power down computers in any of our facilities to support the local electrical grid when required. For example, in the summer, when many homes and businesses run their air conditioning with a demand for power source, the local grid may need to shed power in order to avoid brownouts or turning on expensive, higher carbon-generating peaker plants.
A reminder, software when combined with our other technologies also gives us the ability to power down computers in any of our facilities to support the local electrical grid when required for example in the summer when many homes and businesses run their air conditioning and the demand for power source the loan.
So grid may need to shed power in order to avoid brown outs are turning on expensive higher carbon generating peak or plants by powering down our operations, we help relieve pressure on the grid, our ability to curtail power consumption rapidly and is needed by our power providers enables.
Mike Levon: By powering down our operations, we help relieve pressure on the grid.
Mike Levon: Our ability to curtail power consumption rapidly, and as needed by our power providers, enables us to secure more favorable power contracts.
Us to secure more favorable power contracts.
Mike Levon: It's a way for us to be a good neighbor and serve as a large energy buffer for the local grid and community. We believe in supporting local utilities as they balance the needs of their customers and seek to add more renewable energy to their grid.
It's a way for us to be a good neighbor and serve as a large energy buffer for the local grid and community. We believe in supporting local utility local utilities as they balance the needs of their customers and seek to add more renewable energy to their grids.
Mike Levon: We believe that net carbon-neutral operation is important for the communities in which we operate, for our industry, and for the greater good. We achieve net carbon-neutral status by purchasing renewable energy certificates based on our consumption of energy from carbon-emitting fuels.
We believe that net carbon neutral operation is important for the communities in which we operate for our industry and for the greater good we achieved net carbon neutral status by purchasing renewable energy certificates based on our consumption of energy from carbon emitting sources.
In addition to our self mining and hosting businesses. We also have a team of over 30 block chain in financial technology experts, who are developing innovative products at the intersection of blockchain finance and AI.
Mike Levon: In addition to our self-mining and hosting businesses, we also have a team of over 30 blockchain and financial technology experts who are developing innovative products at the intersection of blockchain finance and AI.
Well its financial impact is not yet material, we engage in network services, such as taking keeping to determine what innovative products and services that may lead to the expansion of the blockchain ecosystem and to new business opportunities.
Mike Levon: While its financial impact is not yet material, we engage in network services such as staking and keeping to determine what innovative products and services may lead to the expansion of the blockchain ecosystem and to new business opportunities.
Mike Levon: with expertise in technology, data center operation.
With expertise in technology data Center operations development power construction in financial services, we are focused on creating long term value for our shareholders.
Mike Levon: development, power, construction, and financial services, we're focused on creating long-term value for our shareholders.
Mike Levon: I encourage you to visit our website and review the credentials and background of our senior management board and of all of our team members.
I encourage you to visit our website and review the credentials and background of our senior management and board and all of our team members.
Mike Levon: We have built a position at the leading edge of blockchain technology and digital assets in a very short time, but we are just getting started. Let's now take a look at the next slide.
We have built a position at the leading edge of block chain technology and digital assets in a very short time, but we're just getting started.
Let's now take a look at our financial performance.
Mike Levon: 2021 was, as I said, a year of strong results for our company.
2021 was as I said, a year of strong results for our company you can turn to <unk>.
Mike Levon: page four of our winnings presentation to see the highlight.
Page four of our earnings presentation to see the highlights in 2021, we generated revenue of $544 5 million net income of $47 3 million and adjusted EBITDA of $238 9 million.
Mike Levon: In 2021, we generated revenue of $544.5 million, net income of $47.3 million, and adjusted EBITDA of $238.9 million.
Mike Levon: We grew our total hash rate from less than 3x a hash to 13.5x a hash by the end of 2021.
We grew our total hash rate from less than three X a hash to 13 and a half ex of cash by the end of 2021.
Looking at total.
Mike Levon: 2021 revenue by segment, you can turn to page seven of the presentation.
2021 revenue by segment, you can turn to page seven of the presentation.
Mike Levon: You'll see our equipment sales were $248.2 million or 46% of revenue, digital asset mining $216.9 million or 40%.
Youll see our equipment sales were $248 2 million or 46% of revenue.
Digital asset mining, $2016, 9 million or 40% and hosting $79 3 million or 14% of revenue.
Mike Levon: and hosting 79.3 million or 14% of revenue.
This slide also shows segment revenue by quarter illustrating our significant capacity ramp throughout 2021, and the favorable impact it had on our adjusted EBITDA.
Mike Levon: This slide also shows Segment Revenue by Quarter illustrating our significant capacity ramp throughout 2021 and the favorable impact it had on our adjusted EVA DS.
Mike Levon: The increase in equipment sales revenue is driven by higher demand for new generation, more efficient mining equipment. That said, equipment sales will become less significant in the future and self-mining and hosting will represent an ever-increasing share of our revenue.
The increase in equipment sales revenue was driven by higher demand for new generation more efficient mining equipment that said equipment sales will become less significant in the future and self mining and hosting will represent an ever increasing share of our revenue.
Mike Levon: The increase in digital asset self-mining revenue last year was driven by an increase in our self-mining hash rate from less than 1.5x a hash at the end of 2020 to 6.6x a hash.
The increase in digital asset self mining revenue last year was driven by an increase in our self mining hash rate from less than one and a half ex <unk> at the end of 2020 266 ex ash the increase in hash rate resulted from investments in infrastructure and in new miners.
Mike Levon: The increase in hash rate resulted from investments in infrastructure and in new mines.
Mike Levon: In 2021, we mined a total of 5,769.
In 2021, we mined the total of 5769 bitcoins.
Mike Levon: At the end of 2021, we held 5,296.
End of 2021, we held 5296 bitcoins.
Mike Levon: The number of held bitcoins increased to 7,355 at February 28th of this year.
The number of held bitcoins increased to 7355.
At February 28 of this year.
Mike Levon: Hosting revenue increased in 2021 as a result of new customer hosting contracts for miners deployed during the year.
Hosting revenue increased in 2021, as a result of new customer hosting contracts for miners deployed during the year.
Slide eight provides detail of our quarterly and annual income statement items.
Mike Levon: Slide eight provides detail of the quarterly and annual income statement item.
Mike Levon: Cost of revenue increased by $254.7 million from 2020 to $305.6 million.
Cost of revenue increased by $254 $7 million from 2020 to $305 6 million.
Mike Levon: This increase was primarily attributable to an increase in the cost of equipment sold to customers and to higher power consumption driven by increased self-mining and hosting activity.
This increase was primarily attributable to an increase in the cost of equipment sold to customers and to higher power consumption driven by increased self mining and hosting activity.
Let's turn now to our operating expenses 2021 research and development expenses totaled $7 7 million.
Mike Levon: 2021 research and development expenses totaled $7.7 million.
Mike Levon: an increase of approximately 50% over 2020, driven by higher personnel and related costs.
An increase of approximately 50% over 2020, driven by higher personnel and related costs sales marketing general and administrative expenses totaled $64 7 million.
Mike Levon: sales, marketing, general, and administrative expenses totaled $64.7 million, a threefold increase over 2020. This increase was largely driven by higher stock-based compensation.
A three fold increase over 2020. This increase was largely driven by higher stock based compensation public company readiness investments and higher personnel and related costs.
Mike Levon: public company readiness investments and higher personnel and related
Mike Levon: non-operating expenses, including interest expense, loss on debt from extinguishment, and other non-operating expenses net totaled $68.4 million in increase of $62.5 million from
Non operating expenses, including interest expense loss on debt from extinguishment and other nonoperating expenses net totaled $68 4 million, an increase of $62 5 million from 2020.
Mike Levon: The increase in non-operating expenses was mainly due to higher interest expense related to several capital raises, including a senior secured credit facility and several equipment financing agreements, and a non-cash accounting adjustment to fair value of our private placement convertible.
The increase in non operating expenses was mainly due to higher interest expense related to several capital raises including our senior secured credit facility and several equipment financing agreements and a noncash accounting adjustment to fair value of our private placement convertible notes.
Mike Levon: Income tax expense totaled $15.8 million. That income for 2021 was, as we mentioned, $47.3 million as compared to a net loss in 2020 of $12.2 million.
Income tax expense totaled $15 8 million.
Net income for 2021 was as we mentioned $47 3 million as compared to a net loss in 2020 of $12 2 million.
Mike Levon: 2021 adjusted EBITDA was $238.9 million, an increase of $232.9 million from 2020.
2021, adjusted EBITDA was $238 9 million, an increase of $232 9 million from 2020.
Scaling our business requires capital, we financed our growth and operations, primarily through the sale of equity or equity linked securities that equipment financing and cash generated from operations.
Mike Levon: Scaling our business requires capital. We've financed our growth and operations primarily through the sale of equity or equity link securities, debt, equipment financing, and cash generated from operations.
Mike Levon: Total cash, cash equivalents and restricted cash was $131.7 million at the end of 2021.
Total cash cash equivalents and restricted cash was $131 7 million at the end of 2021.
This total does not include the approximately $200 7 million.
Mike Levon: This total does not include the approximately $200.7 million in net cash proceeds received from the merger when we became a public company on January 20th of this year.
And net cash proceeds received from the merger when we came became a public company on January 20th of this year.
The carrying value of the 5296 bitcoins held as of December 31.
Mike Levon: The carrying value of the 5,296 Bitcoins held as of December 31 was $224.8 million.
Was $224 8 million cash used in operating activities investing activities and provided by financing activities totaled $56 $7 million, $423 8 million and $603 $5 million respectively.
Mike Levon: Cast used in operating activities, investing activities, and provided by financing activities totaled $56.7 million, $423.8 million, and $603.5 million, respectively.
Mike Levon: During 2021, we entered into agreements to purchase digital asset mining equipment totaling approximately $584 million, of which $326 million was paid as deposits for equipment scheduled to be delivered in 2020.
During 2021, we entered into agreements to purchase digital asset buying equipment totaling approximately $584 million.
Of which $326 million was paid as deposits for equipment scheduled to be delivered in 2022.
Mike Levon: This left a balance of $258 million for mining computers to be delivered in 2018.
This left a balance of $258 million for mining computers to be delivered in 2022.
Mike Levon: Our primary uses of capital are to purchase new miners and to build our data center.
Our primary uses of capital are to purchase new miners and to build our data center infrastructure going forward continued growth will require additional capital. We're mindful of the dilutive impact of additional equity as we pursue opportunities to fund our continued expansion.
Mike Levon: Going forward, continued growth will require additional capital. We're mindful of the dilutive impact of additional equity as we pursue opportunities to fund our continued
Mike Levon: An important element of our capital market strategy is to expand our flow to provide greater liquidity and trading volumes in our stock. We believe that enhanced liquidity will make our equity more attractive to large institutional public equity investors who require those higher trading volumes.
An important element of our capital market strategy is to expand our flow to provide <unk> with greater liquidity and trading volumes in our stock. We believe that enhanced liquidity will make our equity more attractive to large institutional public equity investors, who require those higher trading volumes. Our board's recent decision to release the pre public shareholder lock.
Mike Levon: Our board's recent decision to release the pre-public shareholder lockup was based on the desire to introduce existing shares into the market from our large number of long-time investors.
Up was based on the desire to introduce existing shares into the market from our large number of long time investors.
Supporting our industry's future the President's recent executive order is a welcome step forward in our view.
Mike Levon: Supporting our industry's future, the President's recent executive order is a welcome step forward in our future.
Mike Levon: Rather than rushing into adopting regulations or legislating new laws, the administration is first seeking to learn about the digital assets ecosystem.
Rather than rushing into adopting regulations are legislating new laws. The administration is first seeking to learn about the digital assets ecosystem and develop a policy framework through abroad. Inter agency process. We believe this is a positive development as the government generally regulates that which seeks to preserve and foster.
Mike Levon: and develop a policy framework through a broad interagency process.
Mike Levon: We believe this is a positive development, as the government generally regulates that which it seeks to preserve and foster. We look forward to continuing to add our voice to the process of producing sensible regulations that promote continued innovation and leadership in U.S. blockchain technology development.
We look forward to continuing to add our voice to the process of producing sensible regulations that promote continued innovation and leadership in use blockchain technology development.
Mike Levon: Looking ahead, we've established for 2022 a few goals, first profitable growth.
Looking ahead, we have established for 2022, a few goals first profitable growth we.
Mike Levon: We hope to maintain our leadership position in blockchain infrastructure and digital asset mining. Our business is profitable and our scale provides us with the ability to remain profitable as the network has rate and competition grow. Second, scaling our
We hope to maintain our leadership position in blockchain infrastructure and digital asset mining our business is profitable and our scale provides us with the ability to remain profitable as the network cash rate and competition growth.
Scaling our business efficiently, we regularly review our processes to find ways to operate more efficiently our ability to grow our hatch rates and business requires constant focus on process improvement training and cost management.
Mike Levon: We regularly review our processes to find ways to operate more efficiently. Our ability to grow our hash rate in business requires constant focus on process improvement, training, and cost management.
Mike Levon: Third, investing in the development of new products and capabilities. The blockchain ecosystem is still at a very early stage and evolving rapidly.
Third investing in the development of new products and capabilities. The blockchain ecosystem is still at a very early stage and evolving rapidly. Our technology team has explored in products and services beyond mining and staking to evaluate areas of future opportunity and near term investment.
Mike Levon: Our technology team is exploring products and services beyond mining and staking to evaluate areas of future opportunity and near-term investment.
In terms of quantitative goals for 2022 highlighted on slide nine of the presentation. We anticipate year end total cash rate of 40 to 42 exit hatches split roughly evenly between self mining and hosting.
Mike Levon: in terms of quantitative goals for 2022, highlighted on slide nine of the presentation.
Mike Levon: We anticipate year-end total hash rate of 40 to 42 exahashes, split roughly evenly between self-loss.
Mike Levon: Our growth will not be perfectly linear as we continue to deal with global supply chain issues, but we believe that we can achieve
Our growth will not be perfectly linear as we continue to deal with global supply chain issues, but we believe that we can achieve our year end objectives, we think that approximately 30% of our 2022 infrastructure development will be completed by the end of the second quarter.
Mike Levon: We think that approximately 30% of our 2022 infrastructure development will be completed by the end of the second year.
Mike Levon: We remain comfortable with our previously stated 2022 goals illustrated on slide 10 in our earnings presentation.
We remained comfortable with our previously stated 2022 goals illustrated on slide 10, and our earnings presentation.
Mike Levon: We ended 2021 with a total of 13.5 X a hat.
We ended 2021 with a total of $13 five X a hash the.
Mike Levon: The midpoint of our 2022 hash rate expectation is 41x a hash, leaving us with 27.5x a hash to bring online by receiving, installing, and activating new miners for our hosting customers and for self-mining.
The midpoint of our 2020 to hash rate expectation is 41, axa hedged, leaving us with 27, and a half X a hash to bring online by receiving installing and activating new miners for our hosting customers and for self mining.
Mike Levon: As of December 31, 2021, we had contracts in place for self-minors and hosted minors representing 23.2 Exahash, or approximately 84% of our 2022 goal. Demand for our hosting capacity remains strong.
As of December 31, 2021, we had contracts in place for self miners and hosted miners, representing 23.2 extra cash or approximately 84% of our 2022 goal.
<unk> for our hosting capacity remains strong.
We plan to continue providing monthly updates as we execute our plans. Additionally, we intend to post our daily self mining totals on our website beginning in early April .
Mike Levon: as we execute our plans. Additionally, we intend to post our daily self-minding totals on our website beginning in early
Mike Levon: In closing, I'd like to thank my extraordinary, very hardworking, dedicated colleagues, now numbering over 250. They have built
Closing I would like to thank my extraordinary very hard working dedicated colleagues now numbering over 250.
<unk> has built an incredible company.
Thank you to our customers and to those who possess the courage and conviction to invest alongside us in the very early days.
Mike Levon: Thank you to our customers and to those who possess the courage and conviction to invest alongside us in the very early days.
Thank you and thank you to our shareholders.
Mike Levon: We appreciate the value of the business we've built and see the potential of our company.
Who appreciate the value of the business, we've built and see the potential of our company.
Mike Levon: We are more excited about our future today than we have ever been, and we look forward to speaking with all of you as we continue this incredible journey.
We're more excited about our future today than we've ever been.
And we look forward to speaking with all of you as we continue this incredible journey.
We will now take your questions.
Speaker Change: Thank you, Mike. We'll now begin the question and answer session. If you have a question, please press star and then one on your touchstone phone. If you wish to be removed from the queue, please press,
Thank you Mike we will now begin the question and answer session. If you have a question. Please press star and then one on your Touchtone phone, if you wish to be removed from the queue.
Please press the pound or the hash key.
Speaker Change: If you are using a speaker phone, you may need to pick up your handset first before pressing the number.
If you are using a speakerphone you may need to pick up your handset first before pressing the numbers, we respectfully ask that you limit your questions to two and please reenter the queue to ask further questions thereafter.
Speaker Change: We respectfully ask that you limit your questions to two and please re-enter the queue to ask further questions they're asking.
Speaker Change: Once again, to ask a question, please press star and then one on your touchstone.
Once again to ask a question. Please press star and then one on your Touchtone phone.
Okay.
Speaker Change: And today our first question comes from Chris Brindler of DA Davidson.
And today, our first question comes from Chris <unk> of da Davidson Chris.
Thanks, Steve Mike Mike Congrats on the results.
Chris Brenler: Thanks, Steve, Mike. Mike, congrats on the results. I only get two questions, so I'm going to start with one that's at the top of my list. Thank you. Where do you stand today on cost of power? And what's the outlook in general terms for next year, given what's happening to natural gas prices? And I know that there's contracts in place to protect you from some of those things. But just it's a big question to get into investors lately. Thanks.
When we get to questions. So I'm going to start at the top of my list. Thank you.
Where do you stand today on on cost of power and what's the outlook.
In general terms for next year, given what's happening to natural gas prices and I know that there's contracts in place to protect you from some of those things. That's a big question that we get into your investors lately. Thanks.
Sure given.
Chris Brenler: Sure, given your right energy costs,
You're right energy costs.
Chris Brenler: have been going up all over. We do have some natural gas in our mix of energy. You're also correct that we have a number of agreements that do have limiters on energy cost. But of course, we're also constantly renewing, extending, and developing.
Have been going up all over.
Do have some natural gas in our mix of energy.
You are also correct that.
We have a number of agreements that do have limiters on energy cost, but of course, we're also constantly renewing extending and developing.
Chris Brenler: That said, it's probably fair to assume that energy costs will, just as inflation has, go up a bit. We would anticipate the range, roughly speaking, in the plus or minus 15% area, more or less.
That said, it's probably fair to assume that energy costs will just as inflation has go up a bit.
We would anticipate the range roughly speaking in the.
Plus or minus 15% area.
More or less.
Does that answer your question.
Yes, I guess, the only thing I think we had.
Speaker Change: Yeah, I guess so. I mean, I think we had a number of three and a half cents in the original SPAC deck that was kind of like we're anchored to. So is that the right base to think about 10 to 15 percent higher?
About $3.05 in the original spec deck that was kind of like we're anchored two so is that the right base to think about 10% to 15% higher.
Yes, I think that I think that's the right range to be thinking about.
Speaker Change: Yeah, I think that's the right range to be thinking about.
Yes.
Okay.
<unk>.
Speaker Change: Great. Okay. So I also appreciate the comments on capital that's there.
Great.
Okay. So.
So I appreciate the comments on capital.
Speaker Change: probably bigger question than I get from folks and nice to see that not only do you have this this much higher hash rate target for next year but a lot of it's already in place. I guess one of the options if you if you don't want to issue equity you know I've seen a lot of companies start to borrow off their Bitcoin when you're producing over a thousand a month that seems like the most attractive. Maybe you get Trupec in here and give me an answer on what the capital strategy might be at the current environment.
Probably a bigger question that I get from folks and nice.
Nice to see that not only do you have this much higher attach rate target for next year, but a lot of it's already in place.
I guess what are the options.
I want to issue equity.
I've seen a lot of companies start to borrow after bitcoin on youre producing over 1000, a month that seems like it's the most attractive.
Maybe get through Brexit in here and give you an answer on that.
What's the capital strategy might be at the current environment.
Speaker Change: Well, I'll comment for a moment, but you were right in that we certainly are going to look at the debt markets, and there are any number of ways to look into the debt markets. There was a big BTC-based borrowing transaction actually announced today. I think it was earlier today, but we also have the ability, we believe, to look at traditional debt markets.
Okay.
Comment for a moment, but.
You are right.
In that we certainly are going to look at the debt markets and there are any number of ways to look into the debt markets there.
There was a <unk>.
Big BTC based borrowing.
Transaction actually announced today I think it was earlier today.
But we also have the ability we believe to look at traditional debt markets as well.
Speaker Change: as we are a profitable EVA-DA generative company.
As we are a profitable EBITDA generative company.
Speaker Change: And so it's fair to say that we intend to explore both the traditional
And so it's fair to say that we intend to explore both the traditional.
Speaker Change: debt markets in addition to some of the sort of newer technology Bitcoin related financing alternatives.
Debt markets in addition to <unk>.
Some of the sort of newer technology bitcoin related financing alternatives.
Speaker Change: As you know, I've got a reasonably deep background in and around the debt markets.
As you know I've got a reasonably deep background in and around the debt markets.
Speaker Change: And so I think it's safe to believe that our finance team is looking hard at all of the alternatives that we can utilize. We've also been very fortunate in the last
And so I.
I think it's.
Is it safe to believe that our finance team is looking hard at all of the alternatives that we can utilize.
We've also been very fortunate in the last six months or so we've been able to attract much more traditional asset backed lenders to our business.
Speaker Change: six months or so, we've been able to attract much more traditional asset-backed lenders to
Speaker Change: And as such, we've been able to.
And as such we've been able to.
Speaker Change: to bring financing options in and around our hardware buys at what I would call normal, as opposed to usurious interest rates.
To bring financing options in and around our hardware buys at what I would call normal as opposed to use various interest rates.
Speaker Change: And so we will continue to work that avenue as well.
And so we will continue to work.
That avenue as well.
Thank you for your questions Chris now, we'll move onto our next questioner will go to Greg Lewis from <unk> Good afternoon, Greg.
Speaker Change: Thank you for your questions, Chris. Now we'll move on to our next questioner. We'll go to Greg Lewis from VTIG. Good afternoon, Greg.
Greg: Hey, thank you and good afternoon everybody and thank you for taking my question.
Hey, Thank you and good afternoon, everybody and thank you for taking my question.
Greg: You know, I guess, you know, Mike, you touched on it, you know, obviously the growth of your hash capacity isn't going to be linear. You know, I guess I have two questions around that. One is, you know, I guess I'll just, any guidance you can give us and how we should think about...
I guess, Mike and you touched on it obviously the growth of.
Your hash capacity isn't going to be linear.
I guess I have two questions around that one is.
I guess I'll just any guidance you can give us on how we should think about.
Greg: maybe Q2 versus Q3 versus Q4. I imagine it's back-end weighted, any kind of rough guidance you can give us there and how you're thinking about how hash rate progresses over the next few quarters.
Maybe Q2 versus Q3 versus Q4, I imagine its backend weighted any kind of rough guidance, you can give us there and how youre thinking about how hash rate progresses over the next few quarters.
Speaker Change: Sure Greg, so I want you to know that my comment in there about being approximately 30% complete through the end of the second quarter was just as a tip of my hat to you and a few other folks because we thought you might want a little bit of guidance in that regard. So what that implies of course is that if we're going to be 30% or so
Sure Greg So I want you to know that my comment in there about being approximately 30%.
Complete through the end of the second quarter was just as a tip of my hat to you.
And a few other folks.
Because we thought you might want a little bit of guidance in that regard right. So what that implies of course.
But if we're if we're going to be 30% or so.
Through at mid year that there's another 70% for the back end of the year right.
Speaker Change: through it mid-year that there's another 70% for the back end of the year.
Speaker Change: right? And the back end of the year, it's, you know, it's, it's
And.
The back end of the year.
It's hard to say, but I think.
Speaker Change: hard to say, but I think, you know, you're going to be
Youre going to be.
Speaker Change: more or less on target, we think, if you kind of split that, you know, roughly 40, 60, thereabouts.
More or less on target, we think if you kind of split that roughly 40 60 thereabouts.
Speaker Change: Third quarter, fourth quarter, remaining 70. I guess I got to do the math. So you'd be splitting it, do the math, 28, 42, or whatever.
Third quarter or fourth quarter, yet remained super how remaining 70, I guess I got to do the math, so you would be splitting it.
Do the math.
$28 42 or whatever but.
But thereabouts.
Speaker Change: Great, great, super helpful. And then one of the other things, you know, and congratulations on boosting your your hash, I guess on the last update, you know, there was a nice bump up in kind of your targets for for your end hash. You know, one of the things that that we've been hearing is that some
Great Super helpful. And then one of the other things you know and congratulations on boosting your your hash I guess on the last update there was a nice bump up in kind of your targets for yearend ash one of the things that we've been hearing is that some some rigs that are making actually making their way all of the north all the way to north.
Speaker Change: Some rigs that are actually making their way all the way to North America are sometimes being stranded as the.
Erica are sometimes being stranded as the maybe the previous owner was was is unable.
Speaker Change: you know, maybe the previous owner was, you know, is unable to kind of plug those in. Yeah, as we think about, you know, opportunities, you know, and maybe it's what you already have or what you're already seeing as, you know, maybe the next wave of growth at CORE, you know, are there opportunities to secure rigs already in North America? Are you largely, you know, just given your size already, are you largely just dealing with, you know, the producers in Asia of,
Unable to kind of plug those in as we think about opportunities maybe it's what you already have or what youre already seen as.
And then maybe the next wave of growth at that core.
Are there opportunities to secure rigs already in North America are you largely just given your size already are largely just dealing with the producers in Asia.
Briggs.
Speaker Change: No, actually, your point is right on. And in fact, we are on a modestly continuous basis shown opportunities to acquire rigs already, if you will, stateside. And that's probably going to be a phenomena that goes on for a little while here.
No.
Actually it's your point is right on.
And in fact, we.
We are.
On a modestly continuous basis shown opportunities to acquire rigs.
Already if you will.
State side.
And thats, probably going to be a phenomenon that goes on for a little while here.
Yes.
Speaker Change: The aggregate infrastructure build for the industry has gone slower than many thought.
The aggregate infrastructure build for the industry has gone slower than many thought that it would.
Speaker Change: the actual execution and delivering on infrastructure build.
The actual execution and delivering an infrastructure build.
Speaker Change: is complex, not easy, and I give a lot of credit to Wes Adams and Gary Pfeiff and Carol and the others in our power and construction team because they are really, really good.
As complex not easy and I give a lot of credit to West Adams, and Gary Fyfe, and Carol and the others in our power and construction team.
They are really really good at it and others have realized how really really hard it is to be really really good at it but what that delayed infrastructure development has resulted in is excess rigs youre right sitting on skids on loading docks what have you.
Speaker Change: and others have realized how really, really hard it is to be really, really good at it.
Speaker Change: But what that delayed infrastructure development has resulted in is excess rigs. You're right, sitting on skids, unloading docks, what have you. We have seen some of those.
We have seen some of those.
Speaker Change: We're very aware of, I'll call it, offerings in the market. Our, our
We're very aware of I'll call it offerings in the market.
Our.
Our procurement.
Speaker Change: and customer teams seem to see everything that's for sale everywhere. And yeah, there will be opportunities. As we've said in the past, we like to be opportunistic about it.
And customer teams seem to see everything thats for sale everywhere and yes there'll be opportunities.
As we've said in the past, we like to be opportunistic about it.
Speaker Change: And right now we're pretty comfortable with where we stand, but as the charts imply we've got a little bit of
And right now, we're pretty comfortable with where we stand.
But as the charts imply we've got a little bit of.
Speaker Change: you know, excess capacity now that, you know, we'll see how it feels to offer people hosting. We'll see how it feels to put some more miners in and we'll adjust in whatever way we think is best.
Capacity excess capacity now that will we'll see how it feels to offer people hosting and we'll see how it feels to put some more miners in and will adjust in whatever way. We think is best.
Great Super helpful. Thank you for the color.
Speaker Change: We'll now move on to our next question from Joe Vapi from Canaccord. Joe?
We will now move on to our next question from Joe <unk> from Canaccord Joe.
Joe: Hey guys, good afternoon, can you hear me?
Hey, guys. Good afternoon, congrats to getting yes can.
Can you hear me.
Yes, Joe we can hear you. Thank you hi, Joe.
Speaker Change: Yeah, Joe, we can hear you. Thank you. Hi, Joe. Yeah. Hey, guys. Hey, Mike and Mike and Steve. Congrats on getting your first call here at a public company. It's a big milestone. I thought maybe we just, you know, kind of. Yep. You're absolutely right.
Hey, guys.
Hey, Mike.
And Mike and Steve Congrats on getting to your first call here.
The company is a big milestone.
I thought maybe we just kind of yeah youre absolutely welcome.
Speaker Change: If we circle back to some of the, you know, the build-out and, you know, we're kind of also hearing that, you know, it's not just miners, but, you know, on infrastructure side, if you could give us maybe a more detailed update on how some of your new builds are going, I believe North Carolina and Texas. And then I'll have a quick follow-up.
If we circle back to some of.
The build out.
We're also hearing that it's not just miners but.
On the infrastructure side, if you could give us maybe a more detailed update on on how some of your new builds are going I believe North Carolina, and Texas, and then I have a quick follow up.
Speaker Change: So really, our newest builds are in Texas. And as I think we have mentioned, and if not, I guess I'm mentioning it, our Texas facilities, we are up and running in Texas.
So.
Really our newest builds are in Texas and as I think we have mentioned and if not I guess I'm mentioning it.
Our Texas facilities are we are up and running in Texas.
Speaker Change: In Denton, but we have some other developments, you know that we're working on that we hope to have running this year
But we have some other developments that we're working on that we hope to have running this year.
Speaker Change: The answer, the answer to your question is, you know,
The answer the answer to your question is.
Sure.
We are working hard to deal with the.
Speaker Change: We are working hard to deal with the delivery or supply chain issues that we are all facing. The numbers that we've put out, we of course are very comfortable with our ability to achieve.
Delivery or supply chain issues that we're all facing.
The numbers that we put out we of course are very comfortable with our ability to achieve.
Speaker Change: You know, it's not easy getting steel anywhere in this country right now, but we feel good about our ability to get the steel that we need.
It's not easy getting steel anywhere in this country right now, but we feel good about our ability to get the steel that we need.
For our buildings.
Speaker Change: Um, we feel very good about the electrical equipment, but again, to give credit to our power construction team, they were ordering the electrical equipment last year.
We feel very good about the electrical equipment, but again to give credit to our powered construction team. They were ordering the electrical equipment last year for our requirements for this year, which makes a big difference were very high in the queue for the equipment that we need.
Speaker Change: for our requirements for this year, which makes a big difference. We're very high in the queue.
Speaker Change: for the equipment that we need. So we feel very good about it, and we seem to be moving along at the pace we like. I mean, of course, I wish that it was all built yesterday, because we try to fill it up as fast as we can, but the schedule that we outlined on this call that we've talked about previously,
So we feel very good about it.
And we seem to be moving along.
At the pace, we like I mean of course I wish that it was all built yesterday.
We try to fill it up as fast as we can but the schedule that we outlined on this call we've talked about previously.
Speaker Change: We feel good about your right or what you imply is correct, which is that we have anecdotally heard about significant delays in infrastructure development.
We feel good about you're right or what you imply is correct, which is that we have anecdotally heard about significant delays.
And infrastructure developments at.
Speaker Change: other companies. We don't know for a fact precisely what's going on there, Joe. But, you know, we, we have, we, we have, um,
Other companies, we don't know for a fact precisely what's going on there Joe but we have.
We have.
Yes.
Speaker Change: We have heard about significant delays. And I made a little comment in my remarks earlier about the demand we're seeing for our hosting services. And for sure, part of that demand has been of the nature of, hey, I thought I was going to be hosted here, but I ain't going to be ready for a while. You guys got any room for me? For sure, some of the demand is coming from delays in other infrastructure development and other.
We have heard about significant delays and I made a little comment in my remarks earlier about the demand we're seeing for our hosting services and for sure part of that demand has been of a nature of Hey, I thought I was going to be hosted here, but and it will be ready for a while you guys.
Got any room for me.
For sure some of the demand.
As coming from delays in other infrastructure development at other companies.
Okay.
Speaker Change: Got it. That's helpful. Thanks, Mike. And then just as follow up, I mean, Bitcoin spots rebounding, which is clearly a positive.
Got it that's helpful. Thanks, Mike and then just a follow up I mean pick one spot rebounding whats clearly a positive.
Speaker Change: But how, and I know you've got some efforts going on to overall diversify the business longer term.
But how and I know you've got some.
Efforts going on.
Overall diversify the business longer term.
Speaker Change: Is there any update there on that kind of optionality that you're starting to explore around the kind of broader digital assets ecosystem and food chain?
Is there any update there on you know the kind.
Kind of Optionality that you are starting to explore around the kind of broader.
Digital asset ecosystem and food chain. Thanks, a lot.
Speaker Change: There's not really any detailed update beyond what I said, which is that generally we are participating a bit more actively in staking and keeping activities for other protocols, which has gone well and has resulted in some positive results so far. But it's really, it's kind of, it's still too early to say.
So there's not really any detailed update beyond what I said, which is that generally we are participating a bit more actively and staking and keeping activities for other protocols.
Which has gone well and has resulted in some positive results so far but it's really it's kind of it's still too early to say.
Speaker Change: As I think I had mentioned in some earlier comments and earlier conversations was something we really wanted to get focused on once we got through this going public process, you know, that we had.
As I think I had mentioned in some earlier comments in earlier conversations with something we really wanted to get focused on once we got through this going public process.
Speaker Change: I mean, I got to tell you that I think that the job our team did.
<unk>.
I mean, I would say that I think the job our team did.
Speaker Change: to hit the results we did for 2021 while being in the middle of
To hit the results, we did for 2021, well being in the middle of.
Speaker Change: this going public, these backing process that I vowed I will never ever take part in again is extraordinary. But so we're really just getting more and more focused on that now.
This theres going public these bagging process that I vowed I will never ever take part in again.
Is extraordinary but so we're really just getting more and more focused on that now.
Thanks for your question.
Joe.
I appreciate it.
Speaker Change: Once again, to ask a question, please press star and then one on your touchstone phone. And many of those who have asked questions would like to re-enter the queue feel free to do so. We'll take our next question from Austin Vettric from Rock Capital Partners. Good afternoon, Austin.
Once again to ask a question. Please press Star then one on your Touchtone phone.
Many of those who have asked questions, we'd like to reenter the queue feel free to do so we will take our next question from Austin <unk> from Roth Capital Partners partners. Good afternoon Austin.
Austin Vetter: Hi. Thanks for taking my questions. Just had two quick ones for you guys. So Mike, you talk a lot about leaning in more towards either hosting or self-mining when it's economically prudent. I'm just curious how you view that landscape now, and at what point you would start favoring one over the other, and how you kind of see those trend lines moving now as it relates to those pivot points.
Hi.
Thanks for taking my questions.
Just had two quick ones for you guys.
So Mike you talked a lot about.
Leaning in.
More towards either hosting or self mining when it's economically prudent I'm just curious how you view that landscape now and at what point you would start favoring one over the other.
And how are you kind of see those trend lines moving now as it relates to those pivots.
Pivot points.
Well, so I would say that both right now.
Mike Levon: Well, so I would say that both right now are as attractive as they've ever been in the sense that on the hosting side, infrastructure is scarce.
Are as attractive as they've ever been.
In the sense that on the hosting side infrastructure is scarce.
Mike Levon: And on the self-mining side, the margins are pretty strong. So they're both
On the self mining side, the margins are pretty strong.
They're both.
Very attractive.
Mike Levon: Of course, leaning in on the self-mining side requires capital formation.
Of course leaning in on the shelf mining side requires capital formation.
Mike Levon: And so really where we go and sort of how we balance it the remainder of this year is going to be somewhat dependent on capital formation, our ability to raise capital because, you know, we can – it doesn't require any more capital for us to agree to a profitable hosting agreement. You know, then we have – it will require more capital for us to acquire more machines.
And so really where we go and sort of how we balance it the remainder of this year is going to be somewhat dependent on capital formation, our ability to raise capital.
Yes.
We can we can it doesn't require any more capital for us to agree to a profitable hosting agreement.
Then we had it will require more capital for us to acquire more machines.
Mike Levon: And so, that's the balance we have to look at. We'd like to see, frankly, you know, the capital markets being a little bit more accommodating as you all are very aware. There are some global conflicts that tend to dampen capital market appetites.
And so that's the balance we have to look at.
We'd like to see frankly.
The capital markets being a little bit more accommodating.
As you all are very aware there are some global conflicts.
Dampened capital market appetites.
Mike Levon: And so although we believe we have access to the markets, we're also very, very focused on dilution and on doing things that are very accretive.
And so although we believe we have access to the markets. We're also very very focused on.
Dilution and on doing things that are very accretive.
Mike Levon: And so how much we lean into more self-mining will have to do with availability of well-priced capital.
And so how much we lean into more self mining will have to do with availability of well priced capital.
Speaker Change: for sure, but as well as frankly the cost side, look if there continues to be a glut of equipment sitting on loading docks, you know every day that's burning all
For sure, but as well as frankly, the cost side look if there continues to be a glut of equipment sitting on loading docks.
Everyday that's burning a hole in somebody's pocket.
Speaker Change: And so it's a balance of capital formation and cost. But on the return side, both hosting and self-mining look pretty good going forward this year.
And so it's a balance of capital formation and cost, but on the return side, both hosting and self mining look pretty good going forward this year.
Got it.
And.
Yes.
Are you there Austin.
Speaker Change: Looks like we may have lost Austin from the call. Let's move on to our next question, which comes from Lucas Pipes at eRiley Securities. Lucas, have a good afternoon. Hey, good afternoon. Hey, thanks very much for having this call. This is super helpful, really appreciate it and congrats on being public. Great, great to see you in the public market.
It looks like we May have lost Austin from the call, let's move on to our next question, which comes from Lucas pipes at B Riley Securities Lucas Good afternoon, Hey.
Good afternoon, Hey, thanks, very much for having this call. This is super helpful really appreciate it and congrats on being public.
Great great to see in the public market. Thank you.
Yeah.
Lucas: I wanted to ask you a little bit about hosting fees. You commented on the shortages. How is this ricocheting through what is
I wanted to.
Speak a little bit on ask you a little bit about hosting fees you commented on the shortages.
This ricocheting through what is.
Lucas: what is commercially feasible? Are you looking for greater equity stake or kind of revenue share or longer tenure? How is this translating into the hosting fees?
What is commercially feasible.
Looking for greater equity stake or what kind of revenue share or longer tenure, how is this translating into.
And to the hosting fees the shortage.
A great question and the answer.
Speaker Change: is that the answer is yet to be determined in the following sense so what I can tell you is
Is that the answer is yet to be determined in the following sense. So what I can tell you is we are absolutely thinking creatively about it.
Speaker Change: we are absolutely thinking creatively about it, right? One, we're quite certain that just the US dollar revenue, you know, sort of charged hosting fee, we can charge a higher price.
Alright, one we're quite certain that just the U S dollar revenue sort of charged.
Hosting fee.
We can charge a higher price.
Speaker Change: for our hosting services right now, then we have historically been able to charge. That is, of that, we are quite certain. And we have customers that are requesting it and understand that the prices need to be to go up. But of course, as we discussed earlier, energy prices have gone up a little bit too.
For our hosting services right now than we have historically been able to charge that is of that we are quite certain.
And we have customers that are requesting it and understand that the prices need to be to go up but of course as we've discussed earlier energy prices have gone up a little bit too.
So we know that but your question is really interesting in the sense that we are also tasked russell into dos and Jeff and our customer success team as we call it.
Speaker Change: So we know that. But your question is really interesting in the sense that we've also passed
Speaker Change: Russell and Tadas and Jeff and our customer success team, as we call it, to think creatively about how we can do things that are really good for our customers.
To think creatively about how we can do things that are really good for our customers and really good for us.
Speaker Change: And I don't know if that's going to lead to hatch rate sharing or profitability sharing arrangements.
And I don't know if thats going to lead to.
Cash rate sharing or profitability sharing arrangements, but I can tell you that it is quite topical for our team right now.
Speaker Change: but I can tell you that it is quite topical for our team right now.
Speaker Change: and that we are doing serious work on.
And that we are doing.
Serious work on.
Speaker Change: how we move our hosting business forward this year, and under what kind of terms.
How we move our hosting business forward this year and under what kind of terms.
Interesting very interesting how helpful. Thanks, Thank you very much Mike.
Speaker Change: My second question is on the M&A side, we've seen a proliferation in the space, and you're clear on that.
Thank you Mike.
My second question is on <unk>.
On the M&A side.
<unk> seen a proliferation in the space and you are clearly a leader.
With your scale and scope in the market and how do you look at the landscape.
Speaker Change: your scale and scope in the market and how do you look at the landscape over the next 12 months?
Over the next 12 months.
Mike Levon: So how do you think M&A opportunities might open up?
So how do you think M&A opportunities might open up.
I think that a lot is going to be determined over the next 12 months.
Mike Levon: I think that a lot is going to be determined over the next 12 months. You know, last year there was a period of
Last year, there was a period of.
Extraordinary capital availability to anything that began with the word bitcoin.
Mike Levon: extraordinary capital availability to anything that began with the word Bitcoin.
Mike Levon: and, or DeFi, or digital assets.
And or defy or digital asset.
Mike Levon: And it's going to be very interesting to see how those capital flows are the coming 12 months.
And it's going to be very interesting to see how those capital flows are the coming 12 months.
Mike Levon: There are, and you guys would know better than me, but there are at least 20 companies that I know of that wish to go public, that hope to go public, but I suspect
There are and you guys would know better than me, but they are at least 20 companies that I know of that wish.
To go public debt.
That hope to go public.
But I suspect.
75% of them won't be able to.
There are a lot of companies that.
Mike Levon: are in need of capital, whether it's to fulfill commitments on minors they've ordered, but haven't fully paid for.
Are in need of capital, whether it's to fulfill commitments on minors, they've ordered but havent fully paid for.
Mike Levon: or on infrastructure they said they were going to develop, but haven't fully developed.
Or an infrastructure. They said they were going to develop but haven't fully developed.
Mike Levon: And so if that capital is not flowing.
And so.
That capital is not flowing.
Yes, I think that we're going to have the opportunity to do some very accretive things.
Mike Levon: Yeah, I think that we're going to have the opportunity to do some very accretive things. If that capital is flowing, I mean, we're not, you know, we're not going to compete on the lowest cost of capital basis.
If that capital is flowing I mean, we're not.
We're not going to.
Compete on our lowest cost of capital basis.
We're going to do things that make money for our shareholders.
If I were a betting man.
Mike Levon: I'd probably say that I think that there are going to be opportunities because I think that capital flows are going to be more discriminating over the course of the next
I'd, probably say that I think that theyre going to be opportunities because I think that capital flows are going to be more discriminating over the course of the next year.
So I do think there'll be opportunities, but a lot depends on on that one aspect.
Mike Levon: So I do think there'll be opportunities, but a lot depends on that one aspect.
Thanks, Mike Lucas we appreciate your question.
Yeah appreciate it best of luck.
Speaker Change: Thank you, thank you. Thank you. We have no further questions at this time. If you have any additional questions, feel free to email us at IR at coursescientific.com at any point. We thank you for your attention and for your interest in Core Scientific. An archived version of this call, all SEC filings in relevant company and industry news can be found on our website, coursescientific.com. We wish you a good day and we look forward to speaking with you again following next quarters.
Thank you. Thank you. Thank you.
We have no further questions at this time.
If you have any additional questions feel free to email us at IR at core scientific Dot com at any point, we thank you for your attention and for your interest in core scientific and archived version of this call all SEC filings and relevant company and industry news can be found on our web site core scientific Dot com. We wish you a good day and we look forward to speaking with you again.
Following next quarters results.
Yes.
Okay.
Sure.