Stronghold Digital Mining Inc. Q1 2023 Earnings Call

Speaker 2: Good morning and welcome to the Stronghold Digital Mining conference call for the first quarter ended March 31, 2023. My name is Catherine and I will be your operator this morning. For this call, Stronghold issued its results for the first quarter 2023.

Speaker 2: and a press release which is available in the investor section of the company's website at www.strongholdigitalmining.com. You can find the link to the investor section at the top of the home page.

Speaker 2: Join us on today's call, our Stronghold's Chairman and CEO , Greg Beard, and CFO , Matt Smith. Following their remarks, we will open the call for questions. Before we begin, Alex Cuffton from Gateway Group will make a brief introductory statement. Mr. Cuffton, please proceed.

Speaker 3: Thank you, operator. Good morning, everyone, and welcome.

Speaker 3: Today's slide presentation, along with our earnings release and financial disclosures, were posted to our website earlier today and can be accessed on our website at www.strongholddigitalmining.com. Some statements from nation today may be considered forward-looking statements under securities law.

Speaker 3: and involve a number of risks and uncertainties.

Speaker 3: As a result, we caution you that there are a number of factors, many of which are beyond our control, which could cause actual results and events to differ materially from those described in the forward-looking statements.

Speaker 3: For more detailed risks, uncertainties, and assumptions relating to a forward-looking statement, please see the disclosures in our earnings release and public filings made with the Securities and Exchange Commission.

Speaker 3: We disclaim any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law.

Speaker 3: We will also discuss non-GAAP financial metrics and encourage you to read our disclosures and the reconciliation tables, the applicable GAAP measures, and our earnings release carefully as you consider these metrics.

Speaker 3: We expect to file our quarterly report on form 10-2 on May 15, 2023 with the Securities and Exchange Commission, which sets forth detailed disclosures and descriptions of our business, as well as uncertainties and other variable circumstances, including but not limited to risks and uncertainties identified under the CAPTCH-

Speaker 3: for free by visiting the SEC website at www.sec.gov or Stronghold Investor Relations website at www.ir.strongholddigitalmining.com.

Speaker 3: I would like to remind everyone that this call is being recorded and will be made available for replay via a link available in the investigation section of the Stronghold's website.

Speaker 3: Now, I would like to turn the call over to Stronghold's Chairman and CEO , Greg Beard. Greg?

Speaker 4: Thank you. Good morning, everyone. And thank you for joining us on our first quarter 2023 earnings call.

Speaker 4: For today's call we are going to reference an associated slide presentation that is available through the webcast and on the IR portion of our corporate website.

Speaker 4: While the first quarter of 2023 remained a challenging environment for our business and most public Bitcoin mining companies, we continued to take proactive steps to execute on our strategic plan and best position strongholds for long-term success.

Speaker 4: Before turning the call over to our CFO , Matt Smith, for a detailed review of our financial results, I would like to touch on some recent highlights from our business and our confidence in the year ahead.

Speaker 4: Let's start on slide three.

Speaker 4: As a reminder to everyone call stronghold owns and operates to waste call reclamation facilities in Pennsylvania. Straw grass and Panther Creek, both of which are low cost. Environmentally beneficial coal refuse power generation facilities.

Speaker 4: Today, we have 165 megawatts of power generation capacity and current hash rate capacity of 2.8 exa-hash per second.

Speaker 4: And expect to achieve for exe hash by the end of Q3 2023.

Speaker 4: with our already built and ready to use slots at our data centers.

Speaker 4: Moving to slide four.

Speaker 4: Stronghold today is significantly de-levered versus where we were just nine months ago. We accomplished this de-levering through five transactions or amendments with six counter parties.

Speaker 4: Our net debt is now just approximately $50 million. We have no mandatory amortization payments until July 2024, and we have significantly reduced our outstanding payables. With those efforts behind us, we are very excited to focus on what we believe are accretive and capital efficient businesses.

Speaker 4: growth initiatives and projects. Since returning 26,000 miners representing 2.5 exahash to our lender in August 2022, we have received or procured approximately 22,000 miners representing 2.2 exahash, nearly refilling the capacity made available by the minor return. We have done so while investing only $15 million of incremental capital.

Speaker 4: As announced last month, we recently acquired 5000 microBT What's Minor M50 Minors, or $15.50 per terahash.

Speaker 4: These are top of the line machines and we believe that the price is as attractive as we have seen in the market. These miners were funded with proceeds from our April 2023 private placement in which I invested personally.

Speaker 4: not only because I continue to have a strong faith in the company, but also because we found an exceptionally compelling and creative opportunity.

Speaker 4: Recent power prices have been 20 to $35 per megawatt hour during the month of April .

Speaker 4: forward prices for the next 12 months currently average $40 to $45 per megawatt hour.

Speaker 4: We expect that these M50 miners will generate revenue in excess of $110 per MWh based on an 8 cent hash price, with minimal incremental cash operating costs.

Speaker 4: This represents significant potential uplift to revenue and cash flow that allows us to recover our entire investment in less than one year based on an 8 cent cash price, current forward power prices, and a 95 percent assumed minor uptime. We also recently announced a two year cap...

Speaker 4: will receive 50% of the Bitcoin mined and recover costs

Speaker 4: Half of the miners are currently on site and ready to be deployed. To reiterate, the fact that we can pull out these M50 miners and K-NIN miners into our ready-for-use data center slots immediately further highlights the benefits of owning our own power and data center resources that enables us to undertake these types of transactions without the occurrence of any significant expenses. The MicroBT and K-NIN transactions have accelerated our Bitcoin mining capabilities and growth. On our last earnings call, we raised our hashrate guidance to 4X hash.

Speaker 4: and expected to be there by year end. Following these recent announcements, we now anticipate that we will reach 4-EXA hash by the end of the third quarter.

Speaker 4: we are evaluating various opportunities that would exceed our current capacity. While we can make no assurances regarding future growth, we will continue to explore various opportunities to grow hashrate in an accretive and capital efficient manner.

Speaker 4: Finally, when we talk about growth, we are primarily talking about cash flow growth. And that includes a diligent focus on expenses and operational efficiency. Consistent with our guidance, we achieved a net cost of power between 45 and 50,000 per megawatt hour and March. And we believe that certain tail limbs...

Speaker 4: such as reduced fuel costs and personnel expenses could drive our cost lower for the rest of the year. We are now forecasting a met cost of power of $40 to $50 per megawatt hour on average for the rest of 2023.

Speaker 4: As we discussed on our last earnings call, low power prices have created the opportunity to be more flexible with how we dispatch our power plant resources versus importing power from the grid. Looking forward, we plan to optimize the use of our power plants, which means that the plants would be expected to run a full capacity in the summer and winter.

Speaker 4: But idle during the shoulder months when we expect to be able to import power at a lower cost to stronghold.

Speaker 4: Additionally, as we have disclosed, our plants generally require one to two maintenance outages per year. To that end, we will be taking a two-week outage of Panther Creek letter this month. However, we are happy to report that scrub grass has already performed most of the maintenance work that an outage would have entailed.

Speaker 4: and we do not currently expect to take a planned out of this spring at Squabgrass. Moving to slide five, which weighs out our hash rate growth. We have been able to capitalize on some continued pockets of distress in the Bitcoin mining space and are actively evaluating incremental opportunities to fill our limited remaining data center capacity.

Speaker 4: After a Tony Miner saw our lender in August , 2022, we had a hash rate capacity of 1.4X

Speaker 4: At the end of Q1, we have 2.6 exa hash. We are currently at 2.8 exa hash.

Speaker 4: We have contracted to receive minors to bring us to 3.8 exohash and believe that we will achieve 4 exohash by the end of Q3. Importantly, and I can't emphasize this enough, we are focused on a creative, careful, efficient growth, and I think that the chart on the right illustrates this well. From inception to the first half of 2022.

Speaker 4: our CAPAC divided by the hash rate contracted during the period worth about $60 per tear hash.

Speaker 4: In the second half of 2022, it was $20 per terahesh. And in 2023, year to date, it has been about $10 per terahesh.

Speaker 4: We believe that these numbers demonstrate that we are getting more revenue potential per dollar spent than we ever have before and we aim to prudently grow and deploy a capital.

Speaker 4: Let's move to the next slide. As I mentioned earlier, we recently announced unique agreements with Foundry and Cayman.

Speaker 4: These are technically hosting agreements in name, but we do not believe that the word hosting does them justice because they were very different than industry standard hosting agreements.

Speaker 4: Similar standing hosting agreements, we do not have upfront catbacks and we are being paid to operate Bitcoin miners. However, a significant difference is that we have exposure to Bitcoin mining economics as demonstrated in the chart on this page.

Speaker 4: We preserve power pricing upside in our relatively unique ability to curtail, which we believe is also differentiated.

Speaker 4: We believe that these agreements are highly beneficial for Sarmul and demonstrate our ability to creatively increase hash rate without capital investment. Collectively, these agreements are expected to add hash rate capacity of over .8XH per second.

Speaker 4: Before turning it over to Matt, I want to send our co-founder and former co-chairman Bill Spence for his vision, service, and leadership. Bill recently announced his retirement to spend time with his family and focus on his health, but he will continue to consult with us.

Speaker 4: focusing primarily on supporting our efforts related to environmental reclamation, beneficial use ash, and carbon sequestration.

Speaker 4: primarily supporting our efforts related to environmental reclamation, beneficial use ash, and carbon sequestration, areas of key focus for the company.

Speaker 4: With that, I'd like to pass it over to our CFO , Matt Smith. Thanks, Greg. I'm going to start on slide 7 with a quick recap of our de-leveraging since last summer.

Speaker 4: Insumption. Stronghold has reduced total debt plus net current liabilities from $179 million.

Speaker 4: The 71 million, including a 60% reduction in total debt from 146 million to 60 million over the last nine months.

Speaker 4: and our mandatory principal amortization payments have gone from 45 million to zero for the remainder of 2023.

Speaker 4: We will decide for a review of our Q1 financial results. Revenue for the first quarter was 17.3 million.

Speaker 3: We mined almost 618 Bitcoin during the first quarter and generated a total mining segment revenue of 13.6 million.

Speaker 4: and total energy segment revenue of $3.6 million. Gap net loss was $46.7 million and adjusted EBITDA was a loss of $3.9 million.

Speaker 5: It is important to note that the company's intense focus on cash cost reductions continue to materialize in the first quarter and we achieved a net cost of power $750 per megawatt hour in March. During the quarter, we continue to operate in an environmentally beneficial way.

Speaker 5: removing approximately 259,000 tons of coal refuse from piles and returning approximately 197,000 tons of beneficial-use ash to remediate these toxic coal piles.

Speaker 6: Let's move to slide 9.

Speaker 5: watts of power generation capacity.

Speaker 5: Current data center load is approximately 95 megawatts and we expect it to increase to 130 megawatts by the end of Q3 based on guidance.

Speaker 5: We optimize our operations to maximize gross profit from the following alternatives.

Speaker 5: One, curtail miners to sell power to the grid if power prices are more attractive than Bitcoin mining economics. The next question is from

Speaker 5: 2. Bitcoin miners and maximumized hashrate if bitcoin mining economics are superior to power prices.

Speaker 5: Reduce plant output and purchase power from the grid if power prices are less than our variable fuel costs net of renewable energy credits.

Speaker 5: On this slide, we also provide some explicit guidance for our four key cost categories.

Speaker 5: Moving to slide 10, historically we have focused on two primary drivers of hash price, which are bitcoin price and network hash rate, because transaction fees that we earn have historically been between 1 and 3%. However, since early April , our exchange depressed by over 3 meets our 4th Move at the census again coming

Speaker 5: Transaction fees have dramatically increased due to a sharp rise in transactions on the Bitcoin network.

Speaker 5: Increased transactions have led to increased congestion and time to verify a transaction.

Speaker 5: This has resulted in higher incentives for Bitcoin miners to verify transactions. When the sharp rise in transaction fees is reflected in the hash price calculation, it results in greatly improved Bitcoin mining economics.

Speaker 5: We are not surprised to see increased transaction volume on the Bitcoin blockchain given recent innovations such as ordinals and BRC-20 token standard.

Speaker 5: and we will be watching closely as the trajectory of transactions evolves.

Speaker 5: It is too early to extrapolate the current trend and we cannot be sure that there will continue to be increased transactions or that transaction fees will remain higher than in prior periods. However, we believe that it is important to illustrate the positive impact of transaction fees.

Speaker 5: on our primary revenue driver. I will now turn the call back over to Greg for his closing remarks.

Speaker 4: All right, thank you, math. Just a shout out, thank you to those that need to be recognized. One of the issues that we're not covering on this call is plant uptime and liability, because we have the plants in a very good place now. It took more than 150 different people, including contractors, to get these plants back, where they are, these are engineers, electricians, line-off, turbine, eye to put that your plant, away, people in plea they have been looking tactfully at you?

Speaker 4: infrastructure going. And also a shout out to our general council who had a, uh, who just got married a few weeks ago. So thank you, Matt. Um, and, uh, again, once again, thank you to Bill for everything he's done for the company.

Speaker 2: Please stand by while we compile the Q&A roster. Our first question comes from Chase White with Compass Point Research and Trading. Your line is open.

Speaker 7: Thanks, good morning guys. For the two to four million of maintenance costs for the planned outages, how should we think about that being split between the May and September maintenance periods? Obviously with scrubgrass not going into maintenance at the end of May versus more than likely both of them going down in September . How should that be?

Speaker 5: Scrub grass is not taking an outage this spring. And it's a little too early to know exactly what and if we have outages in the fall. But at this point in time, we pulled a lot of the work we may have done at Pantacreek forward to this outage so that we may only need to take one outage.

Speaker 5: If we do something at panty creek in September , it would be very limited. I would guess less than a week and scrub brass. You know, we've been working on the redundant systems for the last 6 months as we shared since the outage. In September , we've been, you know.

Speaker 5: Kind of carefully checking systems, checking redundancies and we just didn't see a need to take an outage in May given that we've been working on. We've tended to work on the plan, maintain the plan. Well, we're importing power because that's advantageous to do. I think in September . We, you know, we, we have not yet provided guidance on what.

Speaker 5: what an outage would look like for ScrubREST, but I would expect it's also pretty limited. And so that's why we gave the range that it's 2 to 4 million. And I think I'd like to see it lower end of that, but we want to leave ourselves some room in case it makes sense to

Speaker 7: You know, put some more money to work to, you know, to continue to push the plans forward. Yeah, that's helpful and a. Follow up if I may, you know, how should we think about the timing and spend on the 25 megawatts of additional capacity to the extent that you guys definitely move forward with that?

Speaker 5: Yeah, Chase, we're focused on getting to the 4X hash, which we now have numerous opportunities we're evaluating in order to do that in kind of the unique way that we've been trying to accomplish it in a very, very capital efficient way. We have not yet included anything related to 25 megawatts in guidance.

Speaker 5: It's not in the 4 exit hash, certainly. We wanted to highlight that we spent money on all of the data center equipment end-to-end that we would need to deploy an additional 25 megawatts of data center. But we have yet to identify a site. When we do, you can imagine we will be very forthcoming about that.

Speaker 7: How long would it take, I guess is a better way to ask the question, to get from start to finish to get that up and running?

Speaker 4: Yeah, I don't model it, but it's just something that we're focused on. We love to, you know, we spend all the money on the strong boxes, which are the containers.

Speaker 4: that includes a switch gear, includes transformers. So it's very compared to a regular build out. It's really cheap. And given that we've now demonstrated that we can do, you know, what do we call for, quasi-host and agreements with different parties.

Speaker 4: and we just, you know, obviously announced another one recently there. So we think we can do it in a very low capex way. We're focused on it, which means...

Speaker 4: this year. But I think don't put it in your model. Let us have the upside from that, but know that we think we have an exa-hash sitting on the ground to be picked up and there isn't a week that we're going to work on on the site. We've investigated many different locations and you know work on finding the right one.

Speaker 4: It's not going to be a big cap expense. Got it, that's helpful. Thank you.

Speaker 4: it's not going to be a big cap expense. Got it, that's helpful. Thank you.

Speaker 8: it's not going to be a big cap expense. Thank you.

Speaker 2: Thank you and one moment for our next question. Our question comes from Lucas Pipes with B. Riley Securities. Your line is open.

Speaker 3: Thank you very much, operator. Good morning, everyone. Thank you very much for the presentation. Lots of detail there and appreciate all the color. Just to circle back on the ability to toggle back and forth between power generation and importing power. Thank you very much.

Speaker 3: remind us what is the variable cost for scrubgrass and panther that would cause, I guess that would cause you to import power if power prices are lower than that. So appreciate your additional points on that. Thank you.

Speaker 4: Hey, Lucas. Good morning. Thanks for your attention to detail. As we have talked about, the big advantage of being vertically integrated is the ability to buy power from the grid when it's cheap.

Speaker 4: and then sell power to the grid when it's expensive and you know, mind Bitcoin in the cases or in the in between. So if you think about our variable cost, it's in the three-cent range.

Speaker 4: sell power to the grid when it's expensive and mine Bitcoin in the case of sort of in between. So if you think about our variable cost, it's in the three cent range.

Speaker 4: And that's true for both plants. The calculus for running a plant or idling it and importing power has, there are many, many variables in that. We need to, what we describe as net out in a month, and so we need to sell more power to the grid than we consume.

Speaker 4: or we get charged a higher rate for the power that we consume. So that's an important factor. We also earn renewable energy credits when we deliver power to the grid and that reward comes later in the year.

Speaker 4: So on a given month, we're not earning the cash from the renewable energy credit, but it does make sense to later in the year put that in. And the value of those credits have gone up a lot this year, and so that's on our minds as well. But if you were looking for the simple answer for your model, around $30 a megawatt, you

Speaker 4: it's going to make sense to, all in the day, import power rather than run the plant. But you have to, if you see power prices well below 30 and you say, hey, why are you running the plants anyway? The answer is because we needed that out or there are other considerations like renewable energy credits that we're using in our calculations.

Speaker 7: Very helpful. Thank you, Greg. And you kind of answered my second question.

Speaker 3: Is there optionality to, given that you can import power, to go beyond the

Speaker 3: the four plus 25 megawatts, I guess, of exa-hash capacity, i.e. does it make sense to build data centers to import power? I think you answered it in terms of the higher rate you would pay that maybe makes it prohibitive but would appreciate. I am sure it helps that we're seeing realgun attacks.

Speaker 4: Any thoughts on that matter? Thank you. So, if I understand your question, it's can we put the additional 25 megawatts at an existing plant and import power?

Speaker 4: At the existing and 1 or 2 existing locations is that is that what you're asking. Yeah, and then even going a step further. What would it make sense to go even beyond the 25 megawatts?

Speaker 3: or not given that I guess power rates increase if you buy more power than you sell power.

Speaker 4: Yeah, so the way we've designed the data centers and with our interaction with the local grid, we think it makes sense to continue to be a net power supplier to the grid even when the data centers are running at full capacity. That helps us be in sync with the grid and helps us.

Speaker 4: manage the data centers up and down to manage energy flows up and down. That's what helps make the grid stable and is why we argue strongly that our presence as power plants coupled with data centers is hugely beneficial to the residents in our node in PJM.

Speaker 4: by making the grid more stable. If we were to use all of the power and essentially disconnect from the grid or only pull power down from the grid, that argument would be lost. And we wouldn't be inter-stabilizing the grid as much as we are now. And so I think we're unlikely to do that.

Speaker 4: But hey, I think there is potential at our sites to put additional power assets because say Scrub Gas for example has 700 acres and we're using about half of the transmission capacity of the existing line and place that we own....

Speaker 4: So, there very well could be an opportunity to put renewable assets on site that could then increase the capacity of the power generation that would then cause us to look into expanding the data center, but that's not on the agenda for this year.

Speaker 4: that having power assets coupled with data centers makes the development of renewable energy more possible in our section of the grid. We're cleaning up a bunch of nasty sites as we do it. Thank you.

Speaker 7: These are not little projects. It's like sort of 7 stores of steel and hundreds of trucks to move a waste into our facility. So you could not duplicate it today. Very helpful Greg and thank you for the invitation. I will ask a 3rd question. Thank you. And it's actually related. You mentioned.

Speaker 8: Thank you.

Speaker 4: Yeah, so for the purpose of modeling and cap expense, presume that we're not going to spend any money. But with that being said, if you look at what's in the

Speaker 4: in the Inflation Reduction Act. It's a dramatic increase in the value of carbon credits designed for facilities like ours. When we emit carbon, we argue strongly that all the carbon that we emit will be emitted into the environment anyway and the piles sit as they are.

Speaker 4: And obviously when we're doing our cleanup of these areas, it's creating a hugely beneficial circumstance for the populations that live near those piles. So, but in spite of all those benefits, the government still wants us.

Speaker 4: to decarbonize as much as possible, and they've made the value of carbon credits so high that we have to look at it. I think at this point we will say, hey, we are beginning to study strongly the chemical composition of our ash, which we know very well what's in there, and the attributes of what's in our exhaust or flue gas.

Speaker 4: and figuring out, hey, what would it cost to decarbonize that flue gas? So I think it's, give us a quarter, and maybe on the next call we'll say, well, we figured it out and it's cost prohibitive. Or we might say we found a partner to develop that decarbonization with us. But at this point what we think is it's worth a look. So don't presume anything other than.

Speaker 4: it's on our minds. And I think honestly it would, what a great environmentally positive impact that would mean if we could actually clean up all of these toxic waste sites and not put, and have a resulting outcome be even less carbon and toxins in the air.

Speaker 7: That's a, that would be a great outcome and we're working on it. Yeah, yeah, no, I guess you'd be carbon negative considering the alternative. Very helpful, Greg. That's absolutely right. Yep. Yeah, Greg Greg and team really appreciate the color continued best of luck to you and your team.

Speaker 9: Thank you.

Speaker 2: Thank you. Our next question will come from Michael Donovan from HCW. Your line is open. Thank you, Greg and Matt, for taking my question. This is Michael calling on behalf of Kevin Deedy.

Speaker 3: Can you talk more to the new business of selling ash perhaps addressing the cost of transportation such as moving coal in and ash out?

Speaker 3: Also, we're likely to see higher fuel prices this summer. And some of the latest prices haven't declined. So what should we expect at Stonhold? Thanks.

Speaker 3: we're likely to see higher fuel prices this summer and some of the latest prices haven't declined. So what should we expect at Stonewold? Thanks.

Speaker 4: So, hey, thanks for getting on and for the questions. On the ash, we are, when we sell ash, which we've announced a contract, and we have a partnership to sell it ash now, most of the benefit is in cost avoidance.

Speaker 4: So we're avoiding more than $10 per ton of trucking costs.

Speaker 4: and we're gaining a couple dollars per ton as a sale. So I think if you modeled in, you know, say 12 or 13 dollars of net benefit by quote, selling the ash.

Speaker 4: that you're going to be very close in the ballpark. Right now we're having Ash.

Speaker 4: removed from Panther Creek, one of our two sites, and what guns are we giving on tons sold this year? So we've shared that we think the business is in excess of a million dollar benefit this year.

Speaker 5: And we still feel pretty good about that. We want to be credible and so we want to put things out that we can beat and we're going to strive to beat that. But at this point, I can still feel pretty good about that number as a benefit as a net fuel cost deduct. Um, you know, the.

Speaker 5: The cost to remove ash from the site is what is called sort of 10 to 12 dollars per ton that we pay if there's not an off taker taking it. And then there's the opportunity to earn revenue in addition to that. And the agreement, the confidential agreement that we have in place with a, we'll call it a leading waste management company in the US.

Speaker 5: They help us avoid that cost and they also pay us a modest amount of revenue. And we think there is really as we develop these markets, which Bill Spence developed that market from scratch. As we develop these markets, we are going to, we think there is an upside to the revenue component of the ash sales.

Speaker 5: We're pretty excited about it, but too early to go beyond that guidance. Michael asked for your question on diesel. I think there are a couple of components. There's a whole recipe to the fuel on our site. It involves bringing in limestone, bringing in coal refuse. It involves bringing ammonia. We use the Tampa ammonia index as kind of the basis for our ammonia purchases. That index has gone from...

Speaker 5: $1,500 a ton to several hundred dollars a ton. It's reverted meaningfully since last summer. The natural gas and other things are key inputs into ammonia that will be seasonal, but we've gotten substantial relief and some key cost categories in our fuel costs. And then RECs have gone from $10 to approaching $30 over the last number of months.

Speaker 5: For instance, over 100,000 tons of coal on site ready to go with Scobrass when we want to dispatch the plant. And so that would mean for those 100,000 tons, no diesel required. Other than to take the ash away, so I think we've. I wouldn't bet against us in terms of. You know what we put out there for our cost of power.

Speaker 5: And diesel is a key consideration in that we look at the full curve as well. And so hopefully there's some confidence that we're incorporating that into our forecast.

Speaker 4: Great, much appreciated. That's very helpful and congrats on the quarter. Okay, great. Thanks. Hey, before, I don't know if we have more questions, but just for the analysts. Okay, bye.

Speaker 4: make more of your follow-up questions about transaction fees, because I think the market is missing a pretty big opportunity there. So any other questions operator, and then we'll hopefully get one about that topic. Again, if you would like to ask a question, press star 11 on your telephone and wait for your name to be announced. Thanks again so much.

Speaker 4: your follow-up questions about transaction fees, because I think the market is missing a pretty big opportunity there. So any other questions operator, and then we'll hopefully get one about that topic. Again, if you would like to ask a question, press star 11 on your telephone and wait for your name to be announced. One moment.

Speaker 3: At this time, this concludes our question and answer session. I would now like to turn the call back over to Mr. Baird for his closing remarks. Okay. We have a question in the room on transaction fee, so go ahead, Matt. Yeah. I think it seems to us to have been lost. Thanks guys for payments on account.

Speaker 5: and revenue in two ways.

Speaker 5: through block subsidies, which you know those are the current 6.25 BTC per block that are known, and then through transaction fees, which are also paid to miners in the form of additional Bitcoin. There are elegant features built into the Bitcoin blockchain, including market-based congestion pricing. In this case,

Speaker 5: Various innovations such as ordinals and BRC-20 tokens are causing increased traffic by putting more data through the blockchain, which has caused congestion as of late.

Speaker 5: Higher transaction fees are the correct mechanism in the blockchain, and if you want to have your transaction verified, you can pay a higher fee to have your transaction verified sooner. Over the last four to five weeks, we started to see the number of transactions pick up, and it resulted in increased congestion.

Speaker 5: and increase transaction fees. Well, we expect more volatility going forward and look forward to continuing to verify that we look forward to continuing to verify the transactions on the network and seeing how this develops.

Speaker 4: All right. Thanks, Matt. Hey, thank you, shareholders.

Speaker 4: analysts in the interest of people. I think we're really proud of the progress we made this quarter. And thank you also to those that we have, our partners that have contracted with us, some of whom have become shareholders in the company.

Speaker 4: to White Hawk, our remaining lender. We have very good relationships with every one of those groups. We've made a ton of progress, as I said, and it looks like we're going to have a fantastic rest of 2023. So we are thankful and look forward to delivering on that promise.

Speaker 10: Thank you operator.

Speaker 11: Thank you for joining us today for strongholds or new calls. You may now disconnect.

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