Q3 2023 CleanSpark Inc Earnings Call
Okay.
Ladies and gentlemen, good afternoon. My name is Abby and I will be your conference operator today.
At this time I would like to welcome everyone to clean Sparks fiscal third quarter financial results Conference call.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question during that time simply press. The star key followed by the number one on your telephone keypad.
If you would like to withdraw your question Press Star one a second time.
Thank you and at this time I would like to turn the floor over to Isaac Holyoke, Chief Communications Officer, you may begin.
Thanks, Abbe and thank you for joining us today for our fiscal third quarter financial results call covering the period April one 2023 through June 30 of 2023. Our press release was issued about 30 minutes ago and is available on our website at www Dot claims spark dotcom forward slash.
Cash investors today's call is also being webcast and a replay and transcript will be available on our website.
I am here with Zack Bradford, our Chief Executive Officer, and Gary Vecchiarelli, Our Chief Financial Officer.
Keep in mind that some of the statements. We make today are forward looking and based on our best view of the world and our businesses as we see them today.
As described in our SEC filings and on our website those elements may change as the world changes.
We will also discuss certain non-GAAP financial measures concerning our performance during todays call you can find a reconciliation of GAAP financial measures in our press release, which is available on our website and with that it is my pleasure to turn the call over to Zack.
Thank you Ed good afternoon, and thank you for joining us for our third quarter earnings call.
Since last speaking with you we have strengthened our position as one of the largest most efficient publicly traded bitcoin mining operators in the world.
Dedication of our teams has resulted in an extraordinary rapid growth. We now outperformed almost every single one of our competitors and monthly production, even compare to competitors that on paper may seem bigger than us.
As the CEO and founder.
I hope youll excuse a little cheerleading, but I don't think it is at all an exaggeration to say that we are the best bet. In this space. We have a proven track record of doing what we say, we'll do and to that point, we have hit or exceeded every milestone we've set for ourselves This company and the people who were.
Work here are best in class in every way.
Now before I get into the details on the quarter I want to take a moment and announce that we have fully funded our growth to 16 extra cash. This includes machine materials and everything else nuts to bolts that goes into building a world class Bitcoin mining facility and bridging the gap to <unk>.
<unk> per second.
This creates certainty for our shareholders around our future and puts any questions to bed about our path to 16 <unk> per second.
We are building transformational infrastructure with almost 90000 machines deployed and another 60000 on hand or pending delivery for a total fleet of approximately 150000 state of the art miners.
All fully funded.
We are operating over nine <unk> per second and over the next half of the year, we expect to add an additional <unk> <unk> per second after energizing the expansion of our data center and Sandra sale, Georgia.
That expansion I again would like to state is fully funded.
I know this has been an important question for many of you. There is no longer any uncertainty about when we will have the funds in hand to pay for the expansion and the miners.
That day is today.
Our track record speaks for itself so far this fiscal year, which for US started on October one 2022, we have mined over 5600 bitcoins through July .
That speaks not only to our scale, which is substantial but also to our skill as operators. We run the most efficient facilities at scale in the industry. We have among the highest tax rate realization rates of any publicly traded company.
This is a key metric for our shareholders to understand.
Because it doesn't matter if a company has 200000 machines, if those machines aren't plugged in and hashing.
We maintain industry, leading uptime at scale and not only are we becoming ever more efficient as operators, but our efficiency at the machine level is also becoming unmatched by our competitors.
We use technology to maximize our fleet's efficiency.
Fleet efficiency matters, because it means we can mine more bitcoin with less power.
This is a win for our margins and a win for the Bitcoin mining network at.
It allows for us to pack more hash rate into our existing infrastructure and as machines become more powerful and more efficient we are poised to take advantage of some of these synergies and rather sophisticated west.
As of our latest report at the end of July we reported that our fleet wide efficiency is approximately 29 tools per Taro has this is good but not good enough for us.
Once all the xps that are on hand, or ordered are plugged in and hashing, we expect to see our efficiency improved significantly.
Coming in at approximately 25 tools per Terra hash.
We believe this rating will make us one of the most if not the most efficient bitcoin miners at scale on the network.
<unk> more bitcoin, expanding our margins and driving more revenue to our bottom line.
We maintain a hash rate gains to deliver impressive revenue over the nine month period reported today.
Gary will provide more details about the quarter, but through June 30, we've generated over $115 million in revenue.
Our balance sheet has been strong and is growing stronger and as of this call. Today are unaudited cash balance is over $90 million, we have minimal long term outstanding debt and we hold approximately 200 bitcoin.
With our Capex now funded through 16 <unk> per second we have increased flexibility to continue to grow our bitcoin treasury.
We are pragmatic about how we manage our bitcoin balance with the goal of creating the best outcome for our shareholders. We believe we can do this best buy being strategic.
And not ideological and by being responsive to market dynamics.
Now that means moving some of our liquidity into bitcoin.
We see substantial momentum building across the bitcoin ecosystem.
And we intend to gradually grow our bitcoin balance.
<unk>, so underscores our commitment to bitcoin and our critical role in building <unk> infrastructure.
The coin is a remarkable advancement in human history. As we are fond of saying it is just getting started.
Over the last few months, we have seen a string of high profile institutional investors make serious moves in the bitcoin ecosystem, including multiple spot Etfs waiting for approval.
Now while many of these have languished for months and even years there are signs of potentially favorable movement on the horizon.
For example.
<unk> application for a spot Etfs the largest asset manager in the world is one such opportunity.
<unk> has successfully filed hundreds of Etfs and has only ever wants not been approved.
Their track records suggest that they believe there is a path to successfully launch an ETF.
Now, although there can be no guarantee this will occur if it does we would expect to see substantial inflows of funds into bitcoin. We believe this can make the coming months very interesting for our industry.
We also see some of the regulatory scrutiny abating as bitcoin further solidified its position as different from other so called crypto currencies.
We agree with regulators that bitcoin as a commodity and should be treated as such in all respects. We expect the next 12 months to 18 months could be transformational for bitcoin.
Not only with Etfs on the horizon, but also with the coming having and the price action, we expect to see as Bitcoin continues its program trajectory of scarcity.
We are very well positioned to take advantage of this momentum having just completed a 50 megawatt expansion of our data center and Washington, Georgia.
<unk> talked on the outskirts of this beautiful rural community.
That facility now host almost 26000 machines for a total has rate of about $2 eight axa hashes per second.
That expansion alone has already produced 114 bay coins or about $3 $3 million in revenue at an assumed value of 29000 per bitcoin since the first machine and the expansion was turned on just a few weeks ago.
The entire site is now producing nearly seven bitcoin a day, we worked closely with community leaders to negotiate a win win power purchase agreement that allows the city to thrive, while maintaining low power costs for our operations.
Our teams and partners in Washington, led by Deleston branch the site manager.
Garrison, our vice President of business development, and Taylor mining, our vice President of mining have worked through rain and shine heat and cold to expand this remarkable facility.
We also acquired two smaller sites in Dalton, Georgia last quarter, adding 20 megawatts to our portfolio located in northwest, Georgia in the foothills of the Blue Ridge Mountains Dalton is a thriving community with its own electrical utility.
Our move into adult and has allowed us to deepen our regional expertise, while diversifying our utility providers.
Georgia is rich and affordable energy and Dalton is uniquely positioned as one of the owners of Vogel III.
We are eyeing several expansion opportunities and the surrounding area.
Okay.
With the Washington expansion.
Now fully online and Dalton running at full capacity, we have hit all time high pass rate of over nine <unk> per second.
And we are well on our way to achieving our target of 16 <unk> per second.
Now before discussing with the next half of the year looks like.
Like to take a moment to reflect on how momentous achievement is it took us nearly two and a half years to get to where we are today.
And in the last year alone we've grown over 200%. We are now set to nearly double our hatch rate in a matter of a few months with the expansion of the standards <unk> site.
Our standards will expansion is shaping up to be a truly impressive data center.
Currently standards of runs at about 80 megawatts.
The expansion is expected to add another 150 megawatts, giving our data center. There are total operating capacity of 230 megawatts.
We believe the expansion will make it the largest bitcoin mining campus in the SaaS.
Once complete the expansion will consist of 10 buildings each capable of holding thousands of machines.
To give you a sense of the scale here. The two largest buildings are the length of three football fields each.
Site is generally tiered, allowing for a carefully controlled flow of air to maximize ambient cooling efficiencies. This.
This approach ensures machines operate at peak capacity, even during the rare times a year when the region experiences extremely high heat.
As of this call the land has been graded.
Excavation for the underground wiring starts next week and breaker panels and other building materials are arriving on site daily.
Pouring of concrete pads and building construction is expected to start soon.
The expansion of sided directly next to a new substation.
<unk> energy authority of Georgia or EMEA.
Is building the substation.
<unk> provides most of our power needs in the region and we are very proud to continue to work with them and their partner cities.
<unk> expects the substation to be finished by the end of the year now we're dependent on them for the construction of the substation and the related infrastructure.
The delivery of the machines and the construction of the data centers to house them are within our control and we expect to finish our work inside the next few months.
After the substation is complete we will energize the expansion over the following weeks until we hit 16 <unk> per second and become one of the largest proprietary miners in North America.
Of course <unk> per second isn't the end of the road for us.
We are opportunistic.
As one example of potential opportunities we've identified several avenues that would allow us to deepen our commitment to the community and expand our fleet. There were also several new greenfield or newbuild opportunities or acquisitions that we believe could provide maximum optionality.
<unk> for us to choose to build as fast or slow as makes sense over the next several years through and after the next staffing.
As we prepare to corner more and more of the big core networks, North American hash rate.
We also continue to explore opportunities that could monitor monetize renewable projects that are expected to wait years and in Q before they are ever connected to the grid.
The future is bright for bitcoin and for clean spark and we are exceptionally well positioned to make the most of the opportunities we see on the horizon.
Now none of this is possible without the dedication of my management team and our teams in Georgia, and Nevada that believe in this work.
We talk a lot internally about grit and what it takes to be the best I can say without hesitation that our teams have grid. They are the best operators in the entire industry.
So proud to work with them.
I'm going to turn it over to Gary now.
Thank you Zack.
Zach mentioned, we have a proven track record as the last two and a half years of execution speaks for itself.
I am very humbled to be part of this management team and proud of the efforts of our operations team, who have made us a top tier miner.
Let's dive into the numbers for the third quarter now.
For the third quarter 2023, we recognized $45 $5 million of revenue, which was an increase of approximately $14 5 million or <unk>, 47% increase this increase was due to our growth and hash rate and thus greater bitcoin mine during the most recent quarter.
When compared to the preceding second quarter, our revenues increased approximately $3 million or 7%, while our hash rate remained relatively steady in the most recent quarter. The revenues increased due to bitcoin price remaining elevated.
This increase in revenues led to increases in gross profit for both the prior year and preceding quarter comparisons I want to point your attention to the preceding quarter comparison, where our gross profit increased $4 4 million to $24 $8 million. We also saw our gross margins increased 7% from 48% to 55 <unk>.
<unk>.
The increase in gross profit between the quarters is greater than the increase in revenues due to declines in our third quarter power costs I want to call that out now as I will discuss this in greater detail here in a few slides.
Looking at our GAAP net loss, we decreased our net loss in both comparable periods to $14 2 million the largest contributor to our net losses are depreciation and amortization, which is a little less than $22 million for the third quarter.
As you are aware our business model requires significant capital investment and our efforts in acquiring the newest and most efficient ASIC miners on the market combined with our M&A efforts have led to increases in our depreciation expense.
Lever, we remain focused on finding the best deals on infrastructure and machines, often timing or even setting the market lows our ability to hunt for good deals helps keep future depreciation expense as low as possible. So we do expect this number to grow with future purchases.
Let's take a moment to discuss our adjusted EBITDA, which is a metric management uses to evaluate the profitability of its operations for the third quarter. Our adjusted EBITDA was $13 3 million, which is an increase of $8 2 million or 160% over the same quarter last year.
When compared to the immediate preceding second quarter.
Our adjusted EBITDA increased over half a million dollars or approximately 5% we.
We did see a slight dip in our adjusted EBITDA margins between the two quarters from $30 to 29%, which reflected several new items in the third quarter.
Foremost the second quarter's number included a realized gain on sale of bitcoin for approximately $1 4 million, whereas the third quarter had a slight loss of 143000.
I want to point out that we started the third quarter with big corn price and approximately 28000, a bitcoin stayed in the trading range of 20000, approximately 31000 for most of the third quarter. This was a stark contrast to the second quarter, where <unk> prices started the quarter under 17000.
The bitcoin sold earlier in the year had a lower carrying value on the balance sheet than our third quarter production and this resulted in larger variance between the periods and the realized gain loss.
Additionally, we saw greater bighorn impairment expense of approximately $5 million.
I'd like to take a moment to discuss our power costs in greater detail.
Do you have may noticed starting last quarter. We included a table of our power costs and breakeven analysis in the MD&A portion of our 10-Q here I want to highlight our power cost and the breakdown of what is included in those power costs. We.
We have noted that the industry does not have a standard when discussing or disclosing power costs, which should include all costs incurred on the monthly utility Bill in addition to the actual cost of electricity clean.
Clean spark has consistently provided its all in power costs, which includes not just the wholesale cost electricity transmission and distribution charges profit margins through the cities, we operate in taxes and other miscellaneous fees.
For the third quarter, our all in cost of power for proprietary mining sites was four <unk> per kilowatt hour.
As you will see in the chart here are true wholesale electric electrical cost was $2.04 per kilowatt hour.
There are approximately one seven.
Per kilowatt hour of other fees, which comprise over 40% of our all in number.
Fees include charges, which vary based on power purchase agreements, we have negotiated with the three utilities, we operate within the state of Georgia.
Additionally, you will see our power costs decreased half a penny from four six kilowatt hour approximately which is approximately 11% from the second quarter. This is directly attributable to our active power management strategy, and frankly shows the value and monitoring and managing market rate power.
The second quarter saw lower temperatures, especially in January which resulted in higher cost per kilowatt hour. However, the weather was relatively moderate in the third quarter with spring, bringing lower power rates again, you can find our all in cost per kilowatt hour broken down between our proprietary sites and co locations.
Our MD&A section of the most recent filed 10-Q.
Okay.
Before I close out I want to discuss our liquidity position as of June 30, we had approximately $22 million of cash on hand, and a total of 529 bitcoin valued at approximately $14 million.
Our total assets were over $650 million, and we had less than $18 million of debt, which represents a relatively clean and flexible balance sheet.
<unk> stated earlier in the call.
We currently have enough capital on hand to fully fund the capital investments to get towards <unk> goal that includes machines building materials and other infrastructure and as of today, we have over $90 million and almost 200 gig coins, which represents approximately 125 million of liquidity.
And more than enough to reach our targets now.
Now that we have certainty we look forward to continuing to execute on our strategy over the next couple of months.
With respect to the recent increases in our bitcoin balance I wanted to state that from my perspective, I really like the flexibility of our balance sheet and operational performance.
We now have all the pieces in place from people to capital to extend our strong track record of growth and operational excellence.
With that I will turn the call back over to Isaac.
Thanks, Gary Abbvie. This concludes our prepared remarks, we would now like to open the line for questions from analysts.
Okay.
And ladies and gentlemen at this point, we will begin the question and answer session.
To ask a question you can press star and then the number one.
To withdraw your question Press Star one a second time.
And if you are using a speakerphone you do ask that you. Please pickup your handset prior depressing the numbers to ensure the best quality.
Once again that is star one to ask a question.
And we will take our first question from Mike Culinary with H C. Wainwright. Your line is open.
Yes.
Hi, Good afternoon, guys and thank you for taking my questions first one for me.
Great to see the power costs come down in the quarter. If you could just speak to what you've seen in the market since the camber and the trajectory going forward, especially in light of some of the recent heatwave what are you seeing across the U S.
David <unk> III.
In the state.
Hey, Mike This is <unk>.
That one first.
Power prices have continued to remain very advantageous. This is a great thing about Georgia is we're not in Texas, and we're not contending with the power prices in the way that they are also were not seeing the heat in the same way, yes. It's hot yes, we have to manage around that but.
Curtailment has been incredibly limited.
I don't have the exact number but we are able to maintain still.
Still upper 90% up times.
Even after the quarter end, so really what you should expect to see.
In our next update is continued extremely high realization.
July has been great. We do expect probably the last.
Two weeks of August are usually the hottest of the year.
In Georgia, what we're seeing on the power prices, though.
Is that they've been able to maintain fairly flat, so where we see a slight increase in August yes, I think so but we are seeing the wholesale power rates to continue to maintain in the <unk> range. Just like we did last quarter, where we had two to four on average so all in all.
We're feeling really good we're able to keep our machines online more than I think most of our peers and Georgia is again proving to be one of the best bets.
To your last question, let me address Vogel III.
Really its impact is probably a little too early to tell but it's part of the reason that we made the bet. If you understand the power costs are really just supply and demand.
Vogel III is providing is additional supply base load $24 seven to $3 65, and that should lead to <unk>.
Creased abundance, which again on a supply and demand curve should lead to lower cost simple economics.
Great. Thanks for taking my questions.
Okay. Thank you.
We will take our next question from Josh Ziegler with Cantor Fitzgerald. Your line is open.
Hey, guys. Thanks for taking my questions and congrats on getting the <unk> fully funded I think that's.
Quite quite an achievement so congratulations on that.
It actually ties into my first question, which is with the <unk> fully funded now what do you view as the major risks to actually achieving that 16.
Year end target, how do you plan on best managing for things such as.
Transportation on rigs and actually installing the rig to make sure you can still hit the 16 SaaS by yearend.
Hey, Josh Thanks for joining the call appreciate the thoughtful question on this.
What we focus on is what we can control and we've been planning on this for many months. So let me address the rigs first and the miners I should say the miners are going to arrive.
Months in advance is our intention so we expect.
If you look at that 45000 unit order, which will be the majority of what goes into that site.
It's in August and September batch, which means they should be shipped late September .
Alright late August early September and so at that point, it's just a matter of how quickly the planes can get on the ground. So I really would expect that we should have all the all 45000 of those machines state side realistically by the end of October .
Outside case it should be.
The first week or two in November now from there it comes to infrastructure. So our infrastructure is well on track to be ready ahead of time with the minute that we have shelves available.
Optimally, we're storing miners for a very short period of time, and then we're putting them right onto shelves and ready to go.
So everything we control between the rigs and the infrastructure all.
All the long lead time items have already been ordered under contract. We have all the contractor secured so all of that is taken care of the risk to US are the things. We don't control that can of course be utility timing or anything that relates to their side.
As of right now we feel good about the trajectory of that things are going now of course, we can help in some ways.
Along the process and we're going to continue to do so to make sure that we get there as quickly as possible.
But when the power is there it still does take time to turn the machines on.
If you've paid attention to what happened with our recent 50 megawatt expansion.
It took us about 10 days to get 10 to 12 days to get all of those machines turned on hashing and that just comes down to the fact that we are working with a whole lot of power.
Not like flipping a light switch when it comes to 50 or 150 megawatts of power. So.
For us to kind of sum that up.
We're going to try and have everything we can control ready early and that way, we have plenty of buffer room on our side of the equation.
Got it that was very helpful color. Thank you and then I was curious if we could take a look forward rate, 1% to 60 and Exxon has targeted achieve it should set the company up to establish a larger hollow balance over time.
Can you about growth beyond the 16 excellent Ash would you view this larger hollow balance as a potential funding source for growth.
Yes, absolutely we view it also has an ROI source.
Because it's an asset on the balance sheet that has the ability to grow in value and.
Going back to the market events that we're seeing Etfs for example.
<unk> is another one.
Bitcoin is built with scarcity in mind that should push the value up on a long term basis.
We also believe that the other market effects, such as Etfs, but also the.
Continued adoption rates of bitcoin.
Everything is trending in the right direction to show that that will increase in value now as that goes up in value. We can of course use that to fund growth from operations like we have for the last 18 months.
We've always seen it as one of the levers to pull to grow.
So again from a market condition point of view, we got it right. When we started selling our bitcoin, even though it was unpopular.
Almost.
What is that 18 months almost two years ago, when bitcoin hit 69000.
Although unpopular we chose to sell it because the market indicated it was time to sell.
We believe the market is indicating its time to hold onto more than other times and we'll measure it day by day week by week.
But absolutely.
We still see it as a way to fund growth and <unk>.
Again on a long term basis, we also hope that that market has come back into play.
Which they are really not good opportunities there, but the more non dilutive capital, whether it's operating our debts the better and on a long term basis, we think that having a really strong balance sheet sets. It up sets us up to do that and we will look to those levers in a higher degree is for future growth.
Yes.
Great. Thanks, very helpful again, I'll hop back hop back in the queue. Thanks.
Thank you Josh.
We will take our next question from Tyler <unk> Mikael from BP <unk>. Your line is open.
Yes. Thank you I really appreciate the time here. So I was wondering if you could provide a little more color on <unk>, specifically and really what would that expansion look like.
Realizing that Georgia.
The real strong footprint of the company, but any color on timing there. How you would think about going about realizing that was all grocery online obviously nuclear in Georgia is becoming.
Even more important just any other color on that specifically.
At this time im not able to provide a lot of additional information.
We don't want to give away all the secrets of everything we're working on right now so.
There is just opportunity there's opportunity all over Georgia that abundance of power point of view.
To reiterate Georgia again is continuing to prove out just like we made the bet two and a half years ago. It would that power prices would be low and continue to stay low and so that is one of many opportunities for expansion.
When we have more information in hand, we will look forward to sharing with everybody.
Okay, Great and then my follow up here I wanted to circle back on the fleet efficiency at the 29 dose but that it has.
<unk> going to 25, I mean, I guess, how do you think about.
Moving beyond.
Beyond the 25 potentially in really the rig replacement cycle and just growth in general just curious how youre thinking about efficiency and anything you can do to kind of improve that and I know, obviously emotions the big topic in the market today, but just any other color there on kind of how youre thinking about efficiency and what.
That could shake up today.
Yeah. So.
That's obviously going to be an optimization strategy that it's going to be required by all miners in the future.
What we are actively in the process for and if anybody has added up the <unk> of total miners that we have theyre going to see it's over 16.
And we're actively in the process of doing some upgrades that will lead to I'm going to call. It.
Mid term fleet efficiency improvement between now and the end of the year and we think that that's going to get us halfway to 25, and then once we get everything installed and online really there won't be we don't expect at having that there'll be anything in our fleet that will have.
Efficiency over.
38, five watts per tower hash.
All the machines will have been upgraded and.
Shifted from there now what does that mean for the machines that we pull out of cycle Theres, obviously, a couple of things to do with them, we can keep them.
And look to deploy them and may be more remote situations where.
Power is extremely cheap, but maybe where there's uncertainty of timing this can be anything from flare gas to <unk>.
Small sites in Africa, or we can just element tournament of capital and keep buying and building more efficient facilities. So we see that as a point of Optionality. So we are going to have a stack of lower efficiency.
Lower efficient miners, but what the bull market has always proven when you look back in how many S 19th where suddenly flying off shelf for prices for what you can actually nearly by an F 17 era and <unk> 19 for today.
That's another opportunity as yet Steve.
The lease the less efficient machines in a warehouse and the next bull run their worth their weight in gold again, so we see that as a point of Optionality, but we don't expect to have anything plugged in and having that would have an efficiency under 30 or above 35 watts per tear ash.
Okay, Great really appreciate the color there.
Thanks for taking the time.
Thank you.
We will take our next question from Brian Dobson with Chardan. Your line is open.
Hey, Thanks, very much for taking my question.
No.
Interesting interesting thoughts that you shared on.
The potential approval spot ETF.
What are your thoughts on that.
Timeline for that approval and do you have any estimate for how much capital we can see directed.
Toward declined one of those.
<unk>.
Okay.
Anything I would say, it's going to be maybe a guess.
But I expect it to be.
Matter of months.
Years.
If Mike Novogratz yesterday got pretty public during their earnings call on some follow on comments that his belief from insiders that Blackrock was that it would be four to six months out here.
He probably has better information than I do on this so that that's probably a good indication.
But we have had conversations with market participants over.
Over the past few months and I do see it as something that is.
<unk> likely.
Something that has to happen in the very near term so really looking forward to that from a capital point of view.
I think it is going to just come down to percentages.
A lot of money being managed out there and once Etfs from these big firms come into play there is nothing to stop somebody from putting 1% or half a percent or even a 10th of a percent into these etfs.
And when you think about the trillions under management that could potentially be a very large.
Dollar amount that flows into bitcoin, but what that is and how much funds would.
Our family office will consider to allocate into any of these etfs.
It's just the guests I do think that the regulatory certainty is a really big part of this which again we mentioned we think is coming so even if when either etfs come into play there is not.
All of the potential capital that comes in maybe we need another 12 months after that of additional regulatory certainty and when that happens we could see a second wave I think so I think this is a two step process potentially unless.
From a commodity point of view that certainties speeds up just a little bit more.
Very helpful. Thank you.
Thank you I appreciate the question Brian .
We will take a follow up question from Josh <unk> with Cantor Fitzgerald. Your line is open.
Yes, hi, guys. Thanks for taking my follow up I, just wanted to touch on emerging cooling now that you've been hashing in emerging for quite some time I'm curious if you can comment on the efficiency gains youre seeing from immersion and any color you have on its operations as well would be helpful. Thanks.
Yeah, absolutely. So we really like the results we're seeing from immersion.
And I.
I also think in future generation of miners as the chips get more efficient and the nanometers gets smaller and therefore produces more heat potentially.
Immersion is going to become more and more important.
And so as part of that I really do think that in 'twenty four and later, we will look to build more immersion called facilities.
We specifically said that when we built norcross that we knew it wasn't going to be the biggest site that we own it's actually amongst our smallest currently.
But it allowed us to learn everything we needed to learn currently it is running.
Perfectly flat all the time 24 seven.
Repair and downtime is substantially better than air cool and so again, we're extremely happy from the results. We've seen we've also learned a couple of things that we would change in the future. So I do think in 2024 and later, we'll be ready to move into more.
Large scale immersion facilities now when it comes to performance.
Do gain some flexibility in immersion and so there's a lot of headlines and a lot of talk about the ability to overclock, 100% and that's not something we're interested in doing because the efficiency goes out the window.
But instead, what we're seeing is we can hash at 8% to 15% better and maintain or improve.
The base plate or nameplate efficiency of many of these machines. So it allows us to make gains on efficiency, while maintaining those miners very healthy temperatures very long life happy environment for them to be and so we're happy with smaller gains higher efficiency.
Which again drives more to the bottom line.
So that's where we're going to focus on our immersion in the future, we're not going to try and do these massive over clocks because efficiency does go out the window and Thats I guess.
The point of risk I would say for two two when investors do hear about that as you just need to know that that comes at a cost. So again you can overclock when bitcoin goes to 69000, it sounds great, but when bitcoin comes down to current levels or even lower like we saw in the winter.
<unk> under clocking is actually more valuable so flexibility is the real value in immersion Cooley.
Great. Thanks, Jack and thanks for taking my follow up.
Thank you.
And ladies and gentlemen with that.
We will conclude today's conference. We thank you for your participation and you may now disconnect your lines.
We will conclude today's conference. We thank you for your participation and you may now disconnect your lines.
Okay.