Full Year 2023 Iris Energy Limited Earnings Call

September 13, 2023

Speaker 1: Welcome to the IRIS Energy Fiscal Year 2023 results conference call. At this time all participants are in a listen only mode.

Welcome to the Irish energy fiscal year 2023 results conference call. At this time, all participants are in a listen only mode.

Speaker 1: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Robert Lincoln. Please go ahead.

After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message advising that your hand is raised to withdraw. Your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker.

Today, Robert Lincoln. Please go ahead.

Speaker 2: Good afternoon to those of you in North America, and good morning to those of you in Australia. Welcome to the IRIS Energy FY23 earnings conference call. My name is Lincoln Tan, Senior Manager of Investor Relations, and with me on the call today is Daniel Roberts, Co-Founder and Co-CEO, and Belinda Nussifora, CFO .

Yeah.

Good afternoon to those of you in North America, and good morning to those of you in Australia will come to the Irish Energy FY2023 earnings Conference call. My name is Lincoln Chan Senior manager of Investor Relations and with me on the call today is Daniel Roberts co founder and co CEO and Belinda New Sephora C. S O.

Speaker 2: I would like to remind you that certain statements that we make during this call may constitute forward-looking statements. And IRIS Energy cautions listeners that forward-looking information and statements are based on certain assumptions and risk factors that could cause actual results to differ materially from the expectations of the company.

I would like to remind you that certain statements that we make during this call may constitute forward looking statements and Rs energy cautions listeners that forward looking information and statements are based on certain assumptions at risk factors that could cause actual results to differ materially from the expectations of the company.

Speaker 2: Listeners should not place undue reliance on forward-looking information or statements. Please refer to the disclaimer on slide two within the accompanying presentation. Thank you and I will now turn the call.

Listeners should not place undue reliance on forward looking information or statements. Please refer to the disclaimer on slide two within the accompanying presentation.

Thank you and I will now turn the call over to Dan Roberts.

Okay.

Speaker 3: Thank you, Lincoln. Dan Roberts, co-founder, co-CEO.

Thank you Lincoln Dan Roberts.

K C.

Speaker 3: quite powerful and exciting numbers on the slide in front of us.

Quite powerful and exciting numbers on the slide in front of us.

Speaker 3: They do come with caveats and context, which we'll go into. But we do believe we've laid a very powerful foundation to build upon. And today we'd like to present that.

They do come with caveats in context, which will go into but we do believe we've laid a very powerful foundation to beautiful and today, we'd like to present that to you.

Okay.

Speaker 3: Moving through the slides, there's the disclaimer that Lincoln referred to. I encourage you all to read it.

Yeah.

Moving through the slides days, the disclaimer that Lincoln referred to encourage you all to read it.

While our synergy in.

In very simple terms, we've now established a platform, which is ready to scale and continue the growth that we've delivered particularly over the last 12 months as we've discussed today, we've established an extremely powerful power dynamic at Childress, our 600 megawatt Texas solid.

Speaker 3: now established a platform which is ready to scale and continue the growth that we've delivered particularly over the last

Speaker 3: As we'll discuss today, we've established an extremely powerful power dynamic at Childress, our 600 megawatt Texas side, and we'll go through that today.

And we'll go through that today.

Speaker 3: We've got 30 exahash of Bitcoin mining capacity, so far as power availability, the land and the program to execute upon that.

We've got 30 exit hash or be coy mining capacity suppliers power availability, the land and the program to execute upon that.

Speaker 3: And as we've previously mentioned, we're exploring next-gen generative AI computing, and are quite excited about the upcoming deployment of our NVIDIA H100.

And as we've previously mentioned, we're exploring next gem January of AI computing and are quite excited about the upcoming deployment of AI Nvidia H 100 chips.

Okay.

Speaker 3: 1.4 cent power at Childress. Again, caveat.

One 4% power at Childress again, caveats Pcs based on actuals since inception.

Speaker 3: This is based on actuals since inception.

Speaker 3: As you can see, we've delivered around 2 cents once we adjust for ERS, which we assume that we'll receive given we have fulfilled all the requirements to receive.

As you can see we've delivered around two since once we adjust for arris, which we assume that we will receive given we have.

With all the requirements to receive that.

Speaker 3: We weren't eligible for 4CP, given our first year of operations, so if we adjust for that, we're looking at 1.4 cents.

We weren't eligible for CP, giving our first year of operations.

So if we adjust for that we're looking at $1.04.

Speaker 3: That's extremely powerful. It is lower than what we were expecting, quite frankly. It is a function of volatility in the market.

Power.

That's extremely powerful.

It is lower than what we were expecting quite frankly, it is a function of volatility in the market.

Speaker 3: have been located close to the source of low-cost wind and solar congested transmission lines. There are periods of substantial power market volatility. Given the way we've established...

Having located close to the source.

Low cost wind and solar congested transmission lines, there are periods of substantial power market volatility.

Given the way we've established our operations begin.

Speaker 3: the end-to-end control of systems, technology and infrastructure.

The end to end control of systems technology and infrastructure.

Speaker 3: we've been able to dynamically interface with those energy markets and throttle between Bitcoin mining and power market trading to optimize that cost of power.

We've been able to dynamically interface with those energy markets and throttled between bitcoin mining.

And power market trading to optimize that cost of power.

Okay.

However.

Speaker 3: It may vary significantly from that 1.4 cents, as we saw in August .

It may vary significantly from that $1.04 as we saw in August .

Speaker 3: In August , we delivered a net cost of electricity at Childress, our Texas site, of minus 8 cents per kilowatt hour. So rather than the 1.4 that we mentioned on the previous slide, there was volatility in the market that led to a substantially different outcome.

In August we delivered a net cost of electricity at Childress, Texas site.

Minus eight cents per kilowatt hour.

Rather than the one four that we mentioned on the previous slide.

There was volatility in the market that led to a substantially different outcome.

Eight cents per kilowatt hour.

Speaker 3: effectively the equivalent of being paid $28,000 of Bitcoin to mine Bitcoin, which we then sold.

With effectively the equivalent of being paid $28000 of bitcoin Tim.

<unk> claim.

We then sold for another $28000 could be quick.

Speaker 3: delivering $56,000 per Bitcoin in mining profit.

Delivering $56000 per bitcoin.

In mining profit.

Okay.

Yeah.

Speaker 3: Childress and this power market dynamic is the basis upon which we can now scale rapidly.

Childress and these power market dynamic is the basis upon which we can now scale rapidly.

Speaker 3: and we can start working towards 30x hash of overall mining.

And we can start working towards 30 eggs hash of overall mining capacity.

Speaker 3: It involves a single site expansion at this Childress site.

It involved a single source expansion at these children thought.

Speaker 3: As we've previously advised, there's 600 megawatts of power at our total organisational power capacity of 760 megawatts.

As we previously advised the 600 megawatts of power and about title organizational power capacity of 760 megawatts.

Speaker 3: 20 megawatts is operating. Another 80 megawatts is under construction and due to be commissioned early in the new year.

20 megawatts the operating now.

Now the 80 megawatts is under construction and due to be commissioned early in the new year.

Speaker 3: And we've started working through long lead items and construction, construction timeframes to continue scaling that up towards the full 600 megawatts.

We've started working through long lead items and construction construction timeframes to continue scaling that up towards the full 600 megawatts.

Speaker 3: and take our business towards that 30 exahash target.

And takeout business towards that 30 extra cash targets.

Speaker 3: It's an ongoing delivery and construction process. We've got teams on site.

It's an ongoing delivery and construction process, we've got teams on site.

Speaker 3: We envisaged them moving from one data centre to the next data centre, continuing to build our capacity on the side.

They continue to build.

We envisage that are moving from one data center to the next data center continuing to build out capacity on the site.

Speaker 3: In addition, we've been thinking very carefully around funding.

In addition, we've been thinking very carefully around funding.

Our guidance fulfill this.

Speaker 3: And while we will continue to be respectful of market conditions and throttle up and down our fundraising efforts in line with market conditions, we will continue to be respectful

And while we will continue to be respectful of market conditions, and throttle up and down our fund raising.

It's in line with market conditions.

Speaker 3: we have put in place a $626 million funding plan at a minimum.

We have put in place a $626 million funding plan at a minimum.

Speaker 3: That involves the $69 million of existing cash in banks.

That involves a $69 million of existing cash and bank.

Speaker 3: We still have $57 million under the ELOC facility previously announced.

We still have $57 million under the Elan.

<unk> previously announced.

Speaker 3: In addition, we're going to establish a $500 million shelf.

In addition, we're going to establish a $500 million shelf.

Speaker 3: of which $300 million will be dedicated towards an ATM and another $200 million will be put aside for other products.

<unk> $300 million will be dedicated towards an ATM.

And another $200 million will be put aside.

For other products.

Speaker 3: Finally, we continue to envisage reinvesting our operating cash flow in the growth of the business.

Finally, we continue to envisage reinvesting our operating cash flow.

In the growth of the business.

Speaker 3: As we previously advised and differentiated from other miners, we don't believe in holding Bitcoin on our balance sheet. We believe that creates a land of value.

As we previously advised and differentiated from other miners, we don't believe in holding bitcoin on our balance sheet.

We believe that creates a lazy balance sheet.

Speaker 3: we believe that that lowers risk-adjusted returns for shareholders.

We believe that that lowers risk adjusted returns for shareholders.

Speaker 3: when we have the capacity to re-invest that static asset.

When we have the capacity to reinvest that static asset.

Speaker 3: in additional capacity and compound returns for shareholders to deliver more and more Bitcoin equivalent exposure, we believe that's a far superior outcome for shareholders and that they should not be paying us to hold Bitcoin on their behalf. Down the bottom you can see the trajectory that we're on. We've already grown substantially in the last 12 months.

In additional capacity and compound returns for shareholders to deliver more and more bitcoin equivalent exposure.

We believe that's a fee.

<unk> superior outcome for shareholders and that they should not be paying us to help be calling on their behalf.

Down the bottom you can see the trajectory that we're on.

We've already growing substantially in the last 12 months.

We expect that to continue.

Okay.

Lincoln pass back to you.

Thanks, very much Dan.

Speaker 2: So this page just maps out the peer landscape and particular outlines to specific key metrics from August .

So this page just maps out the payer landscape in particular.

I'd like to specific key metrics from August .

Speaker 2: So in the darker blue shaded columns that represents Bitcoin production in August and overlaid on top of that in the light blue outline that represents disclosed exa hash capacity across the sector. And as you can see shaded in the green column, that's Iris Energy.

So in the dark blue shaded columns.

That represents a con production in August and overlaid on top of that in the light blue outline that represents disclosed excess cash capacity across the sector and as you can see shaded in the green column, that's Rs energy.

Speaker 2: third largest production of Bitcoin on the NASDAQ with 410 Bitcoin mines in August .

Lost production of a big part of the NASDAQ with 410 Big quite mind in August .

Speaker 2: So we just take a quick step back here in terms of the relationship that you would expect to see between disclosed exa-hash capacity and Bitcoin production.

So if we just take a quick step back yet in terms of the relationship that you would expect to see between disclosed excess capacity and be quite production.

The greater hatch rate that you have.

Speaker 2: means you've got a greater share of the global hashrate and therefore you would expect that your Bitcoin mining production should be higher. So really it should come down to relatively simple math and probability.

I mean, you've got a greater share of the global hatch rate and therefore, you would expect that you'll be quite mining production should be higher.

It should come down to relatively simple math.

Speaker 2: However, as you can see from the chart, it appears quite evident that not all of the disclosed hashrate capacity is being utilised to mine Bitcoin.

And profitability.

However, as you can see from the chart <unk>.

It's quite evident that not all of the disclosed hash rate capacity is being utilized to buy bitcoin.

Speaker 2: some things not quite matching up as we look across the peer landscape. And to Dan's point earlier, even if we do consider the impact of curtailment, particularly in deregulated markets like Texas, from an IRS energy perspective...

Some things not quite matching up as we look across the payer landscape.

And to Dan's point earlier, even if we do consider the impact of curtailments, particularly in deregulated markets like Texas.

From an Rs energy perspective.

Speaker 2: We just use our capacity to mine the Bitcoin and it's our experience that we are still operating at very close to full output over that four or five month period. So, in terms of what this means, a few key takeaways from our perspective.

We just use our capacity to mind that decline and it's our experience that we are still operating at very close to full output.

Over that four five month period sorry.

In terms of what this means.

Few key takeaways from our perspective.

Speaker 2: Firstly, in terms of how Bitcoin mining companies generate revenue.

Firstly in terms of how bitcoin mining companies generate revenue.

Speaker 2: We don't get paid based on our disclosed ExaHash capacity. We get paid based on our actual Bitcoin production. And that is purely a function of ExaHash that is on the ground, actually operating and hashing within our facilities 24x7.

We don't get paid based on our disclosed excess capacity, we get paid based on our actual current production and that is purely a function of excess cash that is underground actually operating in hashing within our facilities 24 seven.

Speaker 2: So the second key point here is I think this clearly highlights some potential differences in operating models across the sector and potentially exposes some of the challenges that might be associated with, for example, third party hosting, old shipping containers, abandoned warehouses. There's not a lot of days to complete a situation

The second key point here is I think there's clearly highlight some potential differences in operating models across the sector and potentially exposes some of the challenges that might be associated with for example, third party hosting.

Old shipping containers abandoned warehouses.

Speaker 2: in a single source generation and behind the meter arrangements and other business models, which may prioritize speed or other factors over sustainable levels of Bitcoin production.

<unk> source generation and behind the meter arrangements and other business models, which may prioritize speed or other factors.

Sustainable levels of Big Con production.

Speaker 2: And just finally, before I hand back over to Dan, and we don't see this as a particularly recent phenomena. This is nothing new. We've been tracking these metrics fairly closely and the same sort of monthly data across the sector since our IPO. And we don't really get it. We just think that this is potentially overlooked by the market and potentially something that investors should pay a bit of closer attention to. Over to you, Dan.

And just finally before I hand back over to Dan and we don't see this as a particularly recent phenomena.

This is nothing new we've been tracking these metrics fairly closely.

The same sort of monthly data across the sector since our IPO.

And we don't really get it we just think that this is potentially overlooked by the market and potentially something that investors should play pay a bit of closer attention to.

Now over to you Dan.

Okay.

Thanks again.

Speaker 3: So I think that's a good segue link into the next slide. We are positioning ourselves as a next generation computing platform. We're not a crypto miner. If we buy computers, we actually operate.

Yeah.

So I think that's a good segue link into the next slide.

We are positioning ourselves as a next generation computing platform.

A quick dime on if.

If we bought computers, we actually operate them as you can see from the previous slide if we tell you we have an amount of capacity, we will operate it and we will generate revenue from it.

Speaker 3: can see from the previous slide if we tell you we have an amount of capacity we will operate it and we will generate revenue.

Speaker 3: Just as we have put a purchase order in for an Nvidia chips, we don't intend for them to sit their idle either. We intend for them to be operating.

Just as we have put a purchase ordering for Nvidia chips, we don't intend for them to see their Ottawa, we intend for them to be operated.

Speaker 3: As we previously advised, we've ordered 250 NVIDIA H100 GPUs.

As we've previously advised we boarded 250 <unk> hundred Gpus there.

Speaker 3: They're on order, they're expected to arrive in the coming months, and we continue to have a number of promising customer conversations.

They are on order, they're expected to arrive in the coming months and we continue to have a number of promising customer conversations.

Speaker 3: We're talking term, we're talking pricing, we're talking growth ambitions of these customers and in due course.

We're talking to and we're talking crossing we're talking growth ambitions of these customers and in due course.

Speaker 3: we are hopeful and would expect to sign a customer and provide a further update to the market.

We are hopeful and would expect to sign a customer and provide a further update to the market.

Speaker 3: I think what's really exciting for us, the more time that we spend on this sector, is just the enormous amount of time that we spend on this sector.

I think what's really exciting for us the more time that we spend on this sector.

Is just steep enormous growth.

Speaker 3: This is like the dial-up days of the internet. Remember in the 90s you'd have to dial up your modem, it would be slow, it would be clunky, you would go onto a messenger service, it again would be slow, that would be late.

Jade this is locked the dialup days of the Internet.

Remember in the Ninety's you'd have to dial up your modem it would be slow it would be clunky you would go into amazing just service. It again would be slide there would be lightened T. I think it was a bit of a hurdle to adoption because you really have to be committed.

Speaker 3: And it was a bit of a hurdle to adoption because you really had to be committed to pursue and use.

To pursue and utilize those services.

Speaker 3: the exact same dynamic is happening in this space.

The exact same dynamic is happening in this space.

Speaker 3: For those of you on the call that have used generative AI, whether it's large language models or it's generative images like mid journey, it takes time, particularly the images. Text is a bit quicker, but when you're sitting there waiting two minutes to generate an image, that is an indication of why we believe we're at the dial-up phase of this sector. Because A, it is an indication

For those of you on the call that have used generative IR, whether it's large language models or it's generally a images like mid journey.

It takes time, particularly the images, Texas a bit quicker.

But when youre sitting there waiting two minutes to generate an image that is an indication of why we believe we are at the dial upsize of the sector.

Operator: Welcome to the Iris Energy fiscal year 2023 results conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated method devising that your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded.

Because it is an indication of the demand.

Speaker 3: If there was no one using it, then those images would be produced fast.

If there was no unused in it.

Those images would be produced foster.

Speaker 3: Secondly, more GPUs, more capacity will make that quicker, leading to greater utility out of the service, greater adoption and that positive flywheel effect.

Secondly, more gpus more capacity, we will make that quick leading to greater utility out of the service greater adoption and that positive flywheel effect.

Operator: I would now like to hand the conference over to your speaker today, Robert Lincoln. Please go ahead. Good afternoon to those of you in North America and good morning to those of you in Australia.

Speaker 3: So we're super excited and large number of the team are currently in Los Angeles at a conference that we've sponsored.

So we are super excited and large number of the team are currently in Los Angeles at a conference that we've sponsored we've spoken to a number of customers. We're excited about the sector. We look forward to providing a further update in due course.

Speaker 3: spoken there to a number of customers. We're excited about the sector. We look forward to providing a further update in due course.

Lincoln Tan: Welcome to the Iris Energy FY23 earnings conference call. My name is Lincoln Tan, senior manager of investor relations, and with me on the call today is Daniel Roberts, co-founder and co-CEO, and Belinda Nucifora, CFO. I would like to remind you that certain statements that we make during this call may constitute forward-looking statements, and Iris Energy Cautions listeners that forward-looking information and statements are based on certain assumptions and risk factors that could cause actual results to differ materially from the expectations of the company. Listeners should not place undue reliance on forward-looking information or statements. Please refer to the disclaimer on slide 2 within the accompanying presentation.

<unk>.

Thank you Dan.

Speaker 4: So moving to the first slide, and good morning everyone. I'd like to take you through some of the key financial numbers for the year ended 30 June , 2023, has disclosed in our financial statements and 20F.

Moving to the SaaS side and.

And good morning, everyone I'd like to take you through some of the key financial numbers for the year ended 30 June 2023 as disclosed in our financial statements and 'twenty etch.

Speaker 4: So the adjusted if it does for the 12 months was 1.4 million with a 16.5 million increase in Bitcoin mining revenue year on year.

Adjusted EBITDA for the 12 months was $1 4 million with a $16 5 million increase in bitcoin mining revenue year on year.

Speaker 4: Self-mining operating capacity increased by 380% from 1.2 exahash to 5.6 exahash, with an additional 1,860 bitcoin mined in FY23 with total bitcoin mined for the year of 3,259.

Self mining operating capacity increased by 390% from one extra hash to five six extra cash with an additional 1860, the queen mines in FY2023 with title be Queen mines CEO of.

Daniel Roberts: Thank you, and I will now turn the call over to Dan Roberts. Thank you, Lincoln. Dan Roberts, co-founder, co-CEO.

<unk> 3269.

Speaker 4: The average price realized per Bitcoin mined was $23.2K vs $42.2K in FY22.

The average price realized a bitcoin lined with 23 T K.

42, <unk> in FY 'twenty two.

Speaker 4: Average electricity cost per Bitcoin mined during FY23 of 11K versus FY22 of 7.9K.

Average electricity costs.

Mind during FY2023 of 11, K verses FY 'twenty.

Daniel Roberts: Quite powerful and exciting numbers on the slide in front of us. They do come with caveats and contexts which will go into, but we do believe we've laid a very powerful foundation to build upon, and today we'd like to present that to you.

Seven nine K.

Speaker 4: Total other costs, which include site and corporate costs, were 38.3 million for FY23, being an increase of 16.5 mil from FY22, primarily driven by the three new sites commissioned during the year, Prince George, McKenzie, and Childress, as well as an increase in professional fees and other costs associated with our expanded global business and as we grow beyond the 5.6 exa-hash.

Total other costs, which include thought and corporate costs were $38 3 million for FY2023.

Increase of 16, five Neil from FY 'twenty, two primarily driven by the three new thoughts Commission, Jerry Neal Prince George Mackenzie and children.

Daniel Roberts: Moving through the slides, there's the disclaimer that Lincoln referred to and encourage you all to read it. Why Iris Energy? In very simple terms, we've now established a platform which is ready to scale and continue the growth that we've delivered particularly over the last 12 months. As we'll discuss today, we've established an extremely powerful power dynamic at Childress, our 600 megawatt Texas side, and we'll go through that today. We've got 30X the hash of Bitcoin mining capacity, so far as power availability, the land, and the program to execute upon that. And as we've previously mentioned, we're exploring next generation of AI computing, and are quite excited about the upcoming deployment of our Nvidia H100 chips. 1.4 cent power at Childress.

As well as an increase in professional fees and other costs associated with that stat expanded global business and as we go out beyond that five six ex ash.

Daniel Roberts: Again, caveat.

Moving on to the next slide.

Okay.

Speaker 4: consolidated statement of profit and loss.

The consolidated statement of profit and loss.

Speaker 4: So the net loss after income tax of 71.9 million as compared to the loss of 419.8 million in FY22 was a decrease due to the factors with the non-cash mark to mark of the convertible instruments converted to equity at the IPO during the prior period.

So the net loss after income tax of $71 9 million as compared to a net loss of $419 eight mill in FY 'twenty.

With the decrease gha.

With the noncash mark to Mark of the convertible instruments converted to equity.

Ipi during the prior period.

Speaker 4: FY23 loss also includes significant non-cash items such as the impairment of assets of $105.2 million primarily relating to the limited recourse financing of $66.5 million and the impairment of mining hardware of $25.7 million.

FY2023 loss also includes significant noncash items, such as the impairment of assets of $105 million.

Primarily relating to the limited recourse financing of $66 5 million and the impairment of mining hardware of $25 7 million.

Daniel Roberts: Gates. This is based on actual since inception. As you can see, we've delivered around two cents once we adjust for ERS, which we assume that we'll receive, given we have fulfilled all the requirements to receive that.

Speaker 4: We also have other significant non-cash items such as the shared based payments expense of $14.4 million which primarily relates to $11.8 of the amortization of the 75 exercise price options which were granted pre-IPO. Moving on...

We also have other significant noncash items, such as the share based payments expense of $14 4 million, which primarily relates to 11.8 of the amortization of the 75 exercise options, which were granted pre ipi.

Daniel Roberts: We weren't eligible for 4 CP, given our first year of operations. So if we adjust for that, we're looking at 1.4 cents of power. That's extremely powerful. It is lower than what we were expecting quite frankly. It is a function of volatility in the market. Having located close to the source of low cost wind and solar, congested transmission lines, there are periods of substantial power market volatility. Given the way we've established our operations, the end-to-end control of systems, technology and infrastructure, we've been able to dynamically interface with those energy markets and throttle between Bitcoin mining and power market trading to optimise that cost of power.

Moving on to the next slide.

Speaker 4: we have our balance sheet. So we have a strong balance sheet at 30 June 2023 with total net assets of $305.4 million, cash and cash equivalents of $68.9 million, and no debt facilities.

We have a balance sheet.

Daniel Roberts: It is a function of volatility in the market. Having located close to the source of low cost wind and solar, congested transmission lines, there are periods of substantial power market volatility. Given the way we've established our operations, the end-to-end control of systems, technology and infrastructure, we've been able to dynamically interface with those energy markets and throttle between Bitcoin mining and power market trading to optimise that cost of power.

So we have a strong balance sheet at 30 June 2023, with total net assets of $305 4 million.

Cash and cash equivalents of $68 9 million and debt facilities.

Speaker 4: We were able to fully utilise all the Bitmain mining hardware prepayments during FY23 and our total PP&E at the end of 30 June 2023 is 241 million.

We were able to fully utilize all the main mining hardware prepayments during FY2023.

Total <unk> at the end of 30 June 2023 <unk>.

141 million.

Speaker 4: We have a current asset ratio of 3.7 times, which is underpinning our future growth strategy.

We have a current asset ratio of three seven times, which is underpinning our future growth strategy.

Daniel Roberts: However, it may vary significantly from that 1.4 cents, as we saw in August. In August, we delivered a net cost of electricity at children's exercise of minus 8 cents per kilowatt hour. So rather than the 1.4 that we mentioned on the previous slide, there was volatility in the market that led to a substantially different outcome. 8 cents per kilowatt hour was effectively the equivalent of being paid $28,000 of Bitcoin to mine Bitcoin, which we then sold for another $28,000 per Bitcoin, delivering $56,000 per Bitcoin in mining profit. Childress and this power market dynamic is the basis upon which we can now scale rapidly and we can start working towards 30X of overall mining capacity.

Speaker 4: And we also have liabilities to asset ratio of 8%, providing flexibility with no debt obligation.

And we also have liability to asset ratio of 8%, providing flexibility with no debt obligations.

Speaker 4: So I'll now hand over for our Q&A. I think Lincoln, will you start that?

So I'll now hand over for Q&A, I think Lincoln, we stopped that.

Speaker 2: Yeah, that sounds good. Thanks very much, Belinda. In terms of the Q&A, let's start with questions from the conference call line and then to the audience time, we can move to the questions on the webcast.

Yes that sounds good thanks, very much Belinda.

In terms of the Q&A, let start with questions from the conference call line, and then to the account and we can move to the questions on the webcast.

Speaker 1: Certainly. Ladies and gentlemen, if you do have a question, please press star 11 from your touch tone telephone. And one moment for our first question.

Certainly ladies and gentlemen, if you do have a question. Please press star one one from your Touchtone telephone and one moment for our first question.

Yeah.

Yes.

Speaker 1: And our first question will be coming from Mike Colonese of H.C. Wainwright. Your line is open, Mike.

And our first question will be coming from Mike colonies of H C. Wainwright. Your line is open mic.

Speaker 5: Hi, good morning guys and Dan and team congrats on the tremendous growth and operations over the past year here. First for me, it would be great to get some more detail on the expansion build out and energization of the miners at Childress. I know your guidance calls for three and a half x dash of miners to come online in early 2024. So I was wondering, should we expect that to come online all at once? And when you say early 2024? Are we looking sometime in one two?

Hi, Good morning, guys and Dan and team congrats on the tremendous growth in operations over the past year here.

First for me it would be great to get some more detail on the expansion and build out an energized nation of the monitors that children I know your guidance calls for about three and a half ex sort of miners to come online in early 2024. So I was wondering should we expect that to come online all at once and when you say early 2024, we're looking sometime in <unk>.

Daniel Roberts: It involves a single site expansion at this children's site. As we've previously advised, there's 600 megawatts of power and about total organisational power capacity of 760 megawatts. 20 megawatts is operating. Another 80 megawatts is under construction and due to be commissioned early in the new year and we've started working through long lead items and construction timeframes to continue scaling that up towards the full 600 megawatts and take out business towards that 30X hash target.

Okay.

Speaker 3: I can take this Lincoln.

I can take this Lincoln.

Speaker 3: Great to hear from you and see you Mike. Look as we've previously advised the expansion of this site happens in 20 megawatt data center increments. Each 20 megawatt is approximately 8 to 850 petahash depending on the specific miner model that we install there kind of revolving around that low 20.

<unk>.

Great to hear from you and CE Mark.

Look as we've previously advised the expansion of his thought happens in 20 megawatt data center increments.

20 megawatts ease.

He is approximately eight to 850 <unk>, depending on the specific minor model.

Daniel Roberts: It's an ongoing delivery and construction process. We've got teams on site. They continue to build. We envisage them moving from one data centre to the next data centre, continuing to build our capacity on the site.

We installed it kind of revolving around that low twenties.

Speaker 3: efficiency. So basically as and when each data centre is commissioned.

Efficiency, so basically as in Wayne <unk> commissioned.

Speaker 3: facilitates the ability to plug in around that 8 to 850 header hash. In terms of minor procurement we will advise the market once we formally enter into a purchase agreement for delivery but at this stage we remain where we were before where we think there is substantial optionality in holding. There are a number of conversation ongoing around the right way to procure models in terms of the economic

That facilitates the ability to plug in and around that.

Daniel Roberts: In addition we've been thinking very carefully around funding and how we're going to fulfil this and while we will continue to be respectful of market conditions and throttle up and down our fundraising efforts in line with market conditions. We have put in place a $626 million funding plan at a minimum. That involves the $69 million of existing cash and bank. We still have $57 million under the E-Lock facility previously announced. In addition, we're going to establish a $500 million shelf of which $300 million will be dedicated towards an ATM and another $200 million will be put aside for other products.

To 850, Tatahash in terms of monarch procurement.

We will advise the market once we.

Formally enter into a purchase agreement for delivery, but at this stage, we remained where we were before where we think very substantial optionality.

In holding there are a number of conversations ongoing around the right way to procure models, which is what the economics.

Speaker 3: of it and the structure of it. We intend to fill those data centres swiftly as they're commissioned but at this stage we'd...

Other than the structure of it.

We intend to fuel those data centers swiftly as they commissioned but at this stage.

Speaker 3: with the ability to tell you exactly how we're doing that, we'd prefer not to go into too much more detail.

The ability to tell you exactly how we're doing that we'd prefer not to go into too much more detail.

Speaker 5: Great. Well, fair enough Todd, Dan, appreciate that. And just looking beyond phase one of this 100 megawatt build out at Childress, you know, in light of the upcoming halving and thinking about future scale scaling of that facility, how do you plan to approach future expansion? If you just talk through some of the dynamics there in your thought process as we navigate into future expansion.

Great well fair enough sorry, Dan I appreciate that and just looking beyond phase one of this 100 megawatt build out a childress.

Daniel Roberts: Finally, we continue to envisage reinvesting our operating cash flow in the growth of the business. As we've previously advised and differentiated from other miners, we don't believe in holding Bitcoin on our balance sheet. We believe that creates a lazy balance sheet. We believe that that lowers risk adjusted returns for shareholders. When we have the capacity to reinvest that static asset in additional capacity and compound returns for shareholders to deliver more and more Bitcoin equivalent exposure, we believe that's a far superior outcome for shareholders and that they should not be paying us to hold Bitcoin on their behalf.

Daniel Roberts: Finally, we continue to envisage reinvesting our operating cash flow in the growth of the business.

The upcoming having.

Thinking about future scale scaling of that facility.

Daniel Roberts: As we've previously advised and differentiated from other miners, we don't believe in holding Bitcoin on our balance sheet. We believe that creates a lazy balance sheet. We believe that that lowers risk adjusted returns for shareholders. When we have the capacity to reinvest that static asset in additional capacity and compound returns for shareholders to deliver more and more Bitcoin equivalent exposure, we believe that's a far superior outcome for shareholders and that they should not be paying us to hold Bitcoin on their behalf.

Do you plan to approach future expansion. If you could just talk to some of the dynamics there and your thought process as we navigate into future expansion.

Yes.

Speaker 3: Absolutely and I think this is what I was alluding to at the start of the call, like the hard work's been done.

Absolutely.

I think this is what I was alluding to at the start of the call. It. The hardware explained done we've got the platform. We've got the sites. We've got the team. It's just to continue cookie cutter exercise quite frankly.

Speaker 3: We've got the platform, we've got the site, we've got the team. It's just a continual cookie cutter exercise, quite frankly, where we just have teams on site that roll from one building to the next, rolling out 20 megawatts of...

We just have teams on site that rolled from one building to the mixed rolling out 20 megawatts at a time, we don't need any more power, we don't need any more land, we don't need new supply chain, new ways of doing things, we've proven out the us and the design with proven howdy devices with the energy markets.

Speaker 3: We don't need any more power. We don't need any more land.

Daniel Roberts: Down the bottom, you can see the trajectory that we're on. We've already grown substantially in the last 12 months and we expect that to continue.

Speaker 3: We don't need new supply chains, new ways of doing things. We've proven our data center design, we've proven how it interfaces with the energy market. So from a practical implementation perspective, it's just continuing to do more of the same, which is really exciting. And frankly, it's freed up a lot of our time to focus on new growth areas for the business.

From a practical implementation perspective, it's just continuing to do more of the same.

Lincoln Tan: Lincoln, I'll pass back to you. Thanks very much, Dan. This page just maps up the peer landscape and particular outlines two specific key metrics from August. In the darker blue shaded columns, that represents Bitcoin production in August and overlaid on top of that in the light blue outline that represents disclosed extra hash capacity across the sector. As you can see, shaded in the green column, that's our energy. Third largest production of Bitcoin on the NASDAQ with 410 Bitcoin mined in August.

Which is really exciting and frankly has freed up a lot of our time to focus on new growth areas for the business.

Speaker 3: like this generative AI GPU, looking at new sites globally and the development opportunities.

Lock these generative II GPU.

Looking at new sites globally, and the development opportunities.

Speaker 3: there. Funding is a big part of how quickly you can scale. As we saw during the presentation we do have almost 70 million dollars of cash in bank which allows us just to continue to push ahead. We've got other funding lines.

There.

Funding is a big part of how quickly you can scale.

As we saw during the presentation, we do have almost $70 million of cash in bank, which allows us just to continue to.

Bush of hit.

We've got all the funding lines in place and coming in place regard to continue having those conversations.

Speaker 3: in place and coming in place we're going to continue having those conversations. We're going to be respectful of capital markets, liquidity, cost of capital etc, but our intention is to capitalise on the opportunity in front of us for our shareholders and to continue to build into that. Got it, thank you.

Lincoln Tan: Third largest production of Bitcoin on the NASDAQ with 410 Bitcoin mined in August. We just take a quick step back here. In terms of the relationship that you would expect to see between disclosed extra hash capacity and Bitcoin production, the greater hash rate that you have means you've got a greater share of the global hash rate and therefore you would expect that your Bitcoin mining production should be higher. It should come down to relatively simple mass and probability.

We're going to be respectful of capital markets.

Lincoln Tan: We just take a quick step back here. In terms of the relationship that you would expect to see between disclosed extra hash capacity and Bitcoin production, the greater hash rate that you have means you've got a greater share of the global hash rate and therefore you would expect that your Bitcoin mining production should be higher. It should come down to relatively simple mass and probability. However, as you can see from the chart, it appears quite evident that not all of the disclosed hash rate capacity is being utilized to mind Bitcoin.

Liquidity cost of capital et cetera, but our intention is.

He used to capitalize on the opportunity in front of us for our shareholders to continue to build into that.

Got it thank you for taking my questions.

Okay.

One moment for our next question.

Okay.

Speaker 1: And our next question will be coming from Josh Theigler of Cancer Fitzgerald. Your line is open, Josh.

Okay.

And our next question will be coming from Josh Ziegler of Cantor Fitzgerald. Your line is open Josh.

Lincoln Tan: However, as you can see from the chart, it appears quite evident that not all of the disclosed hash rate capacity is being utilized to mind Bitcoin. Something's not quite matching up as we look across the peer landscape. To Dan's point, even if we do consider the impact of curtailment particularly in deregulated markets like Texas, from an iris energy perspective, we just use our capacity to mind Bitcoin and it's our experience that we are still operating at very close to full output over that four or five months period.

Speaker 6: Hey team, this is Will Carlson on for Josh Siegler. First question, could you walk us through the delta between the CapEx required for HPC vs Bitcoin mining?

Hi team. This is will Carlson on for Josh Seigler.

First question.

You walk us through the Delta between the Capex required for HBC versus bitcoin mining.

Lincoln Tan: Something's not quite matching up as we look across the peer landscape. To Dan's point, even if we do consider the impact of curtailment particularly in deregulated markets like Texas, from an iris energy perspective, we just use our capacity to mind Bitcoin and it's our experience that we are still operating at very close to full output over that four or five months period.

Speaker 3: That's a very open-ended question, Will, in terms of...

That's a very open ended question.

In terms of.

Speaker 3: how you answer that because it is a little bit apples and oranges in the sense that one's an ASIC, one's a GPU. They both require different amounts of data center capacity. They both require slightly different configurations in terms of networking and storage infrastructure. They both require different revenue models. So it is a little bit difficult.

How you answer that because it is a little bit apples and oranges in a sense, but one's an ASIC once a GPU.

Both require different amounts of data center capacity.

Lincoln Tan: In terms of what this means, a few key takeaways from our perspective. Firstly, in terms of how Bitcoin mining companies generate revenue, we don't get paid based on our disclosed exohash capacity, we get paid based on our actual Bitcoin production and that is purely a function of exohash that is on the ground actually operating and hashing within our facilities 24.7 So the second key point here is, I think this clearly highlights some potential differences in operating models across the sector and potentially exposes some of the challenges that might be associated with for example, so party hosting, old shipping containers, abandoned warehouses, you know single source generation and behind the media arrangements and other business models which may prioritize speed or other factors over sustainable levels of Bitcoin production.

<unk> slightly different configurations in terms of networking and storage infrastructure.

They buy different revenue models. So it is a little bit difficult to say.

Speaker 3: say I have seen a question that relates to this come through on the chat.

I had seen a question that relates to these come through on the chat.

Speaker 3: which is adjacent to your question, which is around how to return

Which is adjacent to your question, which is around how to returns and payback periods interface between the two business lines. This is something that we're working through live time, but I think it's fair to say that with bitcoin mining, you're generally going to have a higher starting.

Speaker 3: and payback periods interface between the two business lines. This is something that we're working through live time, but I think it's fair to say that with Bitcoin mining you're generally going to have a higher starting.

Speaker 3: return on investment in terms of annualised cash yield. It is going to be more volatile, notwithstanding as a low cost producer, you do have that natural volume hedge.

Return on investment.

In terms of annualized cash yield.

Is going to be more volatile notwithstanding as a low cost producer you do have that natural volume hedged is the cost goes down tusa.

Speaker 3: price goes down too far with GPU and generative AI, the model is more around selling GPU hours.

We've GPU and generative II, the moral is more around selling GPU hours.

Speaker 3: So in the market, someone will contract with you and pay you X dollars per GPU hour for the right to use your capacity.

In the market some of them will contract with you and pay you X dollars per <unk> for the right to use your capacity now.

Daniel Roberts: And just finally before I hand back over to Dan, we don't see this as a particularly recent phenomena, this is nothing new, we've been tracking these metrics fairly closely and the same sort of monthly data across the sector since our IPO and we don't really get it, we just think that this is potentially overlooked by the market and potentially something that investors should pay a bit of closer attention to over to you, Dan. Thanks, Lincoln. So I think that's a good segue link into the next slide.

Lincoln Tan: And just finally before I hand back over to Dan, we don't see this as a particularly recent phenomena, this is nothing new, we've been tracking these metrics fairly closely and the same sort of monthly data across the sector since our IPO and we don't really get it, we just think that this is potentially overlooked by the market and potentially something that investors should pay a bit of closer attention to over to you, Dan. Thanks, Lincoln.

Speaker 3: Now for on-demand spot pricing that's high for long-term contracts one, two, three years it obviously drops lower partly because you're locking up 100% utilisation of that capacity. I think it's generally been said elsewhere in the market that you can expect you know two, two and a half year payback.

Now for on demand spot crossing that hot.

For long term contracts one to three years, it obviously drops lower partly because youre looking up a 100% utilization of that capacity I think it's generally banks did elsewhere in the market.

<unk>.

Two two and a half year paybacks.

Speaker 3: But again, it's a very live dynamic market at the moment in terms of those returns. And it also should be said that our focus

On Gpus.

But again, it's a very large dynamic market at the moment in terms of those returns and it also should be said that now.

Daniel Roberts: So I think that's a good segue link into the next slide. We are positioning ourselves as a next generation computing platform. We're not a crypto miner, if we buy computers, we actually operate them. As you can see from the previous slide, if we tell you we have an amount of capacity, we will operate it and we will generate revenue from it. Just as we have put a purchase order in friend Nvidia chips, we don't intend for them to sit their idle either, we intend for them to be operated.

Speaker 3: on what we see as a test case, this initial 250, is less about the discrete ROI on 250 machines as it is about proving product market fit, building customer relationships and exploring whether a business's scale exists and what that could look like going out into the future.

Our focus on.

What we see as a test case its initial 200 feet deep is less about the discrete ROI on 250 machines as it is about Caribbean product market fit building customer relationships and exploring waiver businesses scale exists and what that could look like going out.

Daniel Roberts: We are positioning ourselves as a next generation computing platform. We're not a crypto miner, if we buy computers, we actually operate them. As you can see from the previous slide, if we tell you we have an amount of capacity, we will operate it and we will generate revenue from it. Just as we have put a purchase order in friend Nvidia chips, we don't intend for them to sit their idle either, we intend for them to be operated.

For the future.

Speaker 6: Got it. And then how are you thinking about energy monetization at Childress moving forward? And how do you expect it contribute during the summer months versus other months of the year?

Got it and then how are you thinking about energy monetization at Childress moving forward and how do you expect to contribute during the summer months versus other months of the year.

Daniel Roberts: As we previously advised, we've ordered 250 Nvidia H100 GPUs. They're on order, they're expected to arrive in the coming months and we continue to have a number of promising customer conversations. We're talking term, we're talking pricing, we're talking growth ambitions of these customers and in due course, we are hopeful and would expect to sign a customer and provide a further update to the market. I think what's really exciting for us, the more time that we spend on this sector, is just the enormous growth ahead.

Speaker 3: Yeah, part of the benefit is we don't need to think. It just does it all automatically.

Yes, part of the beta phase, we don't need to sync.

It just has it all automatically.

Speaker 3: So it's a really simple equation. We can track for power and then our algorithm basically looks at revenue from Bitcoin mining or spot market pricing and makes the decision for us. So we're already using generative AI a little bit actually in terms of how we iterate that in the systems internally.

So it's a really simple equation, we contract for power and then our algorithm basically looks at revenue from bitcoin mining.

Spot market crossing that makes the decision for us.

So we're already using January may a little bit actually in terms of how we used to write that in the systems.

Internally.

Speaker 3: The simple way to think about it is the greater the volatility, the lower our effective power cost will be because we can tap into that. So every 15 minutes there's a market price signal in ERCOT.

The.

The simple way to think about it is the greater volatility the lower our effective power cost will be because we can tap into that so every 15 minutes, there's a market price signal in ERCOT.

Daniel Roberts: This is like the dial up days of the internet. Remember in the 90s, you'd have to dial up your modem, it would be slow, it would be clunky, you would go on to a messenger service, it again would be slow, there would be latency and it was a bit of a hurdle to adoption because you really have to be committed to pursue and utilise those services. The exact same dynamic is happening in this space.

Speaker 3: our systems look at that price signal, they look at the opportunity cost of diverting electrons away from our machines and say where is the highest and best use of that electricity and they send those electrons to that.

Our systems look at that price signal.

I look at the opportunity cost of diversity electrons away from our machines inside Where's the highest and best use of that electricity and nice since those electrons to that.

Speaker 3: So whether that's through the Bitcoin mining, Bitcoin network to deliver Bitcoin's nominated revenues, or whether it's back into the market.

So whether that's through the bitcoin mining between network to deliver bitcoin denominated revenues or whether it's back into the market.

Daniel Roberts: For those of you on the call that have used Generative AI, whether it's large language models or it's generative images like mid-journey, it takes time particularly the images, text is a bit quicker but when you're sitting there waiting two minutes to generate an image, that is an indication of why we believe we're at the dial up phase of this sector, because, A, it is an indication of the demand. If there was no one using it, then those images would be produced faster.

Speaker 3: So we have come through summer months. That has been a volatile period for a number of reasons.

So we have come through some amount months that has been.

A volatile period for.

A number of reasons.

Speaker 3: As we look out into the future, it's fair to say volatility is expected and potentially likely to increase in the future. Transmission lines, congestion, the ongoing increase penetration of intermittent renewables.

As we look out into the future.

It's fair to say volatility is expected and potentially likely to increase in the future transmission lines general congestion beyond going to increase penetration of intermittent renewables et cetera, but all we can do is continue to.

Speaker 3: etc. But all we can do is continue to

Speaker 3: have our system set up to monetise that volatility and lower our overall cost going forward.

Have our systems set up to monetize that volatility and lower our overall cost going forward.

Daniel Roberts: Secondly, more GPUs, more capacity will make that quicker leading to greater utility out of the service, greater adoption, and that positive fly will affect. So we're super excited and large number of the team are currently in Los Angeles at a conference that we've sponsored. We've spoken there to a number of customers. We're excited about the sector.

Speaker 3: The final point I would add is, we've mentioned this before, it is choose your own adventure. I can goal-speak what our pa-

Final point I would add is we've mentioned this before it is choose your own adventure Aachen.

I can go seek what our power cost is if you want us to have Tuesday power. We can do it if we want once in power. We can do it it's all about the parameters that we set in our software and what we tried around.

Daniel Roberts: So we're super excited and large number of the team are currently in Los Angeles at a conference that we've sponsored. We've spoken there to a number of customers. We're excited about the sector.

Speaker 3: If you want us to have 2 cent power, we can do it. If we want 1 cent power, we can do it. It's all about the parameters that we set in our software and what we trade around.

Daniel Roberts: We look forward to providing a further update in due course.

Got it I appreciate you answering my questions.

Belinda Nucifora: Belinda? Thank you, Dan.

And one moment for our next question.

Yeah.

Belinda Nucifora: So moving to the first slide, and good morning everyone. I'd like to take you through some of the key financial numbers to the year ended 30 June 2023. As disclosed in our financial statement and 20 F. So the adjusted of it down for the 12 months was 1.4 million with a 16.5 million increase in Bitcoin mining revenue year on year. Self mining operating capacity increased by 380% from 1.2 exa hash to 5.6 exa hash with an additional 1,860 Bitcoin mind in FY 23 with total Bitcoin mind for the year of 3,259.

Speaker 1: Our next question will be coming from Joseph Avafi of Canaccord Unuity. Your line is open.

Okay.

Our next question will be coming from Joseph <unk>.

Of Canaccord Genuity your line is open.

Speaker 7: Hey, guys, good morning. Nice to see solid progress in the business. Congratulations. Maybe we could talk just a little bit more on that power side, Daniel. You know, relative to your ability to exploit the power market.

Hey, guys. Good morning, nice to see solid progress in the business. Congratulations maybe we could talk just a little bit more on that power side Daniel.

Relative to your ability to exploit the power markets given how much power you used over the summer.

Speaker 7: Given how much power you used over the summer, if Childress does scale, do you think that your same methodology, excuse me, applies to or the same energy strategy applies? I mean, basically, can your energy strategy scale if you're at 200 or 300 megawatts there? Thank you. And then I'll follow up.

Doug scale do you think that your same methodology excuse me applies to you or the same energy strategy applies.

Basically in your energy strategy scale.

You're at two or 300 megawatts. There. Thank you and then I'll have a follow up.

Belinda Nucifora: The average price realize Bitcoin mind was 23.2 K versus 42.2 K and FY 22. The average electricity cost per Bitcoin mind during FY 23 of 11 K versus FY 22 of 7.9 K. Total other costs, which includes site and corporate costs, with 38.3 million for FY 23, being an increase of 16.5 mil from FY 22, primarily driven by the new site's commission during the year, Prince George, McKenzie and Childress, as well as an increase in professional fees and other costs associated with our extended global business.

Yes.

Thanks Jack.

There is no.

Speaker 3: In terms of the scale, I think what you're alluding to is we've had 20 megawatts operating. If that goes 10x, we'll...

In terms of the scale I think what you're alluding to is we've had 20 megawatts operating if that goes <unk> will.

Speaker 3: that volume have an impact on the economics? The shorter answer is no, I don't believe so. No, that is still a very small amount of power relative to the overall liquidity and amount of electrons in the market. I think we've disclosed previously, or you can validate for yourself, there's something like 20, 25 gigawatts of wind solar farms up in that Pantown region of Texas. Bye.

That volume have an impact on the economics.

Yes, the short answer is no at our beliefs are.

That is still a very small amount of power relative to the overall liquidity at amount of electrons in the market.

I think we've disclosed previously we can valid IP itself is something like 2025, gigawatts of wind and solar farms.

Our <unk> region.

Texas.

Speaker 3: A couple hundred megawatts here and there is unlikely to play a material role in that. But look, there is uncertainty around the power market, right? Like it is a dynamic market.

Belinda Nucifora: And as we grow beyond the 5.6 exa hash, moving on to the next slide, the consolidated statement of profit and loss. So the net loss after income tax of 71.9 million as compared to the loss of 419.8 mil in FY 22, was a decrease due to the factors with the non cash mark to mark of the convertible instruments converted to equity at the IPO during the prior period. FY 23 loss also includes significant non cash items, such as the impairment of assets of 105.2 million, primarily relating to the limited recourse financing of 66.5 million and the impairment of mining hardware of 25.7 million. We also have other significant non-cash items such as a shared-based payment expense of 14.4 million which primarily relates to 11.8 of the amortization of the 75 exercise price options which were granted pre-IPO.

A couple of hundred megawatts here and there is unlikely to play a material role in that but look there is uncertainty around the power market right. It is a dynamic market. There is an extraordinary amount of new generation committed tens and tens of gigawatts of new wind and solar in Texas. There are no additional transfer.

Speaker 3: There is an extraordinary amount of new generation committed, tens and tens of gigawatts of new wind and solar.

Speaker 3: In Texas there are no additional transmission lines planned up into our region where Childress is.

Mission lines planned.

Into the our region, where children <unk> notwithstanding is about $10 billion of other transmission lines planned over the next five years, so that congestion.

Speaker 3: notwithstanding there's about $10 billion of other transmission lines planned over the next...

Speaker 3: five years so that congestion, that kind of prevailing dynamic of a lot of cheap renewables is likely to continue on site. We aren't close to the load centres like Dallas and Houston where power tends to be a little bit more expensive and you'd probably want the benefit of a long term.

That kind of prevailing dynamic of a lot of cheap renewables is likely to continue on <unk>.

We aren't close to the load centers like Dallas and Houston.

Power tends to be a little bit more expensive and you probably won't have the benefit of a long term.

Speaker 3: cheap hedge and you might see less volatility. So look, there is substantial uncertainty around that number but equally we can only play what's in front of us and when you step back, this is the whole reason we set up this business, right? Because when the wind blows, the sun shines, there's cheap power, there's volatility in the markets, there needs to be a solution and we have developed a sort of competitive advantage to take it.

Hey.

Hitch and you might see less volatility. So look there is substantial uncertainty around that number but equally we can really play what's in front of us and when you step back. This is the whole reason, we set up this business throughout because when the wind blows. The Sunshine is this cheap power as volatility in the markets there needs to be a solution and I think we have to.

The significant competitive advantage to.

Belinda Nucifora: Moving on to the next slide, we have our balance sheet. So we have a strong balance sheet at 30 June 2023 with total net assets of 305.4 million Caching cash equivalent of 68.9 million and no debt facilities. We were able to fully utilize all the bit main mining hardware prepayments during FY23 and our total PPE and E at the end of 30 June 2023 is 241 million. We have a current asset ratio of 3.7 times which is underpinning our future growth strategy and we also have liabilities to asset ratio of 8% providing flexibility with no debt obligation.

To take advantage of that.

Speaker 7: Sure, that's helpful. And then I know it's super early days, obviously, on the generative AI side, but do you have a feel at this point, Dan, on the future of AI?

Sure.

Helpful and then.

Super early days, obviously on the generative AI side, but do you have a feel at this point Dan on.

Speaker 7: how power constrained that market gets, how quickly, you know, you know, obviously the Bitcoin miners have been able to do a good job of finding cheap power located close to the source of its production. But, you know, if this does ramp, you know, it's going to be a good thing.

How power constrained that market gets how quickly.

Obviously, the big coin miners have been able to do a good job of finding cheap power located close to.

The source of it.

Production.

But.

If this does ramp.

Speaker 7: How do you have a feel for when power gets constrained in that market? Obviously Childress has a lot of megawatts available to it over time. Thanks a lot.

Do you have a feel for when power gets constrained in that market. Obviously childress has a lot of megawatts.

Available to it overtime, thanks a lot.

Yes look it's.

Speaker 3: Because it's such an early market and it's so disparate and the forecasts are all relatively subjective, right? Like, what's the adoption curve for generative AI?

Because it is such an early market and its slight disparity and the forecast are all relatively subjective ROI like what's the adoption curve regenerative IR, but the range of variability in that answer a line that you just guided to cause an enormous amount of noisy in any answer that our site all.

So I'll now hand over for our Q&A. I think Lincoln, will you start that? Yes, thank you very much, Belinda. In terms of the Q&A, let's start with questions from the conference call line and then to the end of the time we can move to the questions on the webcast. Certainly, ladies and gentlemen, if you do have a question, please press star 11 from your touch-tone telephone in one moment for our first question.

Lincoln Tan: So I'll now hand over for our Q&A. I think Lincoln, will you start that? Yes, thank you very much, Belinda. In terms of the Q&A, let's start with questions from the conference call line and then to the end of the time we can move to the questions on the webcast. Certainly, ladies and gentlemen, if you do have a question, please press star 11 from your touch-tone telephone in one moment for our first question.

Speaker 3: But the range of variability in that answer alone is just going to cause an enormous amount of noise in any answer that I say.

Speaker 3: All we can say is everywhere we go, everyone we speak to, speaks about the infrastructure choke on building out more generative AI capacity. Before I jump on this call, I spoke...

All we can say is everywhere. We go everyone. We speak to speak about the infrastructure chart on building out more genuity occupy city.

Before I jumped on this call I spoke to.

Speaker 3: Will, brother, co-CEO, co-founder, who's in California at this AI conference watching a presentation from Meta.

We'll see.

I found out who is in California at this AI conference what should a presentation from Mr and their presentation is dedicated to the infrastructure challenge.

Michael Colonnese: And our first question will be coming from Mike Colonies of HC Wainwright, your line has opened Mike. Good morning, guys, and Dan and team congrats on the tremendous growth in operations over the past year here. First for me, it would be great to get some more detail on the expansion buildout and energization of the miners at Children's. I know your guidance calls for about three and a half extra miners to come online in early 2024.

Speaker 3: And their presentation is dedicated to the infrastructure challenge if they start onboarding billions of billions of people into using generative AI. So it does feel like it's flavor of the month in terms of the narrative. But again, we...

Can I start onboarding billions and billions of people into using generative IR. So it does feel like its flavor of the month in terms of the narrative.

But again we.

Speaker 3: to validate these things rather than just get caught up in market hype. Let's see where we get to with this initial GPU purchase, see what it leads to in terms of tangible customer orders and reviewing them. And then we'll obviously be better positioned to work out our own view on where we're going. Great, thanks very much.

Refer to validate these things rather than just get caught up in market Hot let's see where we get to with this initial GTA you purchased see what it leads to in terms of tangible customer orders in <unk>.

Michael Colonnese: So I was wondering should we expect that to come online at once and we say early 2024, are we looking sometime in one two? I can take this Lincoln. Great to hear from you and see you, Mike. Look, as we've previously advised, the expansion of this site happens in 20 megawatt data center increments. Each 20 megawatt is approximately 850 peta hash, depending on the specific miner model that we installed there, kind of revolving around that low 20s efficiency.

And then we will obviously be better position to work out.

My view on where we're going.

Great. Thanks, very much Sam.

One moment for our next question.

Paul.

Speaker 1: And our next question will come from Lucas Pipes of B Riley.

And our next question will come from Lucas pipes of B Riley.

Michael Colonnese: So basically, as in when each data center is commissioned, that facilitates the ability to plug in around that 850 peta hash. In terms of miner procurement, we will advise the market once we formally enter into a purchase agreement for delivery. But at this stage, we remain where we were before, where we think there is substantial optionality in holding. There are a number of conversation ongoing around the right way to procure models in terms of the economics of it and the structure of it.

Lucas Your line is open.

Speaker 8: Thank you operator. Hi everyone. This is Nick Giles asking a question on behalf of Lucas. Congrats on all the progress here. In particular, the strong utilizations and power costs. My first question is related to the AI opportunity.

Yes.

Thank you operator, hi, everyone. This is this is Nick childs asking a question on behalf of Lucas.

Congrats on all the progress here in particular, the strong utilizations and power costs.

My first question is related to the AI opportunity.

Speaker 2: What do you need to see in this initial purchase of H100s to promote further expansion? Dan, you noted earlier that ability to scale is a key consideration. And is this at the data center itself, access to GPUs? Thank you for your perspective.

What do you need to see in this initial purchases H one hundreds to promote further expansion.

Dan you noted earlier that ability to scale the key consideration.

Is this is the data center itself access to Gpus.

Thank you for your perspective.

Okay.

Speaker 3: Yeah, I think it's, thanks Nick, good to hear from you. Look, I think it's like any business, you want to know this product market fit, you know that you want to know that there's a sustainable return on investment and it's working towards those. Um you know, buying...

Yes.

Thanks, Nick good to hear from me look I think it's like any business you wanted to add this product market fit in either you want to know that there is a sustainable return on investment and it's working towards those.

Michael Colonnese: We intend to fill those data centers swiftly as they're commissioned. But at this stage, the ability to tell you exactly how we're doing that, we prefer not to go into too much more detail. Great. Well, Fair enough to add to that. I appreciate that.

Buying 250, <unk> Gpus spending $10 million to $12 million on that seeing a return.

Speaker 3: GPUs, spending 10 to 12 million dollars on that, seeing a return is part of that. But it's a little bit the chicken and the egg. You can engage in a lot of conversations in the market, but until you do something, you almost don't have a license to have proper.

Is part of that but it's a little bit the chicken and the egg you can engage in a lot of conversations in the market, but until you do suddenly youll start to have a lawsuit proper conversations and we've seen that immediately.

Daniel Roberts: And just looking beyond phase one of this 100 megawatt build out at children's, you know, in light of the upcoming having and thinking about future scale, scaling of that facility, how do you plan to approach future expansion? If you can just talk through some of the dynamics there in your thought process as we navigate into future expansion. Absolutely. And I think this is what I was alluding to at the start of the call.

Speaker 3: conversations and we've seen that immediately. A large number of our management team spent time with NVIDIA this week, speaking with customers and all of a sudden that knowledge curve and understanding of where the market's going, the customer set up, it just grows and compounds really quickly. Just like once you buy these machines and plug them in, you work out how to operate them, you work out what tweaks are required physically around your data center infrastructure.

Large number of our management team.

Spent time with Nvidia this week speaking with customers and all of a sudden that knowledge and understanding of where the market's going to customer set up it just grows and compounds really quickly.

Just like once you buy these machines in public domain, you work out how to operate them you work out what tweaks the required physically around your data center infrastructure.

Daniel Roberts: Like the hard work's been done. We've got the platform, we've got the site, we've got the team. It's just a continual cookie cutter exercise quite frankly, where we just have teams on site that roll from one building to the next, rolling out 20 megawatts at a time. We don't need any more power. We don't need any more land. We don't need new supply chains, new ways of doing things. We've proven our data center design, we've proven how it interfaces with the energy market.

Speaker 3: It just paves the way to develop a better understanding and...

Paves the way to develop a better understanding.

Speaker 3: appreciation for the risk return profile of dedicating more resources towards this sector.

And appreciation.

The appreciation for the risk return profile of dedicating more resources towards the sector.

Speaker 3: So that's broader context. To answer your question more specifically, what do we want to see?

That's good context to answer your question more specifically, what do we want to see we want to see revenue.

Speaker 3: We want to see revenue. Again, we're not in the business of...

Tim we're not in the business of just installing computers and telling people how much we've got without actually generating revenue from them and I think Lincoln made that point very strongly we need to generate revenue from this but equally the discreet amount of revenue we generate from this initial purchase in my mind is sick in order to developing.

Speaker 3: installing computers and telling people how much we've got without actually generating revenue from them. And I think Lincoln made that point very strongly.

Daniel Roberts: So from a practical implementation perspective, it's just continuing to do more of the same, which is really exciting. And frankly, it's freed up a lot of our time to focus on new growth areas for the business, like this generative AI, GPU, looking at new sites globally and the development opportunities there. Funding is a big part of how quickly you can scale. As we saw during the presentation, we do have almost $70 million of cash in bank, which allows us just to continue to push ahead.

Speaker 3: we need to generate revenue from this, but equally the discrete amount of revenue we generate from this initial purchase, in my mind is second order.

Speaker 3: to developing that profile in the market, the understanding of where customers are at.

Profiling the market the understanding of where customers are at and the outlook for deploying a substantial amount of capital over time to build a proper business in this sector and ultimately it guys to risk return, we're going to deploy capital we need to see a long term sustainable return on that capital.

Speaker 3: and the outlook for deploying a substantial amount of capital over time to build a proper business in this sector. And ultimately it goes to risk returning. We're going to deploy capital, we need to see a long-term sustainable return on that capital and that also goes hand in glove.

Daniel Roberts: We've got other funding lines in place and coming in place. We're going to continue having those conversations. We're going to be respectful of capital markets, liquidity, cost of capital, et cetera, but our intention is to capitalize on the opportunity in front of us for our shareholders to continue to build into that. Got it. Thank you for taking my questions.

And that also goes.

Hand in glove with cost of capital.

Speaker 3: because no secret to acknowledge where crypto miners trade in terms of cops and capital. And that's a very large way away from more traditional computing technology businesses. So it will be interesting to see over time, even when we build this business out, how all of those factors come together to put us in a position to hopefully continue to drive shareholder return.

Will Carlson: One moment for our next question.

I think it's no secret to acknowledge with crypto miners tried and.

In terms of cost of capital and that's a very large Y O Y a more traditional computing technology businesses. It will be interesting to see over time.

When we build this business out how all of those factors come together.

Put us in a position to hopefully continue to drive shareholder returns.

Speaker 8: Dan, that's really helpful. I really appreciate that color. You alluded to it earlier, but I just wanted to ask, at a high level, you...

Okay. That's really helpful. I really appreciate that color.

Will Carlson: And our next question will be coming from a Josh Siegler of Canter Fitzgerald.

You alluded to it earlier, but just wanted to ask at a high level.

Will Carlson: Your line is open, Josh.

Daniel Roberts: Hey, team, this is Will Carlson on for Josh Siegler. First question. You walk us through the delta between the CAPX required for HPC versus Bitcoin mining.

Speaker 2: How do you think about structuring agreements with AI customers? You mentioned reserve capacity and on-demand opportunities. Would you expect to be primarily reserve? Interested to hear your perspective there. Thanks a lot.

How do you think about structuring agreements with AI customers.

You mentioned reserve capacity in an on demand opportunities.

Would you expect to be primarily reserves.

Interested to hear your perspective, there thanks a lot.

Daniel Roberts: That's a very open-ended question. In terms of how you answer that, because it is a little bit apples and oranges in the sense that one's an ASIC, one's a GPU. They both require different amounts of data center capacity. They both require slightly different configurations in terms of networking and storage infrastructure. They're both different revenue models, so it is a little bit difficult to say. I have seen a question that relates to this come through on the chat, which is adjacent to your question, which is around how to return and pay back periods interface between the two business lines.

Yes.

Speaker 3: Our nature is always risk first, like we're always going to be trying to lay off risk to other people. So if we can sign a long term contract, our natural bias, just given who we are.

Our nature is always risk first look we're always going to be trying to lay off risk to other people. So if we can sign a long term contract down natural bias just given who we are is.

Speaker 3: is to give that to someone but ultimately it comes to optimising returns and that dovetails into the cost of capital point that I made earlier. If we can enter into long-term financing agreements over these GPUs and we've seen other players like CoreWeave and out-stees in the market.

He is to give that to someone but ultimately it comes to optimizing returns and that dovetails into the cost of capital point that I made earlier.

We can enter into long term financing agreements over these gpus and we've seen other players like Huawei and outpacing the market.

Speaker 3: So source of funding, long-term, attractive cost of capital, and then use of K'Nets to deploy that into a customer at a headline rate that may be lower than what you'd order, with what you'd receive, trading spot capacity.

So its source of funding long term attractive cost of capital and then use of can add scene to deploy that into a customer at a headline right that may be lower than what you'd order.

Daniel Roberts: This is something that we're working through lifetime. But I think it's fair to say that with Bitcoin mining, you're generally going to have a higher starting return on investment in terms of annualised cash yield. It is going to be more volatile, notwithstanding there's a low cost producer. You do have that natural volume head, is the price goes down too far with GPU and generative AI. The model is more around selling GPU hours.

<unk> received trading spot <unk>.

Speaker 3: If that is going to generate more accretive returns for shareholders, then absolutely, that feels like our model. Like, we're not.

<unk>.

Is that is going to generate more accretive returns for shareholders, then absolutely that feels like intermodal like way.

Speaker 3: We don't need to be in the business of trading GPU per hour pricing. If we can line up a scalable way to raise capital and attractive costs and deploy that at scale into a market that needs it with long-term customer contracts then that has a lot of appeal.

We don't need to be in the business of trading GPU per hour pricing.

We can light up a scalable way to raise capital at an attractive cost and deploy that scale into a market that needs. It with long term customer contracts and that has a lot of appeal.

Daniel Roberts: So in the market, someone will contract with you and pay you $X per GPU hour for the right to use your capacity. Now for on-demand spot pricing, that's high for long term contracts, one, two, three years. It obviously drops lower partly because you're locking up 100% utilization of that capacity. I think it's generally been there elsewhere in the market that you can expect, you know, two to and a half year paybacks on GPUs. But again, it's a very live, dynamic market at the moment in terms of those returns.

Yes.

Speaker 8: That's that's very clear Dan. Thanks again and to you and the team continue best of luck.

That's very clear Dan Thanks again.

And the team continued best of luck.

Yes.

Yeah.

One moment for our next question.

Okay.

Speaker 1: Our next question will come from Paul Golding of McQuarrie Capital. Paul, your line's open.

Our next question will come from Paul Golding of Macquarie Capital. Your line is open.

Speaker 5: Thanks so much, Dan. Congrats on the year. I wanted to start by asking if you could give some color on the state of the supply chain. As we were listening to your prepared remarks with respect to Childress expansion, I heard you note that you're looking at the long lead time items and ordering those ahead of capacity expansion. So I just wanted to get a sense of what the lead time is and where there are constraints at the moment in the supply chain. Thanks so much.

Thanks, so much Dan congrats on the year.

Daniel Roberts: And it also should be said that our focus on what we see as a test case, this initial 250, is less about the discrete ROI on 250 machines, as it is about proven product market fit, building customer relationships, and exploring weather, a business of scale exists, and what that could look like going out into the future. Got it.

I wanted to start by asking if you could give some color on the state of the supply chain.

As we were listening to your prepared remarks with respect to children's expansion.

Heard you note that youre looking at the.

Long lead time items and ordering those ahead of capacity expansion. So I just wanted to get a sense of what.

What's the lead time is and where there are constraints at the moment in the supply chain. Thanks, so much.

Speaker 3: Thanks Paul. Great question. Look, the short of it is we're not being constrained because we've had this site for a while. We've been planning. We've got Gantt charts that are longer than I would like to read in terms of the project management, and it's just working through it right. Like every component, every input into construction has an expected lead time. It has an expected risk.

Thanks, Paul.

Great question look the short of it is we're not being constrained because we've had this for a while we've been planning we've got debt shops that are longer than our larger right.

Daniel Roberts: And then how are you thinking about energy monetization at children, moving forward, and how do you expect it contribute during the summer months versus other months of the year? Yeah, part of the benefit is we don't need to think. It just does it all automatically, so it's a really simple equation. We contract for power, and then our algorithm basically looks at revenue from Bitcoin mining or spot market price in the mix of the decision for us.

In terms of the project management and it's just working through it right like every component every input into construction has an expected lead time, it hasnt expected risk.

Speaker 3: It has a number of options. We learnt a lot when we built our facilities in British Columbia across Prince George, Mackenzie and Canal Flat.

It has a number of options.

We learned a lot when we built our facilities in British Columbia across Prince George Mackenzie and can now flats. We then learn to even more building. The first 20 megawatts in Texas. It was a different dynamic.

Daniel Roberts: So we're already using generative AI a little bit actually in terms of how we iterate that in the systems internally. The simple way to think about it is the greater the volatility, the lower our effective power cost will be because we can tap into that. So every 15 minutes, there's a market price signal in ERCOT. Our systems look at that price signal. They look at the opportunity cost of diverting electrons away from our machines and say where is the highest and best use of that electricity, and they send those electrons to that.

Speaker 3: We then learned even more building the first 20 megawatts.

Speaker 3: In Texas it was a different dynamic, different supply chains, different contractors, different labour dynamic. So working through all that we've now got a very accurate lay of the land in terms of what we need to order and when to ensure that we don't have choke points.

Different supply chains.

Daniel Roberts: So whether that's through the Bitcoin money, Bitcoin network to deliver Bitcoin's nominated revenues, or whether it's back into the market. So we have come through some of our months. That has been a volatile period for a number of reasons. As we look out into the future, you know, it's fair to say volatility is expected and potentially likely to increase in the future transmission line congestion, beyond going increase penetration of intermittent renewables, etc. But all we can do is continue to have our systems set up to monetize that volatility and lower our overall cost going forward.

Different contract is different labor dynamic.

So working through all that we've now got a very accurate lay of the land in terms of what we need to order and when to ensure that we don't have checkpoints along the way.

Speaker 3: along the way. So for every component we will look at the lead time, we'll look at the risk that that supplier falls over, what's our contingency, how late can we lead it, leave it, what level of buffer. So the short of it is we would only really be potentially constrained if we had a billion dollars in the bank tomorrow and wanted to pull the trigger on building out infrastructure for the full 600 megawatts and those numbers are not linked but they're illustrative.

So every component we will look at the lead time, we'll look at the risk that that supplier for zebra, what's their contingency how like can we laid it leave at what level of buffer. So the short of it is we would only really be potentially constrained. If we had $1 billion in the bank tomorrow and wanted to push.

Pulled the trigger on building out infrastructure for the full 600 megawatts and those numbers are not linked that illustrative.

Speaker 3: At that point in time, yeah, we probably face some supply chain challenges getting all the equipment as fast as we need. But generally speaking, it's all manageable and we don't envisage any major issues.

At that point in time, Yeah, we probably face some supply chain challenges getting all the equipment as fast as we made.

But generally speaking, it's very manageable and we don't envisage any any major issues.

Speaker 5: Thanks for that, Dan. And then a follow up around uptime and power efficiency and utilization. We've seen in prior presentations, prior results, and the slide that you provided during this presentation that your utilization and efficiency in power use.

Thanks for that Dan and then a follow up around <unk>.

Time, and power efficiency and utilization we've seen in prior.

Presentations prior results and the slide that you provided.

Daniel Roberts: The final point I would add is we've mentioned this before. It is choose your own adventure. I can goal-seek what our power cost is. If you want us to have 2 cent power, we can do it. If we want 1 cent power, we can do it. It's all about the parameters that we set in our software and what we trade around. Thank you. I appreciate you answering my questions. One moment for our next question.

During this presentation that your utilization and efficiency.

Speaker 5: relative to peers based on those charts has been best in class in many cases. And I wanted to ask what you attribute that mostly to. Is it distinct data center engineering profile? Is it algorithmic in terms of your systems? How should we think about your edge versus the rest of the sector in terms of the capacity at your disposal? Thank you.

Our us relative to peers.

Based on those charts has been best in class.

In many cases that I wanted to ask what you attribute that mostly to is it.

Distinct.

Data Center engineering profile is that algorithmic in terms of your systems, how should we think about your.

<unk> versus the rest of the sector in terms of the capacity at your disposal. Thank you.

We built data centers.

Speaker 3: And I know that's a very single statement, but I'm not sure others do. Most of those on that slide are still putting computers in Seacams.

But I know thats, a very single statement, but im not sure others do but most of those on that slide.

Daniel Roberts: Our next question question. Just a little bit more on that power side, Daniel, relative to your ability to exploit the power markets. Given how much power you used over the summer, if children does scale, do you think that your same methodology applies to or the same energy strategy applies? Basically, can your energy strategy scale if you're at two or three hundred megawatts there? Thank you, and then I'll follow up. Thanks, Joe.

Still putting computers in sequence.

Speaker 3: I feel like the sector is maturing. Maybe we're sitting in the wrong concept. Maybe we're a data center computing business and not a crypto miner.

I feel a lot of sectors maturing maybe use it in their own concept, maybe we're a data center computing business and not a crypto monitors.

Speaker 3: I mean there's a lot of white gaps there that illustrate the inability or

Decided I mean, theres a lot of what gaps there.

The dealer stripe inability or.

No.

The fact that they aren't being you.

Speaker 3: Utilised, I think operating thousands of computers in Seacans in a remote site potentially a challenge. I think the whole immersion cooling, we've said it, we'll keep saying it, you cannot manage heat as effectively with immersion cooling in Texas. It is just the laws of physics. It becomes exponentially hard when you're trying to evacuate heat, kind of a fluid in 100 degree temperature.

Utilized I.

I think operating thousands of computers in sequence.

Daniel Roberts: There is no... In terms of the scale, I think what you're alluding to is we've had 20 megawatts operating. If that goes 10x, will that volume have an impact on the economics? Thanks. The shorter answer is, no, I don't believe so. No, that is still a very small amount of power relative to the overall liquidity and amount of electrons in the market. I think we've disclosed previously, or you can validate for yourself, there's something like 20, 25 gigawatts of wind and solar farms up in that pan-town region of Texas.

And a remote sought potentially a challenge I think the whole immersion cooling. We've said it will keep cited you cannot manage hayes as effectively with immersion cooling in Texas maybe.

It's just the laws of physics indicates 8% essentially hard when youre trying to evacuate hate kind of a fluid in 100 degree temperature.

Speaker 3: I don't know, Paul. We're building data centers, we buy computers, we plug them in. Yes, we've developed a lot of competitive advantages and know-how internally, but at the end of the day, there's a PowerPoint, there's a data center, you plug them in, you generate revenue. Why aren't others doing that? I think that's more of a question for them. Fair enough. I'll put the color down and...

Although now both buckets.

Data is as we block computers, we plugged them in.

Yes, we've developed a lot of competitive advantages and know how internally, but at the end of the Davis, a powerpoint with a data center you plug the mean you generate revenue.

Daniel Roberts: So a couple hundred megawatts here and there is unlikely to play a material rolling that. But look, there is uncertainty around the power market, right? Like it is a dynamic market, there is an extraordinary amount of new generation committed, tens and tens of gigawatts of new wind and solar. In Texas, there are no additional transmission lines planned up into the our region where children are. Notwithstanding, there's about $10 billion of other transmission lines planned over the next five years.

Why are the others doing that yes.

It's more of a question for them.

Daniel Roberts: So that congestion, that prevailing dynamic of a lot of cheap renewables is likely to continue on such. We aren't close to the load centres like Dallas and Houston where power tends to be a little bit more expensive and you probably want the benefit of a long-term cheap hedge and you might see less volatility. So look, there is substantial uncertainty around that number, but equally we can only play what's in front of us.

Fair enough thanks for the color and congrats on the year.

Thanks, Paul.

One moment for our next question.

Yeah.

Speaker 1: And our next question will be coming from Joe Flynn of Compass Point Research and Trading. Your line is open, Joe.

And our next question will be coming from Joe Flynn of Compass point Research and trading your line is open Joe.

Speaker 9: Hi guys, we're just looking for some color on maybe the initial timeline of AI HPC and the kind of test runs you guys are offering.

Okay.

Hi, guys.

Looking for some color on maybe the initial timeline of AI HBC and the kind of test runs you guys are offering.

Speaker 9: exactly those entail. And on that front, with the customer conversations you're having, would you attribute it to more, maybe like legacy?

Exactly those Intel and on that front.

What are the customer conversations you're having what would you attribute it to more maybe like legacy cost legacy businesses looking to expand cloud offerings or like.

Speaker 9: Legacy businesses looking to expand cloud offerings or like startups that are getting priced out in the market.

Startups that are getting priced out in the market from Hyperscale ours.

Yes.

Speaker 3: Thanks for the question. So look, the delivery schedule is in the coming months. So yeah, towards the end of this year, very early next year, in terms of when they arrived, we're not waiting for them to arrive. In terms of engaging customers in a perfect world, with the customer lined up, ready to use them the moment they arrive on site and plugged in. So let's see where we get to.

Yeah. Thanks for the question so.

The delivery schedule is in the coming months say towards the end of this year very early next year in terms of when I arrived we're not waiting for them to arrive in terms of engaging customers.

Daniel Roberts: And when you step back, this is the whole reason we set up this business right because when the wind blows, the sun shines, there's cheap power, there's volatility in the markets, there needs to be a solution. And we have developed a significant competitive advantage to take advantage of that.

Perfect World with customer lined up ready to use them. The Monmouth I arrived on site and plugged in so let's say we get to.

Speaker 3: In terms of the nature of the customer conversations, we are talking to everyone, is the short of it. The very large cloud businesses, the global technology majors, all the way through to platform aggregators and more startups, generative AI, specialized.

In terms of the nature of the customer conversations we are talking to everyone is the short of it.

Daniel Roberts: Sure, that's helpful.

Daniel Roberts: And then I know it's super early days obviously on the generative AI side, but you have a feel at this point, Dan, on how power constrained that market gets, how quickly, you know, obviously the Bitcoin miners have been able to do a good job of finding cheap power located close to the source of its production. But, you know, if this does ramp, how do you have a feel for when power gets constrained in that market? Obviously, children has a lot of megawatts available to it over time. Thanks a lot.

The very large cloud businesses, the global technology manages all the way through too.

Platform aggregator is and more startups generative II.

Specialized.

Speaker 3: companies so it's a bit early to preempt the directions that will go in that regard. Although it's probably if I had to guess it's probably not going to be one of the big technology majors at this point partly because of scale. Do they really want to get out of bed to deal with 250 GPUs or is this more part of the broader strategy I was alluding to where

So it's a bit early to preempt the direction that will go in that regard.

Although it probably if I had to guess, it's probably not going to be one of the big technology majors at this point, partly because of scale do they really want to get out of bed to deal with 250 Gpus or is this more part of the broader strategy I was alluding to wear.

Speaker 3: prove our capability, prove the product market fit, and then utilise this test case to really...

Prove up our capability prove the product market fit and utilize these test case to really.

Daniel Roberts: Yes, look, it's because it's such an early market and it's so disparate and the forecast are all relatively subjective, right? Like what's the adoption curve for generative AI? Like the range of variability in that answer alone is just going to cause an enormous amount of noise in any answer that I stay. All we can say is everywhere we go, everyone we speak to speaks about the infrastructure choke on building out more generative AI capacity.

Speaker 3: scale over time and I think that would be the hope or the ambition of us as a business.

Our scale over time.

And I think that would be the higher pool, the ambition of us as a business.

Speaker 3: In terms of how the returns or those customers would work with us, is it long-term contracts, is it spot, we're just going to have to work through that most of the time.

In terms of how they were.

Tens or those customers would work with us he has a long term contract visit spots that we're.

We're just going to have to work.

We're through that.

Closer to the norm.

Yes.

Thanks, that's all for me.

Daniel Roberts: Before I jump on this call, I spoke to Will, brother, co-CEO, co-founder, who's in California at this AI conference, watching a presentation from META. And their presentation is dedicated to the infrastructure challenge if they start onboarding billions of billions of people into using generative AI. So it does feel like it's flavor of the month in terms of the narratives. But again, we prefer to validate these things rather than just get caught up in market height.

Speaker 1: Just as a brief reminder, to ask a question, please press star 11. One moment for our next question.

Okay, just as a brief reminder to ask a question. Please press star 111 moment for our next question.

Speaker 1: And our next question will come from Reginald Smith of JP Morgan. Your line is open.

And our next question will come from regional small Reggie Smith of Jpmorgan. Your line is open.

Speaker 10: Hey, good morning guys. Thanks for taking me the question. A few quick ones. Could you remind us what your cap ex needs are, incremental cap ex needs are to get to the nine exes that you guys are talking about for early 2024?

Okay.

Hey, good morning, guys. Thanks for taking the question a few quick ones.

Can you remind us what your capex needs are incremental capex needs are to get to the nine extra heads that you guys are talking about early 2024.

Daniel Roberts: Let's see where we get to with this initial GPU you purchase, see what it leads to in terms of tangible customer orders and revenue in the world. And then we'll obviously be better positioned to work out our own view on where we're going. Great, thanks very much. One moment for our next question.

Speaker 3: I don't think we've disclosed that number specifically Reggie, so let us take it on notice. It's a good question, I wouldn't want to respond.

I don't think we've disclosed that number specifically <unk> tiger.

It's a good question I wouldn't want to respond.

I can probably provide some color Dan.

Speaker 2: Um, so Reggie, we haven't provided specific detail in this release, but, um, I think one release back, we provided some guidance around what it would cost to do 20 megawatts..

Please.

So we haven't provided specific detail on this release, but I think one of the leaseback, we provided some guidance around what it would cost to do 20 megawatts.

Lucas Pipes: And our next question will come from Lucas Pipes of B.

Nick Jowell: Riley.

Speaker 2: The math hasn't changed materially since then in terms of, you know, to do a 20 megawatt building, roughly $35 million of capex for both the infrastructure and the miners. If we just look at current data points around where miner pricing is at.

Nick Jowell: Lucas, your line is open. Thank you, operator.

The math hasn't changed materially since then in terms of not to do a 20 megawatt building.

Daniel Roberts: Hi, everyone. This is Nick Jowell. That can go question on behalf of Lucas. Congrats on all the progress here, in particular, the strong utilization and power costs. My first question is related to the AI opportunity. What do you need to see in this initial purchase of H-100 to promote further expansion? Dan, you noted earlier that ability to scale is a key consideration. Is this at the data center itself access to GPUs?

Roughly $35 million of.

Capex for both the infrastructure and the miners if we just look at current data points around.

Were minor pricing is that true.

Speaker 2: probably 15 mil on the infra and 20 mil on the miners, thereabouts. So you've got to scale that up times 4, get you up to $140 million for the 80 megawatts, including the latest generation hardware, which is roughly split, 80 mil for miners and 60 mil for the

<unk> <unk>.

<unk> mill on the infra in 'twenty Bill on the on the miners thereabout. So you sort of scaled that up times four.

You're up to.

$140 million for the 80 megawatts, including.

The latest generation.

Which is roughly split sort of ADM open miners in 16, though.

Daniel Roberts: Thank you for your perspective. Yeah, thanks, Nick. Good to hear from you. Look, I think it's like any business. You want to know this product market, you know that you want to know that there's a sustainable return on investment and it's working towards those. You know, buying 250 GPUs, spending 10 to 12 million dollars on that, seeing a return is part of that. But it's a little bit the chicken and the egg.

For the infrastructure.

Speaker 10: Got it. So just to make sure I'm kind of using apples and apples here. Does that figure that you just quoted, should I be comparing that to your cash balance or has some of that already been...

Got it so just to make sure I'm kind of using apples and apples here does that figure that you just quoted so that would be comparing that to your cash balance or has some of that already been.

Speaker 10: than spent, if that makes sense, or paid rather.

Then.

That makes sense or paid rather.

Speaker 2: Yeah, look, some of that has been spent. I think it's just important to note that construction has been ongoing and that $69 million cash balance is a 30 June number based on the 30 June balance sheet.

Yeah. It looks somewhat some of that has been spent I think it's important to note that.

Daniel Roberts: You can engage in a lot of conversations in the market, but until you do something, you almost don't have a license to proper conversations. And we've seen that immediately. A large number of our management team did spend time with Nvidia this week speaking with customers and all of the sudden that knowledge curve and understanding of where the market's going, the customer's set up, it just grows and compounds really quickly. Just like once you buy these machines and plug them in, you work out how to operate them, you work out what tweaks are required physically around your data center infrastructure.

Construction has been ongoing in that 69 million dollar cash.

Cash balances as of 30 June number.

Based on the 30 June balance sheet.

Speaker 10: Got it. Okay. Perfect. This kind of ties in with that question, but you know, obviously we've got to have this going to occur next spring. You know, how do you guys think about or even evaluate?

Got it okay.

Perfect.

It kind of ties in with that question, but.

Obviously, we've got to having that's going to occur.

Next spring.

How do you guys think about.

Alright, even evaluate.

Speaker 10: the offers and the pricing for hardware in this environment, given some of the uncertainty around that having and you know maybe you can talk about kind of your base case, you know, hash rate assumptions or just anything that you guys or how you guys think about it to help investors kind of appreciate that.

The offers and the pricing for hardware in this environment given some of the uncertainty.

Daniel Roberts: It just paves the way to develop a better understanding and appreciation for the risk return profile of dedicating more resources towards this sector. So that's brought a context to answer your question more specifically, what do we want to see? We want to see revenue. Again, we're not in the business of just installing computers and telling people how much we've got without actually generating revenue from them. And I think Lincoln made that point very strongly.

Around that have been and maybe you could talk about kind of your base case.

Hatch rate assumptions or just anything that you guys. How you guys think about it to help investors got it I appreciate that.

Speaker 2: Sure, that's a good question, Regnier. I think part of that goes to the strategy as well, which Dan alluded to around optionality on the timing of the mining hardware purchases. Like, it takes us physically six months to construct this infrastructure. But in terms of...

Yes sure. That's a good question I think a part of that goes to the strategy as well, which Dan alluded to around Optionality on the timing of the mining hardware purchases like it takes us physically six months to construct this infrastructure, but in terms of.

Daniel Roberts: We need to generate revenue from this. But equally, the discrete amount of revenue we generate from this initial purchase in my mind is second order to develop in that profile in the market, the understanding of where customers are at and the outlook for deploying a substantial amount of capital over time to build a proper business in this sector. And ultimately, it goes to risk return. If we're going to deploy capital, we need to see a long term sustainable return on that capital.

Speaker 2: getting miners into these facilities once the infrastructure is built. That's sort of six to eight week type timeframe. And talking to the harving, the RS Energy strategy.

Getting minus into these facilities once the infrastructure is built that sort of.

Six to eight week type timeframe and.

Talking to the having the Rs energy strategy is really <unk>.

Speaker 2: similar to what we've always done, which is prepare for the worst case scenario and hope for the best. So we hope that Bitcoin will run into and post the halving. We look back historically, there are some data points that suggest that's going to be the case, but we just need to lock down re-

To what we've always done which is prepare for the worst case scenario to hope for the best So we hope that decline will run into and post the Harbin.

When we look back historically there are some data points that suggest that it's going to be the case, but we just need to lockdown risk.

Daniel Roberts: And that also goes hand in glove with cost of capital. I think it's no secret to acknowledge where crypto miners trade in terms of capital and that's a very large way away a more traditional computing technology businesses. So it will be interesting to see over time, even when we build this business out, how all those factors come together to put us in a position to hopefully continue to drive shareholder returns. Dan, that's really helpful. I really appreciate that color.

Speaker 2: wherever we can. So, you know, in terms of the cost of energy and making sure we survive and come out the other side, I'm very strong. It's managing our power prices appropriately, which Dan has spoken to. In terms of operating at scale, we are a 5.6 exa hatch business, the largest producer in the NASDAQ last month. So we tick that box.

Wherever we can.

The cost of energy and making sure we survive it and come out the other side are very strong.

It's managing our power prices appropriately, which Dan has spoken to in terms of operating at scale. We are up five six X. The hach business third largest producer in the NASDAQ last month.

Speaker 2: Efficiency is absolutely key. Again, we're demonstrating that. Optionality in the CAPEX deployment, which we've spoken to in terms of...

Check that box.

<unk> is absolutely key and again, we're demonstrating that.

Optionality on the Capex deployment, which we have spoken to in terms of.

Speaker 2: know the box the capex relating to the miners we're going to adopt

The bulk of the Capex relating to the miners we're going to adopt.

Daniel Roberts: You alluded to it earlier, but I just wanted to ask at a high level, how do you think about structuring agreements with AI customers? You mentioned reserve capacity and on demand opportunities. Would you expect to be primarily reserved? It's interested to hear your perspective there. Thanks a lot. Yeah, look, our nature is always risk first, like we're always going to be trying to lay off risk to other people. So if we can sign a long term contract, our natural bias just given who we are is to give that to someone, but ultimately it comes to optimizing returns.

Speaker 2: You know, a bit of a wait and see approach around that to the extent Bitcoin prices run, we have high confidence around the returns we can invest and the capital will be there to the extent there's a drawdown of Bitcoin. Does funny things around the halving. You know, thank God we haven't deployed all of that capital, um, without any visibility around that. So, you know, historically, you know, if

A bit of a wait and see approach around that to the extent the corn prices run we have high confidence around the returns we can invest in the capital will be there to the extent, there's a drawdown of bitcoin does funding things around the having.

Thank God, we haven't deployed all of that capital.

Without any visibility around that so historically.

The drawdown in the Big Horn process, you just expect.

Lower cost minus to prevail in some of the higher got higher cost gotcha.

Debt less efficient facilities high operating costs et cetera to come out of the hatch rate.

And we wanted to be making sure that our synergy is as best position as possible relative to the rest of the sector.

Daniel Roberts: And that dovetails into the cost of capital points that I made earlier. If we can enter into long term finance in agreements over these GPUs and we've seen other players like Corrie announced these in the market. So source of funding, long term, attractive cost of capital, and then use of finance in to deploy that into a customer at a headline rate that may be lower than what you'd order. What you'd receive trading spot capacity is that is going to generate more creative returns for shareholders than absolutely that feels like our model like we're not we don't need to be in the business of trading GPU per hour pricing.

Got it.

Nick one more in and this probably hard to answer but is there a rule of thumb that like investors should think about in terms of.

Speaker 10: maybe a framework, in terms of like, how do you evaluate a follow on offer and if you were to do an equity issuance, like, like, how should investors think about that decreasing potential around that? Is there any, any rule of thumb or, or guidelines for that?

Maybe a framework.

Edward in terms of like.

How do you evaluate.

Follow on offer and if you wouldnt do an equity issuance like like how should investors think about that the accretion potential around that is there any rule of thumb or deadline without people.

Speaker 3: I can take this one. Lincoln. Look, it's something we look very

I can take this one Lincoln.

Yes look it's something we look very closely.

Speaker 3: closely at sorry the videos just taking time to update on my screen. Reggie it's something we monitor almost live time speaking to all the banks around pricing terms etc. I think it's fair to say these ATMs seem a more efficient way to raise capital just to spread on your share price.

Closely at sorry, the video is taking time to update on my screen, Richard It's something we monitor almost a lot of time speaking to all the banks around.

Daniel Roberts: If we can line up a scalable way to raise capital and attractive cost and deploy that at scale into a market that needs it with long term customer contract, then that has a lot of appeal. That's that's very clear. Dan, thanks again and to you and the team continue best of luck. One moment for our next question.

Pricing terms et cetera, I think it's fair to say these atms seem a more efficient way to raise capital.

The spread on your share price.

Speaker 3: You know the lack of discount. We've seen warrants in the past which.

The lack of.

I guess discount.

We've seen warrants in the past which is extremely attractive.

Speaker 3: unattractive. I'm just not sure the feasibility of a placement in the current market versus you know utilizing products like the ELOC, the ATM, speaking to people about kind of indoor financing.

I'm just not sure the feasibility of our placements in the current market versus utilizing products, what a locked the ATM.

Paul Golding: Our next question will come from Paul Goldie of McCory Capital Paul your lines open. Thanks so much, Dan. Congrats on the year.

Speaking to people about vendor financing.

Speaker 3: options, you know, particularly with GPUs in traditional computing land that is more common. I alluded to the core weave

Options.

Equally with Gpus and traditional computing land that is more common I alluded to the cold waves.

Daniel Roberts: I wanted to start by asking if you could give some color on the state of the supply chain as we were listening to your prepare remarks with respect to children's expansion. I heard you note that you're you're looking at the long lead time items and ordering those ahead of capacity expansion. So just wanted to get a sense of what the lead time is and where there are constraints at the moment in the supply chain.

Speaker 3: debt and financing facility they put in place, that's all attractive.

Debt and financing facility that you put in place that's all attractive.

Speaker 3: Look, equity when you're a growing business.

Equity when you're growing business.

Daniel Roberts: Thanks so much. Thanks Paul. Great question. Look, the short of it is when I've been constrained because we've had this site for a while. We've been planning. We've got ganchards that are longer than I would like to read in terms of the project management and it's just working through it right like every component every input into construction has an expected lead time. It has an expected risk. It has a number of options.

Speaker 3: and looking to lock down a platform is attractive, but equally we need to be respectful of our share price, liquidity, etc.

<unk>.

And looking to lock down our platform is attractive, but equally we need to be respectful of our share cross liquidity et cetera.

Speaker 3: and not dilute our shareholders unnecessarily. So we've got a lot of metrics that we look at in terms of accretion versus non-accretive.

And not retail shareholders unnecessarily. So we've got a lot of metrics that we look at in terms of accretion this.

Non accretive dilution of shareholders of potentially some double negatives in there.

Speaker 3: shareholders have potentially some double negatives in there. It's just something you've got to monitor a lifetime. The best thing about putting these products in place is you're not making a point in time.

It's just something to get a modest loss on the best thing about putting these products in place. He is you're not making a point in time.

Speaker 3: Decision you retain that optionality every day that you wake up to ensure that you're optimizing your cost of capital and generating that share.

C. J you retire that Optionality every day that you wake up to ensure that you're optimizing your cost of capital.

And generating that shareholder return.

Speaker 10: I appreciate that. It's a complicated process.

I can appreciate that.

Complicated.

Process for sure thanks for the time.

Daniel Roberts: We learned a lot when we built our facilities in British Columbia across Prince George McKenzie and Canal flats. We then learned even more build in the first 20 megawatts in Texas. It was a different dynamic, different supply chains, different contractors, different labor dynamic. So working through all that we've now got a very accurate layer of the land in terms of what we need to order and when to ensure that we don't have choke points along the way.

Speaker 1: And I'm showing no further questions. I would now like to turn the call back over to Dan Roberts.

Okay.

And I'm showing no further questions I would now like to turn the call back over to Dan Roberts.

Speaker 3: Thank you operator. Well thanks everyone, thanks for the great questions and support from the analysts that ask questions.

Thank you operator.

Everyone. Thanks for the great questions.

And support from the analysts.

Questions.

Speaker 3: As they always do, we appreciate the support of all our shareholders. It's been a very interesting 12 to 18 months establishing the platform, getting us to where we are today has involved an extraordinary amount of hard work from the team internally. Will and I could not be happier. We've got a fantastic team of people who are really, really good at it.

As they always do.

We appreciate the support of all our shareholders, Spain, a very interesting 12 to 18 months.

Yet establishing the platform getting us to where we are today is involved the extraordinary amount of hard work from the team internally.

Daniel Roberts: So for every component, we will look at the lead time. We'll look at the risk that that supplier falls over. What's our contingency, how late can we lead it, leave it, what level of buffer. So the short of it is we would only really be potentially constrained if we had a billion dollars in the bank tomorrow and wanted to push pull the trigger on building our infrastructure for the full 600 megawatts.

And I could not be happier.

We've got a fantastic group the passion the commitment we know that we're at the forefront of an industry that is the future.

Speaker 3: passion, the commitment. We know that we're at the forefront of an industry.

Speaker 3: that is the future. You know, the digitisation of our world, the electrification, the movement of renewable energy into high performance computing. We had conviction five years ago when we started this business. I know for a fact there's a number of SEED shareholders who are on this call that were there back then. They're here today. We're continuing to pursue that dynamic. And I think it's fair to say over the last five years, nothing has changed except...

Digitalization of our world the electrification.

All of renewable energy into high performance computing, we had conviction five years ago. When we started this business I know for a fact, there is the number of seats shareholders.

Daniel Roberts: And those numbers are not linked, but they're illustrative. At that point in time, yeah, we probably place some supply chain challenges getting all the equipment as fast as we need. But generally speaking, it's really manageable and we don't envisage any major issues.

On this call that where they were back then the Isa die.

We're continuing to pursue that dynamic and I think it's fair to say over the last five years nothing has changed except that.

Daniel Roberts: Thanks for that, Dan, and then to follow up around uptime and power efficiency and utilization. We've seen in prior presentations, prior results and the slides that you provided during this presentation that your utilization and efficiency and power use relative to peers based on those charts has been best in class. In many cases, and I wanted to ask what you attribute that mostly to is it distinct data center engineering profile, is it algorithmic in terms of your systems.

Speaker 3: that conviction around where the world is going is increasing. Like we are following that digitization electrification dynamic and we have established a platform which is at the forefront of innovation to capitalize upon it. Yes, it started with Bitcoin mining, but we said five years ago that high performance energy dense compute broadening beyond Bitcoin is likely to happen. And here we are at the forefront of that industry as well with a very unique business model to cap.

That conviction around where the world is going is increasing like we are following that digitalization and electrification dynamic.

We have established a platform, which is at the forefront of innovation to capitalize upon it yes. It started with bitcoin mining, but we said five years ago that high performance energy dense compute broadening beyond bitcoin is likely to happen and here. We are at the forefront of that industry as well with a very unique.

Daniel Roberts: How should we think about your edge versus the rest of the sector in terms of the capacity at your disposal? Thank you. We build data centers, but I know that's a very single statement, but I'm not sure others do. But most of those on that slide are still putting computers in Seacans. I feel like the sector's maturing. Maybe you were sitting in the wrong concept. Maybe we're a data center computing business and not a crypto miner is decided.

Business model to capitalize on that.

Speaker 3: We've got a very unique proposition in terms of near-term growth, those 30x numbers, the 1.4 cent power that we discussed during the slide deck. We feel like we've done a lot of the hard work and we can now execute.

We've got a very unique proposition in terms of near term growth is 30 excess numbers the one.

Boston power that we discussed during the slide deck.

We feel that we've done a lot of the hard work and we can now execute swiftly and most importantly efficiently.

Speaker 3: swiftly and most importantly efficiently pursuing that Bitcoin mining 30 exahash trajectory. But in parallel have put ourselves in a position with a fantastic team to pursue these other business lines.

Assuming that bitcoin mining <unk>.

<unk> trajectory that in parallel to put ourselves in a piece with a fantastic team to pursue these other business lines.

And you can probably tell that as usual I'm super excited.

And again very appreciative for all your support thanks, once again for dialing in.

See you next year, but we'll.

You will see well before that thank you.

Daniel Roberts: I mean, there's a lot of white gaps there to illustrate the inability or the fact that they aren't being utilized. I think operating thousands of computers in Seacans in a remote site, potentially a challenge. I think the whole immersion cooling, we'll keep saying it, you cannot manage heat as effectively with immersion cooling in Texas. It is just the laws of physics. It becomes exponentially hard when you're trying to evacuate heat kind of a fluid in 100 degree temperature.

Speaker 1: And this concludes today's conference call. Thank you for participating. You may now disconnect.

And this concludes today's conference call. Thank you for participating you may now disconnect.

Okay.

[music].

Okay.

[music].

Daniel Roberts: I don't know, Paul, like we're building data centers, we buy computers, we plug them in. Yes, we've developed a lot of competitive advantages and know how internally, but at the end of the day there's a PowerPoint with the data center. You plug them in, you generate revenue. Why aren't others doing that? I guess more of a question for them.

Daniel Roberts: Fair enough, thanks for the color, Dan, and congrats on the year. Thanks.

Operator: One moment for our next question.

Joe Flynn: And our next question will be coming from Joe Flynn of Compass Point Research and Trading, your line of open Joe. Hi, guys. We're just looking for some color on the initial timeline of AIHBC and the kind of test runs you guys are offering and what exactly those entail. And on that front, with the customer conversations you're having, would you attribute it to more, maybe like legacy businesses looking to expand cloud offerings or like startups that are getting priced out in the market from hybrid scholars? Thanks. Thanks for the question.

Joe Flynn: So look, the delivery schedule is in the coming months, so towards the end of this year, very early next year. In terms of when they arrive, we're not waiting for them to arrive, in terms of engaging customers in a perfect world where the customer lined up ready to use them, the moment they arrive on site and plugged in. So let's see where we get to. In terms of the nature of the customer conversations, we are talking to everyone.

Joe Flynn: It's the short of it. The very large cloud businesses, the global technology majors all the way through to platform aggregators and more startups, generative AI, specialized companies. So it's a bit early to preempt the directions that will go in that regard. Although it probably, if I had to guess, it's probably not going to be one of the big technology majors at this point. Partly because of scale, do they really want to get out of bed to deal with 250 GPUs?

Joe Flynn: Or is this more part of the broader strategy I was alluding to where proof up our capability, prove the product market fit, and then utilise this test case to really.., the scale over time, and I think that would be the hope or the ambition of us as a business. In terms of how the returns or those customers would work with us, you know, is it long-term contracts, is it spot, that's we're just going to have to work through that post of this long?

Joe Flynn: All right, thanks, that's all for me.

Operator: Okay, this is a brief reminder to ask a question, please press star 11. One moment for our next question.

Reggie Smith: And our next question will come from Reggie Smith of JP Morgan, your line is open. Good morning guys, thanks for taking the question. A few quick ones.

Reggie Smith: Could you remind us what your cat-x needs or incremental cat-x needs are to get to the nine extra hats you guys are talking about for early 2024? I don't think we've disclosed that number specifically, Reggie, so let us take it on notice. It's a good question. I wouldn't want to respond. I can probably provide some color down please. So Reggie, we haven't provided specific detail in this release, but I think one release back.

Reggie Smith: We provided some guidance around what it would cost to do 20 megawatts. The math hasn't changed materially since then in terms of, you know, to do a 20 megawatt building. And roughly $35 million of cat-x for both the infrastructure and the miners, if we just look at current data points around where minor pricing is at, probably, you know, 15 mil on the infra and 20 mil on the, on the miners, they're about.

Reggie Smith: So you sort of scale that up times four, get you up to, you know, $140 million for the 80 megawatts, including, you know, the latest generation. Which is roughly split sort of 80 mil for miners and 60 mil for the infrastructure. Yeah, and so just to make sure I'm kind of using apples and apples here, does that figure that she just quoted should I be comparing that to your cash balance or has some of that already been been spent if that makes sense or paid rather.

Reggie Smith: Yeah, looks some of some of that has been spent, I think it's just important to note that, you know, construction's been ongoing and that $69 million cash balance is a 30 June number based on the 30 June balance sheet. Got it. Okay. Perfect.

Reggie Smith: And this kind of ties in with the that question, but, you know, obviously you've got to have me to occur next spring. You know, how do you guys think about or even evaluate the offers and the pricing for hardware in this environment, given somebody uncertainty around that having. And you know, maybe you can talk about kind of your base case, you know, hash rate assumptions, there's anything that you guys are, how you guys think about it to help investors kind of appreciate that.

Reggie Smith: Yeah, sure. That's a good question, Reginald Smith. I think part of that goes to the strategy as well, which Dan alluded to around optionality on the timing of the mining hardware purchases. Like, it takes us physically, you know, six months to construct this infrastructure, but in terms of, you know, getting miners into these facilities once the infrastructure is built, that sort of, you know, 68-week time frame. And, you know, talking to the harving, the Iris Energy strategy is really similar to what we've always done, which is prefer for the worst case scenario and hope for the best.

Reggie Smith: So, we hope that Bitcoin will run into and post the harving. We look back historically, there are some data points that suggest that's going to be the case, but we just need to lock down risk wherever we can. So, you know, in terms of the cost of energy and making sure we survive and come out the other side, I'm very strong. It's managing our power prices appropriately, which Dan has spoken to, in terms of operating at scale.

Reggie Smith: We are a 5.6xer hash business that largest producer in the NASDAQ last month. So, we take that box. Efficiency is absolutely key. Again, we're demonstrating that optionality on the graphics department, which we've spoken to in terms of, you know, the box for graphics relating to the miners. We're going to adopt, you know, a bit of a way to see approach around that to the extent Bitcoin prices run. We have high confidence around the returns.

Reggie Smith: We can invest, and the capital will be there to be extent. There's a drawdown, a Bitcoin does funny things around the harving. You know, thank God we haven't deployed all of that capital without any visibility around that. So, you know, historically, you know, if there's a drawdown in the Bitcoin price, you just expect, you know, lower cost minus to prevail. And some of the higher guys, higher cost guards of debt, less efficient facilities, high operating costs, et cetera, to come out of the hash rate. And we want to be making sure that, you know, our energy is as best positioned as possible relative to the rest of the sector. Got it.

Daniel Roberts: You know, if I could sneak one more in and this is probably hard to answer, but is there a rule of thumb that like investors should think about in terms of maybe a framework that were in terms of like how do you evaluate a follow on offering if you were to do an equity issuance like like how should investors think about that the equation potential around that. Is there any any rule of thumb or bad line for that people?

Daniel Roberts: I can take this one. Lincoln, look, it's something we look very closely at. Sorry, the video is just taking time to update on my screen. Reggie, something we monitor almost lifetime speaking to all the banks around price in terms, et cetera. I think it's fair to say these ATMs seem a more efficient way to raise capital, just to spread on your share price, you know, the lack of, you know, I guess discount.

Daniel Roberts: We've seen warrants in the past, which is extremely unattractive. I'm just not sure the feasibility of a placement in the current market versus, you know, utilizing products like the E love the ATM, speaking to people about trying to fend off financing options, you know, particularly with GPUs and traditional computing land that is more common. I alluded to the call weave debt and financing facility they put in place that's all attractive. Look equity when you're a growing business and looking to lock down a platform is attractive, but equally we need to be respectful of our share price liquidity, et cetera.

Daniel Roberts: And not do to our shareholders unnecessarily. So we've got a lot of metrics that we look at in terms of accretion versus non accretive dilution of shareholders of potentially some double negatives in there. It's just something you got to monitor lifetime. The best thing about putting these products in place is you're not making a point in time decision, you retain that optionality every day that you wake up to ensure that you're optimizing your cost of capital and generating that shareholder return. I can appreciate that. It's a complicated process for sure. Thanks for the time.

Operator: And I'm showing no further questions.

Daniel Roberts: I would now like to turn the call back over to Dan Roberts. Thank you, operator. Well, thanks everyone. Thanks for the great questions and support from the analysts that ask questions. As they always do, we appreciate the support of all our shareholders.

Daniel Roberts: It's been a very interesting 12 to 18 months. You know, establishing the platform, getting us to where we are today has involved an extraordinary amount of hard work from the team internally. Will and I could not be happier. We've got a fantastic group, the passion, the commitment. We know that we're at the forefront of an industry that is the future. You know, the digitisation of our world, the electrification, the movement of renewable energy into high performance computing.

Daniel Roberts: We had conviction five years ago when we started this business. I know for a fact there's the number of seed shareholders who are on this call that were there back then. They're here today. We're continuing to pursue that dynamic and I think it's fair to say over the last five years, nothing has changed except that conviction around where the world is going is increasing. Like we are following that digitisation electrification dynamic and we have established a platform which is at the forefront of innovation to capitalise upon it.

Daniel Roberts: Yes, it started with Bitcoin mining, but we said five years ago that high performance energy dense compute, broadening beyond Bitcoin, is likely to happen and here we are at the forefront of that industry as well with a very unique business model to capitalise on that. We've got a very unique proposition in terms of near-term growth, those thirty-exas numbers, the 1.4th end power that we discussed during the slide deck. We feel like we've done a lot of the hard work and we can now execute swiftly and most importantly efficiently pursuing that Bitcoin mining thirty-exas trajectory.

Daniel Roberts: But in parallel to put ourselves in a position with a fantastic team to pursue these other business lines and you can probably tell that as usual, I'm super excited and again very appreciative for all your support.

Daniel Roberts: So thanks once again for dialing in. I'd say see you next year but we'll see you well before that. Thank you.

Operator: And this concludes today's conference call. Thank you for participating. You may now disconnect. Thank you.

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