Q2 2024 Iris Energy Ltd Earnings Call

[music].

Operator: Good day, and thank you for standing by. Welcome to the Iris Energy HY24 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'll need to press star 11 on your telephone.

Good day, and thank you for standing by.

Welcome to Rs energy H Y 20 full results conference call at this time, all participants are in listen only mode.

After the Speakers' presentation, there'll be a question and answer session.

She also a question during the session you will need to press star one on your telephone.

Operator: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like now to hand the conference over to our speaker today, Lincoln Tan, Director of Investor Relations.

Then she at an automated message advising you'll hand, it's rice.

Draw. Your question. Please press star one again please.

Please be advised that today's conference is being recorded.

Like now to hand, the conference over to your Speaker today Lincoln <unk> Director of Investor Relations. Please go ahead.

Lincoln Tan: Good afternoon to those of you in North America and good morning to those of you in Australia, and welcome to the Iris Energy Second Fiscal Quarter Results Conference Call. My name is Lincoln Tan, Director of Investor Relations, and joining me on the call today is Daniel Roberts, Co-Founder and Co-CEO, and Belinda Nusifora, 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.

Good afternoon to those of you in North America, and good morning to those of you in Australia and welcome to the Irish synergy second fiscal quarter results Conference call.

My name is Lincoln Chen Director of Investor Relations and joining me on the call today is Daniel Roberts co founder and co CEO and President Mr. Flores CFO 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 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 two within the accompanying presentation over to you Dan.

Lincoln Tan: Please refer to the disclaimer on slide 2 within the accompanying presentation. Over to you, Dan. Thank you. Good afternoon, everyone, and thank you for dialing in for another earnings call and business update. We're very pleased to be speaking to you today, particularly given the events of the past 6-12 months and the outlook from here. So, jumping straight in.

Thanks Blake.

Hi, good afternoon, everyone and thank you for dialing needing right now the earnings call and business update we're very pleased to be <unk>.

He knew today.

Particularly given the events of the past 612 months and the.

The outlook from here, so jumping striking.

Disclaimer I encourage you all to read it.

Yeah.

Daniel Roberts: Jumping into who we are and what we do, there's obviously been an increasing level of interest in our business over the last few months, so we thought it was worth a recap of who we are and what we do. At our heart, we're a next-generation data center business, very distinct from traditional data centers, and many of you would have heard this before, but traditional data centers have typically grown up and evolved in capital city locations where they're optimized for very different outcomes and very different workloads to what we've designed. You know, your lifetime cloud computing, your mission critical systems, hospitals, governments, corporations, et cetera, where really low latency, ultra-high reliability, and proximity are really, in the emerging world and the future of where we believe computing is going, driving demand and the bifurcation of compute into still those traditional data centers but equally this high-performance computing market.

Jumping into who we are and what we do is obviously paying an increasing level of interest in our business over the last few months. So we thought it was worth a recap of who we are.

And what we do.

And our Hearts were in next generation data center business, a very distinct from traditional got us into as many of you would have heard this before but traditional data center typically growing up and evolved and capital city locations, where they brought demolished with very different outcomes.

Different workloads to what wave designed how are you.

Lifetime cloud computing and mission critical systems hospitals governments, corporates et cetera, with really low latency ultra high reliability and proximity is really important.

In the emerging world in the future, where we believe computing is going.

He's driving demand and the bifurcation of compute into steel dice traditional data centers, but equally this high performance computing market the demand for power dense high performance compute and at its heart that is the platform that we built and are continuing to grow.

Daniel Roberts: The demand for power-dense, high-performance compute, and at its heart, that is the platform that we've built and are continuing to grow. So our asset base, we've now got over a thousand acres under our property portfolio. We've got 200 megawatts of operating data centers, over 2 gigawatts of power, and associated land secured. We've got all the appropriate networking, and physically dual redundant fiber. We've got very strong cyber security protocols that were developed early on.

Our asset base, we've now got over a thousand acres under our property.

Portfolio, we've got 200 megawatts of operating data centers over two gigawatts of power and associated land secured we've.

We've got all the appropriate networking.

Physically dual redundant fiber.

We've got a very strong cyber security protocols that were developed daily on.

Daniel Roberts: And finally, we've got our energy trading capability, particularly around Bitcoin mining, where that gives us the ability to trade energy market pricing against Bitcoin mining profitability on essentially a lifetime basis. So that's the asset base, it's a real asset base, it's next-generation data centers which have been specifically designed and purpose built by us for this emerging class of computing around power-dense high-performance compute. And as we've always said, how we use that asset base and monetise it over time will undoubtedly evolve today. Bitcoin mining, we've been doing it for a number of years now. Most of you understand what Bitcoin mining is. It's essentially using computing power to secure the network, in return. We liquidate those rewards directly into cash, withdraw that cash into our bank accounts, pay the bills, and the power bill at the end of the month, and pocket the rest as profit. It's quite a simple business.

And finally, we've got our energy trading capability, particularly around bitcoin mining and that gives us the ability to trade energy market crossing against bitcoin mining profitability on essentially a lot of time basis.

So thats the asset base, it's a real asset base. Its next generation data centers, which are based specifically designed and purpose built by us.

For this emerging class of computing ramp how data high performance computing.

And as we've always said, how we use that asset base and monetize it over time will undoubtedly evolve.

Tonight.

Morning, we've been doing it for a number of years now.

Most of you understand what be coy Monty knees, it's essentially using computing power to secure the network in return.

Okay, we liquidate those rewards directly into cash withdraw that cash to our bank accounts pay the bill in the month.

And pocket the rest is profit it's quite a simple business.

As we outlined in the last row, there the payback periods on the compute are attractive we intend on continuing to grow this business segment.

Daniel Roberts: I'm Viacom. In parallel, we also have our AI cloud services business, which is NVIDIA GPUs today that may become more than just NVIDIA over time and essentially GPU compute AI customers. So this involves graphic processing cards as distinct from Bitcoin mining, which involves application-specific integrated circuits or ASICs, so two different types of chips, but at its heart, two computers. So the business model for that is essentially selling out our GPU capacity on a per hour basis. Again, we pay the electricity cost. Talk to you. We could be doing both. We anticipate doing both. We're pretty excited to be capitalizing on two macro, tailwinds which we believe are a multi-decade thematics around Bitcoin as a store of value, an emerging monetary asset, and AI, in particular, which we think is fundamentally going to change the way humans work together. In terms of future applications and ways that we can use our high-performance computing data centers, we'll continue to pursue, assess, and weigh up the opportunities. So that's who we are and what we're doing.

In parallel we also have an AI cloud services business, which is Nvidia Gpus today that may become more than just maybe the year over time.

And essentially GPU compute IR customers. So this involves graphic processing cards as distinct from bitcoin mining, which involves application specific integrated circuits or asics.

Different types of chips.

Two different two computers.

So the business model for that is essentially selling out our GPU capacity on a per hour basis again, we pay the electricity costs and pocket. The rest of this profit as you can say also a relatively attractive payback period on the hardware. So that's where we are today in future.

We could be doing bites, we anticipate doing bias.

We're pretty excited to be capitalizing on two macro tayo.

Tayo switch, but we believe our multi decade genetics around bitcoin as a store of value emerging monetary asset and II in particular, which we think is fundamentally going to change the way humans work together in terms of future applications and why is that we can use our high performance computing.

The centers will continue to pursue and assess and weigh up the opportunity.

So thats, who we are what we're doing.

Daniel Roberts: Let's roll into a little bit about Bitcoin mining and where we are today more specifically. So, as many of you know, we were the fastest growing miner in 2023 in terms of percentage, gain in capacity installed, and that's the trajectory we anticipate to continue. We've got 6.2 Exahash operating.

If we roll into.

So a little bit about bitcoin mining and where we are today more specifically.

So as many as you know we were the fastest growing monitor in 2023 in terms of percentage.

And in capacity installed.

And that's the trajectory we anticipate to continue.

We've got six two extra hash operating in the coming months.

Daniel Roberts: In the coming months, that should step up to 10 Exahash. We're finishing off the data centers now. The chips are due for delivery.

That should step up to <unk> of hash, we're finishing off the data center is now the chips are due for delivery, we don't anticipate any reasons why that or whether it be achieved in the first half this year as we've said since last year.

Daniel Roberts: We don't anticipate any reasons why that all won't be achieved in the first half this year, as we've said since last year. Furthermore, we're on track to hit 20 exahash over the next nine to ten months. Again, we have the hardware and the machines secured through a combination of outright purchase agreements and options that were struck when Bitcoin was around $30,000 per Bitcoin. So we've got fixed price contracts already for hardware, which were contracted when Bitcoin was around $30,000. We have the power available, we have the land available, and equally important, this is just a single site expansion. We are not doing anything new.

Furthermore, we're on track to hit 20 extra hash over the next nine to 10 months again, we had the hardware and the machine secured through a combination of outright purchase agreements and options.

That was struck when bitcoin was around $30000 per bitcoin. So we've got fixed price contracts already for hardware, which we're contracted with bitcoin was around 30000.

The power available we have the land available and equally importantly is this is just a single solid expansion we.

We are not doing anything new we are just continuing to build out existing data centers at our existing sites in children, Texas. We have an internal construction team we have external contractors mobilized that will just continue to roll from building to building and deploying this capacity over the course of this year. So we are still.

Daniel Roberts: We are just continuing to build out existing data centers at our existing site in Childress, Texas. We have an internal construction team. We have external contractors mobilized. They will just continue to roll from building to building and deploy this capacity over the course of this year. So we're super excited about the outlook for us in terms of our Bitcoin mining business. We believe that over the next few months, as we approach that 20x hash mark, that will lead us to being one of the largest Bitcoin mining businesses on a standalone basis. In terms of the dynamics around Bitcoin mining, most of you would be aware we've got the halving coming up in about 8-9 weeks, and that's the point in time at which the block reward half. So instead of miners receiving 6.25 Bitcoin every 10 minutes... It gets halved to 3.125.

We're excited about the outlook for us in terms of our bitcoin mining business.

We believe that the next time 10 months as we approach that <unk> has not that will lead us to be one of the largest bitcoin mining.

This is on a standalone basis.

In terms of dynamics around bitcoin mining.

Most of you would be aware, we've got the Harbin coming up in about eight nine weeks and that's the point in time at which the block reward hubs.

State of mind is receiving 625 b coin every 10 minutes it gets hard to $3 125.

Daniel Roberts: We feel like we're in a really strong position. We've got almost $150 million of cash sitting in our bank account today. We've got a strong market position, access to ongoing capital for growth, and that goes to both equity and other non-equity financing opportunities, which I'll come to a little bit later on. We're very excited about the efficiency gains that we will see as we approach that 20th exahash. We've acquired and contracted for new generation Bitcoin mining machines from Bitmain that will drive our efficiency on a portfolio basis to a bit under 22 joules per terahash by the end of this year at that 20 exahash mark in terms of our energy trading business, which continues to perform in line with expectations.

We feel like we're in a really strong position, we've got almost $150 million of cash sitting in our bank account Tonight.

Put a strong market position access to ongoing capital for growth and that goes to both equity as well as other non equity financing opportunities, which I'll come to a little bit later on.

We're very excited about the efficiency guidance that we will say as we approach that 20 extra hash, we've acquired and contracted for new generation coin mining machines for mine that will drive our efficiency on a portfolio basis to a bit under 22 jewels for taro ash by the end of this year.

At that <unk> market.

In terms of energy trading business.

<unk> continues to perform in line with expectations, we delivered the platform.

Daniel Roberts: We delivered the platform, the software, hardware integration, and the ability to dynamically trade between Bitcoin mining profitability and the local power market in Urquhart, Texas, where, essentially, we have an algorithm that automatically trades on our behalf and maximizes profit. So when the market price of power is high, it automatically puts our Bitcoin mining machines to sleep, and we sell power back into the market. When power prices are cheap, of renewables, wind, solar, etc., negative prices at times, we simply route those electrons through our machines and monetize the electricity via the Bitcoin network.

The software hardware integration the ability to dynamically trade between bitcoin mining profitability and the local power market in ERCOT, Texas, where essentially we have an algorithm that automatically trades on our behalf and maximizes profit. So when the market price of power is high.

Automatically puts abbvie Queen mining machines to slate and we sell power back into the market when power prices are Jake because of renewables wind solar etc negative Prost the times, we simply routes those electrons through our machines and monetize the electricity by the Bitcoin network.

Daniel Roberts: So that's been a fantastic strategy and profit center of its own right for us, and we look forward to that continuing, particularly in the macro outlook for energy in Texas. We're seeing the ongoing construction of wind and solar, particularly up in the north where we're locating. We're seeing the forward curve for power starting to soften, so we're very excited about the local dynamic there for power and our ability to dynamically manage it to optimize our cost base and profit. So that's Bitcoin mining.

That's been a fantastic strategy and profit center, even if its own brought for us and we look forward to that continuing particularly among the macro outlook for energy in Texas, We're seeing the ongoing permitting and construction of wind and solar, particularly up in the north where we're like hygiene, we're saying the forward curve.

Starting to soften so we're very excited about the local dynamic there for power and our ability to dynamically manage it to optimize our cost base and profitability.

Yes.

So let's be quite mining.

Daniel Roberts: Moving into the AI cloud services segment, and we're really excited to give you an update on that. It's been a busy period, and as you can see, there's a photo of our data center at Prince George with the NVIDIA GPUs. You may have seen recent announcements where we announced a tripling of all their AI cloud capacity, and as the market continues to utilize each GPU purchased, and demand continues to appear strong in the market, we will continue to grow that. And for us, given the data centers that we've built, the multi-functionality of those data centers, the ability to order GPUs and either replace existing ASICs or plug them into new data center capacity that is agnostic as to whether it is used for Bitcoin mining or GPUs, enormous flexibility to capitalize on a theme that we're extremely excited about, being AI.

Moving into the cloud services segment, and we're really excited to give you an update around this.

Sure.

It's been a busy period as you can see there is a photo of our data center at Prince George with the Nvidia Gpus.

You would have seen recent announcements, where we've announced a tripling.

Although our AI cloud capacity.

And as the market continues to utilize <unk> GPU purchase.

And demand continues to appear strong and the market, we will continue to grow that.

And for US given the data centers that we built the multi functionality all sized data centers the ability to order gpus and other replace existing asics or plug it into new data center capacity that is agnostic as to whether it is used to be coy mining.

Or Gpus gives us enormous flexibility to capitalize on isomedix were extremely excited about <unk>.

Daniel Roberts: We believe artificial intelligence, the development we've seen around here, is a super exciting theme over the next 10 to 15 years. We believe it's still very early, but we believe that that is one significant way that humans are going to progress from here, and our ability to own the real assets, the picks and shovels, as some like to call it, and be agnostic in some cases as to what specific applications are developed is really exciting.

We believe artificial intelligence the development, we're seeing around there is a super exciting theme over the next 10 to 15 years, we believe it's still very early.

We believe that that is one significant y to humans are going to progress from here and our ability to earn the real assets the picks and shovels that somewhat to call it and be agnostic in some cases as to what specific applications.

Developed is really exhausted, we belief that we can play a very large and important role.

Daniel Roberts: We believe that we can play a very large and important role in this evolution of the sector. We have a competitive advantage, which I think is now becoming clear. As I mentioned before, this is very different from traditional data centers. As we've been saying for the last five or six years, you will, and we are, seeing the bifurcation in data centers, where you've got those mission-critical, low-latency, high-reliability capital city hyperscale data centers servicing very important..., high-reliability workloads, but you've got this emerging high-performance computing segment, which is only growing, and growing quickly, which demands very different characteristics.

In this evolution of the sector.

We have a competitive advantage, which I think is now becoming clear as I mentioned before this is very different to traditional data centers as we've been signing for the last five or six years, you will and we are seeing the bifurcation in data centers, where you've got those mission critical low latency high reliability capa.

CD hyper scale data centers.

Have you seen very important.

High reliability workloads, but you've got this emerging high performance computing segment, which is only growing and growing quickly which demands very different characteristics. So for us having developed their own data center designed from the ground floor up where we have optimized from day one for this <unk>.

Daniel Roberts: So for us, having developed our own data center design from the ground floor up, where we have optimized from day one for this power-dense compute, and not being distracted by trying to be everything to everyone by servicing traditional data center loads has put us in a fantastic position with a real competitive advantage, where we have a cost base that is super competitive by virtue of where we locate, both regionally, close to the source of low cost renewable energy, but also in terms We have designed these things from the ground up, we have iterated over a number of years, and we've got a design and internal construction team that we believe is best in class and extremely competitive.

And not being distracted with trying to be everything to everyone by servicing traditional data center lives has put us in a fantastic position.

Position with a real competitive advantage, where we have a cost base that is super competitive by virtue of where we locate by.

Both regionally close to the source of low cost renewable energy.

Also in terms of construction cost we have designed these things from the ground up we have each horizon over a number of years and we've got a design and internal construction team that we believe is best in class and extremely competitive.

Daniel Roberts: So we're extremely excited about where we sit in respect to the AI cloud services business, and we anticipate continuing to grow this strongly over the coming months and years. In terms of that competitive advantage, as I mentioned, we are cost-effective because we have remained specialized; we have a fit for purpose capability. We have not tried to be everything to everyone.

We're extremely excited.

Where we sit in.

In respect to the IR cloud services business, and we anticipate continuing to grow strongly.

Over the coming months and years.

Hello.

In terms of that competitive advantage as I mentioned, we are cost effective because we have remained specialized we have fit for purpose capability, we have not tried to be everything to everyone.

Daniel Roberts: We are laser focused on power dense, high performance computing workloads, and that goes to Bitcoin mining today. AI GPU compute today, tomorrow we don't know, maybe there's more, but just those two alone are extremely exciting for us as we have an outlook and give us the ability to really be competitive in a market. And you can see at the bottom, given our price point, because of our cost base, because of the way we have set up our business, and the fact that we are not trying to be everything to everyone means we can be extremely cost competitive and deliver So now to mix things up a little bit, we're going to jump to a video. In the beginning, there was no data. The only thing driving evolution was evolution itself.

Laser focused on power dense high performance computing workloads and that goes to bitcoin mining today.

<unk> GPU compute to die Tomorrow, we don't know maybe theres more but just those two alone are extremely exciting for us as we have an outlook and give us the ability to really be competitive in a market and you can see there at the bottom given price point because of our cost down.

Because of the way, we have set up our business.

And the fact that we are not trying to be everything to everyone. It means we can be extremely cost competitive and deliver a quality product to our customers.

Yes.

So now to mix things up a little bit.

We're going to jump to a video.

Oh.

In the beginning there was no data.

The only thing driving evolution was evolution itself.

Daniel Roberts: And for millions of years, this was the way. But our beginnings are a different story. A story where data and technology are essential to human progress. A company founded on the idea that there is a right way to power it. Started by pioneers linked by blood and belief.

And familial <unk> of years this was the way.

But our beginnings are a different story.

A story, where data and technology are essential to human progress.

Company founded on the idea that there is a right way to power it.

Started by Pioneer's linked by blood.

Daniel Roberts: With a shared vision to not only power the future but sustain it, and data centers capable of meeting the challenge. Bitcoin mining helped lay the foundations of our platform and primed us for future applications of high-performance compute. But doing this right meant owning the land, the infrastructure, the next generation data center design, and green computing. And it means being smart about how we source our energy. We let the wind, the water, and the sun do the heavy lifting, so we can give the earth a break.

And belief.

With a shared vision to not only power the future sustain it.

And to answer centers capable of meeting the challenge.

Bitcoin mining help lay the foundations of our platform.

Prime does for future applications of high performance compute.

But doing this right.

In the land the infrastructure. The next generation data Center design the Green computes.

And it means being smart about how we source our initiative.

The wind the water out in the Sun do the heavy lifting so we can keep the gray.

Daniel Roberts: And it paid rewards. And not just to the planet, but to our surrounding communities and our shareholders. Our next-generation data centers ensured our future progress, allowing us to master new avenues and evolve as technology does. Same business, same goals, different name. An evolutionary move to match our growth.

And it paid rewards and not just the planet, but to our surrounding communities and our shareholders.

Our next generation data centers insured out future progress, allowing us to master new avenues and evolve as technology does.

Same business same goals different line.

In evolutionary move to match our growth amongst that supports emerging power dense applications in AI in medical advancements in engineering and.

Daniel Roberts: A move that supports emerging power-dense applications in AI, in medical advancements, in engineering, and in areas yet to exist. The way is clear, and while our footprints will be light, our impact will be unmistakable. The future can be anything, but how we get there is everything.

In areas yet to exist.

The way is clear and while our footprints will be light.

Our impact will be unmistakable.

The future can be anything, but how we get there is everything.

Yes.

Yes.

Hiring Chris.

Proceed with purpose.

Yes.

[music].

Belinda Nusifora: Proceed with purpose. wonderful Well, we've been super excited about this as a team; it's fresh, and it's dynamic. We believe it's a better visual representation of who we are in terms of the technology, the innovation that we've developed and the delivery to our customers and the services that we provide, and we're really excited about the rebrand. Fundamentally, we're the same business. Same people, same business, same platform, doing the same things, but we're really excited about a slight identity change and rebranding, and ironically, it is. So on that note, I'd like to pass over to Belinda, who will now run the... through the numbers. Thank you, Belinda. Thank you, Dan. It's very hard to follow up from that video, that's for sure, but I wanted to say good morning to all in Sydney and good afternoon to those in North America.

Yeah.

Wonderful.

We've been Super excited about this is the team.

It's dynamic.

We believe it's a better visual representation of who we are in terms of the technology. The innovation that we've developed and the delivery to our customers and the services that we provide.

And we're really excited with the rebrand.

Fundamentally where the signed business signed.

Same people same business same platform doing the same things, but we're really excited about a slight high density change and rebranding and iron It is.

On that note I'd like to pass over to Belinda.

We'll now run us through the numbers. Thank you believe that.

Yes.

Okay. Thanks.

It's very hard to follow up from that.

But I wanted to say good morning to all.

And good afternoon started in North America.

Belinda Nusifora: So firstly, I'm going to say I'm extremely excited about the rebrand and our expansion to the 20X dash by the end of the year, as well as tripling our growing AI cloud services business. Tying into the concepts Dan just discussed, I wanted to now take you through some illustrative comparative economics. At the top of the slide, we talk about the Bitcoin mining annualized hardware profit, and we're viewing this in a post-halving analysis. The scenarios used have Bitcoin prices of $40,000, $50,000, and $60,000 using the current global hash rate and a further scenario showing a 20% reduction in the global hash rate.

So it's definitely going to.

I'm extremely excited about the rain brand.

The 20.

By the end of the App as well as that tripling of growing.

Hi.

Is that.

Tying into the context than just discussed I wanted to now take you through some illustrative comparative economics.

At the top of the slide which helped pay a bitcoin mining annualized hardware profit and we're doing this on a typed Harbin analysis.

So the scenario is have declined prices of 40000 50000 60000 user.

Using the current global hatch rates and if the scenario showing a 22% reduction in the global hatch right.

Belinda Nusifora: As you can see, the current Bitcoin price is around $50,000, and I believe it's just under $52,000 as of today. And using the current global hash rate, the annualized hardware profit is very healthy at both 10x a hash and as we grow to 20x a hash, we are looking at around just under $200 million of annualized hardware profit. Moving on to the AI cloud services business and looking at an annualized hardware profit there, which would be revenue less electricity costs, based on a cluster of 816 which includes our recent purchase of another, So we had 248 and then we've further purchased GPUs to come up with 816, so based on that cluster, we have used observed pricing from $2 per GPU hour to $3 per GPU hour delivering a range of annualized hardware profit between $14 and $2 So taking a mid-range, that's between $17 and $18 million of annualized hardware profit for the AI cloud service. College

As you can stay with the current the claim process around 50000, and I believe it's just under 50 K as.

As of today.

And using the current global cash rate the annualized hardware profit is very healthy.

And as regard to 10 20 extra hash looking at around just under $200 million.

Annualized top line profit.

Moving on to the AI cloud services business and looking at it annualized hardware profit, which would be revenue less electricity costs.

Based on a cluster of 816, which includes our recent pet.

Purchase also said.

Sorry, we had 248 and then.

Sorry, the purchase GTH come up to 816, so based on that we have.

That said crossing from $2 <unk> to.

The $3 GPU, our delivering a range of annualized hardware profit between 14 and $21 million. So they're taking a mid range between 17 and $18 million of annualized Heartland profit.

Our cloud services business.

I'll, let Shane.

Belinda Nusifora: Moving on to the first slide about Adjusted EBITDA. Adjusted EBITDA increased from a negative 6.4 in the half year ended FY23 to 20.7 in the half year ended FY24. Primarily driven by an increase of 46 million in Bitcoin mining revenue, as ExaHash increased from 2.1 ExaHash to 5.6 ExaHash, being a 167% increase. We had a total Bitcoin mine of 2,367 Bitcoin, which was an increase of 57% for 864 Bitcoin mines. The average price realized per Bitcoin mined was $32.3k in the half year, and that was a 62% increase. The average electricity cost per bitcoin mined increased from $9.3k to $13.9k.

So moving on to the SaaS side around adjusted EBITDA.

Adjusted EBITDA increased from a negative six four in the half year ended FY2023 'twenty.

<unk> 27 in the half year FY 'twenty, four primarily driven by an increase of $46 million and declined mining revenue.

As extra hassle creature shaped like one extra hash to five six extra hash being 167% increase.

We had titled Bitcoin mine of <unk>.

<unk> hundred 67 decline, which was an increase of 57% or 864 bit quaint mind.

The average price realized that the combined with steady.

Sure 8-K in the half year and that was the 62% increase.

Average electricity cost per bit coin mind.

<unk> from non <unk> to $13 nine okay.

Belinda Nusifora: Just to give you a bit of a breakdown in other costs to the heart, we had employee benefit expenses of $8.5 million, start-up and operating costs of $3.1 million, insurance costs of $3.1 million, provision for Canadian non-refundable sales tax of $3 million, and professional and other fees of $1.4 million. Moving on to the quarter, being Q1 versus Q2, our adjusted EBITDA increased from $6.8 million to $14 million, with mining revenue increasing to $42 million. Our hash rate was consistent across both periods, and due to the increase in global hash rates, we saw a 6% or 79% drop in Bitcoin mining. This was offset by an average price realized per bitcoin mine increase of 31%, being $36.8k paid for bitcoin prices during the half. The average electricity cost of Bitcoin mined increased slightly from $13.4k to $14.5k.

Just to give you a bit of a breakdown in other costs. So the hubs, we had employee benefit expenses of $8 5 million and operating cost of $3, one insurance cost as Gerry one provision to Canadian Nonrefundable, Val <unk> 3 million and professional and other fees of $1 4 million.

Moving on into the quarter being Q1 set the <unk>, our adjusted EBITDA increased from $6 eight Neil just 14 mill.

With mining revenue, increasing 240 <unk> Nguyen.

Our cash rate was consistent across time periods.

And Jason increasing global hatch rates, we saw a 6% or 79 drop in bitcoin mines.

This was offset by an average price realized to bitcoin mine increased to 31%.

$36 8-K paid to decline.

Alright, Bitcoin mine increased slightly from 13 four to.

So it's 14 five K, we saw less volatility in <unk> than we do.

Belinda Nusifora: We saw less volatility in Q2 than we experienced in Q1, and as you'll see on the slide, in Q1 we realized a $3m realised gain on financial assets from selling, curtailing at Childress, and selling back into the market. Other costs in the Q2 quarter were made up of employee benefits expense of $4.3 million, site and operating costs of $1.5 million, insurance costs of $1.5 million, provision for Canadian non-refundable sales tax of $1.4 million, and professional fees of $0.8 million. In our Consolidated Statement of Profit and Loss for the period, our loss improved to $10.5.

In Q1, and as you'll see on this slide in Q1, we realized from selling curtailing at children and selling back into the market of three now realized gain on financial asset.

Other costs in there.

<unk> quarter, Amit upheld employee benefits expense of $4 3 million and operating cost of $1 five insurance cost of $1 five provisions in Canadian Nonrefundable sales tax.

And professional fees.

8 million.

Yes.

Okay.

Yes.

Our consolidated statement of profit and loss for the period our loss in trades.

A $10 five previously in the six months ended.

Belinda Nusifora: Previously, in the six months ended FY23, we had a loss of $161 million. That was primarily due to impairment of assets when Bitcoin pricing was at a low in December 2022. Also important to note, the key non-cash items in the half were share-based expenses of $11.8 million and depreciation of $15.2 million. As we move to our balance sheet, as at 31st December 2023, we had approximately $90 million of cash, no debt, and strong operating cash flows. The cash position further strengthened to approximately $146 million at 9 February 2024. Between 1 July and 31 December 2023, we raised $75 million from the sale of approximately 17.6 million shares using our committed equity facility and our ATM. Between 1 January 2024 and date, we raised a further $93 million from the sale of 19.7 shares. As of today, we've terminated the e-lock.

FY2023 we had a loss of 161 mill that was primarily due to impairment of assets when decline pricing without a lie at December 2020.

Also important to note the key non cash items in the hubs.

Share based expenses.

$11 8 million and depreciation of $15 2 million.

As we make sure our balance.

Balance sheet as at 31 December 2023, we had approximately $90 million of cash.

And strong operating cash flows.

Cash position further strengthen to approximately $146 million.

February not 2024.

One July.

31 December 2023, we raised $75 million from the sale of approximately $17 6 million shares.

Using our committed equity facility and our ATM and the 21 January 2024 to date, we raised.

$93 million from the sale of $19 seven shares.

Just today, we've terminated a lock.

Operator: However, we still have the discretion to utilise approximately greater than 300ml of our ATM to support growth. The usage of this facility will be assessed on an ongoing basis considering value accretion, market conditions, and dilution. We have a very strong balance sheet with total net assets of... $382 million, which provides flexibility to fund our future growth. I'm now going to hand over to the moderator for any Q&A. Thank you. We will now be conducting a question and answer session. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

However, we still have the discretion to utilize approximately greater than 300 male about ATM to support growth.

The essence of this facility will be assessed on an ongoing basis, considering value accretion market condition and dilution.

We have a very strong balance sheet with title net net asset sales.

382 million, which provides flexibility to fund our future growth.

Okay.

I'm now going to hand back to the moderator for any Q&A.

Thank you we will now be conducting the question and answer session.

As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced soon.

<unk>. Your question. Please press star one again.

Operator: Please stand by as we combine the Q&A roster. Our first question comes from Reggie Smith of J.P. Morgans. Please go ahead. Hey, good morning.

Please standby.

Combined the Q&A roster.

Our first question comes from Reggie Smith of Jpmorgan. Please go ahead.

Hey, good morning, Thanks for taking the question.

Reggie Smith: Thanks for taking the question. I wanted to dig into the AI cloud opportunity, and I appreciate the disclosure and the slide deck. The question is, I guess, looking at the range of prices, what are the factors that influence the price that you're able to charge there? I would imagine maybe scale, but maybe there are some other factors.

I wanted to dig into the AI cloud opportunity.

And I appreciate the disclosure.

In the slide deck. My question is I guess looking at the.

The range is kind of prices what are the factors that influence.

And for most of the prices youre able to charge there.

Imagine maybe scale, but maybe there's some other packages.

Daniel Roberts: So anything you can share there would be great. And then the second piece of that question is, I guess, at those types of revenues per hour, do you anticipate ever having to curtail? And if you do, how does curtailment impact the service level or quality of service from the customer's perspective?

So anything you can share there would be great.

And then the second piece of that question is.

I guess at those types of revenues per hour.

Do you anticipate ever having to curtail.

And if you did like how does curtailment impacts.

The I guess the service level of quality of service from the customer's perspective.

And I have a follow up thank you.

Okay.

Daniel Roberts: Thanks Reggie, good to hear from you, appreciate the question, it's a good one, and look, it's not a straightforward answer; there are straightforward elements. The price per GPU hour can be influenced by contract length, so for a longer-term contract, you would expect a slightly lower rate. I'm going to need him.

Okay.

Good to hear from you appreciate the question.

Good one and look it's not a straightforward answer there are straightforward element to prosper GPU, our can be influenced by contract links so for a longer term contract you would expect a slightly lower right.

Daniel Roberts: Contract, but the market is evolving. It's dynamic. It is very much kind of segmented where you've got the hyperscalers, the AWS, charging extremely large and high prices, many, many multiples of those pricing points. And then you've got an emerging market that we're looking to play a large role in, which is significantly lower. And we're seeing prices around that $2 to $3.

In the near term.

Contract, but the market is evolving it's dynamic.

He is very much kind of <unk>.

Minted where you've got the hydro skyla as the AWS is charging extremely large and high process. Many many multiples of those pricing points.

Then you've got an emerging market that we're looking to play a large rolling which is significantly lower and we're seeing prices around that two to $3.

GPU our.

Depending on the quality of the counterparty credit provisions in the contract the length of the contract.

Belinda Nusifora: I thank you. The scale of the underlying contract will all influence it, but roughly, we're guiding to around 24 month payback on the hardware. Got it. If I could ask one more question, and I was able to pick up some of the disclosures in the presentation, but curious, how many, how many shares were sold in the fourth quarter related to the ATM? And then year to date? Hi Reggie, I've got the breakdown for the financial half, so we raised 75 million from the sale of 17.6 million shares.

The scale of the underlying contract that will influence it.

Roughly we are guiding to around 24 month payback on the hardware.

Got it that makes sense.

If I could ask one more question.

I was able to pick up some of the disclosures in the.

Presentation, but curious how many.

How many shares were sold in the fourth quarter related to the ATM and then year to date.

That's it for me thank you.

Okay.

Hi, Rajeev, what is the breakdown for the financial Huh.

We raised $75 million from Lasalle 17, 6 million shares.

Belinda Nusifora: And then further to that, from 1 January to date, we've raised a further $93 million from the sale of 19.7 shares. Perfect, thank you. Thank you. Our next question comes from... Josh Singler from, oh my pardon, Mike Colonies of HC Wainwright and Co. Please go ahead. Hi Danny team.

And then further to that from one January to date, we have right now.

$93 million from the sale of $19 seven shares.

Okay perfect. Thank you.

Thank you.

Our next question comes from.

Josh Cingal from.

My my pardon from Mike colonies of H C Wainwright and Kurt. Please go ahead.

Mike Colonies: And thank you for taking my questions this morning or afternoon, based on where some folks are from. It sounds like you're pretty confident you'll exercise the full purchase option with Bitmain to acquire all 10x a hash under that agreement with them. So how should we think about the ramp up in the second half of the year as you scale from 10x a hash to 20x a hash? Yeah, thanks, Mike. It's good to hear from you.

Hi, Dan and team and thank you for taking my questions. This morning or afternoon.

Some folks are from.

It sounds like you're pretty confident youll exercise the full purchase option with <unk> to acquire all tenants under that agreement.

Treatment with them. So how should we think about the ramp up in the second half of the year as you scale from <unk> to the 20 X ash.

Yes, Thanks, Mark good to hear from you look as we've disclosed nine ex cash of that pain.

Daniel Roberts: Look, as we've disclosed, 9 exahash of that 10 is an option agreement in our favor, where we've got a call option to purchase those at $14 a terahash, an option agreement that was struck when Bitcoin was around $30,000 per Bitcoin. So given where Bitcoin's trading now, that does mean that the probability of exercise, from our perspective, particularly combined with the availability of capital in the market and the outlook, the confidence level in getting to that full 20 exahash is obviously higher than what it was when we signed that option agreement. And I guess it validated my entry into that option agreement in some ways. In terms of the specific ramp-up, we've got flexibility. So there are two attributes to this.

He is an option agreement in our favour, where we've got a call option to purchase those at $14 a tear hush.

And option agreement that was struck when be claim was around $30000 could be coin.

So given where <unk> is trading now that does mean that the probability of exits from our perspective, particularly combined with the availability of capital in the market and the outlook the confidence level in getting to that full 20 ex ash is obviously higher than what it was when we signed.

That option agreement and.

And I guess has validated the entry into that option agreement in some ways.

The specific ramp up we've got flexibility.

It's two attributes to this one is building the infrastructure, if we step back and look at capital allocation within the business.

Daniel Roberts: One is building the infrastructure. So if we step back and look at capital allocation within the business, Your first decision is around CapEx on... knowing multiple ways to monetize that data center capacity once it is built, whether that's Bitcoin or AI. Given that we've got the outlook for AI that we do and the growth we're seeing there, as well as the strength in Bitcoin, what these ETFs are doing, mopping up 10 to 15 times the available daily supply, we are very comfortable with going full steam ahead building out all of that infrastructure. We've then got a discrete, separate investment decision around exercising the options to go up to that 20 exahash. That's not something we need to make today.

Your first decision is around Capex.

No multiple ways to monetize that data center capacity once these built whether thats bitcoin or IR.

Given that we've got the outlook for what we do and the growth we're seeing there as well as the strength in bitcoin.

<unk> doing mopping up 10 to 15 times the available daily supply.

We are very comfortable with going full steam ahead building out all of that infrastructure.

They can go to a discrete separate investment decision alright.

Around exercising the options to go up to that 20 excess that's not something we need to make today.

Daniel Roberts: We can be patient. We've got a lot of flexibility in terms of when and how we exercise that option during the second half of this year. So in terms of the specific ramp-up, that will still be slightly market-dependent, assuming we do go to the 20 exahash, but you can expect that it will be a relatively gradual ramp-up into the end of the year, similar to what we'll see in the first half with the ramp-up to 10 exahash. So we've already hit 6.2; you can expect that to pick up again in the next couple of weeks I got it.

We can be patient, we've got a lot of flexibility in terms of when and how we exercise that option. During the second half of this year. So in terms of the specific ramp up that will still be slightly market dependent assuming we do go to the 20th Hush.

But you can expect that it will be a relatively gradual.

Ramp up to the end of the year.

Similar to what we will say in the first half with the ramp up to 10 X ash. So we've already hit $6. So you can expect that to tick up again in the next couple of weeks and gradually increase to that Phoenix ash.

Lighter than 30 June.

Daniel Roberts: That makes a lot of sense, and congrats on securing that deal with Bitmain. Just a quick follow-up for me, Dan. I'm just curious why you guys decided to go with the T21 miners instead of the S21s or another model out in the market today.

Got it that makes a lot of sense Sundar congrats on securing the deal with them in just a quick follow up for me. Then just curious why you guys decided to go with the $2 21 miners and started the 'twenty ones or another model out in the market today.

Okay.

Daniel Roberts: Yeah, look, we've had a fantastic experience with Bitmain and I think I've told you offline, we cannot speak more highly of them as an organisation, their flexibility, their commercial readiness, we're extremely happy with the pre-market service we get, the post-market service, the quality of the hardware, equally we have used units from other manufacturers and anticipate scaling up more with those manufacturers over the time, but the price point, the quality, the flexibility around structure, for example, that 9x hash option agreement is a really compelling opportunity for us and our investors and in terms of specific selection of those T21s, you know, they're sub-20 watts per tera hash, highly efficient, they'll drive us extremely low down in the global cost curve in terms of resilience, they also allow us to make the most of our data centres. So when we've built quality data centres, we're not jamming these things in shipping containers, seacans, you know, regional warehouses that have been retrofitted.

Yes look we've had a fantastic experience with benign.

And I think I've told you offline, we cannot speak more highly of them as an organization the flexibility the commercial rates on us.

We're extremely happy with the <unk>.

Pre market service, we get post market service.

The quality of the hardware.

Equally we have used units from other manufacturers and anticipate.

Scaling up more with those manufacturers over the time, but.

But the price point.

Quality flexibility around structure for example that Nymex hash option agreement.

<unk> is a really compelling opportunity.

For us and our investors and in terms of specific selection of those T 21.

This sub 20 watts <unk> highly efficient they'll drive is extremely laid down in the global cost curve in terms of resilience. They also allow us to make the most of our data centers. So when we built quality data centers, we're not jamming these things in shipping containers.

<unk>.

Regional warehouses that are being retrofitted.

Daniel Roberts: You want to make the most of it, and the ability to move as much computing capacity in our data centers as possible to make the most of those operating conditions makes a lot of sense. And then the final point on the T21 specifically is they've actually got two operating modes, a high energy and a normal energy mode, which again gives you a lot of flexibility around both efficiency and maximising revenue when Bitcoin prices are surging, as we've seen over the last month. Great; I appreciate all the color.

You want to make the most of it and the ability to move as much computing capacity now data centers as possible to make the most of those operating conditions. It makes a lot of sense and then the final point on the 221 specifically.

I've actually got two operating modes to high energy in a normal energy mode, which are gaining keeps you a lot of flexibility.

Ramp up efficiency.

And maximizing revenue when the claim process.

<unk> as we've seen over the last month.

Great I appreciate all the color.

<unk>.

Joyce Singler: Thank you. Our next question comes from... This is Joyce Singler of Kent Office Gerald, please go ahead.

Thank you.

Our next question comes from.

Jos <unk> of Cantor Fitzgerald. Please go ahead.

Joyce Singler: Yeah. Hi, guys. Thanks for taking my question. A lot of, you know, moving parts here. Very exciting on the AI front. Specifically, I just want to dive a little bit more into that.

Yeah, Hi, guys. Thanks for taking my question a lot of moving parts here very exciting on the AI front, specifically I just wanted to dive a little bit more into that.

Daniel Roberts: You know, I'd love to better understand the decision to really, you know, expand on the cloud compute front and how you're comparing that against, potentially, a larger co-location deal. Yeah, look, we are having... Discussions, but to be frank, I can look at it. I think, in some ways, that's a good way to scale up and scale up quickly, but I think our value-add is more on the cloud solution, the internal expertise we've got around not just the infrastructure and the real assets, but the technology and software layers that sit above that, I think is emerging as a real competitive advantage. And we've received direct feedback from Sorry, iron.

No I'd love to better understand the decision to really.

Expand on the cloud compute front and how you're comparing that against the potentially a larger co location deal.

Okay.

Yes.

Having.

Gushan.

To be Frank look I think in some ways. That's a good way to scale up and scale quickly, but I think our value add is more on the cloud solution. The internal expertise, we've got around not just the infrastructure and the real assets, but the technology and software where lies that sit above that I think is emerging.

Real competitive advantage and we received direct feedback from a number of market participate Vince about the Onboarding and user experience that now you see with the Rs II cloud, sorry, IRA I'll get there.

Daniel Roberts: I'll get there, so they see the AI cloud experience. You know, typically, they will have to wait two days before they can use a workload because they're having to download and install specific applications from NVIDIA, etc. to be able to use it. We preset it all up. We have one week full burning processes of every attribute of the InfiniBand network in the GPUs itself, and By the time they get to it, They get a full handover document, their own VPN, they log in, it is ready to go, and I think that convenience. When you think about the end customer market with all these generative AI Startups, all these corporates who are all dipping their toes into AI, the convenience, the ease of use, the ability to click a button and get into our cloud environment is a real competitive advantage. I believe going forward, as distinct from simply giving That's a super helpful color, and I also appreciate all the things you disclosed around unit economics for the AI side of things. Really helpful.

The nice safety AI cloud experience.

Typically they will have to wait two days before they can use a workload because they're having to download and install specific applications remain video et cetera to be honest, we use it we price. It all up we have one wakeful burning processes of every attribute in a band networking the gpus itself and by the time they.

Get to it make it a full handover document their own VPN by logging. It is ready to go and I think that convenience. When you think about the end customer market with all these generally NII startups. All these corporates, who are dipping their toes into II. The convenience the ease of use the ability to click a button and <unk>.

Getting into a cloud environment is a real competitive advantage I believe going forward as distinct from simply giving up our infrastructure for someone else to monetize on our behalf.

Thanks, Dan Thats Super helpful color and also I appreciate all the things we disclosed around unit economics to the AI.

Side of things really helpful switching gears over towards back towards taking my money I was wondering if you could elaborate a little bit more on the future our strategy, especially as <unk> scales up.

Joyce Singler: Switching gears over to back towards Bitcoin mining, I was wondering if, you know, you could elaborate a little bit more on the future power strategy, especially as Childress scales up. You talk a little bit more about the hedging opportunities that exist. Yeah, absolutely. So, as you know, we've been entering into rolling short-term power hedges, which we then use as a basis to arbitrage Bitcoin mining profitability and energy market pricing. It's been highly effective.

Talk a little bit more about the hedging opportunities that exist.

Yeah, absolutely. So as you know we've been entering into rolling short term power hedges, which we then used as a basis to arbitrage between mining profitability and energy market pricing its been highly effective.

Daniel Roberts: We've been in the demand response program. We said we would. We said we would go into 4CP and qualify. And we did.

Meeting the demand response program, we said we would.

We said, we would go into foresee pay and qualify we deed with started effective January.

Daniel Roberts: We started effective January this year. So, we have absolutely delivered on every attribute of that. In fact, we've delivered so well that the energy companies are now seeing our performance, seeing the reliability, and we're now having conversations around slightly longer-term hedges with collateral and credit requirements that are far more appealing to us today than where they were 12 months ago. So, over time, we'll look to enter into potentially longer-term contracts, but equally, the model today with shorter-term hedges and then trading around those hedges is proving to be highly effective.

This year. So we have absolutely delivered on every attribute of that.

In fact, we've delivered so well that the energy companies are now seeing the outperformance seen the reliability and we're now having conversations around slightly longer term hedges.

Collateral and credit requirements that are far more appealing to us today than where they were 12 months ago. So over time, we'll look to enter into potentially longer term contracts, but equally the model today, we have shorter term hedges and then trading around those hedges is proven to be highly effective.

Joyce Singler: Perfect. Thanks so much, Dan. I appreciate your time today.

Perfect. Thanks, so much Dan I appreciate your time today.

Lucas Pipes: Thank you. Our next question comes from Lucas Pipes of Bay Rally. Please go ahead. Thank you very much, Operator. Good morning, good afternoon, everyone.

Thank you.

Our next question comes from Lucas pipes of B Riley. Please go ahead.

Thank you very much operator.

Good morning, good afternoon, everyone.

Lucas Pipes: Dan, I first wanted to follow up on the AEI side. I would ask if you could maybe articulate growth plans beyond the 816 GPUs that you outlined. We would appreciate kind of how you think about and, also, on the financing path. What do you think is kind of the most feasible approach at this time? Thank you. Thanks, Lucas. It's a really simple answer.

And our first wanted to <unk>.

Follow up on the AI side.

Yeah.

I'll ask if you could maybe articulate growth plans beyond the 816 Gpus that you that you outlined.

Would appreciate kind of how you think about it also.

The financing path, what do you think is kind of the most feasible.

Approach at this time thank you.

Thanks Lucas.

Daniel Roberts: We anticipate growing and growing strongly but doing it in a prudent fashion. We received a fantastic level of interest from a customer perspective for those 248 GPUs that we are now delivering to poolside AI, and off the back of seeing that demand, we ordered twice as many more to add to that. So as and when they are delivered over the coming 6-10 weeks, we'll look to deploy them, look at customer demand, assuming everything goes to plan as expected. I think we'll order more. Why not?

A really simple answer we anticipate growing and growing strongly but doing it in a prudent fashion.

We received a fantastic level of interest from a customer perspective.

So those 248 Gpus that we are now delivering to pool side.

And off the back of seeing that demand reordered twice as many more.

Add to that so as and when they are delivered over the coming six to 10 weeks.

We'll look to deploy them look at the customer demand assuming everything goes to plan as expected.

I think we will order more why not its a massive opportunity like we are.

Daniel Roberts: It's a massive opportunity. We are real believers and have been since day one, as you know, in this theme around power consumption and energy-dense computing, really powering our society forward. The advent of AI, all this data analytics, machine learning, high-performance compute, Bitcoin, etc. So I think the ability to be so well positioned for that tailwind and continue to snowball momentum as we are prudent around capital allocation and make sure that we continue to deliver what we're seeing is top-class customer service is something that we're really focused on. That's helpful.

Flavors and has changed since day, one as you know in this dramatic around how consumption and energy dense compute really Perry.

Now society forward the advent of AI.

All these data analytics machine learning and high performance compute bitcoin etcetera. So I think the ability to be so well positioned for that tayo and continue to snowball momentum.

As we be prudent around capital allocation and make sure that we continue to deliver what we've seen is a top class customer service.

It's something that we're really focused on.

Lucas Pipes: Thank you. Thank you, Dan. And in terms of infrastructure for the GPUs, at what point do you think you would have to make kind of separate investments for structure, power, et cetera, so that you would have ample runway on the infrastructure side? Yeah, so Luke, I know we've had this conversation in the context of other businesses that are spending large sums of money on data centers. We just haven't had to, like as we've disclosed previously, we're spending around $750,000 to the public. We are using the same fundamental infrastructure for Bitcoin mining and AI. There is no substantial additional cost.

That's helpful. Thank you. Thank you Dan.

In terms of infrastructure for the Gpus.

At what point do you think you would have to make kind of separate investment.

Call it structure power et cetera.

So that you would have ample runway on on the infrastructure side. Thank you.

Yes.

I know we've had this conversation the context.

Other businesses.

Spending large sums of money on data centers.

Havent had to like as we've disclosed previously we're spending around that $750000.

Megawatt of Capex.

I think it's reasonable to assume that we're seeing more efficiencies over time, so stay tuned around that.

<unk> been using that $750000 number.

We are using the same fundamental infrastructure to bitcoin mining and there is no substantial additional.

Daniel Roberts: Capital costs and structural changes that we need to make to these data centers. And I know we were cautious around it, we were hesitant, we asked questions around this over the last few years because until we did it and made sure we didn't miss anything, it was prudent to do so, but we've now done it, and it works. These base data centers are multifunctional, where we have got the flexibility to plug in GPUs for AI or Bitcoin mining assets. Thank you, and in terms of when you would have to expand that footprint and allocate additional capital towards infrastructure at that rate called $750,000, when would that be, kind of considering going to 20 exa-hash on the BTC side plus growth in the GPUs? I'm just trying to get a sense for when you would look to further expand the infrastructure component.

Capital cost.

And structural changes that we need to make to these data centers and I know we were cautious around it we were hesitant to inquiries around these are the last few years because until we did it.

And make sure we didn't Miss anything it was prudent to do so, but we've now done it and it works what these nice data centers, a multifunctional, where we have got the flexibility to plug in Gpus for AI will be coin mining ethics.

Thank you and and in terms of when you would have to expand that footprint.

Allocate additional capital towards towards infrastructure at that great call. It 750000.

That be kind of considering.

Go into 'twenty excess cash on the on the PTC side plus growth in the GPU. So just trying to get a sense for when when you would look to further expand.

Lucas Pipes: Yeah, look, so we're expanding the infrastructure components, as you know, to hit 20 exahashes by the end of this year. That is the goal. But to put it in context of AI and the GPUs. The 816 GPUs that we've purchased... What's the capex for that? 30, 35 million US dollars. Let's round it up to 35; that's using less than one and a half megawatts of power.

The infrastructure component. Thank you.

Yes look so we're expanding the infrastructure.

<unk> partners as you know to hit the 20 extra cash by the end of this year that is the goal, but could it put it in context of the <unk> and the Gpus.

Every the 806 to eight Gpus that we've purchased what's.

What's the capex for that cost $30 $35 million U S dollars was rounded up to <unk> 35.

That's using less than one and a half megawatts of power.

Daniel Roberts: So times that by 100. You know, you're at a $3 billion CapEx line with a 24-month payback on that CapEx, and you're only using 150 megawatts of our data center capacity. So this is an attribute that we're also super excited about, the diverse revenue lines, where you've got the ability to charge forward aggressively on the infrastructure build-out, knowing that you've got the ability to deploy Bitcoin or AI, but the AI machines are very capital-intensive and equally deliver more revenue per megawatt. It means that your infrastructure constraint isn't there like it might be for different people at different times with Bitcoin mining.

So Tom is that 500.

Yes.

You are at a $3 billion Capex line with 24 at.

24 month payback on that Capex and Youre only using 150 megawatts out of our data center capacity. So this is an attribute that we're also super excited about the diverse revenue lines.

<unk> got the ability to charge forward aggressively on the infrastructure build out.

Knowing that you've got the ability to deploy bitcoin or I R.

The AI machines very capital intensive and equally.

Yes deliver more revenue per megawatt, which means that your infrastructure constraints is that market might be different people with different times, we'd be quite minor.

Joseph Barfi: Dan, I really appreciate all the color you and your team have given us. Continue the best work. Thank you. Our next question comes from Joseph Barfi of Kanakor, Dunedin. Please go ahead. Hey guys, good morning.

Dan I really appreciate all the color to you and your team continued best of luck.

Thanks.

Thank you.

Our next question comes from Joseph.

<unk> of Canaccord Genuity. Please go ahead.

Daniel Roberts: Nice to see progress in the business. I just really have one question, you know, relative to the having coming up and optionality emerging in your business model between the two lines of business here that are, you know, clearly Bitcoin mining and then the emerging AI business. Are there any guideposts for us relative to where resources may be more deployed in one line of business versus another, you know, relative to where network difficulty is or where spot prices are post-halving?

Hey, guys. Good morning, nice to see progress in the business I, just really have one question relative to the having coming up and.

Optionality emerging in your business model between.

The two lines of business here that.

Clearly bitcoin mining and then the emerging AI.

Business.

Are there any guideposts for us relative to.

Where resources may be.

More more deployed in one one line of business versus another relative to where.

Network difficulty.

Or.

Where spot prices are post having.

Joseph Barfi: You know, it's nice to have options just trying to get into your head a little bit of how you may be thinking about where to deploy resources in 24 and moving forward. Thanks a lot. Thanks, Joe. Appreciate the question. Look, it is optionality, but equally, it's just two discreet, super exciting business models that we're charging full steam ahead with.

It's nice to have options just trying to get into your head a little bit of how you may be thinking about where to deploy resources in 'twenty four and moving forward. Thanks a lot.

Yes.

Thanks, Joe I appreciate the question.

Look it is optionality, but equally it's just two discrete super exciting business models that we're charging full steam ahead at.

Daniel Roberts: So that dovetails a bit into capital allocation, which, as I've said, is essentially the following for this year. On the Bitcoin mining side, we're looking to go to 20x hash by the end of the year. So we'll be looking to allocate capital to achieve that. In terms of the AI cloud service, we'll be looking to allocate capital essentially as quickly as the market for GPUs absorbs the new GPUs as we order them. So we bought the initial order. They obviously had high demand.

So that dovetails a bit into capital allocation.

Which as I've said is essentially the following this year.

On the bitcoin mining side, we're looking to go into 'twenty excess cash by the end of the year. So we will be looking to allocate capital to achieve that in terms of the AI cloud service.

We will be looking to allocate capital essentially as quickly as the market for Gpus absorbs the new Gpus as we order them.

So we bought the initial order they obviously had high demand we contracted them with a quality counterparty on terms that were really excited about so we ordered twice as many more immediately.

Daniel Roberts: We contracted them with a quality counterparty on terms that we're really excited about, so we ordered twice as many more immediately. When they arrive, we'll look to deploy them straight away, and assuming all goes to plan, we'll look to scale up further. So I think it's right to be more dynamic and flexible around AI and prudent in terms of how you allocate capital in response to, you know, live time validation of the product and monetization of that capacity rather than me sitting here and giving you some arbitrary target for CapEx and revenue by the end of this year. But to be clear, we're super big believers in this theme, and we're keen to go pretty hard at it.

When they arrive we will look to deploy them straight away and assuming all goes to plan, we will look to scale up further so.

I think it's right to be more dynamic and flexible.

Around AI and be prudent in terms of how you allocate capital in response to.

Live time validation of the product and monetization of that capacity rather than may sitting here and giving you some arbitrary target for capex and revenue by the end of this year, but to be clear, we're super big believers in the thematic.

Where it came to go pretty hard at it, but we're going to be prudent around how we deploy capital.

Joseph Barfi: But we're going to be prudent around how we deploy capital. Great. Thanks for that, Culler. Looking forward to a good 24.

Great Thanks for that color.

Looking forward to a good 24, thanks guys.

Jo Flynn: Thanks, guys. Thank you. Our next question comes from Jo Flynn of Compass Point Research and Trading. Please go ahead, assuming you would. We have a projection of remaining capital. For more information, visit www.fema.gov.

Thank you.

Our next question comes from Joe Flynn of Compass point Research and trading. Please go ahead.

Hi, guys.

When you take the option we had a question just on do you have a projection for remaining capex for the build out for 'twenty accession.

Daniel Roberts: For more information, visit www.fema.gov. By Yeah, so we've disclosed that we're fully funded for the 10x hash. That was some time ago, but as you've seen, we've raised additional capital since then and have almost $150 million of cash in the bank today. In terms of CapEx data centers, as we've said before, around $750,000 per megawatt, so if you shoot 200 megawatts of We've also disclosed that it's $14 per terahash for the machines. So 10 exahash is doing the numbers for everyone and working out all the zeros involved. That's about a hundred and forty million dollars.

Kind of what the.

Financing sources.

Tend to be.

Yes.

We've disclosed that we're fully funded for the <unk> ash that was some time ago as you've seen we've raised additional capital.

Since then have almost a $150 million of cash.

In the bank today in terms of Capex data centers.

As we've said before around that $750000.

Per megawatt.

So if you assume 200 megawatts of capacity, that's about $150 million for the data centers.

We've also disclosed that it's $14 to tear ash to the machines <unk> at ash.

The numbers for everyone.

Working out all the zeros involved that's about $140 million. So you've got $290 million of Capex. If you look at that an incremental step up from 10 to 20 extra cash.

Jo Flynn: So you've got two hundred ninety million dollars of CapEx if you look at that as an incremental step up from 10, 20 exahash, so $290 million of CapEx total to deliver that. Keep in mind that we've got $150 million in the bank. Great. Great, thank you. Our next question comes from Paul Golding of Macquarie Capital. Please go ahead. Thanks so much. Just a housekeeping question.

$290 million of Capex total to deliver that.

<unk> demand that we've got $150 million in the bank.

Great. That's helpful. That's all great.

Great. Thank you.

Our next question comes from Paul Golding of Macquarie Capital. Please go ahead.

Thanks, So much just a housekeeping question I was just wondering if you could give us an update on how the buildings are progressing at children and I guess as a follow up to Joe's question earlier, how that influences. The way you think about deploying.

Paul Golding: I was just wondering if you could give us an update on how the buildings are progressing at Childress, and, I guess, as a follow-up to Joe's question earlier, how that influences the way you think about deploying ASICs versus GPUs, given that you also have to go out and sell the GPU capacity, whereas with Bitcoin mining, you plug it in, and you start generating revenue. Thank you. Yeah, so maybe starting in reverse, sorry, Link, but you go for it.

86 versus <unk>.

<unk> given that you also have to go out and sell the GPU capacity, whereas the.

<unk> mining you plug it in and you start generating revenue. Thank you.

Yes, so starting in reverse.

Thank you guys.

Lincoln Tan: So I was just going to talk about the first piece, Paul. The construction is progressing very well; in fact, it's progressing ahead of schedule. You know, I haven't got a photo to share literally right here on the screen, but if you look at our social media and the videos, etc., you'll see the five buildings that we've got in respect of phase one. So it's very, very well-progressed. We've obviously energized 40 megawatts already. At Childress, as Dan mentioned earlier in the presentation, you should expect that hash rate to start ticking up in the next couple of weeks from the 6.2 exahash that we're currently at, and certainly, you know, well on track to hit that 10 exahash in the first half.

So I was going to I was just going to talk to the SaaS pace Paul.

The construction is progressing very well in fact, it's progressing ahead of schedule.

I haven't got a photo to sandwich day right here on the screen, but if you look at our Socials and on the videos et cetera, Youll see and the five buildings that we've got in respect of phase one should look at it very very well progressed.

Obviously energized 40 megawatts already.

At she'll address as Dan mentioned earlier in the presentation that you should expect that has right to start ticking up in the next couple of weeks from the $6 two and perhaps that we're currently at and certainly well on track to hit that 10 X a hash.

In the first half.

Lincoln Tan: And then to just take an hour for your questions, more around deep new timings and... Bitcoin mining, you're right, as soon as you plug in these Bitcoin mining chips, you sync them into the network, you get paid immediately. That's always been an attractive reason that we started with Bitcoin, right? Because you didn't have to have a customer onboarding experience, you didn't have counterparty risk, just plug and play and start printing money. In terms of the GPUs, it's different; you've got to find customers, you've got to onboard them, etc. But look, judging by the experience we had with the 248, it's really minimal in terms of the latency and the lag between having those GPUs ready to go and market demand and appetite for them. So, as I mentioned before, we typically put them through a one-week burn process where we basically throttle each component of the system very high to test it and make sure that it's all functioning to its full capacity.

And then to the second half of your question.

Thank you Amin.

Because you're right as soon as you're plugging these becoming mining chips, you're seeing them into the network you get paid immediately that's always been an attractive reason that we started with bitcoin brought because you didn't have to have a customer onboarding experience you didn't have counterparty risk you could just plug and play and to start.

Printing money.

In terms of the Gpus, it's different you've got to find customers, you've got onboard them et cetera.

But look just judging by the experience we had with the $2 48.

It's really minimal in terms of the licensee in the lag between having those gpus ready to go and market demand and appetite to use them. So as I mentioned before we typically put them through a one week earned process, where we basically throw it relates component of the system.

Very hard to test it.

And make sure that it's all functioning to its full capacity once we go through that we've got an onboarding document and process and customers.

Daniel Roberts: Once we go through that, we've got an onboarding document and process, and customers are basically free to log in and start using the service. Great. Thanks so much. Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. Thank you. I see no further questions on my side. Now, I'll pass back the link.

Basically free to login and start using the service.

Great. Thanks, so much.

Thank you as a reminder to ask a question. Please press star one on your telephone.

For your name to be announced.

Thank you I see no further questions on my side now I'll pass back to Lincoln.

Okay.

Operator: Thanks very much. We're just about to approach the hour, so I think that's all we have time for in terms of Q&A today. Perhaps we can hand over to Dan just very briefly for a couple of closing remarks. Thanks, Link. Thanks, everyone. We're obviously continuing to be very excited. 2024 is a good year for us.

Thanks very much.

But we're just about to approach the hour. So I think that's all we have time for in terms of Q&A.

Today.

<unk>.

Perhaps we hand over to Dan just very briefly for a couple of closing remarks, and then we can we can end the call from there.

Thanks Lee.

Thanks, everyone. We're obviously continuing to be very excited 2024 is a good year for us on.

Daniel Roberts: On the Bitcoin mining side, we look forward to approaching 20x hash on the AI. Cloud services, we continue to look forward to growing that strongly throughout the year. This is all off the back of a starting base where we saw Adjusted EBITDA double for the corresponding period last year, Adjusted EBITDA being a good proxy for cash flow and operating.

On the bitcoin mining side, we look forward to approaching 20 ex ash on the AI cloud services, we continue to look forward to growing that strongly throughout the year.

This is all off the back of a starting base, where we saw adjusted EBITDA doubled.

The corresponding period last year, adjusted EBITDA being a good proxy for cash flow and operating.

Cash we're in a good position the teams going well we're excited about the rebrand.

Daniel Roberts: We're in a good position, the team is going well, we're excited about the rebrand. The margins on both Bitcoin Mining and AI Cloud seem really compelling to us, the return on capital, and the flexibility of the data centers. So look, for us, we're super pumped, to be frank. We believe we're at the beginning of two enormous multi-decade tailwinds with Bitcoin and AI. And the ability to capitalize on both of those tailwinds through one platform and one common set of infrastructure is something that we're really excited about. So, thanks, everyone. I think we had record attendance today by quite a margin, even multiples.

The margins on voice between mining and cloud.

Our cloud.

So you really compelling to us the return on capital the flexibility of the data centers.

So look for us we're super pumped to be Frank We believe we're at the beginning of two enormous multi decade title wins with bitcoin NII and the ability to capitalize on both of those timings through one platform and one common set of infrastructure is.

Is something that we're really excited about so thanks, everyone. I think we had record attendance today by quite some margin even multiples.

Daniel Roberts: So really appreciate everyone taking the time and looking forward to a big 2024. Thanks everyone. Thank you. This concludes today's conference call. All right, we are clear. I'm going to slip Belinda's back in here and Lincoln. Well done, Ben. Great. Great job. Thank you. Thank you for watching!

So I really appreciate everyone, taking the time and look forward to 2024, thanks, everyone.

Thank you. This concludes today's conference call. We are clear on those slipped Belinda announced second here in Lincoln of reimbursement.

All right, great well great job.

Thanks.

Okay.

[music].

Okay.

Okay.

Yes.

[music].

Okay.

Yes.

[music].