Q4 2023 Canaan Inc Earnings Call
Okay.
Operator: Ladies and gentlemen, thank you for standing by, and welcome to Canaan Inc.'s fourth quarter and full year 2023 earnings conference call. At this time, all participants are in listen-only mode.
Ladies and gentlemen, thank you for standing by and welcome to <unk>, Inc. 's fourth quarter and full year 2023 earnings conference call.
At this time, all participants are in listen only mode.
Operator: After the management's prepared remarks, we will have a question and answer session. Please note that this event is being recorded. The company's financial and operating results were released by the newswire services earlier today and are currently available online. The company has also prepared a presentation for today's call. You may view the presentation and navigate through the slides on the webcast page for the fourth quarter 2023 earnings call on the company's IR website. Joining us today are Canaan Inc.'s Chairman and CEO, Mr. Nangeng Zhang, and CFO, Mr. Jingcheng James. In addition, Mr. Leo Wang, IR Senior Director, and Ms. Shi Zhang, IR Manager, will also be available during the question and answer session.
After the managements prepared remarks, we will have a question and answer session. Please note that this event is being recorded.
The company's financial and operating results were released by the Newswire services earlier today and are currently available online.
The company has I'll say perpetual presentation for today's call.
He might be you the presentation and navigate through the slides on the webcast page for the fourth quarter 2023 earnings call on the company's IR website.
Joining us today, our Canaan inks, chairman and CEO, Mr. Nan Ganga Shang and CFO, Mr. Cheng Cheng James In addition, Mr. Li Wang IR Senior director Ms. Shang I owe them on a job will also be available during the question and answer session.
Operator: Mr. Zhang will start the call by providing an overview of the company and performance highlights for the quarter. Mr. Chen will then provide details on the company's operating and financial results for the period before we open the call up for your questions. Before we continue, I would like to refer you to our safe harbor statement in our earnings press release. Today's call will include forward-looking statements. These statements include, but are not limited to, our outlook for the company and statements that estimate or project future results of operations or the performance of the company. These statements speak only as of the date hereof, and the company assumes no obligation to revise any forward-looking statements that may be made in today's press release, call, or webcast, except as required by law. These statements do not guarantee future performance and are subject to risks, uncertainties, and assumptions.
Mr. Shang will start the call by providing an overview of the company and performance highlights for the quarter Mr.
Mr. Chen will then provide details on the company's operating and financial results for the period before we open up the call up for your questions.
Before we continue I would like to refer you to our safe Harbor statement in our earnings press release.
Today's call will include forward looking statements. These statements include but are not limited to our outlook for the company and statements that estimate or project future results of operations or the performance of the company.
These statements speak only as of the date hereof and the company assumes no obligation to revise any forward looking statements that may be made in today's press release call or webcast, except as required by law.
These statements do not guarantee future performance and are subject to risks uncertainties and assumptions.
Operator: Please refer to the press release and the risk factors and documents we file with the Securities and Exchange Commission, including our most recent annual report on Form 20F, for information on risks, uncertainties, and assumptions that may cause actual results to differ materially from those set forth in such statements. In addition, during today's call and webcast, we will discuss both GAAP financial measures and certain non-GAAP financial measures which we believe are useful as supplemental measures of the company's performance. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results.
The press release under risk factors in documents, we file with the Securities and Exchange Commission, including our most recent annual report on form 20-F for information on risks uncertainties and assumptions that may cause actual results to differ materially from those set forth in such statements.
In addition, during today's call and webcast will discuss both GAAP financial measures such non-GAAP financial measures, which we believe are useful as supplemental measures of the company's performance.
non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results in our earnings press release, which is posted on the company's website.
Nang Geng-Shiang: You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results, in our earnings press release, which is posted on the company's website. With that, I will now turn the call over to our Chairman and CEO, Mr. Nang Geng-Shiang. Please go ahead, sir.
With that I will now turn the call over to our chairman and CEO. Mr. <unk> Ganga Shang. Please go ahead Sir.
Nang Geng-Shiang: Hello everyone, this is NG, the CEO of Canaan. Thank you for joining our conference call. Our CFO James and I are at the company's headquarters in Singapore to share our quarterly results with you. In the first quarter of 2023, especially in December, the price of Bitcoin, in general, kept showing an upward trend. Starting at around $27,000 at the beginning of the quarter and reaching an annual high of about $44,000 by the last week of the quarter.
Hello, everyone. This SMG the CEO of China. Thank.
Thank you for joining our conference call, our staff, which I understand.
Company's headquarters in Singapore to share our quarterly results with you.
In the first quarter of 2020 as street, especially in December.
There is a bit quiet in general kept showing for China.
Dark here at around $27000 at the beginning of the quarter and reaching annual high of about $44000 by the last week of the quarter.
At the same time.
Natural tax rate continue to rise exceeding 500 extra half a second.
Nang Geng-Shiang: At the same time, the total network hash rate continued to rise, exceeding 500 X hash per second. The rapid continuous rise in Bitcoin price and the increase in transaction fee rewards led to a rapid increase in mining revenue, promoting miners' willingness to purchase computing power. Furthermore, discussions about the end of the interest rate hike cycle and the upcoming approval of a Bitcoin spot ETF have made industry participants, including miners, more optimistic about the future. As a result, post-production sales exceeded expectations in this quarter, especially in December, as a Harvey event approaches. Mining equipment providers are also stepping up de-stalking efforts, with the theme of small profits for fast turnover remaining prevalent this quarter, keeping product ASPs low as expected.
Directly to continuous rise in corn price and the increase in transaction fee rewards that too.
Rapid increase in mining.
Provoke humana's BNS purchase computing power. Furthermore, discussions about.
The interest rate hike cycle and.
Approval.
It's quite small etfs have made the industry.
It paints, including minors more optimistic about future as a result, both production ourselves extended.
Issues in this quarter, especially in December.
As a hobby than your guidance.
Yes.
Pigment providers are also stacking destocking efforts.
The theme of small properties for faster or it remains pretty muted this quarter keeping product ESP slow at least as effective.
That's exactly changing market environment.
You see it's a favorable market window of this quarter, especially in December achieving total revenue of <unk>.
Nang Geng-Shiang: In such a rapidly changing market environment, we see the favorable market window of this quarter, especially in December, achieving a total revenue of $49 million, including mining machine sales revenue of $44 million, much higher than management's expectation of $34 million U.S. revenue in the third quarter's conference call. In the last quarter of 2023, we also adjusted the company's strategy and organizational structure according to changes in the market situation. Improving R&D and operational efficiency, increasing investment in production capacity, diversifying mining operations, and exploring international markets such as North America, Southeast Asia, and the Middle East. Meeting Financing in the market with sufficient funds enables us to deploy in advance and meet the explosive demand in the upcoming bull market. Now, let me go into more detail.
49 million U S dollar, including machine mining machine sales revenue for Q4 of them in the U S dollar.
It's higher than the management's expectation of 34 million U S dollar revenue in the quarter.
This conference call in.
In the last quarter of <unk> history. We also have adjusted the company's strategy and organizational structure. According to changes in the market situation improve.
Improving R&D.
Operational efficiency, increasing investments in production capacity diversifying mining operators and exporting in international.
International markets, such as North America, Southeast Asia, and the Middle East.
Financing.
The market is.
Is sufficient fault enable us to deploy our advice and the meat.
Explosive demand in the upcoming pool market.
Now let me go to.
Go into more detail.
After announcing a 14th Crs monitors in September 20th faced 10, HIV history, we'll continue to work diligently over.
The following quarter to improve performance.
Rarely ability at whole machinery level and that transitions, new dilution products into mass production.
Nang Geng-Shiang: After announcing the A14 series miners in September 25, 2023, we continue to work diligently over the following quarter to improve performance and reliability at the whole machine level and transition the new generation products into mass production. The A14 series miners are expected to begin small-scale deliveries in Q1 2024, with large-scale deliveries expected to concentrate in Q2 to Q3. Meanwhile, the development of our next-generation products is also progressing rapidly. As usual, we will publicly disclose the specific performance of new products after prototype testing is complete. In addition to mining machines, the company's self-developed integrated air or liquid cooling mining solutions have been gradually delivered and generating revenue throughout the third and fourth quarters. These integrated solutions are highly integrated, allowing for rapid deployment and enabling our mining machines to operate in a controlled environment, thereby maximizing performance and reducing maintenance costs. These benefits increase customer willingness to purchase our mining machines, putting us in a favorable position in terms of sales. To better test our products, we choose to showcase them first in the hot... Middle Eastern region, demonstrating our confidence in product performance.
So April serious manner I expect it to begin small scale deliveries in Q1 2024.
Large scale deliberate or is expected to concentrate in Q2 to Q3.
Meanwhile, the development of our next generation products, it's also progressing rapidly.
Yes.
Customary we will publicly disclose the specific performance of new product after prototypes testing is completed.
In addition to mining machines the company itself.
<unk> air or decreased accordingly, minus solutions have been gradually DD award and are generating revenue.
The third and fourth quarters.
This integrated solution is a highly integrated allowing for rapid deployment, enabling our mining machines to operate and control environments, thereby maximizing performance and reducing maintenance costs.
These benefits increased customer awareness to purchase our myeloma shares putting us in a favorable position in the serious ourselves.
To better test our products issues to showcase for us in the heart.
Middle Eastern region, demonstrating our confidence in product performance.
In terms of widely machines.
Our machine sales were achieved approximated $5 47 billion tariff Ashwin <unk> of computing power. So in the first quarter, a year over year decrease of 192% and up quarter over quarter increase of 49%.
Money machine revenue reached.
$44 1 million in U S dollars refill.
Representing a sequential increase of about 49% <unk>.
Additionally, the contracts out for our April cancers mining machines received.
Yes.
Yes.
S take booking from customers this quarter.
Nang Geng-Shiang: In terms of mining machine sales, we achieved approximately 5.47 million terahertz per second of computing power sold in the fourth quarter, a year-over-year increase of 192 percent and a quarter-over-quarter increase of 49 percent. Mining machine revenue reached 44.1 million U.S. dollars, representing a sequential increase of about 49%. Additionally, the contract sales for our A14-series mining machines received issue-sensitive bookings from customers this quarter, with accumulated contract sales orders exceeding 7.5 million THPS with customer prepayment. This encourages growth in contract sales orders, and has elevated the company's level of customer advance as of the end of 2023. However, the growth margin of these free cells is not high.
Accumulated contract house owners exceeding seven 5 million terror hotspots that credit at.
Least customer prepayments.
Country encouraging growth in contracts householders.
Yes.
Advocate.
In this level.
Customer advice.
And that hotel history.
However, the gross margin out of these pre south aldar safe not high.
If blocks of contract odors, we also test the company's delivery capability.
Better.
As cash flow out of inventory as well as manage its inventory allocation changes contacts while.
While owners.
Total business.
At the end.
Last quarter, we once again entered into.
Procurement agreement Green.
Greenland suites publicly listed company, especially our cycle of minors and stronghold digital money.
These include a contract SaaS order from <unk> for.
<unk> thousand 700 units of.
It's a $40 66 mining machines and another older funds strong Calder for 1100 units after searching for the ethics Manley machine. Additionally earlier deliveries include.
Nang Geng-Shiang: A sudden influx of contract orders will also test the company's delivery capability. We will better balance cash flow and inventory, as well as manage the inventory allocation between contract sales, spot orders, and the mining business. At the end of the fourth quarter, we once again entered into procurement agreements with publicly listed companies such as Cypher Mining Inc. and Stronghold Digital Mining Inc. This includes a contract sales order from Cypher for 16,700 units of the A1466 mining machine and another order from Strongholder for 1,100 units of the A1346 mining machine. Additionally, earlier deliveries include 11,000 units of the A1346 model to Cypher and 2,000 units to Strongholder, all of which have been delivered to their respective mining sites and installed by the fourth quarter, operating smoothly. In the Southeast Asia region, where we focus on channel cells, we achieve cells of 900,000 terahertz per second of computing power in the fourth quarter, contributing to stable cell orders.
<unk> installed units.
<unk>.
Certainly the 46 models of cyber and 2000 units to draw it.
All of which have been TD award to their respective mining sites.
And installed <unk> fourth quarter operating smoothly.
In the Southeast Asia region.
Where are we focus on channels house, we achieve yourselves.
900000 per house.
Computing power in the fourth quarter contributing to a stable sales others are all on retail.
Thor.
Targeting overseas market.
Expanded they are.
To reach two four new regions include on Norway.
The Dominican Republic.
Partly out of Israel totaling 46 regions reached a pie.
This quarter meeting the part.
Assessing needs of decentralized individual learners worldwide.
Okay.
Benefiting from sectors, such as increasing.
Comprise.
This extra FTE rewards and the improved uptime.
We achieved revenue of <unk>.
Absolutely.
Three point stamina meeting in the fourth quarter.
Presenting a <unk>.
Nang Geng-Shiang: Our online retail store, targeting overseas markets, expanded their reach to four new regions, including Norway, the Dominican Republic, Paraguay, and Israel, totaling 46 regions reached by this quarter, meeting the purchasing needs of decentralized individual miners worldwide. Benefiting from factors such as increasing the Bitcoin price, transaction fee rewards, and improved uptime, we achieved mining revenue of approximately $3.7 million in the fourth quarter, representing a growth of about 14% compared to about $3.3 million in the third quarter. In the fourth quarter, we mined a total of 101 bitcoins. The company continues to maintain a holding strategy in Canaan, uh... Bitcoin mining business. At the end of the fourth quarter, we held 909 bitcoins belonging to the company, reaching a historical high. The current market value of our bitcoin assets is almost 50 million US dollars. At the end of the fourth quarter of 2023, our total energy mining computing power was 1.91 exahash per second.
Most of about 14.
Percent compare to about $3 3 million U S dollars in third quarter in the fourth quarter, we mined a total of 100 and the one points.
Company continues to maintain a wholesale strategy.
Yes.
At <unk> mining business.
At the end of the.
Fourth quarter.
909.
Class belonging to the company, reaching a historical high.
The current market value of our assets.
It's almost 50 million U S dollars.
At the end.
The fourth quarter of 2023, our total Edison energy.
But Matt mining computer empower was one point.
Non one extra hash or second.
You can kind of next tier.
Following.
The acquisition of the necessary type two large tenants for mining.
Have been collaborating with our local partners to resume mining operations.
Despite challenges such as hash court.
Weather and the need to re establish cross border accounts, we have made significant progress.
We come off the <unk>.
In our mining machines in the first quarter of 2024 and at the majority of them have now been successfully re attitude.
Nang Geng-Shiang: In contact time, following the acquisition of the necessary Type 2 license for mining, we have been collaborating with our local partners to resume mining operations, despite challenges such as harsh cold weather and the need to re-establish cross-border accounts. We commenced reanalyzing our mining machines in the first quarter of 2024, and the majority of them have now been successfully reanalyzed. As a result, these gradually reactivated mining machines have begun generating mining revenue in 2024. While maintaining our mining strategy, we will continue to adjust and upgrade our specific operating tactics. So, when selecting project opportunities, we will pay more attention to factors such as the legal system and regulatory stability in the project's located regions.
As a result this gradually.
Activated mining machines, how it began generating mining revenues.
In 2024.
While.
<unk> training.
Our mining strategy, we will continue to adjust and to upgrade our specific operating.
Tax.
Techniques.
<unk>.
When selecting project opportunities.
We will pay more attention to factor.
Actors such as vehicle states and regulatory stability in the protect our projects are located regime.
It has been in risk control we.
We will expand our scale, while ensuring the security of our company assets.
Secondly, we will shift from cash flow or a tier two growth oriented strategies.
Therefore.
Unlike in the past, we will use more advanced mining machine models for South Miami.
Prolonging investments per reducing operational risks.
And enhancing the market.
Nang Geng-Shiang: Enhancing Risk Control. We will expand our scale while ensuring the security of our company assets. Secondly, we will shift from cash flow-oriented to growth-oriented strategies. Therefore, unlike in the past, we will use more advanced mining machine models for self-mining.
Competitiveness of our mining business.
Lastly, in addition to call proactive monitoring models, we will also consider fixed that rate hosting and the other ways such as south construction or acquisition to deeply participate in mining operations.
Nang Geng-Shiang: Prolonging investment span, reducing operational risk, and enhancing the market competitiveness of our mining business. Lastly, in addition to proactive mining models, we will also consider fixed rate hosting and other ways, such as self-construction or acquisition, to deeply participate in mining operations. As of today, the company has 11 active mining projects globally, with a total of 2.8 exahertz per second of energy. Power.
As of today.
Albany has 11 active mining projects globally with a total of 2.8 extra heads per second of <unk> computing power.
This energetic computing power has increased by 46% compared to the end.
Our fourth quarter of 2000 and title III, mainly due to the re energize Asian up some machines in Kazakhstan and.
And as a nation of machines in other projects.
Today, we have two part one has to has protected us expected computing power to be installed.
Nang Geng-Shiang: This energy computing power has increased by 46% compared to the end of the fourth quarter of 2023, mainly due to the re-energization of some machines in Kazakhstan and the energization of machines in other projects. As of today, we have 2.1 exaHash per second of expected computing power to be installed. This refers to the computing power that Canaan has shipped to a targeted mining country but has not yet been put on the shelf, and we expect to gradually install and power it up in the first and second quarters of this year. We defined the estimated total computing power deployed as the sum of computing power installed and expected computing power to be put on the shelf. Based on the estimated total cooking power deployed, the estimated total power demand of all mining farms is 177 MW, with a weighted average electricity cost of around $0.05 per kilowatt hour and per kilowatt hour and weighted average revenue share ratio of around 70.9 percent.
This refers to the computing power of that tenure has shaped to targeted mining country, but has not yet been.
We put on the shelf.
And we expect it.
Expect to gradually started power it's up in the first and second quarter of this year, we defined it.
Estimated total computing power deployed at the start of computing power installed and expected computing power to be put on the shelf based.
Based on the estimated total cooking empower deployed to estimated total power demand of all mining farms is a 177 megawatts, which we.
Weighted average electricity costs are wrong five cents per kilowatts.
And.
<unk>, our and our weighted average revenue share ratio of around 70.
9%.
In the fourth quarter.
Marketing environment.
And by the price of Bitcoin.
<unk> improved although the performance of the mining machine market lacked behind it.
Pete Glenn price change showing continued decrease in the mining machine price.
On one hand, the company continued its.
Prudent cost and expense control on the other hand following the organizational.
Divestments, we have.
And the more efficient the team, which is well prepared for the pool market.
Our sales efforts resulted in a significantly increase in cell cash inflows.
Nang Geng-Shiang: In the fourth quarter, the marketing environment, driven by the price of Bitcoin, notably improved. However, the performance of the mining machine market lagged behind the Bitcoin price change, showing a continuous decrease in the mining machine price. On the one hand, the company continued its growth, investments; we have a leaner and more efficient team which is well prepared for the bull market. Our sales efforts resulted in a significant increase in sales and cash inflow, despite some non-cash provisions and impairments associated with promotional interactivity. This interactivity enables us to generate crucial cash inflows, and our de-stocking efforts are near completion. In general, our strong sales collection and fundraising contributed to a robust increase in the ending cash balance in Q4 2023. In the first quarter of 2023, through the issuance of preferred shares and an ATM offering, the company secured a net financing amount of about 86.2 million US dollars.
Despite some noncash provisions and impairments.
Associated with our promotional activities. This is <unk>.
So as to generate crucial cash inflows and our destocking efforts are near nearing completion.
<unk> in general our strong sales production and falling rising.
Contributed to our robust increase.
Ending cash balance in Q4 of 2000 and tell the story.
In the first quarter of 2000 <unk> history.
Route.
Issuance up pretty <unk> sheriffs, and ATM offering the company has secured a net.
Financing amongst us about 86 point to a median U S dollars in the first quarter of 2024. The company received another 15 million U S dollars as financing through a settlement or preferred shares.
In the early stages of last year's fourth quarter, we made.
Nang Geng-Shiang: In the first quarter of 2024, the company received another US$15 million of financing through the settlement of free-for-share. In the early stages of last year's fourth quarter, we made the judgment that the bear market was bottoming out, and the bull market was approaching. However, based on experience, market changes during the bear-to-bull transaction will be very rapid, requiring early preparation of the supply chain and product layout.
Judgment.
The bear market was bottoming out and pool market was approaching however, based on the Paris market changes due to.
At the Orleans bare chip or transaction, we're very rapid requiring an early preparation of the supply chain and the product layout.
<unk> will be the I relied on internal funds and the proceeds from <unk>.
Customer advances.
Nang Geng-Shiang: In the past, we relied on internal funds and proceeds from customer advances; cash from these resources was slower to materialize and constrain our ability to expand during bullish periods, resulting in suboptimal capital utilization. This infusion of funds from preferred shares and the ATM offerings has allowed us to advance our supply chain and the related production capacity preparation by at least two months. This enabled increased investment in research and development and the Accelerating Product Development Program. From a longer perspective, the benefits derived may even exceed the two-month time frame, positioning us to capitalize. Significant Market Opportunity, in the bull market, and expand our market share. Since the SEC officially approved the listing and the trading of Bitcoin SPOCK ETFs, the price of Bitcoin has experienced a brief consolidation phase and recently broke through and stabilized above US$50,000, with a combined effect of improved sales and successive financing settlements. However, we must also recognize that the Fed's interest rate cut cycle has not yet truly begun.
The vast month cash from these resources was slower.
To materialize and.
Strained our ability to expand.
During.
For each periods, resulting in SAP.
Stop Optima.
Ill.
Capital utilization this.
This inflection of songs from preferred shares and the ATM offerings has allowed us to advance our supply chain and the related production capacity preparing shares by at least two months.
This enabled increased investment in research.
Government.
And.
Accelerating product development progress.
From a longer perspective the benefits.
The deep river may even exceed the two months' timeframe positioning us to.
<unk>.
Capitalized technique.
Significant market opportunities.
Bull market and expand our market share.
Since the FTC, obviously approved the listing and trading of <unk>.
Spot Etfs.
The price of Bitcoin has expanded.
Consolidation phase and recently.
Broke through and stabilize above 50000 U S dollars.
With a combined.
Improved sales and success.
Financing settlements, our cash and the cash it.
<unk> increased from 41 million U S tariffs at the end of third quarter to $96 million at the end of the fourth quarter. However, we must also recognize that SaaS interest rate cut cycle has not yet truly begun.
Nang Geng-Shiang: Financing costs remain high for miners, and there is still uncertainty about the pace of Bitcoin's upward movement, posing ongoing challenges to the industry. The first quarter of 2024 is also the last complete quarter before the halving event. And based on our past experience, this quarter is a super wait and see period that occurs every four years, coupled with the multiple factors of the harming and the new year, the Chinese lunar new year, the market in this quarter is expected to be very subdued. And recovery is likely to occur in the second phase.
Financing costs that remain high for minors and there is still.
Uncertainty about the pace us with clients upward movement.
Hosting ongoing challenges to the industry. The first quarter of 2024 is also locked complete quarter before the hardening event and based on our past experience.
This quarter it Super wait and see period that aircraft every four years, coupled with the multiple factors of the hobby.
The new year, the Chinese lunar new year.
The marketed in this quarter is expected to be.
Very subdued.
The recovery is likely to occur.
Second quarter.
Nang Geng-Shiang: Based on the comprehensive situation I've learned about, we are providing a culture's outlook for the first half of 2024. We anticipate revenue of approximately $33 million. This forecast is based on the company's current market and operating conditions, and actual results may vary. 2023 was a challenging year for the entire industry with an, they reinforce. We overcame the rise of obstacles and successfully navigated through the market downturn as planned. Even during the times of this pair, we enhanced corporate governance and made extensive preparations for Harbin and Burma. What doesn't kill me will only make me stronger.
Based on the comprehensive saturation Atlanta Bob.
For Whiting.
<unk> outlook.
Outlook for the first half.
<unk> thousand 34.
We anticipate revenue of approximately 33.
Mean in U S dollars in the first quarter of 2024, and approximately $70 million in the second quarter Pittsburgh path is based on the company's current market and operating conditions and actually.
Actual results may vary.
2023 was a challenging year and tower industry.
On <unk>.
<unk> face, we overcome will rise.
T calls and successfully navigate us through the market downturn as planned.
You've been doing in times of this payer we enhanced corporate.
Covenants.
Extensive.
Our preparations for the hot end of the pool market.
What doesn't kill me will only makes me stronger we have never been more confident.
Nang Geng-Shiang: We have never been more confident in seizing the historic opportunities presented by the Bitcoin bull market. For the industry, 2024 will be a pivotal turning point in the period cycle; institutional investors, represented by Wall Street, launched a significant bull market with $69,000 price per bitcoin. I have always said that the next bull market can only and must be driven by widespread public participation. As the new year begins, the approval of the Bitcoin SWOT ETF is a milestone and can serve as a starting point for the next bull market. We will continue to work diligently, supporting the Bitcoin system with computing power, and over the next four years, stripping the applications of computing power from most industry development and to enhance social operational efficiency alongside industry leading partners, ultimately supporting the progress of society. This concludes my prepared remarks. Thank you, everyone.
It means our historic opportunities presented by the pit Bull market.
For the industry 2024, we will be.
But if you got hall.
Turning point in the cycle.
<unk> investors represented by Wall Street.
<unk> lost a significant oil market.
69 installed in price.
Perfect client.
I have always said that the next bull market can only and must be driven by <unk>.
<unk>.
Public participation.
The new year begins.
Through all of that being client swap Etfs is a milestone and the Kansas Suraj, It's a starting point for the next bull market.
We will continue to work diligently.
Portland, because system with computing power and over the next four years.
Yes.
This trip to Japan.
Patient applications of computing power from multi industry development and enhanced social operational efficiency.
<unk> industry, leading partners automated east Portland to progress our society.
This concludes my prepared remarks central Iowa.
James: I will now turn the call over to our CFO, James. Thank you. Thank you, NG, and good day, everyone.
I will now turn the call of our tower CFO James <unk>.
Thank you Angie and good day, everyone. This is Jamie speaking on top of a single headquarters.
James: This is James speaking at our Singapore headquarters. As NG studied at the top of the core, Bitcoin price grew significantly in Q4, especially in December, and market demand on machines quickly recovered before total hash rate exceeded 500x hash per second. We seized the short window of the Bitcoin price increase, maximized our machine sales through multiple channels, drove customer advanced payment on our new A14 series, promoted diversified deployment in mining, improved operational efficiency by organization optimization, and received a series of fundraising from ATM and preferred shares. Our strong sales collection and fundraising contributed to a positive ending cash balance, which reached 96 million U.S. dollars at the end of quarter four, increased from 41 million U.S. dollars Frankly speaking, those were a series of better results beyond our previous expectations in November.
As <unk> studied at the top of the call.
Oil price grew significantly in quarter, four, especially stayed high in December and the market demand on machines quickly recovered before total cash rate exceeding 500 extra hospital segment.
We see is that the short time window of bitcoin price increase maximized our machine sales through multiple channels drove customer advanced payment on our new April 14th serious promoted a diversified deployment in mining improved operational efficiency by organization.
Optimization and it received a series of Thunder racing from ATM and preferred shares.
Our strong sales collection in our fund raising contributed to our positive ending cash balance, which reached $96 million at the end of quarter four increased from $41 million at the end of quarter three friends.
Frankly speaking those or a series of better results beyond our previous expectations in November.
James: Let's start with profit and loss. Quarter 4 total revenue was $49.1 million, which beat our guidance of $34 million by a 44% favorable variance and represented an increase of 47% quarter over quarter. Our revenue from machine sales was US$44 million, and our mining revenue was US$3.7 million. Regarding our machine cells, we deliver a total computing power sold of 5.5 million terahash per second, representing a year-over-year growth of 192% and a quarter-over-quarter growth of 46%. As the average selling price increased from $7.9 per THPS in Q3 to $8.2 per THPS in Q4, the increases were mainly driven by our de-stocking efforts for the A13 series and improved customer demand. Meanwhile, distributors and online retail stores also contributed to the revenue of machine sales. Southeast Asia contributed 900k TeraHash per second delivery in Q4, mainly from distributors, and our online store for the first time covered the Kingdom of Norway, Dominican Republic, Paraguay, and Israel. Total country and areas with shipments reached 46 for the first time, and demand from more and more small-scale miners was satisfied.
Let's start with profit and loss.
Quarter four total revenue was $49 1 million U S dollars, which beat our guidance of 34 million U S dollars by 44% favorable variance and it represented an increase of 47% quarter over quarter.
Our revenue from machine sales was $44 million and our mining revenue was $3 7 million U S dollars.
Regarding our machine sales, we delivered a total computing power. So the 555 million Taro has.
Representing a year over year growth of 192% and a quarter over quarter growth of 46%.
And the average selling price increased from $7 $9 <unk> per second in quarter, 328, or $2 per tower harsh for certain in quarter. Four the increase is mainly driven by our destocking efforts for <unk> and the improved the customer.
Demand.
Meanwhile, distributors and the online retail store also contributed to the revenue of machine sales.
Southeast Asia contributed 900, K Taro has settled the delivery in quarter four mainly from distributors.
And our online store first time cover the kingdom of Norway, Dominican Republic, Paraguay and in Israel.
Total country in areas with shipments reached 46 for the first time <unk>.
Demand from more and more small scale miners was satisfied.
Considering both factors of power sold and ASP.
Our revenue from mining machine sales achieved a $44 million up 49% from $29 $5 million in the last quarter.
James: Considering both factors of power sold and ASP, our revenue from mining machine sales achieved US$44 million, up 49% from US$29.5 million in the last quarter. In addition to mining machines, our self-developed integrated air or liquid cooling mining solutions have been gradually delivered throughout the third and fourth quarters. Accumulated orders from customers were higher than 4 million US dollars, driven by customer recognition of our integrated cooling technology. The revenue from integrated mining solutions in Q4 was $0.6 million, up 133% from $0.2 million in Q3, driven by the increased delivered volume. Specifically, for our mining machine cells, we accrued US$55.5 million for inventory write-down, prepayment write-down, and provision for reserve for inventory purchase commitments in this quarter. The inventory write-down decreased sequentially by 16% to US$45.1 million, which was driven by the accelerated destocking in this quarter.
In addition to mining machines, our self developed an integrated air or liquid cooling mining solutions have been gradually delivered throughout the third and fourth quarters.
Accumulated orders from customers was higher than Formula U S dollars driven by customer recognition of our integrated According tech knowledge.
The revenue from integrated mining solutions in quarter, four was zero point $6 million up 133% from 0.2 million U S dollars. The encoder suite driven by the increased delivered volume.
Specifically for our mining machine sales. So we accrued at $55 5 million U S dollars for inventory write downs prepayments write down and the provision for reserve for inventory purchase commitments in this quarter.
Inventory write downs decreased sequentially by 16% to $45 $1 million, which was driven by the accelerated destocking in this quarter.
Those write offs and provisions are made on the U S. GAAP rules jeopardizing, our gross profit, but do not impact our cash status.
If the above write downs and provisions were excluded we would have a gross profit for our mining machine sales of nearly $7 million and a gross margin of one 6%.
Turning to our mining business, our money revenue increased 14% quarter over quarter.
We expanded our mining business in Africa, South America, and the Middle East, which resulted in our total energize the hash rate accumulated to one nine extra hospital setting in the end of quarter four.
We mined 101 pinch points in this quarter and achieved a 35.
James: Those write-downs and provisions are made under U.S. GAAP rules, jeopardizing our gross profit but do not impact our cash status. If the above write-downs and provisions were excluded, we would have a gross profit for our mining machine sales of 0.7 million US dollars and a gross margin of 1.6 percent. Turning to our mining business, our mining revenue increased 14% quarter over quarter. We expanded our mining business in Africa, South America, and the Middle East, which resulted in our total energized hash rate accumulated to 1.9 exahash per second at the end of Q4. We mined 101 bitcoins in this quarter and achieved 35 bitcoins for mining profit. Gross profit margin reached a record high 41% for the mining business in this quarter, which was mainly attributed to the average Bitcoin price increase from about $28,000 in the last quarter to over $36,000 in this quarter.
Clients for mining profit.
Gross profit margin reached a record high of 41% for our mining business in this quarter, which was mainly attributed to the average bitcoin price increase from about $28000 in the last quarter to over $36000 in this quarter. Please note here.
That's the mining profit or loss is defined as the proportion of mining revenues deducting costs for energy and hosting in terms of mining revenues without consideration of depreciation for the deploy the machines.
Additionally, we and our local partners in cannabis ton went through a bunch of challenges from harsh colder weather to resetting up cross border Bank accounts.
109 extra harsh per second out of 2.0 extra Huschka secondly, in Kazakhstan has been successfully re energize the two normal in early January.
That makes our total energize the computing power to two eight at the harsh in quarter, one 'twenty 'twenty four which has been deployed in six countries and areas. This enables us to expect a material mining revenue increased in quarter, one 2024 compared.
Quarter, four and we continue to expand our mining business with another two one extra cash for a second the machines to be energized in quarter, one quarter, two and CEO mentioned previously.
James: Please note here that mining profit or loss is defined as the proportion of mining revenues deducting costs for energy and hosting in terms of mining revenues without consideration of depreciation for the deployed machines. Additionally, we and our local partners in Kazakhstan went through a bunch of challenges, from harsh cold weather to resetting up cross-border bank accounts. 1.09 exahars per second out of 2.0 exahars per second in Kazakhstan have been successfully re-energized to normal in early January.
Shifting to our AI business revenue was <unk> $3 million in this quarter up 59% quarter over quarter. This growth was primarily driven by the increased sales volume.
I'd products.
Now turning to the expenses.
Our operating expenses totaled $39 2 million U S dollars, decreasing 36% year over year, and 10% quarter over quarter, respectively.
James: That brings our total energized computing power to 2.8 exahash in Q1 2024, which has been deployed in six countries and areas. This enables us to expect a material mining revenue increase in Q1 2024 compared to Q4, and we continue to expand our mining business with another 2.1 exahash per second machines to be energized in Q1 and Q2, as CEO mentioned previously. Shifting to our AI business, AI revenue was $0.3 million in this quarter, up 59% QOQ. This growth was primarily driven by the increased sales volume of our AI products. Now turning to the expenses, our operating expenses totaled US$39.2 million, decreasing 36% year-over-year and 10% quarter-over-quarter, respectively. Excluding the one-off expenditure for our new generation chips incurred in Q4 2022, our operating expenses decreased 15% year-over-year, which was mainly due to the decrease in staff costs, share-based compensation, and Bitcoin impairment.
Excluding the one off expenditures for our new generation chips incurred in quarter four 2022, our operating expenses decreased 15% EBIT year over year, which was mainly due to the decrease in staff costs share based compensation and bitcoin impairment the sequential decrease was.
Mainly due to the decreased a bit point impairment and the realized gain on bitcoin and then I'll hand, the mining machines sold please.
Please note that according to the accounting rules when we sell the secondhand machines replaced from our mining business. They realize the income will benefit our P&L by offsetting G&A expenses, rather than contributing to the revenue.
Besides in this quarter, we incurred one off expenditure of $2 2 million U S dollars for the organization optimization.
Which was offset by the decreased annual performance based upon us.
We believe the positive effects of operational efficiency improvements will begin to be reflected in our operating data from quarter one 2024.
The net result of the foregoing was a non-GAAP operating loss of $78 3 million U S dollars for this quarter narrowed 29% year over year, and 20% quarter over quarter, respectively.
<unk> benefited from the noncash recognition for deferred tax assets non-GAAP net loss was $53 9 million U S dollars narrow the 30% year over year, and 17% quarter over quarter, respectively.
James: The sequential decrease was mainly due to the decreased Bitcoin impairment and the realized gain on Bitcoin and second-hand mining machines sold. Please note, according to the accounting rules, when we sell the second-hand machines replaced from our mining business, the realized income will benefit our P&L by offsetting G&A expenses rather than contributing to revenue. Besides, in this quarter, we incurred a one-off expenditure of US$2.2 million for organization optimization, which was offset by a decreased annual performance-based bonus.
Please note that according to U S. GAAP accounting rules, we recognize that the first closing of preferred a shares financing as convertible liability. The second closing of preferred shares at Pall, where liability and the pre delivery.
Oh sure lending equity respectively.
These financial instruments incurred excess of fair value over proceeds received and a fair value change. This noncash accounting treatments pizza, our Q4 bottom line with totaled 70 million U S dollars.
In order to represent outperformance more accurately in a more comparable we excluded this impact from our non-GAAP measures. In addition, although legally issued the pre delivery.
James: We believe the positive effects of Operational Efficiency Improvement will begin to be reflected in our operating data from Q1 2024. The net result of the foregoing was a non-gap operating loss of $78.3 million for this quarter, narrowed 29% year-over-year and 20% quarter-over-quarter, respectively. Benefiting from the non-cash recognition for deferred tax assets, the non-gap net loss was Please note that according to U.S. GAAP accounting rules, we recognized the first closing of preferred shares financing as a convertible liability, the second closing of preferred shares as a forward liability, and the pre-delivery ADSes as own-share lending equity, respectively. These financial instruments incurred an excess of fair value over proceeds received and a fair value change. These non-cash accounting treatments hit our Q4 bottom line by a total of US$70 million. In order to represent our performance more accurately and more comparably, we excluded these impacts from our non-GAAP measures.
This will not considered outstanding that excluded from basic and diluted earnings per share.
Turning to our balance sheet and the cash flow in quarter, four we received $61 $2 million from the ATM and $24 8 million from preferred a shares financing facilities with that.
<unk>.
And we paid $35 million to secure our wafer supply by utilizing the fund raising proceeds the other proceeds also utilized for the wafer supply to repayment in January 2020 for.
During this quarter the cash outflow of $71 million for productions was offset by cash inflow of 75 million U S dollars from cells, which was mainly contributed by spot sales of certain series and advanced payment for a 14th areas.
So our cash flow from production operation turned positive with 4 million U S dollars.
Consequently at the end of 2023 was held cash and cash equivalents of $96 million on our balance sheet, which was $55 million higher than the ending balance of September 30.
Now moving on to a contra liability the improved market demand helped us to record.
Contract advances of $19 6 million.
As of 2023, and this balance increased 28, six times compared to 0.7 million U S dollars at the last of year end and two five times compared to $5 $6 million after the last quarter end.
James: In addition, although legally issued, the pre-delivery AESs were not considered outstanding and therefore excluded from basic and diluted earnings per share. Turning to our balance sheet and cash flow, in Q4, we received $61.2 million from the ATM and $24.8 million from preferred shared financing facilities, respectively. And we paid US$35 million to secure our wafer supply by utilizing the fundraising proceeds. The other proceeds were also utilized for wafer supply prepayment in January 2024. During this quarter, the cash outflow of US$71 million for production was offset by cash inflow of US$75 million from sales, which was mainly contributed by spot sales of the A13 series and advance payment for the A14 series.
The majority of contractor advances Kim from pre sales of 814. It is included but not limited to those sales contributions from big clients.
As previously announced we secured a follow on purchase orders from cipher and stronghold with over 17000 mining machines.
As of the end of quarter four we recorded account receivable of $3 million declining 69% compared to the end of quarter three as a serious payments have been made by customers during quarter four.
We will continuously evaluate market demand and adopt.
Corresponding credit policies with caution.
Now turning our attention to our bitcoin assets.
Each client so we held our own holding assets kept growing in this quarter, and which reached 900 zero nine bit points as of December 31st which is 49 more than 860 at the end of quarter three.
James: So our cash flow from production and operations turned positive with $4 million. Consequently, at the end of 2023, we held cash and cash equivalents of 96 million US dollars on our balance sheet, which was US$55 million higher than the ending balance of September 30. Now moving on to our contract liability. The improved market demand helped us to record contract advances of 19.6 million US dollars as of 2023 year-end. This balance increased 28.6 times compared to 0.7 million US dollars at the last year-end and 2.5 times compared to 5.6 million US dollars at the last quarter-end. The majority of contract advances came from pre-sales of A14.
We also held 169, which points received as customer deposits, which declined 200 zero nine with clients compared to the balance of September 30.
I wanted to share with you that we plan to early adopt the FASB, new accounting rules on crypto currency assets since January the first 'twenty 'twenty, four which allow Peruvian currency has to be carried at fair market value if adopted with the price at Janney.
Refers to 2024.
Our critical currently held by the end of 2023, we anticipate that the carrying value would increase approximately $18 million based on latest price difference between market price ended the booking price.
The current fair market value of those.
Owned bid.
Bitcoin is almost a $50 million. We believe this rule will enhance the transparency and accuracy of our financial statements as well as provide better clarity to our investors and shareholders.
James: It included, but was not limited to, those sales contributions from big clients. As previously announced, we secured follow-on purchase orders from Cypher and Stronghold for over 17,000 mining machines. As of the end of Q4, we recorded an account receivable of $3 million, declining 69% compared to the end of Q3, as serious payments were made by customers during Q4.
Turning to our pharma raising from November 'twenty eight 2023 the date, we reported our Q3 financial results to December 31st 2023, we utilized the ATM profound racing with net proceeds of $61 2 million U S dollars.
In late 2023, we closed the first tranche of preferred shares financing raising total net proceeds of $24 8 million U S dollars.
In early January 2024, we closed the second tranche of preferred shares financing raising total net proceeds of $49 7 million U S dollars.
James: We will continuously evaluate market demand and adopt corresponding credit policies with caution. Now turning our attention to our Bitcoin assets, the Bitcoins we held as our own holding asset kept growing in this quarter and reached 909 Bitcoins as of December 31, which is 49 more than 860 at the end of Q3. We also held 169 bitcoins received as a customer deposit, which declined 209 bitcoins compared to the balance of September 30. I want to share with you that we plan to early adopt the FASB's new accounting rules on cryptocurrency assets beginning January 1, 2024, which allows cryptocurrencies to be carried at fair market value. If adopted with the price at January 1, 2024, will be, the current fair market value of those owned bitcoins is almost 50 million US dollars.
The total proceeds of $136 million fund raising helped us carry out new product R&D and wafer capacity preparation to secure future mining machine supply after Harvey.
In the first quarter of 'twenty 'twenty four we anticipate our revenue was 33 million U S dollars considering many of our customers are waiting for having to generate more visibility about our ROI of Capex investment.
<unk> fourth quarter, two 2024, we anticipate revenue of $70 million U S dollars, considering a 14th serious preorder volume and the potential demand upside up after Harvey.
Consequently, the selling price of computing power will remain under pressure policy changes regarding crypto currencies and the mining different countries will also add uncertainty to industry operations. We made for some unforeseen obstacles based on the above comprehensive situation we.
James: We believe these rules will enhance the transparency and accuracy of our financial statements, as well as provide better clarity to our investors and shareholders. Turning to our fund raising, from November 28, 2023, the date we reported our Q3 financial results to December 31, 2023, we utilized the ATM for fund raising with net proceeds of US$61.2 million. In late 2023, we closed the first transfer of preferred shares financing, raising a total net proceeds of US$24.8 million. In early January 2024, we closed the second tranche of preferred shares financing, raising a total net proceeds of US$49.7 million. The total proceeds of US$136 million in fundraising helped us carry out new product R&D and wafer capacity preparation to secure future mining machine supply after halving.
Give a cautious expectation for the first half of 2024.
Now I would like to briefly walk you through our financial results for the quarter.
Revenues in the fourth quarter of 2023 were $49 $1 million as compared to $33 3 million in the third quarter of 293, and a $58 3 million U S dollars in the same period of 2022.
<unk> loss in the fourth quarter of 293 was.
With $54 1 million U S dollars compared to $69 $1 million in the third quarter of 2023, and $64 1 million U S dollars in the same period of 2022 total operating expenses in the fourth quarter of 2023 were $39 2 million U S dollars compared to 43.
8 million U S dollars in the third quarter of 2023 and $68 million in the same period of 2019 two.
non-GAAP loss from operations in the fourth quarter of 2023 was $78 $3 million compared to $97 $4 million in the third quarter of 2023 and $110 million in the same period of 2022.
non-GAAP net loss in the fourth quarter alternative industry was $53 9 million U S dollars compared with $64 7 million in the third quarter of 2023 and $76 $6 million in this NPL ratio 2022.
James: In the first quarter of 2024, we anticipate revenue of US$33 million, considering many of our customers are waiting for the halving to generate more visibility about the ROI of CapEx investment. Meanwhile, for Q2 2024, we anticipate revenue of $70 million, considering the A14 series pre-order volume and the potential demand upside after halving. Consequently, the selling price of computing power will remain under pressure.
non-GAAP basic and diluted net loss per ads in the fourth quarter of 2023 or 30 year.
U S dollar.
As of December 31st.
2023, the company had a cash and cash equivalents of $96 2 million U S dollars.
This concludes our prepared remarks, we are now open for questions.
We will now begin the question and answer session.
As a courtesy to other investors and analysts who may wish to ask a question. Please limit yourself to three questions. At this time do you have any follow up questions. After the Q&A session. The Investor relations team will be available after the call.
James: Policy changes regarding cryptocurrencies and mining in different countries will also add uncertainty to industry operations. We may face unforeseen obstacles. Based on the above comprehensive situation, we give a cautious expectation for the first half of 2024. Now, I would like to briefly walk you through our financial results for the quarter. Revenues in the fourth quarter of 2023 were US$49.1 million, as compared to US$33.3 million in the third quarter of 2023 and US$58.3 million in the same period of 2022. Gross loss in the fourth quarter of 2023 was US$54.1 million as compared to US$69.1 million in the third quarter of 2023 and US$64.1 million in the same period of 2022. Total operating expenses in the fourth quarter of 2023 were US$39.2 million as compared to US$43.8 million in the third quarter of 2023 and US$60.8 million in the same period of 2022. Non-gap loss from operations in the fourth quarter of 2023 was 78.3 million U.S. dollars compared to 97.4 million U.S. dollars in the third quarter of 2023 and 110 million U.S. Non-GAAP net loss in the fourth quarter of 2023 was US$53.9 million, compared to US$64.7 million in the third quarter of 2023 and US$76.6 million in the same period of 2022. Non-GAAP basic and diluted net loss per ADS in the fourth quarter of 2023, or $0.30.
For the benefit of all participants on today's call. If you wish to ask a question to management in Chinese. Please immediately repeat your question in English to ask a question you will need to press star one and one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one and one again.
Please standby, while we compile the Q&A roster.
Okay.
Thank you.
We'll now take our first question.
Hello.
Question is from the line of shrank Sun from <unk> Securities. Please go ahead.
Can you hear me.
Yes. Please.
Okay.
Diego when you ship concentrate didn't think that the kingdom and Congo.
Glen had all homegrown.
So your chicken coop currency suddenly.
However, they are great and some other things.
Youll see increased the cells in mining machines that minor asthma, a glass of adult.
English.
Caring for the hobby.
Okay.
Yeah.
In Q4 'twenty traditionally.
We exceeded our expectations in both our sales and pre sales odors.
Total computing power solar reached reached $5 5 million, perhaps secondly, this quarter.
Our year over year increase of.
<unk> hundred, 92% and sequential increase up 46% from the previous quarter.
And after the accrual of the spot with core Etfs.
In January this year.
So <unk> comprise beds through consolidation fees and market spreads slightly slowdown in orders compare tool.
Q4.
This is.
Nomura.
Nominal.
Because based on our past.
Experienced.
Observations.
You're already at the <unk>.
Six months before it's a hobby.
Monarch two wheel.
Mrs.
Who have existing facilities.
May deploy winding machines quickly too.
To maximize profits.
However, about a quarter before a hobby.
Miners tend to.
Adopt a wait and see stance bolstered partners prefer to make plans for the.
Sure.
<unk> and <unk>.
<unk> Miami machines.
Operator: As of December 31, 2020, 2023, the company had cash and cash equivalents of 96.2 million US dollars. This concludes our prepared remarks. We are now open to questions. We will now begin the question and answer session. As a courtesy to other investors and analysts who may wish to ask questions, please limit yourself to three questions at a time. If you have any follow-up questions after the Q&A session, the Investor Relations team will be available after the call. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced.
For the upcoming full year cycle.
Steve.
Our certainty generally.
<unk> Mark of one.
One months before the hiring.
Yes.
Market in deep <unk> curse are mostly stabilized.
And the market.
Begins to recover.
We are also actively preparing for this.
Including securing production capacity for its new product.
Mass production.
And constantly occasions R&D tape outs.
Our next generation products.
Okay.
Yeah sure.
Also as shown by the clunky.
She also had dropped out.
Well known condo.
Okay.
Sure without sounds about its army he the.
Charlotte.
Yeah.
No Chuck Michelle, what's you're going to be any issues at mountain Laurel choppy.
They'll call Dr. Jacob.
And it sounds like some call.
Josh Algonquin done that Sean.
Uh huh.
Operator: To withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A roster. Thank you. We will now take our first question. Hello. Your first question is from the line of Shuang San from Guosheng Securities. Please go ahead. Uh, can you hear me?
Killing power starting place increased Paul was a pause.
As compared to contract.
It was.
Sounds of nine machines with higher power essential in terms of all the sales volume.
S P.
Okay.
No entry into Q1.
24.
Its approval.
Spot <unk> EPS for these teams.
Led to a market correction following initial surge.
Shuang San: Yes, please. Okay, the first question is, how has the order situation of the company been in the last one or two months? Is it possible to observe that in order to cope with the shortage, the miners have to stop mining in advance? How was your recent custom order?
Despite this there has been an intense infection in mining machines manufacturers.
For us to destock.
Without an accompanying.
Accompanying rise the spot price of competing.
Power.
As of now.
Nang Geng-Shiang: Did you see increased sales in mining machines as miners are more aggressive with stocks? Are mining machines preparing for the halving? Pipes.
13th serious machines.
<unk>.
So on the swap market.
Nang Geng-Shiang: In Q4 2023, we exceeded our expectations in both our sales and pre-sales orders. The total computing power sold reached 5.5 million terahertz per second in this quarter. A year-over-year increase of 192 percent and a screenshot increase of 46 percent from the previous quarter. And after the approval of the spot Bitcoin ETFs in January this year, the Bitcoin price went through a consolidation phase, and the market experienced a slight slowdown in orders compared to Q4. This is no more phenomenal because, based on our past experience and observation, during the six months before the monarch will come, those who have existing facilities may deploy mining machines quickly to maximize profit. However, about a quarter before the monarch arrives, miners tend to adopt a wait-and-see stance. Most of us prefer to make plans for the, uh... Procurement and Deployment of Money Machines for the Upcoming 4-Year Cycle when we see more certainty. Generally, around one month before the halving, the rice market indicators are mostly stabilized, and the market will begin to recover.
But skiing.
Cost.
A 14th serious mining machines offered fewer.
Future events space.
We are.
Pre sell price how soon.
Gradual increase.
Over the past four months.
It is anticipated that the majority of a 14 serious the reverse will be.
Concentrated in the second and third quarters.
In Q4 of 2023.
<unk> sales reached computing power.
<unk> plants.
Four 7 million <unk> per second.
And with pre sell theirs.
Surpassing seven five meeting Terabits per second.
So a 14th serious.
With this enhanced computing power and energy efficiency.
Yes.
Carrier market approval.
However, due to its future sales nature many monitors.
<unk> ready to use purchase activity.
It is.
Still have Shaw.
Prefer itself.
<unk> purchase.
And history.
Verizon needs.
Along with the markets.
Okay.
Okay.
Thank you.
We will now take our next question.
Okay.
The next question is from the lineup Lucas pipes from B Riley. Please go ahead.
Thank you very much operator, good day everyone.
Nang Geng-Shiang: We are also actively preparing for this, including securing production capacity for the new product, Masterful of Action, and constantly engaging in the R&D and K-PoWs of our next emission products. Thank you. Okay. Is the company's current mining machine still rising in price? Because we see the statistics on the Internet, 25 to 38 Joules per T, seemed to start rising in December last year. What is the ratio of this limited goods to 7 goods?
So my question is is this a little bit higher level.
Given the environment we're in.
Research and interest.
And Bitcoin network and.
Obviously, the ETF approval, how aggressive do you want do you want to.
Okay.
Uh huh.
Lot of extra capacity procure.
Your chips.
To really press.
Press forward in this environment, if you want to be.
Kind of guarded.
Think about it.
Potential downside risks posed tapping just curious how you how you kind of.
Navigate.
Tweens between greed and fear in this environment. Thank you very much for your perspective.
Uh huh.
Yes.
Okay.
Yeah.
Yeah.
Very interesting and high level.
Question.
Nang Geng-Shiang: How is the sales of the mine with a higher yield ratio in terms of sales and unit price? Has the computing power selling price increased? How are the spout cells compared to contract cells?
You know.
I think there is.
Many.
Sure.
Ah certainties.
Before the.
The honey and.
Nang Geng-Shiang: How were the sales of manning machines with higher power efficiency in terms of sales volume and ASP? Entering Q1 2024, the approval of the Bitcoin ETF for listing led to a market correction following the initial surge. Despite this, there has been an intensive action by mining machine manufacturers' efforts to de-stock, with a company right in the spot price of competing power. As of now, all A13 series machines are being sold on this water market, uh, But in contrast, the A14 series mining machines are offered on a future basis, where the pre-sale price has seen a gradual increase over the past four months, and It is anticipated that the majority In Q4 2023, spot cells reached a computing power of 5.47 million TeraHertz per second, and with pre-sale orders exceeding 7.5 million THPS.
For us.
We believe that.
Our goal is.
To have.
You know, there's only three significant.
Players in India.
In this field.
And.
We we need to.
We need to.
Make targeted adjustments and customized.
For our product types and.
And.
With the best.
Power efficiency.
Sure.
Competitive pricing.
Also.
AI is booming so we need to.
Secure.
The.
Prime is a refreshed climates.
For the especially for the second half of this year.
We already started.
Agreements with our suppliers.
And.
For Us I think.
So myself.
I think so.
We are changing.
Our strategy for South Miami.
Nang Geng-Shiang: So, the A14 series, with its enhanced power and energy efficiency, has... Gathered Market Approval. However, due to its future-style nature, many miners with ready-to-use facilities still have shown a preference for spot perch, an industry that has a variety of needs among the markets.
Before we our target is.
It's for the cash flow.
But.
From this year, we will change we change our strategy to accruals.
So that means we will start to your best.
Shuang San: Thank you. Okay. Xiexie.
Operator: Thank you. Thank you. Your next question is from the line of Lucas Pipes from B Riley. Please go ahead. Thank you very much, operator. Good day, everyone. So my question is a little bit higher level, um, given the environment we're in with resurgent interest in Bitcoin and the network and, obviously, ETF approval. How aggressive do you want to be?
On the facilities and they use our products to.
Two to South Miami.
Specialty we will.
<unk> put our majority targets.
At well regulated and.
<unk> developed the country, yes so.
Yes.
I think for the last few months we have.
Lucas Pipes: Do you want to..., you know, take on a lot of extra capacity, procure chips, to really press forward in this environment if you want to be kind of guarded and think about potential Downside Risks Post-Halving? Just curious how you kind of navigate between greed and fear in this environment.
Sufficient funds for us too.
Sure.
<unk> production and.
R&D.
But and but for the.
For market.
<unk>.
Sure.
We make the judgment that.
The time to kind of comps.
We'll use.
To capitals to.
To do the expansion.
Nang Geng-Shiang: Thank you very much for your perspective. Uh... Ah, ah, ah, hmmm, Mmm. Yeah, it's a very interesting and high-level question. Um, Mmm. Uh, you know, uh, I think there's, uh, uh, many uncertainties before The Hague. For us, we believe that... Our one goal is to have only three significant players in this field. And, uh, we, uh, we need to. Uhh, we need to make targeted adjustments and customization for our product designs, power efficiency, and competitive pricing. Also... You know, as AI is booming, so we need to... secure the reefless climate. Especially for the second half of this year, we have already signed some agreements with our suppliers. And for us, I think, for myself, I think we are changing our strategy for self-money. Before, our target was cash flow, but from this year, we will change our strategy to growth, so that means we will start to invest in facilities and use our best products to do self-mining. Especially, we will... put our majority target at a well-regulated and developed country, yeah.
More aggressively.
All of that said before yes.
So I think for the for us the best products and.
Sure.
More important.
So minus strategy.
We will.
In the past.
The capital we will.
It makes us better.
Better score biases.
This bull market cycle I.
I think James can make some.
Yeah, I think it's always difficult or challenging to balance between aggressive and conservative and all we do.
Fund raising to support our R&D and support our capacity of wafer for future oil market I think always we made decision together and LNG has a lot of experience.
Going through the past cycles, so we always predict.
The poor market and the band market for future and then we'll decide together about how.
How big are the investments we are going to spend in.
In the new machine design and a lot of parts experience helped but we always face to new challenges.
Just like mining just like.
In different generation of machines. So we have to solve a lot of.
Challenges in the R&D.
So I think that it's not easy.
Two to describe the all of the operations, but we always carry the courage to phase two the uncertainties and.
Nang Geng-Shiang: And yes, I think for the next few months, we have sufficient funds for us to... do production and R&D. But, and for, but for if the, you know, the bull market, if we make the judgment that the time, the timing comes, we will use the capital to... do the expansion more aggressively than before. So, I think for us, the best products and, more important, the self-mining strategy, plus the capital, will make us make a better score by this bull market cycle. I think James can make some add-ons to this. Yeah, I think it's always difficult or challenging to balance between aggressive and conservative.
We will go through a kind of balanced between very aggressive and a very conservative and then we try to maximize the performance of machine sales and mining mining revenue together, so I think.
Strategically <unk> lead the company to do all this.
We do have a management team in different areas trying to contribute to our best to the decision, making I think of that.
<unk>.
Thank you Lucas thank.
Thank you. Thank you very much for all the perspective.
Thank you.
We will now take our next question.
Your next question is from the line of Kevin Dede from H C. Wainwright. Please go ahead.
Yeah.
Hello, gentlemen, thank you very much for having me on the call.
First question just around the salt mining and.
Sort of tangential to Lucas's question about.
James: You know, we do fundraising to support our R&D and support our capacity of wafer for future bull markets. I think we always make decisions together, and NG has a lot of experience going through the past cycles. So we always predict the bull market and bear market for the future.
Our strategic objectives understand you're at about 4.9 extra hash.
Installed and running total.
I'm wondering if you think all of that will be running.
James: And then we decide together about how, you know, how big the investment we are going to spend on the new machine design. And, you know, a lot of past experience has helped, but we always face two new challenges, just like mining, just like, you know, in different generations of machines. We have to solve a lot of, you know, challenges in the R&D phase. So I think it's not easy to describe all the operations, but we always carry the courage to face the uncertainties, and we go through a kind of balance between very aggressive and very conservative, and then we try to maximize the performance of machine sales and mining revenue together. So I think strategically, NG leads the company to do all this, but we do have a management team in different areas trying to contribute our best to the decision making. I think that's my two cents. Thank you. Thank you very much for all the, Thank you.
By the end of the March quarter.
<unk>.
Maybe more specifically what you think.
Your your self mining hash rate will grow through the balance of the year.
Hi.
Sure.
Yes.
I want to.
Mentioned again is.
Four we started out soft mining business.
Second half of 2021.
And.
We have been deploying.
And many projects and.
I think in impulse experience on the licenses.
So.
We have deployed more than five ex cash per segment.
Empower.
And as it annualize over 2008 <unk> per second.
Through the life saturation of that first half recur.
South America Middle East Coast along.
But in 2024.
While midstream I've been training our mining strategy.
This year, we will adjust and upgrade our specific.
Operator: We will now take our next question. Your next question is from the line of Kevin Deedy from HC Wainwright. Please go ahead. Hello, gentlemen.
<unk> tactics.
Firstly is.
We pay more attention for factors, such as legal system and regulatory stability.
It has the risk of crop so that means we will change our.
Kevin Deedy: Thank you very much for having me on the call. First question is just around self-mining and sort of tangential to Lucas's question about, uh, strategic objectives. I understand you're at about 4.9 extra hash installed and running total. I'm wondering if you think all of that will be running by the end of the March quarter and maybe more specifically what you think. Your self-mining hash rate will grow through the balance of the year. Oh, hi Kevin, uh... What I want to mention again is, You know, we started our self-mining business in the second half of 2021, and we have been deploying many projects and... I think of gaining both experience and lessons.
Our major targets.
Major regions for our mining operations.
Even as always maybe a little bit of coffee or.
Take a slightly longer time.
Hi.
And also we will expand our scale well.
Yes.
Alright.
The shift from cash flow oriented to growth over there.
What are your terminal fees are actually in the past.
Where are we now.
Inventories, we will towards the inventories to two to save money.
This is.
Basically inventories to generate cash flow.
The company.
Nang Geng-Shiang: So, we have deployed more than 5x hash per second of computing power and analyzed over 28x hash per second through Central Asia, North Africa, Africa, South America, Middle East, and so on. But in 2024, while maintaining our mining strategy, this year, we will adjust and upgrade our specific operating tactics. First, we pay more attention to factors such as the legal system and regulatory stability, uh enhancing the risk of cold so that means uh we will uh change our uh major targets, and major regions for our mining operation, even though it may be a little bit costly or will take a slightly longer deployment time.
Yes.
Or from now our target is to.
Gross stock.
Stop mining business, not only with our cash.
Cash flow generation.
So that means we need we will use our president.
Models to do the same.
You can see you are using.
Our machines, if you will.
The lower U R.
Milan, prolonging you'd see our investor pack.
And they are reducing the operational risks.
Such as.
So it might be revenue cannot reached.
Power costs or something.
Obviously, we're a lumberyard.
Lifestyle of your entire <unk> estimates.
Yes.
So.
In the past.
Nang Geng-Shiang: And also, we will expand our scale. Well, yeah, and, you know, we will shift from cash flow oriented to growth oriented. What this means is, I think in the past, when we had inventories, we would put the inventories to do stuff. This is to make the interest generate cash flow for the company.
Maybe.
We are.
We use our corporate space.
Hosting companies, we haven't no.
SaaS self sourced opportunities and we are not doing any lack of SaaS construction or something.
But today after over two years three years I think so.
Earned a threat.
Is it is.
Nang Geng-Shiang: Yeah, and from now on, our target is to grow the slab mining business, not only the cash flow generation. So that means we will use our best models to do the setup. If you are using the better machines, it will lower your... it will prolong your investor span and reduce the operational risks, such as the money revenue cannot reach the power cost. So it will number your lifetime, your entire life.
The value of.
Stable.
Authorities.
The power.
<unk> is really very important for this industry.
So we will we will go deeper to.
Participated with many operations.
More exporting more.
Collaborations.
Yes.
Nang Geng-Shiang: Yeah, and also, you know, in the past, we cooperate with hosting companies; we have no self-host facilities, and we are not doing any self-construction or something. But today, after over three years, I think we have learned that the value of the stable facilities, the power resources is really very important for this industry. So we will go deeper to participate with mining operations and explore more collaborations. Yeah, Kevin, one thing to mention here is that the whole deployed hash rate is 5x hash, and the energized hash rate is now about 2.8x hash.
Kevin one thing to mention here is the whole deploy that cash.
Right, it's the size of extra hash and energized.
Energized.
Hush right now is about $2 eight extra cash so we still have to wipe the harsh to be implemented in quarter, one quarter, two while waiting for the progress update from our partners.
So it's not yet happening and we believe that will happen in <unk>.
One of the two.
So just to make sure.
Understand the same assets.
Okay, Angie James Thank you for the detail.
James: So we still have 2.1x hash to be implemented in quarter one and quarter two. We're waiting for the progress update from our partners. So it's not yet happening, and we believe it will happen in quarter one or quarter two. So just to make sure you understand the same as us. Okay, NG, James, thank you for the detail. NG, you mentioned your next generation machine. I'm going to assume it's going to be the A15.
And Jay You mentioned you mentioned your next generation machine I'm going to assume it's going to be the <unk> I'm wondering if some of the cost you incurred include the full tape out on that chip.
And if you could give us an idea on the process geometry or are we down to maybe three nanometers now.
And when do you think when do you think that machine maybe available for sale.
Okay.
Okay.
You already we will.
Public debt.
Kevin Deedy: I'm wondering if some of the costs you incurred include the full tape out on that chip, and if you could give us an idea of the process geometry. Are we down to maybe three nanometers now, and when do you think when do you think that machine may be available for sale? OK, usually we will publish that detail when we have the test machine finished. Um, but, uh, I think for the, you know, uh... So the machine is, You know, we just deployed the machines, so we're not selling the chips to our customers. So it's very important to know that the performance of mining machines is not determined by the process node of the chips or the manufacturer of the wafers. So for a long time, to avoid confusion among our customers, we do not emphasize the specific foundry partners. Yes, there are many other reasons, but this is the main reason.
It helps when we have it.
The test machine.
<unk> finished the testing.
But.
Earnings for the you know.
The machine is.
Sure.
Yes.
The machines.
Reject.
Deploy the machines, so we know selling the chips to our.
Our customers. So it's very important to know that the performance of mining machines not determined by the protest note.
The chips or is a manufacturer of April.
So from a long time to avoid confusion among our customers.
We do not emphasize.
Specific foundry partners.
Yes, that's and many other reasons, but.
This is the.
Right so.
That's focusing focusing instead on the actual performance matrix of the product.
Yes, we have planned is power plant two.
About 20%.
Nang Geng-Shiang: So let's start focusing instead on the actual performance matrix of the product. Yeah, we have planned for about 20% performance improvement every generation. If less than 20%, I think it's not very valuable to upgrade a new generation. So 20% is our target. And also, in the past, I think there were 9 to 12 months between each generation.
<unk>.
Improvement I regeneration.
Less than 20% that things.
Not very valuable to upgrade a new a new generation.
20% is our target and also in the past setting that nine to 12 months between.
Each generations.
And today, we are.
What are the odds.
King.
It's a period.
So that means.
Nang Geng-Shiang: And today we are working very hard to not interfere with it. So, that means... Our target is to have at least one generation this year, or maybe, if everything is going 100% right, we will have another generation, maybe Q1 next year or something, and every generation will have like 20% of the impact. So I think another target is for the finance side. Yes, we want the new generation to have some revenues this year. This is our target. That means we need to put the next generation in mass production. Yeah, uh, yeah, this, uh, this is, uh, maybe it's what I can say now. There are no very accurate numbers, and we will have the numbers as soon as possible.
Our target is to have.
At least.
One generation this year or and also maybe if everything is going 100% right.
We maybe have we will have.
Another generation.
Maybe.
Q1 next year of our country.
Every every kind of reshape.
20% of the performance so.
I think.
Another target is.
For the finance side.
Sure.
Yes.
We've launched a new dilution have some.
<unk>.
Revenues. This year this is our target.
We need to put our next generation <unk> mass production this year.
Yes.
Yes.
It is.
Maybe.
I can say now.
There's nowhere reactivated numbers.
And we will have the debt numbers.
Kevin Deedy: Yeah, we probably will. Thank you, NG. That detail was incredibly helpful, and I really appreciate it. Last question for me, probably best for James.
That's possible, yes, we are a part of it.
Thank you Angie that detail was incredibly helpful and I really appreciate it a last question for me probably best for James inventory was down about 34% Q to Q.
Kevin Deedy: Inventory was down about 34% Q2Q. I understand that the A13 is now completely out of inventory. I was wondering if maybe you could give us a little insight on the inventory that you are carrying. Maybe how much of each type is... You know, air cooled versus liquid cooled and what your expectations are for that mix in the A14 series.
Understand that the 813 is now completely out of inventory.
I was wondering if maybe you could give us a little insight on the inventory that you are carrying maybe how much is.
Okay.
Air Air cooled versus liquid cooled and what your expectations are for that mix and the a 14 series.
James: Yeah, Kevin, I think we are in the transition between the A13 series and the A14 series. I cannot say we have already completed the inventory clearance of the A13 series, but luckily, A13 can also generate profit for miners after halving in our calculation. So it looks like the demand is still there, and we can still get a lot of A13 spot sales orders even in Q1. So it looks like A13 inventory clearance will last through Q1 and Q2. So it looks to me like A13 has not been completely cleared yet.
Yeah Ken.
Kevin I think we are in the transition the Asa Crs two a 14th theories I cannot say, we have already complete either the inventory clearance of <unk> 13, but Luckily Asa team can also generate profit for miners after having in our calculation.
So it looks like the demand is still there and.
And then with.
That still get a lot of <unk> small cells orders.
Even in quarter, one so it looks like for <unk>.
Entry clearance that will last in quarter, one and.
<unk>.
So it looks to me a setting has not.
Being completely clear yet.
James: And A14, I think we will ship small batches in Q1, like in March, and mass production and mass shipment will happen in Q2. So we have already got a lot of contract sales orders, like Angie mentioned, 7.5 million terahash. And this number is still being updated every day.
<unk> I think we will ship a small batches in.
Quarter, one in March and.
Mass production in March shipments were happening in quarter two.
We have already got a lot of contract sales.
Orders later, and you mentioned, the $7 5 million Tyra Ash.
And.
This number is still.
Being updated every day.
James: It looks like customers are still placing orders to get A14, so it looks like the transition is better than what I had planned in November. At that time, I was thinking the A13 series would be very difficult to clear, but it looks like the progress is better than I had expected.
Like customers are still placing orders to get 314.
So looks like the transition.
It's better than what I have planned in November at that time, I was thinking a 13 theories.
Will be very difficult to clear, but it looks like the progress is better.
Then what I have expected the cash flow tends to be positive.
Kevin Deedy: The cash flow tends to be positive. The operating cash flow tends to be positive in Q4. And that looks very good to me. Pipes, Canaan Pipes, Canaan, Thank you very much.
Our operating cash flow tends to be positive in quarter four and.
That's that.
It's a very good looks to me.
Thank you very much.
Yes, yes, yes.
Thank you Johan.
I understand that you might not want to be.
James: I understand that you might not want to be extremely granular regarding I think it's about 142 million in inventory and what might be A13 and what's A14. But I appreciate your insight, sir. I think it was good to see the improvement in the fourth quarter.
Extremely granular regarding I think it's about $142 million of inventory and what might be a 13 and what a 14, but I appreciate your insights there.
It was it was good to see the improvement in the fourth quarter. Congratulations on the hard work, you gentlemen, and your entire team.
Kevin Deedy: Congratulations on the hard work you gentlemen and your entire team have done. Thank you, Kevin. Thank you, Kevin.
Thank you Kevin.
Sure.
Operator: Thank you. We will now take our next question, and this is from the line of Michael Legg from the Benchmark Company. Please go ahead. Thanks. I wanted to talk a little bit about the share count. We ended the quarter with $222 million in ADS out there. We closed the second tranche for another $49.7 million. Can we get some guidance on the shares outstanding that you expect for the first quarter and second quarter, along with your revenues? It looks like... Yeah, with the ATM and the tranches, it's moving up pretty high. Can you talk about that?
Thank you.
We will now take our next question.
Okay.
This is from the line of Michael <unk> from the Benchmark Company. Please go ahead.
Thanks.
Wanted to talk a little bit about the share count we ended the quarter with 222 million Avs out there we closed the second tranche for another $49 7 million can we get some guidance on the shares outstanding that you expect for the first quarter and second quarter laundry revenues it looks like.
Yes, with the ATM and immature.
Moving up pretty high.
Talk about that.
Michael Legg: Yes, Michael. I think at the end of last November, we announced that we signed a preferred stock sales agreement with a US institutional investor for $125 million. As of today, we have successfully completed the settlement of $75 million of the financing. Due to the terms of the preferred stock financing agreement, the closing of the third tranche of preferred shares would be contingent upon mutual agreement between both parties. That means that, currently, we are not going to immediately execute the third tranche. That means $75 million is the total amount we have completed, and we are not going to immediately go to another trench. And, you know, it's a little bit complicated to say how big the common shares increased, but you can already see we have increased the common shares, and that's already the common shares converted. I don't think we will increase this number in quarter one, but let's see how it goes. The second trench we have already delivered to the investor; let's see how they are going to convert the preferred shares to common shares. But currently, it is not yet updated for us.
Okay.
Yes, Michael I think at the end of last November we announced we signed a preferred a stock sales agreement with the USD institutional investor.
$125 million as of today, we have successfully completed the settlement of $75 million after financing.
Due to the terms of preferred stock financing agreements of the closing of the third tranche of preferred shares would it be contingent upon mutual agreement between both parties.
It means the currently we are not going to immediately execute the third tranche that means.
$75 million.
Is the total what we have completed and we are not going to immediately.
No.
To another trench and.
It's a little bit complicated to say how big the.
The common shares increased but you kind of already seen we have increased the common shares.
That's already the common shares converted convert either I don't think we will increase this number in quarter one.
Let's see how it goes.
The second tranche, we have already delivered to the investor, let's see how they are going to convert the preferred shares to common shares.
Currently.
Not.
Not yet to update it to us.
James: Okay, and then the $40 million convert liability, long-term liability. Can you just explain the terms of that and how that works? Yeah, from accounting rules, that is, we recognize the fair value of both the first and second tranches of preferred stock based on the evaluation from an independent third party. Through our, you know, auditor, they found an independent third party to evaluate the preferred stocks. Then, you know, we also recognize the pre-delivery shares associated with the preferred stock as an ADS lending equity on a fair value basis. So the country treatment of these three segments of preferred share financing had a certain impact on our bottom line for quarter four 2023, which is about $70 million. This total, including the first tranche and the second tranche and also the lending preferred shares, so lending equity. So putting all this together, it is about $70 million impact on our P&L.
Okay, and then and then the 40 million convert liability long term liability.
Just explain the terms of that and how that works.
Yeah from accounting rules.
We recognize the fair value of both the first and second tranches are preferred a stock based on the evaluation from an independent third party.
Through our auditor.
They finally found the independent third party to evaluate the preferred stocks then.
We also recognize the pre delivery shares associated with the preferred stock.
Lending equity on a fair value basis. So the accounting treatment of these three segments are preferred share financing.
Had a certain impacted our bottom line.
Quarter, four 2023 is about $17 million.
This total Inc include.
Including the first tranche and.
And then the second tranche and also the landing.
I refer to shares so lending equity so putting all this together is about $17 million impact on our P&L.
Okay, Great and then can you just do you know the average price you did $61.2 million of your ATM what was the average price so.
We haven't yet we haven't knowing the average price in the preferred a shares but we do know the ATM preferred ATM.
James: Okay, great. And do you know the average price you got for your $61.2 million ATM? What was the average price sold? We haven't yet, we haven't known the average price in the preferred shares, but we do know the ATM average price we have already put there is $1.99, if my memory is correct.
Average price that we have already put there is that.
One $1 99.
If my memory is correct.
Oh one.
Okay.
I have one thing too.
At Ollie's.
For the for me and.
James: I have one thing to add. For me and for the company side, after the 50 million US dollars preferred shares settled in January, for the next three months, at least the next three months, I mean, we have enough funds for our operation and expansion. Yeah, this is what I want. Okay, thank you very much. Thank you, Michael. Thank you. As there are no further questions now, I'd like to turn the call back over to the company for any closing remarks. I think I will thank you once again for joining us today. If you have any further questions, please feel free to contact us through the contact information provided on our website. Thank you. That concludes the call today. Thank you, everyone, for attending. You may now disconnect. Thank you. Hello Everyone!
For the Communist buyer company side.
After the $50 million preferred shares.
At <unk> in January.
For the next three months at least three months.
Yes.
We have.
In our forecast for our operation and expansion.
This is.
What I'd also say yes.
Okay. Thank you very much.
Thank you Michael.
Okay.
Thank you.
As there are no further questions now I'd like to turn the call back over to the company for any closing remarks.
I think thank you once again for joining us today.
You have for any further questions. Please feel free to reach us through the contact information provided on our website.
Thank you that concludes the call today. Thank you everyone for attending you may now disconnect.
Thank you.
Hum.
[music].
Sure.
[music].
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