Q1 2024 Bitfarms Ltd Earnings Call

Operator: Greetings. Welcome to the Bitfarms First Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Tracy Krumme. You may begin.

Greetings and welcome to the bit farms first quarter 2024 financial results Conference call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: Question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Unknown Executive: Please note. This conference is being recorded I will now turn the conference over to your host Tracey crew me you may begin.

Unknown Executive: Thank you.

Tracy H. Krumme: Good morning, everyone, and welcome to Bitfarm's first quarter 2024 conference call. With me on the call today is Nico Bonta, Interim Chief Executive Officer; Jeff Lucas, Chief Financial Officer; and Ben Gagnon, Chief Mining Officer.

Speaker Change: Good morning, everyone and welcome to bid form first quarter 2024 conference call.

Speaker Change: With me on the call today is Nico Bonzer interim Chief Executive Officer.

Speaker Change: Jeff Lucas Chief Financial Officer, and then getting young Chief marketing Officer.

Tracy H. Krumme: Before we begin, please note that this call is being webcast with an accompanying presentation. Today's press release and our presentation can be accessed on our website, bitfarms.com, under the Investor section. Turning to slide two, I'll remind everyone that certain forward-looking statements will be made during the call and that future results could differ from those implied in the statement. Such forward-looking information is based on certain assumptions and is subject to risks and uncertainties, and I invite you to consult Bitfarms' MD&A for a complete list.

Speaker Change: Before we begin please note that this call is being webcast with an accompanying presentation.

Speaker Change: Today's press release, and our presentation can be accessed at our website at <unk> Dot com under the investors section.

Speaker Change: Turning to slide to.

I'll remind everyone that certain forward looking statements will be made during the call and that future results could differ from those implied in the statements.

Speaker Change: The forward looking information is based on certain assumptions and is subject to risks and uncertainties and I invite you to consult the farms M. DNA for complete left.

Tracy H. Krumme: Please note that references will be made to certain measures not recognized under IFRS and therefore may not be comparable to similar measures presented by other companies. We invite listeners to refer to today's press release and our MD&A for definitions of the aforementioned non-IFRS measures and their reconciliations to IFRS measures. Please note that all financial references are denominated in U.S. dollars unless otherwise noted. I would also like to add that we will be attending the following equity conferences.

Speaker Change: Please note that references will be made to certain measures not recognized under ifr at and.

Speaker Change: And therefore may not be comparable to similar measures presented by other companies.

Speaker Change: We invite listeners to refer to today's press release, and our MD&A for definitions of the aforementioned non iron ore measures and their reconciliation to I FRS measures.

Speaker Change: Please note that all financial references are denominated in U S dollars unless otherwise noted.

Tracy H. Krumme: The B. Reilly Securities Institutional Investor Conference in Beverly Hills, California on May 22nd and May 23rd and the Northland Growth Conference, which is virtual, on June 26th. If anyone is interested in meeting with us on those dates, please reach out to me or a sales representative from those firms. And now, it is my pleasure to turn the call over to Nico Bonta, Chairman, Co-Founder, and Interim CEO. Nico, please go

Speaker Change: I would also like to add that we will be attending the following upcoming equity conference at the.

Speaker Change: The B Riley Securities Institutional Investor Conference in Beverly Hills, California on May 22nd and May 23rd.

Speaker Change: And the Northland growth conference, which is virtual in June 'twenty theft.

Speaker Change: If anyone is interested in meeting with US an update please reach out to me or sales representatives from those firms.

Speaker Change: And now it is my pleasure to turn the call over to Niko Banda Chairman co founder and interim CEO Nikko. Please go ahead.

Nicolas Bonta: Thank you, Tracy, and thank you, everyone, for joining us today. For those of you who might not know me, I founded the company along with board director Emiliano Groski in 2017 and have served as chairman of the board since. As you will recall, on March 25, we announced a CEO transition whereby Jeff Murphy would remain CEO until we concluded our executive search. However, his departure has now been expedited due to a legal claim against the company brought by Jeff on Friday, May 10.

Nicolas Bonta: Thank you Tracy and thank you everyone for joining us today.

Nicolas Bonta: For those of you who might not know me I founded the company along with board of director <unk> anniversary in 2017 and have served as chairman of the board sees.

Speaker Change: As you will recall on March 25, we announced a CEO transition whereby Jeff Murphy would remain CEO.

Speaker Change: We concluded our executive search.

Nicolas Bonta: This also caused us to reschedule our earnings calls in order to provide time to incorporate the required subsequent events into our filing. Jeff claimed damages for breach of contract, wrong dismissal, and aggregated and punitive damages in the amount of 27 million dollars.

Speaker Change: However, he said Badger has all been expedited did you do a legal claim against the company broke by Jeff on Friday May 10.

Speaker Change: This also caused us to reschedule our cause.

Speaker Change: Order to provide time to incorporate their quotas subsequent events into our filings.

Speaker Change: Jeff claim damages for breach of contract wrong. This Michelle.

Speaker Change: Aggregate ABB ability of damages in the amount of $27 million.

Nicolas Bonta: The company believes the claims are without merit and intends to defend itself vigorously. As a result, Jeff's termination was accelerated, and I stepped as interim CEO until the conclusion of our CEO search, which we expect to occur in the next several weeks. Importantly, I would like to emphasize my confidence in the strong leadership team we have built, the significant opportunities ahead of us, and the dedication of our employees to meet our growth targets this year.

Speaker Change: The company believes the claims are without merit and intends to defend it says vigorously.

Speaker Change: As a result, just elimination was accelerated and I step as interim CEO until the conclusion of our CEO search which.

Speaker Change: Which we expect to occur in the next several weeks.

Speaker Change: Personally I would like to emphasize my confidence in the strong leadership team we have built there.

Speaker Change: There are significant opportunities ahead of us and dedication of our employees to meet our growth targets. This year.

Nicolas Bonta: We expect minimal disruption from the CEO transition. Our 2024 growth plans will not be impacted. We are moving full steam ahead and expect to achieve our previously stated guidance of 12 exahash in Q2 and 21 exahash in Q4. Now turning to slide four, I am pleased to turn the call over to Ben, our Chief Mining Officer, who will discuss our Q1 results, updates, and our growth plan, and exciting outlooks for the ERA.

We expect minimal disruption from the CEO transition.

Speaker Change: Our 'twenty to 'twenty four growth brands will not be impacted we are moving full steam ahead and expect to achieve our previously stated guidance of 12 X a hushed in Q2 and 21 extra husky in Q4.

Speaker Change: Now turning to slide four I'm pleased to turn the call over to Ben Our Chief Mining Officer, who will discuss our Q1 results updates on our growth plan.

Ben: And the exciting outlook for the year isn't it.

Speaker Change: Thanks Heiko.

Benjamin Gagnon: Turning to slide five. Since we announced our transformative fleet upgrade in November and additional minor purchases in March, investor interest has increased. Before we dive into our Q1 results, I would like to take a minute to provide a brief company overview for any newcomers. Bitfarms is a vertically integrated global Bitcoin mining company that provides investors with high-quality exposure to Bitcoin.

Ben: Turning to slide five.

Ben: Since we announced our transformative fleet upgrade in November and additional minor purchases in March Investor interest has increased.

Speaker Change: Before we dive into our Q1 results I would like to take a minute to provide a brief company overview for any newcomers.

Speaker Change: Big farms is a vertically integrated global Bitcoin mining company that provides investors with high quality exposure to bitcoin, we measure our success on three key performance indicators cash rate energy efficiency and direct cost of mine noticed cash cost.

Benjamin Gagnon: We measure our success on three key performance indicators, hash rate, energy efficiency, and direct cost to mine, known as hash cost. This year, Bitfarms is poised to deliver the greatest hash rate growth and cost improvement in our history with industry-leading benchmarks. We expect to reach 21x a hash, nearly tripling our current hash rate and nearly doubling our operating capacity this year. With the development of our new Paso Pei site, we now have 12 farms spread across North and South America with an additional farm in development in Paraguay.

Speaker Change: This year bid farms is poised to deliver the greatest cash rate growth cost improvement in our history with industry, leading benchmarks. We expect to reach 21 Axa has nearly tripling our current house rate and nearly doubling our operating capacity this year.

With the development of our new pass a pay site. We now have 12 farms spread across North and South America with an additional farm in development in Paraguay.

Benjamin Gagnon: We will continue to opportunistically evaluate new geographies, new markets, and new opportunities. In Q1 2024, our revenue and margins will continue to improve as Bitcoin prices move upward. Total revenue of $50 million increased 67% year over year and 9% over Q4, and our adjusted EBITDA increased 50% to $21 million versus Q4 last year. In addition, due to our success in recouping our Canadian VAT, we will soon receive a $24 million cash refund that will be used to fund our growth. Turning to slide 6.

Speaker Change: We will continue to opportunistically evaluate new geographies, new markets and new opportunities.

Speaker Change: In Q1, 2024, our revenue and margins continue to improve aspect when prices moved upwards.

Speaker Change: Total revenue of $50 million increased 67% year over year, and 9% over Q4 and.

Speaker Change: And our adjusted EBITDA increased 50% to $21 million versus Q4 last year.

Speaker Change: In addition, due to our success recouping, our Canadian VA T. We will soon receive a $24 million cash refund that will be used to fund our growth.

Speaker Change: Turning to slide six.

Benjamin Gagnon: We are on track to achieve our 2024 guidance of 21 ExaHash, a 223% increase, and 21 watts per terahash, a 40% improvement, while growing our operational infrastructure by nearly 80% to 428 megawatts. We are frontloading the majority of energy efficiency improvements and growth in the first half of this year, with 70% of our new miners being allocated to upgrade our existing mining farms. This will ensure the fastest improvement in fleetwide energy efficiency by replacing the least efficient miners first.

Speaker Change: We are on track to achieve our 2024 guidance 21 actually has a 223% increase and 21 loss per Terra has a 40% improvement while growing our operational infrastructure by nearly 80% to 428 megawatts.

Speaker Change: We are frontloading, the majority of energy efficiency improvements and growth in the first half of this year with 70% of our new miners being allocated to upgrade our existing mining farms.

Speaker Change: This will ensure the fastest improvements in fleet wide energy efficiency by replacing the least efficient minors first.

Benjamin Gagnon: The remaining 30% of miners will be energized at new locations, primarily in Paraguay, with Lessons Learned From the Past. Having said that, over the last two years, we deliberately deleveraged our balance sheet and followed a strategy emphasizing low cost, vertically integrated operations. Now, with no debt, a rapidly increasing hash rate, improving energy efficiency, and cost reductions on a per-unit basis, we are aggressively entering this new era to capture as much upside as possible while maximizing returns and driving long-term value for shareholders. Turning to slide seven.

Speaker Change: The remaining 30% of miners will be energized in new locations primarily in Paraguay.

Speaker Change: With lessons learned from the past having.

Speaker Change: Over the last two years, we deliberately deleveraged, our balance sheet and followed a strategy emphasizing low cost vertically integrated operations now with no debt a rapidly increasing hatch rate improving energy efficiency and cost reductions on a per unit basis. We are aggressively entering this new era too.

Speaker Change: Capture as much upside as possible, while maximizing returns and driving long term value for shareholders.

Speaker Change: Turning to slide seven.

Benjamin Gagnon: Our growth this year is a major inflection point for the company and represents a golden opportunity for current and prospective investors. The strategic timing of this inflection point should not be overlooked. So why are we growing so aggressively right now? In 2023, we analyzed over six years of purchase history for every miner, evaluating the following: the price we paid, the time we plugged them in, how much revenue was generated, the cost and profit, what the payback was, and the cost effectiveness of each purchase. What we found is that the most important factor for determining a good miner investment is timing, as timing ultimately determines cost.

Speaker Change: Our growth this year is a major inflection point for the company and represents a golden opportunity for current and prospective investors.

Speaker Change: The strategic timing of this inflection point should not be overlooked.

Speaker Change: Why are we growing so aggressively right now.

Speaker Change: In 2023, we analyzed over six years of purchase history for every minor evaluating the following the price we paid the timely plug them in how much revenue was generated the costs and profit what the payback was and the cost effectiveness of each purchase what.

Speaker Change: What we found is that the most important factor for determining a good minor investment timing as timing ultimately determined costs. The miners we purchased in the months leading into and out of the last having in 2020, we're incredibly cost effective and pay themselves back between five and eight times over delivering.

Benjamin Gagnon: The miners we purchased in the months leading into and out of the last halving in 2020 were incredibly cost-effective and paid themselves back between five and eight times over, delivering by far the best returns on investment. Emboldened by the data, we launched our transformative fleet upgrade strategically timed with these cycles in mind. First, we secured low-cost and stable power of 170 megawatts in a region where we could build out quickly, deploying the remaining miners expeditiously and predictably.

Speaker Change: By far the best returns on investments.

Speaker Change: Emboldened by the data we launched our transform its fleet upgrade strategically timed with these cycles in mind.

Speaker Change: First we secured low cost and stable power of 170 megawatts in a region, where we can build out quickly deploying the remaining minors expeditiously and predictably.

Benjamin Gagnon: Second, we created a plan to quickly and cost-effectively upgrade every single one of our existing farms by upgrading our older and less efficient miners. Third, in November 2023, with Bitcoin around $37,000 and the halving just months away, we jumped on an announcement by Bitmain regarding a new series of more powerful and more productive miners. We secured some of the lowest prices seen in years and negotiated a minor option, an industry first.

Speaker Change: Second we created a plan to quickly and cost effectively upgrade every single one of our existing farms by upgrading our older and less efficient miners.

Speaker Change: Third in November 2023, with bitcoin around $37000 and having just months away. We jumped on an announcement by bit me regarding a new series of more powerful and more productive Myers.

Speaker Change: We secured some of the lowest prices seen in years and negotiated a minor option an industry first.

Benjamin Gagnon: We moved quickly and launched our fleet upgrade plan, and in March, followed up with even more minor purchases, purchasing nearly an additional 24,000 of the best performing machines on the market at competitive prices. Lastly, in January 2024, we purchased land for Iguazu Paraguay Farm. This land is strategically located across the road from a recently constructed substation, which is fed by a 500 kilovolt line directly from the Typhoo hydro dam and has additional acreage to accommodate further expansion. In summary, this transformative plan speaks to our discipline by first securing megawatts with a plan for every miner purchased and our strategically timed investments by purchasing miners at attractive prices. Turning to slide 8.

Speaker Change: We moved quickly and launched our fleet upgrade plan and in March followed up with even more minor purchases purchasing nearly an additional 24000 of the best performing machines on the market with competitive pricing.

Lastly in January 2024, we purchased land for equilibrium Paraguay farm.

Speaker Change: This land is strategically located across the road from our recently constructed and a substation, which is fed by a 500 kilovolt line directly from the tie to Hydro dam and has additional acreage to accommodate further expansion.

Speaker Change: In summary, this transformed a plan speaks to our discipline by first securing megawatts with a plan for every minor purchased and are strategically timed investments by purchasing miners at attractive prices.

Speaker Change: Turning to slide eight.

Benjamin Gagnon: By executing on our growth plan, we are well positioned to gain market share, and we believe our planned growth towards our year-end portfolio represents the best opportunity in the market. By the end of 2024, we will have increased our hash rate 223% from 6.5 to 21x a hash. 2.

Speaker Change: By executing on our growth plan, we are well positioned to gain market share and we believe our planned growth towards our year end portfolio represents the best opportunity on market.

Speaker Change: By the end of 2024, we will have increased our hatch rate, 223% from $6 five to 20 onex a hash.

Benjamin Gagnon: We increase our energy capacity nearly 80% from 240 megawatts to 428 megawatts, 3, improved our energy efficiency 40% from 35 to 21 watts per terahash, four, increased the total miners deployed by 48%, and five, increased our total farms under management by 18%. Combined, we believe these figures make up the most meaningful and concrete growth plan announced among publicly traded miners. As a result, we will close the year with a geographically well-balanced portfolio of nearly 100,000 highly efficient and competitive miners. Purchased at some of the lowest costs in a year, operated at 13 farms spread across North and South America, and primarily powered by consistent and sustainably low-cost hydropower. Turning to slide 9.

Speaker Change: To increase our energy capacity nearly 80% from 240 megawatts to 428 megawatts three <unk>.

Speaker Change: Improved our energy efficiency, 40% from 35 to 21 wants preterm house or.

Speaker Change: Increase the total minor supported by 48% and five increase our total farms under management by 18%.

Speaker Change: Combined we believe these figures make up the most meaningful and concrete growth plan announced among the publicly traded miners.

Speaker Change: As a result, we will close the year with a geographically well balanced portfolio of nearly 100000 highly efficient and competitive miners purchased at some of the lowest costs in in years operated at 13 farms spread across North and South America, and primarily powered with consistent.

Sustainably low cost hydropower.

Speaker Change: Turning to slide nine.

Benjamin Gagnon: Based on our 2024 growth, we will be improving and expanding faster than the Bitcoin network, as demonstrated by these two sensitivity tables. On the left, we show our growth relative to the network cash rate. By growing faster than the network, we will capture market share and increase the number of Bitcoins earned per day. Our 223% hash rate growth to 21 exahash will be a significant revenue driver and spread our G&A over a larger number of bitcoins.

Speaker Change: Based on our 2020 for growth.

Speaker Change: We will be improving and expanding faster than the bitcoin network as demonstrated by these two sensitivity tables on the left we show our growth relative to the network cash rate by growing faster than the network, we will capture market share and increase the numbers of big coins earned per day.

Speaker Change: Or 223% hash rate growth to 21, <unk> will be a significant revenue driver and spreader G&A over a larger number of big wins.

Benjamin Gagnon: On the right, we show how our improvement in energy efficiency is also expected to be faster than network growth. This, combined with our largely stable and competitive energy rates, driven by approximately 80% surplus hydropower, should result in increasingly lower direct energy costs per Bitcoin mined over the year. It is important to note that these results are determined by our continued improvement across key performance indicators of hash rate and energy efficiency relative to network hash rate, and they are not reliant on Bitcoin pricing.

Speaker Change: On the right we show how our improvement in energy efficiency are also expected to be faster than network growth.

Speaker Change: This combined with our largely stable and competitive energy rates driven by approximately 80% surplus hydropower should result, an increasingly lower direct energy cost per bit quaint mined over the year.

Speaker Change: It is important to note that these results are determined by our continued improvement across key performance indicators attach rate and energy efficiency relative to network cash rate they are not reliant on bitcoin pricing.

Benjamin Gagnon: As the widely anticipated bull market takes off in 2024, these improvements will ensure we are well positioned to capture upside from quickly expanding mining markets. This is how we plan to outperform the industry this year. Turning to slide 10.

Speaker Change: The widely anticipated bull market takes off in 2020 for these improvements will ensure we are well positioned to capture upside with quickly expanding mining margins. This is how we plan to outperform the industry. This year.

Speaker Change: Turning to slide 10.

Benjamin Gagnon: In Quebec, we are executing our transformative fleet upgrade, generating a low risk and stable growth path. Quebec boasts competitive rates on hydropower and cost-effective growth as we upgrade our state-of-the-art facilities with our new T21 miners. We have already completed two farm upgrades, generating a remarkable 51% improvement in energy efficiency and illustrating the transformative impact of our fleet upgrade. With three more farm upgrades underway, our total hash rate and energy efficiency in Quebec will improve dramatically throughout Q2.

In Quebec, we are executing our transformative fleet upgrade generating a low risk and stable growth pathway.

Speaker Change: Quebec, both competitive race on hydropower and cost effective growth as we upgrade our state of the art facilities with a new T 21 liners, we have already completed two farm upgrades generating a remarkable 51% improvement in energy efficiency and illustrating the transformative impact of our fleet upgrade with.

Speaker Change: With three more farm upgrades underway, our total half rate and energy efficiency in Quebec will improve dramatically throughout Q2.

Benjamin Gagnon: Additionally, we have begun testing recycled heat from hydro mining technology with the deployment of 153s plus miners. We are incredibly excited about the potential of this technology for heat recapture and reuse. The province of Quebec has tremendous demands for residential, commercial, and industrial heat, and we believe the hydrominers are potentially the best technology available to expand our business in the province, drive down costs, and help achieve the province's climate goals by recycling our primary waste product, heat. Turning to slide 11.

Speaker Change: Additionally, we have begun testing recycled heat from hydro mining technology with the deployment of 153 S plus miners.

Speaker Change: We are incredibly excited about the potential of this technology for heat recapture and reuse the province of Quebec has tremendous demands for residential commercial and industrial heat and we believe the hydro miners are potentially the best technology available to expand our business in the province drive down costs and help achieve the province climate goals.

Speaker Change: By recycling or primary waste product heat.

Speaker Change: Turning to slide 11.

Benjamin Gagnon: Argentina remains a low-cost jurisdiction with significant expansion possibilities. In September, we will be deploying up to 6,400 new T21 miners that will improve our site's energy efficiency from 32 watts per terahash to 23 watts per terahash, while increasing the site hash rate by approximately 850 petahash. Turning to slide 12.

Speaker Change: Argentina remains a low cost jurisdiction with significant expansion possibilities in September we will be deploying up to 6400, New T 21 miners that will improve our site energy efficiency from 32 <unk> to 'twenty three watts for Terry Ash, while increasing the site has rate by approximately 800000.

Speaker Change: <unk> potash.

Speaker Change: Turning to slide 12.

Benjamin Gagnon: Now let's turn our attention to Washington, currently our only site in the U.S. With no curtailment and incredibly high uptimes, it is also one of our most productive sites. We are currently expanding and doing site modifications to accommodate additional T21 miners to be deployed in October this year. This deployment will improve site efficiency approximately 27% from 30 watts per terahash to 22 watts per terahash and increase total hash rate approximately 46% to 910 petahash. Notably, the US represents the smallest region in our portfolio, and we are actively looking at numerous opportunities to increase our exposure in the US in both 2024 and 2025. Turning to slide 13.

Speaker Change: Now, let's turn our attention to Washington currently are only site in the U S with no curtailment and incredibly high up times. It is also one of our most productive sites. We are currently expanding and doing site modifications to accommodate additional T 21 miners to be deployed in October this year.

Speaker Change: This deployment will improve site efficiency approximately 27% from 30 <unk> to 'twenty, two osprey tear ash and increased total hatch rate approximately 46% to 910th at Ash.

Speaker Change: Notably the U S represents the smallest region in our portfolio and we are actively looking at numerous opportunities to increase our exposure in the U S. In both 2024 and 2025.

Speaker Change: Turning to slide 13, let's.

Benjamin Gagnon: Let's talk about our expansion in Paraguay, which represents the largest growth in our plan this year, with megawatt expansion of 170 megawatts and 9.2 exahash growth from our two new farms. We have already installed thousands of miners in Paso Pei and are finalizing work on the substation. When complete, AsaPay will add over 3x a hash and 70 megawatts to our portfolio, growing our megawatts under management 29% to 310. Construction at our third site in Paraguay, Iguazu, is well underway and on track to be energized in Q4, contributing approximately 5 exahash and 100 megawatts with energy efficiency of 20 watts per terahash in 2024. Paraguay's economic and political landscapes make it highly attractive.

Speaker Change: Let's talk about our expansion in Paraguay, which represents the largest growth in our plan. This year with megawatt expansion of 170 megawatts and 9.2 acts of hash growth from our two new farms, we have already installed thousands of miners in Paso pay and are finalizing work on the substation when.

Speaker Change: <unk> asked to pay will add over three X the hash and 70 megawatts to our portfolio growing our megawatts under management, 29% to 310.

Speaker Change: Construction at our third site in Paraguay equals zoo is well underway and on track to be energized in Q4, contributing approximately five ex ash and a 100 megawatts with energy efficiency of 20 loss per tear ash in 2024.

Speaker Change: Paraguay is economic and political landscapes make it highly attractive the.

Benjamin Gagnon: The majority of its political leaders and senior leadership of Ondeh, the state-owned power distribution company, recognize the tremendous economic benefits Bitcoin mining operations bring and are very supportive of legal Bitcoin mining ventures. Numerous senators and public officials have signed letters and commented publicly about the positive outcomes of Bitcoin mining. These include increased employment opportunities, capital spending, higher revenues from energy sales for legal Bitcoin mining operations, and increased electrical infrastructure investment. Importantly, Paraguay boasts a massive surplus of energy relative to local demand.

Speaker Change: The majority of its political leaders and senior leadership of on day. The stayed on power distribution company recognize the tremendous economic benefits Bitcoin mining operation spring and are very supportive of legal bitcoin mining ventures.

Speaker Change: Numerous senators and public officials signed letters and commented publicly about the positive outcomes of Bitcoin mining. These include increased employment opportunities capital spending higher revenues from energy sales for legal bitcoin mining operations and increased electrical infrastructure investments.

Benjamin Gagnon: Over 50% of its power is exported to neighboring countries for a fraction of the price legal Bitcoin mining operations pay. Bitcoin mining represents a meaningful conduit to sell excess renewable energy to a global marketplace and drive significant economic growth.

Speaker Change: Importantly, Paraguay, both a massive surplus of energy relative to local demand.

Speaker Change: 50% of its power is exports to neighboring countries for a fraction of the price legal bitcoin mining operations pay bitcoin mining represents a meaningful conduit to sell excess renewable energy to a global marketplace and drive significant economic growth in turn we benefit from access to low cost reliable sustain.

Benjamin Gagnon: In turn, we benefit from access to low cost, reliable, sustainable green power with almost no curtailment, a skilled and cost-effective labor pool, expedited construction schedules, and a business-friendly environment supportive of our industry. Building upon our success in Paraguay, we recently signed an agreement with the state-owned utility Onde, doubling the energy capacity of our Iguazu site with an additional 100 megawatts in 2025. Growing Ikwesu to 200 megawatts increases our 2025 megawatts under management by 23% from 428 megawatts to 528 megawatts.

Speaker Change: Annabelle Green power with almost no curtailment, a skilled and cost effective labor pool, expedited construction schedules and a business friendly environment supportive of our industry.

Speaker Change: Building upon our success in Paraguay, We recently signed an agreement with the state owned utility Andre doubling the energy capacity ever Iguazu site with an additional 100 megawatts in 2025.

Speaker Change: Growing equal to 200 megawatts increases our 2025 megawatts under management, 23% from 428 megawatts to 528 megawatts. Importantly, this expansion takes advantage of our existing construction plan amortizing costs over a greater amount of infrastructure and driving down overall <unk>.

Benjamin Gagnon: Importantly, this expansion takes advantage of our existing construction plan, amortizing costs over a greater amount of infrastructure and driving down overall cost per megawatt. Changes to construction plans and equipment orders are already in progress, and we are currently analyzing potential deployment plans. To contextualize the impact of this, assuming a similar minor model and the same 20 watts per terahash efficiency already planned for Iguazu, this additional 100 megawatts could support an additional 5 exahashes in 2025. Turning to slide 14, I'll now hand the call over to Jeff Lucas to talk about our financial performance.

Speaker Change: Cost per megawatt.

Speaker Change: Changes to construction plans and equipment orders are already in progress and we are currently analyzing potential deployment plans.

Speaker Change: To contextualize the impact of this assuming a similar minor model and the same 20 loss per Terra house efficiency already planned for Iguazu. This additional 100 megawatts could support an additional five extra cash in 2025.

Speaker Change: Turning to slide 14, I'll now hand, the call over to Jeff Lucas to talk about our financial performance.

Jeffrey P. Lucas: Thank you Ben. Turning now to slide 15. This is a great time for the industry, and we have been preparing for the post-hacking world with a strategic growth plan, an accretive financing strategy, and a debt-free balance sheet. With our funds from operations, along with our substantial tax refunds and the judicious use of our ATM financing facility, we are well positioned to grow our capacity from 240 megawatts to 420 megawatts this year and hit our year Here are a few first quarter highlights, large in comparison to the fourth quarter of 2023.

Jeffrey P. Lucas: Thank you Dan turning now to slide 15.

Jeffrey P. Lucas: This is a great time for the industry and we have been preparing for the post having world with the strategic growth plan and accretive financing strategy and a debt free balance sheet.

Jeffrey P. Lucas: With our funds from operations, along with a substantial tax refund and the judicious use of our ATM financing facility, we are well positioned to grow our capacity from 240 megawatts 20 megawatts. This year and hit our year end 'twenty, one that can I ask a second target.

Jeffrey P. Lucas: Here are a few first quarter highlights large in comparison to the fourth quarter of 2023.

Jeffrey P. Lucas: Revenue of $50 million was up 9% over the fourth quarter and up 67% year over year. The quarter over quarter comparison reflects a 44% higher average Bitcoin price offset by 24% fewer Bitcoin earned during the first quarter. We earned 943 Bitcoin in the quarter compared to 1,236 Bitcoin in the prior quarter, primarily the result of an increase in average network difficulty of 21 percent. Mining revenue was $49 million compared to $45 million in the prior quarter.

Jeffrey P. Lucas: Revenue of $50 million was up 9% over the fourth quarter and up 67% year over year.

Jeffrey P. Lucas: The quarter over quarter comparison reflects a 44% higher average paid claim price offset by 24% fewer bitcoin earned during the first quarter.

Jeffrey P. Lucas: We earned 943 big coin in the quarter compared to 12 36 bitcoin in the prior quarter, primarily the result of an increase in average network difficulty of 21%.

Mining revenue was $49 million compared to $45 million in the prior quarter.

Jeffrey P. Lucas: Gross mining profit was $29 million, or 59% of mining revenue, compared to $23 million, or 52% of mining revenue, in the fourth quarter. General and Administrative (G&A) expense was $13.2 million, including $3.1 million of non-cash compensation expense and approximately $1.6 million of non-recurring severance charges associated with the management change announced in March. Net of these items, CAST G&A expanded in the first quarter with $8.5 million, down 11% from the previous quarter.

Jeffrey P. Lucas: Gross profit was $29 million or 59% money revenue.

Jeffrey P. Lucas: Year to $23 million of 50.

Jeffrey P. Lucas: 2% of mining revenue in the fourth quarter.

Jeffrey P. Lucas: General and administrative or G&A expense was $13 2 million, including $3 $1 million of noncash compensation expense and approximately $1 6 million of nonrecurring severance charges associated with the management change announced in March.

Jeffrey P. Lucas: Net of these items cash G&A expense in the first quarter with $8 $5 million down 11% from the previous quarter.

Jeffrey P. Lucas: Our operating loss was $24 million in comparison to a $13 million loss in the fourth quarter. The first quarter operating loss included $39 million in depreciation expense, which was $39 million in the prior quarter. First quarter depreciation expense included $18.5 million of accelerated depreciation expense associated with the older miners replaced by the new T21 miners in Quebec. Under the FRA program, the existing miners are being depreciated on an accelerated basis over the remainder of their expected operating life.

Jeffrey P. Lucas: Our operating loss of $24 million in.

Jeffrey P. Lucas: In comparison to a $13 million loss in the fourth quarter.

Jeffrey P. Lucas: The first quarter operating loss included a $39 million depreciation expense in comparison at $22 million in the prior quarter.

First quarter depreciation expense included $18 $5 million of accelerated depreciation expense associated with the all the miners replaced by the new 221 monitors in Quebec.

Jeffrey P. Lucas: Under the upgrade program.

Jeffrey P. Lucas: The existing mine is being depreciated on an accelerated basis over the remainder of their expected operating life.

Jeffrey P. Lucas: As such, a higher level of depreciation expense is expected over the remaining quarters of 2024 as the new miners are brought online. In the first quarter, we recorded a $9 million non-cash gain for the revaluation of the financial liability for warrants issued in earlier finances, compared to a $38 million non-cash charge for the revaluation of this financial liability in the fourth quarter. Under IFRS, we are required to recognize a liability for these warrants, even though they cannot be settled for cash.

Jeffrey P. Lucas: As such a higher level of depreciation expense is expected over the remaining quarters of 2024 and the new miners are brought online.

Jeffrey P. Lucas: In the first quarter, we recorded a $9 million noncash gain from the revaluation of financial liability for warrants issued in earlier financing compared to a $38 million noncash charge with revaluation of this financial liability in the fourth quarter.

Jeffrey P. Lucas: <unk>, we are required to recognize the liability. Please once even though they cannot be settled for cash.

Jeffrey P. Lucas: The first quarter net loss was $6 million, or a loss of $0.02 per share. In comparison to a net loss in the fourth quarter 2023 of $57.2 million, or a loss per share of $0.19. Now let's turn our attention to operating performance and the per Bitcoin metric. Our corporate cost of electricity during the quarter was $0.041 per kilowatt hour, substantially unchanged from the prior quarter.

Jeffrey P. Lucas: First quarter net loss was $6 million or a loss of <unk> <unk> per share in comparison to a net loss in the fourth quarter 2023 of $57 2 million alright loss per share of <unk> 19.

Speaker Change: Now, let's turn our attention to operating performance and pretty big Prime metrics.

Speaker Change: Our corporate cost of electricity during the quarter was $4.01 per kilowatt hour substantially unchanged from the prior quarter.

Jeffrey P. Lucas: Due to Canadian tax legislation proposed in February of 2022, our direct cost of production since that date has included a 15% value added tax or VAT on Canadian energy costs. While this continued to impact our direct costs in the first quarter, I am delighted to report that we succeeded in obtaining approval from the Canadian Tax Authority for the VAT regulation. Going forward, we'll be able to recover the VAT and not have to reflect the tax on electricity costs. This represents a significant reduction in our operating costs. Were we not to have included the VAT in our first quarter electricity rate, our corporate cost of electricity would have been 3.7 cents per kilowatt hour.

Speaker Change: Due to Canadian tax legislation proposed in February of 2022, our direct cost of production since that date has included a 15% value added tax.

Speaker Change: On Canadian energy costs.

Speaker Change: While this continued to impact our direct cost of the first quarter I am delighted to report that we succeeded in obtaining approval from the Canadian tax authority against that regulations going forward, we will be able to recover that and not have to reflect the tax electricity costs.

Speaker Change: This is a significant reduction in our operating costs.

Speaker Change: Where are we not have included that in our first quarter electricity rate, our corporate cost electricity would have been three seven <unk>.

Speaker Change: Per kilowatt hour.

Jeffrey P. Lucas: Furthermore, this VAT recovery will entitle us to a $24 million refund for the tax amounts paid since February 2022, which will be applied towards funding our 2024 growth initiative. In the first quarter, our direct cost of production for Bitcoin was $20,500. Overall, excluding the Canadian VAT, our corporate direct cost would have been $18,400, $2,100 lower than our actual corporate direct cost.

Speaker Change: Furthermore, this VAT recovery will entitle us to a $24 million refund for the tax amounts paid in February 2022, which will be applied towards funding our 2024 growth initiatives.

Speaker Change: In the first quarter, our direct cost production with bitcoin with $20500 overall, excluding the Canadian that our corporate direct cost would have been $18100 $2100 lower than our actual corporate direct costs.

Jeffrey P. Lucas: Turning now to slide 16. Adjusted EBITDA increased to $21 million, up 50% from the fourth quarter. This equates to cash profitability per bitcoin of $22,700, which is about double the $11,200 per Bitcoin in the fourth quarter. Adjusted EBITDA margin increased to 42% from 30% in the previous quarter.

Speaker Change: Turning now to slide 16.

Speaker Change: Adjusted EBITDA increased to $21 million up 50% from the fourth quarter.

Speaker Change: This equates to cash profitability per big coin of $20700 or about double the $11200 per big coin in the fourth quarter adjust.

Speaker Change: Adjusted EBITDA margin increased to 42% from 30% in the previous quarter.

Jeffrey P. Lucas: I want to point out that our adjusted EBITDA is a very straightforward measure, comprised simply of our cash profit per Bitcoin times the number of Bitcoin miners, plus the profit earned on our vaulted subsidiary. As an IFRS filer, we do not mark to market our Bitcoin holdings, and we do not include this or any other balance sheet valuation changes in our adjusted EBITDA. Turning to slide 17, adjusted EBITDA for us is purely a measure of the cash profitability of our mining operations and the modest profit contribution of our Volta Electric subsidiary.

Speaker Change: I want to point out that our adjusted EBITDA is a very straightforward measure comprise simply over our cash profit per bitcoin.

Speaker Change: <unk> declined mine both of profit earned on a both a subsidiary.

Speaker Change: As in Ifr's Pilar, we do not mark to market a bit quite holdings, and we do not improve this or any other balance sheet valuation changes in our adjusted EBITDA and <unk>.

Speaker Change: Adjusted EBITDA for us purely a measure of the cash profitability of our mining operations and the modest profit contribution a revolt subsidiary.

Speaker Change: Turning to slide 17.

Jeffrey P. Lucas: On March 31st, we held cash of $66 million in Bitcoin valued at $58 million for total liquidity of $124 million. This compares to $118 million of total liquidity on December 31st. On March 11th, we commenced our ATM program and raised $38 million in net proceeds during the quarter, which are earmarked to fund our growth initiatives and our fleet upgrades. In addition, we received $1.7 million in net proceeds from the sale lease back of our Garlock facility.

Speaker Change: At March 31, we had cash of $66 million in big claim valued at $58 million with total liquidity of $124 million.

Speaker Change: This compares to $118 million of total liquidity at December 31.

Speaker Change: On March 11, we commenced our ATM program and raised $38 million net proceeds during the quarter, which are earmarked to fund our growth initiatives in our fleet upgrade.

Speaker Change: In addition, we received $1 $7 million net proceeds from the sale leaseback of our Garlock facility.

Jeffrey P. Lucas: From March 31st to May 14th, we raised an additional $83 million under the ATM program to further fund our growth. Additionally, during the quarter, we paid off the remaining equipment financing debt, leaving us debt-free at March 31st. I'll point out, however, that we show $1.6 million of long-term debt on our March 31st balance sheet to reflect the IFRS accounting associated with the GARLAC sale. Importantly, I want to emphasize that we have sufficient liquidity to pay for all the miners needed to reach 21 exahash per second this year. Turning now to slide 18.

Speaker Change: On March 31 to May 14, we raised an additional $83 million under the ATM program to further fund our growth.

Speaker Change: During the quarter, we paid off the remaining equipment financing debt, leaving us debt free at March 31.

Speaker Change: I will point out however, we still have $1 $6 million of long term debt on our March 31 balance sheet to reflect the <unk> accounting associated with the Garlock sale leaseback.

Importantly, I want to underscore that we have sufficient liquidity to pay for all the miners needed to reach 21 <unk> has the second this year.

Jeffrey P. Lucas: Before we open the call for questions, I'd like to summarize. We are dramatically altering our operating profile via our ongoing upgrade and expansion plan. Recent minor upgrades are already delivering major efficiency gains, and further gains throughout the year should contribute to post-happening margin improvement. Driving growth and improving our portfolio, we are on track to achieve 21 exahash per second and 21 watts per terahash efficiency in 2024. With an industry-leading Bitcoin mine for Exahash, Bitfarms distinguishes itself through exceptional margin performance, demonstrating operational efficiency and profitability in a highly competitive industry.

Speaker Change: Turning now to slide 18.

Speaker Change: We open the call for questions I'd like to summarize here, we are dramatically altering our operating profile via our ongoing upgrade and expansion plan.

Speaker Change: Recent minor upgrades are already delivering major efficiency gains and further gains throughout the year should contribute a post having margin improvements.

Speaker Change: Driving growth and improving our portfolio. We are on track to achieve 21 actually has the second in 'twenty, one and what prepare house efficiency in 2024.

Speaker Change: With an industry, leading bitcoin mine correctly hash bid firms distinguishes itself through exceptional margin performance, demonstrating operational efficiency and profitability in a highly competitive industry. This.

Jeffrey P. Lucas: This preparation is underpinned by a robust balance sheet and strong liquidity, which are crucial for sustaining growth and capitalizing on new opportunities. With a strong leadership team with a proven track record of driving profitable growth, our operational excellence and strategic vision have been instrumental in our success over the past six years, including two major events. Furthermore, Bitfarms' commitment to ESG reflects our dedication to sustainable and responsible mining practices. It is gratifying that our largest project, now under development, will draw power from the Itapu Dam, the third largest hydropower facility in the world. Overall, we are very well positioned for continued growth and success in 2024 and beyond. With that, I'd like to turn the call back to the operator to open this call to questions.

Speaker Change: This preparation is underpinned by our robust balance sheet and strong liquidity, which are crucial for sustaining growth and capitalizing on new opportunities.

Speaker Change: With a strong leadership team with a proven track record of driving profitable growth, our operational excellence and strategic vision had been instrumental in our success over the past six years, including two having events.

Speaker Change: Furthermore, bid farms' commitment to ESG reflects our dedication to sustainable and responsible mining practices.

Speaker Change: Gratifying that our largest projects now under development will drive powerful <unk> tap a dam third largest hydropower facility in the world.

Speaker Change: Overall, we are very well positioned for continued growth and success in 2024 and beyond.

Speaker Change: With that I'd like to turn the call back to the operator to open this call for questions.

Operator: Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Your first question for today is from Lucas Pipes with B. Reilly Securities.

Speaker Change: Certainly at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Confirmation tone will indicate your line is in the question queue you.

Speaker Change: You May press Star two if you would like to remove your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Speaker Change: Your first question for today is from Lucas pipes with B Riley Securities.

Operator: Thank you very much, operator. Good morning, everyone. Good morning, Lucas.

Speaker Change: Thank you very much operator, good morning, everyone.

Jeff: Good morning, Lucas Jeff.

Jeff:

Jeffrey P. Lucas: You just mentioned in your remarks that kind of all the minor costs are kind of covered with the liquidity you have. So in that context, how should we think about the use of the ATM over the balance of this year? Do you expect to raise capital for infrastructure or other reasons? Just curious. Thank you very much.

Speaker Change: You just mentioned there in your remarks that.

Speaker Change: Of all the minor costs R. R.

Speaker Change: Kind of.

Speaker Change: Covered with our with the liquidity you have so in that context, how should.

Speaker Change: Should we think about the use of the ATM over the balance of this year.

Speaker Change: Do you expect to.

Speaker Change: <unk>.

Speaker Change: <unk> raised capital.

Speaker Change: For infrastructure or other reasons, just just curious how you think about that thank you very much sure.

Jeffrey P. Lucas: Sure. So, yeah, let me be glad to address your question here. First of all, we have been active with the ATM since March 31st, and the liquidity that we have today is higher than what we reported on March 31. The other point to keep in mind here, as he pointed out to both Ben and me during the call, is that we are receiving a tax refund, which we expect to have by the end of June for roughly 24 million US dollars.

Speaker Change: Yeah, let me I'll be glad to address your question here first of all we <unk>.

Speaker Change: <unk> been active with the ATM Magic since March 31, and.

Speaker Change: And the liquidity that we have today is higher than what we reported on March 31, we had.

Speaker Change: Point to keep in mind here as he pointed out both Ben and I. During the call is that we are able to receiving a tax refund, which we expect to have by the end of June for roughly $24 million here does that address is in large part both requirement that we have for our miners as well as the.

Jeffrey P. Lucas: So that addresses, in large part, both the requirements that we have for our miners, as well as the infrastructure that we have going forward. All that being said, you know, we are looking to continue to judiciously use the ATM going forward. And our conjecture, you know, to be candid, over the balance of the year here, we could see ourselves using $50 million or a little north of that. But again, we're being very careful in terms of how we, you know, manage our ATM here going forward.

Speaker Change: The infrastructure that we have going forward all of that being said we are looking to continue to judiciously use the ATM going forward.

Speaker Change: Conjecture to be candid over the balance of the year here, we can see yourself using $50 million a little north of that.

Speaker Change: But again, we're being very careful in terms of how we manage our ATM here going forward.

Jeffrey P. Lucas: What I also want to share with you is that when we sit here with our projections here, including our anticipated use of the ATM here going forward, one thing that we have not reflected in our numbers here is that we are projecting here the excess cash flow from operations on a monthly basis, anywhere from about $6 to $10 million over the next several months. Now, of course, that's dictated in large part in terms of what happens with the price of BTC.

Alex: Alex I wanted to share with you is that when we sit here with our projections here, including our anticipated use of the ATM here going forward.

Alex: One thing that we have not reflected in our numbers here that we are projecting here.

Alex: Excess cash flow from operations on a monthly basis anywhere from about $6 million to $10 million.

Alex: Several months now of course that dictate in large part in terms of what happens with the price of the BTC.

Jeffrey P. Lucas: So while we have that in our pocket, you know, we'll obviously avail ourselves of that, particularly through our synthetic hodler program. But that aside, you know, we have not backed into some of the numbers I just mentioned here with the plans for the ATM. You know, if I can take advantage of this, Lucas, one other comment here in terms of the benefits of the ATM to us here. So when you think about what we're doing here in terms of our growth, you know, for every hash rate that we're adding here, it's costing us between $21 to $23 million all in.

Alex: So while we have that in our pocket will obviously avail ourselves of that particularly through our synthetic scholar program.

Alex: But that aside we also have not factored into some of the numbers I just mentioned here with the parents of the ATM.

Jeffrey P. Lucas: If I can take advantage of this Lucas one other comment here in terms of the benefit to the ATM for us here.

Jeffrey P. Lucas: So when you think about what we're doing here in terms of our growth.

Jeffrey P. Lucas: For every hash rate that we're adding here is costing us between 'twenty, one 'twenty 3 million all in.

Jeffrey P. Lucas: That includes infrastructure, miners, and some of the logistical costs associated with getting those miners up and running at the various locations, you know, in Canada and also South America as well. You look at valuations for mining companies here, and generally, you're seeing in the range of about $45 million for X and a half. So in our minds here, while we are being very careful and very thoughtful with the ATM, we are certainly husbanding our money very carefully here and our funds here. We do indeed see the use of it, you know, certainly validating the accretive nature of what we're doing.

That includes infrastructure minors.

Jeffrey P. Lucas: Just a little cost associated with getting that mine is up and running at the various locations.

Jeffrey P. Lucas: And in Canada, and also South America as well here.

Jeffrey P. Lucas: You look at valuations for mining companies here and generally youre seeing in the range of about $45 million correctly hatch.

Jeffrey P. Lucas: In our mind here, while we are being very careful and very thoughtful with the ATM. We are accurately has been got money very carefully here and our fans here, we do indeed see the use of it certainly validating the accretive nature of what we're doing here.

Jeffrey P. Lucas: Okay.

Jeffrey P. Lucas: Thank you. Thank you very much for those comments. On the power cost side, you're adding capacity and power. And I wondered if you could kind of walk us through the impact as maybe you're making changes a bit. Thank you very much.

Speaker Change: Thank you. Thank you very much for those comments.

Speaker Change: On the on the power cost side.

Speaker Change: Youre, adding capacity of Powerpoint and I wondered if you could kind of walk us through.

Speaker Change:

Speaker Change: Okay.

Speaker Change: The impact is as maybe your mix.

Speaker Change: Thank you very much.

Benjamin Gagnon: Ben, do you want to speak to that? Or do you want to just talk about some of the economics we actually anticipate going forward? Sure, I can speak to that.

Speaker Change: And do you want to speak to that I'd like to just talk about some of the economics that we anticipate going forward sure I can speak to that.

Benjamin Gagnon: to speak to that. Really, at a high level, Lucas, the cost that Jeff just put out there for Q1 was about 4.1 cents. The contracts that we have for additional power that's under construction in Paraguay are for 3.9 cents a kilowatt, which is fixed with no annual inflation adjustment mechanisms in it for the coming years. And when you add VAT on top of that, that comes out to, I think, just approximately about 4.2.

Speaker Change: Really at a high level.

Jeffrey P. Lucas: Lucas the cost of Jeff just put out there for Q1 was about $4 one.

Speaker Change: The contracts that we have four additional power that's under construction in Paraguay is a $3 nine contract, which is fixed with no annual inflation adjustment mechanisms in that for the coming years.

Speaker Change: And when you add on top of that that comes out to I think just approximately about $4. Two so the average cost for our power with with what we had last quarter and just looking at where the all in costs for power is in Paraguay, I mean, it doesn't really meaningfully change the average price for power across our portfolio just.

Benjamin Gagnon: So, the average cost for our power compared to what we had last quarter and just looking at where the all-in cost for power is in Paraguay, it doesn't really meaningfully change the average price for power across our portfolio. It just gives us a much greater amount of power in our portfolio for about the same cost.

Speaker Change: US are much greater.

Speaker Change: The amount of power in our portfolio for about the same cost.

Jeffrey P. Lucas: Got it. Got it. Okay. No, that's, that's very helpful. I appreciate all the color and continue. The best of luck. Thank you.

Speaker Change: Got it got it okay no. That's that's very helpful.

Speaker Change: I appreciate all the color and continued best of luck. Thank you.

Jeffrey P. Lucas: Thank you thank you Lucas.

Jeffrey P. Lucas: Thank you. Thank you, Lucas.

Operator: Your next question is from Joe Flynn with Compass Point.

Speaker Change: Your next question is from Joe Flynn with Compass point.

Unknown Executive: Hello Joe. Hi guys.

Unknown Executive: Hello, Joe Hi, guys.

Unknown Executive: Thanks for the question. I had a question regarding, you guys mentioned potential expansion opportunities in the U.S. Ultimately, if you could provide more color on what that potential deal pipeline looks like, and I'd be kind of curious to get your perspective on, you know, as you're competing for power with in-demand HPC, is, ultimately, do you think Bitcoin mining is moving more internationally?

Unknown Executive: Thanks for the question I had a question regarding you know you guys mentioned potential expansion opportunities in the U S.

Unknown Executive: Ultimately if you could provide more color on what that.

Unknown Executive: Potential deal pipeline looks like and be kind of curious to get your perspective on.

Speaker Change: You are competing for power for <unk>.

Speaker Change: <unk> it's <unk>.

Speaker Change: Do you think you know big reminds us moving more internationally. Thanks.

Benjamin Gagnon: Thanks, Joe. You know, we're looking at multiple deals right now; we have a global view on power and getting cost-effective megawatts at scale in various jurisdictions where the economics are compelling. We think the US has a lot of very good opportunities for 2024 and 2025 expansion, and we're evaluating those right now. I think the good thing and the kind of added benefit to our existing growth plan here is that we've got a lot of room to reach that 21x a hash, getting more miners or getting more hash rate out of those miners and, you know, driving even greater hash rate growth.

Unknown Executive: Thanks, Joe.

Speaker Change: We're looking at multiple deals right now we have a global view on power and getting cost effective megawatts.

Speaker Change: At scale in various jurisdictions, where the economics are compelling we think the U S has a lot of very good opportunities.

Speaker Change: For 2024 and 2025 expansion.

Speaker Change: And we're evaluating those right now I think the good thing in the.

Speaker Change: The kind of.

Speaker Change: Added benefit to our existing growth plan here is that we've got a lot of.

Speaker Change: That's kind of built in extra capacity here with the miners that we've purchased the growth to 21 extra cash.

Speaker Change: Basically it's using a much lower configuration for those miners and theyre capable of pushing through so if we do find additional megawatts.

Speaker Change: Ideally in the United States or somewhere else with compelling economics.

Speaker Change: Be able to grow our house right using the miners we've already have on hand that we already have the.

Speaker Change: The liquidity to pay for it to reach at 20, Onex, a hash getting more mind nurse or getting more hatch rate out of those miners and driving even greater house rate growth. So.

Benjamin Gagnon: So, you know, those are the kind of things that we're looking at right now. Are there good opportunities for us to do this? on maybe some additional megawatts, which would enable us to get even greater utilization out of our miners and our growth plan for this year. As we move forward, obviously, we're communicating those deals to the public, but we do have numerous different deals in our pipeline right now in the United States and elsewhere.

Speaker Change: Those are the kinds of things that we're looking at right now are there good opportunities for us to execute.

Speaker Change: On on maybe some additional megawatts, which would enable us to get even greater utilization out of our miners in our growth plan for this year.

Speaker Change: As we as we move forward, obviously, we're communicating those deals to the public.

Speaker Change: But we do have numerous different deals in our pipeline right now in the United States and otherwise.

Unknown Executive: Great, thanks. And then just on the kind of, you know, Bitcoin treasury management side, going forward, should we expect continued kind of, you know, sales of, you know, the majority of your production? And if you maybe can comment and provide more color on just you guys, option exposure and how that is done, kind of here with Bitcoin, you know, up strongly here today.

Speaker Change: Great. Thanks, and then just on the kind of.

Speaker Change: Bitcoin Treasury management side.

Speaker Change: Going forward should we expect continued.

Speaker Change: Sales of <unk>.

Speaker Change: Majority of your production.

Speaker Change: If you maybe can you comment or provide more color on just you guys are you know option exposure and how that is done.

Gwen: Here with the Gwen.

Speaker Change: <unk> year to date.

Jeffrey P. Lucas: Sure, actually glad to do that here. So, you know, we do anticipate some increases in our huddle may not be overly expensive, in large part because we put in place here what we've talked about in the past called the pathetic huddle, which, in our minds, gives us the best of both worlds. Just for clarification in terms of how we treat this here, what we normally do is, you know, when we access cash flow from operations, we will generally sell those Bitfarms.

Speaker Change: Sure actually glad to do that here so.

Speaker Change: We do anticipate some increases in our hurdle may not be all of the expenses in large part because they put in place here, what we've talked about in the past called synthetic hurdle, which part of our minds gives us the best of both worlds just a clarification in terms of how we treat this year. What we normally do is we have you know when the excess cash flow from operations.

Speaker Change: We will generally sellers bitcoin and.

Jeffrey P. Lucas: And by way of example here, we may take 90% of that Bitcoin proceeds and use it to fund our CapEx going forward, which of course means there's less having to tap into the ATM. The other 10 or 15% of the proceeds on the Bitcoin we use to buy long-dated call-offs. So, in essence, here, while the actual HODL itself will be increasing to a modest degree here, our exposure to the upside of Bitcoin will be that much greater by virtue of the synthetic HODL. And I'll just add a couple of numbers here.

Speaker Change: And by way of example, here, we may take 90% of that bitcoin proceeds.

Speaker Change: And our Capex going forward, which of course means there's less having to tap into the ATM.

Speaker Change: 10, or 15% of the proceeds on the bitcoin, we used to buy long dated call options here.

Speaker Change: So in essence here, while the actual hottle itself will be increasing to a modest degree here our exposure to the upside of bitcoin will be that much greater by virtue of the synthetic cartilage.

Speaker Change: Just add a couple of numbers here, that's actually worked out very well for us while we don't normally share what the actual achievement of our game here that we realized here in aesthetic auto but in the fourth quarter of last year. We asked you had a gain of about $1 $6 million and it was up about 119% return.

Jeffrey P. Lucas: That's actually worked out very well for us. While we don't normally, you know, share what the actual achievements of our gains are that we realize here in our synthetic HODL. But in the fourth quarter of last year, you know, we actually had a gain of about $1.6 million, and it was up about 119%. For the first quarter of this year, we actually had a realized gain of about $3 million, and roughly over 500% return.

Speaker Change: The first quarter of this year, we actually had a unrealized gain about $3 million in roughly over 500% return here. So this has actually worked out very handsomely for it again provided would probably the cheapest source of capital out there versus having to access the capital markets here and also still gives us the preservation of the upside are a bit.

Jeffrey P. Lucas: So this has actually worked out very handsomely for us. It again provides us with probably the cheapest source of capital out there versus having access to the capital markets here and also still gives us the preservation of the upside and a big. Does that fully answer your question, Joe? Ah, it does.

Speaker Change: Corn here.

Speaker Change: Does that answer your question clearly there Joe.

Unknown Executive: It does. I appreciate all the color. That's all for me. Your next question for today is from Josh Siegler with Cancer Fitzgerald. Yeah. Hi, guys. Good morning. Thank you for taking my question.

Unknown Executive: It does yes I appreciate all the color that's all for me.

Speaker Change: Your next question for today is from Josh Sigler with Cantor Fitzgerald.

Joshua Michael Siegler: Your next question for today is from Josh Siegler with Cancer Fitzgerald. Yeah. Hi guys. Good morning.

Joshua: Yeah, Hi, guys. Good morning, taking my question Joshua.

Joshua Michael Siegler: Follow up on Joe's question was just you know now that we're post having seen any difference in terms of deal terms, becoming more attractive.

Joshua Michael Siegler: No from peers that might be more with just kind of curious the types of the opening or does that change at all over the last month or so.

Joshua Michael Siegler: Yeah, thanks for the question. I think, for the most part, we haven't seen the full impact from having just yet, you know, having just happened not even a full month ago, as of today. And it still takes miners usually a few weeks or a few months in order for those lags between kind of a changing market condition and really feeling any sort of need to make any sort of changes in their operation or in their structure.

Speaker Change: Yes. Thanks for the question I think for the most part we haven't seen the full impact from having just yet you know having just happened not even a full month ago.

Speaker Change: As of today and it still takes miners usually a few weeks or a few months in order for those lags between.

Speaker Change: Kind of a changing market condition and really feeling.

Any sort of a need to.

Speaker Change: Make any sort of changes in their operation or in their structure. So I don't think the deals have changed at all.

Joshua Michael Siegler: So I don't think the deals have changed at all over the last couple of months; more or less, it's still the same. You know, a hash price of five cents is the level that we anticipated where there would start to be some level of response from the market, whether that be slower growth or underclocking of machines or deracking older miners. We did expect those kinds of pressures to start happening at the five cent level.

Speaker Change: Over the last couple of months.

Speaker Change: More or less it's still the same.

Cash price of five.

Speaker Change: He is the level that we anticipated where there would start to be some.

Speaker Change: Some level of response from the market.

Speaker Change: Whether that be slower growth or under a clock in of machines or GE racking older miners. We did expect those kind of pressures to start happening at the 5% level. So without house price basically there right now I don't think there's a whole lot of us.

Joshua Michael Siegler: So with that hash price basically there right now, I don't think there's a whole lot of change happening in internal operations. But certainly, as the hash price kind of stabilizes, and we find out where we're heading here, that will be that will be a big driver. If it goes down, or if it goes up, there'll be some definite changes to the potential opportunities out there. Yeah, got it. That makes sense.

Speaker Change: Of change here happening at internal operations, but.

Speaker Change: Certainly as <unk> kind of stabilizes and we find out where we're heading here.

Speaker Change: That will be that will be a big driver if it if it goes down or if it goes up there'll be there'll be some changes.

Speaker Change: Changes to the.

Speaker Change: Potential opportunities out there.

Joshua Michael Siegler: And for my follow-up question, I was wondering if you could elaborate a little bit more just on the cost of infrastructure build out in Pirate Way versus your other. Sure, Jeff, do you want to handle that one? Sure, let me.

Speaker Change: Yeah got it that makes sense.

Speaker Change: For my follow up I was wondering if you could elaborate a little bit more on the cost of infrastructure build out in Paraguay, but.

Speaker Change: Right.

Speaker Change: Yeah.

Speaker Change: So Jeff you want to handle that one.

Benjamin Gagnon: Sure, let me start off and then you can add a little more color, Ben, as you see fit here. So actually, our cost, you know, our cost in the pegway is generally a little more attractive, actually, we're finding than it is in other parts of the world. And, you know, we target here to do under $350,000 per megawatt to build out here. And the rates that we are incurring, or the cost that we're actually incurring in Paraguay are less than that, actually more around $300,000 per megawatt. So to us, that's pretty good. I was looking for opportunities for improvement here, but I see the flaws within our guidelines and the ROI in our payback.

Jeff: Sure. Let me start off and then you can add a little more color Ben as you see fit here.

Jeff: So actually our costs.

Jeff: Our cost in the Paraguay is generally a little more attractive actually refining than it is in other parts of the world here.

We target here to do under $350000 per megawatt to build out here and the rates actually that we are incurring are the costs that were actually incurring in Paraguay, our lesson that asking more around the $300000 per megawatt range here.

Jeff: So to us that's pretty good always looking for opportunities for improvement here.

Jeff: But that said they pause within our guidelines and our ROI and a payback projections here.

Jeffrey P. Lucas: Maybe just add one quick comment there. You know, all the developments there in Paraguay are greenfield developments. Now, these are brand new sites that we're developing from the ground up, including the substation, all the interconnections, the actual facilities themselves, and, of course, building out the mining infrastructure and the support systems in order to make all of this work, you know, and we're doing this on a rather accelerated timeframe. For example, the passive pay site is going to be done in well under a year.

Speaker Change: Maybe just to add.

Speaker Change: One quick comment there.

Speaker Change: All the developments, there and Paraguay are greenfield developments.

Speaker Change: This is brand new sites that we're developing from the ground up including the substation all the interconnections the actual facilities themselves and of course building out the <unk>.

Speaker Change: The mining infrastructure and the support systems in order to make all this work and we're doing this in a rather accelerated timeframe.

Jeffrey P. Lucas: And same thing with the Ecozoo site from start to finish. So we've got very aggressive construction schedules and a very talented labor force that we're drawing from there, which helps to make sure that the deployments are very fast, and we get the most out of, you know, an unexpected bull run later in 2024. And it also helps to drive down the cost when things just don't take the same. And by the way, if I can just add one additional comment here, because this is

Speaker Change: The paths of pace are you just going to be done in well under a year and same thing with the equalizer slide from start to finish. So we've got very aggressive construction schedules and a very talented labor force that we're drawing from there which helps to make sure that the deployments are very fast and we get the most out of it.

Speaker Change: Unexpected Bull run later in 2024.

Speaker Change: And it also helps to drive down the costs when things just don't take this long.

Jeffrey P. Lucas: And by the way, if I can just add one additional comment here, because this is actually disclosed in our financial statement, we should talk about as a subsequent event the additional 100 megawatts that we're getting in Ulazu and Paraguay, and that's for 2025, just to be very clear. And our estimate of the actual infrastructure cost to build that out is roughly $23 to $25 million. The point to be garnered from that is the fact that while we are looking at costs of roughly $300,000 to a little north of $300,000 per megawatt per pegway here, the marginal cost of additional build-out at those existing locations is actually lower. In this case, you know, for next year, for the additional $100,000, we're talking, we think, around $230,000 to $250,000.

Speaker Change: Okay.

Speaker Change: And by the way if I can just add one additional comment here because this is actually disclosed in our financial statements.

Speaker Change: Can talk about as a subsequent event the 100 and the additional 100 megawatts ever getting in and you guys do in Paraguay and that's for 2025 just to be very clear here.

Speaker Change: Our estimate of the actual infrastructure cost to build it out it's roughly $23 million to $25 million.

The point to be garnered from that and the fact that what we are looking at cost of roughly 300, a little north of 300000 per megawatt for Paraguay here, the marginal cost of additional build out.

Speaker Change: Listing locations here is actually lower and in this case you know for next year for an additional 100, we're talking we think around 230 to $250000 per megawatt.

Speaker Change: Okay, great. Thanks appreciate the color.

Speaker Change: Yeah.

Speaker Change: Uh huh.

Unknown Executive: Your next question for today is from Mike Grondahl with Northland Securities.

Your next question for today is from Mike Grondahl with Northland Securities.

Unknown Executive: Hey guys, thanks. Um, could you talk a little bit about Argentina and how high that is on your list for any kind of future expansion?

Unknown Executive: Hey, guys. Thanks could you talk a little bit about Argentina, and how high that is on your list for kind of future expansion.

Jeffrey P. Lucas: So, first of all, Argentina is very attractive for us. I think we pointed out here that we've actually, during the lower energy cost summer months in Argentina, entered into a six-month contract at 2.1 cents per kilowatt hour. Now, that is going to be higher for the five months that follow the winter months, which are coming up shortly, and we're anticipating higher energy costs in Argentina for the next five months or so.

Ashwin: While we are Ashwin I'll start off and then months ago agile follow up okay.

Speaker Change: So first of all Argentina is very attractive for US and then we pointed out here, though we've actually during the lower energy cost summer months of Argentina.

Speaker Change: It into a six month contract at 2.1 cents per kilowatt hour now that is going to be higher for the five months that followed the winter months, which are coming up shortly and we are anticipating higher energy costs in Argentina, you know for the next five months or so here.

Jeffrey P. Lucas: So, we've mentioned in the past, and we're holding to it, that the average year-round cost of energy in Argentina is roughly 3 to 3.5 cents here. We've got about 54 megawatts here now. We have the opportunity, as you may recall, to go up to 210 megawatts here.

Speaker Change: We've mentioned in the past and we're holding to it that the average year around cost of energy in Argentina is roughly three to three and a half turns here. We've got about 54 megawatts and now we have the opportunity as you may recall to go up to 210 megawatts here.

Jeffrey P. Lucas: We're actually, we're looking at it carefully. We're pleased to see things sort of settling themselves out economically and politically. What's going on in Argentina. But we were sort of on hold for a while, while those things did indeed settle out, because really, vis-a-vis some of the other opportunities that we had available to us, including Paraguay, they were just more attractive when you do sort of a risk-adjusted rate of return, which is how we look at our projects overall. So, while we are optimistic, and we see further upside with Argentina, we are moving there cautiously Right now, I'm really focused on other opportunities, particularly in Paraguay, and you want to add to that.

We've actually we're looking at that carefully we're pleased to see things sort of settling themselves out economically and politically what's going on in Argentina, but we were sort of on hold for a while while both and it didn't did settle out because really vis vis some of the other opportunities that we had available to us including Paraguay. They were just more attractive when you do sort of a risk adjusted rate of return which is.

Speaker Change: How do we look at our projects are overall, so while we are optimistic and we see further upside with Argentina. We are moving they're cautiously right now is to really focus on other opportunities, particularly in Paraguay, Dan do you want to add to that.

Benjamin Gagnon: No, I think you handled it well, Jeff. I think that's exactly the point. We're just going to take advantage of our best opportunities right now with Paraguay. And, you know, we've got plenty of optionality there with Argentina as the conditions settle and we have a better outlook on the future or a more clear outlook on the future. Got it. That's helpful.

Dan: No I think you handled it well Jeff.

Speaker Change: I think that's exactly the point, we're just going to take advantage of our best opportunities right now with Paraguay, and we've got plenty of Optionality, there with Argentina as the conditions settle in and we have a better outlook on the future or a more clear outlook on the future.

Unknown Executive: Got it. That's helpful. Um, and secondly, can you guys kind of talk about what you're looking for in a new CEO and what gives you the confidence that you think you can have an announcement in, I think somebody said, Nicolas, maybe a few weeks?

Speaker Change: Got it that's helpful and secondly.

Speaker Change: Can you guys kind of talk to a little bit what you're looking for in a new CEO and what gives you. The confidence that you think you can have an announcement and I think somebody said Nicholas maybe a few weeks.

Operator: Lucas, do you want to try that, or would you like us to step in for you? I know you're far away.

Speaker Change: They go through what drove that or do you like us to step in for you I know you're far away.

Jeffrey P. Lucas: Let me step in because we may have connection issues here with Nico. So, you know, Jeff was very helpful to us in taking our company to the next level as it matured. We were a very entrepreneurial, very creative company initially. He helped put in place the sort of organizational and professional infrastructure that really allows us to be a scalable organization on a global basis. When Jeff first came on board, we were in one country, Canada.

Speaker Change: Let me step in because we may have connection issues here with Nico here.

Speaker Change: So you know what Jeff was very helpful for us and taking our company into the next level as a matured we were very entrepreneurial very creative company. Initially he helped put in place these sort of organ organizational and professional infrastructure. There really allows us to be a scalable organization on a global basis.

Speaker Change: Jeff first came on board, we were in one country, Canada, We're now pork and most importantly, we are positioned to look at opportunities up and down the northern and southern hemisphere. So we're very well positioned now that we are well positioned and we have a scalable organization in fact here management and the board are very focused now on where the growth opportunity.

Jeffrey P. Lucas: We are now in four, and most importantly, we are positioned to look at opportunities up and down the north and southern hemispheres, so we're very well-positioned. Now that we are well-positioned and we have that scalable organization effect here, management and the board are very focused now on where the growth opportunities are going forward. How do we capitalize on this administrative and organizational infrastructure we have in place here? That's how we really take advantage of it.

Speaker Change: Is that going forward.

Do we capitalize on this administrative and organizational infrastructure, we have in place here and that's how we really take advantage of it and there's a wealth of opportunities within mining into degree outside of money that we really know wanted to begin pursuing more aggressively here.

Jeffrey P. Lucas: And there's a wealth of opportunities within mining and, to a degree, outside of mining that we really now want to begin pursuing more aggressively. We've got a great team with Ben and others that really play a role in identifying terrific opportunities here for us to really improve our shareholder value. And we are now seeking a CEO who can really step in and help drive that process.

Speaker Change: We've got a great team.

Speaker Change: Then and others that really play a role in identifying terrific opportunities here for us to really improve our shareholder value here and we are now seeking a CEO, who can really step in and help drive that process going forward.

Unknown Executive: Got it. Got it. And then there's one last one, Jeff.

Got it got it and then.

Jeff: One last one Jeff.

Unknown Executive: Have you guys provided any updated thoughts about how Bitfarm kind of views the HPC AI opportunity? I would just be interested to hear any updated thoughts there.

Jeff: Have you guys provided any updated thoughts about how big farm kind of views the H P C AI opportunity.

Speaker Change: Just be interested to hear any updated thoughts there.

Benjamin Gagnon: Well, outside of economics, I'm going to pass that one over to Ben.

Speaker Change: Well outside the economics, I'm going to pass that one over to Ben.

Benjamin Gagnon: Sure, I'm happy to address that. Obviously, we've taken a look at the HPC and the AI opportunities, you know, but when you look at our business and where our core competencies are, you know, really, it's in building and operating the world's best Bitcoin mining infrastructure. And when you look at what Bitcoin mining infrastructure is versus HPC and AI infrastructure, there really are not a whole lot of similarities, other than the fact that they both have large demands for power.

Ben: Sure I'm happy to address that obviously, we've taken a look at the HBC and the AI opportunities, but when you look at our business and where our core competencies are really you can building and operating the worlds best Bitcoin mining infrastructure and when you.

Ben: Look at what bitcoin mining infrastructure is versus HBC and AI infrastructure. There really are not a whole lot of similarities other than the fact that they both have large demands for power.

Ben: For us we have very very competitive cost when we're building out our bitcoin mining infrastructure and a few hundreds of thousands of dollars per megawatt for us to do HBC, our AI infrastructure really it's it's measured in the millions of dollars per megawatt and those numbers.

Benjamin Gagnon: You know, for us, we have very, very competitive costs when we're building out our Bitcoin mining infrastructure at the 200s of 1000s of dollars per megawatt. For us to do HPC or AI infrastructure, it's really measured in the millions of dollars per megawatt. And those numbers vary quite widely depending on the quality and the location and everything in the data center, but you're seeing numbers anywhere, honestly, from about four to $12 million a megawatt for the infrastructure side.

Ben: Vary quite widely depending on the quality of the location and everything in the data center, but you are seeing numbers anywhere.

Ben: Honestly from about $4 million to $12 million a megawatt for the infrastructure side.

Benjamin Gagnon: The higher amounts of CapEx are also similar on the computation equipment itself. So when you're looking at the relative cost of the GPUs per megawatt and other supporting equipment relative to, let's say, Bitcoin mining equipment per megawatt, the costs have a very similar kind of overweight component here where, you know, we're talking about tens of millions of dollars per megawatt, as opposed to a few million. So the costs are very different, and the businesses are very different.

Ben: The higher amounts of Capex is also similar on the computation equipment itself. So when you're looking at the relative cost of the Gpus per megawatt and other supporting.

Ben: Equipment relative to let's say bitcoin mining equipment per megawatt the costs or have a very similar kind of.

Ben: Overweight component here, where you know you're.

Speaker Change: We're talking about tens of millions of dollars per megawatt as opposed to a few million dollars. So the costs are very different the businesses are very different and I think that.

Benjamin Gagnon: And, you know, I think that for investors who are looking for HPC and AI exposure, it's probably, from the investor's perspective, better for them to manage that in their portfolio directly. You know, if they want high-quality Bitcoin mining infrastructure exposure, that's what we provide through our Bitfarm shares. And then, if they want to have that HPC AI, it's probably better to put that through a separate vehicle and just control that allocation in their portfolio directly. I think that's more what investors and the market are searching for. So, kind of a high-level response on

Speaker Change: For for investors, who are looking for HTC and AI exposure I think it's probably.

Speaker Change: Better from the investor's perspective for them to manage that in their portfolio directly.

Speaker Change: If they want high quality bitcoin mining infrastructure exposure, that's what we provide through our best farm shares even if they want to have that HBC AI, it's probably better to put that through a separate vehicle and just control that allocation in their portfolio directly I think that's more what.

The investors in the market is just searching for so.

Speaker Change: Kind of a high level response on that sure.

Jeffrey P. Lucas: Ben answered that pretty aptly, Mike. But let me just add a couple more points here.

Mike: Sure no that answered that pretty athlete, Mike limited to add a couple more points here, we take great pride in being the best operators in the business and we're convinced that we could operate the high performance computing center very very effectively.

Mike: First of all to be very directly and very straightforward you know.

Mike: Our cost of capital, while we manage it very carefully and it's attractive if not the track with some of the larger players out there and for us to have to make the investments to be effective and high performance computing here has been pointed out here.

Jeffrey P. Lucas: You know, we take great pride in being the best operators in business, and we're convinced that we could operate a high-performance computing center very, very effectively. But, first of all, to be very direct and very straightforward, our cost of capital, while we manage it very carefully and it's attractive, it's not as attractive as some of the larger players out there. And for us to have to make the investment to be effective in high-performance computing here, as Ben pointed out here, doesn't really make the best sense for our shareholders versus doing what we actually do very well here in terms of very efficiently running mining operations here.

Mike: It doesn't really make the best sense for our shareholders versus doing what we actually do very well here in terms of very efficiently running mining operations here.

Jeffrey P. Lucas: The third point I'd like to point out to you here is that, you know, as we explore the lowest cost structure we can get out there, we always look at power opportunities, which are of a different nature than high-performance computing. We are in a position where we can take advantage of lower-cost power, recognizing that there can be some curtailment or interruptibility to it. High-performance computing cannot afford that. So for us, and for what we do very well here, it just makes a lot more sense, really, on many accounts, for us to really focus more on mining and not to, at this juncture, really get sidetracked by high-performance computing. Fair.

Mike: The third point I'd make I'd point out to you here is that as we explore the lowest cost structure. We can get out there. We always look at power opportunities, which are of different nature and high performance computing.

Mike: We are in a position, where we can take advantage of lower cost power recognizing that there can be some curtailment or interrupt ability to it high performance computing cannot afford that so for us and who we do very well here. It just makes a lot more things really many counts properly focuses more on mining and not to at this juncture it really get sidetracked.

Mike: The high performance computing.

Unknown Executive: Bear, hey, good to hear your perspective and good luck the rest of 24.

Speaker Change #100: Okay. Good to hear your perspective, and good luck the rest of the 24.

Mike: Thanks, Mike.

Operator: Your next question for today is from Martin Toner with ATB Capital Markets.

Speaker Change #101: Your next question for today is from Martin encounter with ATB capital markets.

Martin Toner: Good morning. Thank you for taking my question. I think investors would benefit from a little more detail on the timing of CapEx through the end of 2024. Can you kind of give us a little talk through that a little bit for us, and maybe include how much of the, you know, difference in exahash from now till 21 at the end of 2024 has already been paid?

Speaker Change #102: Good morning, and thank you for taking my question, let's see investors would benefit.

For them, a little more detail on timing of Capex.

Speaker Change #103: Through end of 2024, and you kind of give us a little talk to that a little bit for us and maybe include how much of the.

Speaker Change #104: Difference in ex us from from now till 'twenty one at the end of 2024 has already been paid for.

Speaker Change #105: Sure glad to talk to that so first of all importantly, as he pointed out during the year.

Jeffrey P. Lucas: Sure. I'm glad to talk to you.

Jeffrey P. Lucas: So first of all, importantly, as you pointed out during the earlier part of the call here, we have covered the cost, the remaining cost that we have for the miners to get into the 21x cash going forward. We do have additional spending, of course, that we have to do for the infrastructure here, and that actually spoke to the first question that Lucas asked at the beginning of the call here. So to put your person in very concrete number theory, take a look at our financial statements. We have a session called Commitment.

Speaker Change #105: The other part of the earlier part of the call here.

Speaker Change #106: We have covered actually the cost the remaining cost that we have for the miners to get into 'twenty, one that cash going forward we.

We do have additional spending of course that will you have to do for the infrastructure here and that actually spoke to the first question. So look at that in the beginning of the call here.

Speaker Change #107: So to put your person there and very concrete numbers here. If you take a look at our financial statements. We have a section called commitment.

Jeffrey P. Lucas: And on that is a specific section saying what's left to pay for these monies. And it indicates $156 million, of which roughly $40 million is in the second quarter, $85 million is in the third quarter, and roughly about $30 million is in the fourth quarter. The good news here is that of the $40 million that we actually have in the second quarter, almost all of that has already been paid. So we're in pretty good shape here. Where we do see probably the lion's share of our payments going forward, as evidenced by that commitment schedule here, is really going to be in the third quarter, when we are anticipating to point out roughly that $86 million going forward.

Speaker Change #106: On that basis.

Speaker Change #108: Specific section thing what's left to pay for these miners.

Speaker Change #108: And it indicates $156 million.

Speaker Change #109: Of which roughly $40 million in the second quarter $85 million in the third quarter and roughly about $30 million in the fourth quarter.

Speaker Change #110: The good news here is it about $40 million that we actually have in the second quarter almost all of that has already been paid yet.

Speaker Change #110: We're in pretty good shape here, where we do see probably the lion's share of our payments going forward as evidenced by that commitment schedule here is really going to be in the third quarter. When we are anticipating the pointed out roughly that $86 million of going forward and then also the infrastructure costs.

Jeffrey P. Lucas: And then also the infrastructure costs, particularly what's going on in Wazoo, are really going to be felt in that quarter. So we've actually got, you know, we're anticipating roughly $50 million in build out remaining for the infrastructure. And I think most of that's actually going to be happening probably in the third quarter.

Speaker Change #110: I think with what's going on in what I'll do is really going to be felt in that quarter. So we've actually got you know, we're anticipating roughly $50 million build out remaining for the infrastructure.

Speaker Change #110: And I think most of that is actually going to be happening probably in the third quarter Martin.

Martin Toner: That's fantastic. Philosophically, and I know it depends on the nature of the infrastructure, but from start to finish, where are the costs incurred? And over what time period? Can you kind of give people just a bit of a rule of thumb for the types of mines that you need?

Speaker Change #111: That's fantastic.

Speaker Change #112: Philosophically and I know it depends on the nature of the infrastructure, but from start to finish where are the costs incurred and over what time period, you really give people just like a bit of a rule of thumb for the types of mine you are building.

Martin Toner: I'm sorry, I'm not fully understanding your question. Yeah, just like from start to finish, ours takes, let's say, start to finish takes a year and a half with, you know, a quarter of the CapEx spent in the first half and then, you know, what percentage is spent in the end. Just wondering if there's a simple rule of thumb that you guys think about that investors can use to think about what kind of, like what kind of CapEx you guys are likely to put out just going forward. [inaudible]

Speaker Change #113: I'm, sorry, I'm afraid I'm not fully understanding your question is that just like from start to finish or like it takes let's say start to finish it takes a year and a half with you know.

Speaker Change #114: A quarter.

A quarter of the Capex spend in the first half and then.

Speaker Change #115: You know what percentage of spend in here just wondering if if there is a simple rule of thumb that you guys think about that the investors can use to think about what kind of expect like what kind of capex are you.

Speaker Change #116: You guys are likely to put out just going forward.

Speaker Change #116: Sure.

Speaker Change #116: The lion's share of that go ahead, Ben and we take a sleek yeah I think I can just try and give some high level figures here just to help you with your modeling estimates.

Benjamin Gagnon: Yeah, I think I can just try and give you some high-level figures here to help you kind of with your modeling estimates. You know, as a rule of thumb, you should look at the miners as costing approximately 80% to 90% of the total CapEx billed for a new mine. This is assuming, of course, you're buying newer miners with higher efficiency and you're not trying to look for a, you know, a used miner deal at significantly lower prices. So, ballpark about 80% to 90% for the miners. You know, an easy way to model that would be splitting that into maybe like a 50-50 component.

Speaker Change #117: As a as a rule of thumb you should look at the miners as costing approximately 80% to 90% of the total capex build for a new mine. This is assuming that of course, you're buying newer miners with with higher efficiency and you're not trying to look for are you know.

Speaker Change #117: I used minor deal at significantly lower prices, so ballpark about 80% to 90% for the miners.

Speaker Change #117: I.

Speaker Change #117: Easy way to model that would be splitting that into maybe like a 50 50 component different miners and different manufacturers that have a different cost structure and payment schedule, but one thing is consistent with all of the minor purchase agreements is that there is usually a cost to secure the purchase in the form of a nonrefundable deposit and then there was a call.

Benjamin Gagnon: Different miners and different manufacturers have a different cost structure and payment schedule, but one thing that is consistent with all of the miner purchase agreements is that there is usually a cost to secure the purchase in the form of a nonrefundable deposit. And then there's a cost to pay out, like a settlement balance payment prior to pick-up. So, you know, those costs will need to be incurred in advance. And then when you look at the infrastructure that makes up that 10% to 20% remaining, you know, I would look at that as almost like a 50-50 as well, just as a rule of thumb.

Speaker Change #117: Loss to.

To pay out.

Speaker Change #117: The settlement balanced payment.

Speaker Change #117: Prior to tick up so those costs will need to be incurred in advance and then when you look at the infrastructure that makes up that 10% to 20% remaining.

Speaker Change #117: I would look at that as almost like a 50 50 as well as just rule.

Speaker Change #117: Rule of thumb, you can look at about 50% of the cost would be associated with the substation and longer lead time items, and then about 50% of that cost is going to be associated with labor and.

Benjamin Gagnon: You know, about 50% of the cost would be associated with the substation and longer lead-time items. And then about 50% of that cost is going to be associated with labor and, you know, other component pieces that are not long lead-time items, you know, throughout the course of the bill. And in that way, you can kind of use those percentages as a rough rule of thumb for looking at how CapEx spreads over time. However, each project and each purchase is going to have its own unique variables. So it's kind of a hard question to answer specifically.

Speaker Change #117: Other component pieces that are not long lead time items throughout the course of the build.

Speaker Change #117: And in that way you can kind of use those percentage is as a rough rule of thumb for looking at how capex spreads over time, but.

Speaker Change #118: Each project and each purchase is going to have its own unique variables. So it's kind of a hard question to answer specifically.

Martin Toner: Same characterization. That's very good. That's a great color. Thank you very much.

Speaker Change #119: Yes, thank you characterized it well.

Speaker Change #120: That's very good that's great color. Thank you very much.

Martin Toner: What type of balance sheet levels would you, is Bitfarm comfortable maintaining?

Speaker Change #121: What type of balance sheet levels would you.

Speaker Change #122: Is that farm comfortable maintaining.

Martin Toner: Founders Sheet Levels of work.

Speaker Change #122: Balance sheet levels of Hey, it's.

Jeffrey P. Lucas: Just the amount of liquidity on the balance sheet, as you guys are outlaying some of this CapEx. You know, the more bullish, I'm assuming the more bullish you are on the company, the more undervalued you think the company is, the more you'd be willing to reduce levels of liquidity and utilize ATM less. I'm just wondering what type of, are there certain levels of liquidity? you know, that you want to maintain.

Speaker Change #123: Just a matter of liquidity on the balance sheet.

Speaker Change #124: As you guys are outweighing some of this capex cycle.

Speaker Change #124: The.

Speaker Change #124: The more bullish I'm, assuming the the more bullish you are on the company. The more undervalued you think the company is the more you'd be willing to.

Speaker Change #124: Reduced levels of liquidity and utilized ATM Wes I'm, just wondering what type of others other certain levels of liquidity.

Speaker Change #124: You know that you want to maintain.

Jeffrey P. Lucas: So it's actually volatile. And the reason it's volatile here is largely because as we are pursuing further opportunities, including in the United States here, we want to make sure that we have the liquidity and the funds on hand to really take advantage of those opportunities as the opportunity arises. So that results in us leaving a little more cash in the balance sheet than we otherwise normally would here. But I think for us to have a base level of liquidity of, I'd say, roughly 30 to 50 million dollars, which we're pretty much comfortable with. 30 or 50 million dollars, by the way, just to be clear.

Speaker Change #125: Sure. So it's actually a variable and the reason is variable here is largely because as we are pursuing further opportunities including in the United States. Here. You know we wanted to make sure that we have the liquidity and the funds on hand to really take advantage of those as the opportunity arises here so that results in us, leaving a little more cash in the balance sheet than we otherwise normally would here.

Speaker Change #126: But I think for us to have that base level liquidity about say roughly 30 to 50 million that would pretty much comfortable with $30 million to $50 million by the way just to be clear.

Jeffrey P. Lucas: But, you know, as we look at the larger picture here, we do also think about, of course, we have our Bitcoin huddle there. Not that we really want to use that here for purposes of, obviously, liquidity, but it's there. And that gives us a little more of a cushion to be a little more cautious and conscientious, I should say, in terms of how we are deploying our capital and making sure that we maximize the return on our assets, including our liquidity assets.

Speaker Change #127: But as we look at the larger picture here. We do also think about of course, we have a bitcoin huddle there not that we really want to use that here for purposes of obviously liquidity, but it's there and that gives us a little more of a cushion to be a little more Austrian conscientious I should say in terms of how we are deploying our capital and making sure that we maximum.

Speaker Change #127: What is the return of our assets, including our liquidity assets.

Speaker Change #127: Okay.

Martin Toner: That's great. Thanks, Jeff.

That's great. Thanks, Jeff.

Speaker Change #128: Last question for me it sounds like the synthetic caught all of US is working.

Speaker Change #129: Interest in an ability to increase the size of it.

Speaker Change #129: Yes.

Jeffrey P. Lucas: Well, what dictates the size of it is really two things. One is our very rigorous governance approach we have around what goes on. We have a risk committee comprised of the top five managers who are very careful, including Ben, by the way, who are very careful in terms of how we view our next steps here. Secondly, any strategy that we do regarding any derivative activity, we have to present to the board for their approval to make sure that they are comfortable with it as well. So, we have some pretty good controls in place here.

Speaker Change #130: But what what dictates the size of its really two things one is a very rigorous governance, we have around what goes on we have a risk committee comprised of the top five managers, who are very carefully including banned by the way. We're very careful in terms of what we view our next steps here.

Speaker Change #130: Secondly, any strategy that we do regarding any derivative activity, we have to present to the board for their approval to make sure that they're comfortable with it as well. So we have some pretty good controls in place here that is indeed, a guardrail over how extensive would get involved in any hurdle.

Jeffrey P. Lucas: That is indeed a guardrail over how extensively we get involved in the company huddle. But most importantly, from your question, Martin, what drives how much we do with our synthetic huddle here really is based on what our capex and cash needs are going forward, because we really want to use our cash flow from operations to fund our CapEx. It is dramatically cheaper from a cost of capital standpoint than going to the street.

Speaker Change #131: But most importantly from your question Martin what drives how much we do with our synthetic huddle here really is based on what our capex and cash need going forward here.

Martin: Because we really want to use our cash flow from operations to fund our capex. It is dramatically cheaper from a cost of capital standpoint of course been going to the street.

Jeffrey P. Lucas: So I can't give you a direct answer there, but I can give you a sense of those two things that sort of govern how we really look at our synthetic huddle. We anticipate, by the way, increasing the synthetic huddle going forward here because we anticipate increasing our cash flow from operations here, and as we're working to address our extensive cap needs that we've identified for this year here, we're going to be in a better position to really take advantage of both the synthetic huddle and our traditional huddles.

Martin: I can't give you a direct answer there, but I can't give you a sense of those two things are sort of govern how we will look at assets that are caught up we anticipate by the way in creating a synthetic color going forward here.

Martin: We anticipate increasing our cash flow from operations here and as we're working to address our extensive cap need that we've identified for this year here, we're gonna be in a better position to really take advantage of both the synthetic hurdle in our traditional huddle as well.

Okay.

Martin Toner: That's great. Thanks for all the candor. That's all for me.

Speaker Change #133: That's great. Thanks for all the candor that's all for me.

Martin: Well.

Operator: We have reached the end of the question and answer session, and I will now turn the call over to management for closing remarks.

Speaker Change #134: We have reached the end of the question and answer session and I will now turn the call over to management for closing remarks.

Jeffrey P. Lucas: We want to thank all of you for joining us on the call today. It's been an interesting, in one way, and a very exciting time for the company going forward. I think we're very excited. We appreciate and value greatly, you know, Nico, and your stepping in here at an important time for your guidance, your experience, the history you have both in mining and with the company here has been crucial in guiding us going forward here.

Speaker Change #135: We want to thank all of you for joining us on the call today.

Speaker Change #136: It's been an interesting one way and a very exciting time for the company going forward here.

Speaker Change #137: We're excited we appreciate and value greatly.

Speaker Change #138: Nico and you're stepping in here at an important time, but your guidance your experience.

Speaker Change #138: Have both in mining and where the company here has been crucial in guiding us going forward here and we encourage everybody. They touch we are really doing an extraordinary growth mode for us as you know here just to repeat some of the key comments here, but at 223% increase in our excess cash for the year extraordinary not only for us but for the industry overall.

Jeffrey P. Lucas: And we encourage everybody to stay in touch. We are really in an extraordinary growth mode for us, as you know, here, just to repeat some of the key comments here, but a 223% increase in our ExaHash for the year, extraordinary, not only for us, but for the industry overall, and a dramatic 45% improvement almost in our efficiency. So we are very excited about what's ahead of us and really keeping an eye on the long ball. Thank you all for joining us.

Speaker Change #138: And a dramatic 45% improvement in our efficiency here. So we are very excited about what's ahead of us and really keeping an eye on long ball here.

Speaker Change #138: Thank you all for joining us.

Speaker Change #138: Thank you.

Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Speaker Change #139: This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.