Q1 2024 TeraWulf Inc Earnings Call

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Operator: Greetings and welcome to TeraWolf's 2024 First Quarter Earnings Call. At this time, all participants are in a listen-only mode.

Greetings and welcome to charitable 'twenty 'twenty four first quarter earnings call. At this time all participants are in a listen only mode. A brief 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.

Operator: A brief 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Jason Assad, Director of Corporate Communications. Thank you, operator. Good afternoon.

As a reminder, this conference is being recorded it is not my pleasure to introduce your host Mr. Jason Assad director of corporate Communications. Thank you Mr asset do you may begin.

Jason Assad: Welcome to Terrell's first quarter earnings call. With me today are Chairman and Chief Executive Officer Paul Prager, Chief Operating Officer Nazar Khan, and our Chief Financial Officer Patrick Fleury. Before we get started, I'd like to remind everyone that our prepared remarks may contain forward-looking statements that are subject to risk and uncertainties, and we may make additional forward-looking statements during the question-and-answer session. These forward-looking statements are subject to risk and uncertainties, and actual results may differ materially.

Jason Assad: Thank you operator, good afternoon, and welcome mature wells first quarter earnings call with me today are chairman and Chief Executive Officer, Paul Brager, Chief operating officer, and as our PON and our Chief Financial Officer, Patrick Blurry.

Get started like to remind everyone that our prepared remarks may contain forward looking statements, which are subject to risks and uncertainties and we may make additional forward looking statements. During the question and answer session. These forward looking statements are subject to risks and uncertainties and actual results may differ materially when used in this call. The words anticipate could enable estimate intend expect.

Jason Assad: When using this call, the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project, and similar expressions as they relate to Terrewolf are such forward-looking statements. Investors are cautioned that forward-looking statements involve risk and uncertainties which may cause actual results to differ materially from those anticipated by Terrewolf at this time. In addition, other risks are more fully described in Terrewolf's public filings with the U.S. Securities and Exchange Commission, which may be viewed at sec.gov and in the Investors section of our corporate website at www.terrewolf.com.

Jason Assad: Believe potential will should project and similar expressions as they relate to terrible such forward looking statements investors are cautioned that forward looking statements involve risks and uncertainties, which may cause actual results to differ materially from those anticipated much are well at this time. In addition to other risks are more fully described in <unk> public bonds with U S Securities Exchange.

Jason Assad: The Michigan, which made me if you'd asked me a few dot Gov and in the investors section of our corporate website at <unk> Dot Com. Finally, please note that on todays call well refer to certain non-GAAP financial measures. Please refer to our company's periodic reports on Form 10-K, and 10-Q and on our website for a full reconciliation of these non-GAAP performance measures the most comparable GAAP measure.

Jason Assad: Finally, please note that on today's call, we'll refer to certain non-GAAP financial measures. Please refer to our company's periodic reports on Form 10-K and 10-Q and on our website for a full reconciliation of these non-GAAP performance measures to the most comparable GAAP financial measures. I'd also like to inform investors of our new investor deck, which may be found also at Terrewolf.com. We'll begin today's call with prepared remarks from Paul, Nazar, and Patrick, then we'll proceed to Q&A. It is my pleasure to now turn the call over to Terrewolf's CEO, Paul Prager. Paul?

Jason Assad: The national measures.

Jason Assad: It's also inform investors of our new investor deck, which may be found it also a terrible dotcom will begin today's call with prepared remarks from Paul Navarre and Patrick then we'll proceed to Q&A my pleasure to now turn the call over to tell we'll see a ballpark or Paul.

Paul B. Prager: Thank you, Jason, and good afternoon, everyone. We appreciate your attendance today as we dive into our first quarter 2024 financial results. Just a couple of months ago, on our last earnings call, we highlighted Terrell's significant growth and accomplishments throughout the fiscal year 2020. We experienced robust organic growth at existing sites, achieved substantial debt repayment, and Ulster Liquid. These achievements underscore the strength of FMD.

Paul B. Prager: Thank you, Jason and good afternoon, everyone.

Paul B. Prager: We appreciate your attendance today as we dive into our first quarter 2024 financial results.

Paul B. Prager: Just a couple of months ago, our last earnings call, we highlighted terrible significant growth and accomplishments throughout the fiscal year 2023.

Paul B. Prager: We experienced robust organic growth at existing sites achieved substantial debt repayment and bolstered liquidity.

Paul B. Prager: These achievements underscore the strength of our foundation and set the stage for the growth. We are excited to talk to you about today.

Paul B. Prager: It's at the stage for the growth we are excited to talk to you about today. For those unfamiliar with Terrewolf, we specialize in energy infrastructure, drawing from over three decades of experience. Our primary focus presently centers on Bitcoin mining, where we employ sustainable practices utilizing zero-carbon energy resources while also contributing to grid stability operating from our two principal data centers. Lake Merida in upstate New York and Nautilus Cryptomine in Pennsylvania, a joint venture with Talon.

Paul B. Prager: For those familiar with Terribles, we specialize in energy infrastructure, drawing from over three decades of experience.

Paul B. Prager: Our primary focus presently centers on bitcoin mining, where we employ sustainable practice utilizing zero carbon energy resources, while also contributing to grid stability.

Paul B. Prager: Operating from our two principal data centers like Mariner in upstate New York and not on a script I'm item and Sylvania, a joint venture with talent, we take great pride in sourcing 95% of our power from clean energy sources.

Paul B. Prager: We take great pride in sourcing 95% of our power from clean energy sources. Our expansive mining facilities currently have a combined self-mining hash rate of 8 exahash per second, powered by approximately 64,000 deployed miners with a fleet efficiency of 24.6 joules per terahash. We utilize 210 megawatts of infrastructure capacity. Notably, our miners consistently operate at an impressive 98% of installed nameplate capacity. We're actively expanding our mining operations at Lake Mariner, with Building 4 scheduled to be completed at the end of June and Building 5 commencing construction.

Paul B. Prager: Our expansion mining facilities currently have a combined self mining has rate of eight <unk> per second.

Paul B. Prager: Powered by approximately 64000 deployed miners with a fleet efficiency of $24 six fuels pentair at Ash, we utilized 210 megawatts of infrastructure capacity.

Notably our miners consistently operate at an impressive 98% of installed nameplate capacity.

Paul B. Prager: We're actively expanding our mining operations Mariner with building four scheduled to be complete at the end of June and building five commencing construction.

Paul B. Prager: These expansions are projected to raise our total operational capacity, to over 10 exahash per second by mid-year with a fleet-efficient... 22.7 joules per carat, and subsequently to more than 13 exahash per second with a fleet efficiency of 20.9 joules, We have one of the most efficient minor fleets in the... Patrick will elaborate, We finalized a new minor purchase and option agreement with Bitmain for S21s and S21 Pros, solidifying our growth trajectory.

Paul B. Prager: Expansions are projected to raise our total operational capacity to over 10 extra half per second by mid year with a fleet efficiency of $22 seven jewels precarious and subsequently to more than 13 extra hash per second with a fleet efficiency of 29 joules per carrier.

Paul B. Prager: Cash.

Paul B. Prager: We have one of the most efficient minor fleets in the industry.

Paul B. Prager: As Patrick will elaborate we finalized a new pipe minor purchase and option agreement with fitment for F. 'twenty one's in F. 'twenty, one pros solidifying our growth trajectory.

Paul B. Prager: This contract not only ensures the prompt delivery of machines to Occupy Building 4, but also secures favorable pricing for up to 6x ash of potential future delivery. Looking forward, our plan is to achieve a 300-megawatt infrastructure capacity by year-end 2020, with the goal to further expand to 600 megawatts of deployed infrastructure in 2025. We are committed to ongoing development and identifying optimal applications for our megawatts, whether it's Bitcoin mining or high-computing endeavors. The significance of owning infrastructure and scalability cannot be overstated. Our optionality extends well beyond that of a...

Paul B. Prager: This contract not only ensures prompt delivery of machines to occupy building for but also secures favorable pricing for up to six X as a potential future deliveries.

Paul B. Prager: Looking forward our plan is to achieve a 300 megawatt infrastructure capacity by year end 'twenty 'twenty four with.

Paul B. Prager: With the goal to further expand to 600 megawatts of deployed infrastructure in 2025.

Paul B. Prager: As an energy infrastructure business, we are committed to ongoing development and identifying optimal applications for our megawatts, whether it's bitcoin mining or high computing endeavors.

Paul B. Prager: The significance of owning infrastructure and scalability cannot be overstated.

Paul B. Prager: Our optionality extend well beyond that of our peers, thanks to our energy backgrounds and existing digital infrastructure.

Paul B. Prager: Thanks to our energy backgrounds and existing digital infrastructure. In fact, I believe no miner is better positioned than Terrewolf when it comes to owning scalable, low-cost, and zero-carbon energy infrastructure. Over the last nine months, Wolf Compute, our internal innovation... has been focused on researching, developing, and deploying our extensive and scalable digital infrastructure. Following a successful pilot phase involving a compact NVIDIA GPU, we allocated a 2-megawatt power block at our Lake Mariner, which could support over 1,000 H100 GPUs as part of a broader high-performance computing initiative aimed at diversifying our revenue streams.

Paul B. Prager: In fact, I believe no mine is better positioned than terrorists when it comes to owning scalable low cost and zero carbon energy infrastructure assets.

Paul B. Prager: Yes.

Paul B. Prager: Over the last nine months won't compute our internal innovation hub has been focused on researching developing and deploying our extensive and scalable digital infrastructure.

Paul B. Prager: Following a successful pilot phase involving that Compaq Nvidia GPU system, we allocated a two megawatt power block at our Lake Merritt facility, which could support over 1000, H 100, Gpus as part of a broader high performance computing initiative aimed at diversifying our revenue stream.

Paul B. Prager: <unk>.

Paul B. Prager: Terrell's Large-Scale Energy Infrastructure, coupled with access to zero-carbon, low-cost power, is invaluable for meeting the growing demand for Bitcoin mining and AI applications. Our sites fulfill demanding specifications of hyperscalers, offering direct access to extensive contiguous land suitable for constructing data centers, as well as access to abundant water for cooling and adherence to a sustainable ESG framework.

Paul B. Prager: <unk> large scale energy infrastructure.

Paul B. Prager: Coupled with access to zero carbon low cost power.

Paul B. Prager: His invaluable for meeting the growing demand from bitcoin mining and AI applications.

Paul B. Prager: Our site's fulfill demanding specifications of hyperscale offering direct access to extensive contiguous land suitable for constructing data centers as well as access to abundant water for cooling and adherence to a sustainable ESG framework.

Paul B. Prager: In a few moments, Nazar will provide more detail on how we are strategically and carefully approaching the AI HPC operation. The immense value of our available, scalable, and sustainable energy infrastructure is undeniable, as demonstrated in recent research reports from both Morgan Stanley and Goldman Sachs. We believe the market isn't properly attributing the inherent and significant value of our owned infrastructure in our current market value. Turning to our finances, we remain steadfast in leveraging a resilient, low-cost infrastructure to maximize profits, repay debt, and return value to shareholders.

Paul B. Prager: In a few moments NASA will provide more detail, how we are strategically and carefully approaching the AI H B C opportunity.

Paul B. Prager: The immense value of our available scalable and sustainable energy infrastructure is undeniable as demonstrated in recent research reports from both Morgan Stanley and Goldman Sachs.

Paul B. Prager: We believe the market isn't properly attributing the inherited and significant value of our owned infrastructure in our current market valuation.

Paul B. Prager: Turning to our financial position, we remain steadfast in leveraging our resilient low cost infrastructure to maximize profit repay debt and return value to shareholders.

Paul B. Prager: Our performance in the first quarter highlights Terrell Wolf's consistent achievement of industry-leading profitability. We delivered a GAAP gross margin of 66%, which increased to 71% inclusive of Nautilus, and non-GAAP adjusted EBITDA of $32 million, which translates to an EBITDA per exahash of approximately $4,100, among the highest of our public peers. Additionally, our quarterly SG&A of $8 million and stock-based comp of $7 million are far below all of our competitors. Why are these statistics important for management and shareholders to consider? because they highlight Terrell's competitive advantages versus all other public Bitcoin miners. One is low-cost, zero-carbon power.

Paul B. Prager: Our performance in the first quarter highlights terribles consistent achievement of industry, leading profitability.

Paul B. Prager: We delivered a GAAP gross margin of 66%, which increased to 71% inclusive of dauntless and non-GAAP adjusted EBITDA of $32 million.

Paul B. Prager: Which translates to an EBITDA per excess cash of approximately $4100. Among the highest of our public peers. Additionally, at quarterly SG&A of $8 million and stock based comp of 7 million are far below all of our peers.

Speaker Change: Why are these statistics important for management and shareholders to consider.

Speaker Change: Because they highlight Charles competitive advantages versus all other public bitcoin miners, one low cost zero carbon power to.

Speaker Change: Sure.

Paul B. Prager: Two, profitability. We generate more EBITDA per EXA-HASH than our larger public peers and therefore require less capital and future growth to achieve the same level of profitability as our peers. And three, efficiency. Our team is lean and mean, and we manage Teri Wolf to achieve maximum profitability for our shareholders. We are not a lifestyle company for managers.

Profitability, we generate more EBITDA for Xa, hashed, and our larger public peers, and therefore require less capital and future growth to achieve the same level of profitability as our peers and three efficiency.

Speaker Change: Our team is lean and mean and we managed care a walk to achieve maximum profitability for our shareholders. We are not a lifestyle company for management.

Paul B. Prager: We estimate our cost to mine a bitcoin at approximately $40,000 per bitcoin post-tax, utilizing a network hash rate of 600 XASH, positioning us as one of the lowest cost producers in the industry. Looking forward, we remain squarely focused on capital efficiency, ensuring that every dollar we spend on CapEx creates shareholder value. This approach underscores our commitment to maximizing returns and driving long-term sustainability in our business. Before I conclude my remarks today, I want to emphasize the significance of capital efficiency within our strategic framework.

Speaker Change: We estimate our cost to mine a bitcoin at approximately $40000, but bitcoin post tax utilizing a network cash rate of 600 ex ash positioning us as one of the lowest cost producers in the industry.

Speaker Change: Looking forward, we remain squarely focused on capital efficiency, ensuring that every dollar we spend on capex creates shareholder value.

Speaker Change: This approach underscores our commitment to maximizing returns and driving long term sustainability in our business.

Speaker Change: Before I conclude my remarks today I want to underscore the significance of capital efficiency within our strategic framework.

Paul B. Prager: At Wolfe, we firmly believe that our success hinges not merely on the speed of our expansion but on the judicious allocation of capital to generate sustained returns for our shareholders. But what precisely do I mean by capitalism?

Speaker Change: At Wolf, we firmly believe that our success hinges not nearly on the speed of our expansion, but on the discerning allocation of capital to generate sustained returns for our shareholders.

So what precisely do I mean by capital efficiency.

Paul B. Prager: I'm referring to the prudent utilization of funds, whether derived from free cash flow, debt, or equity, to operate and expand with a keen focus on the relationship between capital deployed and the resulting return. This distinction is crucial; it enables investors to differentiate between the companies that are growing profitably versus simply growing. At Terrewolf, we firmly believe that not all exahash is created equal. And guess what? The same is true for d

I'm, referring to the prudent utilization of funds, whether derived from free cash flow debt or equity to operate and expand with a keen focus on the relationship between capital deployed and the resulting returns.

Speaker Change: This distinction is crucial.

Speaker Change: Tables investors to differentiate between the companies that are growing profitably.

Speaker Change: <unk> simply growing.

Speaker Change: Apparel Wolf, we firmly believe that not all excess cash is created equal.

Speaker Change: And guess what the same is true for dilution as.

Paul B. Prager: As we have demonstrated quarter after quarter, our approach is one of prudence, ensuring minimal dilution to maintain alignment with our stakeholders. Remember, this management team, including yours truly, is among the largest shareholders, which underscores our entire alignment with you, the investor. So beyond the exhaustive analysis and modeling, what truly defines our strategy is capital efficiency. You should rest assured that when we decide to utilize the ATM, it is with the absolute, undeniable conviction that every dollar invested will yield a substantial return. It is clear that some of our competitors aren't focused on profitability when announcing expansion plans, and that is what differentiates us.

Speaker Change: As we have demonstrated quarter after quarter. Our approach is one of prudence, ensuring minimal dilution to maintain alignment with our stakeholders remember this management team, including yours truly is among the largest shareholders, which underscores our inter.

Speaker Change: Alignment with you the investor.

Speaker Change: So beyond the exhaustive analysis and modeling what truly defines our strategy is capital efficiency.

Speaker Change: You should rest assured that when we decide to utilize the ATM it.

It is with the absolute undeniable conviction that every dollar invested will yield a substantial return.

Speaker Change: It is clear that some of our competitors aren't focused on profitability when announcing expansion plans and that is what differentiates terrible.

Paul B. Prager: Capital efficiency serves as the cornerstone of our decision-making process, guiding us to make investments that not only fuel growth but also ensure that every dollar spent generates substantial long-term value. This disciplined approach empowers us to maintain a lean and adoptable business model while seizing opportunities that align with our core objective of delivering sustainable growth and returning value to our shareholders. It is also why Terrewolf delivers more profitability with less dilution than any of our competitors.

Capital efficiency serves as the cornerstone of our decision making process.

Speaker Change: <unk> us to make investments that not only fueled growth, but also ensure that every dollar spent generates substantial long term value.

Speaker Change: This disciplined approach empowers us to maintain a lean and adaptable business model, while seizing opportunities that align with our core objective of delivering sustainable growth and returning value to our shareholders. It is also white terrible delivers more profitability with less dilution than any of our.

Speaker Change: Peers.

Paul B. Prager: Now I'll hand the call over to my partner and friend, Nazar Khan, to elaborate on Wolf Compute's initiatives before our CFO, Patrick Fleury, provides a detailed review of our financial results for the first time. Thank you, Paul, and good afternoon, everyone.

Speaker Change: Now I'll hand, the call over to my partner friend Gaza Con to elaborate on Wolf Computes initiative before S. CFO Patrick Flurry provides a detailed review of our financial results for the first quarter.

Gaza Con: Thank you Paul and good afternoon, everyone.

Nazar M. Khan: Before delving into the latest developments at Wolf Compute, I'd like to provide some context regarding the surging demand for energy infrastructure. As Paul mentioned, our expertise lies in the power generation sector. Over the past two decades, we've been involved in the development, construction, financing, ownership, and operation of power generation facilities, both domestically in the United States and in various overseas jurisdictions. Central to our operations has been our keen understanding of power, a skill that's particularly pertinent in today's life.

Gaza Con: Before delving into the latest developments will compute I'd like to provide some context regarding the surging demand for energy infrastructure.

Gaza Con: I'll mention our expertise lies in the power generation sector over the past two decades, you've been involved in the development construction financing ownership and operation of power generation facilities, both domestically in the United States and in various overseas jurisdictions.

Gaza Con: Central to our operations has been a keen understanding of power flows at scale, that's particularly pertinent in today's landscape with.

Nazar M. Khan: With the advent of high-demand modes such as HPC and AI, ensuring timely access to sufficient power has become a critical concern. However, access to power and energy infrastructure remains a significant constraint. These high-density compute loads have two primary objectives.

Gaza Con: With the advent of high demand modes, such as <unk> and AI.

Gaza Con: Timely access to sufficient power is becoming critical concern however, access to power and energy infrastructure remains a significant constraint here.

Gaza Con: These high density compute loads of two primary objectives first to secure access to power at scale and second to do so within the next 12 to 24 months. Once these primary objectives are met considerations, then shift to securing low cost <unk> zero carbon power solutions.

Nazar M. Khan: First, to secure access to power at scale, and second, to do so within the next 12 to 24 months. Once these primary objectives are met, considerations then shift to securing low-cost and zero-carbon power solutions. Fortunately, the Terrell portfolio boasts substantial capacity to fulfill each of these objectives. As high-density compute loads gravitate towards areas with pamphlet power resources, we're actively engaging with various counterparties to allocate our energy infrastructure accordingly. We are in the early stages of this transition and are thoughtfully analyzing the alternatives.

Gaza Con: Fortunately the terrible portfolio both substantial capacity.

Gaza Con: Each of these objectives as high density compute loads gravitate towards areas with painful power resources.

Gaza Con: Actively engaging with various counterparties to allocate our energy infrastructure accordingly.

Gaza Con: We are in the early stages of this transition in our thoughtfully analyzing the alternatives.

Nazar M. Khan: Over the past nine months, Wolf Compute has been dedicated to developing the blueprint for our low-cost, zero-carbon, and scalable digital infrastructure. Traditional data centers are facing challenges in meeting the escalating rack density requirements of current and next-generation GPUs. To address this, our engineering team has collaborated closely with industry leaders such as NVIDIA to design air-cooled and liquid-cooled facilities tailored to meet these demands. The culmination of these efforts was the construction of our two-megawatt facility at the Lake Mariners site, slated for completion by early August. We're currently in discussions with several counterparties regarding the utilization of this capacity. Our core expertise at Hairwolf lies in energy efficiency.

Gaza Con: Over the past nine months, both compute has been dedicated to developing the blueprint.

Gaza Con: Low cost zero carbon scalable digital infrastructure traditional data centers are facing challenges in meeting the escalating rack density requirements for current and next generation Gpus.

Gaza Con: To address this our engineering team is collaborating closely with industry leaders, such as Nvidia designs air cooled and liquid cooled facilities tailored to meet these demands.

Gaza Con: The culmination of these efforts is the construction of our two megawatt facility at the Lake Merritt a site slated for completion by early August.

Gaza Con: Currently in discussions with several counterparties from parties that utilization of this capacity.

Gaza Con: Our core expertise of terrible lives in energy infrastructure and our primary objective remains to expand our facilities to meet the increasing energy demands of the rapidly growing high density compute market.

Nazar M. Khan: And our primary objective remains to expand our facilities to meet the increasing energy demands of the rapidly growing high-density compute market. Following our initial two-megawatt project, we're now in the final stages of designing a 10-megawatt facility engineered to be easily scalable. As you'll see in our most recent investor presentation, we've summarized various strategies for extracting value from our infrastructure as it relates to AI HPC applications. Each strategy entails distinct capital, operational, and margin considerations.

Gaza Con: Following our initial two megawatt project. We're now in the final stages of designing a 10 megawatt facility engineered to be easily scalable.

Gaza Con: As you'll see in our most recent investor presentation, we summarize various strategies for extracting value from our infrastructure as it relates to AI H P C applications.

Gaza Con: Each strategy entails distinct capital operational margin considerations, given our dedication to energy infrastructure, and our belief and being at the forefront of the growing demand for it. Our current focus is on the Colocation white space and rack ready model. This.

Nazar M. Khan: Given our dedication to energy infrastructure and our belief in being at the forefront of the growing demand for it, our current focus is on the co-location white space and RAC-ready model. This approach strikes a balance between long-term ownership of energy infrastructure and the potential for increased revenue per megawatt over time in the most capital-efficient manner. We expect the supply of scaled, low-cost, zero-carbon energy infrastructure to become more constrained over the next year.

Gaza Con: This approach strikes a balance between long term ownership of energy infrastructure and the potential for increased revenue per megawatt overtime, the most capital efficient manner.

Gaza Con: We expect the supply of scale low cost zero carbon energy infrastructure as they become more constrained over the next year.

Nazar M. Khan: Hyperscalers are aggressively acquiring and optioning energy infrastructure that they plan to grow into over the next few years. We believe the path to creating the highest shareholder value is by designing and building next-generation data center infrastructure that we offer to the market. Looking forward, we see an opportunity to expand our high-density compute business to 100 megawatts within the next few years. This expansion will leverage our existing assets and may involve acquiring additional sites to bolster our capacity. Now, I'll hand the call over to our CFO, Patrick Fleury, to provide a detailed review of our financial results for the first quarter. Thank you, Nazar.

Gaza Con: Hyperscale are aggressively acquiring optioning energy interest structure that they plan to grow into over the next few years.

Gaza Con: We believe the path to creating highest shareholder value by designing and building next generation data center infrastructure that we offer into the market.

Gaza Con: Looking forward, we envision an opportunity to expand our high density compute business to 100 megawatts within the next few years. This expansion will leverage our existing assets and may involve acquiring additional sites to bolster our capacity further.

Gaza Con: Now I'll hand, the call over to our CFO, Patrick <unk> to provide a detailed review of our financial results for the first quarter.

Patrick A. Fleury: As Paul stated, our first quarter was strong across all financial metrics, driven by favorable business fundamentals and outstanding execution. In the first quarter of 2024, we self-mined 767 Bitcoin at Lake Mariner, and our net share of mined Bitcoin at Nautilus was 284, for a total of 1,051 Bitcoin, or about 11.5 Bitcoin per day, a 10% increase over the 959 Bitcoin mined in 4Q23. We received an additional 6 Bitcoin in 1Q24 and 13 Bitcoin in 4Q23 from profit sharing associated with a hosting agreement at Lake Mariner that expired in February 2022.

Patrick: Thank you neither as Paul stated our first quarter was strong across all financial metrics, driven by favorable business fundamentals and outstanding execution.

In the first quarter of 2024, we self mine 767, Bitcoin and Lake Mariner and our net share of mind, Bitcoin and Nautilus with 284 for a total of 1051 bitcoin or about 11.5 bitcoin per day, a 10% increase over the 959 Bitcoin mine.

Patrick: And for Q2 'twenty three.

Patrick: We received an additional bitcoin and <unk> 24, and 13, Bitcoin and <unk> 23 from profit sharing associated with a hosting agreement at lake manner that expired in February 2024.

Patrick A. Fleury: Our GAAP revenue saw outstanding growth of 82% quarter over quarter, reaching $42.4 million in 1Q24 from $23.3 million in 4Q22. Our value per Bitcoin self-mined this quarter, a non-gap metric that includes Bitcoin mined at Nautilus, averaged $53,750 per Bitcoin for a total of $56.8 million, as detailed and defined in our monthly operating reports and press releases. As a reminder, there is a key difference between our GAAP financials and the monthly operating reports and 2024 guidance.

Patrick: Our GAAP revenue saw outstanding growth of 82% quarter over quarter, reaching $42 4 million and <unk> 24 from $23 3 million and <unk> 23.

Patrick: Our value per bitcoin self mined this quarter, our non-GAAP metric that includes bitcoin minded in Ottawa averaged 53750 per bitcoin for a total of $56 8 million as detailed and defined in our monthly operating reports and press releases.

As a reminder, there is a key difference between our GAAP financials and the monthly operating report and 2020 for guidance.

Patrick A. Fleury: Due to our 25% ownership in Nautilus, the revenue, cost of revenue, operating expenses, depreciation, and amortization at Nautilus are not consolidated into our GAAP financial savings. Instead, the financial impact of the Nautilus joint venture is reflected in the equity in net income or loss of investee net of tax line item on the GAAP income statement. Our gap cost of revenue, exclusive of depreciation, for 1Q24 was $14.4 million, a 61% increase over $8.9 million in 4Q23.

Patrick: Due to our 25% ownership and not a lot of the revenue cost of revenue operating expenses depreciation and amortization adenoidal are not consolidated into our GAAP financial statements instead, the financial impact of the Nautilus joint venture is reflected in the equity and net income or loss.

Patrick: A M best the net of tax line item on the GAAP income statement.

Patrick: Our GAAP cost of revenue exclusive of depreciation for <unk> 24 was $14 4, million% to 61% increase over $8 9 million and <unk> 23.

Patrick A. Fleury: The quarter-over-quarter increase was principally due to a 37% increase in average operating exa-hash, in addition to higher realized power costs at Lake Mariner in 1Q24. Looking now at our gross profit, also exclusive of depreciation, we saw an increase of 95 percent quarter over quarter from $14.4 million in 4Q23 to $28 million in 1Q24. Our total power cost for Bitcoin Mined, a non-GAAP metric that includes Bitcoin Mined at Nautilus, was $15,501 in 1Q24 compared to $10,308 in 4Q22.

Patrick: Quarter over quarter increase was principally due to a 37% increase in average operating after the hash. In addition to higher realized power cost at Lake Mariner and <unk> 24.

Patrick: Looking now at our gross profit also exclusive of depreciation we saw an increase of 95% quarter over quarter from $14 4 million and for Q23 to 28 million and <unk> 24.

Patrick: Our total power cost for Bitcoin mine, a non-GAAP metric that includes bitcoin mine that Nautilus.

Patrick: 15501, and <unk> 24, compared to 10308 in for Q 'twenty three.

Patrick A. Fleury: As a reminder, in our GAAP financials, unlike our monthly operating reports, the company records proceeds received and to be received for demand response programs as a reduction in the cost of revenue. These expected proceeds totaled $1.2 million in 1Q24 and $1 million in 4Q23. As disclosed in our 2024 guidance, we expect to achieve an average power cost, including demand response revenues and the impact of non-office two-cent power, of 3.5 cents per kilowatt hour in 2024. In 1Q24, we achieved an average power cost of 4.1 cents per kilowatt hour. Operating expenses were stable quarter-over-quarter at $1.7 million in 1Q24 and 4Q25.

Patrick: As a reminder, in our GAAP financials. Unlike our monthly operating reports the company recorded proceeds received and to be received for demand response programs as a reduction in cost of revenue.

Patrick: These expected proceeds totaled $1 2 million and <unk>, 24, and $1 million and four to 'twenty three.

Patrick: As disclosed in our 2024 guidance, we expect to achieve an average power costs, including demand response revenues and the impact of non losses to Sunpower, a 3.5 cents per kilowatt hour in 2024.

Patrick: For <unk> 'twenty four we achieved an average power cost of 4.1 cents per kilowatt hour.

Patrick: Operating expenses were stable quarter over quarter at $1 7 million and <unk> 24, and <unk> 23.

Patrick A. Fleury: As disclosed in our 2024 guidance, we expect $13.5 million of operating expenses in 2024, which includes operating expenses at Noddle. Of the 13.5% total, approximately 50% is expected to be incurred at Lake Mariner and 50% at SG&A expenses increased quarter over quarter from $8.8 million in 4Q23 to $14.9 million in 1Q24. However, the increase is almost entirely due to $6.2 million of stock-based compensation expense incurred in 1Q24. Adjusting for stock-based comps, SG&A decreased 6% year-over-year from $8.5 million in 1Q23 to $7.9 million in 1Q24.

Closed in our 2024 guidance, we expect a $13 5 million of operating expenses in 2024, which includes the operating expenses at Nautilus.

Patrick: The $13 five total approximately 50% is expected to be incurred at lake Mariner and 50% are anonymous.

Patrick: SG&A expenses increased quarter over quarter from $8 8 million and <unk> 23 to $14 9 million and <unk> 24. However, the increase is almost entirely due to $6 2 million of stock based compensation expense incurred <unk> 24.

Patrick: Adjusting for stock based comp SG&A decreased 6% year over year from $8 5 million and <unk> 23 to seven 9 million and <unk> 24.

Patrick A. Fleury: SG&A spend is more heavily weighted to the first quarter of the year versus subsequent quarters. And as disclosed in our 2024 guidance, we continue to anticipate approximately $27.5 million of SG&A in 2024. Depreciation increased quarter over quarter from $8.3 million in 4Q23 to $15.1 million in 1Q24, which was the result of an increase in mining capacity and infrastructure placed into service, as well as $3.8 million of accelerated depreciation related to certain miners for which the company shortened their estimated useful life based on expected replacement by April 30, 2022.

Patrick: SG&A spend is more heavily weighted to the first quarter of the year versus following quarters as disclosed in our 2020 for guidance. We continue to anticipate approximately $27 5 million of SG&A in 2024.

Patrick: Depreciation increased quarter over quarter from $8 3 million and 423 to $15 1 million and <unk> 24, which was the result of an increase in mining capacity and infrastructure placed into service as well as $3 8 million of accelerated depreciation related to certain miners are what's the company sure.

Patrick: Their estimated useful lives based on unexpected replacement by April 30th 'twenty 'twenty four.

Patrick A. Fleury: Gain on fair value of digital currency, net of $1.3 million in first quarter 24, is a new line item for us, given our early adoption of the new FASB accounting rule, which marks the company's Bitcoin holdings to their fair market value as of the filing date, with changes in fair value recorded in netting. It is critically important to note this $1.3 million is substantially all realized gain, meaning it is real cash in our bank account and not theoretical mark-to-market gains on paper which many of our peers at HODL have reported.

Patrick: Gain on fair value digital currency net of $1 3 million in first quarter 'twenty four is a new line item for us given our early adoption of the new status be accounting rule, which marks the company's bitcoin holdings to the fair market value as of the filing date with changes in fair value reported in.

Net income.

It is critically important to note that's 1.3 million substantially all realized gain meaning it is realized cash in our bank account and not theoretical mark to market gains on paper, which many of our peers that hogle have reported.

Patrick A. Fleury: I am amused watching our public peers report, quote, adjusted EBITDA, unquote, inclusive of theoretical mark-to-market gains on BTC hodl balance, as adjusted EBITDA is supposed to help an investor determine normalized cash flow generation for a business.

Patrick: I'm amused watching our public peers report quote adjusted EBITDA unquote inclusive of theoretical mark to market gains on BTC hold balances at adjusted EBITDA is supposed to help an investor determining normalized cash flow generation for our business.

Patrick A. Fleury: It will be telling to see if our peers stick to this methodology if and when BCC's price drops quarter over quarter, as it has done thus far in 2022. I won't be holding my breath for the self-declared industry leaders to do the right thing. Gap interest expense in first quarter 24 and fourth quarter 23, respectively, which includes cash interest expense and amortization of debt issuance costs and debt discount related to the term loan financial.

Patrick: It will be telling to see if our peers did this methodology, if and when BTC price dropped quarter over quarter as it's done thus far in Q2 24.

Patrick: I won't be holding my breath for the self declared industry leaders to do the right thing.

Patrick: GAAP interest expense in first quarter, 'twenty, four and <unk> 23 was $11 million and $9 3 million, respectively, which includes cash interest expense and amortization of debt issuance cost.

Patrick: And debt discount related to the term loan financing.

Patrick A. Fleury: However, cash interest paid during 1Q24 was $3.7 million, down over 8% from $4.1 million in 4Q22. This decrease is the result of repayment of $33.4 million of debt in 1Q21. This trend will continue in 2Q24 as we repay the further $30.1 million of debt in early April. In total, the company has reduced its debt balance by over $70 million since the start of 4Q23, with $51.5 million of free cash flow from operations and only $18.6 million of equity proceeds.

Patrick: However, cash interest paid during <unk> 24 was $3 7 million down over 8% from $4 1 million and <unk> 23.

Patrick: This decrease is the result of repayment of $33 4 million of debt and <unk> 24.

Patrick: This trend will continue in Q2 24, as we repaid a further $31 million of debt in early April.

Patrick: In total the company has reduced its debt balance by over $70 million since the start of <unk> 23, with $51 5 million of free cash flow from operations and only $18 6 million of equity proceeds.

Patrick A. Fleury: In connection with the voluntary prepayment of $18.6 million of debt in 1Q24, the company incurred prepayment fees of $0.3 million, recognized unamortized discount of $1.7 million associated with the principal repaid, and recorded a loss on extinguishment of debt of a total of $2 million.

In connection with the voluntary prepayment of $18 $6 million of debt and <unk> 20 for the company and third prepayment fees of 0.3 million recognized the unamortized discount of $1 7 million associated with the principal repaid and recorded a loss on extinguishment of debt for a total of two.

Patrick: Yeah.

Patrick A. Fleury: In 1Q24, we reported $5.3 million in equity in the net income of the investee, net of tax, as compared to $3.3 million in 4Q23. These amounts represent Terrell's proportional share of net income of the Nautilus joint venture. Our gap net loss for the first quarter was $9.9 million, compared to a net loss of $10.8 million in 4Q23.

Patrick: And <unk> 24, we reported $5 3 million in equity and net income of Investees.

Patrick: Net of tax as compared to $3 3 million and <unk> 23.

These amounts represent perils proportional share of net income of the Nautilus joint venture.

Patrick: Our GAAP net loss for the first quarter was $9 9 million compared to a net loss of $10 8 million and <unk> 23.

Patrick A. Fleury: Our non-gap adjusted EBITDA for 1Q24 was $32 million, a 95% improvement over $16.4 million in 4Q23. Turning our attention to the balance sheet, as of March 31st, we held $45.8 million in cash, with total assets amounting to $395 million and total liabilities of $123 million. As we move through 2024, we anticipate a consistent and rapid reduction in our long-term debt with an estimated $15 to $20 million repayment in the first week of July. Our net working capital, excluding the current portion of long-term debt, held steady quarter over quarter at positive 31%.

Patrick: Our non-GAAP adjusted EBITDA for <unk> 24, it was $32 million, a 95% improvement over $16 4 million in four Q 'twenty three.

Patrick: Turning our attention to the balance sheet as of March 31st we held $45 8 million in cash with total assets amounting to $395 million and total liabilities of 123 million.

Patrick: As we move through 2024, we anticipate a consistent and rapid reduction in our long term debt.

Patrick: With an estimated $15 million to $20 million of D payment. The first week of July.

Patrick: Our net working capital excluding the prime person of long term debt held steady quarter over quarter at positive $31 million.

Patrick A. Fleury: As disclosed in our updated Investor Deck and 2024 Guidance slide, we achieved a marginal cost of production, including every single cost in the company, of approximately $29,000 in 1Q24 and expect to achieve approximately $40,000 in 2Q and the second half of 2026. However, our 1224 realized cost per BTC was higher than our expected $25,000 due to seasonally higher realized power costs. The 4.1 cents per kilowatt hour versus our projected 3.5 cents per kilowatt hour annual average and seasonally higher 1Q24 SG&A expense due to annual filings, audits, and related legal fees.

Patrick: As disclosed in our updated investor deck in 'twenty 'twenty four guidance slide we achieved our marginal cost of production, including every single cost in the company of approximately 29000 in <unk> 24, and expect to achieve approximately 40000.

Patrick: In Q2, and second half of 'twenty four.

Once you 24 realized cost per BTC was higher than our expected 25000 due to seasonally higher realized power cost of 4.1 cents per kilowatt hour versus our projected $3.05 per kilowatt hour annual average and seasonally higher <unk> 24 S.

Patrick: DNA expense due to annual filings audits and related legal fees.

Patrick A. Fleury: Lackley, in March 2024, the company entered into a minor purchase and auction agreement with Bitmex to lock in pricing of approximately $16 per terahash on an additional seven exahash of F21 and F21 Pro minus. The company has paid $17.5 million for 5,000 S-21 miners, which we expect on-site at Lake Mariner by the end of May, and funded a further $9.6 million deposit for an additional 30,000. At Wolf, our financial objectives remain clear and simple: maximize profit, repay debt, and return value to shareholders while providing investors access through transparency and accountability. With that, I'll pass it back to Paul and look forward to answering your questions. Thank you once again for joining us today.

Patrick: Lastly in March 2024, the company entered into a minor purchase and option agreement with did mean to lock in pricing of approximately $16 per ton or ash on an additional seven extra half of F. 'twenty one in F. 'twenty one pro miners.

Patrick: The company has paid 17 and a half million for 5000 F. 'twenty, one miners, which we expect onsite at Lake Mariner by the end of May and funded a further $9 6 million deposit for an additional 30000 minus.

Speaker Change: Well, our financial objectives remain clear and simple maximize profit repay debt and return value to shareholders, while providing investors access to transparency and accountability with that I'll pass it back to Paul and look forward to answering your questions.

Paul: Thank you once again for joining us today and summary.

Paul B. Prager: In summary, Terrell stands at the forefront of the industry, with its best-in-class access, lowest unit economics, and unparalleled ability to scale its own infrastructure. We remain deeply committed to delivering consistent growth and profitability while aligning closely with the interests of our investors. As we look ahead, we believe our infrastructure of strategic importance is currently undervalued by the market. The foundation we've laid and the trajectory we're on underscore our potential for continued success. We appreciate your continued support and confidence in Terrell.

Paul: <unk> stands at the forefront of the industry with its best in class assets lowest unit economics, and unparalleled ability to scale. Our owned infrastructure, we remain deeply committed to delivering consistent growth and profitability, while aligning closely with the interests of our investors.

<unk>.

Paul: As we look ahead, we believe our infrastructure of strategic importance is currently undervalued by the market.

Paul: The foundation, we've laid and the trajectory Ron underscore our potential for continued success.

Paul: We appreciate your continued support and confidence in terrible together, we are poised to capitalize on the exciting opportunities that uphold our position as a leader in capital efficiency and deliver sustained value to our shareholders.

Paul B. Prager: Together, we are poised to capitalize on the exciting opportunities ahead, uphold our position as a leader in capital efficiency, and Deliver Sustained Value to Our Children. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in question. You may press star 2 if you would like to remove your questions from the queue.

Paul: Okay.

Speaker Change: Thank you.

Speaker Change: We will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your questions from the queue.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please. We'll pull for questions. The first question comes from the line of Josh Siegler with Cantor Sajjarao.

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

Speaker Change: The first question comes from the line of Josh Seigler with Cantor Fitzgerald. Please go ahead.

Joshua Michael Siegler: Please go ahead. Yeah, hi guys. Good afternoon.

Joshua Michael Siegler: Thanks for taking my question today. I just want to start by saying I really appreciate the breakdown of your unit cost here. It's very helpful for us investors. For my first question, I was wondering, you know, now that we have passed the halving, you've demonstrated this profitability. Now, do you expect more financing channels to really open up, maybe perhaps debt markets once you've proven that profitability post-halving? Yeah, hey Josh, this is Patrick. Can you hear me okay?

Joshua Michael Siegler: Yeah, Hi, guys. Good afternoon. Thanks for taking my question today, just wanted to start by saying I really appreciate the breakdown of your unit costs. Yeah. It's very helpful for us investors.

Joshua Michael Siegler: My first question I was wondering you know now that we are past the having demonstrated this profitability now you expect more financing channels really open up maybe perhaps that mark is once you've proven that profitability post having right.

Patrick A. Fleury: Yes, yes. I'll take that as a yes. Yeah. Look, it's a great question.

Yeah, Hey, Josh This is Patrick can you hear me okay.

Patrick: Yes, yes, I'll take that on the yeah look it's a great question I think we've talked about this before.

Patrick A. Fleury: I think we've talked about this before. You know, I'd like to see the debt markets kind of from a corporate level, so not the old minor finance model, because that obviously didn't work very well, but, you know, from a corporate level debt perspective, as the business gets more mature, and candidly post having, you know, there's a separation of companies that are profitable and those that are not, that are really, you know, set up more as lifestyle companies, as Paul mentioned, corporate management teams.

Patrick: You know I'd like to see the debt markets kind of from a corporate level. So not deal minor finance models that obviously didn't work very well, but you know from a corporate level debt perspective, as the business gets more mature.

Patrick: And candidly post having you know there's a separation of companies that are profitable and those that are not that are really set up more lifestyle companies as Paul mentioned for management team.

Yeah, I think you know I'd like to see the debt markets reopen and you'll see them in our slides that we put in our slide deck page 12, but you know, we're just providing a bridge of capital need for the year and we have assumed that we just take all of our free cash flow and pay down our debt.

Patrick A. Fleury: Yeah, I think, you know, I'd like to see the debt markets reopen, and you'll see on a slide that we put in our slide deck, I think it's page 12, but we just are providing a bridge of capital needs for the year. And we have assumed that we just take all of our free cash flow and pay down our debt. You know, I do think there's a possibility. I've already received a bunch of inbound calls.

Patrick: Do think theres, a possibility I've already received a bunch of inbounds and certainly given our business and the collateral that we put in the ground has grown over time.

Patrick A. Fleury: I mean, certainly given our business and the collateral that we've put in the ground has grown over time, and the debt has been reduced. Yeah, I think there'll be opportunities to kind of turn that debt out. So it really will become a question of whether we want to keep it or not.

Patrick: And the debt has been reduced yeah, I think there'll be opportunities to kind of term that debt out too. It really will become a question of whether we want to keep it or not but I think for us as we pivot a bit more into the high power compute and AI space, you know that space the public companies trade at 20 to 25 times EBITDA.

Patrick A. Fleury: But I think for us, as we pivot a bit more into the high-power compute and AI space, you know, that space, the public companies trade at 20 to 25 times EBITDA, and they all have six times leverage because you've got long-term contracts, and it's a much more stable revenue business. So, you know, I could see us as we kind of get into that really having two kinds of silos, one, the Bitcoin mining business, and the compute business, and those are very different financing beats. So, yeah, I'll just leave it at that. Yeah, I understand. That makes sense.

Patrick: And they all have six times leverage because you've got long term contracts and it's a much more stable revenue business. So you know I could see us as we kind of get into that really have to kind of silos, one that bitcoin mining business too you know the compute business and those are very different financing needs.

Speaker Change: So yeah I'll just leave it at that.

Joshua Michael Siegler: And, you know, following up on that, I did want to ask a little bit more about the HPC side of things. For my second question was, notably, the last time we talked about high-performance computing was a couple months ago. And in your deck, you've outlined, you know, the three potential business models that you could pursue, and you have the pilot program and work here. I was just wondering, now that time has passed, if you're becoming more comfortable with one specific model over another in terms of, you know, what the future of HPC may look like for Wolf. Yeah, sure. Go ahead, Naz. Hey, Josh. It's Nazar here.

Yeah understood that makes sense and you know following up on that I did want to ask a little bit more about the HBC side of things for my second question well. There's nobody you know lastly, you talked about a high performance compute was a couple of months ago and in your deck. You've outlined you know the three potential business models that you could pursue and you have the pilot program and works here I was just.

Speaker Change: Wondering you know now that I'm as positive you're becoming more comfortable with one specific model over another in terms of you know what the future of H B C may look like for that.

Speaker Change: Yeah.

Speaker Change: Go ahead, Matt.

Nazar M. Khan: Yeah, I think, as we've noted, our core expertise is really around energy infrastructure. And so we are getting more comfortable, and we've been working to design the next generation data center. Given where GPU rack density is going, a lot of legacy data centers may not be able to most efficiently meet their power needs. And so we think from delivering an infrastructure that can be used for not just H100s but even kinds of black wells and beyond.

Hey, Josh it's a nicer here yeah, Matt I think as we've noted our core expertise is really around energy infrastructure, and so where you are getting more comfortable and we've been working to design you know the.

Matt: And next generation datacenter, given where G. P U.

Matt: <unk> density is going a lot of legacy data centers may not be able to most efficiently meet the power needs and so we think from a delivering a infrastructure that can be used for that just H, one hundreds, but even kind of black wells and beyond we're designing digital infrastructure that meet those.

Nazar M. Khan: We're designing digital infrastructure that can meet those needs, so we're getting very comfortable that we can design, put up, and operate that physical infrastructure. So kind of like that if you look at page, I think it's page 14 in our deck.

Matt: So we're getting very comfortable that we can design put up and operate that because clinical structure. So kind of in that if you look at page.

Matt: I think it's page 14 in our deck that middle column really kind of look I think there's a sweet spot between owning the infrastructure, bringing in customers who've made pay frizzy Gpus and having kind of a long term ownership around that now that being said you know this is kind of the full spectrum of the alternatives that are out there and as we get further along into it.

Nazar M. Khan: That middle column really kind of represents what we think is a sweet spot between owning the infrastructure, bringing in customers who may pay for the GPUs, and having kind of a long-term ownership around that. Now, that being said, you know, this is kind of the full spectrum of the alternatives that are out there. And as we get further along in it, you know, post our two-megawatt pilot, we're, you know, finalizing the design for a 10-megawatt facility.

Matt: Most of their two megawatt pilot, where you know we're finalizing the design for a 10 megawatt facility. If we see an opportunity to know Patrick suspension, you know on financing or other things to be able to facilitate kind of.

Nazar M. Khan: If we see an opportunity, you know, as Patrick just mentioned, on financing or other things to be able to facilitate kind of..., participating in more of the chain, we will do so. But currently, we're really focused on that middle column. And that's where we think our expertise lies. I don't know, Patrick, if you have anything to add to that. Yeah, this is Paul. Hey, Josh.

Matt: Being part if theres been any more of the chain will do so but you know currently we're really focused kind of in that middle column, and that's where we're thinking of our expertise wise I don't know Patrick could I can't attached to that.

Paul B. Prager: The only thing I'd want to add is something unique to Wolf, which is their sites. You know, not everybody has the energy infrastructure for that kind of scale in terms of power. Not everybody has the water permits, that kind of volume of water, and all the access to the contiguous land that one of these massive data centers wants. That makes it exciting.

Paul: Yeah. This is Paul Hey, Josh.

Paul: The only thing I'd want to add is love it our unique two volt, which is there are sites you know I'm not not everyone has the energy infrastructure.

Paul: Or is that kind of scale in terms of power and not everybody has the water permit for that kind of volume of water and.

Paul: And all the access to the contiguous land at one of these massive datacenters want them that makes it exciting but it again.

Paul B. Prager: But again, they were all out shopping for this stuff, which just means that the energy infrastructure value is going to continue to head north. I think Nazar said the other day on one of our calls, you know, we're not looking for a trade, we're looking to build a business. So in that regard, I think our inclination is to focus on that middle column, because I think it's just...

Paul: They were all out shopping for this stuff, which just means that the energy infrastructure values going to continue to head North I think NASA said the other day on one of our calls you know we're not looking for a trade we're looking to build a business. So in that regard I think.

Paul: Our inclination is to focus on that middle column, because I think it's just.

Paul B. Prager: It's about returning maximum value to the shareholder as opposed to sort of having us work for MetaAmazon or one of those guys. And so that's how we're currently thinking about it. But these are early days, Josh, and I don't think one needs to sort of make a commitment at this point as much as one needs to really study this market and understand it. That said, it's also very important to us that we continue mining Bitcoin. We're really good at it. I think we're the best in class at it.

Paul: It's about returning maximum value to the shareholder.

Paul: As opposed to sort of having US worked for you know met Amazon or one of those guys and so that's how we're currently thinking about it but these are early days, Josh and I don't think one needs to sort of make.

Paul: To make a commitment at this point as much as one needs to really study this market and understand it that said, it's also very important to us that we remain mining bitcoin.

Paul: Really good at it I think we're best in class at it and we believe in Bitcoin. So I think what Patrick said earlier, which is we see ourselves as possibly having at least a couple of buckets out there.

Paul B. Prager: And we believe in Bitcoin. So I think what Patrick said earlier, which is that we see ourselves as possibly having at least a couple of buckets out there, one HPC and one mining Bitcoin, I think you'll continue to see that as a driver of our business flow. Yeah, understood in that regard. Congratulations on the great results here, guys, and looking forward to the future.

Paul: H B C and one mining bitcoin I think you'll you'll continue to see that as a driver of our business philosophy.

Speaker Change: Yeah understood in that regard Ah congrats on the great results here, guys and looking forward in the future.

Joshua Michael Siegler: Thank you. The next question comes from the line of Lucas Pipes with BYD Securities. Please go ahead. Thank you very much, operator. Good afternoon, everybody.

Speaker Change: Thank you next question comes from the line of Lucas pipes with Bofa Securities. Please go ahead.

Lucas Nathaniel Pipes: Thank you very much operator, good good afternoon everybody.

Lucas Nathaniel Pipes: Hum.

Lucas Nathaniel Pipes: Patrick, I guess I'll have to look up that industry classification system, but on more serious matters, we are hearing a lot about the tightness in the power markets with the AI growth. And Paul, you know power markets extremely well. So I wondered, I wanted to hear your opinion on that.

Lucas Nathaniel Pipes: Patrick I guess I'll have to look up that industry classification system, but and and.

Lucas Nathaniel Pipes: And more serious matters, we are hearing a lot about.

Lucas Nathaniel Pipes: Tightness in the power markets with <unk>.

Lucas Nathaniel Pipes: With the AI AR growth.

Lucas Nathaniel Pipes: Paul you know power markets extremely well, so I wonder why.

Lucas Nathaniel Pipes: Wanted to hear your opinion on that is is that true do you see that.

Lucas Nathaniel Pipes: Is that true? Do you see that tightness in the power markets? And then, if it is true, who gets that economic rent? Is it the utility? Is it anyone with the PPA?

Lucas Nathaniel Pipes: Tightness in the power markets and then if it is true who gets that economic rent is at the utility is that anyone with a P. P E and to what extent this geography matter and all of US appreciate your thoughts on this thank you.

Lucas Nathaniel Pipes: And to what extent does geography matter in all of this? Appreciate your thoughts on this. Now, if you want to start with Respect HPC, and I'll follow. Sure. Hey, Lucas.

Speaker Change: Now if you wanted to start with respect to actually saying I'll follow.

Nazar M. Khan: It's Nazar here. So. Well, as we look at the landscape, there's a mismatch between the size of the demand and the timeframe for which supply is available. So, you know, with infrastructure, if you have enough time and enough money, things can be solved. Right now, we're at a point in time where near-term demand outstrips the available supply. And that's particularly the case if you want scalable access to power at a low cost and it comes from a zero carbon source. There are not that many places where you can find all of those variables available to you.

Luca: Sure Luca.

Luca: Yes.

Luca: Here.

Luca: So.

Luca: So as we looked at the landscape.

Luca: So there's a mismatch.

Luca: The size of the demand and the time frame for which supplies available. So you know with infrastructure do you have enough time and enough money things can be solved and right now we're at a point in time, where the near term demand outstrips the available supply and that's particularly the case with you want scaled.

Our access to power at a low cost and close from a zero carbon source now theres not that many places where you can find all of those variables are available to you.

Nazar M. Khan: And so as we think about it, you know, kind of the owner of that infrastructure or the owner of that right to procure or use that power should be able to capture the rent. And so what we see happening right now is that if you look at kind of the end of the spectrum, the hyperscalers are flush with cash. And they're out there optioning up as many of these sites as they can, you know, and whether they ultimately use the capacity or not, that's not their concern for today.

Luca: And so as we think about it you know kind of the owner of that infrastructure or the owner of that right to procure or use that power should be able to capture the right and so what we see happening right. Now is if you look at kind of at one end of the spectrum, the hyperscale or are flushed with cash on hand.

Luca: They're out there optioning up as many of these sites as we can.

Luca: Whether they ultimately use the capacity or not that's not a concern for today and I don't worry about that tomorrow, but in the near term there just optioning it all up and so again from our perspective, we've got you know 300 megawatts of incremental available capacity yet to be developed and so we think fundamentally we're sitting at the constraint.

Nazar M. Khan: You know, they'll worry about that tomorrow, but in the near term, they're just optioning it all up. And so, again, from our perspective, we've got, you know, 300 megawatts of incremental available capacity yet to be developed, and so we think fundamentally we're sitting at the constraint point, where, again, there's not enough supply to meet the demand.

Luca: Where again, there's not enough supply to meet the demand and so we should be positioned to capture a fair amount of that rent.

Nazar M. Khan: And so, we should be positioned to capture a fair amount of that rent, how we do so. And I think, you know, that those business models are still evolving. And so the other thing that we're seeing is the traditional model for how data centers operate.

Luca: And.

Luca: How we do so and I think you know that those business models are still evolving and so the other thing that we're seeing is the traditional models for how data center operators you know they went into a territory that called Dominion South.

Nazar M. Khan: You know, they went into a territory that called up Dominion, said they needed 40 megawatts, Dominion said they'd serve you, and that may still happen. We think that will still happen, but we're also seeing demand sources go directly to procuring that supply for themselves, whether it's Microsoft announcing with Brookfield saying build out 10.5 gigawatts of capacity for us, or what Amazon did at the talent site. So again, those places where you have access to that power and you can deliver that, we do think that those will be best positioned to kind of capture the value that's coming from that Dominion.

Luca: We need 40 megawatts Dominion Ted will serve you.

Speaker Change: You know me Okay. You know, we think that will occur.

Speaker Change: We will still occur, but we're also seeing you know the demand sources going directly to procuring that supplier themselves and whether it's Microsoft Schnauzer, Brookfield, saying, you know build out 10, and a half kicks up capacity for us.

Speaker Change: Or you know what Amazon did up at the town site and so again those places where you have access to that power you can deliver that and we do think that those will be.

Speaker Change: The best position to kind of capture the value that's coming from that demand.

Nazar M. Khan: The only thing that I would add to it is, you know, I look at there being some competition for a Bitcoin miner because he's got to compete with a whole different level of fellow in these hyperscalers for sites with power, and Not All Sites are Created Equal. Likewise, I think, you know, Patrick mentioned earlier today. He said, if you've got a good business model but bad power, well, you're hosed because, at the end of the day, you have a bad power contract. It's a bad power contract. You'll never right-size your costs.

Speaker Change: The only thing that I would add to it as you know I look at it.

Speaker Change: There being some competition them to a bit quite minor.

Speaker Change: Because you just got to compete with a whole different level of our fellow.

Speaker Change: And these hyperscale.

Speaker Change: Four sites with power and and not all sites are created equal Likewise, I think Patrick mentioned earlier today.

Speaker Change: He said if you've got a good business model, but bad power well.

Speaker Change: Your host because at the end of the day, you got a bad power contracted spend power contract, you'll you'll never rightsize your costs and so we have good power, we have good location, but green power, but good tower and that it's really inexpensive. So I think you know you have to look at some of the shops.

Paul B. Prager: And so we have good power. We have a good location, but it's not green power, but it's good power in that it's really inexpensive. So I think, you know, you have to look at some of the shops in Bitcoin mining that really have great power agreements and are transparent, by the way, about them. And that's where you ought to be making your bet. That's very helpful. I really appreciate the color, and yeah, that provides a lot of context.

Speaker Change: And bitcoin mining that really have great power agreements and are transparent by the way about them and that's where you ought to be making you bet.

Speaker Change: That's very helpful really appreciate the color and yeah that that that that provides a lot of context.

Lucas Nathaniel Pipes: A quick second question, just in terms of that $9.6 million towards an additional $30,000 minor. How should we think about that, by itself, from a timing perspective, and then kind of longer term, or rather, beyond that, in your head as it relates to growth? I appreciate that. Yes, sure. So, Lucas, I think that whole contract, right, is for 7 exahash total.

Speaker Change: A quick second question just in terms of that $9 6 million towards an additional 30000 miners.

Speaker Change: How should we think about kind of.

Speaker Change: That by itself from a timing perspective, and then kind of longer term.

Speaker Change: Rather beyond that whereas you had as it as it relates to growth I. Appreciate your thoughts. Thank you.

Speaker Change: Yeah sure. So Lucas I think that whole contract rate is for seven acts as total.

Speaker Change: Uh huh.

Speaker Change: You know 5000 of that neat pointed out in the call.

Been paid for and will be delivered at the end of this month and then really I think as you.

Patrick A. Fleury: You know, we haven't committed beyond what you see on page 12 of our deck, and perhaps Nazar can speak to this, but I'll just mention it, because part of it is we think that model is changing. I mean, even over the past few weeks, we've gotten some calls from folks that are discussing concepts like giving the miners to us for free with a profit share. And so, you know, I think we're hesitant to kind of commit to anything beyond what we've kind of laid out.

Speaker Change: You know we haven't committed beyond what you see on page 12 of our deck and in perhaps neither can speak to this but I'll just mention it because you.

Speaker Change: You know part of it is we think that model is changing I mean, even over the past few weeks, we've gotten some calls from folks that are.

Speaker Change: Or are discussing concepts like giving the miners to us for free with a profit share and so you know I think we're hesitant to kind of commit to anything beyond what we've kind of laid out you know, we'll have 13 acts as a infrastructure ready to rock and roll this year will be at <unk>.

Patrick A. Fleury: You know, we'll have 13x a hash of infrastructure ready to rock and roll this year. And we'll be at 10x a hash by July 1st. So that's, you know, I realize, Lucas, that's not as specific as I typically like to be, but there's a lot of movement in that market. So that's kind of how we think about it. I don't know Nazar or Paul, if you want to add anything.

Speaker Change: On an ex ash by July 1st So that's you know I realize that's not as specific as I typically like to be but there's a lot of movement in that market. So that's kind of how we think about it I don't know there are policy you want to add anything there.

Nazar M. Khan: Yeah, just add to that, Lucas, you know, the contract is for 25,000 remaining machines at $60 per tera hash, and that 9.6 million represents a 10% deposit on those machines, and so, as Patrick said, we're in that contract. And we've effectively taken down 10,000 of those machines to cover building four, which will come online here, as Patrick said, by July 1st. And then the remaining miners are on an option available to us.

Speaker Change: Yeah, just just hard to tell Lucas.

Speaker Change: Contractors for.

Speaker Change: 25000 remaining machines at $16 per tire and the $96 million represents a 10% deposit.

Speaker Change: Those machines and so as Patrick said that we.

Speaker Change: We use.

Speaker Change: In that contract and we've effectively taken down 10000 of those machines are to cover the building four which will come online here as Patrick said by July 1st and then the remaining miners are an option.

Nazar M. Khan: And for us, it's really about capital efficiency. So as we are thinking about continuing to grow the business and allocating the infrastructure most effectively, that capital kind of question comes in. And so, as Patrick said, we're looking at a number of different ways to skin that cat.

Speaker Change: Available to us and you know for US, it's really about capital efficiency. So as we're thinking about continuing to grow the business and allocating the infrastructure most effectively.

Speaker Change: That capital kind of question comes in it so as Patrick said you know, we're we're looking at a number of different.

Nazar M. Khan: And it ranges from purchasing more miners at $16 a terahash, some sort of profit share, and even, you know, kind of something in between, which would just be, you know, effectively being able to replace hashboards in machines. So you're significantly limiting your capital costs by using kind of the existing box that exists for the miner and swapping out hashboards with the next generation of hashboards. So there's a whole spectrum of things that we're actively looking at in terms of how we will populate, you know, those next buildings that are coming. Thank you, and is the deposit transferable, so if you choose to go forward with another option.

Speaker Change: Ways to skin that cat and it ranges from you know purchasing more miners at 16 Bucks tear ash.

Speaker Change: Some sort of profit share and even you know kind of something in between which would just be you know effectively being able to replace passports in Michigan. So you're you're significantly limiting your capital costs by using kind of the the existing box that exist for the minor and swapping out high sports, but with the next generation of high sports. So.

Speaker Change: There's a whole spectrum of things that we're actively looking at in terms of how we will populate those next buildings that are coming up.

Speaker Change: Thank you and if the deposit transferable. So if you can.

Speaker Change: Jos to go for it with another option.

Patrick A. Fleury: How should we think about the deposit? Now, I mean, the deposits for those machines, Lucas, so, you know, we'll either way, but as you know, that deposit kind of works down every time we take a delivery of machines regularly, right?

Speaker Change: How should we think about the deposit.

Jos: No I mean, there's a pause.

Speaker Change: That's where the those machines Lucas so well either.

Speaker Change: But as you know that deposit kind of worked down every time, we take a delivery of machines ratably.

Speaker Change: Yeah, Yeah, so the deposits down to secure the price and the future delivery and then we'll kind of work that down over time as we take machines.

Patrick A. Fleury: So, the deposit's down to secure the price and future delivery, and then we'll kind of work that down over time as we take. I appreciate the caller and continue to wish them best of luck.

Speaker Change: Got it alright, well I appreciate the color and continued best of luck.

Speaker Change: Thanks Lucas.

Lucas Nathaniel Pipes: Thank you. The next question comes from the line of Joe Flynn with Compass Point Research and Tweeting. Please go ahead.

Speaker Change: Thank you next question comes from the line of Joe Flynn with Compass point Research and trading. Please go ahead.

Joe Flynn: I guess I had a question related to the.

Joe Flynn: I got the other side of the question. Nautilus' option to expand to 50 megawatts. Do the terms of that option change at all with, you know, the Amazon acquisition, or does it require, like, a sign-off, and then, ultimately, how should we do it? Sure. Amazon is a new landlord to the agreement we have, so there's no change in the terms and conditions of the agreement.

Joe Flynn: The option to expand 15 megawatts.

Joe Flynn: Due to the terms of that option changed at all with the.

Joe Flynn: On the acquisition or does it require like a sign off and then ultimately how should we think about timing.

Joe Flynn: Timing of getting that capacity online there is no change.

Speaker Change: Sure. The the Amazon is a new landlord to the agreement. We have is the agreement we have so there's no change in the terms and conditions of the agreement. We are currently working to finalize the design for that facility, we're targeting a 20.

Nazar M. Khan: We are currently working to finalize the designs for that facility, and we're targeting a 2025 opening date for it. Currently, we're focused on completing Building 4, and we've got a pretty quick turn on delivering Building 5 at Lake Mariner. And so, we've slated the knowledge expansion for 2025. And so we are working, you know, with a landlord there to finalize the design for the building that we put up at that site, uh... great and um... and pet already, but I guess the low-cost hash price. How are you trying to be a predator?

Speaker Change: Twenty-five online date for that you know currently were focused on completing building four and we've got a pretty quick turn on delivering building five that like Mariner and so we've slated cause the nautilus expansion for 2025.

Speaker Change: And so we are working with our landlord there to finalize the design.

Speaker Change: The building that we put at that site.

Speaker Change: Oh, great and.

Speaker Change: Patrick you've kind of touched on this already but I guess in this.

Speaker Change: The low cost price environment.

Patrick: How do we prioritize prioritize.

Patrick: Between.

Patrick: Paying down debt and capex opportunities to push some capex out if.

Patrick A. Fleury: CapEx is out. Yeah, sure. I mean, I think what we tried to be again... Our philosophy, as everyone knows on this call, is being highly transparent, which many of our peers purposely do not. And so we are going the other route. So on page 12, we've literally laid out everything that the management team has committed to for this year. And so you can see on that slide, you know, we've got around... 45-50 million bucks left to raise over the next 6-7 months.

Patrick: Neither.

Patrick: Thanks.

Speaker Change: Yeah sure I mean, I think what we tried to be again.

Speaker Change: Our philosophy as everyone knows on this call is being highly transparent, which many of our peers purposely do not and so we are we are going the other routes. So on page 12, we've literally laid out everything that we the management team has committed to for this year and so you can see on that slide you know we've got.

Speaker Change: It's around <unk>.

Speaker Change: 45, 50 million Bucks left to raise over the next six seven months.

Patrick A. Fleury: So that, just to put into context, and the reason why we put slide 11 in our deck, is that absolutely pales in comparison to even if, again, even if we just did equity for that 45-50 million that we're talking about, and we used all of our free cash flow generated during this year to pay off the debt. It's just, page 11 puts it in context for you.

Speaker Change: So that just to put into context. The reason why we put slide 11 in our deck is that absolutely pales in comparison to even if even again, even if we just did equity for that 45 to 50 million that we're talking about and we used all of our free cash flow generated.

Speaker Change: This year to pay off the debt.

Jim: It's Jim.

Jim: Page 11 puts it in context 40, I mean, some of our peers issued over $500 million on the ATM in the first four months of the year.

Patrick A. Fleury: I mean, some of our peers issued over $500 million on the ATM in the first four months of the year, okay? And not only that, but they generated virtually no profit. I mean, two of our largest peers generated close to $10 million and $50 million, being close to 50% and 150% larger than our company. And we generated $32 million of EBITDA. And so I think we are happy to own and commit to what is on page 12 here because we are massively and accretively growing the business using equity as an eyedropper whereas these other companies on page 11 use equity with a fire hose.

Jim: Okay, and not only that but they generated.

Jim: Virtually no profit I mean, two of our largest peers generated close to $10 million and 50 million being.

Jim: Close to 50% and 150% larger than our company and we generated 32 million of EBITDA and so I think we we are happy to own and commit to what is on page 12 here, because we are massively and accretively growing the business using equity.

Jim: He is an eye dropper. These other companies on this page 11 use equity with a fire hose and so not only that but you know.

Patrick A. Fleury: And so not only that, but you know. And by the way, my hat's off. As you can see on the top of this page, Clean Spark is highly profitable. So using your ATM to fund highly profitable growth, I will applaud that all day. But when you're using your ATM to fund a hodl strategy where only management benefits by paying themselves more if the price of Bitcoin goes up, you know, that's why we put the quote on the top of the page.

Jim: And by the way my Hat's off you'll see on the top of this page clean spark highly.

Jim: Highly profitable so using your ATM to fund heightened profitable growth I will applaud that all debt.

Jim: But when you're using your ATM to fund a whole it'll strategy, where only management benefit by paying themselves more if if the price of bitcoin goes up.

Jim: You know that's why we put the quote on the top of the page read it revenue was Vanity profit is sanity of cash is king.

Patrick A. Fleury: Read it, revenue is vanity, profit is sanity, but cash is king. A bunch of our peers are focused, and they'll go out and tout to you guys how much exahash they're putting in the ground and how big their revenue is. Well, guess what? It doesn't matter.

Jim: One of our peers are focused and they'll go out and talk to you guys. How much actually has they're putting in the ground and how big their revenue is well guess what it doesn't matter every single business that I've ever invested in or most investors on this phone right even uber at some point Uber has to be profitable for the people.

Patrick A. Fleury: Every single business that I've ever invested in or most investors on this phone, right, even Uber, at some point, Uber has to be profitable for people to stay invested. And so I think you have to see some of these companies show you guys a profit. And I think now that we're into the halving, you know, some of the peers are telling you their hash cost, which we also put out in crystal clear numbers on page 13, both the actual realized hash cost in the first quarter and what we expect in 2Q and the second half. It's all right there for you guys to see. A bunch of our peers were asked recently, what's your cost to produce a Bitcoin? They won't even answer.

Jim: So to stay invested and so I think you have to see some of these companies show you guys. The profit and I think now that we're into the having you know some of the peers, they're telling you they're half cost, which we also put out in crystal clear numbers on page 13, both actual realized in first quarter and what we expect in <unk> and the second half.

Jim: It's all right there for you guys to see.

Jim: Most of our peers are asked recently, what's your cost to produce a big one they won't even answer I don't know how you stay invested in the company like that so we are bucking that trend and trying to give you all the tools you need to see that we are a profitable company that prudently accessing the capital markets when we need you to grow.

Joe Flynn: I don't know how you stay invested in a company like that, so we are bucking that trend and trying to give you all the tools you need to see that we are a profitable company that prudently accesses the capital markets when we need to grow. Understand? Thanks for the call.

Speaker Change: Understood. Thanks for the car.

Michael John Grondahl: Thank you. The next question comes from the line of Mike Grondahl with Northland Security. Please go ahead.

Speaker Change: Thank you next question comes from the line of Mike Grondahl with Northland Securities. Please go ahead.

Michael John Grondahl: Hey, thanks guys. Um, but I was kind of referring to slide 14, Wolf Compute, or the, or the HPC operative. Now you're kind of focused on that center column. Paul, are you thinking of this as a business, tens of millions? or hundreds of millions?

Hey, Thanks, guys I'm kind of referring to slide 14, Wolf compute or the H P C opportunity.

Michael John Grondahl: Now you're kind of focused on that center.

Michael John Grondahl: Column.

Michael John Grondahl: Paul are you thinking of this as a business tens of millions.

Or hundreds of millions.

Nazar M. Khan: And then maybe, as a follow-up, what do you think this business will look like in three to five years? So Naz, why don't you start, and then I'll come in and give my thoughts on where we're headed. Mike, we think we can grow this business to hundreds of megawatts. And so our two-megawatt pilot and the 10-megawatt building that we're designing are more geared toward an engineering exercise to ensure that the product that we have available meets all of the specifications and demands of people that will use that infrastructure, not just today but again, future-proofing a bit for at least the next couple of iterations of GPUs that may come out. And we believe, again, that the availability of power at scale at low cost and zero carbon is tight.

Michael John Grondahl: And then maybe as a follow up what do you think this business will look like in three to five years.

Nazar M. Khan: And so, we firmly believe that over time, this is a business that we could build into 100 megawatts plus. With the 300 megawatts that we have today, we think we could build that up. We are also looking at a number of other sites as well, which could further add to the capacity to build that business. So, again, we think we're trying to build a business here that's really focused on, [inaudible] Again, I gave the example earlier of Microsoft and Brookfield, 10.5 gigawatts of power that will feed directly into Microsoft's needs. And so there's only a few names in the world that can afford to do that, and they're going to do it.

Paul: So that's why don't you start and then I'll come in and give my thoughts on where we're headed because.

Paul: Sure.

Paul: Mike We think we can grow this business to hundreds of megawatts and so are our two megawatt pilot and the 10 megawatt building that we're designing is.

More geared towards an engineering exercise to ensure that the products that we have available meets all of the specifications and demands.

Paul: The people that we use that infrastructure not just today, but again, you know future proofing and bad for at least the next couple of iterations of Gpus They come out so.

Paul: And we believe again the availability of power at scale and low cost of zero carbon is tight and so we firmly believe that over time. This is a business that we can build into.

Paul: You know 100 megawatts plus with the 300 megawatts. We have today, we think we could build that up we are also looking at a number of other sites as well, which could further add to the capacity to build that business out. So so again, we think it's it's we're trying to build a business here. That's that's really focused in on that as we kind of.

Paul: You know fast forward, two or three or four years from today again, you know this page also lays out somewhat of.

Paul: The how we see the marketplace playing out.

Paul: Have your Hyperscale or is again, who have the capital and the ability to throw down a lot of cash and trying to control their own destiny and so you see them doing that in a number of different places.

Paul: Again I gave the example earlier of Microsoft Brookfield paying a half gig watts of power that will feed directly into Microsoft needs and so there's only a few names in the world that can can afford to do that and they're going to do that.

Nazar M. Khan: At the other end of the spectrum, you have, you know, kind of the newer AI companies developing; one or two or three of them will likely grow from where they are today to become something fairly significant. And you have enterprise customers in between. And so we really believe that, for other than the kind of hyperscalers, the availability of what we can offer is going to be tight, limited, and we're going to be a natural and complementary customer or partner for them.

At the other end of the spectrum you have a you know kind of the newer AI companies developing.

Paul: One or two or three of them will likely.

Paul: Growth from where they are today, it's becoming something so significant.

Paul: And you have enterprise customers in between and so we really believe that you know for other than kind of the hyperscale theirs.

The availability of what we can offer is going to be tight and limited and we're going to be a natural and complementary customer or a partner for them. So that's where we're positioning ourselves and we do think that over time. This can become a real business.

Nazar M. Khan: So that's where we're positioning ourselves, and we do think that, over time, this can become a real business. Yeah, and thanks, Tash. What I'd like to add is a couple of things. One is, you know, B.B. King has a great song. He used to sing it.

Speaker Change: Yeah, and thanks des.

Speaker Change: Like to add is a couple of things one is you know.

Paul B. Prager: It's called Don't Make You Move Too Soon. These are very early days in high-speed computing, and I think it would be prudent for us to really look at all the ways that we could take advantage of their megawatts, of their energy infrastructure. Because that's really our advantage, right? The sites, the water permits.

Speaker Change: Yeah.

He became has great soggy E cigarettes don't make you move too soon you know these are very early days and the hype in the high speed compute business and I think it would be prudent for us to really look at all the ways that we can take advantage of their met megawatts of their energy.

Speaker Change: Structure, because that's really our advantage right. Besides the water permit but it's the access to low cost carbon free energy that is what is so enabling on a long term basis to building a business at Wolf.

Paul B. Prager: But it's the access to low-cost, carbon-free energy that is what is so enabling on a long-term basis to building a business at Wal-Mart, so I think. That is why we're focused on that center column right now, because that's where we think it's likelyest to see the best value for Wolf shareholders. That said, we're constantly, I mean, this is all we talk about every minute of the day, trying to figure out how do we get the most value for our shareholders out of our energy industry. I think on a long-term basis.

Speaker Change: So I think.

Speaker Change: That is why relocate our that's why we're focused on that center column right now because that's where we think it's likely to see the best value for both shareholders.

Speaker Change: That said we're constantly I mean this is this is all we talk about every minute of the day trying to figure out how do we get the most to our shareholders out of our energy infrastructure.

Speaker Change: I think on a long term basis.

Michael John Grondahl: You would see Wolf having, you know, two divisions, if you will, high-speed compute and Bitcoin mining. We like Bitcoin mining. We're very constructive about the price of Bitcoin. We are the most efficient at it, and we don't think it would be prudent to just sort of... switch gears and become a high-speed compute company. Particularly at this point in time, there's so much to learn.

Speaker Change: You would see Wolf, having you know to two divisions, if you will high speed computing bitcoin mining.

Speaker Change: We like Bitcoin mining, we're very constructive on the price of bitcoin.

Speaker Change:

Speaker Change: We are the most efficient at it and we don't think it would be prudent to just sort of.

Speaker Change: Switch gears I'm, a high speed compute company.

Speaker Change: Particularly at this point in time, there's so much to learn we think the right thing to do is to sort of continue our analysis focused on the center column.

Michael John Grondahl: We think the right thing to do is to sort of continue our analysis, focus on the center column, do what we're doing in terms of the two and then the 10 megawatts, and then, you know, continue to be dedicated to Bitcoin mining at the lowest possible cost. And so that's where I think we're headed. I think I think that will also avail us additional opportunities in terms of our cap structure because I think that, again, The High Speed Computing Space, much more.

Speaker Change: Do what we're doing in terms of the two and then the 10 megawatts and then you know continue to be dedicated to bitcoin mining at the lowest possible cost.

Speaker Change: And so that that's where I think we're headed I think I think that will also avail us additional opportunities in terms of our cap structure, because I think that again the.

Speaker Change: High speed computing space much more it's it's much kinder on an institutional level.

Michael John Grondahl: It's much kinder on an institutional level to a business when you think about lending and the kind of terms that are available to you. So, I think that's where we'll end up. Got it. And then one follow-up. I'm trying to connect slide 12. One of the uses of the $47 million of capital is Wolf Compute, and it says $5 million. How did that do?

Speaker Change: To a business and when you think about lending and the kinds of terms that are available to you. So.

Speaker Change: I think that's where we'll end up.

Speaker Change: Got it.

Speaker Change: And then one follow up.

Speaker Change: I'm trying to connect slide 12.

Speaker Change: One of the uses of the 47 million of capital is Wolf compute and it says five.

Speaker Change: How did that.

Nazar M. Khan: Blend into slide 14 in the financing line for the middle column, you know, it says equity initially. Can you just kind of speak to the financing and what equity initially means in that center column and how far 5 million goes? Yeah, Naz. Do you want to take that first part and then I'll take the second on the slides?

Speaker Change: Blend into slide 14 in the financing line for the Middle column you know it says equity initially can you just kind of speak to.

Speaker Change: To the.

Speaker Change: To the financing and what equity initially means in that center column and how far 5 million goes.

Speaker Change: Yeah, No you want to take that first part and then I'll take the second on the size.

Speaker Change: Sure.

Speaker Change: The.

Nazar M. Khan: Sure. The two megawatt pilot that we're building is largely, or most of that $5 million budget. So that's the full design, engineering, and construction costs associated with that 2-megawatt pilot. That 2-megawatts of capacity will be available in early August, and we're in discussions with a number of different county parties around utilizing that capacity. So that's where the bulk of that goes, and that budget also includes the engineering and design work for the 10-megawatt building as well.

Speaker Change: The two megawatt pilot that we're building are largely most of that $5 million budget. So that's the full.

Speaker Change: Design engineering construction cost associated with that two megawatt pilot that two megawatts of capacity will be available in early August and we're in discussions with a number of different counterparties around utilizing that capacity and so that's where the bulk of that goes in that budget also includes.

Speaker Change: The engineering and design work for the 10 megawatt building as well and again that 10 megawatt building is designed to be scalable and so whether we built 10 megawatts 20 megawatts 30 megawatts.

Nazar M. Khan: And again, that 10-megawatt building is designed to be scalable, and so whether we build 10 megawatts or 20 megawatts or 30 megawatts, it's really just scaling up that design. And so that's what's included in that budget for that. Yeah, and then, Mike, to answer your question, I think it's helpful to distinguish between perhaps the build-to-suit, which is the right column, and then the co-location, which is the middle column.

Speaker Change: It's really just scaling up that design and so that's what's included in that budget there for.

Speaker Change: Towards the compute business.

Speaker Change: Yeah, and then Mike to answer your question. So I think it's helpful to distinguish between perhaps the build to suit.

Speaker Change: The right column and then the co location, which is the middle column. So in the build to suit model, which I think you know we've talked a little bit about before that's a.

Patrick A. Fleury: So in the build-to-suit model, which I think, you know, we've talked a little bit about before, that's a single company, you know, big public company, you know, Magnificent Seven type stock. And what we've learned as we have gotten down that rabbit hole is that's, you know, borrow Paul's phrase, although BB King wasn't, he was far from a one-hit wonder, but that's a bit of a one-hit wonder, meaning we think we can create a lot of value doing that, but then it's a, you know, one-time event creates a lot of value, and then we're working for that entity basically for the next 15 years.

Speaker Change: Single Company, you know big public company.

Speaker Change: A magnificent seven type stock and what we've learned is we have gotten down that rabbit hole is that's a you know a borrow Paul's phrased, although BB King wasn't he was far from a one hit wonder, but that's a bit of a one hit wonder, meaning we think we can create a lot of value doing that but then it's a.

Speaker Change: You know one time event creates a lot of value and then we're working for that entity basically for the next 15 years, whereas if we pursue the co location.

Patrick A. Fleury: Whereas if we pursue the co-location, and by the way, sorry, just backing up, Mike, that's obviously very financeable because that corporate, right, is an A-plus credit, and so, generally speaking, you can get 80 to 90 percent financing at 250 to 300 basis points behind the corporate credit.

Speaker Change: And by the way sorry, just back and I'm like that's obviously very financeable, because that corporate rate as an a plus credit and so generally speaking you can get 80% to 90% financing.

Speaker Change: At 250 to 300 basis points behind the corporate credit and so.

Patrick A. Fleury: And so, that's different if you go to co-location, the middle column; it's essentially the same business, but instead of the sort of magnificent seven type stock taking all the profits, because, as we know, those companies are all very profitable, Wolf gets to effectively bring in third parties to help us manage that, because that's, you know, our business isn't cloud compute, but we can leverage third parties that aggregate enterprise customers, and And so initially, that is equity, but as that business matures, it is also financeable, you know, up to kind of 80 ish percent, but it's kind of baby steps because you've got to aggregate the customers, and then there's sort of safety in numbers once you have a bunch of customers in there, as opposed to just financing off of the back of the corporate credit rating of one customer. Does that make sense?

Speaker Change: That's different if you go to co location in the Middle column, it's essentially the same business, but instead of the sort of magnificent seven type stock taking all the profits because as we know those companies are all very profitable.

Patrick A. Fleury: Yeah, that's helpful. Thank you. The next question comes from the line of Bill Papanastasiou with Stifel. Please go ahead.

Speaker Change: <unk> gets to effectively bring in third parties to help us manage that because that's you know our business isn't cloud compute but we can leverage third parties that aggregate enterprise customers and then you know finance off that and so initially that is that is equity, but as that business much.

Speaker Change: <unk> is also financeable.

Speaker Change: Up to kind of 80 ish percent, but it's it's it's kind of baby steps because you've got to aggregate the customers and then there's sort of safety in numbers. Once you have a bunch of customers in there as opposed to just financing off the back of the corporate credit rating of one customer does that makes sense yeah.

Speaker Change: That's helpful.

Speaker Change: Okay.

Bill: Thank you next question comes from the line of Bill pop unless they feel with Stifel. Please go ahead.

Bill Papanastasiou: Good evening, gentlemen. I appreciate the transparency in the slide deck and those funny analogies on dilution. For my first question, I'm just curious to hear whether there's been an uptick in the number of subscale Bitcoin mining peers knocking on your door following the halving event, just given the dynamics of mining economics. Do any of these peers have compelling assets or operations that would be of appetite to Chair Wolf today, or will the focus remain on the existing growth plans at Lake Mariner and the HPCA? and Paul Pilon.

Bill Papanastasiou: Good evening, gentlemen, I appreciate the transparency in the slide deck and those funny analogies on dilution for my first question I'm, just curious to hear whether there's been an uptick in the number of subscale bitcoin mining peers, knocking on your door or into having a that just.

Bill: Given all the dynamics on mining economics.

Bill: Do any of these peers have compelling assets or operations.

Bill: That would be of appetite to terrible today.

Bill: Hmm.

Bill: Or or will the focus remain on the existing growth plans at Lake Mariner M. D. H P C I puts us.

Speaker Change: Yeah, Paul I'll happy to yeah sure.

Paul B. Prager: Listen, I think we have to focus on the execution of our business plan, and that's what we're focused on. We have, you know, even when Nazar mentioned earlier, like pushing Nautilus' expansion out to 2025, it's because we have such a low cost to build at Lake Mariner that it just makes sense for us to focus on the careful and considerate execution of our business plan with our existing... That's it. Everybody in the space is talking to everybody else in the space.

Speaker Change: Listen I think we have to focus on execution of our business plan and that's what we're focused on.

Speaker Change: We have you know even when as I mentioned earlier like pushing nautilus's expansion out to 2025, it's because we have such a low cost to build.

At like Meritor that it just makes sense for us to focus on.

Speaker Change: The careful and considerate execution of our business plan with our existing sites that said everybody in this space is talking to everybody in the space.

Paul B. Prager: And as you know, we have a management team that's been together for a very, very long time, and they are really focused on energy infrastructure. And, as Patrick, you know, went off of that a little while ago, really focused on even a per-exa-hash at the smallest dilution to the shareholder. So, culturally, finding somebody that would be a right fit for us is probably not easy.

Speaker Change: As you know we have a management team that's been together for a very very long time that are really focused on energy infrastructure.

Speaker Change:

Speaker Change: As Patrick you know went off about a little while ago really focused on EBITDA for excess cash at the smallest dilution to the shareholders. So culturally finding somebody that would be a right fit for us probably not easy.

Paul B. Prager: And we're very focused, as well, on the carbon-free element in our energy. So I think that, sure, everybody is chatting. Are there many likely dates?

Speaker Change: And we're very focused as well on the carbon free element to our energy. So I think that I'm sure. You know everybody is chat and are there many likely dates I don't think so I think we need to focus on.

Paul B. Prager: I don't think so. I think we need to focus on execution, Paying Down Our Debt. And we're on our way. I think the institutions, when they come to the market, are coming to us. They're appreciating the level of transparency and the actual performance that Dara Wolf is delivering under Nazar and Patrick.

Speaker Change: Just execution paying down our debt.

Speaker Change: And run our way I think you know the institutions when they come to the market are coming to us they're appreciating the level of transparency and the actual performance that Darryl is delivering under an asthma and Patrick and I think that we just need to continue to get that message out to.

Paul B. Prager: And I think that we just need to continue to get that message out to the real world. If you, again, take a look at that slide 11. We're talking about Eve, setting it up for Exahash, and then you take a look at the massive dilution on the right side of the page versus the left, hardly any on the left side of the page.

Two two to the real world.

Speaker Change: If you again take a look at that slide 11 am.

Talking about.

EBITDA per exit cash and then you take a look at the B.

Speaker Change: Massive dilution on the right side of the paid versus the <unk>.

Speaker Change: Hardly any on the left side of the page and then when you put in that third column, where you looked at stock based comp I mean, it really is very troubling and you'll see that they're just there are a lot of companies out there that they just they they shouldn't be out there and and it doesn't make sense for us to sort of join with them because you.

Paul B. Prager: And then when you put in that third column where you look at stock-based comp, I mean, it really is very troubling. And you'll see that there just are a lot of companies out there that just shouldn't be out there. And it doesn't make sense for us to sort of join with them.

Bill Papanastasiou: You know, we're all about making money through the appreciation of the shares, so we are aligned with our goals. That's sort of how I look at it. Cultural is a big issue with us because again, focused on energy infrastructure and been around a long time. Shifting gears, just hoping to get some more color on the debt repayment plans. Previously, there were talks about potentially refinancing once the indebtedness dipped below 100 million. Should we assume that that's completely off the table and, you know, full repayment's going to happen before 2024? Any color you can provide there? Yeah, Bill, it's Patrick.

Speaker Change: We're all about making money through the appreciation of the shares of our stock.

Speaker Change: We're aligned with our investors. So that's sort of how I look at it cultural is the big issue with us because again focused on the energy infrastructure and we've been around a long time.

Speaker Change: I appreciate that color shifting gears, just hoping to get some more color on the debt repayment plans previously.

Speaker Change: Previously they there were talks about potentially refinancing once the indebtedness that.

Speaker Change: Below $100 million.

Speaker Change: Should we assume that that's completely off the table and full repayment is going to happen before 2020 for any color you can provide there.

Patrick A. Fleury: So like I said, you'll see in our updated slide deck on page 12, we've laid out the capital bridge for 2024. Our free cash flow this year will take care of all of our debt. And then we've got some commitment out there for building 5. Also, laying the foundation. You'll see on that page we've got a bar chart that says LMD site electrical. That's some electrical work that we're doing on the site that will allow us to expand, you know, into 300 megawatts very quickly. So some significant line expansion, transformers, and upgrades that we're doing.

Speaker Change: Yeah Bill it is Patrick so.

Patrick: On you'll see in our updated slide deck on page 12, we've laid out the capital bridge for 2024, our free cash flow. This year will take care of all of our debt.

Patrick: And then we've got some commitments out there for building five also laying the foundation, you'll see on that page. We've got a bar chart that says M. D size electrical that's some electrical work that we're doing on the site that will allow us to expand into 300 megawatts very quickly. So some significant.

Patrick: Line expansion Transformers upgrades that we're doing so.

Patrick A. Fleury: So I think, yeah, I mean, look at the financing market. [inaudible] The biggest asset of our company is the cash flow generating ability because our power costs are so low and our profitability is so high. So let's take advantage of that, get rid of the debt, and then start looking to the future. Awesome.

Patrick: Yeah, I mean look if it if the financing market.

Get more affordable work, we'd want to sort of combine that that may be with the debt financing at the compute business. Yeah. I mean, there's a lot of options on the table that would that decrease.

Patrick: The capital need there, but I think for now.

Patrick: Our view is you watch it.

Patrick: Yeah, the biggest asset of our company is the cash flow generating ability because our power costs are so low and our profitability is so high so let's take advantage of that get rid of the debt and then you know.

Patrick: Start.

Patrick: Look to the future.

Patrick: Yeah.

Patrick: Awesome.

Speaker Change: Thanks for answering the questions and congrats on the strong operating cash flow.

Speaker Change: Thanks Bill.

Bill Papanastasiou: Thanks for answering the questions and congratulations on the strong operating cash flow. Thanks, Bill. Thank you. The next question comes from the line of Marcelo Rossi, a private investor. Please go ahead. Hey everyone, thanks for taking the question. I understood Nautilus. [inaudible] Earlier in the call, somebody mentioned there was just an L.A.T. power outage.

Bill: Thank you <unk>.

Next question comes from the line of Maslow ROTC.

But I wouldn't messed up please go ahead.

Hey, everyone. Thanks for taking the question I understood Nautilus runs on two cents per kilowatt power, but earlier in the call somebody mentioned there was seasonality power cost adjustments.

Marcelo Rossi: Do you elaborate on that, what percentage of the power? Yeah, sure, Marcel. It's a good question. My name is Patrick Fleury.

Maslow ROTC: Can you elaborate on that what percentage of the power is subject to seasonality.

Patrick A. Fleury: So we have...two hundred and ten megawatts in operation right now, fifty megawatts at Nautilus, that is fixed power at two cents, and then the hundred and sixty that we have at Lake Mariner, which is soon to be a hundred ninety-five when building four comes online July first, that power floats. And we realize, generally, zone A power prices in the New York ISO at that plant. And so you can see, if you look on page 20 of our updated deck there, that power generally at Lake Mariner has been around $0.04.

Speaker Change: Yeah sure myself.

Speaker Change: Good question, it's Patrick flurry so.

Patrick: We have.

Patrick A. Fleury: 210 megawatts in operation right now.

Patrick A. Fleury: The megawatts at Nautilus that is fixed power at Tucson.

Patrick A. Fleury: And then the 160 that we have that like Mariner, which is soon to be 195. When building four comes online July 1st that power flows.

Patrick A. Fleury: And we realized generally zone a power prices in the new in the New York ISO at that plant.

Patrick A. Fleury: Plant and so you can see if you look on page 20 of our updated deck there that power generally at a lake Mariner has been around four cents.

Patrick A. Fleury: Last year, for the entire year of 2023, we realized they blended 3.2 cents at both sites, and that was roughly $0.02 at Nautilus and I think $3.6 or $3.8 at Lake Mariner. And so, yeah, typically, in the first quarter, our power is a little higher. In the shoulder months, which tend to be, you know, the second quarter and the fourth quarter, those tend to be really low price periods at Lake Mariner because there's no real demand there.

Last year for the entire year 2023, we realized a blended 3.2 cents at both sites.

And that was roughly two cents.

Patrick A. Fleury: Nautilus and I think 3.638 at Lake Mariner and so yeah. There are they're typically in the first quarter, our powers a little higher in the shoulder months, which tends to be you know the second quarter and the fourth quarter those tend to.

Patrick A. Fleury: The really low price periods at Lake Mariner, because theres no real demand there the demand is really a function of heating and cooling days. So it's mostly in the winter.

Patrick A. Fleury: The demand is really a function of heating and cooling days, so it's mostly in the winter where it gets real cold for a couple weeks, and then in the summer where it's real humid for a couple weeks. But that's the beauty about being 30 miles east of Niagara Falls.

Patrick A. Fleury: Where it gets real cold for a couple of weeks and then the summer where its real human for a couple of weeks, but that's the beauty about being 30 miles east of Niagara Falls.

Patrick A. Fleury: So, yeah, we haven't changed our guidance for the year. It's still that we expect to realize $0.035 and, like I said, we feel good because we realized $0.032 last year. Thank you. The next question comes from the line of Bob Evans with Pennington Capital. Please go ahead.

Patrick A. Fleury: So yes, so we haven't changed our guidance for the year, it's still that we expect to realize 3.5 cents and like I said, we feel good because we realized a 3.2 cents last year.

Speaker Change: Thank you.

Speaker Change: Thank you next question comes from the line of Bob Evans, but Pennington capital. Please go ahead.

Speaker Change: Sure.

Speaker Change: Yes.

Bob Evans: Mr. Evans, please go ahead with the question. Hi, thanks for taking my question. Just to follow up a prior question, just to get a sense of scale that you're thinking for the HPC-AI opportunity. I know you're looking at the middle part of the slide, but again, is this a hundreds of millions of revenue opportunity? Or give us some sense of scale, at least what we should think this should ramp to. I know you're trying to put various clients into this, into this project, but just give us a sense of revenue potential.

Bob Evans: Mr. Evans. Please go ahead with the question.

Bob Evans: Hi, Thanks for taking my question just a follow up a prior question just to get a sense of scale that you're thinking.

Bob Evans: For the H P C a opportunity.

Mr. Evans: I know you were looking at the middle of the Middle part of the slide but again is this is this a hundreds of millions of revenue.

Mr. Evans: Opportunity or give us some sense of scale at least what we should think this should ramp to I know you're trying to put various clients into this.

Mr. Evans: Into this project, but just give us a sense of revenue potential.

Mr. Evans: Sure.

Bob Evans: Yeah, look, I think Bob, you know, as we kind of put it on the page, right? If we took 300 open megawatts at Lake Mariner, you can multiply 300 times 1.3 and 1.5, you know, 300 to 450 million. So I think Nazar, you know, answered earlier like we expect it to be in the hundreds of millions.

Speaker Change: Yeah look I think Bob you know.

Speaker Change: As we kind of put on the page right I mean.

Speaker Change: If we took 300.

Speaker Change: Our 300 open megawatts at Lake Mariner.

Speaker Change: Right. It would be you know you can multiply 300 times, one three and 1.5 right. So it's you.

Speaker Change: You know $300 million to $450 million.

Speaker Change: So I think neither you know answered earlier like we expect it to be in the hundreds of millions you know I think at this point, we're not committed to dedicating as Paul mentioned all of that capacity to H B C. A I because we're very good at bitcoin mining as well, but we're also infrastructure people and and you know.

Patrick A. Fleury: You know, I think at this point we're not committed to dedicating, as Paul mentioned, all of that capacity to HPCAI because we're very good at Bitcoin mining as well. But we're also infrastructure people, and, you know, there's a big business that sits outside of the public company as well. So I think I would just say stay tuned. There's lots to come this year on that. Okay, and then is the right way to look at it in terms of cost per megawatt and revenue per megawatt? And then if we just take the midpoints of both of those ranges and divide them out, is that...

Speaker Change: There's a big business that sits outside of the public company as well. So I think I would just say stay tuned theres lot.

Speaker Change: To come this year on that.

Speaker Change: Okay and then he is the right way to look at it on the.

Speaker Change: Cost per megawatt and revenue per megawatt.

Speaker Change: I mean, if we just take the mid points of both of those ranges and divide it out does that mean it's.

Bob Evans: I guess my understanding is that this business might have kind of a payback period of a couple of years, but if I do the math, it might look like it's longer than that. I'm just trying to understand the right way to think of cash generated and paying for itself. Yeah. So that's a really good question, Bob. So, we are, and look, I just want to caveat this because, you know, we put down a lot of numbers here on page 14, and you'll see that the title of the page is Potential Illustrative Business Models.

Speaker Change: I guess my my understanding is that this business might be kind of a payback period of a couple of years, but if I do that math it might look like it's longer than that I'm just trying to understand.

Speaker Change: The right way to think of cash generated and paying for itself. Yeah. So that's a really good question Bob So.

Speaker Change: So we are and look I, just I want to caveat that because you know we put down a lot of numbers here on the page on page 14, and you'll see that it says the title the pace just potential illustrative business models and I just wanted to point out Bob that we've been you know where we're a hard working smart man.

Bob Evans: And I just want to point out, Bob, that we've been, you know, we're a hardworking, smart management team, but we've been studying this business for nine months, right? We've been in the private power business for 30. So, you know, when you're in your lane for 30 years, and you get into a new lane, you know, there's a lot of work to do before you get run over. You don't want to get run over.

<unk> team, but we've been studying this business for nine months right. We've been in the private tower business for 30. So you know when you're in that in your lane for 30 years and you get into a new lane.

Speaker Change: There's a lot of work to do before you get bundle you don't Wanna get run over so this is our initial learning.

Speaker Change: Hum, but I think generally speaking the.

Patrick A. Fleury: So, this is our initial learning. But I think, generally speaking, the cloud business, right? So the far left column, much more revenue, sorry, much more capital-intensive business, but quicker paybacks, right, because people are desperate for GPUs as a service business. We're more focused, again, I think our sweet spot is, don't necessarily, we aren't comfortable taking the GPU technology risk yet that the far left column would require. So the co-location business, yeah, to your point, it doesn't have this sort of 18 months to 36-month payback. It's more of a kind of, I would say, three to eight-year payback period.

Speaker Change: Cloud business right. So the far left column.

Speaker Change: Much more revenue.

Speaker Change: Sorry, much more capital intensive business.

Speaker Change: But quicker paybacks right because people are desperate for GPU as a service type business.

Speaker Change:

Speaker Change: We're more focused again I think our sweet spot is neither pointed out where infrastructure people and we also.

Speaker Change: Don't necessarily we aren't comfortable taking the GPU technology risks yet that the far left column would require so the co location business yeah to your point it doesn't have the sort of 18 months.

Speaker Change: <unk> 36 month payback, it's more of a kind of I would say three to eight year payback period, but that's still pretty good and that and that business. Like we said, we think these multiples down here in the bottom of the page you're very conservative, but our view is that should be a 10 to 20 stable multiple business overtime.

Patrick A. Fleury: But that's still pretty good, And that business, like we said, we think these multiples down here on the bottom of the page are very conservative. But our view is, you know, that should be a 10 to 20 stable multiple business over time. So we think we can create a lot more value with less capital, focusing on that middle column versus either the left or the right. Okay, so if I was going to simplify it, we'd say you believe you can build a multi-hundred million dollar business with, call it, 70% plus EBITDA margins that should have a higher EBITDA value than, you know, than a lot of other authors. Yeah, correct, and the only thing I would add is less capital intensity as well.

Speaker Change: So we think we can create a lot more value with less capital.

Speaker Change: Focusing on that middle column.

Speaker Change: Versus either the left or the right.

Speaker Change: Okay. So if I was going to simplify it we'd say.

Do you believe you can build a multi hundred million dollar business with us.

Speaker Change: Call it 70% plus EBITDA margins that should have a higher EBITDA value.

Speaker Change: Multiple then.

Speaker Change: Then you know.

Speaker Change: And then a lot of other options out there.

Speaker Change: Yeah, correct and the only thing I would add is less capital intensity as well.

Speaker Change: Yeah, I would say that I wouldn't want to just say one other thing is that you're mentioned in this presentation.

Patrick A. Fleury: Okay. Yeah, but I would want to just say one other thing. As Nazar mentioned in his presentation, you know, we've got these two-megawatt units at Wolf Compute, and we're putting up a 10-megawatt facility. So we are, we're not set, Bob, on... What we're going to do here, we're set on taking the experience of Wolf Compute 2 and putting up this 10 megawatt building and continuing to refine our analysis to come up with the right program for tarot, utilizing both the existing infrastructure that we have and the access to large, massive other infrastructure that we would have sort of outside of public vehicles. That's the point.

Paul B. Prager: The 2 megawatts and the 10 megawatts are us dipping our toe in the water in a prudent way to ensure we come up with the right answer on behalf of our customers. I get that, and I agree with you, and that obviously, if things work out anywhere on this slide, it's a higher multiple, more predictable business model. I agree. Thank you.

Speaker Change: We've got these two megawatt.

Speaker Change: At Wolf compute we're putting up a 10 megawatt facility. So we are we're not set Bob on.

Speaker Change: What we're gonna do here were set on taking the experience of Wolf computed two and putting up this 10 megawatt building and continuing to refine our analysis to come with the right.

Speaker Change: Program for terrible.

Speaker Change: Utilizing both the existing infrastructure that we have and the access to large massive.

Speaker Change: Other infrastructure.

Speaker Change: That we would have sort of outside of.

Speaker Change: The public vehicles so.

Speaker Change: That's that's the point the two megawatts 10 megawatts are us dipping our toe in the water in the prudent way to ensure we come with the right answer on behalf of our shareholders.

Speaker Change: I I get that and I I I I I agree with you and that obviously.

Speaker Change: Things work out to.

Anywhere on this slide it's a oh.

Speaker Change: A higher multiple more predictable business model so.

Speaker Change: I I agree.

Speaker Change: Thank you thanks for clarifying clarifying.

Speaker Change: Thanks, Bob.

Jason Assad: Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. I would now like to turn the floor over to Jason Assad for closing comments.

Speaker Change: Thank you ladies and gentlemen, we have reached the end of question and answer session I would now like to turn the floor over to.

Speaker Change: Jason Assad for closing comments.

Jason Assad: Thank you, Operator. That concludes today's conference call. Thank you for joining us. I'm pleased to note this has been one of our highest-pinned calls, so thank you for the continued and growing support. I'd also like to again remind you about our new investor deck, which may be found on our website at parowolf.com. Much like everything we do, it was proposed in the spirit of transparency. We hope investors will find it insightful.

Thank you operator that concludes today's conference call. Thank you for joining us I'm pleased to note that this has been one of our highest attended call. So thank you for that.

Speaker Change: Continued and growing support.

Jason Assad: I'd like to again remind you about our new investor deck, which may be found on our website at fair Wolf dotcom much like everything we do it was proposed in the spirit of transparency, we hope investors will find it insightful you ever have any questions or need anything please reach out directly as always please remember to followers on social media operator, you may end the call.

Operator: If you ever have any questions or need anything, please reach out directly, as always, and please remember to follow us on social media. Operator, you may end the call. Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and Bill Papanastasiou.

Speaker Change: Thank you. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.

Uh huh.

Speaker Change: Yeah.

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