Q1 2024 Core Scientific Inc Earnings Call

Tia: Good afternoon, ladies and gentlemen. Thank you for joining today's CORE Scientific first quarter fiscal year 2024 earnings conference call. My name is Tia, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the call over to your host, Steve Titlin. Please proceed.

Good afternoon, ladies and gentlemen, thank you for joining today's core scientific first quarter fiscal year 2024 earnings conference call.

Steve Titlin: My name is Tia and I'll be your moderator for today's call.

Tia: All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question. Please press star one on your telephone keypad.

Tia: Now I'd like to pass the call over to your host Steve Gitlin. Please proceed.

Stephen Gitlin: Good afternoon, ladies and gentlemen, and welcome to Core Scientific's first quarter fiscal year 2024 earnings call. This is Stephen Gitlin, Senior Vice President of Investor Relations for Core Scientific. At this time, all participants are in a listen-only mode.

Tia: Good afternoon, ladies and gentlemen, and welcome to core Scientifics first quarter fiscal year 2024 earnings call. This is Steven Gitlin Senior Vice President of Investor Relations for core scientific at this time, all participants are in a listen only mode.

Stephen Gitlin: We will conduct a question and answer session after management's remarks. As a reminder, this conference is being recorded for replay purposes. Before we begin, please note that on this call, certain information presented contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement other than historical or current facts that predict or indicate future events or trends, forecasts, performance, or achievements, and may contain words such as believe, anticipate, expect, estimate, intend, project, plan, or words or phrases of similar meaning

Stephen Gitlin: We will conduct a question and answer session. After management's remarks as a reminder, this conference is being recorded for replay purposes.

Stephen Gitlin: Forward-looking statements are based on current expectations, forecasts, and assumptions that involve risks and uncertainties that may cause actual results to differ materially. For further information on these risks and uncertainties, we encourage you to review the risk factors discussed in the company's annual report on Form 10-K filed with the Securities Exchange Commission and the special note regarding forward-looking statements contained in the company's current report on Form 8-K filed today and the earnings release and slide presentation contained therein.

Stephen Gitlin: Before we begin please note that on this call certain information presented today's forward looking statements within the meaning of the safe Harbor provisions of the private Securities Litigation Reform Act of 995.

Stephen Gitlin: Today's presentation is available on our website at corescientific.com in the events and presentations section. The content of this conference call contains information that is accurate only as of today, May 8, 2024. The company undertakes no obligation to update statements made today to reflect events or circumstances occurring after today.

Stephen Gitlin: Forward looking statements include without limitation any statements other than historical or current facts that predict or indicate future events or trends forecast performance or achievements and may contain words, such as believe anticipate expect estimate intend project plan or words or phrases of similar meaning.

Stephen Gitlin: Forward looking statements are based on current expectations forecasts and assumptions that involve risks and uncertainties that may cause actual results to differ materially.

Stephen Gitlin: For further information on these risks and uncertainties. We encourage you to review the risk factors discussed in the Companys annual report on Form 10-K filed with the Securities Exchange Commission and a special note regarding forward looking statements contained in the company's current report on form 8-K filed today and the earnings release and slide presentation.

Stephen Gitlin: Today's presentation is available on our website at core scientific dot com in the events and presentations section.

Stephen Gitlin: Content of this conference call contains information that is accurate only as of today may eight 2024.

Stephen Gitlin: The company undertakes no obligation to update statements made today to reflect events or circumstances occurring after today.

Stephen Gitlin: Joining me today from Core Scientific are Chief Executive Officer Mr. Adam Sullivan and Chief Financial Officer Mrs. Denise Sterling. We will now begin with remarks from Adam Sullivan.

Speaker Change: Joining me today from core scientific our Chief Executive Officer, Mr. Adam Sullivan, and Chief Financial Officer, Mrs. Denise Sterling.

Adam Sullivan: We will now begin with remarks from Adam Solver Adam.

Adam Sullivan: Thanks, Steve.

Adam Sullivan: I'll start today's call with a high-level summary of our positioning as we enter 2024 and some highlights of our exceptional first quarter performance. I will then hand the call over to Denise Sterling to review our first quarter financial results... After Denise's remarks, I'll take some time to talk about the current industry environment and our strategy to drive continued growth and value creation for 2024 and beyond. We will then take your questions.

Adam Sullivan: I'll start today's call with a high level summary of our positioning as we enter 2024 and some highlights of our exceptional first quarter performance.

Denise Sterling: Then hand, the call over to Denise early and to review our first quarter financials.

Denise Sterling: After todays remarks, I will take some time to talk about the current industry environment and our strategy to drive continued growth and value creation for 2024 and beyond.

Denise Sterling: We will then take your questions.

Adam Sullivan: Core Scientific is a market leader position for growth. Slide 3 summarizes the position of strength from which we operate today, highlighted by the following key points. First, we operate the largest owned Bitcoin mining infrastructure in the industry in terms of operating megawatts, comprising approximately 745 megawatts of operational power and contracts for a total of up to 1.2 gigawatts of power. Next, we own and control every structure, every transformer, and every concrete pad in our seven mining data centers.

Adam Sullivan: Fortunately typically as a market leader position for growth slide.

Adam Sullivan: Slide three summarizes position of strength from which we operate today highlighted by the following key points.

Adam Sullivan: First we operate the largest own bitcoin mining infrastructure and the industry in terms of operating megawatts comprising approximately of 745 megawatts of operational power and contracts for a total of up to one two gigawatts of power.

Adam Sullivan: We own and control every structure every transformer and every concrete pattern or seven mining data centers.

Adam Sullivan: Finally, we have the experience, track record, and team to monetize our infrastructure for the highest value uses and to secure additional infrastructure opportunistically. We started our business by identifying high-power sites with attractive power rates that could support emerging high-value compute applications. We focus on designing and building efficient, low-cost, proprietary infrastructure for Bitcoin mining operations that offer attractive hosting opportunities for third parties. When the price of Bitcoin increases, we use our expertise to mine for our own account.

Adam Sullivan: Finally, we have the experience track record and team to monetize our infrastructure for the highest value users into secured additional infrastructure opportunistically.

Adam Sullivan: We started our business by identifying high power sites with attractive power rate that could support emerging high value compute applications, we focused on designing building efficient low cost proprietary infrastructure, particularly mining operation that offered attractive posting opportunities for third parties.

Adam Sullivan: When the price of Bitcoin increase we use our expertise to mine for our own account.

Adam Sullivan: We invested in mining equipment and expanded the geographic footprint of our infrastructure, increasing our revenue and the ROI of our original infrastructure investment. You can see our current infrastructure footprint on slide 4. Our industry-leading infrastructure has allowed us to produce more Bitcoin than any other public company for the last three years through our self-mining business, shown on slide five. We now believe our infrastructure is well positioned to take advantage of the enormous demand for power and infrastructure required for high-performance computing, and we see this as the next major growth opportunity for our business.

Adam Sullivan: We invested in mining equipment and expanded the geographic footprint of our infrastructure, increasing our revenue and the ROI of our original infrastructure investment.

Adam Sullivan: You can see our current infrastructure footprint on slide four.

Adam Sullivan: Our industry, leading infrastructure has allowed us to produce more <unk> than any other public company for the last three years through our self money business shown on slide five.

Adam Sullivan: We now believe our infrastructure is well positioned to take advantage of the enormous demand for power and infrastructure required for high performance compute and we see that as the next major growth opportunity for our business.

Adam Sullivan: With the demand for ready high-power sites increasing rapidly, our infrastructure can be repurposed to provide access to HPC without the development, planning, regulation, construction, permitting, and supply chain timelines associated with greenfield HPC sites. According to Bank of America Research, power demand from data centers is expected to double in the next three to five years. With this in mind, we'd like to focus today's conversation around a simple central theme.

Adam Sullivan: With the demand for ready high power site, increasing rapidly our infrastructure can be repurposed to provide access to HPT without the development planning regulation construction permitting and supply chain timelines associated with Greenfield HPT sites.

Adam Sullivan: According to Bank of America Research power demand from data center is expected to double in the next three to five years.

Adam Sullivan: With this in mind, we would like to frame today's conversation around a simple central theme.

Adam Sullivan: Owning and controlling all of our valuable high-power data center infrastructure gives us a significant advantage at a time when the demand for such infrastructure exceeds the available supply. Our high-power data center infrastructure places us in a uniquely valuable position where we can balance our portfolio between Bitcoin mining and alternative compute hosting to maximize cash flow, minimize risk, and maintain significant exposure to Bitcoin's upside potential. We can offer clients a shorter time to power as compared to them waiting potentially three to five years for new Greenfield data center capacity to come online.

Adam Sullivan: Owning and controlling all our valuable high powered datacenter infrastructure gives us a significant advantage at a time when the demand for such infrastructure exceeds the available supply.

Adam Sullivan: Our high power data center infrastructure places us in a uniquely valuable position, where we can balance our portfolio between bitcoin mining and alternative <unk> hosting to maximize cash flow minimize risk and maintain significant exposure to big points upside potential.

Adam Sullivan: We can offer clients, a shorter time to power as compared to them waiting potentially three to five years for new Greenfield data center capacity has come online.

Adam Sullivan: We see this as a powerful mix that provides the potential for multi-year, high-visibility cash flows to buffer against the inherent volatility of Bitcoin pricing. And because we own and control our infrastructure, we can optimize for the allocation of our infrastructure portfolio, investing in Bitcoin mining positions as well, and we now have the opportunity to maximize the value of these assets. Moving forward, we will continue to seek out low cost, abundant power for Bitcoin mining as our entry point, and we'll constantly evaluate the market for a way to pair that power with another higher value use case.

Adam Sullivan: We see this as a powerful mix that provides the potential for multiyear high visibility caseloads to buffer against the inherent volatility of bitcoin pricing.

Adam Sullivan: And because we own and control our infrastructure, we can optimize the allocation of our infrastructure portfolio.

Adam Sullivan: Investing in bitcoin mining position as well and we now have the opportunity to maximize the value of these assets.

Adam Sullivan: Moving forward, we will continue to seek out low cost abundant power, particularly mining as our entry point and we will constantly evaluate the market great way to pair that power with another higher value use case.

Adam Sullivan: With Bitcoin mining as our base business, our infrastructure becomes the platform upon which we will continue to grow and optimize. We have created a unique business opportunity for us and for you, our shareholders, to monetize our own infrastructure for both Bitcoin mining and HPC hosting. I will discuss this further after Denise's comments, so now let's review our strong first quarter results, summarized on slide 6. We entered 2024 with strong momentum from 2023, continuing to set the pace for our industry by earning 2,825 Bitcoin in the first quarter, more than any other listed miner.

Adam Sullivan: With bitcoin mining our base business, our infrastructure becomes the platform upon which we will continue to grow and optimize.

Adam Sullivan: We have created a unique business opportunity for us and for you our shareholders to monetize our own infrastructure for both bitcoin mining and HBC hosted.

Adam Sullivan: Our leading Bitcoin production generates $150 million in revenue plus $29 million from our hosting business for total revenue of $179 million, up 49% year over year. Nearly all our key financial metrics reflect strong performance in the quarter. Argo's profit margin was 43 percent, and operating margin was 31 percent. Net income was $211 million, and adjusted EBITDA was $88 million, up 118 percent year over year. We exited the quarter with healthy liquidity, consisting of $98 million in cash and cash equivalents and $16 million in restricted cash.

Adam Sullivan: I will discuss this further after <unk> comments, so now let's review our strong first quarter results summarized on slide six.

Adam Sullivan: We entered 2024 with strong momentum from 2023, continuing to set the pace for our industry by earning 2825 point in the first quarter more than any other listed miner.

Adam Sullivan: Our leading bitcoin production generated $150 million in revenue plus $29 million from our hosting business for total revenue of $179 million.

Adam Sullivan: Up 49% year over year.

Adam Sullivan: Nearly all our key financial metrics reflect strong performance in the quarter.

Adam Sullivan: Our gross margin was 43% operating margin was 31% net income was $211 million in.

Adam Sullivan: And adjusted EBITDA was $88 million up 118% year over year.

Adam Sullivan: We exited the quarter with healthy liquidity, consisting of $98 million in cash and cash equivalents and $16 million in restricted cash.

Adam Sullivan: Shortly after the end of the quarter, we deployed capital to pay down $19 million in debt associated with outstanding mechanics claims and fund a $1 million project at our Denton Data Center to add 72 megawatts of infrastructure. Throughout the first quarter, we continued to deliver strong half rate utilization, which remains higher than the average for our peer group and for scaled miners, as illustrated on slide seven. We also continue to refresh our self-mining fleet with new S21s, completing the deployment of 2.5 hexahash in April and improving our average miner efficiency to 25.78 joules per terahash. We are waiting to make counter-cyclical minor purchases to take advantage of improved pricing after the recent have-ins. We are already seeing that dynamic take shape with post-halving pricing lower than pre-halving.

Adam Sullivan: Shortly after the end of the quarter, we deployed capital to pay down $19 million in debt associated with outstanding mechanically and fund a $1 million project at our events and data center to add 72 megawatts of infrastructure.

Adam Sullivan: Throughout the first quarter, we continued to deliver strong cash rate utilization, which remained higher than the average for our peer group and for scaled miner illustrated on slide seven.

Adam Sullivan: We also continued to refresh our self mining fleet with new F. 'twenty one completing the deployment of two five to have in April and improving our average minor efficiency to $25 seven eight drills prepare ash.

Adam Sullivan: We are waiting to make countercyclical minor purchases to take advantage of improved pricing after the recent habit.

Adam Sullivan: We are already seeing that dynamic.

Adam Sullivan: With post having pricing lower than pre habit.

Adam Sullivan: In March, we entered into a contract for high-performance compute hosting at our new Austin data center, which we have leased. Importantly, we delivered the 16 megawatt data center to our client, CoreWeave, more than 30 days ahead of schedule, helping them accelerate their time to power, which refers to how long it takes to establish operations and service their clients. Upgrading this data center was no small task and required a team effort to completely reconfigure 118,000 square feet of compute space, including pulling 18 miles of fiber and 500 miles of copper cable, removing 1,500 racks, and installing 4,500 new PDU strips.

Adam Sullivan: In March we entered into a contract for high performance compute hosting at our new often data center, which we believe.

Adam Sullivan: Importantly, we delivered a 16 megawatt data center to our client core we more than 30 days ahead of schedule, helping them accelerate their time to power, which refers to how long it takes to establish operations and service their clients.

Adam Sullivan: Upgrading their datacenter was no small task and requires a team effort to completely reconfigured 118000 square feet of compute space, including 18 miles of fiber and 500 miles of copper cable removing 500 rack installing 4500, new <unk> scripts are.

Adam Sullivan: Our team's performance was nothing short of spectacular. As we look to the remainder of 2024, we are confident our outstanding first quarter has positioned us well to continue building on our momentum and capitalizing on the significant growth opportunities we see ahead. Now, I'll turn the call over to our CFO, Denise Zerlin.

Adam Sullivan: <unk> performance was nothing short of spectacular.

Denise Zerlin: As we look to the remainder of 2024, we are confident our outstanding first quarter has positioned us well to continue building on our momentum and capitalizing on the significant growth opportunities. We see ahead.

Denise Zerlin: Now I'll turn the call over to our CFO Denise Sterling.

Denise Sterling: Thank you, Adam. As Adam stated, our first quarter performance was strong across all financial metrics driven by favorable fundamentals and outstanding execution. Total revenue for the fiscal first quarter of 2024 was $179.3 million and consisted of $150 million in digital asset mining revenue and $29.3 million in hosting revenue. Segment economics are highlighted on slide 10. Digital asset mining revenue of $150 million for the fiscal first quarter of 2024 exceeded mining cost of revenue of $81.6 million by $68.4 million, representing a growth margin of 46 percent.

Denise Zerlin: Thank you Adam as Adam stated, our first quarter performance was strong across all financial metrics, driven by favorable fundamentals and outstanding execution.

Denise Sterling: Total revenue for the fiscal first quarter of 2024 with $179 3 million.

Denise Sterling: And consistent at a $150 million in digital asset mining revenue and $29 3 million and hosting revenue.

Denise Sterling: Segment economics are highlighted on slide 10.

Denise Sterling: Digital asset mining revenue of $150 million for the fiscal first quarter of 2024 exceeded mining cost of revenue of $81 6 million, a $68 4 million, representing a gross margin of 46%.

Denise Sterling: Digital asset mining revenue of $98 million for the same period in the prior year exceeded mining costs of revenue of $72.7 million by $25.4 million, resulting in a gross margin of 26%. Gross profit increased by $43 million, demonstrating a significant improvement quarter over quarter.

Denise Sterling: Digital asset revenue of $98 million at the same period in the prior year exceeded mining cost of revenue of $72 7 million by $25 4 million, resulting in a gross margin of 26%.

Denise Sterling: Gross profit increased by $43 million, demonstrating a significant improvement quarter over quarter.

Denise Sterling: The quarter-over-quarter increase in digital asset mining revenue of $51.9 million was driven primarily by a 134% increase in the price of Bitcoin and a 20% increase in our self-mining hash rate driven by the deployment of an additional 18,000 new generation mining units. The increase in digital asset mining cost of revenue of $8.9 million for the fiscal first quarter of 2024 was primarily driven by an increase in depreciation expense resulting from the deployment of our new self-mining units and an increase in payroll and benefits costs associated with merit and market adjustments made during the quarter.

Denise Sterling: The quarter over quarter increase in digital asset mining revenue of $51 9 million was driven primarily by 134% increase in the price of bitcoin and a 20% increase in our self mining cash rate driven by the deployment of an additional 18000, new generation mining unit.

Denise Sterling: The increase in digital asset mining cost of revenue of $8 9 million for the fiscal first quarter of 2024 was primarily driven by an increase in depreciation expense, resulting from the deployment of our new self mining units and an increase in payroll and benefits costs associated with merit and market adjustments made during the.

Denise Sterling: Quarter.

Denise Sterling: Power costs were relatively flat quarter-over-quarter as the increase in power consumption associated with the deployment of the additional self-mining units was offset by a 3.8 percent decrease in our power costs per kilowatt hour, which declined to 4.3 cents from 4.4 cents per kilowatt hour for the same period in the prior year. As a reminder, digital asset mining cost and revenue consists primarily of direct production costs of mining operations. These direct production costs consist of electricity and data center operating costs, which include salary, stock-based compensation, and depreciation of property, plant, and equipment.

Denise Sterling: Power costs were relatively flat quarter over quarter as the increase in power consumption associated with the deployment of the additional self mining units was offset by a three 8% decrease in our power cost per kilowatt hour, which declined to four three and.

Denise Sterling: $4.04.

Denise Sterling: Per kilowatt hour at the same period in the prior year.

Denise Sterling: As a reminder, gives you elastic mining cost and revenue consists primarily of direct production cost of mining operations.

Denise Sterling: Direct production costs consist of electricity and data center operating costs, which include salaries stock based compensation and depreciation of property plant and equipment.

Denise Sterling: Hosting revenue of $29.3 million exceeded hosting cost of revenue of $20.1 million for the fiscal first quarter of 2024 by $9.3 million, resulting in a 32% growth margin. Hosting revenue of $22.6 million for the same period in the prior year exceeded hosting cost of revenue of $16.2 million by $6.4 million, representing a 28% gross margin. Posting growth profit increased by $2.8 million, or 44% quarter over quarter, driven by the onboarding of revenue-sharing clients beginning in the fiscal second quarter of 2023. Hosting costs consist primarily of direct electricity costs and data center operating costs.

Denise Sterling: Hosting revenue of $29 3 million exceeded hosting cost of revenue of $20 1 million for the fiscal first quarter of 2024 by $9 3 million, resulting in a 32% gross margin.

Denise Sterling: Hosting revenue at $22 6 million for the same period in the prior year exceeded hosting cost of revenue of $16 2 million by $6 4 million, representing a 28% gross margin.

Denise Sterling: Hosting gross profit increased by $2 8 million or 44% quarter over quarter, driven by the Onboarding of proceeds sharing clients beginning in the fiscal second quarter of 2023.

Denise Sterling: Hosting costs consists primarily of direct electricity cost and data center operating cost.

Denise Sterling: Operating expenses for the fiscal first quarter of 2024 totaled $16.9 million, as compared to $24.2 million for the same period in the prior year. The decrease of $7.3 million was primarily attributable to lower stock-based compensation of $13.3 million due to forfeitures during the quarter, partially offset by a $3.4 million increase in personnel and related expenses and a $1.7 million increase in advisor fees related to the reorganization incurred during the fiscal first quarter.

Denise Sterling: Operating expenses for the fiscal first quarter of 2024 totaled $16 9 million as compared to $24 2 million for the same period in the prior year.

Denise Sterling: The decrease of $7 3 million was primarily attributable to lower stock based compensation of $13 3 million due to forfeitures during the quarter, partially offset by a $3 $4 million increase in personnel and related expenses and a $1 $7 million increase in advisor fees related to the.

Denise Sterling: In addition incurred during the fiscal first quarter.

Denise Sterling: Net income for the fiscal first quarter of 2024 was $210.7 million as compared to a net loss of $388,000 for the same period in the prior year. Net income increased by $211.1 million, driven primarily by a decrease of $143 million in reorganization items, which included $143.8 million associated with the extinguishment of pre-emergence obligations in excess of the amount settled post-emergence, lower Chapter 11 financing cost of $11.1 million, partially offset by a $12.8 million increase in claimant-related bankruptcy professional fees, and a $60.1 million mark-to-market adjustment on our warrants and contingent value rates.

Denise Sterling: Net income for the fiscal first quarter of 2024 with $210 7 million as compared to a net loss of 388000 for the same period in the prior year.

Denise Sterling: Net income increased by $211 1 million driven primarily by a decrease of $143 million.

Denise Sterling: And reorganization items, which included $143 8 million associated with the extinguishment of pre emergence obligations in excess of the announced settled post emergence.

Denise Sterling: Lower chapter 11 financing costs of $11 1 million, partially offset by a $12 $8 million increase in claimant related bankruptcy professional fees.

Denise Sterling: A $60 1 million mark to market adjustment on our warrants and contingent value rights.

Denise Sterling: Non-GAAP-adjusted EBITDA for the fiscal first quarter of 2024 was $88 million as compared to non-GAAP-adjusted EBITDA of $40.3 million for the same period in the prior year. This $47.7 million increase was driven by a $58.6 million increase in total revenue and a $1.1 million decrease in impairment of digital assets. Partially offset by a $4.4 million increase in total cash-based operating expenses, a $4.1 million increase in cash cost of revenue, a $3 million increase in realized losses on energy derivatives, and a $0.5 million decrease in gain from sales of digital assets. Our power contracts vary in price and term.

Denise Sterling: non-GAAP adjusted EBITDA for the fiscal first quarter of 2024 was $88 million as compared to non-GAAP adjusted EBITDA of $40 3 million at the same period in the prior year.

Denise Sterling: This $47 7 million dollar increase was driven by a $58 $6 million increase in total revenue and a $1 $1 million decrease in impairment of digital assets, partially offset by a $4 $4 million increase in total cash based operating expenses.

Denise Sterling: $4 $1 million increase in cash cost of revenue.

Denise Sterling: $3 million increase in realized losses on energy derivatives, and $8 $5 million decrease in gains from sales of digital assets.

Denise Sterling: Our power contract very in pricing terms as mentioned previously our fleet wide power cost averaged four three per kilowatt hour in the first quarter.

Denise Sterling: As mentioned previously, our fleet-wide power cost averaged 4.3 cents per kilowatt hour in the first quarter. We continue to expect average power cost in 2024 to be between 4.5 cents and 4.7 cents per kilowatt hour. At the end of the first quarter, our self-mining to hosted mining mix was 77% to 23%, respectively. We plan to increase the efficiency of our self-mining fleet through ongoing miner refresh and additional hash rate to achieve our 2024 goal.

Denise Sterling: We continue to expect average power costs in 2024 to be between $4 <unk>.

Denise Sterling: And $4 seven per kilowatt hour.

Denise Sterling: At the end of the first quarter, our self mining to hosted mining mix was 77% to 23% respectively.

Denise Sterling: We plan to increase the efficiency of our self mining fleet through ongoing minor refreshed and additional cash rate to achieve our 2024 goal as.

Denise Sterling: As we expand our self-mining fleet, we expect our hosting mining mix to decline over time. Our fleet-wide average energy efficiency was 26.85 Joules per Carahash as of March 31, 2024, and 25.78 Joules per Carahash as of April 30, 2024. The improvement was due to the completion of our S-21 deployment in April. As of March 31, 2024, we operated approximately 173,000 miners in our self-mining fleet. The model mix shown on slide 11 was 10% S19, 64% S19Pro and S19JPro, 24% S19JXPs, and 2% S21.

Denise Sterling: As we expand our self mining fleet, we expect our hosting mining mix to decline over time.

Denise Sterling: Our fleet wide average energy efficiency with 20 685 <unk> as of March 31, 2024, and $25 seven eight <unk> as of April 32024.

Denise Sterling: The improvement was due to the completion of our F. 'twenty one deployment in April.

Denise Sterling: As of March 31, 2024, and we operated approximately 173000 miners and our self mining fleet.

Denise Sterling: The model mix shown on slide 11 was 10% EF 19, 64% S 19, Trop and S 19, Jay Powell, 24% S 19, J, XP and 2% F 'twenty ones.

Denise Sterling: Now I'd like to discuss the strength of our balance sheet. Cash in equivalence at the end of the first quarter was $98 million, up from $50 million at the end of 2023 and does not include an additional $16 million in restricted cash. Slide 12 compares our first quarter capital structure to year-end 2023. At the end of 2023, total debt was just under $1 billion. As of March 31, 2024, total debt was $608 million, a decrease of $390 million. The reduction in debt for the quarter was driven mainly by the equitization of legacy debt and the settlement of prior claims.

Denise Sterling: Now I'd like to discuss the strength of our balance sheet.

Denise Sterling: Cash and equivalents at the end of the first quarter was 98 million up from $50 million at the end of 2023 and does not include an additional $16 million in restricted cash.

Denise Sterling: Slide 12 compares our first quarter capital structure to year end 2023.

Denise Sterling: At the end of 2023 total debt with just under $1 billion as.

Denise Sterling: As of March 31, 2024, total debt was 608 million a decrease of $390 million.

Denise Sterling: A reduction in debt for the quarter was driven mainly by the acquisition of legacy debt and the settlement of prior claims.

Denise Sterling: As a reminder, a share price of $6.81 puts our tranchement warrants in the money, and their full exercise would provide us with $670 million in cash, allowing us to pay down debt and to build our cash flow. A share price of $7.79 triggers the mandatory conversion of the convertible notes, which would clear $260 million off our balance sheet. Now I'll turn to our topic.

Denise Sterling: As a reminder, a share price of $6 81.

Denise Sterling: Puts our tranche one warrants in the money and they are full exercise would provide us with $670 million in cash, allowing us to pay down debt and to build our cash balance.

Denise Sterling: A share price of $7 79 trigger.

Denise Sterling: Triggers the mandatory conversion of the convertible notes, which would clear $260 million off our balance sheet.

Denise Sterling: Now I'll turn to our Capex plans.

Denise Sterling: In the first quarter, we made all payments due this year on miners we ordered and have deployed in 2024. We anticipate purchasing additional miners in 2024 to complete our planned refresh and to achieve our 21.8 Exahash self-mining hash rate goal. The precise amount and timing of this purchase will ultimately depend on us finalizing the details of our HPC strategy. In April, we announced the start of an expansion project at our Denton, Texas data center, where we are increasing our operational power by 72 megawatts to 197 megawatts, an expansion of more than 50% by the end of our fiscal second quarter.

Denise Sterling: In the first quarter, we made all payments due this year on miners, we workers and have deployed in 2024, we anticipate purchasing additional liners in 2024 to complete our planned refresh and to achieve our 21 eight extra hash self mining cash rate goal.

Denise Sterling: The precise amount and timing of this purchase will ultimately depend on us finalizing the details of our <unk> strategy.

Denise Sterling: In April we announced the start of the expansion project at our Denton, Texas Data Center, where we are increasing our operational powered by 72 megawatts to 197 megawatts.

Denise Sterling: An expansion of more than 50% by the end of our fiscal second quarter.

Denise Sterling: The capital expenditures associated with this expansion were included in our 2024 CAPEX plan and were paid in April of 2024. Additionally, we will incur an incremental 4.5 million in CapEx associated with our new Austin HPC data center, which was not previously included in our 2024 CAPEX plan. Now I'll turn to a review of the mining economics summarized on slide 13. Our direct cash cost to MyBitcoin in the first quarter was $18,915. This consists of power costs of $15,977 and a cash-based facility operations cost of $2,938, allocated based on 77% of our fleet dedicated to self-mining and divided by total bitcoins self-mined in the first quarter of $2,825. Another way to look at this is by calculating the cash-based hash cost of these same items, which represents the same cost expressed as a cost per terahash per day.

Denise Sterling: The capital expenditures associated with this expansion were included in our 2020 for Capex plan and were paid in April of 2024.

Denise Sterling: We will incur an incremental $4 5 million in capex associated with our new Austin HP data Center, which was not previously included in our 2020 forecast plan.

Denise Sterling: Now I will turn to a review of the mining economics summarized on slide 13.

Denise Sterling: Our direct cash cost to mine a bit claim in the first quarter was $18915.

Denise Sterling: This consist of power cost of $15977 and a cash based facilities operations costs of $2938 allocated based on the 77% of our fleet dedicated to self mining and divided by total bitcoin self mined in the first quarter of 2000.

Denise Sterling: 825.

Denise Sterling: Another way to look at this as by calculating the cash base cash cost of these same items, which represent the same cost expressed as a cost per <unk> per day.

Denise Sterling: Our total cash-based cash costs in the first quarter were 3.26 cents per terahertz. In summary, we expect operating cash flow to be sufficient to support operating expenses, debt service, and CapEx associated with our organic growth plans in 2024. Now, a few pieces of housekeeping.

Denise Sterling: Our total cash base cash costs in the first quarter with $3 two six per tear ash.

Denise Sterling: In summary, we expect operating cash flow to be sufficient to support operating expenses debt service and capex associated with our organic growth plans in 2024.

Speaker Change: And now a few housekeeping items.

Denise Sterling: We continue to model a statutory effective tax rate of approximately 23% for 2024.

Denise Sterling: We also have more than $300 million and net operating loss carryforwards, which will reduce our future cash taxes.

Denise Sterling: Our share count as of March 31, 2024 is approximately 182 million shares.

Denise Sterling: We continue to model a statutory effective tax rate of approximately 23% for 2020. We also have more than $300 million in Net Operating Loss Carry-Forwards, which will reduce our future cash tax. Our share count as of March 31, 2024 is approximately 182 million shares. And now I'll turn the call back to Adam to discuss our expectations for 2024.

Denise Sterling: And now I'll turn the call back to Adam to discuss our expectations for 2020 for Adam.

Adam Sullivan: Thanks Denise.

Adam Sullivan: Before we turn to Q&A, I'll spend some time walking through our strategic priorities for the rest of the year and the macro environment factors driving these priorities. Now that we are three weeks removed from the latest halving, we have seen a normalization of the record-high transaction fees immediately after the halving.

Adam Sullivan: Before we turn to Q&A I'll spend some time walking through our strategic priorities for the rest of the year and the macro environment factors driving these priorities.

Adam Sullivan: Now that we are three weeks removed from the latest having we have seen a normalization of the record high transaction fees immediately after the housing.

Adam Sullivan: The cash price has declined to around $0.05, and we are seeing a small decline in global network hash rates. Barring any traumatic and sustained increase in hash price over the next three to six months, we expect to see inefficient hash rates drop off the network as some machines are turned off and as operators seek new homes for their miners. We expect some difficulty decreases throughout this process.

Adam Sullivan: Cash price has declined to around <unk>.

Adam Sullivan: And we are seeing a small decline in global network hash rate.

Adam Sullivan: Barring any dramatic and sustained increase in average price over the next three to six months, we expect to see inefficient task rate drop off the network at some machines are turned off and as operators seek new homes for their miners.

Adam Sullivan: We expect some difficulty decreases throughout this process and we expect year end tax rate to be higher than current levels.

Adam Sullivan: We expect the year-end hashrate to be higher than current levels. Speaking more broadly, in 2024 and over the next few years, we anticipate increased competition for blocks as skilled miners continue to invest CapEx to increase their hash rates. We also expect to see increases in U.S. power prices over the coming years. The question for Core Scientific now is, how can we best grow our business and continue to create economic value for our shareholders at a time when the value of our owned infrastructure is increasing? For Core Scientific, the answer comes in three parts.

Adam Sullivan: Speaking more broadly in 2024 and over the next few years, we anticipate increased competition for blocks. The skilled miners continue to invest capex to increase their half rates.

Adam Sullivan: We also expect to see increases in U S power prices over the coming years.

Adam Sullivan: The question for core scientific now is how can we best for our business and continue to create economic value for our shareholders at a time when the value of our owned infrastructure is increasing.

Adam Sullivan: For core scientific the intercompany three parts.

Adam Sullivan: First, I continue to build out our owned infrastructure, particularly through the completion of our Texas project. Second, by expanding our hash rate to complete refresh and emerging minor options. And finally, as I discussed, we are focused on leveraging our owned infrastructure to capture the significant opportunity HPC holds. I'll describe each of these in more detail, starting with our partially built infrastructure at our two Texas sites. At these sites, we have 372 megawatts that require an investment of about $200,000 per megawatt on average to complete.

Adam Sullivan: First by continuing to build out our own infrastructure, particularly through the completion of our Texas projects.

Adam Sullivan: Second by expanding our hatch rate through fleet refresh and emerging minor options.

Adam Sullivan: And finally as I discussed we are focused on leveraging our owned infrastructure to capture the significant opportunity in <unk> hosting.

Adam Sullivan: I'll describe each of these in more detail starting with our partially built infrastructure at our two Texas sites.

Adam Sullivan: At these sites, we have 372 megawatts that are required investment of about $200000 per megawatt on average to complete.

Adam Sullivan: These 372 megawatts can support more than 20 exahash of mining capacity over the next three years when complete, and as mining technology yields higher efficiencies and hashrate per megawatt, that total hashrate will increase. We can also dedicate a portion of this new infrastructure to HPC hosting, depending on customer needs and opportunities. We are currently on track to energize the 17 megawatts in Denton by the end of our second quarter.

Adam Sullivan: These 373 megawatts can support more than 20 <unk> behalf of mining capacity over the next three years, when complete and as mining technology yields higher efficiencies and tax rate per megawatt that total accurate will increase.

Adam Sullivan: We can also dedicate a portion of this new infrastructure to HBC hosting depending on customer needs and opportunities.

Adam Sullivan: We are currently on track to energize, the 70 megawatts invention by the end of our second quarter.

Adam Sullivan: We expect to purchase the remaining miners to achieve our refresh and hash rate expansion goals later this year. Second, we are taking advantage of mining market economics and new miner suppliers to expand our hash rate cost effectively, both through refreshing our fleet and expanding our rack space. For perspective, based on our current 745 megawatts of infrastructure, if we were to refresh all of our prior generation S19, S19 Pro, and S19J Pro miners with S21s, we would be able to increase our existing hash rate by more than 10x a hash without adding any new infrastructure.

Adam Sullivan: We expect to purchase the remaining miners to achieve our refreshed and has great expansion goals later this year.

Adam Sullivan: Second we are taking advantage of mining market economics, and new minor suppliers to expand our accurate cost effectively both through refreshing our fleet and expanding our space for.

Adam Sullivan: Perspective based on our current 745 megawatts of infrastructure. If we were to refresh all of our prior generation estimate team. That's 19 pro and estimate team J pro miners with F. 'twenty, one we would be able to increase our existing accurate by more than 10 extra half without adding any new infrastructure.

Adam Sullivan: We are already seeing improved mining equipment economics in this post-habit environment. We are also working with multiple technology companies to develop and deploy new lower-cost technologies with higher energy efficiency that will offer greater procurement options. And third, our emerging alternative compute business, launched with our successful deployment of 16 megawatts of data center capacity for Core Wave. As discussed earlier, buyers of advanced GPUs for workloads such as AI Cloud and high-performance computing have a limited supply of infrastructure options and often face significant and costly delays in the availability of new data center capacity.

Adam Sullivan: We are already seeing improved mining equipment economics in this post COVID-19 environment.

Adam Sullivan: We are also working with multiple technology companies to develop and deploy new lower cost minor technology with higher energy efficiency that will offer greater procurement options.

Adam Sullivan: And third is our emerging alternatives to keep business launched with our successful deployment of 16 megawatts of data center capacity per quarter.

Adam Sullivan: As discussed earlier buyers of advanced Gpus for workloads, such as AI cloud and high performance computing had a limited supply of infrastructure option and often faced significant and costly delays and the availability of new data center capacity.

Adam Sullivan: Core Scientific has more than 500 megawatts out of our total 1.2 gigawatts of contracted power that can be utilized for alternative compute workloads based on geographic proximity to major cities and fiber lines. Furthermore, we have a successful track record of efficiently managing large-scale datacenters, and we have a team from the datacenter industry leading our operation. We are in regular discussions with customers in this space and expect to build out this part of our business further over the course of the year.

Adam Sullivan: Core scientific is more than 500 megawatts of our totaled one two gigawatts of contracted power that can be utilized for alternative compute workloads based on geographic proximity to major cities and fiber lines.

Adam Sullivan: Further we have a successful track record of efficiently managing large scale data centers and we have a team from the datacenter industry, leading our operations.

Adam Sullivan: We are in regular discussions with customers in the space and expect to build up this part of our business further over the course of the year.

Adam Sullivan: We think it's important to help frame the economics of this potentially significant business opportunity as follows. Based on industry data, the cost to build a new Tier 1 HVC data center ranges between $7 and $12 million per megawatt. Based on our current assumptions, we project the cost to convert one of our high-power Bitcoin mining data centers into a Tier 1 HVC data center at between $5 and $8 million per megawatt. Even saving $1,000,000 per megawatt represents a $100,000,000 in construction savings for a 100-megawatt data center.

Adam Sullivan: We think it's important to help frame the economics of this potentially significant business opportunity as follows.

Adam Sullivan: Based on industry data the cost to build a new tier one <unk> datacenter ranges between $7 and $12 million per megawatt.

Adam Sullivan: Based on our current assumptions, we project the cost to convert one of our high power Bitcoin mining data centers into a tier one <unk> data center at between five and $8 million per megawatt.

Adam Sullivan: Even saving $1 million per megawatt represents $800 million and construction savings for 800 megawatt data center.

Adam Sullivan: We are pursuing clients that are able to prepay for construction CapEx as an offset against a portion of their monthly hosting payment. We aim to become a market leader in providing digital infrastructure for high-performance computing. The cash-generating power of that business will enable us to keep some of our Bitcoin production on our balance sheet in anticipation of future increases to the extent that we have cleared certain debts that prevent us from holding Bitcoin today.

Adam Sullivan: We are pursuing clients that are able to prepay for construction capex as an offset against a portion of their monthly hosting payments.

Adam Sullivan: We aim to become a market leader in providing digital infrastructure for high performance computing.

Adam Sullivan: The cash generating power of that business will enable us to keep some of our bitcoin production on our balance sheet in anticipation of future increase to the extent that we have cleared certain debt that prevent us from holding bitcoin today.

Adam Sullivan: Based on industry data, we target Tier 1 HPC hosting revenue on the order of $1.4 million to $1.6 million per megawatt per year, with a gross margin of 75-80%. Power costs and utilities are a direct pass-through to clients.

Adam Sullivan: Based on industry data, we target tier one each PC hosting revenue on the order of $1 4 million to $1 6 million per megawatt per year with gross margin of 75% 80% power.

Adam Sullivan: Power costs and utilities are direct pass through to clients the <unk>.

Adam Sullivan: The complete conversion of 500 megawatts of Bitcoin mining infrastructure to HPC hosting would likely take three to four years, but we expect to begin generating revenue earlier as capacity comes online incrementally during that process. HPC hosting provides stable revenue and gross profit. This is important for Core Scientific because it will provide stability and a greater degree of revenue predictability, which can also help moderate the variability in our Bitcoin mining results against the more dynamic mining backdrop.

Adam Sullivan: <unk> conversion of 500 megawatts of bitcoin mining infrastructure to HPT hosting would likely take three to four years, but we expect to begin generating revenue earlier as capacity comes online incrementally during that process.

Adam Sullivan: HCC hosting provide stable revenue and gross profit. This is important for core scientific because it will provide stability and a greater degree of revenue predictability, which can also help moderate the variability in our bitcoin mining results against the more dynamic mining backdrop.

Adam Sullivan: As we consider these three points, we see a transformational opportunity to balance our portfolio and business between highly efficient Bitcoin mining at scale and alternative compute hosting. Our Bitcoin mining business generates profitable cash flow and preserves our exposure to the upside potential in Bitcoin prices. It also builds a platform for an alternative compute business that can provide significant multi-year steady cash flows with strong financial returns. The potential to optimize our asset portfolio across these two attractive and high-value compute areas is only available to us because we own and control all our infrastructure.

Adam Sullivan: As we consider these three points, we see a transformational opportunity to balance our portfolio and business between highly efficient <unk> mining at scale and alternative compute hosted.

Adam Sullivan: Art Bitcoin mining business generates profitable cash flow and preserves our exposure to the upside potential in bitcoin price.

Adam Sullivan: It also built a platform for an alternative to <unk> business that could provide significant multiyear steady cash flows with strong financial returns.

Adam Sullivan: The potential to optimize our asset portfolio across these two attractive and high value compute areas is only available to us because we own and control all of our infrastructure.

Adam Sullivan: We could not be better positioned to capture the opportunity in these two growing markets. We will provide more details about our emerging alternative compute hosting business when we reach any definitive agreement. Our board, our leadership team, and I are more excited than ever about Core Scientific and our growth plan. We truly believe that by executing on our balanced strategy of bitcoin mining at scale and alternative compute hosting, we can enhance value for all our stakeholders, both in the near and long term, and deliver compelling financial results that will unlock tremendous value in our company. Thank you all for your engagement and attention, and thank you to our customers, industry partners, and all our teammates for your ongoing efforts and support. We will now take your questions.

Adam Sullivan: We could not be better positioned to capture the opportunity in these two growing markets.

Adam Sullivan: We will provide more details about our emerging alternative compute hosting business when we reach any definitive agreements.

Adam Sullivan: Our board our leadership team and I are more excited than ever about core scientific and our growth plans.

Adam Sullivan: We truly believe that by executing on our balanced strategy between minded scale and alternatives compute hosting we can enhance value for all our stakeholders both in the near and long term and deliver compelling financial results that will unlock tremendous value in our company.

Adam Sullivan: Thank you all for your engagement and attention and thank you to our customers industry partners and all of our teammates for your ongoing efforts and support we will now take your questions.

Tia: We will now begin the Q&A session. If you would like to ask a question, please press star followed by 1 or your touchtone keypad. If for any reason you would like to remove that question, please press star followed by 2. Again, to ask a question, please press star 1. Please limit your questions to one and one follow-up. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly to allow questions to generate in queue. The first question comes from Delana Jo Flynn with Compass Points. Please proceed.

Speaker Change: We will now begin the Q&A session. If you would like to ask a question. Please press star followed by one or your Touchtone keypad.

Speaker Change: If for any reason you elect to remove that question. Please press star followed by Tim again to ask a question. Please press star one.

Speaker Change: Please limit your questions to one question and one follow up.

Tia: As a reminder, if you are using a speaker phone please remember too.

Speaker Change: Pick up your handset before asking a question.

Speaker Change: Policy of Brinci to allow questions to generate in Q.

Speaker Change: The first question comes from the line of Joe Flynn with Compass point. Please proceed.

Delana Jo Flynn: Hi Guys. Thanks for the question. On the HPC front, with the 500 megawatts of potential infrastructure capacity, I was curious, like, what kind of customers are you currently having conversations with? You know, whether they be, you know, hyperscalers, data center operators, startups; just any color you could provide there would be helpful.

Speaker Change: Hi, guys. Thanks for the question.

Delana Jo Flynn: On the HBC front with the 500 megawatts.

Delana Jo Flynn: Julia infrastructure capacity.

Delana Jo Flynn: I was curious.

Delana Jo Flynn: What kind of customers are you currently having conversations with.

Delana Jo Flynn: Hyperscale data center operators startups.

Delana Jo Flynn: Just any color you can provide there would be helpful.

Adam Sullivan: Of course, Joe. I would say our target base right now is mainly around our goal to have prepaid revenue as part of this contract, so they have the client pay for the CapEx. That definitely narrows the scope of potential clients, but that definitely puts it in the range of large tech companies that are looking at the development of their AI segments. So that's really our focus right now, is mainly around large tech companies with a focus on AI, where the demands are for application-specific infrastructure.

Delana Jo Flynn: And of course shown I would say our target base right now is mainly around our goal to have prepaid revenues part of this contract so having the clients pay for the Capex.

Adam Sullivan: That definitely narrows, the scope of potential clients for that definitely puts it in the range of large tech companies that are looking at the development of their AI segments. So that's really our focus right now is mainly around large tech companies with a focus on AI, where the demands are for application specific infrastructure.

Delana Jo Flynn: And just drilling down to the, you know, the economics you guys mentioned, it looks like the existing core wave contract was roughly $100 per megawatt hour, and the number of use cases was closer to 150 to 170. I'm just kind of curious, is that $150 per megawatt hour level, is that with these existing agreements where the CapEx would be prepaid, and really just any other color you could provide on a margin profile? Yeah, of course. So our

Speaker Change: And just drilling down to the economics, you guys mentioned.

Speaker Change: The existing core we have contracts with.

Delana Jo Flynn: Roughly $100 per megawatt hour.

Delana Jo Flynn: The number you just gave is closer to 150 to 170 <unk>.

Speaker Change: Just kind of curious.

Delana Jo Flynn: Is that $150 per megawatt hour level is that what.

Delana Jo Flynn: These existing agreements, where the capex would be prepaid and really just any other color you could provide on what the margin profile that would be great.

Adam Sullivan: Yeah, of course. So, our target for, or what we laid out is really our target for conversions of sites. And so, when we talk about things like the existing corporate deal or any conversion of existing space where we lease and then sublease to a potential client, our total revenue and our margin profile would be a bit different and a bit lower. Our focus going forward is really on the conversion of sites.

Speaker Change: Yeah of course so.

Adam Sullivan: Our target for what we laid out is really our target for two versions of sites and so when we talk about things like the existing quarter deal or any conversion of existing space.

Adam Sullivan: We leased and then sublease to potential client.

Adam Sullivan: Our total revenue and our merchant profile would be a bit different and a bit lower our focus going forward is really on the conversion of sites and so what we've laid out our and based on discussions with potential clients as well as industry data, that's helping guide us really to the answer and so what we're looking at on the on the margin.

Adam Sullivan: And so, what we've laid out is based on discussions with potential clients as well as industry data that's helping guide us really to the answer. And so, what we're looking at on the margin side is really that 75% to 80% is really what we're targeting today. And that's on the back of about 1.4 to 1.6 million in revenue per megawatt.

Adam Sullivan: <unk> is really that 75% to 80% is really what we're targeting today.

Adam Sullivan: That's on the back of about one four to $1 6 million in revenue per megawatt.

Speaker Change: Alright, great. Thanks, guys.

Adam Sullivan: Sure.

Speaker Change: Thank you.

Delana Lucas-Pipes: The next question comes from Delana Lucas-Pipes with B-Rally Securities. Please proceed.

Adam Sullivan: The next question comes from the line of Lucas pipes with B Riley Securities. Please proceed.

Delana Lucas-Pipes: Thank you very much, operator. Thank you for all the detail in the prepared remarks and presentation. Adam, I also want to ask about the HPC opportunity, and you mentioned kind of three to five years for Greenfield, and if I understood you right, you mentioned three to four years for your conversion. Is that correct?

Delana Lucas-Pipes: Thank you very much operator, thank you for all the detail in the prepared remarks and presentations.

Delana Lucas-Pipes: Adam I also wanted to ask about the <unk> opportunity and you mentioned kind of three to five years for Greenfield and if I understood you right.

Delana Lucas-Pipes: You mentioned three to four years for <unk>.

Delana Lucas-Pipes: Your conversions is that correct.

Adam Sullivan: And maybe more importantly, kind of the process for developing a greenfield. I'd like to understand kind of the competition. So if someone comes in looking at a greenfield, how long does it take for power, how long does it take for construction, and how do you compete against that? Thank you.

Delana Lucas-Pipes: Maybe more importantly kind of what is the process.

Adam Sullivan: Four developing greenfield I'd like to understand kind of the competition.

Adam Sullivan: So if someone comes in looking at a greenfield how long does it take power how long does it take to construction and how do you how do you compete against them. Thank you very much.

Speaker Change: Of course, thanks, Lucas I'm going to start with the second part of the question.

Adam Sullivan: Of course. I'm going to start with the second part of the question. What we're seeing from traditional operators today, you know, traditional data center operators. They have long-stated contracts, you know, 10 years or greater. And so on the existing infrastructure side, they have a very hard time competing with the part of the industry that we're focused on today. And then going forward, you know, they've sold forward, I would say, at least three to five years of capacity at which they've locked up.

Adam Sullivan: We're seeing some traditional operators today traditional data center operators.

Adam Sullivan: They have long dated contracts, you know 10 years or greater and so for on the existing infrastructure side. They have a very hard time competing with with the part of the industry that we're focused on today.

Adam Sullivan: And then going forward. They sold forward I would say at least three years to five years of capacity at which they've locked up and so converting any of that in the short term is very difficult for them. Now if you look forward right now youre seeing some large tech companies securing power 2028 2029 2013.

Adam Sullivan: And so converting any of that in the short term is very difficult for them. Now, if you look forward right now, you're seeing some of the large tech companies securing power in 2028, 2029, 2030. You know, that's just to secure the power aspect.

Adam Sullivan: That's just to secure the power aspect you tack on on top of that a lot of supply chain constraints for equipment, Luckily that we already own so.

Adam Sullivan: You tack on top of that a lot of supply chain constraints for equipment, luckily, that we already own. So, you know, in the traditional data center industry, it's at least three to five years for them to really start attacking this industry. You know, from our perspective, what we're looking at, we said three to four years to fully develop the 500 megawatts. We mentioned we're going to have incremental capacity come online throughout that time period.

Adam Sullivan: Nutritional data center industry isn't minimum three years to five years for them to really start attacking this industry.

Adam Sullivan: From our perspective, what we're looking at we said three to four years to fully develop the 500 megawatts.

Adam Sullivan: We mentioned, we're going to have incremental capacity come online throughout that time period, and that's mainly driven by the fact that we have a lot of the long lead items already owned inside of our inside of our business today and you had a lot of those constraints around the electrical infrastructure that you could see.

Adam Sullivan: And that's mainly driven by the fact that we have a lot of the long-lead items already owned inside of our business today. And, you know, a lot of those constraints are around the electrical infrastructure that you can see.

Delana Lucas-Pipes: Thank you, Adam. To follow up on this,

Speaker Change: Thank you Adam.

Speaker Change: To follow up on on this.

Delana Lucas-Pipes: In your presentation, you show valuation and arbitrage between some of the leading Bitcoin miners and data center companies. In light of everything discussed, why haven't we seen M&A yet? What's your take on that?

Speaker Change: In your presentation, you show that valuation.

Speaker Change: Arbitrage between some of the leading bitcoin miners.

Delana Lucas-Pipes: And.

Speaker Change: And data center companies.

Speaker Change: In light of everything discussed widened.

Speaker Change: Why haven't we seen M&A yet.

Speaker Change: As you take on that.

Adam Sullivan: Yeah, Lucas, if I might just follow up on your question, are you referring to M&A in our industry itself? Yeah, yeah.

Speaker Change: Yes, Lucas and if I might just follow up your question referring to M&A.

Delana Lucas-Pipes: Yeah, well, specifically what I'm referring to on slide 8 is a forward EV2E multiple for data center companies 20 times. You cite 9 to 14 times multiple for the highest multiple Bitcoin miners, certainly consistent with some of the data I've looked at. Why haven't we seen M&A from the data center side to the Bitcoin mining side to date? I would appreciate your thoughts on that.

Speaker Change: Our industry itself, yes, yes, well.

Delana Lucas-Pipes: Obviously, what im referring to on slide eight is a forward EV to EBITDA multiple for datacenter companies 20 times.

Delana Lucas-Pipes: You said nine to 14 times multiple for the highest multiple bitcoin miners.

Delana Lucas-Pipes: Consistent with some of the data I've looked at.

Delana Lucas-Pipes: Sure.

Delana Lucas-Pipes: Why why why haven't we seen M&A from the data center side to bitcoin mining side to date.

Delana Lucas-Pipes: Would appreciate your thoughts on that.

Adam Sullivan: Yeah, no, it's a great question. I think, you know, Morgan Stanley put out a very good report related to the opportunity that Bitcoin miners actually have today given the fact that, you know, just on electrical equipment alone, it's at least a 36 month lead time for traditional data centers. So just having access to power is a significant advantage and is actually of much higher value to traditional data centers than the valuations that we're seeing for Bitcoin mining infrastructure traded today. You know, I wouldn't rule that out.

Speaker Change: Yeah, No. It's a great question I think.

Adam Sullivan: Morgan Stanley put out a very good report related to the opportunity that pick one minor it's actually have today given the fact that just on electrical equipment alone. It's at least 36 month lead time for traditional datacenter. So just having access to the power is a significant advantage and it is actually a much higher value to traditional data centers and really the valuation.

Adam Sullivan: We are seeing.

Adam Sullivan: Particularly mining infrastructure traded today.

Adam Sullivan: Wouldn't rule that out traditional datacenters are definitely trying to find ways to bring power online more quickly.

Delana Lucas-Pipes: Traditional data centers are definitely trying to find ways to bring power online more quickly. You know, what we're seeing across a number of reports is that data center capacity is going to double over the course of the next six years. So, you know, I think that's something that we're still in the early stages. I would imagine that companies throughout the industry are having those types of conversations. You know, from our perspective, we're focused on executing this because we believe we can drive a significant amount of short-term and long-term value for our shareholders.

Delana Lucas-Pipes: What we're seeing across a number of reports is that data center capacity is going to double over the course of the next six years. So I think that's something that we're still in the early stages.

Delana Lucas-Pipes: Imagine that companies throughout the industry are having those types of conversations from our perspective, we're focused on executing this.

Delana Lucas-Pipes: We believe we can drive a significant amount of short term and long term value for our shareholders.

Delana Lucas-Pipes: Adam, I appreciate your prospectus. Best of luck. Thank you very much for all the calls. Thank you.

Speaker Change: Adam I appreciate your perspective.

Delana Lucas-Pipes: Best of luck. Thank you very much for all the color.

Adam Sullivan: Thanks Lucas.

Speaker Change: Thank you.

Tia: Again, to ask a question, please press star 1. We will pause here briefly to allow questions to generate in queue. The next question comes from the line of Kevin Beattie with H.C. Wainwright. Please proceed. Thank you, Adam, and Denise.

Delana Lucas-Pipes: Again to ask a question please press star one.

Kevin Beattie: Policy briefly to allow questions to generate in Q.

Tia: Okay.

Kevin Beattie: The next question comes from the line of Kevin Dede with H C. Wainwright. Please proceed.

Kevin Beattie: Thank you. Hi Adam, and Denise, thanks for having me on.

Kevin Beattie: Thank you Hi, Adam Denise Thanks for having me on.

Kevin Beattie: So, Adam, maybe you could offer a little operational insight. I know the hash price has trended down, right? Maybe a little bit lower than you expected or had modeled. I'm wondering, and I know you said that you expect minors to come off and you look for the next difficulty adjustment this week and two weeks beyond. Is there anything that you're doing sort of in-house to... Maximize the performance of the fleet?

Kevin Beattie: So Adam maybe you could offer a little operational insight I know.

Kevin Beattie: The hash prices trended down right.

Kevin Beattie: Maybe a little bit lower than you expected or had modeled I'm wondering and I know you said that you expect miners to come off when you look for the next difficult difficult to your adjustment this week and two weeks beyond.

Kevin Beattie: Is there anything that youre doing sort of in house.

Kevin Beattie: Maximize the.

Kevin Beattie: Performance of the fleet.

Max: Thanks, Kevin.

Adam Sullivan: I think it comes down to really two items, and the first is it comes down to operation. Prior to the halving, we actually moved our machines based on their efficiency amongst our sites based on their power contracts, really to prepare for a time period that could be much worse than what we're seeing today in terms of the five cent ask price level. The second part is our in-house software development team has developed a significant amount of firmware around the ability to adjust machines on a minute-by-minute basis amongst different types of firmware settings, and really what that does is it allows us to change our efficiency of our machine fleet, and it allows us to do that based on power prices at each of our sites as well as prevailing ask price metrics, and so for us, that provides a significant advantage over our peers who have outsourced much of that capability set, whereas we've been able to integrate really all three parts of the software stack, the energy management, the fleet management, and the firmware all into a single software stack that allows us to provide a significant amount of control greater than our peer set today.

Kevin Beattie: I think it comes down to two really two items.

Adam Sullivan: And the first is comes out operations prior to the hobby, we actually moved our machines based on their efficiency amongst our sites based on their power contracts really to prepare for a time period that could be.

Adam Sullivan: Much worse than what we're seeing today in terms of the <unk> price level.

Adam Sullivan: Second part is our in house software development team has developed a significant amount of firmware.

Adam Sullivan: Round, the ability to adjust machines on a minute by minute basis amongst different types of firmware settings, and really what that does it allows us to change our efficiency of our machines suite and it allows us to do that based on power prices at each of our sites as well as prevailing cash price metrics and so for us that provides a significant advantage over our.

Adam Sullivan: Peers, who who have outsourced much of that capability.

Adam Sullivan: Whereas we have been able to integrate really all three parts of the software stack the energy management.

Adam Sullivan: The fleet management and the firm we're all into a single software stack that allows us to provide a significant amount of control greater than our peer set today.

Kevin Beattie: You know, at what point would you consider developing fresh megawatts to address the HPC market versus conversion, and how would you balance that infrastructure spend vis-a-vis the 10 or so extra hash that you could gain by improving your fleet?

Adam Sullivan: At what point would you consider developing.

Kevin Beattie: Developing.

Kevin Beattie: Fresh megawatts vert for HP and address each PC market versus conversion.

Kevin Beattie: And how would you bought balance that infrastructure spend.

Kevin Beattie: These are the tenor.

Kevin Beattie: 10, or so extra hash that you could gain and improving your fleet.

Adam Sullivan: Yeah, we're in a very unique position today where we have infrastructure that can support both Bitcoin mining and HPC hosting. Obviously, Bitcoin mining is the platform for which we're able to expand into new markets and find new sites. And on the contract side for the HPC business, our focus today is really on customers who are able to prepay for that CapEx. And so as we evaluate new opportunities, you know, it's going to come down to a month by month, quarter by quarter basis in terms of how we allocate capital, but we'll continue to we'll be able to continue to grow our Bitcoin mining exahash over the course of the next few years.

Adam Sullivan: Yeah, we're.

Kevin Beattie: Yes.

Kevin Beattie: <unk> unique position today, where we have infrastructure that can support both bitcoin mining and HBC hosting obviously bitcoin mining the platform for which we are able to expand into new markets and find new sites and on the contract side for the <unk> business. Our focus today is really on customers, who are able to prepay for that capex.

Adam Sullivan: And so as we evaluate new opportunities, it's going to come down to a month by month quarter by quarter basis in terms of how we allocate capital, but we'll continue to we'll be able to continue to grow our bitcoin mining.

Adam Sullivan: Over the course of the next few years as you mentioned we have.

Adam Sullivan: As you mentioned, we have a 10 exahash opportunity just within our existing fulcrum today if we were to upgrade our machines to the newest generation. And so what we're looking at is an exciting opportunity on the Bitcoin mining side and a very exciting opportunity on the HPC side.

Adam Sullivan: A 10 X ash opportunity just within our existing footprint today, if we were to upgrade our machines to the newest generation and so what we're looking at is an exciting opportunity to pick one mine site and a very exciting opportunity on the <unk> side.

Speaker Change: Thanks, Adam.

Speaker Change: Thank you.

Greg Lewis: The next question comes from the line of Greg Lewis with BTIG. Please proceed.

Adam Sullivan: The next question comes from the line of Greg Lewis with <unk>. Please proceed.

Greg Lewis: Yeah, hey, thank you, and good afternoon, and thanks for taking my questions. And Adam, I was kind of curious about your thoughts on Kevin's question where you kind of addressed your firmware and your stack. You know, you mentioned other miners using third-party solutions. As I think about your firmware solution that you're using internally, is there an opportunity, potentially, to bring that out into the market and have other smaller miners, you know, the potential customer's eyes, see this as a potential other revenue stream for Coors?

Greg Lewis: Yes, hi, Thank you and good afternoon, and thanks for taking my questions.

Greg Lewis: I was kind of curious on your thoughts.

Greg Lewis: Kevin's question, where you kind of addressed your firmware in your stack.

Greg Lewis: You mentioned the other miners using third party.

Greg Lewis: Solutions.

Greg Lewis: <unk>.

Greg Lewis: As I think about your firmware solution that you're using internally is there an opportunity potentially to bring that out into the market.

Greg Lewis: And have other smaller minors.

Greg Lewis: Yeah.

Greg Lewis: The potential customers I E is this a potential other revenue stream for our cores.

Adam Sullivan: Yeah, thanks for the question. This is something that we've evaluated in the past, potentially, you know, rolling out to a broader market. You know, we view this as a significant competitive advantage over our peers, and what we've seen over the past few years in terms of the development of software is that we've continued to lead the pack in terms of our development. And so, from our perspective, you know, we're going to continue to keep this as our proprietary in-house software so that we can maintain that competitive advantage over our peers as we continue to grow.

Adam Sullivan: Thanks for the question. This is something that we've evaluated in the past potentially rolling out to the broader market.

Adam Sullivan: We view this as a significant competitive advantage over the over our peers.

Adam Sullivan: And what we've seen over the past few years in terms of the development of software is that we've continued to lead the pack in terms of our development.

Adam Sullivan: So from our perspective, we're going to continue to keep this as our proprietary in house software. So that we can maintain that competitive advantage over our peers as we continue to grow I think one important note on that as well is that our peers when theyre running third party software theyre paying a pretty significant development fees to the ultimate owners.

Adam Sullivan: I think one important note on that as well is that our peers, when they're running third-party software, they're paying a pretty significant development fee to the ultimate owners of that firmware. You know, that's a fee that we're able to not pay and actually generate greater gross profit than our peers on the same machine type, holding all their variables.

Adam Sullivan: If that firmware.

Adam Sullivan: To see that we're able to not pay and actually generate greater gross profit than our peers on the same machine type.

Adam Sullivan: Holding all other variables constant.

Speaker Change: Okay Super helpful. And then I also wanted to follow up on the.

Greg Lewis: Okay. Very helpful.

Greg Lewis: And then I also wanted to follow up on the HPC opportunity. You mentioned the ability for prepaying. I guess prepaying is one thing, and that obviously sounds like the ideal solution, but what about approaching it using your existing infrastructure with a joint venture?

Greg Lewis: The <unk> opportunity I mean, you mentioned.

Greg Lewis: The ability for prepaying.

Speaker Change: I guess is.

Greg Lewis: Prepaying is one thing.

Greg Lewis: And Thats, obviously, it sounds like like the ideal solution, but but what about approaching it using your existing infrastructure with a joint venture is that something that could make sense or at this stage in the game, it's something that we're not really interested in.

Adam Sullivan: Is that something that could make sense, or at this stage in the game, is it something that we're not really interested in? You know, bringing on a partner. Yeah, I'll tell you how we look at it.

Adam Sullivan: Bringing on a partner.

Greg Lewis: Yeah, I would say the way we look at it right now and really what excites us most is utilizing the prepaid revenue structure allows us to own that infrastructure free and clear after that prepaid revenue has run off. Owning this infrastructure, whether it's at the end of the contract or whether it's after that prepaid revenue has paid off, will give us a significant advantage in terms of being able to refinance that equipment or that infrastructure and potentially pull some capital out to fund future growth.

Adam Sullivan: Yes, I'd say that the way we look at it right now and really what excites US most is utilizing the prepaid revenue structure allows us to own that infrastructure clean clear after that prepaid revenue.

Greg Lewis: Owning this infrastructure.

Greg Lewis: Whether it's at the end of the.

Greg Lewis: The contract or whether it's after that prepaid revenue is paid off well.

Greg Lewis: We will give us significant advantage in terms of being able to refinance at a quote or that infrastructure and potentially pull some capital out to fund future growth and so we view. This as we have the technical capabilities in house, we have the infrastructure base and so from our perspective really the capital Giulia as part of that that's necessary.

Greg Lewis: And so, you know, we view this as we have the technical capabilities in-house, we have the infrastructure base, and so from our perspective, really, the capital is the only other part of that that's necessary to execute. And if we can get that from our client base, that will provide us a significant advantage going forward. Very helpful. Thank you. The next question comes from the line of Tyler Delmario.

Tyler Delmario: And if we can get that from our client base that will provide us a significant advantage going forward.

Tyler Delmario: Okay Super helpful. Thank you.

Greg Lewis: Yes.

Tyler Delmario: Thank you.

Tyler Delmario: The next question comes from the line of Tyler Delmario with BTIG. Please proceed. Yeah, hey guys, thanks for taking the question. Adam, I just wanted to follow up really quick.

Tyler Delmario: The next question comes from the line of tailored Yamana Hill with BTG. Please proceed.

Tyler Delmario: Yeah, Hey, guys. Thanks for taking the question Adam I just wanted to follow up really quickly on the prepayments from the HBC customers. I mean, do you have a threshold level in mind and I guess like what's the lead time, you were thinking about for that payment and then maybe rolling it down.

Tyler Delmario: Okay.

Adam Sullivan: Yeah, of course. I think, you know, what we're looking at right now is really the 100% payment term. So, you know, for the total CapEx bill, you're receiving 100% of that from our potential clients. I think, you know, some high-level guidelines here to think about in terms of how we're thinking about it are that you're really not using more than 50% in any given year towards the revenue that we could be generating.

Tyler Delmario: Yes of course, I think what we're looking at right now is really on the 100% payment terms. So for the total capex bill receiving 100% of that from our from our potential clients.

Adam Sullivan: I think some high level guidelines here to think about in terms of how we're thinking about it is <unk>.

Adam Sullivan: Really not utilizing more than 50% in any given year towards the revenue that we could be generating.

Adam Sullivan: And I think that, you know, really brings us to a point where we're still able to experience significant free cash flow generation off of these megawatts, even with the prepaid structure rolling off over the course of the contract.

Adam Sullivan: And I think that really brings us to a point, where we're still able to experience significant free cash flow generation off of these megawatts, even with the prepaid structure rolling off over the course of the contract.

Speaker Change: Great Thats all I had thanks, so closing the loop on I appreciate the time.

Speaker Change: Of course, thank you.

Speaker Change: Thank you.

Lucas Pipes: The next question comes from the line of Lucas Pipes with B. Reilly Securities. Please proceed.

Adam Sullivan: The next question comes from the line of Lucas pipes with B Riley Securities. Please proceed.

Lucas Pipes: Thank you very much for taking my follow-up question, hopefully really quick. The $1.4 million to $1.6 million that you mentioned, Adam, is that including the pass-through on power? And I think you mentioned another pass-through, if you could remind me of that. And so, for the EBITDA margin, I think you mentioned 75 to 80 percent. That would still be kind of straight on top of that revenue line. Just wanted to make sure I didn't miss anything.

Lucas Pipes: Thank you very much for taking my follow up question.

Lucas Pipes: So it really quick.

Lucas Pipes: One four to $1 6 million.

Lucas Pipes: That you mentioned.

Scott: Adam This is Scott.

Lucas Pipes: Including the pass through on power and I think you mentioned another pass through if you could remind us.

Lucas Pipes: Pat.

Lucas Pipes: And so for the for the EBITDA margin.

Lucas Pipes: Thank you mentioned, 75% to 80%.

Lucas Pipes: That would be still kind of straight.

Lucas Pipes: <unk> revenue line.

Lucas Pipes: Just wanted to make sure I didn't miss anything there. Thank you.

Adam Sullivan: Thank you. Yeah, so the 1.4 to 1.6 is not inclusive of the utility, the pass-through power in utilities. And so, when you think about that number, that's really the lease rate on a per-megawatt basis for the entirety of the year. All of the other expenses that are incurred are passed through to the client. And so, when you think about the 75 to 80 percent, we like to think about that as the gross margin on that per-megawatt number that's given, so that 1.4 to 1.6 number.

Adam Sullivan: Yes. Thank you, yes, so the one four to one six that is not inclusive of the utility pass through power and utilities.

Adam Sullivan: And so when do you think about that number that's really the lease rate on a per megawatt basis for the entirety of the year.

Adam Sullivan: All of the other expenses that are incurred on pass through to the clients and so when you think about the 75% 80% we'd like to thank bought that is the gross margin on those on that per megawatt number that's getting into that one four to one six number.

Lucas Pipes: Got it. So that, call it 20-25%. Those would be more or less maintenance costs of the site, security, fixing a plug, and a leak here and there.

Speaker Change: Got it so that call it.

Lucas Pipes: 2025%.

Lucas Pipes: Those would be more or less maintenance cost of debt of the site.

Lucas Pipes: Security fixing fixing the plug the leak here and there.

Lucas Pipes: That's kind of the way to think about it. Absolutely right, Lucas. Adam, I really appreciate it. Thank you so much and best of luck.

Lucas Pipes: That's kind of the way to think about it.

Lucas Pipes: Absolutely right Lucas.

Speaker Change: Adam I really appreciate it. Thank you so much and best of luck.

Speaker Change: Thank you very much.

Speaker Change: Thank you.

Kevin Beavey: The next question comes from the line of Kevin Beavey with HC Wainwright. Please proceed. Thank you.

Speaker Change: The next question comes from the line of Kevin Dede with H C. Wainwright. Please proceed.

Kevin Beavey: Thanks.

Kevin Beavey: Me again. Denise, you mentioned two stock price thresholds for warrant conversion and the flood of cash that would offer you and perhaps clear the balance sheet at that point. Could we take a step back and think about that process without the stock moving? I mean, at what point would you consider retiring debt? Given cash generation in a favorable mining economy.

Kevin Beavey: Me again, Denise you mentioned two stock price thresholds for warrant conversion and the flood of cash that would offer you and perhaps.

Kevin Beavey: During the balance sheet at that point.

Kevin Beavey: Can we take a step back and think about that process without the stock moving I mean at what point would you consider retiring debt.

Kevin Beavey: Given cash generation and favorable mining economics.

Adam Sullivan: Hey, Kevin. I'll take that question. So, really, what we're thinking about today, yeah, first, you know, the $19 million that we paid off early in the second quarter was related to the mechanics needs to build out that 72 megawatts at our Jensen facility. We have some additional debt service over the course of this year that will pay down some additional principal. As we've evaluated the evolving market that we're in today, what we believe, based on our analysis, is that it's better to put capital towards growth than pay down debt at this point.

Denise Sterling: Hey, Kevin I'll take that question.

Speaker Change: So really how we're thinking about today.

Adam Sullivan: Yes.

Adam Sullivan: $19 million that we paid off.

Adam Sullivan: Early in.

Adam Sullivan: In the second quarter was related to mechanics liens to build out that 72 megawatts at our <unk> facility.

Adam Sullivan: Have some additional debt service over the course of this year that will pay down some additional principal.

Speaker Change: As we have evaluated.

Speaker Change: The evolving market that we're in today.

Adam Sullivan: What we believe based on our analysis is that it's better to put capital towards growth than paying down debt at this point and so we're going to continue to fund growth and that May change over the course of the next month to next quarter, but today. Our focus is on continuing to fund the growth of this business. We believe its more accretive to our bottom line.

Adam Sullivan: And so we're going to continue to fund growth, and that may change over the course of the next month, the next quarter. But today, our focus is on continuing to fund the growth of this business. So we believe it's more accretive to our bottom line. Perfect, Adam.

Kevin Beavey: Perfect, Adam. I appreciate that nuance. Thanks for sharing. Of course. Thank you, Kevin. Thank you. The next question comes from Donata Jackson.

Speaker Change: Perfect Adam I appreciate that nuance thanks for sharing.

Donata Jackson: Of course, thank you Kevin.

Donata Jackson: Thank you.

Donata Jackson: The next question comes from the line of Jack Chang with Imperial Capital. Please proceed. Hi, thanks for taking the question. On the HPC, I'm curious to know if

Kevin Beavey: The next question comes from the line of Jack Chang with Imperial Capital. Please proceed.

Jack Chang: Hi, Thanks for taking the question.

Jack Chang: <unk> curious to know.

Jack Chang: The potential clients reached out to us directly thank you.

Jack Chang: Tried to them and how much of the 500 megawatts would be potentially taken by these clients you are in talks with.

Adam Sullivan: Thank you for your question. You know, I would have to say it's a bit of a mix of both, you know, people recognize the platform that we've built, you know, they know the locations of our sites, and they know the capabilities that we have on our internal team. You know, you look at our operations team, up and down, coming almost directly from the data center industry with decades of experience across each member. And so, you know, that is the experience that it is.

Speaker Change: Thank you for your question.

Adam Sullivan: I'd have to say, it's a bit of a mix of both people recognize the platform that we built they know the locations of our sites and they know the capabilities that we have on our on our internal team and you look at our operations teams up and down coming almost directly from the datacenter industry with decades of experience across each.

Adam Sullivan: Remember and so.

Adam Sullivan: So that his experience at.

Adam Sullivan: You know, the traditional data center industry, as well as the tech industry, know, and they know many of our team members very well. And so, it was a bit of a combination of both inbound calls as well as some outbound calls to certain partners that we knew may be interested. You know, our goal right now is to repurpose about 500 megawatts to HPC, and, you know, really what we're focused on is trying to accomplish this, you know, potentially, depending on how negotiations and discussions go with potential clients.

Adam Sullivan: The traditional data center industry as well as the tech industry no.

Adam Sullivan: Many of our team members very well and so there's a bit of a combination of both inbound as well as some outbound calls to certain partners that we knew may be interested.

Adam Sullivan: Our goal right now is to repurpose about 500 megawatts to HBC.

Adam Sullivan: And <unk>.

Adam Sullivan: Really what we're focused on is trying to accomplish this potentially depending on how negotiations and discussions with potential clients over the course of the next three to three years to four years and so that's really what we're focused on today executing on our growth plan not only in the bitcoin mining side, but also on the APC side.

Adam Sullivan: And so, that's really what we're focused on today, you know, executing on our growth plan, not only on the Bitcoin mining side, but also on the HPC side. Thank you.

Speaker Change: Thank you and good.

Adam Sullivan: I think you said the timing of a potential deal could be this year, or did I mishear that? Yeah, that's something that we're going to be updating the market on as these negotiations conversations evolve. So as we get to more definitive decisions around this, we will be announcing that to the market.

Speaker Change: I think you said the timing of a potential deal cookie into here or did I mishear that.

Adam Sullivan: Yes, that's something that we're going to be updating the market as as these negotiations conversations evolve so as we get to more definitive decisions around this we will be announcing that in the market.

Speaker Change: Thank you.

Speaker Change: Thank you.

Tia: There are no additional questions left at this time. I will hand the call back over to Stephen Gitlin for closed remarks.

Speaker Change: There are no additional questions at this time.

Stephen Gitlin: I will hand, the call back over to Steven Gitlin for closing remarks.

Stephen Gitlin: Thank you, Tia. With no further questions, we thank you for your attention and your interest in Core Scientific. An archived version of this call, all SEC filings, and relevant company and industry news can be found on our website, corescientific.com. We wish you a good day, and we look forward to speaking with you again following next quarter's results.

Stephen Gitlin: Thank you Tia with no further questions. We thank you for your attention and your interest in core scientific and archived version of this call all SEC filings and relevant company and industry news can be found on our website core scientific dotcom, we wish you a good day and we look forward to speaking with you again following next quarter's results.

Stephen Gitlin: Okay.

Tia: That concludes today's conference call. Thank you. You may now disconnect your lines.

Speaker Change: That concludes today's conference call. Thank you you may now disconnect your lines.