Q3 2024 Iris Energy Limited Earnings Call
Please be advised that today's conference is being recorded.
Speaker Change: After the Speakers' presentation there'll be a question and answer session to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again I would not like to hand, the conference over to your Speaker today, Lincoln 10 director of Investor Relations.
Lincoln Tan: Thank you good afternoon, all for those of you in North America and good morning to those of you in Australia and welcome to Irons third quarter FY 'twenty four results presentation. My name is Lincoln Tan director of Investor Relations and joining me on the call today are Daniel Roberts co founder and co CEO and Belinda New sofa.
Lincoln Tan: Brett CFO before we begin please note that this call is being webcast live within the accompanying presentation for those that have dialed in via phone you can elect to ask a question via the Monterey sought after our presentation I would like to remind you that certain statements that we make during this call may constitute forward looking statements and iron and caution.
Brett CFO: Listeners that forward looking information and statements are based on certain assumptions and risk factors that could cause actual results to differ materially from the expectations that the company listeners should not take place undue reliance on forward looking information or statements. Please refer to the disclaimer on slide two within the accompanying presentation.
Brett CFO: Thank you and I will now turn the call over to Dan Roberts.
Okay.
Dan Roberts: Thanks, everyone for dialing in thanks Lincoln for the introduction.
Dan Roberts: We're thrilled to be here for our quarterly earnings call, there's a little bit.
Good day, and thank you for standing by welcome to Iran's third quarter for FY 2024, Investor update at this time all participants are in a listen only mode.
Dan Roberts: To get through so let's jump straight into it.
Speaker Change: So festival.
Dan Roberts: Probably worth recapping, where we're at in terms of our business and our priorities for 2020 full.
Be advised that today's conference is being recorded.
Speaker Change: And beyond and I think working from left to rush on the slide deck in front of you.
After the Speakers' presentation there'll be a question and answer session to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again I would not like to hand, the conference over to your Speaker today, Lincoln 10 director of Investor Relations.
Speaker Change: The Big News is we're now going to 30 extra hash. This calendar year. So we're now at 10 <unk> of courage Bitcoin mining operating capacity we told.
Speaker Change: Guidance and provided guidance around 30 June for that milestone we've hit it in mid May and we're now upgrading.
Thank you good afternoon to those of you in North America and good morning to those of you in Australia and welcome to Iron stack, what our FY 'twenty four results presentation. My name is linking Chen director of Investor Relations and joining me on the call.
Speaker Change: In the V. So over the next seven months and a bit we're going to 30 ex ash. That's as a result of bringing forward. The construction of some infrastructure. So some additional data centers that we will build by the end of this year alone with a transaction that we're pleased to announce today a recent.
Daniel Roberts co founder and co CEO and Mr. Flores CFO before we begin. Please note that this call is being webcast live within the accompanying presentation for those that have dialed in by phone you can elect to ask a question via the motivation after our presentation I would like to remind you that certain statements that we make.
Speaker Change: We completed we've beat mine, so a bit more on that to come but that's obviously super exciting and will take us up into that very top.
Speaker Change: Here up listed becoming miners.
This call May constitute forward looking statements and irony cautions listeners that forward looking information and statements are based on certain assumptions and risk factors that could cause actual results to differ materially from the expectations of the company listeners should not take place undue reliance on forward looking information or statements. Please refer to the disclaimer on slide two.
The next part which is also exciting is the continued development of our cloud service business. We provided updates over the course of this year.
Speaker Change: We're looking at ways to expand this.
So we look forward to giving you a further update during the course of this presentation.
Speaker Change: And then there's been a lot of commentary publicly in the media social media about the value of power and land in the context of the data center and IR Crunch.
Within the accompanying presentation.
Thank you and I will now turn the call over to Dan Robert over to you.
Yeah.
Speaker Change: As most of you know we've got over 3000 megawatts of power and land secured.
Speaker Change: This not only provides a squeeze fantastic optionality and flexibility to continue our organic growth profile.
Speaker Change: But it's also giving rise to some interesting near term opportunities.
Speaker Change: To potentially bring forward monetization of some of that portfolio again, we're getting to that ILUVIEN will detail, but it's an exciting time.
There's a lot going on and without further Ado, let's jump in too.
Please standby your conference will begin momentarily.
Speaker Change: <unk> mining side right now in a position to go to 30 <unk> in 2024 and in fact 20 extra cash.
Speaker Change: By the end of Q3, so over the next few months, we anticipate quite a large.
Speaker Change: Swift ramp up in our capacity.
Speaker Change: We were the fastest growing <unk> in Montana.
Please standby your conference will begin momentarily.
Speaker Change: Last year in the listed market and as a result of this we anticipate being similar this year.
Speaker Change: So at 30 <unk> of capacity the majority of that.
Speaker Change: He's via F. 'twenty, one pros from beat mine, which have an average efficiency of 15, Jules <unk>, which by the end of it all being installed in the <unk> This year.
Speaker Change: We anticipate 16 jewels to <unk> in terms of nameplate efficiency and 17000 dollar per bitcoin electricity cost.
Speaker Change: So in terms of size scale.
Speaker Change: Low cost.
Speaker Change: We're very pleased to be in a position, where we think that we're on course to be one of the real industry leaders in this so again. This is as a result of bringing forward the construction of the infrastructure.
Daniel Roberts: It's something.
The connection will be reconnecting very shortly.
Speaker Change: The operations team the construction team really.
Speaker Change: Accelerating their work around this as we've spoken about in the past we've got a standardized data center design that we've been rolling out for a number of years now we recently upgraded that from the 20 megawatt design to 'twenty five megawatt does on that's indeed helped by the fact that it is standardized the fact that we have been doing this for a number of years.
Please stand by your conference will begin momentarily.
Speaker Change: The team is simply getting better and foster assets, that's putting us in a great position.
Hey, Lou.
Speaker Change: To continue to build.
Speaker Change: What I also I should say.
All right.
Speaker Change: Is that we're not stopping at <unk>, we've got options for another 10 X ash.
Dan you may begin whenever you're ready.
Okay.
Speaker Change: As Youll see on the next slide.
Yeah.
Speaker Change: So as you can see we're pleased to announce that we are at <unk> in terms of current operating capacity, we anticipate hitting 20 excess cash over the course of the next few months I E. By the end of September and then by the end of December hitting that 30 ex Hashmark that I've mentioned a few times now in addition.
Excellent I think way back on apologies for the technical issues.
Daniel Roberts: Ready to go.
Thanks, everyone for dialing in thanks Lincoln for the introduction.
We're thrilled to be here for our quarterly earnings call, it's a little bit.
Daniel Roberts: To get through so let's jump straight into it.
Speaker Change: We've got fixed price options for an additional 10 X ash to.
Right Festival.
Probably worth recapping, where we're at in terms of our business and our priorities for 2024.
Speaker Change: To potentially deploy.
Speaker Change: Early in 2025.
And beyond and working from left to rush on the slide deck.
Speaker Change: And I think what's really important to battle. A this is the fact that we've got the land we've got the power. So six years ago, when will my brother and I set this business up.
In front of you.
The Big News is we're now going to sticky extra hash. This calendar year. So we now have 10 extra hash of courage bitcoin mining operating capacity, we told guidance and provided guidance around 30 June for that milestone we've hit it in mid May and we now upgrading.
Speaker Change: Our belief was firmly the power and land would be scale and the fact that it takes multiyear timeframes to develop and many of you on this call investors in our early rounds, where we spoke about things like the matrix ready player one wreck it Ralph only saw five movies, where.
And if he so.
So over the next seven months and a bit are we going to 30 extra cash that's as a result of bringing forward. The construction of some infrastructure sorry, some additional data centers that we will build by the end of this year.
Speaker Change: Could try and humanity in a certain direction.
As a result of that how much computing power it would need now who knows where we end up is it that way is a different trajectory, but our belief was that over the next 10 2030 years.
Along with a transaction that we're pleased to announce today. Our recently completed we'd beat mine, so a bit more on that to come but that's obviously super exciting and will take us up into that very top.
Speaker Change: World is going to have this insatiable amount of demand for computing power and we're going to have this real world digital world dislocation that we've spoken about many times before the fact that the revenue line. The demand drivers are largely driven by the digital world, whether it's the price of bitcoin, whether its demand for II, whether it's some sort of.
Uplifted between minus.
The next part which is also exciting is the continued development of our AI cloud service business. We provided updates over the course of this year, we're looking at ways to expand this so we look forward to giving you a further update during the course of this presentation.
New computing.
Speaker Change: Application in the future. The reality is once the real world gets to a critical mass it's very hard to scale up and this is why at the moment, we're seeing such demand for new power both from Bitcoin mine as data centers hyper scale is et.
And then there's been a lot of commentary publicly in the media social media.
The value of power and land in the context of the data center and AI Crunch.
Speaker Change: Et cetera, and the fact that as you just cannot bring forward. These power projects for various reasons. We'll go into so we're in a really good position, where it's all organic growth.
As most of you know we've got over 3000 megawatts of power and land secured.
Spoken to you for years about the platform and the foundation that we aligned down in terms of that organic growth and over the next six to nine months.
This not only provides a suite fantastic optionality and flexibility to continue our organic growth profile.
We believe that you really see the fruits of that investment.
But it's also giving rise to some interesting near term opportunities.
Speaker Change: As we scale up our business extremely quickly.
To potentially bring forward monetization of some of that portfolio again, we're getting to that should be a little bit more detail, but it's an exciting time.
So I pass over to Lincoln.
There's a lot going on and without further Ado, let's jump in.
Lincoln Tan: Thanks, Dan So just to provide context for the next couple of slides just talked through.
<unk>.
Lincoln Tan: Capex for a club its funding requirements as well as some further detail around the.
To be coin mining side of things.
Okay.
Speaker Change: The agreements that we've just.
Lincoln Tan: Signed.
Shouldn't we now in a position to guide to 30 <unk> in 2024 and in fact 20 eggs hash.
Lincoln Tan: So.
Speaker Change: Turning to to this page.
Speaker Change: In terms of the Capex as we previously mentioned.
By the end of Q3, so over the next few months, we anticipate quarter large.
Speaker Change: Expansion to 20 eggs hash.
Speaker Change: Which is now being pulled forward to the end of September this year that is already fully funded and the focus on this page is really talking about the additional capex and growth to get to 30 excess cash by the end of this year.
Swift ramp up in our capacity.
We were the fastest growing be quite minor.
Last year in the listed market and as a result of this we anticipate being similar this year.
Speaker Change: As we saw on the previous slide the step up from <unk> requires an additional 10 X as a minus and an additional 150 megawatts of data center capacity. So rarely at Childress by the end of this year, we will have 350 megawatts of operating data.
So <unk> has a capacity the majority of that is via F. 'twenty one price from beat mine, which have an average efficiency of 15, Jules <unk>, which by the end of it all being installed so Dx ash this year.
We anticipate 16 jewels to tear hash in terms of nameplate efficiency and a 17000 dollar could be coin electricity cost.
Speaker Change: Center capacity at Childress and the Capex guidance that we're providing for both the mining hardware as well as the data centers is approximately $300 million and as you can see on the top right quadrant of that slide.
So in terms of size scale.
Low cost.
We're very pleased to be in a position, where we think that we're on course to be one of the real industry leaders in this.
Speaker Change: Comprises approximately $119 million for tenants a hash of the latest generation bit main as 'twenty, one prime machines and approximately $110 million for 150 megawatts of data centers, which is broadly in line with the previous guidance we provided.
Again this is as a result of bringing forward the construction of the infrastructure.
The operations team the construction team are really.
Accelerating a work around this as we've spoken about in the past we've got a standardized data center design that we've been rolling out for a number of years now we recently upgraded that from the 20 megawatt designed to 25 megawatt design. That's indeed helped by the fact that it is standardized the fact that we have been doing this for a number of years.
That's sort of bench.
Speaker Change: Benchmark data center Capex at about $750000 10 megawatt.
Speaker Change: Now turning to the funding strategy, we anticipate funding the step up to 30 Axa has through a combination of existing cash resources operating cash flows and other sources of capital and as we've previously mentioned, we have $322 million of cash and that is up.
The team is simply getting better and faster asset that's produced in a great position.
To continue to build what.
What I also I should say.
Is that we're not stopping at <unk>, we've got options for another 10 <unk>.
Speaker Change: The April 2024.
Speaker Change: The business is generating very strong operating cash flows, which we are reinvesting into growing the business and blend is going to touch on this in more detail in the financial statements, but you will note that we reported $48 million of positive operating cash flow year to date this financial year.
As Youll see on the next slide.
So as you can see we're pleased to announce that we are at <unk> in terms of current operating capacity, we anticipate hitting 20 ex cash over the course of the next few months I E. By the end of September and then by the end of December hitting that 30 extra hashmark that I've mentioned a few times now in addition.
Blend: And we are also continuing to explore other funding opportunities right across the capital structure. So as you are aware, we've got our existing ATM, which has a capacity of $137 million remaining we've also just filed a new $500 million shelf and ATM.
We've got fixed price options for an additional 10 <unk>.
To potentially deploy.
Early in 2025.
And I think what's really important to battle. A this is the fact that we've got the land. We've got the power say six years ago, when will my brother and I set this business up.
Blend: And in parallel we're also exploring opportunities with that capital, including potential funding for data centers and equipment financing for Gpus, which Dan is going to touch on a little bit later in this presentation.
Our belief was family that parent land would be scale and the fact that it takes multiyear timeframes to develop and many of you on this call investors in early rounds, where we spoke about things like the matrix ready player one wreck it Ralph OLED side five movies, where.
Dan Roberts: And then finally in terms of returns and Thats just talking to the shaded box on the left of this page.
Speaker Change: We just wanted to take a take the opportunity to provide a little bit more detail around how we frame up our capital raising and investment decisions. So fundamentally.
Petraeus humanity in a certain direction.
And as a result of that how much computing power. It with date now who knows where we end up is it that way is a different trajectory.
Speaker Change: The use of the ATM program. For example is entirely at our discretion and we just view this as an important instrument that helps us funding growth that makes sense strategically and also financially in terms of returns to shareholders.
Appalachia wells over the next 10 2030 years.
The world is going to have the insatiable amount of demand for computing power and we're going to have this real world digital world dislocation that we've spoken about many times before.
Speaker Change: We ran some analysis some benchmarking analysis on how the market is valuing bitcoin minus today.
The revenue line the demand drivers are largely driven by the digital world, whether it's the price of bitcoin, whether its demand for AI, whether it's some sort of new computing application.
And we note a high degree of value being placed on installed excess capacity and in particular for the largest scale miners, specifically math clean spark in right.
Application in the future. The reality is once the real world gets to a critical mass it's very hard to scale up and this is why at the moment, we're seeing such demand for new power by through decoy miners data centers Hyperscale is et.
Speaker Change: Each of these operators.
Clean Spark: With hatch rates above 10, net cash the market is valuing their capacity at an average of around $135 million to install ex ash.
Speaker Change: And as you can see on the right hand side of the page, we are building and delivering incremental hash rate.
Et cetera, and the fact is you just cannot bring forward. These power projects for various reasons. We'll go into so we're in a really good position, where it's all organic growth.
Speaker Change: At $30 million Capex for one <unk> and that is inclusive of the mining hardware and the data centers. So putting all of that together, we see raising capital to become one of the largest and most efficient publicly listed on US. This year is making strategic sense and also driving long term value creation flour.
We've spoken to you for years about the platform and the foundation that we aligned down in terms of that organic growth and over the next six to nine months.
We believe that you'll really see the fruits of that investment as.
As we scale up our business extremely quickly.
Speaker Change: Shareholders.
Okay.
So am I pass over to Lincoln.
Speaker Change: Stepping to the next slide.
Speaker Change: We won't spend too much time on this there's a lot of detail in our disclosures, but we've entered into a number of purchase an option agreements with Maine, which underpin our growth to <unk> this year and providing a pathway to <unk> in the first half of calendar 2025, just wanted to emphasize that these.
Thanks, Dan So just to provide context for the next couple of slides just talked through.
Capex for climate funding requirement as well as some further detail around the.
The F 'twenty, one CRO agreement that we've jet's some.
<unk>.
So.
Turning to to this page.
Speaker Change: New and amended agreements related to a combined 35 eggs hash up the <unk> 21 per miners.
In terms of the Capex as we previously mentioned the expansion to 20 excess cash which.
As Dan mentioned have efficiency of 15 bills the Terra hash these.
Which is not being pulled forward to the end of September this year that is already fully funded and the focus on this page is really talking about the additional capex and growth to get to 30 excess cash by the end of this year.
Speaker Change: These agreements have been struck at $18 90 per Terra hash and as you as you.
Speaker Change: You can see on that on the table as we start to deploy that hardware you can see that meaningful improvement in overall fleet efficiency to 16 <unk> at <unk> and then to 15 <unk> at <unk>.
As we saw on the previous slide.
Slide the step up from 20 <unk> requires an additional 10 X as a minus and an additional 150 megawatts of data center capacity the rally at Childress by the end of this year. We will have 350 megawatts of operating data center capacity at Childress.
Speaker Change: And in terms of just the structuring.
Speaker Change: Agreements will have very deliberately structured in this manner.
Speaker Change: With delivery dates that align to the data center rollout at Childress over the rest of 2024 and 2025.
And the Capex guidance that we're providing for both the mining hardware as well as the data center is approximately $300 million and as you can see on the top right quadrant of that slide.
Speaker Change: Having options in the structure provide a degree of flexibility around growth as compared to for example, a <unk> purchase.
Speaker Change: As well as an element of downside protection to the extent market conditions changed and as we've just demonstrated.
That comprises approximately $119 million for 10 X a hash of the latest generation bit main F. 'twenty, one prime machines and approximately $110 million for 150 megawatts of data centers, which is broadly in line with with the previous guidance we provided.
Speaker Change: New technology images in new and more efficient mining hardware measures.
Speaker Change: We were able to for example.
Speaker Change: In the terms of our $2 21.
Speaker Change: <unk> into the latest generation is 21 approach without impacting the deployment timeline.
That sort of.
Benchmark data center Capex at about $750000 10 megawatt.
Speaker Change: And just flagging that this may not have been possible. If we've made a firm purchase order for those same machines.
Now turning to the funding strategy, we anticipate funding the step up to 30 Axa has through a combination of existing cash resources upgrading caseloads and other sources of capital and as we previously mentioned, we have $322 million of cash and that is up 30 April 2000.
Turning to the next slide this just maps out the landscape.
Speaker Change: And a couple of perspectives to share he had the chart.
Speaker Change: Shows decline mined in April and the table underneath.
Speaker Change: Just shows market cap as of last Friday, and install a hash rate across the sector. So as Dan mentioned, we were the fastest growing minor in 2023, increasing our hatch rate last year from one five X a hash to $5 six excess at the end of 2023 <unk>.
24.
Business is generating very strong operating cash flows, which we are reinvesting into growing the business and believe this is going to touch on this in more detail in the financial statements, but you will note that we reported $48 million of positive operating cash flow year to date this financial year.
Whilst maintaining market leading levels of efficiency.
We are continuing that trajectory this year, having drawn from that five six ex attached to the side of the yet to <unk> today, and obviously theres a lot more growth to come in 2024.
And we are also continuing to explore.
Other funding opportunities right across the capital structure, so that you're aware, we've got our existing ATM, which has a capacity of $137 million remaining.
Speaker Change: We grow to 30 extra cash this year.
Speaker Change: And moving into 2025 fully expect to maintain that momentum as well with a pathway to 40 <unk> in the first half.
We've also just filed a new $500 million shelf and ATM.
And in parallel we're also exploring opportunities with that capital, including potential funding for data centers and equipment financing for Gpus, which Dan is going to touch on a little bit later in this presentation.
Speaker Change: I'm going to hand, this back to Dan now to <unk>.
Speaker Change: Two.
Speaker Change: The AI cloud services business.
Alright, so into the IR update thanks linked to Randy at the Bitcoin mining, obviously very exciting.
And then finally in terms of return and that's just talking to the shaded box on the left of this page.
Daniel Roberts: We just wanted to take a take the opportunity to provide a little bit more detail around how we frame up out a capital raising and investment decisions that fundamentally.
So unless you would be aware of that.
When we set out building this business, we built data centers. So we never built shipping container see cans, we never subscribed to the abandoned warehouse model of money because we built multi function data centers from day, one capable of supporting different types of computing power.
The use of the ATM program. For example is entirely at our discretion and we just view this as an important instrument that helps us funding price that makes sense strategically and also financially in terms of returns to shareholders.
Speaker Change: We signed an Mou with Dell computing.
Speaker Change: Many many years ago about four years ago, four and a bit.
We ran some analysis some benchmarking analysis on how the market is valuing be quite minor today.
Speaker Change: To bring some of their customers and hardware out to our first saw at the time the market wasn't quite ready we put it on our focused on bitcoin mining and then with the ramp up in la.
And we note a high degree of value being placed on installed excess capacity and in particular for the largest scale miners, specifically math and clean spark in right.
Speaker Change: Last year, we dusted off the old strategy.
Speaker Change: Ordered some Nvidia H one hundreds have installed the same data centers.
Daniel Roberts: Of these operators.
With hatch rates above.
Speaker Change: We unplugged, the ICP and we plugged in the Gpus the same infrastructure the same data centers and we launched an IR cloud service.
The market is valuing debt capacity at an average of around $135 million has been sold ex ash.
And as you can see on the right hand side of the page, we are building and delivering incremental hash rate.
Speaker Change: It's a highly complementary business law, and we don't see it as competing.
Speaker Change: Between mining, we see it as additional and incremental to be coin mining and the key reason for that is the power consumption. As you can see in the chart on that right hand side every $100 million of GPU expenditure.
At $30 million Capex for one <unk> and that is inclusive of the mining hardware and the data centers. So putting all of that together, we see raising capital to become one of the largest and most efficient publicly listed minus yeah, that's making strategic sense and also driving long term value creation.
Speaker Change: These are only using around 1% all of our data center capacity that will have online. This year. So we could go and spend the $1 billion on Gpus Tomorrow run rate earnings from that would be somewhere in the order of $400 million plus based on market data and it would use around 10% of our data center capacity.
Cloud shareholders.
Stepping to the next slide.
We won't spend too much time on this there's a lot of detail in our in our disclosures, but we've entered into a number of purchase and option agreement with Maine, which underpin our growth to <unk> this year and providing a pathway to 40 extra cash in the first half of calendar 2025, just wanted to emphasize that these.
Speaker Change: So again, we don't see it as competing with bitcoin mining, we see it as complementary and additional now in terms of cost of capital.
Speaker Change: And optimizing it we see this as a really important.
New and amended agreements relate to a combined 35 X a hash of the F 'twenty, one minus which as Dan mentioned.
Speaker Change: <unk> or inflection point for the business.
Speaker Change: No secret that be coin miners have struggled to raise debt financing, it's a volatile in commodity it's been a volatile business, but all of a sudden with the introduction of an additional earnings lawn and importantly, an additional view on the collateral within the platform.
<unk> 15 bills the Terra hash these.
These agreements have been struck at $18 90 per Terra hashed and as you can see on that on the table as we start to deploy that hardware you can see that meaningful improvement in overall fleet efficiency to fixing Joseph <unk> at <unk>, and then to 15 <unk>.
Speaker Change: Conversations with lenders.
Speaker Change: Looking far more perspective in terms of terms.
Speaker Change: Of potential debt.
At 40 ex ash.
Speaker Change: To elaborate on that more.
And in terms of just the structuring.
Speaker Change: Visualize yourself as Linda you go out to your credit Committee, and I say youre lending to a bitcoin mining business what happens you'd be going goes to zero now most of us if not all of US on this call understand the promo really between going to zero is very low, but that's not the point those types of questions get asked so all of a sudden.
These agreements will have very deliberately structured in this manner with.
With delivery dates that align to the data center rollout at Childress over the rest of 2024 and 2025.
Having options in the structure provide a degree of flexibility around growth as compared to for example, a fad purchase.
What's the secondary value of the infrastructure, having now proven that our data centers can be used for alternate use cases, all of sudden theres a collateral value in the data centers the infrastructure of the land portfolio of the power connections as we know.
As well as an element of downside protection to the extent market conditions changed and as we've just demonstrated as new technology images of new and more efficient mining hardware and measures.
We were able to for example.
Speaker Change: Which really opens up a very different lanes.
In the terms of our T 21 option into the latest generation at 21 price without impacting that ducommun timeline.
Speaker Change: These credit funds and prospective debt providers. So this is something we're quite excited about pursuing where in a number of conversations at the moment. If the terms are raj.
And just flagging that this may not have been possible. If we'd made a signed purchase order for those same machines.
Speaker Change: We will pursue.
Speaker Change: Some corporate level debt financing.
Turning to the next slide this just maps out the landscape.
Speaker Change: But equally given the accretion of continuing to use existing capital sources as Lincoln went through a couple of slides earlier.
And a couple of perspectives to share he had the chart.
Show us the coin mined in April and the table underneath.
Speaker Change: We certainly don't feel the pressure to do this so we'll make the right decision.
Just shows market cap as of last Friday, and installed hatch rate across the sector as Dan mentioned, we were the fastest growing minor in 2023, increasing our hatch rate last year from 1.5 X a hash to 566 <unk> at the end of 2023, whilst.
Speaker Change: Over time.
Speaker Change: The other interesting aspect to scaling the IR cloud service business of Ares Capital's concerned is there appears to be substantial demand for GPU financing structures.
Speaker Change: We saw coal wave announced last year at $2 $3 billion GPU financing structure led by Blackstone. We then saw only a couple of weeks ago Lambda Another cloud service provider secure a $500 million.
Whilst maintaining market leading levels of efficiency.
We are continuing that trajectory this year, having dry food that five six ex has to decide it yet to <unk> today, and obviously, there's a lot more growth to come in 2024.
Speaker Change: In GP financing again, we've now proven out our cloud service, we've had exceptional customer feedback.
We grow to 30 exit hashed it yet.
And moving into 2025 fully expect to maintain that momentum as well with a pathway to 40 <unk> in the first half.
Speaker Change: Our customers and importantly, we've got the powerpoints, we've got the data centers and the same cannot be said for other cloud providers certainly not all of them.
Okay.
I'm going to hand, this back to Dan now to.
Speaker Change: Essentially they sit in the middle of a data center in the end customer and they are in the computers and I think.
Dan: To talk to the.
The AI cloud services business.
Speaker Change: Part of the feedback, we're receiving and trying to dissect why it's been so positive I think is down largely two things one is our vertical integrated platform, where we're not sitting in the middle of a data center and in customer so when the customer wants to optimize some of their machines. They want to update some software.
Please standby your conference will begin momentarily.
Speaker Change: Where they want to do something on the ground in the data center, if you will.
Speaker Change: Simply a cloud service provider or you can do is larger support ticket we'd be in data center and wait for them to come back to you Youll governed under the terms of your service level agreement now contrast that to iron where the customer picks up the phone to offset CTO or customer service.
For the technical difficulties.
We'll see.
Step in and talk to the next couple of slides about <unk> pay.
Pay down I think we've got your back.
Speaker Change: And all of a sudden they can do absolutely anything lifetime on site, we've got 24 seven.
Excellent I'm not sure what's going on technical issues, we'll have a chat afterwards, alright, so into the II update thanks linked to Randy at the Bitcoin mining, obviously very exciting.
Speaker Change: People on site, and we own and control everything all the way from the soil the concrete foundations the steel structures the ventilation the network cabling all of the infrastructure the software the firm where layer. So it's very easy in relative terms for us to tweak make adjustments and optimize the service offering for these <unk>.
So most you'd be aware of that.
When we set out building this business, we built data centers. So we never built shipping container CK ends we never subscribed to the abandoned warehouse model of mining because we built multi function data centers from day, one capable of supporting different types of computing power we saw.
Speaker Change: Customers live time.
Speaker Change: The second element.
Speaker Change: Received again really positive feedback around the performance of our clusters and you can see the quarters when youll screen.
Signed an Mou with Dell computing.
Many many years ago, four years ago, four and a bit to.
Speaker Change: Sound performance of one metric being three times bigger than any other hardware set up one of our customers is used and we've been trying to say why is this the case, we've set it all up properly.
To bring some of their customers and hardware out to a first order at the time the market wasn't quite ready.
We put it on us focused on bitcoin mining and then with the ramp up in II last year, we dusted off the old strategy wind and ordered some Nvidia H one hundreds have installed them in the same data centers.
Speaker Change: And our theory something to be tested is that it's due to the rack density that we're operating under so to step back traditional data centers, 80% of traditional data centers operate at five kilowatts or less rack density. According to the Uptime Institute report.
Hey, we unplugged, the IC X and we plugged in the Gpus the same infrastructure the same data centers and we launched an AI cloud service.
It is a highly complementary business line, we don't see it as competing with <unk>.
Speaker Change: Nvidia Gpus required 40% to 45 kilowatt rack density based on when they reference architecture.
<unk> mining.
We see it as additional and incremental to be quite mining and the key reason for that is the power consumption. As you can see in the chart on that right hand side every $100 million of GPU expenditure.
Jensen: Now if you are installing Iraq in different rooms, because you can't manage the power E comp manage the heat and the ventilation all of a sudden you've got they serve is spread out across quite a distance within the data center now Jensen. The Nvidia CEO has been out there talking about things like the data center is the new <unk>.
Regarding to using around 1% all of our data center capacity that we will have online.
So we could go and spend a $1 billion on Gpus Tomorrow run rate earnings from that would be somewhere in the order of $400 million plus based on market data.
Jensen Huang: And when you zoom out you think about over the last 10 years to 20 years, a lot of the innovation in compute at a chip level has been minimizing and shrinking the gateways on the transistors to enable the signal to travel back and forth faster and more effectively extrapolate that out to the data center, where all of us.
And it would use around 10% of our data center capacity. So again, we don't see it as competing with bitcoin mining, we see it as complementary and additional now in terms of cost of capital.
Speaker Change #101: Some of these Gpus are now.
Speaker Change #102: Now talking to each other to crunch training models to run these II.
And optimizing it we see this as a really important.
Speaker Change #102: Models.
Opportunity or inflection point for the business.
Speaker Change #103: And it stands to reason that if theyre all spread out and there is a lot of latency between the Gpus go back and forth than they might be.
It's no secret that be coin miners have struggled to raise debt financing, it's a volatile in commodity it's been a volatile business.
Speaker Change #104: Lower performance as compared to someone like US who is operating 70 kilowatt rack density. So all of our servers are in one spot that's all Todd.
All of a sudden with the introduction of an additional earnings line and importantly, an additional view on the collateral within the platform conversations with lenders looking far more perspective in terms of terms of potential debt.
Speaker Change #104: So in theory, the latency is very low the signals communicating very quickly. So it is possible that is leading to the.
Speaker Change #105: Exceptional service.
To elaborate on that more.
Speaker Change #106: Reviews that we're getting but we're testing that further to try and validate.
<unk> yourself as I, Linda you got to your credit Committee, and I say youre lending to be quite mining business, what happens you'd be coin goes to zero now most of us if not all of US on this call understand that probably between going to zero, it's very large, but that's not the point those types of questions get asked.
Speaker Change #107: In terms of the rest of the strategy on <unk> Cloud service. We're currently testing the on demand market. So we've proven the model with bilateral contracts and now we're going down the pathway of tissue and on demand service, which is really exciting because we believe we understand.
All of a sudden what's the secondary value of the infrastructure, having now proven that out data centers can be used for alternate use cases, all of a sudden there's a collateral value in the data centers the infrastructure the land portfolio the power connections as we know.
Speaker Change #107: There are a number of smaller users in a number of bigger users that don't want to saw and contractual commitments medium or long term for compute.
Speaker Change #108: It does deliver a much higher price for us.
Which really opens up a very different lanes.
Speaker Change #108: Versus a contracted relationship.
For these credit funds and prospective debt provider side. This is something we're quite excited about pursuing a we're in a number of conversations at the moment if the terms are right.
Speaker Change #109: Yes, it's at a higher risk, but for us using some of the service to do this to build relationships to learn we're in the process of developing software actually to allow true burst op and burst down such that essentially prospective customers can come onto our website clicker dropdown box and start utilizing.
We will pursue.
Some corporate level debt financing.
But equally given the accretion of continuing to use existing capital sources as Lincoln went through a couple of slides earlier.
Speaker Change #110: Our cloud service. So these type of capability, we will take our cloud service to another level and its something that were.
We certainly don't feel the pressure to do this we will make the right decision.
Speaker Change #110: We're quite excited about so in terms of the outlook for this.
The other interesting aspect to scaling the IR cloud service business suffice capitals concerned is there appears to be substantial demand for GPU financing structures.
Speaker Change #111: Technically we've proven it up commercially it's looking really good with the larger pool side the on demand market and we are now in the process of working through the optimal way to scale. This up further through capital.
We sold coal wave announced last year at $2.3 billion GPU financing structure led by Blackstone. We then saw only a couple of weeks ago Lambda Another cloud service provider secured $500 million in GPU financing again, we've now proven out our cloud service.
Speaker Change #112: Maybe it's GPU financing maybe its other sources.
Speaker Change #112: Now onto a little bit about our power and land portfolio. So I mentioned at the outset that will and I when we set this business up.
Will: We had a view that over the next 10 years to 20 years. The world was going to have a very large growing exponentially growing demand for compute and power from renewable energy sources to power that compute.
We've had exceptional customer feedback.
From our customers and importantly, we've got the powerpoints, we've got the data centers and the same cannot be said for all the cloud providers certainly not all of them were essentially they sit in the middle of a data center and the end customer and they are and the computers and I think.
Speaker Change #114: So developing power and land.
Will: Something that doesn't cost a lot of money, but it costs a lot of time. It takes EES identifying start securing the sites putting in grid connection studies building that grid connections. It's something that historically has taken 345 years and now with the onset of <unk>.
Part of the feedback, we're receiving and tried to dissect why it's been so positive I think is down to largely two things one is our vertical integrated platform, where we're not sitting in the middle of a data center and an <unk> customer.
Will: Tremendous amount of demand from the coin miners hyper scale as data center providers, we're being told that these timelines are getting pushed out 567 years. So what does this mean.
So when the end customer wants to optimize some of their machines. They want to update some software firm, where they want to do something on the ground in the data center.
The opportunity for us has always been to organically grow into this capacity.
Simply a cloud service provider all you can do these larger support ticket we'd be in data center and wait for them to come back to you Youll governed under the terms of your service level agreement now contrast that to iron where the customer picks up the phone to our staff CTO or customer service.
Speaker Change #115: But we're now engaged in conversations with various stakeholders to continue to triangulate and validate that these data and power Crunch, Israel Morgan Stanley Goldman Sachs of all rates relates to reports in the last month in fact, a Morgan Stanley report went into some detail quantitate.
And all of a sudden they can do absolutely anything lifetime on sites, we've got 24 seven.
Speaker Change #116: Analysis around what the value of having parent land.
People on site, and we own and control everything all the way from the soil.
Speaker Change #117: And they came out with a number of five to $12 per watt.
Speaker Change #118: Got 3 billion watts.
Concrete foundations the steel structures the ventilation the network cabling all of the infrastructure the software the firmware layers. So it's very easy in relative terms for us to tweak make adjustments and optimize the service offering for these end customers live time.
Speaker Change #119: That implies a tremendous amount of value in the portfolio.
Speaker Change #120: Is it worth that is it something different we have no idea.
Speaker Change #121: But certainly this is the time in the market to start finding out so we're undertaking a process to explore various structures everything from prospective sales of some of their development thoughts to joint ventures over our development sites.
The second element, having received again really positive feedback.
Around the performance of our clusters and you can see the quiet when youll screen around performance of one metric being three times bigger than any other hardware set up one of our customers is used and we've been trying to das saying why is this the case, we've said it all up properly.
Speaker Change #122: Where we could build own and operate some sort of she'll provide us a co location service provider a cloud service.
Speaker Change #123: We're talking to a number of the technology companies, we're talking to a number of investors the large banks and it's something that we're excited to pursue.
And our theory something to be tested is that it's due to the rack density that we're operating on that sorry to step back traditional data centers, 80% of traditional data centers operate at five kilowatts or less rack density. According to the Uptime Institute report.
Speaker Change #124: Months, ultimately again, we don't feel any pressure to execute on anything specific key we're in a great position to continue growing organically and utilize these power for our own purposes as a going concern so on that note.
Nvidia Gpus required 40 to 45 kilowatt rack density based on their reference architecture.
Speaker Change #124: I'll pass over to link to continue with some financial summary, before Linda then takes over from you. Thank you.
Now if you are installing Iraq in different rooms, because you can't manage the power companys to H and the ventilation all of a sudden <unk> got these serve as spread out across quite a distance within a data center.
Dan Roberts: Thanks, Dan.
Speaker Change #125: This is this page is actually.
Speaker Change #126: Exactly the same one from out from our previous.
Speaker Change #127: Our half yearly update we've just refreshed some of the economics.
Now Jensen the Nvidia <unk> has been out there talking about things like the data center is the new computer and when you zoom out you think about over the last 10 to 20 years a lot of the innovation in compute at a chip level has been minimizing and shrinking the gateway on the transistors to enable the signal.
Speaker Change #127: Based on current market conditions.
Speaker Change #128: And as you can see bitcoin mining margins and return on a post having basis remains strong and as we scale the business at <unk> at currently climb prices and network hash rate we've calculated.
Speaker Change #129: Sort of electricity cost a bit kind of 17, K and annualized hardware profit of $408 million.
To travel back and forth foster and more effectively.
Strictly that out to the data center, where all of a sudden these gpus are now talking to each other to crunch trainee models to run these II.
Speaker Change #129: Driving sub two year paybacks and those economics that were calculated on a breakpoint price of about $63000.
<unk> and it stands to reason that if theyre all spread out and there's a lot of latency between the Gp's go back and forth then it might be a lower performance as compared to someone like US who is operating 70 kilowatt rack density. So all of assay of US are in one spot it's all Todd.
Speaker Change #129: Days ago.
Speaker Change #130: Turning to the right hand column.
Speaker Change #131: The AI cloud services business similar economics to what we've discussed previously.
Speaker Change #131: With very high margins at the gross margin level above 95% driving approximately two year paybacks on the GP hardware as well. So just to reiterate we continue to see very healthy margins and attractive payback periods across both lines of business, which underpins why we are continuing to invest in growing.
So in theory, the latency is very low the signal is communicating very quickly. So it is possible that is leading to the.
Dan: Exceptional service.
Reviews that we're getting but we're testing that further to try and validate.
Speaker Change #132: <unk> lines of business.
In terms of the rest of the strategy on <unk> Cloud service. We're currently testing the on demand market. So we've proven the model with bilateral contracts and now are going down the pathway of tissue and on demand service.
Speaker Change #132: Stepping through to the next page before I hand over to Linda.
Linda: This is the first financial reporting period, where we have recorded revenue for our cloud services business and you'll see that come through on the face of the P&L NSE.
Which is really exciting because we believe we understand that there are a number of smaller users in a number of bigger users that don't want to saw and contractual commitments medium or long term full compute.
Linda: And as you can see from February to today.
Linda: A rapid ramp up in revenue, which coincides with.
Linda: The on boarding of pool side as a customer in February.
You'll note that they also announced and.
Does deliver a much higher price for us.
Versus a contracted relationship.
<unk>, an extension to that contract to 504, Gpus, which was effective in mid April. So we should start to see some of that increased revenues from the upsized contract start flowing through.
Yes, it's at a higher risk.
For us using some of the service to do this to build relationships to learn we're in the process of developing software actually to allow true best op and best down such that essentially prospective customers can come onto our website clinker dropdown box and start utilizing our cloud service sites. These trough.
Speaker Change #134: To revert to the revenue line in May and in the coming months and on the right hand side of the chart, which is highlighted that 2000 $14 million to $18 million revenue opportunity that's associated with the current GPU fleet that's already operating.
Capability, we will take our cloud service to another level and its something like that where we're quite excited about so in terms of the outlook for this.
Speaker Change #134: Okay.
Speaker Change #134: I'll hand over now to the Linda to take us through the rest of the financial section.
Technically we prevent up commercially it's looking really good with the larger pool side beyond demand market and we are now in the process of working through the optimal way to scale. This up further through capital.
Linda: Thank you Lincoln and Dan and good morning to you guys in Sydney and good morning in North America. Thank you for joining us today for our first quarterly update.
Maybe it's GPU financing maybe its other sources.
Linda: To start I wanted to highlight a positive cash flow from operations was 48 million for the nine month period ended 30, <unk> March 2024 distinct.
Okay.
Now onto a little bit about our power and land portfolio. So I mentioned at the outset that will and I when we set this business up.
Speaker Change #135: This includes 129 offer states, resulting from the timing of liquidation of happy quite mind.
We had a view that over the next 10 years to 20 years. The world was going to have a very large growing exponentially growing demand.
Speaker Change #136: These positive operating cash flows highlight the quality of the underlying operations and reinvested to support our ongoing expansion plans.
For compute and power from renewable energy sources to power that compute.
Developing power and land.
Speaker Change #137: Turning to the consolidated statement of profit and loss during the three months ended 30 <unk> March 2024, we reported.
Is something that doesn't cost a lot of money, but it costs a lot of time. It takes EES identifying sought securing the sites putting in grid connection studies building that grid connections. It's something that historically has taken 345 years and now with the onset of a tremendous amount of demand for <unk>.
Speaker Change #141: A positive net profit before tax of $12 million and net profit after tax of $8 6 million.
Speaker Change #138: As we did not how big coin on our balance sheet. This result has been a change without any reliance on bitcoin mark to market revaluation gains and non cash expenses of $17 million.
<unk> hyper scale as data center providers, we're being told that these timelines again pushed out 567 years. So what does this mean.
The opportunity for US has always been to organically grow into this capacity, but we are now engaged in conversations with various stakeholders to continue to triangulate and validate that data and power Crunch, Israel Morgan Stanley Goldman Sachs of all rates.
Speaker Change #139: Moving on to adjusted EBITDA for the quarter.
Speaker Change #140: EBITDA increased from Tashan nine mill to 'twenty one.
Speaker Change #140: Ill.
Jason: This is Jason bitcoin mining revenue, increasing from $42 million to $50 or a full meal as the average operating cash rate increased from five six perhaps.
<unk> reports in the last month in fact, a Morgan Stanley report went into some detail quantitative analysis around what the value of having parent land.
Jason: Six four ex ash, resulting in 1000 and trade Bitcoin mine at.
And they came out with a number of five to $12 per watt, we've got 3 billion what's.
Jason: At an average realized price of 53 to <unk>.
That implies a tremendous amount of value in the portfolio.
Jason: 45% increase in price during the quarter.
Is it with that is that with something different we have no idea.
Jason: Our average net electricity costs have declined mined increased from $14, one K to $19 three K, primarily J to lower number of bitcoin mine during the quarter as a result of increased LIFO mining difficulty.
But certainly this is the time in the market to start finding out so we're undertaking a process to explore various structures everything from prospective sales of some of our development sites to joint ventures, Biograph development sites, where we could build iron and operate some sort of shell provide us a call.
Jason: Quarter on quarter other costs remained relatively flat.
Location service provider a cloud service.
We're talking to a number of the technology companies, we're talking to a number of investors the large banks and so I think that we're excited to pursue over the coming months. Ultimately again, we don't feel any pressure to execute on <unk> specific key we're in a great position to continue growing organically and utilize these power for our own.
Speaker Change #143: Looking at the adjusted EBITDA for the nine months ended 31st of March 2024, we had a record adjusted EBITDA of 42.
Speaker Change #144: <unk> 5 million. This is an increase of 32% year on year and very pleasing to see.
<unk> as a going concern.
Speaker Change #145: As I spoke about earlier, the nine months' cash by being $48 million, a direct play confiding into that cash flow from operation.
I'll pass over to link to continue with some financial summary, before Linda then takes over from you. Thank you.
Speaker Change #146: The coin mining revenue for this period increased from $41 3 million to 129.
Thanks, Dan.
This is this page xactly.
Speaker Change #147: $9 million as the average operating cash rank credits from <unk> to $5 of excess cash and we mined 3371 declined at an average cost of $38 five K being an 87% increase in price.
Exactly the same one from out from our previous App.
Our half yearly update, but just refresh some of the economics.
Based on current market conditions.
And as.
As you can see bitcoin mining margins and return on a post having bases remained strong and as we scale the business that that exa hash at current bitcoin prices and network hash rate we've calculated.
Speaker Change #148: Average net electricity costs. During this period increased from nine non K 15, full pay primarily related to increased LIBOR mining typically pay.
<unk> electricity cost a bit kind of 17, K and annualized hardware profit of $408 million.
Speaker Change #149: And other costs increased from 30, <unk> to $36 million with the children Si operational in April 2023.
Driving sub two year paybacks and those economics are calculated on a big client price of about $63000.
Speaker Change #150: Moving on to our consolidated cash flow net cash and cash equivalents increased by $191 million for the nine months ended March 31st 2024.
A couple of days ago.
Turning to the right hand column.
The AI cloud services business similar economics to what we've discussed previously.
With very high margins at the gross margin level above 95% driving approximately two year paybacks on the GP hardware as well. So just to reiterate we continue to see very healthy margins and attractive payback periods across both lines of business, which underpins.
The increase in net cash flow from the operations.
Speaker Change #151: Activities was 48 million J to the increase in the average operating cash rate coupled with the higher average realized the claim process.
Speaker Change #151: The increase in net cash used in investing activities was $198 million adjacent expansion of children as well as our purchase of 816.
Why we're continuing to invest in growing both lines of business.
Sure.
Stepping through to the next page before I hand over to Belinda.
Speaker Change #151: 100 <unk>.
Hi.
Speaker Change #152: Increase in net cash from financing activities of 331 nail primarily due to net proceeds received from sales sold under the ATM and a lot of facilities.
This is the first financial reporting period, where we have recorded revenue for our AI cloud services business and you'll see that come through on the face of the P&L.
And as you can see from February to today.
Speaker Change #152: Okay.
Rapid ramp up in revenue, which coincides with the on boarding of cool side as a customer in February.
Speaker Change #153: Lastly, moving on to the balance sheet.
Speaker Change #154: Cash closing cash balance of $260 million at the end of March.
You'll note that they also announced and.
Speaker Change #155: Debt facilities and as I've mentioned strong operating cash flows during that period.
Upsize and extension to that contract to 540, <unk>, which was effective in mid April. So we should start to see some of that increased revenues from the upsized contract stop falling through.
Speaker Change #156: The cash position has strengthened to 320 $10 million at 30 April 2024.
Speaker Change #158: Sure in the period of the quarter, we raised $294 million from the sale of approximately 56 million shares.
To revert to the revenue line in May and in the coming months.
And on the right hand side of the chart, which is highlighted that $14 million to $18 million revenue opportunity that's associated with the current GPU fleet that's already operating.
Speaker Change #157: And I.
Speaker Change #157: For one we Brian just said $45 million from the sale of $8 2 million shares.
Okay.
I'll hand over now to the Linda to take us through the rest of his financial section.
Speaker Change #159: So we have a strong balance sheet with title assets of $724 million, which will provide us flexibility to fund and into the future.
Okay.
Thank you Lincoln and Dan and good morning to diagnose today and good morning to those in North America.
Speaker Change #160: I'll now hand back to the operator to take any Q&A session today.
Joining us today for our first quarterly update.
I wanted to highlight a positive cash flow from operations of 48 million for the nine month period ended 30 <unk> March 2024.
Speaker Change #160: Yes.
Speaker Change #161: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
This includes a 129 offer states, resulting from the daily liquidation of Abbvie coins mined.
Speaker Change #162: One moment for questions.
Speaker Change #162: Okay.
Speaker Change #162: Yeah.
This positive operating cash flow highlight the quality of the underlining our progression and our reinvested to support our ongoing expansion plans.
Our first question comes from Lucas pipes with B Riley you May proceed.
Thank you very much operator.
Good afternoon morning, everyone.
Turning to the consolidated statement of profit and loss during the three months ended 30 <unk> March 2024, we reported a non op.
Lucas Pipes: And my first question is on the incremental excess and the Optionality. There that you outlined earlier on the call could you kind of walk us through.
Positive net profit before tax of $12 million and net profit after tax of $8 6 million as.
Lucas Pipes: Where this would be deployed and then also.
Lucas Pipes: Just in terms of the potential timing around all of that thank you. Thank you so much.
As we did not help the coin on our balance sheet. This result has been a change without any reliance on decline mark to market revaluation gains and claimed non cash expenses of $17 million.
Lucas Pipes: Dan might have dropped off there.
Lucas Pipes: Lucas I'll take that question so.
Lucas Pipes: The majority of the capacity is being deployed into Childress and as we've previously disclosed that is scaling to 350 megawatts. This year. So the vast majority of the <unk> growth is going to come on at shoulders throughout the remainder of this year.
Oh.
Yes.
Moving on to adjusted EBITDA for the quarter.
EBITDA increased from $13 nine Neil to 21 8 million.
Speaker Change #164: In terms of hitting that 40 SaaS in the first half of next year that is also going to be deployed at show address we did mention fleet upgrade as well so some of the.
This is Jason that the coin mining revenue increasing from 42 million to 53 point pulp mill as the average operating cash rate increase from $5 six six.
Speaker Change #164: Capacity will be used to upgrade the existing fleet of S 19, J pro machines, which are primarily located in.
Six four extra ash, resulting in 1000 and trade Bitcoin mine at.
At an average realized price of $53 two K.
Speaker Change #165: British Columbia Davis.
Speaker Change #166: So it'll be a combination of both but primarily at children, where it's a single site expansion currently operating in 100 megawatts and scaling to 350 megawatts this calendar year.
45% increase in price during the quarter.
Our average net electricity costs have declined mined increased from $14, one K to $19 three K, primarily J to lower number of bitcoin mine during the quarter as a result of increased global mining difficulty.
Speaker Change #167: When can thank you so much for the additional color there I appreciate it.
Speaker Change #168: Best of luck I'll turn it over.
Quarter on quarter other costs remained relatively flat.
Lucas Pipes: Thanks Lucas.
Speaker Change #169: Thank you.
Speaker Change #170: One moment for questions.
Okay.
Okay.
Joseph <unk>: Our next question comes from Joseph <unk> with Canaccord Genuity you May proceed.
Okay.
Looking at the adjusted EBITDA for the nine months ended 31st of March 2024, we had a record adjusted EBITDA of $42 5 million. This is an increase of 32% year on year and very pleasing to see.
Speaker Change #172: Hey, everyone. Thanks for the update good morning.
Speaker Change #173: To you a few questions number one on that.
Speaker Change #173: 10 10.
Speaker Change #174: <unk> extra hash option would it mean that you have just wondering if you could kind of go through what would.
Speaker Change #175: What would be some of the reasons you might.
As I talked about earlier, the nine months cash flow being $48 million of directly converting into that cash flow from operations.
Speaker Change #175: You might exercise that obviously, if bitcoin is a lot higher that maybe one but just kind of balanced against maybe some of your other initiatives that you've got going on and I know I know.
The coin mining revenue for this period increased grew $41 3 million to 129 nine.
Speaker Change #175: There's a lot of moving parts, but just trying to get inside your head on that and then I'll follow up thanks.
Non again as the average operating cash rank credits from two extra hash to five X ash and we mined 3371 bitcoin at an average cost of $38 5 billion, 87% increase in price.
Joe: Thanks, Joe So just to clarify that's the index Nash option to go from 30 to 40.
Joe: <unk>.
Dan Roberts: Right exactly Dan yes.
Dan Roberts: Perfect.
Joe So: Expect we'll exercise it.
Average net electricity costs. During this period increased from nine non K typically obtained client saw K, primarily due to the increased global mining typical T.
Speaker Change #178: The presentation is clear in terms of the metrics when we can mind the coin around that indicative cost of $17000 of coin with between where it is today around 65, that's a pretty healthy gross margin and a pretty good exposure going into what we believe is the next.
And our other costs increased from 30, <unk> to 36 million with the children thought operational in April 2023.
Speaker Change #179: <unk> cycle, and where we need to do is to continue to build out the same data centers at our existing sites.
Moving on to our consolidated cash flow.
Net cash and cash equivalents increased by $191 million for the nine months ended March 31st 2024.
Speaker Change #180: So for US we're planning to execute it.
Speaker Change #180: <unk> continued to grow through the cycle and when you see those market metrics that link spoke to wear.
The increase in net cash flow from the operations operating activities was 48 million Jay did increase in the average operating cash rate coupled with the higher average realized the coin crossed.
Speaker Change #181: Minus above 10 extraction capacity being valued at $135 million per excess cash and we can continue building out and <unk> with $30 million.
The increase in net cash used in investing activities was $198 million, Jason the expansion at children.
Speaker Change #182: The value creation to shareholders is absolutely crystal clear and we are only going to grow when it's accretive.
While it is a purchase of 816 net new Purion H 100 G. P <unk> <unk>.
Speaker Change #183: As you would've seen in the last six weeks I think we use the ATM three days, we sold a grand total of 5 million shares now, yes, we've launched.
Increase in net cash from financing activities of 331 mill, primarily due to net proceeds received from sale sold under the ATM and <unk>.
Speaker Change #184: A shelf to replace the existing one.
Speaker Change #185: But if we use it to generate that type of value creation.
Speaker Change #186: For our shareholders. So we anticipate continuing to grow and to ultimately exit Casas <unk> expansion from 30 to 40 early next year.
Okay.
Lastly, moving on to the balance sheet.
Cash closing cash balance of $260 million at the end of March no debt facilities and as I mentioned strong operating cash flow during that period.
Speaker Change #186: <unk>.
Speaker Change #187: Great. Thanks for that update and then just maybe one quick follow up here.
On the.
Speaker Change #188: The three Gigawatts of development sites, you have we could maybe drill down on that a little bit I know I think Dan you said that you may be entertaining some from deals and that we might.
Our cash position has strengthened to 322 million at 30 April 2024.
Sure in the period of the quarter, we raised $294 million from the sale of approximately 56 million shares.
Fear about that soon.
Speaker Change #189: I wanted to understand.
Speaker Change #189: <unk>.
Speaker Change #190: With with things moving so fast because it makes sense to structure a deal now or perhaps the way to another nine months to a year when perhaps there is even more scarcity in the market relative to power in development. Thanks a lot.
And post April one we Brian just said.
$45 million from the sale of $8 2 million shares.
So we have a strong balance sheet with title assets of 724 million, which will provide us flexibility to fund and drive into the future.
Speaker Change #190: It's a great question, Joe short answer is I have no idea. What you can do is work through the process and see what options are presented in front of you and make a decision on that basis.
I'll now hand back to the operator to take any Q&A session today.
Speaker Change #190: I can make the case both ways for Whiting.
Thank you as a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Speaker Change #191: We've got these level of scarcity now in respect of an asset or a parent land that can take five to aes to develop then the scarcity factor may indeed increase over the next 612 18 months, but equally I'm a believer in burden bird in the hand, if you get a compelling offer that can demonstrate construed.
One moment for questions.
Okay.
Yeah.
Our first question comes from Lucas pipes with B Riley you May proceed.
Speaker Change #192: Considerable value to shareholders, particularly recognizing our market capitalization now as compared to some of these numbers that are being thrown around.
Thank you very much operator, and good afternoon morning, everyone.
And my first question from the incremental extra hash it the optionality there that you outlined earlier on the call could you kind of walk us through.
Speaker Change #192: In terms of the value of the asset base. We have then we're compelled.
Speaker Change #193: To explore and we will.
Where this would be deployed and then also just in terms of the potential timing around all of that okay. Thank you. Thank you so much.
Speaker Change #194: What I also I should say is.
Speaker Change #195: Selling off or doing a joint venture on one of these thoughts is going to have realistically a very limited impact on our organic.
Okay.
No problems.
Thanks Lucas.
Speaker Change #196: You might recall, we've always said we've got over 1000 megawatts of additional development sites, where we don't disclose additional data that was the case before we announced our 1400 megawatt saw late last year and it was still the case after we announced that four to 800 megawatts Hot last year, so over 1000 megawatts under.
So in terms of demand.
Deployment.
The guide that we were.
At year end and data center capacity.
Yes.
Sorry.
Got it.
Speaker Change #197: The development could indicate any number above 1000 megawatts. So I feel like we're long and assets that we can look to monetize without necessarily compromising our organic.
Okay.
Great.
Sure.
Dan might have dropped off there.
Lucas I'll I'll I'll take that question.
The majority of the capacity is being deployed into Childress and as we've previously disclosed that is scaling to 350 megawatts. This year. So the vast majority of the <unk> is going to come on at Childress throughout the remainder of this year.
Speaker Change #196: Growth.
Speaker Change #196: Lance.
Speaker Change #196: Okay Fair.
Fair enough, it's nice to have options. Thanks, a lot there.
Speaker Change #198: Thank you.
Speaker Change #199: One moment for questions.
And in terms of hitting that 40 <unk> in the first half of next year that is also going to be deployed at Childress, We did mention fleet upgrade as well so some of the.
Speaker Change #199: Our next question comes from my colonized with HC Wainwright you May proceed.
Speaker Change #200: Hey, good morning, guys, congrats on the quarter and great to see you delivering ahead of schedule again with your build out here of children.
Capacity will be used to upgrade the existing fleet of S 19, J Prime machines, which are primarily located in.
Speaker Change #201: So you guys have taken a measured approach throwing out the AI cloud services business, which is certainly has shown early successful pull side.
Speaker Change #202: The Upsized deal there now that you have this proven model in place.
British Columbia David.
So it'll be a combination of both but primarily at children square at a single site expansion currently operating in 100 megawatts and scanning to 350 megawatts this calendar year.
Speaker Change #203: Service in place how have conversations evolved with potential customers for this business and how should we think about growth of the business based on the current pipeline and some of the funding opportunities you spoke to the.
Okay Lincoln.
Lincoln: Lincoln. Thank you so much for the additional color there I appreciate it.
Mark: Yes, thanks Mark.
Speaker Change #205: It's an evolving space.
Best of luck I'll turn it over.
Speaker Change #206: Clearly we have received really good reviews, we've received really good demand for the cloud service.
Thanks Lucas.
Thank you.
One moment for questions.
Speaker Change #207: See the mainstream narrative around the world being short.
Speaker Change: Our next question comes from Joseph <unk> with Canaccord Genuity you May proceed.
Speaker Change #208: Gpus in short data center capacity.
And.
Speaker Change #209: We seem to be leaving that day to day.
Okay.
Hey, everyone. Thanks for the update good morning.
Speaker Change #210: But the focus for US is continuing to develop this service and expand its capability, which is why we've taken.
To you a few questions number one on the 10.
Speaker Change #211: A group or a cluster of the lost units, we bought and developing these on demand service, where the pricing is much higher and we believe that there might be quite a deep market.
10 extra hash option with bit main that you have I just wondering if you could kind of go through what would.
What would be some of the reasons you might.
You might exercise that obviously, if bitcoin is a lot higher that maybe one but just kind of balanced against maybe some of your other initiatives that you've got going on and I know I know.
Speaker Change #212: That's attractive way you can provide that true on demand burst up versus down.
Speaker Change #212: Service.
Speaker Change #213: Continuing to engage in conversations with everything from smaller customers to larger customers on multiyear contracts and all of that goes hand in hand, with the finance employees. So looking at different structures around how we finance it.
There's a lot of moving parts, but just trying to get inside your head on that and then I'll have a follow up thanks.
Thanks, Joe So just to clarify that's the <unk> ash option to go from 30 to 40.
Speaker Change #213: There is a number of different type of structures that are being suggested around GPU financing. So it's just working through all that and looking at the best way to match it off and continuing to grow the service I must say over the last couple of weeks. This has been absolutely on nailing down the <unk>.
<unk>.
Right exactly Dandy.
Yes perfect.
Expect we'll exercise it.
The presentation is clear in terms of the metrics when we can mind the coin.
Speaker Change #213: Trajectory finalizing the transaction decline and giving ourselves with very cleanly.
Around that indicative cost of $17000 of coin, we'd be coin where it is today around 65.
Speaker Change #214: The path to industry leadership on the Bitcoin mining and now we can really focus back on the IR cloud service, we're engaged with a number of those large customers financing providers and let's see what happens over the next few months.
Pretty healthy gross margin and a pretty good exposure going into what we believe is the next big coin cycle and what we need to do is to continue to build out the same data centers at our existing sought.
Speaker Change #214: Great I appreciate the color and just a follow up for me.
So for US we are planning to execute it.
Speaker Change #215: Power costs come in during the quarter, our children and how are you thinking about pricing in the market and uptime versus curtailment levels at the facility as we look out through the balance of the calendar year.
And continue to grow through the cycle and when you see those market metrics that link spoke to were.
Minus above <unk> capacity being valued at $135 million or exit hash and we can continue building out and <unk> with $30 million I mean, the value creation to shareholders is absolutely crystal clear and we are only going to grow when it's accretive as you would.
Speaker Change #215: I'm happy to take that one Mike.
Speaker Change #216: It is touched on in our presentation, but three three kilowatt hour sort of.
Mike: Average processed childress since at this alright, this financial year and Thats just based on our experience obviously, it's a volatile market, we trade energy in that market and thats for purely economic reasons.
<unk> seen in the last six weeks I think we use the ATM three days, we sold a grand total of 5 million shares now, yes, we've launched.
The shelf to replace the existing one.
Speaker Change: But if we use it to generate that type of value creation.
Mike: Three three cents per kilowatt hour at at Childress.
Speaker Change #218: As a very attractive rate of energy costs.
For our shareholders. So we anticipate continuing to grow and to ultimately exercise that <unk> hash expansion from 30 to 40 early next year.
Speaker Change #219: From a curtailment perspective, and downtime uptime to you earlier client.
Speaker Change #220: We're always making a lot of decisions around whether we take the powder might be calling or we sell it back to the grid and.
Yes.
Great. Thanks for that update and then just maybe one quick follow up here on EPS.
Speaker Change #221: We've proven up and ability to operate the data centers.
The three Gigawatts of development sites, you have we could maybe drill down on that a little bit I know I think Dan you said that you may be entertaining some some deals and that we might hear about that soon.
Speaker Change #222: Through relatively extreme conditions up to a 111 Fahrenheit posture in the summer.
Without skipping a beat.
Speaker Change #222: These facilities are operating at near 100% uptime.
Any curtailment of downtime.
Wanted to understand.
Speaker Change #223: Basically purely for economic reasons, and we expect that to be the case as we continue to scale the Dallas Center capacity there.
Speaker Change: I mean.
With with things moving so fast because it makes sense to structure a deal now or perhaps way to another nine months to a year when perhaps there Devon.
Speaker Change #224: Great. Thank you for taking my question.
More scarcity in the market relative to power in development. Thanks, a lot.
Speaker Change #224: Thank you.
Speaker Change #225: One moment for questions.
It's a great question Jive short answer is I have no idea what you can do to work through the process and see what options are presented in front of you and make a decision on that basis and I can make the case both ways for Whiting.
Speaker Change #225: Our next question comes from Joe Flynn with Compass point research and trading you may begin.
Joe Flynn: Hi, guys. Thanks for the question.
I was hoping you could provide more color.
Speaker Change #227: It's really on the two year payback on H 100.
If we've got these level of scarcity now in respective in assets Ie parent lands that can take five to aes to develop then discuss the effect of my in date increase over the next 612 18 months, but equally I'm a believer in burden bird in the hand, if you get a compelling offer that can demonstrate concern.
Speaker Change #227: <unk>.
Speaker Change #228: Ultimately if you expect with data center design specs to change materially.
Speaker Change #229: Move to further generations of chips with such as the Black oil.
Speaker Change #230: Just any color there would be helpful.
Speaker Change #230: Yes.
So the two yes, thanks, Joe the two year payback on chips is a rough guide reality used when you offer on demand and shorter term contracts, you're receiving a price where that payback will be shorter than 24 months equally if you saw on a longer term contract and the payback might be a bit higher.
Routes considerable value to shareholders, particularly recognizing our market capitalization now as compared to some of these numbers that are being thrown around.
In terms of the value of the asset base. We have then we're compelled.
Speaker Change: And we will.
What I also I should say is selling.
Speaker Change #230: Then 24 months.
Selling off or doing a joint venture where they start is going to have realistically a very limited impact on our organic growth you might recall, we've always said we've got over 1000 megawatts of additional development sites, where we don't disclose additional data that was the case before we announced our 1400 Meg.
Speaker Change #231: Market crossing to Gpus.
Speaker Change #232: Pretty transparent so you can see how many dollars for <unk>.
Speaker Change #233: Nvidia <unk> hundred's cost around $40000, so really its effects soybean.
Speaker Change #234: To that to get there.
Speaker Change #235: That rough two year payback on the chips.
Speaker Change #236: In terms of data center configuration.
What sorry late last year and it was still the case after we announced that for the 800 megawatt site.
Speaker Change #237: It's something to watch, but what's becoming really apparent ease very few people can manage the 70 kilowatt rec density.
Last year, so over a thousand megawatts under development could indicate any number above a 1000 megawatt. So I feel like we're long and assets that we can look to monetize without necessarily compromising our organic.
Speaker Change #238: That we're operating at we're seeing traditional data centers has to go down these liquid to achieve and liquid cooling path, where they can move to <unk> outside the data center like physically cannot deal with the H and the ventilation and the airflow in these multi storey legacy data centers, so they're having to go down the path already of retrofits.
Right.
<unk>.
Sure Fair.
Fair enough, it's nice to have options. Thanks, a lot Dan.
Thank you.
One moment for questions.
Speaker Change #239: <unk> and improvising to deal with that Rec density and the reference architecture for Nvidia chips is early that $40 to 45.
Yes.
Our next question comes from my colonies with HC Wainwright you May proceed.
Speaker Change #240: So it's really hard to see how our data centers, our Friday that 70 kilowatt plus rack density.
Hey, good morning, guys, congrats on the quarter and great to see you delivering ahead of schedule again with your Buildout here Childress. So you guys have taken a measured approach throwing out the AI cloud services business, which has certainly shown early successful pull side with the Upsized deal there and now that you have this proven model.
Speaker Change #241: The purpose and somewhat future proof as these new chips are released.
Speaker Change #242: Great that's all for me.
Speaker Change #243: Thank you.
Place.
And service in place how have conversations evolved with potential customers for this business and how should we think about growth of the business based on the current pipeline and some of the funding opportunities you spoke to that.
One moment for questions.
Speaker Change #243: Our next question comes from Paul Golding with Macquarie You May proceed.
Speaker Change #244: Thanks, so much.
Paul Golding: Question on the supply chain for GPU, just wondering Dan if you could comment on availability.
Yes, thanks Mark.
It's an evolving space.
Clearly we have received really good reviews, we've received really good demand for the cloud service we.
Dan Roberts: The main constraint really just capital at this point in other words, if you have the power capacity available based on your.
We see the mainstream narrative around the world being short.
Gpus in short data center capacity.
We seem to be leaving that day to day.
Dan Roberts: Energizing.
But the focus for us is continuing to develop the service and expand its capability, which is why we've taken.
Speaker Change #246: Charles Ruth's and subsequent data center. If you had it available are you confident you'd be able to get the Gpus and hand through your suppliers and then as a follow on to that just briefly and looking at the table showing the 95% plus gross margin is there a scenario.
A group or a cluster of the lost units, we bought and developing these on demand service, where the pricing is much higher and we believe that there might be quite a deep market.
Speaker Change #247: We should keep in mind, where it might make more sense to.
Thats attractive way you can provide that true on demand burst up versus down.
Speaker Change #248: Unplug, what's more AC and plug in Gpus incremental gpus. Thanks, so much.
Speaker Change: This way.
We're continuing to engage in conversations we everything from smaller customers to larger customers on multiyear contracts and all of that goes hand in hand, with the finance employees. So we're looking at different structures around how we finance it.
Speaker Change #249: A pleasure.
Speaker Change #250: Also on the last one.
Charles Ruth: Absolutely there are scenarios, where you might unplugs from ICT and as I went through in the presentation. You are almost not mutually exclusive way you can continue to manage both of these businesses in parallel because the gpus simply cost so much but they are so expensive per unit of <unk>.
As a number of different taco structures that are being suggested around GPU financing.
It's just working through all that and looking at the best way is to match it up and continuing to grow the service I must say over the last couple of weeks.
Absolutely on nailing down the stairs.
Speaker Change #252: Power consumed so if we secure the financing.
Trajectory finalizing the transaction, we beat line and giving ourselves with very lenient.
Speaker Change #253: And wanted to go out hypothetically and buy $1 billion worth of Nvidia <unk> Hundred's Tomorrow 25000 units.
Past two industry leadership on the bitcoin mining and now we can really focus back on the IR cloud service, we're engaged with a number of those large customers financing providers and let's see what happens over the next few months.
Speaker Change #254: That would displace a bit less than 10% of our overall data center portfolio. So we're still able to be a very large scale become a mining business. In addition to having all this optionality and additionality.
Great Great appreciate the color and just a follow up for me, Alberta power costs come in during the quarter at Childress and how are you thinking about pricing in the market and uptime versus curtailment levels at the facility as we look out through the balance of the calendar year.
Speaker Change #255: On the IR side and in terms of timing look.
Speaker Change #256: Look at the movie faced in week to week it does.
Speaker Change #256: It does move around but yes guidance at the moment, we can probably stand up new clusters within two months of go to work.
I'm happy to take that one Mike.
Speaker Change #257: Great. Thanks, so much and then just around availability it sounds like it's more a question of capital.
It is touched on in our presentation, but three three kilowatt hour sort of.
Speaker Change #257: Just wanted to confirm that.
Average.
Speaker Change #258: GPU marketplace will allow you to make some strategic purchasing as needed.
Process Childress since at this financial year, and that's just based on our experience obviously.
Speaker Change #258: I believe so currently guidance that we're receiving from our suppliers.
<unk> market, we trade energy in that market and Thats for a purely economic reasons.
Speaker Change #259: Is is such that we could stand up new clusters within that two to three months timeframe, maybe three or four if it was a very large size.
It's a three three cents per kilowatt hour at at Childress.
Which is a very attractive radar of energy costs.
From a curtailment perspective, and downtime uptime Tia Lia clients.
Speaker Change #260: Understood. Thank you so much.
Speaker Change #261: Thank you.
We're always making life decisions around whether we take the powder might be kind of we sell it back to the grid.
Speaker Change #262: One moment for questions.
Joshua <unk>: Our next question comes from Joshua <unk> with Cantor you May. Please proceed.
And we've proven up and ability to operate the data centers through relatively extreme conditions up to 111 Fahrenheit posture in the summer.
Joshua <unk>: Yeah, Hi, guys. Thanks for taking my questions first of all I was wondering if you can comment briefly on that claim started exploring and doing a little bit more work on the co location aspect of the HBC business and kind of what that would entail to actually get set up.
Without skipping a beat.
These facilities are operating near 100% uptime.
Any curtailment of downtime base.
Joshua <unk>: Thanks. Thanks, Josh This is something we've been looking at and could form part of this kind of a JV type structure to monetize additional land and power that we've got.
Basically purely for economic reasons, and we expect that to be the case as we continue to scale the data center capacity there.
In the portfolio and it really goes to <unk>.
Great. Thank you for taking my questions.
Speaker Change #264: <unk> customer what's the length of the contract how do you finance that and what's the opportunity cost around using that capacity ourselves. So do we want to lease out the data center capacity and access to that power and land, which we understand is scarce in the current market or do we want to own and operate.
Okay.
Thank you.
One moment for questions.
Speaker Change: Our next question comes from Joe Flynn with Compass point research and trading you may begin.
Joseph Newton Flynn: Hi, guys. Thanks for the question.
I was hoping you could provide more color, particularly on the two year payback on H one hundreds.
Speaker Change #264: Our own compute units, whether it's <unk> or whether that's Nvidia gpus and monetize that capacity directly. So there is an opportunity cost there is options around that it's something that we're continuing to explore.
<unk>.
Ultimately if you would expect with data center design specs to change materially as we move to further generations of chips with such as the Blackwell.
Yes. It is there any color there would be helpful.
Speaker Change #264: But equally lockups keep saying in the presentation, we don't feel any pressure to engage and do a deal over a portion of these capacity when we can continue to monetize it out.
Joseph Newton Flynn: Okay.
Okay.
Thanks Jerry.
The payback on chips is a rough guide reality used when you offer on demand and shorter term contracts youll, receiving a price where that payback will be shorter than 24 months equally if you saw on a longer term contract and the payback.
Speaker Change #264: So we'll just keep looking at the options that present themselves.
Speaker Change #265: Yeah understood I appreciate the color there I guess secondly, I'd like to take a second and just ask a little bit about what youre seeing in the market post adding at the same different dynamics and that can kind of talk to how.
Then 24 months.
Market crossing to Gpus.
Speaker Change #265: Our unit economics are holding up especially given your.
Pretty transparent so you can see how many dollars for <unk>.
Speaker Change #266: A new growth plan simply.
Nvidia <unk> hundred's cost around $40000, so really its effects solving.
Speaker Change #267: Yes look its interest in my view publicly before the <unk> was that you wouldn't see any downward adjustment in the hash rates, thus proving slightly wrong. It was.
Into that to get that.
Joseph Newton Flynn: That rough two year payback on the chips.
Speaker Change #269: And maybe there will be a little bit more to come just given where the hedge prices now and the squeeze that that is having on some higher cost modest but ultimately when you believe that because it's going to remain robust.
Joseph Newton Flynn: In terms of data center configuration.
It's something to watch but.
What's becoming really apparent ease very few people can manage the 70 kilowatt rack density.
We're operating at we're seeing traditional data centers has to go down these liquid to achieve and liquid cooling path, where they can move to probably outside the data center like physically cannot deal with the H and the ventilation and the airflow in these multi storey legacy data centers.
Speaker Change #269: Assume that the hash rate will continue to remain where it is and potentially trickle higher over the coming period.
Speaker Change #275: Private miners.
Speaker Change #267: A lot of <unk>.
Speaker Change #271: Respective processes, where people are looking to sell yes, we've seen some of the public models.
They are having to go down the path already of retrofitting and improvising to deal with that rack density and the reference architecture for Nvidia chips design lead at 40% to 45.
Speaker Change #268: Informally or formerly <unk>.
Speaker Change #273: Talk about putting themselves up.
Speaker Change #270: Wholesale and for US, it's really hard to justify when we've got the ability to grow organically when we can grow so crazy Blake.
So it's really hard to see how our data centers, our Friday that 70 kilowatt plus rack density.
Speaker Change #272: And with those metrics outlined in the presentation, where by the end of this year from seven five months.
The purpose and somewhat future proof as these new chips that relates to.
Speaker Change #274: Indicative cost per be claimed mind of $17000 post Harvey.
Great that's all for me.
Speaker Change #276: And generating that value for shareholders, where you're spending $30 million in excess cash on capex and the market's valuing that at 135. It just seems very clear decision for us.
Thanks, guys.
Thank you.
Sure.
One moment for questions.
Our next.
Comes from Paul Golding with Macquarie You May proceed.
Thanks, so much.
Speaker Change #277: Yeah understood I appreciate the color thanks for taking my questions.
Quick question on the supply chain for Gpus, just wondering Dan if you could comment on availability.
Josh: Thanks, Josh.
Josh: Thank you I would now like to turn the call back over to Lincoln Tan for any closing remarks.
The main constraint really just capital at this point in other words if.
Speaker Change #279: Thanks, I think I think that's.
Joseph Newton Flynn: You have the power capacity available based on your.
Lincoln Tan: Just over the hour now and Thats, probably all we have time for this morning.
Energizing.
Childress and subsequent data center. If you had it available are you confident you'd be able to get the Gpus and hand through your suppliers and then as a follow on to that just briefly and looking at the table showing the 95% plus gross margin is there a scenario.
Lincoln Tan: Thank you for the questions I think just to reiterate <unk> hash.
Lincoln Tan: This year.
Speaker Change #280: Here in 2024 pathway to 40 <unk> in the first half of 2025.
Speaker Change #281: No vesting into very accretive growth.
Speaker Change #282: <unk> fastest growing minor last year, we fully intend to continue that trajectory.
We should keep in mind, where it might make more sense to.
Unplug more apex and plug in Gpus incremental gpus. Thanks, so much.
Speaker Change #283: And we look forward to taking the shareholders.
Speaker Change #284: After this brief thank.
Speaker Change #285: Thank you very much for your time everybody.
Right.
Speaker Change #285: Yeah.
Matt pleasure coal so on the last one.
Absolutely there are scenarios, where you might unplugs from ICT and as I went through in the presentation. You are almost not mutually exclusive way you can continue to manage both of these businesses in parallel because the gpus simply cost sorry, much but they are so expensive per unit.
Power consumed so if we secured financing.
And wanted to go out hypothetically and buy $1 billion worth of Nvidia H, one hundred's Tomorrow 25000 units.
That would displace a bit less than 10% of our overall data center portfolio. So we're still able to be a very large scale become a mining business. In addition to having all this optionality and additionality.
Joseph Newton Flynn: On the IR side and in terms of timing.
Looking at the movie based and wait to wake it does.
It does move around but your guidance at the moment, we can probably stand up new clusters within two months of go to work.
Great. Thanks, so much and then just around availability it sounds like it's more a question of capital.
But just wanted to confirm that the GPU marketplace will allow you to make the strategic purchasing as noted.
I believe so currently guidance that we're receiving from our suppliers.
Is is such that we could stand up new clusters within that two to two months' timeframe, maybe three or four if it was a very large size.
Understood. Thank you so much.
Thank you.
One moment for questions.
Our next question comes from Joseph <unk> with Cantor you May. Please proceed.
Yes, hi, guys. Thanks for taking my questions first of all I was wondering if you can comment briefly on that plane started a flooring and doing a little bit more work on the co location aspect that the HBC business and kind of what that would entail to actually get set up.
Thanks. Thanks, Josh This is something we've been looking at and could form part of this kind of a JV type structure to monetize additional land and power that we've got.
In the portfolio and it really goes to <unk>.
<unk> customer what's the length of the contract how do you finance that and what's the opportunity cost around using that capacity ourselves. So.
Do we want to lease out the data center capacity and access to that power and land, which we understand is escaping the current market or do we want to iron ore and compute units, whether it's <unk> or whether that's nvidia gpus and monetize that capacity directly so there's an opportunity cost.
These options around that it's something that we're continuing to explore.
But equally lockups keeps ending the presentation, we don't feel any pressure to engage and do a deal over a portion of this capacity when we can continue to monetize it out.
Ourselves so well just keep looking at the options that present themselves.
Yeah understood I appreciate the color there I guess secondly, I'd like to take a second and just ask a little bit about what youre seeing in the market post, adding if you're seeing different dynamics.
Can you kind of talk to.
Your unit economics are holding up especially given your.
New growth plan simply thanks.
Okay.
Yes, I look at the interest in my view publicly before the hobby and wells that you wouldn't see any downward adjustment in the hash rates I was proven slightly wrong there was.
And maybe there will be a little bit more to come just given where the hedge prices now and the squeezed that that is having on some higher cost minus but ultimately when you believe that <unk> is going to remain robust.
Assume that the hash rate will continue to remain where it is and potentially trickle higher over the coming period.
Yes private miners.
You see a lot of prospective processes, where people are looking to sell yes, we've seen some of the public models.
Informally or formally.
Joseph Newton Flynn: Talk about putting themselves up.
<unk> and for US, it's really hard to justify when we've got the ability to grow organically when we can grow so crazy Blake.
And we those metrics outlined in the presentation, where by the end of this year seven and half months.
Indicative cost per claim mind of $17000 priced Harbin.
And generating that value for shareholders, where you're spending $30 million in excess cash on capex and the market's valuing that at 135. It just seems very key decision for us.
Yeah understood I appreciate the color Dan Thanks for taking my questions.
Thanks, Josh.
Thank you I would now like to turn the call back over to Lincoln Tan for any closing remarks.
Joseph Newton Flynn: Okay.
I think thats.
Just over the hour now and Thats, probably all we have time for this morning.
Thank you for the questions I think just to reiterate that exa hash.
Yeah in 2024 pathway to <unk> in the first half of 2025.
Vesting into very accretive growth.
With fastest growing minor last year, we fully intend to continue that trajectory.
And we look forward to speaking.
Anything to shareholders.
After this result, thank you.
You very much for your time everybody.
Okay.
Thank you. This concludes the conference. Thank you for your participation you may now disconnect.
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