Q3 2024 CleanSpark Inc Earnings Call

Speaker Change: Ladies and gentlemen, this is the operator today's conference is scheduled to begin momentarily until that time your lines again will be placed on music hold thank you for your patience.

Speaker Change: [music].

Christa: Ladies and gentlemen, and good afternoon. My name is Christa and I will be your conference operator today at this time I would like to welcome everyone to the clean Sparks third quarter fiscal year financial results Conference call.

Speaker Change: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad and if you'd like to withdraw. This question again press Star one. Thank you I will now turn your conference over.

Speaker Change: Britney Moore director of Investor Relations Brittany, you may begin.

Britney Moore: Thank you Christa and welcome to the clean Spark third quarter 'twenty 'twenty four earnings call covering the period April to June 32024.

Speaker Change: Our press release was issued about five minutes ago and is available on our website at clean spark Dot com.

Speaker Change: Today's call is also being webcast and a replay and transcript will be available on our website.

Speaker Change: On the call with me are exact Bradford, our Chief Executive Officer, and Gary Becker Rally, our Chief Financial Officer.

Speaker Change: Keep in mind that some of the statements. We make today are forward looking and based on our best view of the world and our businesses as we see them today.

Speaker Change: These statements and information provided remains subject to the risk factors disclosed in our most recently filed annual reports.

Speaker Change: We will also discuss certain non-GAAP financial measure concerning our performance during today's call.

Speaker Change: You can find the reconciliation of non-GAAP financial measure in our press release, which is available on our website.

Speaker Change: And with that it is my pleasure to turn the call over to Zack.

Zack: Thank you Britney and good afternoon, everyone and thank you for joining us today.

Zack: Before I start with my prepared comments I want to thank you all for your patients due to the short unforeseen delay with our earnings release in this call.

Zack: As a result of our rapid growth we have gone through a number of changes most recently upgrading our external audit firm to a well known and highly respected national firm BDO.

Zack: The team of BDO have been incredible in their efforts to familiarize themselves with our company as part of our first quarter together ultimately as you could expect with any new relationship sometimes you just need a little extra time.

Zack: In addition, as you read in our Form 10-Q filed today I'm pleased to announce our agreement to acquire up to an additional $22 eight <unk> per second.

I'll now at 21 X P series of immersion called miners operating at an efficiency of $13 five tools for Taro has we've secured seven eight <unk> per second of these minor or delivery before year end, which will be going to Wyoming.

Zack: This purchase will drive us even further ahead of the pack when it comes to overall fleet efficiency, which we believe will be a critical differentiator during this cycle and as usual we've secured the best pricing available for these theater.

Speaker Change: With that and again, thanks for your patience, let's begin.

Speaker Change: This quarter has been one filled with change the bitcoin happening event is now behind us and I'm pleased to report that our momentum has not slowed down for the second consecutive quarter, we've exceeded $100 million in revenue and produced $290 million in revenue since the beginning of our fiscal year in October 2000.

Speaker Change: 23.

Speaker Change: We grew our hash rate by Forex, the highest per second and delivered on our commitment to achieve 20 Axa has per second by the end of the quarter as.

As we look forward to the end of this year I'm happy to report that we made on track to meet and optimally exceed our target of 32 SaaS per second.

Speaker Change: In line with that it's my pleasure to announce.

Speaker Change: That as of last night, we achieved 22, three <unk> per second.

Speaker Change: The foundation of grit and commitment and scale, we built over the years has proven to be robust and enduring.

Speaker Change: Our achievements this quarter are a testament to our strategic vision and the relentless efforts of our team.

Speaker Change: We've not only maintained our growth trajectory through happening, but have also set new benchmarks in operational efficiency and market leadership.

Speaker Change: We intend to continue building on that strong foundation, reinforcing our position as market leader.

Speaker Change: Post tapping environment as highlighted our strength and adaptability, allowing us to navigate this period with confidence and agility.

Speaker Change: I want to highlight that our energy background has been foundational to the success.

Speaker Change: While we have seen peers struggled a balance between production and energy costs. Our teams have seamlessly integrated into the new normal utilizing our expertise and proprietary methods and technology to continually optimize our production to deliver the best results to our shareholders.

Speaker Change: Our focus on innovation operational excellence and strategic growth ensures that we are well positioned to capitalize on the opportunities that lie ahead.

Speaker Change: The journey, we embarked on years ago is far from over and I'm confident that.

Speaker Change: That is yet to come.

Speaker Change: I'd like to take a moment to discuss our portfolio of data center and our performance in this space.

Speaker Change: Our strategy has always been one of infrastructure first owning and operating our sites has been a center of what we do and the current market environment is showing how difficult. It is for peers, who have taken different paths.

Speaker Change: Also central to our strategy has been our distributor portfolio.

Speaker Change: This means we aren't dependent on the output from any single site or utility, giving us flexibility and resilience.

Speaker Change: Over just the past nine months, we've expanded that strategy significantly we've grown from operating five sites in Georgia to now operating more than a dozen unique sites over four states with several more to come.

Speaker Change: There is infrastructure growth has greatly enhanced our scale and the overall value of our portfolio.

Speaker Change: We're seeing the benefits of this strategy in our performance and it positions us well for continued success in the future.

Speaker Change: I wanted to drill down a little deeper into why this matters and why I believe our shareholders and investors at large should be paying attention to this.

It's important to understand the energy markets are regulated at the state and local levels by being spread across multiple states and jurisdictions, where significantly de risked as compared to what are often referred to as super site.

Speaker Change: Our portfolio is comprised of sites that have differing power contracts, including both fixed pricing and market based pricing.

Speaker Change: This provides us with the flexibility to manage our fleet as a whole recently.

Speaker Change: Historically low wholesale pricing in Georgia has produced higher margins than where compared to strictly fixed price markets, although highly profitable wholesale markets can be affected by weather events, making the fixed price agreements in our portfolio highly advantageous during these weather driven short term events we.

Speaker Change: Take a great deal of pride in our high uptime, but sometimes perfection isn't the right answer having the flexibility to curtail on a moment's notice can eliminate exposure to pricing spikes bad hedges that can adversely impact profitability.

Speaker Change: This is the beautiful nature of bitcoin mining as potentially the most flexible and profitable energy load management system honor cities States, our federal government and foreign Nations are just now understanding the benefits that bitcoin mining can bring to create more resilient and profitable.

Speaker Change: Grid for the future and we intend to carry the clean spark flag forward into the brighter better future of energy resiliency.

Speaker Change: As part of this path I want to highlight our key achievements over the past quarter, focusing on our quarterly revenue performance strategic acquisitions, and our roadmap to achieving 32 <unk> per second by the end of this year and our continued pathway to 50 <unk> per second in 2025.

Speaker Change: I would like to emphasize our exceptional top line performance with total revenue of $104 million. This quarter, we delivered a gross margin of 57% on this revenue further the topline represents an increase of 129% over the prior years fiscal third quarter results.

Speaker Change: Now the success may not be easily identified in the face of our financials. This quarter due to some noncash items, including the change in fair value of bitcoin and an impairment charge related to our current fleet upgrade cycle, which we've chosen to implement ahead of schedule.

Speaker Change: Before I get into the details I want to call out that excluding these two items our operational efforts paired with the industry's most efficient fleet resulted in approximately $35 million to the bottom line before noncash items.

Speaker Change: Our long term strategy is to remain the most efficient large scale bitcoin miner in the industry.

Speaker Change: Over the past year, we have secured best in class mining equipment at best in class prices.

As a result, we've already upgraded a substantial portion of our fleet and over the next several months. We expect to continue this cycle specifically, we plan to remove all units from the fleet that are less efficient in 'twenty, two joules per tear hash I want to emphasize that the rigs being upgraded or still.

Speaker Change: Currently competitive and profitable these are proactive steps to ensure our position as the most efficient large scale miner, enabling us to withstand and more importantly, thrive during periods of future market volatility.

Speaker Change: Further by removing the less efficient units now we can maximize the resale value in the secondary markets.

Speaker Change: Our industry is unique and that the product of our efforts is dictated by an algorithm that caps. The total number of bitcoin available each day at a static number currently 450.

Speaker Change: Thereby limiting potential revenue earned unlike mining gold whereby deploying more shovels and manpower is likely to result in more resources extraction.

Speaker Change: This is why our focus on adding efficiencies through economies of scale and growing our market share of Bitcoin reports has been central to our strategy and.

Speaker Change: In recent months, we've seen a number of industry participants announced a shift towards new endeavors, and AI and HBC.

Speaker Change: And we wish each of them good fortune for in our view every dollar appear invest outside bitcoin mining represents an opportunity for us to maintain and increase our share of the 450 bitcoin available each day.

Speaker Change: We are fortunate to have abundant access to increasingly scarce low cost low carbon power by accelerating our fleet upgrades and replacing older rigs, we're getting the compound benefit of substantial increases in hash rate using the same power resources.

Speaker Change: At a time when the daily Bitcoin earnings for the next four years is potentially at its highest.

Gary: I will let Gary provide a bit more detail on the mechanics of the accounting treatment a bit later in the call, but I wanted to address the topic head on as we see it as a tremendous opportunity.

Gary: During the quarter, we reached and exceeded a number of milestones, including operational hash rate fleet efficiency and bitcoin produced.

Gary: We disclosed in our June monthly mining update we achieved and exceeded our stated mid year target of 20 <unk> per second in total operational hatch rates by achieving 20 <unk> per second we more than doubled our total hash rates since January of this year.

Gary: As I mentioned earlier, we've already increased our hatch rates over 10% at a little over a month to 22 three <unk> per second we are on a trajectory to quickly double or a half rate once again, our past the 32 <unk> per second and beyond is clear now.

Gary: Now it's up to our talented team to execute on our plans at our past performance indicate we have the ability to achieve these targets.

Gary: I'll take a moment and provide some important details on the path forward and the steps we are taking to reach and exceed 32 <unk> per second.

Gary: We've continued pursuing M&A opportunities to strategically secure additional power contracts and infrastructure.

Gary: Resulting in rapid and immediate megawatts in parallel we've continued to lay the groundwork for Greenfield and brownfield construction for 2025 and beyond.

Gary: We expect that after the current fleet upgrade is complete we will exceed 28 <unk> per second we will then only need to bring 65 megawatts of additional infrastructure online to add four more <unk> per second needed before year end.

Gary: With that I am pleased to announce that the city of standard fill has informed us that they have resolved the issues with the substation transformer and they expect to provide us with the final 50 megawatts of power. This September when added to the 15 megawatts that are about to go live in Dalton, Georgia. This will allow us to meet the 65 megawatts of new.

Speaker Change: <unk>, adding again forex to hash before the end of September.

Speaker Change: Beyond the opportunities just discussed we also have 30 megawatts under active development and an additional 188 megawatts under binding purchase agreement, making our targets very achievable before even considering the substantial pipeline of additional opportunities we are pursuing.

Speaker Change: Looking beyond the end of this year, we've identified a clear path to expanding our footprint in two states and.

Speaker Change: In Tennessee, we have a target to reach 200 megawatts in 2025 and over 400 megawatts by the end of 2026. We also expect to continue our growth in Wyoming, where we currently have 75 megawatts under contract, but we intend to expand to several hundred megawatts in the coming years.

I have full confidence in our team's ability to execute on this ambitious agenda our conviction in achieving this remarkable goal is built upon our plan to execute a very similar strategy in Tennessee in Wyoming as we proudly achieved in Georgia over the past three years.

Speaker Change: While our trajectory in Georgia has been impressive our recipe for success in this key market was developed as a direct result of our rapid ascent of the learning curve through bricks and relentless hard work, we learn from each of our incremental wins as well as well as the challenges.

Speaker Change: Maintaining a mindset of continuous improvement we were able to refine our formula into a blueprint for success.

Speaker Change: One, which we believe optimizes the countless variables to drive maximum efficiency.

Speaker Change: The lessons learned in Georgia, whether they relate to the structural design of the facility to improve cooling efficiency or the standardization of our site configuration to streamline operations and maintenance reflect the impact of the many small details we pay close attention to over time.

Speaker Change: We've optimized all of these in order to gain a percentage point of efficiency here or a point of reduced downtime there.

Speaker Change: But when employed in concert and body the level of efficiency, we constantly strive for importantly, each of these lessons were learned and developed with a single common element in mind.

Speaker Change: Repeat ability at scale.

Speaker Change: It is this template we've arrived at which we believe we can successfully implement wherever we set our sights.

In close proximity to an existing site or on distant shores, which gives me the confidence in our team to deliver similar results in Tennessee in Wyoming as we have enjoyed in Georgia.

Speaker Change: We are also incredibly excited about the people and communities and these great states. They are full of hardworking people with type of grip that can't be top but that instead must be instilled from the beginning as a foundational core tenant.

Speaker Change: Theyre also home to some of the largest utilities in the country, including the Tennessee Valley Authority, which has abundant renewable and nuclear power.

Speaker Change: We have the power contracts, we have the hardware, but perhaps most importantly, we have the people and the grit to execute this plan.

Speaker Change: We will continue to remain highly active in M&A on our path to achieving our growth targets for 25 and 26.

Speaker Change: While M&A is an important pillar of our strategy I want to reiterate the importance of the other critical pillar to executing these targets.

Speaker Change: And that is harvesting the significant inventory of organic opportunities before us.

Speaker Change: By deploying a blueprint for success I, just described to the existing opportunities in our current portfolio of assets and other greenfield opportunities. We believe our multiyear goals are well within reach.

Speaker Change: As we continue to expand and scale efficiency will remain a crucial metric for us our efficiency ranks amongst the best in the world a core component of our strategy is to remain the leader in energy efficiency.

Speaker Change: In our view the winners in this industry will not be crowned simply by a measure of total hash rate, but by the ability to endure and thrive in all markets, both bull and bear.

Speaker Change: Our current fleet efficiency across the entire portfolio stands at an industry, leading 22 three tools for terahertz.

Speaker Change: <unk> from 28, four joules per tear ash at the beginning of our fiscal year for an overall, 21% reduction in the power required to produce hash rate while during the same period more than doubling our total has right.

Speaker Change: In summary, we are extremely pleased with the results achieved this quarter, our combined opportunistic approach to M&A combined with our nimble approach to balance sheet management as evidenced by our pivot in our holiday strategy. Prior to the most recent run up in the price of bitcoin have enabled us to reach new.

Speaker Change: <unk> as a market leader.

Gary: Before I hand, the call over to Gary I would like to thank each and every member of the clean spark team without whom this would not be possible. Our outstanding performance is a testament to the relentless focus and dedication of our entire team every member of the clean spark family embodies our core values of grip and operational excellence.

Speaker Change: <unk>.

Speaker Change: On an individual level.

Gary: I am, particularly proud of the team's impressive performance considering the discipline required to maintain such high standards. During a time when our operating cash rate more than tripled in a 12 month period with additional size and scale comes unique challenges and hurdles yet. Despite this rapid growth our commitment to <unk>.

Gary: Excellence has remained unwavering across the organization.

Gary: With that.

Gary: I would now like to turn the time over to Gary to review the quarter's financial results in greater detail.

Gary: Thank you Zack and good afternoon, everyone hopefully you've all had a chance to review our detailed financial results and our press release, our Form 10-Q is expected to be filed shortly.

I am pleased to review our results for the fiscal third quarter, which reflect the continued execution of our long term growth strategy. Thanks to the commitment and hard work of our team <unk>.

Gary: Revenue for the third quarter came in at $104 million, an increase of 129% over the prior year. This was due to our growth and hatch rate and depreciation a big one price between the periods.

Gary: <unk> the immediately preceding second quarter, our revenue decreased only slightly 7% or $7 7 million. Despite the having occurring early in the third quarter.

Gary: Managed to grow our hash rate during the quarter and produced 1583 bitcoin.

Gary: <unk> 2031 in the prior quarter. This reflects a decrease of only 22% and production, despite having bringing a 50% reduction in block rewards.

Gary: So having always brings challenges for minors. However, we met to having with the most efficient fleet amongst our peers and continue a very high uptime of approximately 98%.

Speaker Change: Looking at our gross margins for the third quarter, we had approximately $59 million in gross profit, which is an increase of $34 million or 137% over last year.

Speaker Change: Paired to the preceding second quarter, our total margins decreased from 78 million to $59 million.

Speaker Change: However, our margins remain healthy above 50% as the margins are directly attributable to our strong mining operations effective power management strategy and upgrades to our state of the art machines happening throughout our portfolio.

Speaker Change: We did recognize a net loss of approximately $236 million in the third quarter, which was driven by two significant noncash items foremost beckmann price at June 30 was lower by almost $9000 than where it was at the March 31 balance sheet date. This has resulted in a mark to market unfavorable.

Speaker Change: Noncash adjustment of approximately $48 million.

Speaker Change: Additionally, as Jack mentioned, we recognized an impairment on our miners. This impairment was approximately 189 million and was directly attributable to the company's strategy of upgrading its fleet to state of the art and significantly more efficient miners as you may be aware the company purchased a large portion of our various S 19 models during the bull.

Speaker Change: Market at prices between 60 to $80 a tear house. While these machines have served us well and helped contribute to our current <unk> balance of over 7000 Bitcoin. This impairment is a direct reflection of our conscious change and upgrading our fleet and change in our expected use of those machine models.

Speaker Change: The impairment charge brings the balance sheet carrying value of those older machines to fair value and while we have not removed them from service yet we expect to utilize machines to maximize use of any available megawatts or sell them for cash if the market becomes appealing.

Speaker Change: Also as a result of our change in strategy, we expect to do fleet upgrades more often likely on a three year schedule and our updated depreciation methods reflect this we've noted that there continued to be advancements in ASIC technology for which we will use our scale and relationships and continuing to have the top of the line.

And state of the art mining fleet in the World. This strategy combined with our strong operational acumen will allow us to maintain profitably even in tough times.

Looking at our adjusted EBITDA, which is a non-GAAP metric we recognized negative adjusted EBITDA of approximately 12, 7%.

Speaker Change: $12 7 million. This reverses positive adjusted EBITDA from the same quarter last year and immediately preceding second quarter I would like to point out that the current quarter's adjusted EBITDA was significantly affected by the mark to market fair value adjustment of $48 million, which is included in net loss, but.

Speaker Change: But not adjusted for purposes of this non-GAAP metric.

Speaker Change: We continue to have profitable mining operations as you can see from our cost per coin metric, which is disclosed in our management's discussion and analysis portion of our Form 10-Q.

Speaker Change: For the third quarter, our energy cost of mine big win at our wholly owned locations was approximately $27000 when adding depreciation and financing costs our cost of mine each big when it was less than $44000 to note. Our average revenue per <unk> mine. This quarter was approximately $66000 is also.

Speaker Change: Important to note that our total all in cost of energy was $4 eight per kilowatt hour for the third quarter and our average for the nine months period is four five cents per kilowatt hour.

Speaker Change: As a reminder, the all in costs includes our wholesale power cost transmission and delivery costs margins and sales taxes paid of utilities and communities, where we operate.

Speaker Change: We also experienced higher than normal overhead costs, which are a direct reflection of our growth and progress we've seen increases in legal accounting and other professional fees related to our active M&A efforts, including acquisitions, we've announced over the past few months.

Speaker Change: Additionally, we have grown significantly as a company. We currently have over 250 employees, whereas this time last year, we had approximately $100.

Speaker Change: I'd now like to turn my focus to the balance sheet, which we continue to believe is one of the strongest in the industry.

Speaker Change: We had total liquidity of $542 million as of June 30.

Speaker Change: Of this amount, we had $129 million in cash and almost 6600 gig one valued at 430 $413 million. Additionally.

Speaker Change: Additionally, we had $284 million of cash pay deposits on miners in transit and total assets of $1 5 billion.

Speaker Change: Our balance sheet remains strong as it is there as it has.

Speaker Change: It has ever been with virtually no long term debt and substantial liquidity, which provides us with significant flexibility to continue pursuing the many M&A opportunities.

Speaker Change: <unk> in the wake of the April having event according to our plans.

Speaker Change: Given our strong balance sheet, we are pleased to announce our partnership with Coinbase, which provides a $50 million line of credit collateralized by a portion of our big win huddle balance.

Speaker Change: This revolving line of credit will allow us to utilize our strong balance sheet take advantage of opportunities in the marketplace also.

Speaker Change: Also given the significant tax and economic realities of selling portions of our huddle balance we're able to put a big winter work, while paying a low cost of capital as we look ahead, we will continue to be focused on being the most efficient the quin minor at scale on the planet.

Speaker Change: Believe our operations team is one of the best in the World and a combination of our state of the Art fleet power management strategy and strong financial condition will allow us to take advantage of even more opportunities from this point.

Brittany: Forward over to Brittany.

Brittany: Thank you Gerry for that detailed financial overview, we will now open the floor to questions from the analyst community. Operator, please provide instructions and manage the queue for the Q&A session.

Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star one on your <unk>.

Speaker Change: Telephone keypad to raise your hand and joined the queue and if you'd like to withdraw that question again Press Star. One. Your first question comes from the line of Mike colonies with H C. Wainwright. Please go ahead.

Mike Colonies: Hi, good afternoon, guys and congrats on achieving your midyear target here, it's great to see first one for me. If you could just provide an update on the grid acquisition what needs to happen to finalize the transaction.

Do you still expect to close the deal this quarter.

Speaker Change: Hey, Mike Thanks for joining the call.

Mike Colonies: Really the only thing that needs to happen is the S. Four which we filed so that what <unk> does.

Speaker Change: You probably notice for anybody that doesn't it allows the shares that their shareholders will get to ultimately be registered that needs to go through the SEC review process. So we'd love to close this quarter, it's ultimately going to come down to timelines around that so I don't really have a specific timeline other than it's going to take as long as the.

Speaker Change: The SEC takes.

Speaker Change: Got it got it fair enough I appreciate the color there and I know you are still working through the final deal terms, but doing some quick math it looks like youll be paying just a bit more for grids assets than you have for previous acquisitions that you have now in the portfolio would made grid the right choice compared to other.

Speaker Change: <unk> opportunities in the pipeline that may have been available to clean spark at a lower price.

Speaker Change: I think the key with this as it became one of several opportunities we executed on so when measured with that is the real driving factor of what led us to grid grid strongest asset is something that isn't reflected on our balance sheet or on a P&L or even in megawatts right now from an active contracts point of view.

Speaker Change: It's still a robust pipeline of opportunities. So the reason that we chose to acquire grid falls in the fact that they have a lot of opportunities. They are a lot of relationships in this day and we've seen how in.

Speaker Change: In the state of Georgia, what allowed us to grow so quickly and so rapidly and successfully was our relationships.

Speaker Change: And so we could spend.

Speaker Change: Another year or two developing the same relationships in Tennessee, or we can bring on to the clean spark family a group of individuals that have those relationships now grid.

Speaker Change: They have their own story, but it took them a while to get public and I think that.

Speaker Change: For them. This is a great merge because it allows them to execute on the plans they put in place with the capital and access to that we have and so that's the real value of grid, we do get immediate megawatts. We do expect optimally have over 100 megawatts with live this year.

Speaker Change: But it's really about the two three and 400 megawatts that we think we can rapidly bring online in the future.

Speaker Change: Great. Thank you for taking my questions.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Brett Knoblauch with Cantor Fitzgerald. Please go ahead.

Brett Knoblauch: Hi, guys. Thanks for taking my question, maybe if we can just start on the corn based transaction.

Brett Knoblauch: I guess what is the thinking there is that you want to maybe add some leverage to the balance sheet and maybe diversify away a bit from.

Speaker Change: Equity capital and curious as to what rate you're paying on that.

Brett Knoblauch: <unk>.

Speaker Change: Yes. Thanks.

Speaker Change: Thanks for the question so.

Speaker Change: So this is just going to another tool in our toolbox.

Speaker Change: We don't have immediate plans to draw down on that but.

Speaker Change: Pending on on the cost of capital and where the equity lever is and where the stock prices at that time, we might choose to drawdown on on the corn based line of credit to really take advantage of opportunities whether its purchase of machines, where potentially some tuck in acquisitions that we're looking at as well in terms of the cost of that capital is really market base, but I'd tell.

Speaker Change: The cost of capital is.

Speaker Change: Is below 10%.

Speaker Change: Or we would expect it would be 10% at least in the near future.

Speaker Change: Sure.

Speaker Change: Yes.

Got it. Thank you and then on the expansion in Wyoming I believe you said to several hundred megawatts could you maybe provide some some timing there and what you need to do on your end to start ramping capacity in that new region for you guys.

Speaker Change: Yes, so going back to the foundation, we have 75 megawatts under contract out there right now.

Speaker Change: That several hundred megawatts is something we're building towards I expect that to be more 25, and 26 megawatts nothing thats going to happen tomorrow.

Speaker Change: And what it's going to take from US is its going to be continuing to build the relationships.

Speaker Change: The relationships, we have established thus far show that we can get access to quite a bit more megawatts.

Speaker Change: Using similar.

Speaker Change: Structures and there's definitely a willingness in the state of Wyoming as everybody knows centered alumnus has been a longtime supporter of bitcoin and so we want to really go in and support Wyoming as part of that process being a friendly state on that side. So we're really confident on our ability to execute on that but it's going to be more 'twenty five 'twenty six.

Speaker Change: As we pushed past what we have now.

Speaker Change: Perfect and then if I can just add one more question on the I guess, the new suite upgrade timing that you guys have outlined could you just maybe remind us from a unit economic level of payback periods.

Speaker Change: And what you are I guess, what the ROI is on a per machine basis that gives you confidence that you can go out and do this every three years, despite what would be considerably high Capex every three years.

Speaker Change: Yes, the <unk>.

Speaker Change: Great thing about miners themselves is there value is largely indexed also on whatever the market is doing with bitcoin. So.

Speaker Change: We would execute on the strategy, we've always done which is we build in bear markets. We intend to take advantage of fleets that are in place and highly efficient during bull markets.

Speaker Change: And from there with the capital that we access during bull markets, we should be well positioned to upgrade during bear markets.

Speaker Change: Our statement around three years is a very generalized statement in the sense that if we're if we're mid bull cycle and year three why would we upgrade machines that are cranking out bitcoin that we turn into cash of course.

Speaker Change: We would do that in the bare cycle, where machine prices get low and we would use our size and scale to leverage into that so again don't take three years, something hard and fixed but what it is is what we've done is we've essentially looked at Moore's law.

Speaker Change: Seen how it has proved out.

Speaker Change: Frankly, I'll tell you I think the I thought it would take a little bit longer for machine to get below 15, joules per tear ash and based on what we're seeing in the technology that is coming in line over the next three to four years, we think that it'll be maybe three years from now we see some units that are going to be sub <unk>.

Speaker Change: I think there's some interesting challenges I will say that they have to face from a heat extraction, which is why we're leaning into emerging right. Now. So I think it's going to come just like it is when where we address our hottle balance that's going to come in a real time market based decisions.

Speaker Change: But I would expect really what we're pointing to is we think that there is still a solid long bull cycle ahead of US and then the next bear cycle every time to upgrade.

Speaker Change: Perfect makes sense. Thanks, guys really appreciate it congrats on the quarter.

Speaker Change: Thank you.

Speaker Change: Hi, Ken if you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: And we have no further questions in our queue. At this time I will now turn the call back over to Brittany for closing remarks.

Brittany: Thank you for joining us today, we appreciate your interest in clean spark and we look forward to speaking with you again next quarter.

Speaker Change: This concludes today's conference call. Thank you for your participation and you may now disconnect.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Okay.

Okay.

Speaker Change: Okay.

Speaker Change: [music].