Q2 2024 Core Scientific Inc Earnings Call

August 7, 2024

Greetings and welcome to the CORE Scientific second quarter fiscal year 2024 earnings conference call.

Operator: 2nd quarter fiscal year 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow a formal presentation.

Speaker Change: At this time, all participants are in a listen-only mode. A brief question and answer session will follow a formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Operator: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Operator: As a reminder, this conference is being recorded.

Steven Gitlin: It is now my pleasure to introduce your host, Steve Gitlin, Senior Vice President and Investor Relations. Thank you, you may begin.

Speaker Change: As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Gitlin, Senior Vice President, Investor Relations. Thank you. You may begin.

Steven Gitlin: Good afternoon, ladies and gentlemen, and welcome to Core Scientific 2nd quarter fiscal year 2024 earnings call. This is Steve and Gitlin, Senior Vice President of Investor Relations for Core Scientific. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session after management remarks. As a reminder, this conference is being recorded for replay purposes.

Stephen Gitlin: Good afternoon, ladies and gentlemen, and welcome to Core Scientific's second quarter fiscal year 2024 earnings call. This is Stephen Gitlin, Senior Vice President of Investor Relations for Core Scientific. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session after management's remarks.

Speaker Change: As a reminder, this conference is being recorded for replay purposes.

Steven Gitlin: Before we begin, please note that on this call, certain information presented contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement other than historical or current facts that predict or indicate future events or trends, forecasts, performance, or achievements, and may contain words such as believe, anticipate, expect, estimate, intent, project plan, or words or phrases with similar meaning. Forward-looking statements are based on current expectations, forecasts, and assumptions that involve risks and uncertainties that may cause actual results to differ materially.

Speaker Change: Before we begin, please note that on this call, certain information presented contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

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

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

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

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

Steven Gitlin: Today's presentation is available on our website at CoreScientific.com in the Events and Presentation section. The content of this conference call contains information that is accurate only as of today, August 7, 2024. The company undertakes an obligation to update statements made today to reflect events or circumstances occurring after today.

Speaker Change: Today's presentation is available on our website at CoreScientific.com in the events and presentation section.

Speaker Change: The content of this conference call contains information that is accurate only as of today, August 7, 2024. The company undertakes no obligation to update statements made today to reflect events or circumstances occurring after today.

Steven Gitlin: Joining me today from CoreScientific are Chief Executive Officer Mr. Adam Sullivan, and Chief Financial Officer Mrs. Denise Sturdling.

Speaker Change: Joining me today from Core Scientific are Chief Executive Officer Mr. Adam Sullivan and Chief Financial Officer Mrs. Denise Sterling.

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

Speaker Change: We will now begin with remarks from Adam Sullivan. Adam? Thanks, Steve. Today I'll summarize the incredible progress we've made this year before quickly highlighting our second quarter financial performance.

Adam Sullivan: Thanks, Dave. Today, I'll summarize the incredible progress we've made this year before quickly highlighting our second quarter financial performance. Denise will then review our second quarter financials before I discuss what distinguishes CoreScientific from other companies in our industry and provide a look ahead at the key catalysts and milestones that will demonstrate continued progress towards achieving our goals.

Speaker Change: Denise will then review our second quarter financials before I discuss what distinguishes Core Scientific from other companies in our industry and provide a look ahead at the key catalysts and milestones that will demonstrate continued progress towards achieving our goals. We will then take your questions.

Adam Sullivan: We will then take your questions. We've achieved exciting milestones this year, illustrated on slide four. We announced a contract with CoreWeave to lease a 16 megawatt data center in Austin for HPC, and we delivered that data center more than 30 days ahead of schedule and began generating revenue from it in the second quarter. We successfully executed our plans for the April having, maintaining strong operational performance and favorable cash cost of mine. We have now signed HVC hosting contracts with Core Weave for a total of 382 megawatts and aggregate total potential revenue of $6.7 billion over the 12 years beginning in 2025 and 2026.

Speaker Change: We have achieved exciting milestones this year, illustrated on slide 4. We announced a contract with CoreWeave to lease a 16-megawatt data center in Austin for HPC hosting, and we delivered that data center more than 30 days ahead of schedule and began generating revenue from it in the second quarter.

Speaker Change: We successfully executed our plans for the April halving, maintaining strong operational performance and favorable cash costs to mine.

Speaker Change: We have now signed HPC hosting contracts with CoreWeave for a total of 382 megawatts, an aggregate total potential revenue of $6.7 billion over the 12 years beginning in 2025 and 2026.

Adam Sullivan: We completed 72 megawatts of partially built infrastructure at our Denton, Texas site, bringing our total to about 830 megawatts of operational infrastructure highlighted on slide 5. We began to build out a partially completed 100 megawatt facility in Pecos, Texas. Stock price appreciation triggered mandatory conversion of secured convertible nodes, eliminating 260 million in-depth from our balance sheet. We signed an agreement with BLOCK to procure 15 ex-a-hash of their new 3nm ASIP chip to refresh and expand our self-mining fleet beyond 2024. Stock price appreciation triggered the ability to exercise our tranche two warrants, and we are now preparing some of our sites for HVC hosting, migrating minors from HVC designated sites, and redeploying them to Bitcoin mining sites.

Speaker Change: We completed 72 megawatts of partially built infrastructure at our Denton, Texas site, bringing our total to about 830 megawatts of operational infrastructure highlighted on slide five. We began build out a partially completed 100 megawatt facility in Pecos, Texas.

Stephen Gitlin: We began the build-out of a partially completed 100-megawatt facility in Pecos, Texas. Note that for the first time, we are now reporting HPC hosting as a separate segment in our financial statements to provide greater visibility to this growth driver for our business.

Speaker Change: Stock price appreciation triggered mandatory conversion of secured convertible notes, eliminating $260 million in debt from our balance sheet.

Speaker Change: We signed an agreement with Block to procure 15 exahasts of their new 3nm ASIC chip to refresh and expand our self-mining fleet beyond 2024.

Speaker Change: Stock price appreciation triggered the ability to exercise our tranche 2 warrants. And we are now preparing some of our sites for HVC hosting, migrating miners from HVC-designated sites and redeploying them to Bitcoin mining sites.

Adam Sullivan: Our ability to achieve all of this is a testament to the dedication and tenacity of our best-in-class team. We are executing on our strategy and remain focused on making continued progress while creating a new category in the digital infrastructure industry. While we expand our hosting business for HVC, we remain one of the largest and most efficient Bitcoin mining companies, as illustrated on slide 6. Our Bitcoin mining business continues to produce operating cash flow and will become even stronger as we migrate our minors to dedicated sites with more favorable power pricing. Slide 7 highlights our strategic operational and financial achievements in the second quarter.

Speaker Change: Our ability to achieve all of this is a testament to the dedication and tenacity of our best-in-class team. We are executing on our strategy and remain focused on making continued progress while creating a new category in the digital infrastructure industry.

Speaker Change: While we expand our hosting business for HPC, we remain one of the largest and most efficient Bitcoin mining companies as illustrated on slide 6.

Speaker Change: Our Bitcoin mining business continues to produce operating cash flow and will become even stronger as we migrate our miners to dedicated sites with more favorable power pricing.

Speaker Change: Slide seven highlights our strategic, operational, and financial achievements in the second quarter. Note that for the first time, we are now reporting HPC hosting as a separate segment in our financial statements to provide greater visibility to this growth driver for our business.

Adam Sullivan: Note that for the first time, we are now reporting HVC hosting as a separate segment in our financial statements to provide greater visibility to this road drive for our business. We earned 1,600 and ED Bitcoin in the second quarter and generated total revenue of $141 million, including $5.5 million in HVC hosting revenue from our Austin data center. Gross profit of $39 million increased by 5%, while operating income of $7 million declined by 31%. Our $805 million net loss was mainly driven by the significant quarter-over-quarter appreciation in share and warrant prices that required us to make mark-to-market adjustments to the value of our equity.

Speaker Change: We earned 1,680 Bitcoin in the second quarter and generated total revenue of $141 million, including $5.5 million in HPC hosting revenue from our Austin data center.

Speaker Change: Gross profit of $39 million increased by 5% while operating income of $7 million declined by 31%.

Denise Sterling: Our 805 million dollar net loss was mainly driven by the significant quarter-over-quarter appreciation in share and warrant prices that required us to make mark-to-market adjustments to the value of our equity. Denise will explain this in more detail shortly.

Adam Sullivan: Denise will explain this in more detail shortly. Adjusted, even the 46 million dollars in the second quarter increased by 2% over the prior year and reflects continued strong cash generation from our core business. Our team has worked exceptionally hard to deliver these strong results, and while we are proud of what we have done, we are just getting started.

Denise Sterling: Adjusted EBITDA of $46 million in the second quarter increased by 2% over the prior year and reflects continued strong cash generation from our core business.

Denise Sterling: Our team has worked exceptionally hard to deliver these strong results and while we are proud of what we have done, we are just getting started. Now I'd like to turn the call over to Denise Sterling, our CFO, for more details on our financial performance and positioning. Denise? Denise? Denise?

Denise Sterling: Now, I'd like to turn the call over to Denise Sterling, RCFO, for more details on our financial performance and positioning.

Denise Sterling: Denise. Thank you, Adam. We are pleased with our second quarter operational execution and financial performance, particularly given the having. As Adam mentioned a moment ago, total second quarter revenue was $141 million, consisting of $111 million in digital asset self-mining revenue, $25 million from digital asset hosted mining, and $5.5 million from HPC home. testing. Digital asset self mining growth profit for the quarter was $30.7 million. Self mining revenue increased by $13.7 million or 14% year over year, primarily from a 134% increase in the price of Bitcoin, and an increase of 28% in our self mining hash rate, which was due to the deployment of approximately 19,000 additional new generation self mining units.

Denise Sterling: Thank you, Adam. We are pleased with our second quarter operational execution and financial performance, particularly given the halving.

Denise Sterling: As Adam mentioned a moment ago, total second quarter revenue was $141 million consisting of $111 million in digital asset self-mining revenue, $25 million from digital asset hosted mining and $5.5 million from HPC hosting.

Denise Sterling: Digital assets self-mining gross profit for the quarter was $30.7 million.

Stephen Gitlin: Self-mining revenue increased by $13.7 million, or 14% year over year, primarily due to a 134% increase in the price of Bitcoin and an increase of 28% in our self-mining hash rate, which was due to the deployment of approximately 19,000 additional new generation self-mining units. Segment Gross Margin was 28% in the quarter.

Denise Sterling: Self-mining revenue increased by $13.7 million, or 14% year-over-year.

Speaker Change: primarily from a 134% increase in the price of Bitcoin and an increase of 28% in our self-mining hash rate, which was due to the deployment of approximately 19,000 additional new generation self-mining units.

Denise Sterling: Although our self mining hash rate increased 28%, the April 2024 having and a 68% increase in the network hash rate led to a 52% decrease in the number of Bitcoin earned during the quarter. Digital asset self mining cost of revenue increased by $13.2 million for the fiscal second quarter of 2024. The increase was primarily driven by an increase in depreciation expense resulting from the deployment of our new self mining units, an increase in payroll and benefits cost associated with merit and market adjustments made during the quarter, and higher stock base compensation. Segment growth margin was 28% in the quarter.

Denise Sterling: Although our self-mining hash rate increased 28%, the April 2024 halving and a 68% increase in the network hash rate led to a 52% decrease in the number of Bitcoin earned during the quarter.

Denise Sterling: Digital asset self-mining cost of revenue increased by $13.2 million for the fiscal second quarter of 2024.

Denise Sterling: The increase was primarily driven by an increase in depreciation expense resulting from the deployment of our new self-mining units, an increase in payroll and benefits costs associated with merit and market adjustments made during the quarter, and higher stock-based compensation.

Denise Sterling: Segment growth margin was 28% in the quarter.

Denise Sterling: HPC hosting revenue of $5.5 million exceeded HPC hosting cost of revenue of $4.9 million for the fiscal second quarter of 2024 by $0.6 million for a gap growth margin of 11%. Revenue at the Austin site ramped up over the course of the quarter based on the original delivery schedule, while gap lease expenses were accelerated as a result of delivering the data center capacity more than 30 days ahead of schedule. As a reminder, the HPC hosting costs the Austin data center consists primarily of lease and power expenses. Our power expenses are a direct pass-through to our client with no added margin.

Denise Sterling: HPC hosting revenue of $5.5 million exceeded HPC hosting cost of revenue of $4.9 million for the fiscal second quarter of 2024 by $0.6 million for a gap gross margin of 11%.

Stephen Gitlin: Revenue at the Austin site ramped up over the course of the quarter based on the original delivery schedule, while GAP lease expenses were accelerated as a result of delivering the data center capacity more than 30 days ahead of schedule. As a reminder, the HPC hosting costs for the Austin Data Center consist primarily of lease and power expenses. Our power expenses are a direct pass-through to our client with no added margin.

Denise Sterling: Revenue at the Austin site ramped up over the course of the quarter based on the original delivery schedule, while gap lease expenses were accelerated as a result of delivering the data center capacity more than 30 days ahead of schedule.

Denise Sterling: as a reminder the hpc hosting cost for the austin data center consists primarily of lease and power expenses

Denise Sterling: Our power expenses are a direct pass-through to our client with no added margin.

Denise Sterling: Overall, this resulted in a lower than anticipated gap margin in the initial quarter of operations. We anticipate the Austin data center margin to improve over time to between 35% and 40%, excluding power pass-through, as the additional lease expense associated with the acceleration of HPC capacity will be fully recognized by the first half of 2025, resulting in more normalized margins. It is important to note that the terms of our hosting contract for our East Boston data center, which is leased from a third party, very significantly from those of our larger HPC hosting contracts, where we are modifying our owned infrastructure and therefore do not incur lease expenses.

Denise Sterling: Overall, this resulted in a lower than anticipated gap margin in the initial quarter of operations.

Denise Sterling: We anticipate the Austin Data Center margin to improve over time to between 35% and 40%, excluding power pass-through, as the additional lease expense associated with the acceleration of HPC capacity will be fully recognized by the first half of 2025, resulting in more normalized margins.

Denise Sterling: It is important to note that the terms of our hosting contract for our ACE Boston data center, which is leased from a third party, vary significantly from those of our larger HPC hosting contracts where we are modifying our owned infrastructure and therefore do not incur lease expenses.

Denise Sterling: A summary of our segment economics can be found on Slide 8. Gross margins in the quarter were 28%, 30%, and 11%, respectively, for digital assets self mining, digital asset hosting, and HPC hosting. Our power costs were favorable in the quarter, declining to 4.02 cents from 4.25 cents per kilowatt hour for the same period in the prior year. Operating expenses for the fiscal second quarter of 2024 totaled 31.4 million, as compared to 27.1 million for the same period in the prior year. The increase of 4.3 million was primarily attributable to 7.2 million increased in personnel and related expenses.

Denise Sterling: A summary of our segment economics can be found on slide 8. Gross margins in the quarter were 28%, 30%, and 11% respectively for digital asset self-mining, digital asset hosting, and HPC hosting.

Speaker Change: Our power costs were favorable in the quarter, declining to 4.02 cents from 4.25 cents per kilowatt hour for the same period in the prior year.

Stephen Gitlin: Operating expenses for the fiscal second quarter of 2024 totaled $31.4 million, as compared to $27.1 million for the same period in the prior year. The increase in net loss of $795.6 million was primarily due to a net $796 million non-cash mark-to-market adjustments to our warrants and contingent value right liabilities required as a result of a significant quarterly-over-quarter increase in the value of our equity. And now I'd like to discuss actions we are taking to strengthen our balance sheet.

Denise Sterling: Operating expenses for the fiscal second quarter of 2024 totaled $31.4 million as compared to $27.1 million for the same period in the prior year.

Denise Sterling: The increase of $4.3 million was primarily attributable to a $7.2 million increase in personnel and related expenses.

Denise Sterling: and 4.6 million of HPC hosting segment startup costs incurred during the current period, partially offset by lower stock-based compensation of 6.5 million due to cancellations and forfeitures of equity-based awards, and a decrease of 1.6 million in bankruptcy advisory cost. Net loss for the fiscal second quarter of 2024 was 804.9 million, as compared to a net loss of 9.3 million for the same period in the prior year. The increase in net loss of 795.6 million was primarily due to a net $796 million non-cash marked to market adjustments to our warrants and contingent value-right liabilities required as a result of significant quarter-over-quarter increase in the value of our equity.

Denise Sterling: and $4.6 million of HPC hosting segment start-up costs incurred during the current period, partially offset by lower stock-based compensation of $6.5 million due to cancellations and forfeitures of equity-based awards, and a decrease of $1.6 million in bankruptcy advisory costs.

Denise Sterling: Net loss for the fiscal second quarter of 2024 was $804.9 million as compared to a net loss of $9.3 million for the same period in the prior year.

Denise Sterling: The increase in net loss of $795.6 million was primarily due to a net $796 million non-cash mark-to-market adjustments to our warrants and contingent value right liabilities required as a result of significant quarter-over-quarter increase in the value of our equity.

Denise Sterling: Also contributing to the increase in net loss was a $14.8 million increase in interest expense, partially offset by an $18.5 million decrease in reorganization items net, with no comparable activity for the same period in fiscal 2024 due to the company's emergence from bankruptcy during the first quarter. Non-GAAP adjusted EBITDA for the second fiscal quarter of 2024 was 46 million for 33% of revenue, a year-over-year increase of 1 million that included several offsetting adjustments. Our power contracts vary in price in terms. As I mentioned previously, our fleet ride power cost averaged 4.02 cents per kilowatt hour in the fiscal second quarter.

Denise Sterling: Also contributing to the increase in net loss was a $14.8 million dollar increase in interest expense, partially offset by a $18.5 million dollar decrease in reorganization items net, with no comparable activity for the same period in fiscal 2024 due to the company's emergence from bankruptcy during the first quarter.

Denise Sterling: Non-GAAP-adjusted EBITDA for the second fiscal quarter of 2024 was $46 million for 33 percent of revenue, a year-over-year increase of $1 million that included several offsetting adjustments.

Speaker Change: Our power contracts vary in price and terms. As I mentioned previously, our fleet ride power cost averaged 4.02 cents per kilowatt hour in the fiscal second quarter.

Denise Sterling: We now expect average cost in 2024 to be between 4.2 cents and 4.4 cents per kilowatt hour. At the end of the second quarter, our self-mind to hosted mining mix was 79% to 21% respectively. As our hosted mining contract sunsets this year and we expand our self-mining fleet, we expect our hosted mining percentage to decline. As of June 30, 2024, we operated approximately 163,500 minors in our self-mining fleet. We have included the composition of our self-mining fleet, including the model mix and efficiency on slide 9.

Speaker Change: We now expect average cost in 2024 to be between 4.2 cents and 4.4 cents per kilowatt hour.

Speaker Change: At the end of the second quarter, our self-mined to hosted mining mix was 79% to 21% respectively.

Speaker Change: As our hosted mining contracts sunset this year and we expand our self-mining fleet, we expect our hosted mining percentage to decline.

Denise Sterling: As of June 30, 2024, we operated approximately 163,500 miners in our self-mining fleet. We have included the composition of our self-mining fleet, including the model mix and efficiency, on slide 9.

Denise Sterling: And now I'd like to discuss actions we are taking to strengthen our balance sheet. We've enhanced our liquidity in the quarter ending with 96 million in cash and cash equivalents, up from 50 million at the end of 2023. As illustrated on slide 10 during the second quarter, our debt decreased by an additional 56 million dollars to 552 million. This decrease was primarily driven by a reduction of 26.4 million in secured convertible notes that were voluntarily converted, and the payments of approximately 19.2 million for a mechanics lane related to the additional 72 megawatts of infrastructure completed at our Denton, Texas data center.

Denise Sterling: And now I'd like to discuss actions we are taking to strengthen our balance sheet.

Stephen Gitlin: We've enhanced our liquidity in the quarter ending with $96 million in cash and cash equivalents, up from $50 million at the end of 2023. As illustrated on slide 10, during the second quarter, our debt decreased by an additional $56 million to $552 million.

Speaker Change: We've enhanced our liquidity in the quarter ending with $96 million in cash and cash equivalents up from $50 million at the end of 2023.

Speaker Change: As illustrated on slide 10, during the second quarter, our debt decreased by an additional $56 million to $552 million.

Speaker Change: This decrease was primarily driven by a reduction of $26.4 million in secured convertible notes

Speaker Change: that were voluntarily converted and the payment of approximately nineteen point two million for a mechanics lean related to the additional seventy-two megawes of infrastructure completed at our debtin texas data center

Denise Sterling: And shortly after the end of the second quarter, stock price appreciation triggered the mandatory conversion of our secured convertible notes, resulting in the equitization of the remaining 233.6 million, which resulted in a further decrease in our debt to 318 million.

Speaker Change: And shortly after the end of the second quarter, stock price appreciation triggered the mandatory conversion of our secured convertible notes, resulting in the equitization of the remaining $233.6 million, which resulted in a further decrease in our debt to $318 million.

Denise Sterling: Julian. The average interest rate of our remaining debt after mandatory conversion of the secured convertible notes is approximately 12%. We continue to evaluate potential options that would further reduce our debt service and strengthen our balance sheet.

Speaker Change: the average interest rate of our remaining debt after mandatory conversion of the secured converble notes is approximately twelve percent we continue to evaluate potential options that would further reduce our debt service and strengthen our balance sheet

Stephen Gitlin: We continue to evaluate potential options that would further reduce our debt service and strengthen our balance sheet. Now, I'll turn to our CAPEX plan. We plan to acquire an additional 10,000 to 15,000 Bitcoin miners in 2024 to continue refreshing our self-mining fleet and to achieve our 21.8 Exahash self-mining hash rate goal. We anticipate the CapEx for this purchase would range between $13 million and $19 million, which is included in our 2024 CapEx plan.

Denise Sterling: Now I'll turn to our CAPEX plans. We plan to acquire an additional 10,000 to 15,000 bitcoin mires in 2024 to continue refreshing our self-mining fleet and to achieve our 21.8 exo-hash self-mining hash rate goal. We anticipate the CAPEX for this purchase would range between 13 million and 19 million, which is included in our 2024 CAPEX plan. We also anticipate investing 13 million on the 100 megawatt expansion of our Pekos, Texas site, which is also included in our CAPEX plan. CAPEX associated with our contracted 382 megawatts of infrastructure to host high performance computing is funded by our existing HPC client.

Stephen Gitlin: We also anticipate investing $13 million in the 100-megawatt expansion of our Pecos, Texas, site, which is also included in our CapEx plan. Our direct cash cost to self-mine a Bitcoin in the second quarter was $29,879, This consists of the power cost of $24,533 and the direct cash-based facilities operations cost of $5,346, allocated based on the 79% of our fleet dedicated to self-mining and divided by the total amount of Bitcoin self-mined in the second quarter of $1,680.

Speaker Change: Now I'll turn to our CapEx plans.

Speaker Change: We plan to acquire an additional 10,000 to 15,000 Bitcoin miners in 2024 to continue refreshing our self-mining fleet and to achieve our 21.8 Exahash self-mining hash rate goal.

Speaker Change: We anticipate the CapEx for this purchase would range between $13 million and $19 million, which is included in our 2024 CapEx plan.

Speaker Change: We also anticipate investing $13 million on the 100 megawatt expansion of our Pecos, Texas site, which is also included in our CapEx plan.

Speaker Change: CAPEX associated with our contracted 382 megawatts of infrastructure to host high-performance computing is funded by our existing HPC client. With the exception of the portion we will repay through CAPEX credits and therefore is not included in our plan.

Denise Sterling: With the exception of the portion we will repay through CAPEX credits and therefore is not included in our plan.

Denise Sterling: I'll now turn to our review of our mining economics summarized on slide 11. Our direct cash cost to self-mine a Bitcoin in the second quarter was $29,879. This consists of power cost of $24,533 and direct cash-based facilities operations cost of $5,346 allocated based on the 79% of our fleet dedicated to self-mining and divided by total bitcoins self-mined in the second quarter of $1,680. Another way to evaluate our mining cost is by calculating the cash-based cash cost of these same items, which represents the same cost expressed as a cost per terahash per day. Our total cash-based cash cost in the second quarter was $3 cents per tarahash.

Speaker Change: I'll now turn to our review of our mining economics summarized on slide 11. Our direct cash cost to self-mine a Bitcoin in the second quarter was $29,879.

Speaker Change: This consists of power costs of $24,533 and direct cash-based facilities operations costs of $5,346.

Speaker Change: allocated based on the 79% of our fleet dedicated to self-mining and divided by total Bitcoin self-mined in the second quarter of 1680.

Stephen Gitlin: Another way to evaluate our mining cost is by calculating the cash-based hash cost of these same items, which represents the same cost expressed as a cost per terahash per day. Based on the total 382 megawatts now contracted for HPC hosting, we project aggregate total revenue over the 12-year contracts of approximately $6.7 billion with a profit margin of up to 80%. Power and utilities costs are a direct pass-through to our client and will be grossed up and included in both revenue and cost of revenue.

Speaker Change: Another way to evaluate our mining cost is by calculating the cash-based hash cost of these same items, which represents the same cost expressed as a cost per tera hash per day.

Speaker Change: Our total cash-based hash cost in the second quarter was $0.03 per tera hash.

Denise Sterling: On slide 12, we provide an updated illustrative financial view of our HPC contracts with our existing client. Based on the total 382 megawatts now contracted for HPC hosting, we project aggregate total revenue over the 12-year contract of approximately 6.7 billion, with a profit margin of up to 80%. Power and utilities costs are direct pass-through to our client and will be grossed up and included in both revenue and cost of revenue. As a reminder, our client is paying for all CAPEX, and we are responsible for repaying 1.5 million per HPC megawatt through a CAPEX credit once the data center is energized.

Speaker Change: on slide twelve we provide an updated a ustrative financial view of our hpc contracts with our existing client

Speaker Change: Based on the total 382 megawatts now contracted for HPC hosting, we project aggregate total revenue over the 12-year contracts of approximately $6.7 billion with a profit margin of up to 80%.

Speaker Change: Power and utilities costs are direct pass-through to our client and will be grossed up and included in both revenue and cost of revenue. As a reminder, our client is paying for all CapEx and we are responsible for repaying $1.5 million per HPC megawatt through a CapEx credit once the data center is energized.

Denise Sterling: Slide 13 illustrates the flow of CAPEX related to the HPC data center buildout cost and their impact to our financial statements over time. Funds are deposited by Pour Weave in a joint escrow account to pay for buildout costs as they are incurred. During construction, expenses incurred to develop the HPC data centers will be recorded in Construction in Progress. Once the data center is placed into service, the costs will be reclassified to property, plant, and equipment and begin to depreciate.

Speaker Change: Slide 13 illustrates the flow of CapEx related to the HPC data center build-out cost and their impact to our financial statements over time.

Speaker Change: Funds are deposited by CoreWeave in a joint escrow account to pay for build-out costs as they are incurred. During construction, expenses incurred to develop the HPC data centers will be recorded in Construction in Progress.

Speaker Change: Once the data center is placed into service, the cost will be reclassified to property plant and equipment and begin to depreciate.

Denise Sterling: And now I'd like to share a few modeling details. We continue to model a statutory effective tax rate of 23% for 2020. 44. We also retain more than 300 million in net operating loss carryforwards, which will reduce future cash taxes. Our share count was approximately 183 million shares as of June 30th, 2024, and approximately 258 million shares as of August 2nd, 2024. Note that approximately 40 million shares associated with the mandatory conversion of our convertible notes have now been issued, along with approximately 35 million shares from exercise warrants.

Stephen Gitlin: And now I'd like to share a few modeling details. We continue to model a statutory effective tax rate of 23% for 2024. Our updated share count will be reflected in our third quarter filing. And now, I'll turn the call back to Adam.

Speaker Change: And now I'd like to share a few modeling details.

Speaker Change: We continue to model a statutory effective tax rate of 23% for 2024. We also retain more than $300 million in net operating loss carry-forwards, which will reduce future cash taxes.

Speaker Change: Our share count was approximately 183 million shares as of June 30th, 2024, and approximately 258 million shares as of August 2nd, 2024.

Speaker Change: Note that approximately 40 million shares associated with the mandatory conversion of our convertible notes have now been issued, along with approximately 35 million shares from exercise warrants.

Adam Sullivan: Our updated share count will be reflected in our third quarter filings, and now I'll turn the call back to Adam.

Speaker Change: Our updated share count will be reflected in our third quarter filings.

Adam Sullivan: Adam, thanks, Denise, Core Scientific leader in digital infrastructure for Bitcoin mining and HPC hosting. We now have approximately 830 megawatts of operational infrastructure within our total contracted power of 1,200 megawatts. This contracted power represents power that is ready for us to use when we complete the associated data center infrastructure. Our significant portfolio of contracted power is only part of what differentiates Core Scientific and positions us to become one of the largest publicly traded data center companies in the United States. Core Scientific is creating a new category in digital infrastructure, and we are executing on our vision for the future of application-specific data centers.

Adam Sullivan: And now I'll turn the call back to Adam. Adam?

Adam: Core Scientific is a leader in digital infrastructure for Bitcoin mining and HPC hosting. We now have approximately 830 megawatts of operational infrastructure within our total contracted power of 1200 megawatts.

Adam Sullivan: Thanks, Denise.

Speaker Change: Core Scientific is a leader in digital infrastructure for Bitcoin mining and HPC hosting.

Adam Sullivan: we now have approximately eight hundred and thirty megawatts of operational infrastructure within our total contracted power of one thousand two hundred mects

Adam: This contracted power represents power that is ready for us to use when we complete the associated data center infrastructure. Our significant portfolio of contracted power is only part of what differentiates Core Scientific and positions us to become one of the largest publicly traded data center companies in the United States. Core Scientific is creating a new category in digital infrastructure, and we are executing on our vision for the future of application-specific data centers. We understand the differing requirements between GPUs and Bitcoin miners because our team has considerable experience in managing both, as well as deep industry expertise across the design, development, and operation of data sets.

Speaker Change: This contracted power represents power that is ready for us to use when we complete the associated data center infrastructure.

Speaker Change: Our significant portfolio of contracted power is only part of what differentiates Core Scientific and positions us to become one of the largest publicly traded data center companies in the United States.

Speaker Change: Core Scientific is creating a new category in digital infrastructure, and we are executing on our vision for the future of application-specific data centers.

Adam Sullivan: We understand the differing requirements between GPUs and Bitcoin miners because our scheme has considerable experience managing both, as well as deep industry expertise across the design, development, and operation of data centers. Now that we have the potential to generate 6.7 billion dollars in cumulative revenue over the next 12 years from HPC hosting, viewing us as a data center company is more aligned with the future of our business. As we convert a portion of our digital infrastructure to HPC hosting, we expect more investors to value this growing part of our business using data center multiples; will value our Bitcoin mining business using mining industry multiples.

Speaker Change: We understand the differing requirements between GPUs and Bitcoin miners because our team has considerable experience in managing both, as well as deep industry expertise across the design, development, and operation of data centers.

Adam: Now that we have the potential to generate $6.7 billion in cumulative revenue over the next 12 years from HPC hosting, viewing us as a data center company is more aligned with the future of our business. These opportunities range from 25 megawatts to several hundred megawatts, including brownfield and greenfield projects and extend over a large geographic area. Modifying our sites to accommodate HPC hosting involves developing detailed designs, performing selective demolition and construction, installing new equipment and supporting infrastructure, and delivering the completed site to our client.

Speaker Change: Now that we have the potential to generate $6.7 billion in cumulative revenue over the next 12 years from HPC hosting, viewing us as a data center company is more aligned with the future of our business.

Speaker Change: As we convert a portion of our digital infrastructure to HPC hosting, we expect more investors to value this growing part of our business using data center multiples while valuing our Bitcoin mining business using mining industry multiples.

Adam Sullivan: We believe that this approach will yield a more accurate representation of the true value we are creating. Now would like to discuss the main value creation catalyst for the remainder of this year, described on slide 14. Executing on our remaining option agreement, expanding our power portfolio, and diversifying our HPC hosting client base. First, yesterday we announced another HPC hosting option exercise under our contract with CoreWeave for an additional 112 megawatts, increasing our total contracted infrastructure for HPC hosting to 382 megawatts. We are in discussion with CoreWeave in a number of other potential clients to contract the remaining 118 megawatts of our infrastructure available to support additional HPC hosting.

Speaker Change: We believe that this approach will yield a more accurate representation of the true value we are creating.

Speaker Change: Now I'd like to discuss the main value creation catalysts for the remainder of this year, described on slide 14.

Speaker Change: Executing on our remaining option agreement, expanding our power portfolio, and diversifying our HPC hosting client base.

Speaker Change: First, yesterday we announced another HPC hosting option exercise under our contract with CoreWeave for an additional 112 megawatts, increasing our total contracted infrastructure for HPC hosting to 382 megawatts.

Speaker Change: We are in discussion with CoreWeave and a number of other potential clients to contract the remaining 118 megawatts of our infrastructure available to support additional HPC hosting.

Adam Sullivan: Our client's option for additional infrastructure extends through the beginning of September, providing the ability to contract additional capacity at the original contract terms. Second, we are also building a pipeline of opportunities for new assets to expand our infrastructure capacity. These opportunities range from 25 megawatts to several hundred megawatts, including brownfield and greenfield projects, and extend over a large geographic area. We have developed specific site selection criteria to guide our efforts and optimize our resources as we seek to expand our site portfolio for HBC hosting and Bitcoin mining. Third, we seek to diversify our client base and are working to achieve that either with the remaining 118 megawatts or with new asset opportunities.

Speaker Change: Our client's option for additional infrastructure extends through the beginning of September , providing the ability to contract additional capacity at the original contract terms.

Speaker Change: Second, we are also building a pipeline of opportunities for new assets to expand our infrastructure capacity.

Speaker Change: These opportunities range from 25 megawatts to several hundred megawatts, including brownfield and greenfield projects, and extend over a large geographic area.

Speaker Change: We have developed specific site selection criteria to guide our efforts and optimize our resources as we seek to expand our site portfolio for HPC hosting and Bitcoin mining.

Speaker Change: Third, we seek to diversify our client base and are working to achieve that either with the remaining 118 megawatts or with new asset opportunities.

Adam Sullivan: Of course, delivering the completed infrastructure to our client is what will trigger revenue generation. We are now at the early stage of the process. Modifying our sites to accommodate HBC hosting involves developing detailed designs, performing selective demolition and construction, installing new equipment and supporting infrastructure, and delivering the completed site to our client. We will provide updates over time as we progress through this modification process. We remain on track to deliver the associated HBC hosting infrastructure for the first 200 megawatts in the first half of 2025, the next 70 megawatts in the second half of 2025, and deliver the latest 112 megawatts in the first half of 2026, as illustrated on slide 15.

Speaker Change: Of course, delivering the completed infrastructure to our client is what will trigger revenue generation. We are now at the early stage of the process.

Speaker Change: Modifying our sites to accommodate HVC hosting involves developing detailed designs, performing selective demolition and construction, installing new equipment and supporting infrastructure, and delivering the completed site to our client.

Speaker Change: We will provide updates over time as we progress through this modification process.

Speaker Change: We remain on track to deliver the associated HPC hosting infrastructure for the first 200 megawatts in the first half of 2025, the next 70 megawatts in the second half of 2025, and deliver the latest 112 megawatts in the first half of 2026 as illustrated on slide 15.

Adam Sullivan: I want to make it clear how integral our team and our experiences to the process of converting our sites to HBC hosting. Without a deep understanding of the entire process, we would not have been able to create this opportunity to expand our hosting business. This is an important differentiator favoring course scientific. Shifting now to our Bitcoin mining business, April marked the latest having event in which Bitcoin block rewards declined by 50%, which should have resulted in a 100% increase in our cash cost of mine, assuming all of their factors held constant. However, our cash cost of mine in the second quarter was about $29,900, an increase of approximately 60% over the first quarter.

Speaker Change: I want to make it clear how integral our team and our experience is to the process of converting our sites to HPC hosting.

Speaker Change: Without a deep understanding of the entire process, we would not have been able to create this opportunity to expand our hosting business.

Speaker Change: This is an important differentiator favoring Core Scientific.

Speaker Change: Shifting now to our Bitcoin mining business, April marked the latest halving event in which Bitcoin block rewards declined by 50%, which should have resulted in a 100% increase in our cash cost to mine, assuming all other factors held constant.

Adam: However, our cash cost to mine in the second quarter was about $29,900, an increase of approximately 60% over the first quarter. To summarize our guidance for 2024, highlighted on slide 16, we expect 21.8x the self-mining hash rate. Approximately 800 megawatts of total operational infrastructure. Understanding that this number will vary significantly as we temporarily power down sites for HPC conversion and power up sites for Bitcoin mining, 16 megawatts of revenue-generating HPC hosting infrastructure, and an average Bitcoin mining fleet power price of 4.2 to 4.4 cents per kilowatt hour.

Speaker Change: However, our cash cost to mine in the second quarter was about $29,900, an increase of approximately 60% over the first quarter.

Adam Sullivan: Lower power prices in the second quarter mitigated the effects of the having as it carefully managing the operations of our self mining fleet relative to hash and power prices based on the detailed plans we developed well before the haven. As Denise mentioned, we plan to procure 10,000 to 15,000 additional miners this year to achieve our fleet refresh and hash vehicles. Beyond 2024, we expect to begin acquiring the new three nanometer block ASIC chips when they are available in deploying them in our own chassis to our dedicated Bitcoin mining sites to boost our hash rate and efficiency.

Speaker Change: Lower power prices in the second quarter mitigated the effects of the halving as did carefully managing the operations of our self-mining fleet relative to hash and power prices based on the detailed plans we developed well before the halving.

Speaker Change: As Denise mentioned, we plan to procure 10,000 to 15,000 additional miners this year to achieve our fleet refresh and hash rate goals.

Speaker Change: Beyond 2024, we expect to begin acquiring the new 3nm block ASIC chips when they are available and deploying them in our own chassis to our dedicated Bitcoin mining sites to boost our hash rate and efficiency.

Adam Sullivan: When deployed and combined with our proprietary firmware, fleet management and energy management software, we expect to have greater operational control over these miners to respond more dynamically to change using hash price, power price, and environmental conditions. We expect the new block chips combined with our proprietary tech stack to improve our operating efficiency and profitability. We expect the majority of our Bitcoin hosting contracts this sunset this year, making way for us to focus on self mining and HVC hosting. To summarize our guidance for 2024, highlighting on slide 16, we expect 21.8X hash of self mining hash rate of approximately 800 megawatts of total operational infrastructure, understanding that this number will vary significantly as we temporarily power down sites for HVC conversion and power up sites for Bitcoin mining.

Speaker Change: When deployed and combined with our proprietary firmware, fleet management, and energy management software, we expect to have greater operational control over these miners to respond more dynamically to changes in hash price, power price, and environmental conditions.

Speaker Change: We expect the new blockchips combined with our proprietary tech stack to improve our operating efficiency and profitability.

Speaker Change: We expect the majority of our Bitcoin hosting contracts to sunset this year, making way for us to focus on self-mining and HPC hosting.

Speaker Change: To summarize our guidance for 2024, highlighted on slide 16, we expect 21.8x hash of self-mining hash rate.

Speaker Change: Approximately 800 megawatts of total operational infrastructure. Understanding that this number will vary significantly as we temporarily power down sites for HPC conversion and power up sites for Bitcoin mining.

Adam Sullivan: Team. Sixteen megawatts of revenue-generating HPC-hosting infrastructure and average Bitcoin mining fleet power price of 4.2 to 4.4 cents per kilowatt hour. We have been deliberate in our planning and communication, having established our strategy, described its evolution, and now executed against it with significant HPC-hosting contracts and progress in the conversion process. There is much work to do, but we are the best equipped team in our industry to succeed, and we are confident that we are best positioned to translate that work and to share with our value. Thank you for your engagement and attention, and thank you to all our clients, industry partners, and all our teammates for your ongoing efforts and support.

Speaker Change: 16 megawatts of revenue-generating HPC

Speaker Change: average Bitcoin mining fleet power price of 4.2 to 4.4 cents per kilowatt hour.

Adam: We have been deliberate in our planning and communication, having established our strategy, described its evolution, and now executing against it with significant HPC hosting contracts and progress in the conversion process. There is much work to do, but we are the best equipped team in our industry to succeed, and we are confident that we are best positioned to translate that work into shareholder value.

Speaker Change: We have been deliberate in our planning and communication, having established our strategy, described its evolution, and now executing against it with significant HPC hosting contracts and progress in the conversion process.

Speaker Change: There is much work to do, but we are the best-equipped team in our industry to succeed, and we are confident that we are best positioned to translate that work into shareholder value.

Speaker Change: Thank you for your engagement and attention, and thank you to all our clients, industry partners, and all our teammates for your ongoing efforts and support. We will now take your questions.

Operator: We will now take your questions. Thank you. We'll now conduct the question and answer session. Please limit yourselves to one question and one follow-up question for each time that you queue. Please feel free to queue for additional times. Thank you. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary before picking up your handset, before pressing the star keys. One moment, please, while we pull for questions.

Speaker Change: Thank you.

Operator: Please limit yourselves to one question and one follow-up question for each time that you queue. Please feel free to queue for additional time. Thank you. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Speaker Change: We'll now conduct a question and answer session.

Speaker Change: Please limit yourselves to one question and one follow-up question for each time that you queue.

Speaker Change: Please feel free to queue for additional time. Thank you.

Speaker Change: A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Speaker Change: For participants using speaker equipment it may be necessary before picking up your handset before pressing the star keys. One moment please while we pull for questions.

Gregory Lewis: Our first question comes from Greg Lewis with BTIG. Please state your question.

Speaker Change: Our first question comes from Greg Lewis with BTIG. Please state your question.

Analyst: Yeah, thank you, and good afternoon, and thanks for taking my questions, everybody. You know, Adam, you know, clearly you continue to execute on, you know, Transitioning your existing power to HPC, so congrats on that. I was hoping to get a little bit more color.

Gregory Lewis: Yes, thanks. Thank you and good afternoon. Thanks for taking my questions, everybody.

Greg Lewis: Yeah, thank you and good afternoon and thanks for taking my questions everybody. You know, Adam, clearly you continue to execute on, you know...

Adam Sullivan: You know, Adam, you know, clearly you can continue to execute on, you know, transitioning, you know, your existing power to HPC, so congrats on that. You know, I was hoping to get a little bit more color. You know, obviously there's inherent value in the data center contracts.

Greg Lewis: transitioning, you know, your existing power to HPC, so congrats on that. You know, I was hoping to get a little bit more color, you know, obviously there's inherent value in the data center contracts.

Analyst: Obviously, there's inherent value in the data center contracts. But I'm kind of curious, as we think about...

Adam Sullivan: Kind of curious as we think about opportunities ahead to kind of site and source new locations, whether for HPC or traditional Bitcoin mining, how you're thinking about funding that and is there an opportunity to take advantage of these contracts, 12 of your contracts with core weeds to help you kind of finance for the growth.

Speaker Change: I'm kind of curious, as we think about...

Speaker Change: opportunities ahead to kind of cite and source.

Speaker Change: new locations whether for HPC or traditional Bitcoin mining, how you're thinking about funding that and is there an opportunity to take advantage of these contract, 12-year contracts with CoreWeave to help you kind of finance further growth.

Adam Sullivan: Thanks, Greg. On the capital process, your capital structure process and how we're thinking about that going forward, you know, the nice part, as you mentioned related to our contracts, you know, it does open up a number of different doors for us. Your credit story is rapidly improving as we move towards 2025, and you know, that's really, that's not only exciting to us, but also exciting to boot to our shareholders.

Speaker Change: hel

Adam: On the capital process or capital structure process and how we're thinking about that going forward. You know, the nice part, as you mentioned, related to our contracts, it does open up a number of different doors for us. Our credit story is rapidly improving as we move towards 2025.

Speaker Change: Yeah, thanks, Greg.

Speaker Change: On the capital process, or capital structure process, and how we're thinking about that going forward.

Speaker Change: You know, the nice part, as you mentioned, related to our contracts, you know, it does open up a number of different doors for us. You know, our credit story is rapidly improving as we move towards 2025.

Adam: And, you know, that's really exciting to us but also exciting to our shareholders. And I think something that's gonna open the door to is our ability to continue to access different parts of the capital markets that, you know, we haven't been able to access more specifically as just a Bitcoin mining company. So right now, our focus is on, you know, the site selection process, targeting sites anywhere ranging from 25 megawatts to a few hundred megawatts.

Speaker Change: And, you know, that's really, that's not only exciting to us, but also exciting to our shareholders. And I think something that's going to open the door on is our ability to continue to access different parts of the capital markets that, you know, we haven't been able to necessarily access more specifically as just a Bitcoin mining company.

Adam Sullivan: And I think something that's going to open the door on is our ability to continue to access different parts of the capital markets that, you know, we haven't been able to necessarily access, more specifically, as just a Bitcoin mining company. So right now, our focus is on, you know, the site selection process targeting sites anywhere ranging from 25 megawatts to a few hundred megawatts. And really, we're targeting sites that aren't necessarily going through the traditional broker processes. And that will allow us to go after sites that are less expensive, but very attractive to us. And so right now, our plan is to continue to fund purchases out of, you know, either our operational cash flow, cash on balance sheet.

Speaker Change: So, right now our focus is on the site selection process, targeting sites anywhere ranging from 25 megawatts to a few hundred megawatts.

Adam: And really, we're targeting sites that aren't necessarily going through the traditional brokering processes, and that will allow us to go after sites that are less expensive but still very attractive to us. And so right now, our plan is to continue to fund purchases out of, you know, either our operational cash flow, or cash on the balance sheet, and there are other methods for us to look at right now in the capital market that could provide us with, you know, a lot more optionality in terms of going out and acquiring sites. So, you know, we have a number of sites in our target range right now, and, you know, we're definitely hopeful, as we mentioned, to build on some of those over the course of 2024.

Speaker Change: And really, we're targeting sites that aren't necessarily going through the traditional brokered processes.

Speaker Change: and that will allow us to go after sites that are less expensive but very attractive to us and so right now our plan is to continue to fund fores out of either

Speaker Change: operational cash flow, cash on balance sheet, and there are other methods for us to look at right now in the capital markets that could provide us, you know, a lot more optionality in terms of going out and acquiring sites.

Adam Sullivan: And there are other methods for us to look at right now in the capital markets that could provide us, you know, a lot more optionality in terms of going out and acquiring sites. So, you know, we have a number of sites in our target range right now. And, you know, we're definitely hopeful, as we mentioned, to exercise on some of those over the course of 2024.

Speaker Change: So, we have a number of sites in our target range right now, and we're definitely hopeful, as we mentioned, to exercise on some of those over the course of 2024.

Adam Sullivan: Okay, great. And then just one more for me on the, you know, you kind of guide to that fleet average price and 4.2 to 4.4 cents. You know, just kind of curious. I don't believe it's fixing any power.

Analyst: Okay, great. And then just one more for me on the, you know, you kind of guide to that fleet average price of 4.2 to 4.4 cents, you know, just kind of curious. I don't believe we'll have been fixing any power. So, as we think about that number, is that just based on forward curves or kind of like any kind of thoughts around, you know, how we're kind of focused in on that? That's a pretty narrow attractive power cost, so just kind of any color around that.

Speaker Change: Okay, great. And then just one more for me on the, you know, you kind of guide to that fleet average price of 4.2 to 4.4 cents.

Speaker Change: I'm just kind of curious, I don't believe we've been fixing any power, so as we think about that number, is that just based on forward curves or any kind of thoughts around how we're kind of focused in on that?

Adam Sullivan: So, as we think about that number, is that just based on forward curves or kind of like any kind of thoughts around, you know, how we're kind of focused in on that. That's a pretty narrow attractive power cost, so just kind of any color around that. Absolutely. You know, the way we're looking at the rest, the remainder of this year is based on not only our fleet efficiency and machines that will be acquiring and placing it each of our sites, but that also takes into account the four curve at certain facilities. You know, when you look at our site, our site portfolio today, we are operating in a number of regulated markets, and so we have much greater insight into where those power prices will come in at. And then in the deregulated markets such as Texas, you know, those are based on our current efficiency, based on where the four curve is. You know, we feel very confident in our ability to execute on that 4.2 to 4.4 cents.

Speaker Change: That's a pretty narrow attractive power cost, so just kind of any color around that.

Adam: Absolutely. The way we're looking at the remainder of this year is based not only on our fleet efficiency and machines that we'll be acquiring and placing at each of our sites, but it also takes into account the forward curve at certain facilities. When you look at our site portfolio today, we are operating in a number of regulated markets, and so we have much greater insight into where those power prices will come in. And then in deregulated markets such as Texas, those are based on our current efficiency, based on where the forward curve is. We feel very confident in our ability to execute on that 4.2 to 4.4.

Speaker Change: Absolutely. You know, the way we're looking at the rest of the remainder of this year is based on not only our fleet efficiency and machines that we'll be acquiring and placing at each of our sites,

Speaker Change: but it also takes into account the forward curve at certain facilities

Speaker Change: When you look at our site portfolio today, we are operating in a number of regulated markets.

Speaker Change: And so we have much greater insight into where those power prices will come in at. And then in the deregulated markets such as Texas, you know, those are based on our current efficiency, based on where the forward curve is, you know, we feel very confident in our ability to execute on that 4.2 to 4.4 cents.

Gregory Lewis: Super helpful.

Analyst: Super helpful. Thank you for your time.

Gregory Lewis: Thank you for the time.

Gregory Lewis: Thanks, Frank.

Speaker Change: Super helpful, thank you for the time.

Lucas Pipes: Our next question comes from Lucas Pipes with the Riley Securities. Please state your question. Thank you very much, Operator. Good afternoon, everyone. Adam and team, great, great job on the execution this year.

Operator: Our next question comes from Lucas Pipes with B Riley Securities. Please state your question.

Speaker Change: Thanks, Frank.

Speaker Change: Our next question comes from Lucas Pipes with B Riley Securities. Please state your question.

Lucas Pipes: Thank you very much, Operator. Good afternoon, everyone.

Adam: Adam and team, great job on the execution this year. My first question is also on the expansion of the HPC site portfolio, and I wondered, Adam, if you could maybe comment just on the general kind of competitive dynamics in that market today after what you have done. Who is competing with you in this, in terms of the site selection, and in terms of the next couple of sites? How quickly do you think you might be able to execute something? Thank you very much.

Lucas Pipes: Thank you very much, operator. Good afternoon, everyone. Adam and team, great job on the execution this year.

Lucas Pipes: My first question is also on the expansion of the HPC site portfolio, and I wondered, Adam, if you could maybe comment just from the general kind of competitive dynamics in that market today after what you have done, who is competing with you in this in the site selection, and in terms of like the next couple of sites, how quickly do you think you might be able to execute something? Thank you very much for your perspective. Yeah, thanks, Lucas. Thanks for joining. You know, as we go through processes on some of the larger sites and some of the broker processes, the folks that we're competing with are the likes of, you know, Equinex, Digital, Realty, et cetera.

Lucas Pipes: My first question is also on the expansion of the HPC site portfolio.

Lucas Pipes: I wondered, Adam, if you could maybe comment just on the general kind of competitive dynamics in that market today after what you have done. Who is competing with you in this, in the site selection?

Speaker Change: And in terms of like the next couple of sites, how quickly do you think you might be able to execute something? Thank you very much for your perspective.

Adam: Yeah, thanks. Thanks, Lucas.

Adam: Yeah, thanks. Thanks, Lucas. Thank you for joining.

Adam: Thanks for joining us. You know, as we go through processes on some of the larger sites and some of the broker processes, the folks that we're competing with are the likes of Equinix, Digital Realty, etc. And so, you know, those processes can get expensive at certain times, and that's really why we're focused on, you know, I would call it, a different set of assets. What we're focused on are both greenfield and brownfield opportunities for certain data center companies that are not interested in touching brownfield opportunities.

Adam: You know, as we go through processes on some of the larger sites and some of the broker processes,

Speaker Change: The folks that we're competing with are the likes of Equinix, Digital Realty, etc. And so, you know, those processes can get expensive at certain times, and that's really why we're focused on, you know, I would call it a different set of assets.

Adam Sullivan: And so, you know, those processes can get expensive at certain times, and that's really why we're focused on, you know, I would call it a different set of assets. What we're focused on are both greenfield and brownfield opportunities. You know, for certain data center companies, they're not interested in touching brownfield opportunities. We have experience converting brownfield opportunities not only from a data center perspective, but also a Bitcoin mining perspective. You know, you look at our portfolio today; we have three sites in there that are brownfield conversions. So, we have the experience, and we believe we are carving out a nation; the site selection process that will provide our company very interesting opportunities.

Adam: What we're focused on are both greenfield and brownfield opportunities. You know, for certain data center companies that are not interested in touching brownfield opportunities.

Adam: We have experience converting brownfield opportunities, not only from a data center perspective but also from a Bitcoin mining perspective. If you look at our portfolio today, we have three sites in there that are brownfield conversions. So we have the experience, and we believe we are carving out a nation, the site selection process that will provide our company with very interesting opportunities. And those opportunities aren't only great for us, but these are opportunities that are very interesting to the potential clients that we're speaking to.

Adam: You know, we have experience converting brownfield opportunities not only from a data center perspective, but also a Bitcoin mining perspective. You know, you look at our portfolio today, we have three sites in there that are brownfield conversions.

Adam: So, we have the experience and we believe we are carving out a nation, the site selection process that will provide our company very interesting opportunities. And those opportunities aren't only great for us, but these are opportunities that are very interesting to the potential clients that we're speaking with.

Adam Sullivan: And those opportunities aren't only great for us, but you know, these are opportunities that are very interesting to the potential clients that we're speaking with.

Lucas Pipes: Thank you very much.

Lucas Pipes: My second question is regarding leverage. Adam, and Denise, how do you think about the kind of proper leverage ratio of this business after what happened? You touched on it a little bit earlier, but I would appreciate how you think about that. And then is there any sense of urgency to make changes to the balance sheet as it stands today? I would appreciate your thoughts. Thank you.

Adam Sullivan: My second question is regarding leverage, Adam Denise. How do you think about kind of the proper leverage ratio of this business after what happened? You touched on it a little bit earlier, but I would appreciate how you think about that, and then say any sense of urgency to make changes to the balance she does it stands today would appreciate your thoughts. Thank you. Absolutely.

Speaker Change: Thank you very much. My second question is regarding leverage.

Adam: Adam, Denise, how do you think about kind of the proper leverage ratio of this business after what happened? You touched on it a little bit earlier, but I would appreciate how you think about that. And then is there any sense of urgency to make changes to the balance sheet as it stands today? I would appreciate your thoughts.

Adam: Absolutely. Our objective with our capital structure is to create something that balances the risk of the business with the future growth of the business. Right now, we essentially have a Bitcoin credit risk, and as we look forward to 2025, it's a much more stable credit risk business. And so we feel very confident that there will be opportunities for us. Obviously, that $260 million conversion to convertible notes is an incredible milestone for us as a company.

Adam Sullivan: Our objective with our capital structures to create something that balances the risk of the business with the future growth of the business. Right now, we essentially have Bitcoin credit risk. And as we look forward to 2025, there's a much more stable credit risk business. And so, we feel very confident that there will be opportunities for us, obviously, that 260 million conversions to convertible notes. That's an incredible milestone for us as a company. We've almost cut our debt in half since emergence. We've cut our debt by over 60% since the beginning of the year. So, we're in a process right now of making sure we're going to have the right securities on our balance sheet.

Speaker Change: Absolutely. Our objective with our capital structure is to create something that balances the risk of the business with the future growth of the business.

Speaker Change: Right now, you know, we essentially have Bitcoin credit risk and as we look forward to 2025, you know, it's a much more stable credit risk business.

Speaker Change: And so, we feel very confident that there will be opportunities for us. Obviously, the $260 million conversion of the convertible notes, that's an incredible milestone for us as a company. We've almost cut our debt in half since emergence.

Adam: We've almost cut our debt in half since emerging, and we've cut our debt by over 60% since the beginning of the year. So we're in a process right now of making sure we're going to have the right securities on our balance sheet. There's not urgency around that. We feel very comfortable with where we are from a capital structure perspective today. But as we look forward, that perspective obviously changes, and so we're evaluating all opportunities that are available to us, and those opportunities are going to continue to expand as we start to see more of our sites come online.

Speaker Change: And we've cut our debt by over 60% since the beginning of the year. So, you know, we're in a process right now of making sure we are going to have the right securities on our balance sheet.

Adam Sullivan: There's not urgency around that. We feel very comfortable with where we're at from a capital structure perspective today. But as we look for, you know, that perspective obviously changes. And so, we were evaluating all opportunities that are available to us. And those opportunities are going to continue to expand as we start to see more of our sites come online.

Speaker Change: You know, there's not urgency around that. You know, we feel very comfortable with where we're at from a capital structure perspective today. But as we look forward, you know, that perspective obviously changes. And so we're evaluating all opportunities that are available to us.

Speaker Change: And those opportunities are going to continue to expand as we start to see more of our sites come online.

Lucas Pipes: Adam and team, I really appreciate it, and keep up the good work. Thank you, Lucas.

Lucas Pipes: Adam and the team, I really appreciate it, and keep up the good work.

Speaker Change: Adam and team, I really appreciate it and keep up the good work.

Joe Flynn: Our next question comes from Joe Flynn with Compass Point Research. Please say your question.

Adam: Thanks, Lucas.

Operator: Our next question comes from Joe Flynn with Compass Point Research. Please state your question.

Speaker Change: Our next question comes from Joe Flynn with CompassPoint Research. Please state your question.

Joe Flynn: Thanks for the question.

Joe Flynn: Hi guys, thanks for the question. I was hoping you could comment on the remaining options for the 112 megawatts of data center capacity. Just like what ultimately has to be achieved to get those signed, whether it be like finalizing designs or securing items in the supply chain. And could you maybe just count on continuing conversations with diversified and the customer base? Thanks.

Joe Flynn: I was hoping you could comment on the remaining options for the 112 megawatts of data center capacity. Just like what ultimately has been achieved to get those signed, whether it be like finalizing designs or, you know, securing items in the supply chain. And could you maybe just comment on, you know, continuing conversations with diverse right in the customer base? Thanks.

Speaker Change: i guys thanks for the question ho ing to comment on they remain options for the onehundredand twelve go lots of dat and expensity just like what ultimately has been achieved to get those signed but that would be like finalizeding designs or scurrying items in the spy chain

Speaker Change: And, uh, could you maybe just count on, you know, continuing conversations with Diverso at the customer base?

Adam Sullivan: Thanks for the question, Joe. What we're looking at today, and the one point I'll make a note on first is, you know, we're obviously very close to discussions with Coral Leave. You know, just recently exking 118 megawatts this week to another great milestone for us as a company. The next 112, we're working through finalized designs, working through all the necessary items related to that. And we're still in discussions with other clients. And I think that's really a key point here: is that all of the work we're doing to prepare and negotiate with Coral Leave on these last 118 megawatts.

Adam: Thanks for the question, Joe. What we're looking at today, and the one point I'll make a note on first is, you know, we're obviously in very close discussions with Corwave, recently executing 118 megawatts this week, which is another great milestone for us as a company. The next 112, working through finalized designs, working through all the necessary items related to that, and we're still in discussions with other clients. And I think that's really a key point here, that all of the work we're doing to prepare and negotiate with CoreWeave on these last 112 or 118 megawatts, you know, that all directly relates to the same type of design and diligence that would be required for us to sell that site to somebody else as well.

Speaker Change: Thanks for the question, Joe. What we're looking at today

Speaker Change: And the one point I'll make a note on first is, you know, we're obviously very close discussions with CoreWave, you know, just recently executing 118 megawatts this week, which is another great milestone for us as a company. The next 112, working through finalized designs, working through all the necessary items related to that.

Speaker Change: And we're still in discussions with other clients, and I think that's really a key point here, is that all of the work we're doing to prepare and negotiate with CoreWeave on these last 112 or 118 megawatts,

Adam Sullivan: You know, that all directly relates to the same type of design and diligence that would be required for us to sell that site to somebody else as well.

Speaker Change: That all directly relates to the same type of design and diligence that would be required for us to sell that site to somebody else as well.

Adam Sullivan: I think on the client diversification point, you know, that's really important. That's really why we're so focused on our site selection right now. We want to be able to make an offering to a number of clients who have differing needs, differing size needs, differing location needs. And those, and part of what we're going through right now is ensuring that we are building a portfolio that is attractive to these end clients. And so that's why we're very aggressively pursuing sites today. And that's going to provide us a really interesting opportunity for the remainder of this year to diversify our client piece, which is one of our key catalysts.

Adam: I think the client diversification point, you know, that's really important. That's really why we're so focused on our site selection right now. We wanna be able to make an offering to a number of clients who have differing needs, differing size needs, differing location needs. And part of what we're going through right now is ensuring that we are building a portfolio that is attractive to these end clients. And so that's why we're very aggressively pursuing sites today, and that's gonna give us a really interesting opportunity for the remainder of this year to diversify our client base, which is one of our key catalysts.

Speaker Change: I think on the client diversification point, you know, that's really important. That's really why we're so focused on our site selection right now. We want to be able to make an offering to a number of clients who have differing needs, differing size needs, differing location needs.

Speaker Change: And part of what we're going through right now is ensuring that we are building a portfolio that is attractive to these end clients. And so that's why we're very aggressively pursuing Snipes today. And that's going to provide us a really interesting opportunity for the remainder of this year.

Speaker Change: to diversify our client base, which is one of our key catalysts.

Joe Flynn: Thanks, that's helpful, and I was wondering if you could comment on reports about delays in Blackwell shipments, and ultimately, it sounds like the contract starts on delivery of the data center, but if that could ultimately impact timing of delivery. We're obviously

Joe Flynn: Thanks, that's helpful.

Joe Flynn: And it's one of the things coming on, you know, reports about delays in Blackwell shipments, and ultimately, it sounds like the contract starts on delivery of the DIT data center, but if that could ultimately impact timing of deliveries, thanks. We're obviously keeping a pulse on where Blackwell pods are in the delivery process. This is something that we're working very closely with our clients, and you've been potential clients on to ensure that we're delivering facilities alongside of schedules when there's going to be the deliveries of those GPUs.

Speaker Change: Thanks, that's helpful.

Speaker Change: I was wondering if you could comment on reports about delays in Blackwell shipments and ultimately it sounds like the contract starts on delivery of the debt data center, but if that could ultimately impact timing of deliveries.

Adam: We're obviously keeping a pulse on where Blackwell pods are in the delivery process. This is something that we're working very closely with our end clients and even potential clients to ensure that we're delivering facilities alongside schedules of when there are going to be deliveries of those GPUs. So it's hard to comment today about where the deliveries will end up in 2025 and 2026. And really, right now, we're focused on continuing to execute and deliver these facilities as quickly as we possibly can for our end clients to have the optionality to turn on as quickly as those GPUs are delivered.

Speaker Change: Thanks.

Speaker Change: We're obviously keeping a pulse on where Blackwell pods are in the delivery process. This is something that we're working very closely with our end clients and even potential clients on to ensure that we have...

Speaker Change: We're delivering facilities alongside of schedules of when there's going to be the deliveries of those GPUs.

Adam Sullivan: So it's hard to comment today about where the deliveries will end up in 2025 and 2026. And really right now, we're focused on continuing to execute and deliver these facilities as quickly as we possibly can for our clients to have the optionality to turn on as quickly as those GPUs are delivered.

Speaker Change: So, it's hard to comment today about where the deliveries will end up in 2025 and 2026. And really, right now, we're focused on continuing to execute and deliver these facilities as quickly as we possibly can for our end clients to have the optionality to turn on as quickly as those GPs are delivered.

Joe Flynn: Thanks for all the guard.

Speaker Change: Thanks for all the glory.

Brett Noblock: Our next question comes from Brett Noblock with Cantor Fitzgerald.

Operator: The next question comes from Brett Knoblock with Cantor Fitzgerald.

Speaker Change: Our next question comes from Brett Knobloch

Brett Noblock: Please do your question. Thanks for taking my question. Maybe to start on sourcing new sites and locations. Can you maybe just provide some color on the supply and demand and balances out there for energy, and I guess what you're seeing in terms of not competition for the same sites, but going out and adding additional sites? You have to have a view that HPC demand is only going to continue to increase. So I guess health tight is the market out there. I don't know if you can quantify it or anything qualitative would be helpful, but I guess health tight is the market out there for power.

Brett Knoblock: All right, guys, thanks for taking my question. Maybe to start off, sourcing new sites and locations, I guess, can you maybe just provide some color on the supply and demand imbalances out there for energy and, I guess, what you're seeing in terms of... Not competition for the same sites, but going out and adding additional sites, you have to have a view that HPC demand is only going to continue to increase. So I guess how tight is the market out there? I don't know if you can quantify it, or anything qualitative would be helpful, but I guess how tight is the market out there for power?

Brett Knobloch: Hi, guys. Thanks for taking my question. Maybe to start on...

Speaker Change: sourcing new sites and locations, I guess can you maybe just provide some color on the supply and demand imbalances out there for energy and I guess what you're seeing in terms of

Speaker Change: not competition for the same sites, but going out and adding additional sites, you have to have a view that HPC demand is only going to continue to increase.

Speaker Change: So I guess, how tight is the market out there? I don't know if you can quantify it or anything qualitative would be helpful, but I guess how tight is the market out there for power?

Adam Sullivan: Thanks, Brett.

Adam: Thanks, Brent. You know, the market right now is tight, and it's requiring, I would say, expertise in the site selection process. You know, the interesting part about the process we've gone through over the past seven years, locating sites for Bitcoin mining, is that we're using a very similar criteria in terms of what we're looking for on the HPC. So we've been able to locate sites, and we're in the process of working through those negotiations on sites that will provide us with, or that are, I would say, a more interesting opportunity for us from a pricing perspective because it is competitive.

Adam Sullivan: You know, the market right now is tight and it's requiring, I would say, expert expertise in the site selection process. You know, the interesting part about the process we've gone through over the past seven years locating sites for Bitcoin mining is reusing a very similar criteria in terms of what we're looking for on the HPC site. So we've been able to locate sites, and we're in the process of working through those negotiations on sites that will provide us, you know, or that are, I would say, a more interesting opportunity for us from a pricing perspective because it is competitive.

Speaker Change: Thanks Brent. You know the market right now is tight and it's requiring

Speaker Change: I would say, expertise in the site selection process.

Adam: On these large sites, even behind the meter, that's another part that is extraordinarily competitive today amongst the hyperscalers. And so those are some processes that we're involved in, but they aren't necessarily the main focus of our site selection. We're looking at a range of different sites, a range of different states of those sites, and I think that's really gonna provide us with the greatest amount of value here. And that's really just given our experience working with utilities, working with local governments, and all of those things over the past seven years that we've worked on the Bitcoin mining side are helping us greatly in this process that we're going through on the HPC side.

Speaker Change: You know, the interesting part about the process we've gone through over the past seven years locating sites for Bitcoin mining is we're using a very similar criteria in terms of what we're looking for on the HPC side.

Speaker Change: So we've been able to locate sites and we're in the process of working through those negotiations on sites that

Speaker Change: will provide us you know or that are I would say a more interesting opportunity for us from a pricing perspective because it is competitive you know on these large sites you know even on behind the meter that's another part that is extraordinarily competitive today amongst the hyperscalers.

Adam Sullivan: You know, on these large sites, you know, even on behind the meter, that's another part that is extraordinarily competitive today amongst the hyperscalers. And so, you know, those are some processes that were involved in, but isn't necessarily the main focus for our site selection. We're looking at a range of different sites, a range of different states of those sites, and I think that's really going to provide us the most amount of value here. And that's really just given our experience working with utilities, working with local governments. And all of those things over the past seven years that we've worked through on the Bitcoin mine side are eating us greatly in this process, and we're going through on the HPC side.

Speaker Change: And so those are some processes that we're involved in, but isn't necessarily the main focus for our site selection. We're looking at a range of different sites, a range of different states of those sites.

Speaker Change: And I think that's really going to provide us the most amount of value here. And that's really just given our experience working with utilities, working with local governments. And all of those things over the past seven years that we've worked on the Bitcoin mine side are leading us greatly in this process that we're going through on the HPC side.

Brett Noblock: Perfect, now that's helpful.

Brett Knoblock: And then, I guess when you talk about different locations and regions across the U.S., are you looking at a site with, you know, I guess thinking, this site could be used for training or this site could be used for inferencing, or is it all one of the same for you guys? Are you like primarily looking at maybe sites with maybe very low one, two millisecond latency?

Brett Noblock: And then I guess when you talk about different locations and reasons across the US, are you looking at a site with, you know, I guess thinking this site could be used for training or this site could be used for inferencing, or is it all one of the things where you guys, or are you, like, primarily looking at it? You're, like, very low one, two millisecond late and two sites. Our focus is mainly on low latency sites.

Speaker Change: And then, I guess when you talk about different locations and regions across the U.S., are you looking at a site with, you know, I guess thinking this site could be used for training or this site could be used for inferencing or is it all one of the same?

Speaker Change: for you guys, or are you like primarily looking at maybe like very low one to millisecond latency sites?

Adam: Our focus is mainly on low-latency sites. What we're seeing right now is a pretty major shift, or we believe there's going to be a major shift going on in training versus inference over the next few years. And so when we are locating sites, we want to ensure that they have the opportunity to do both. We think that's important not only for the longevity of the site but also for the longevity of the client's health as well, having the optionality to switch between either application that they're utilizing the site for.

Speaker Change: Our focus is mainly on low latency sites. What we're seeing right now is a pretty major shift or we believe there's going to be a major shift going on in training versus inference over the next few years.

Brett Noblock: What we're seeing right now is a pretty major shift, or we believe there's going to be a major shift going on in training versus inference over the next few years. And so when we are locating sites, we want to ensure that they have the opportunity to do both. We think that's important not only for the longevity of the site, but also for the longevity of the client health as well. Having the optionality to switch between either application that they're utilizing the site for. Awesome. Perfect. Thank you. I really appreciate it.

Speaker Change: And so, when we are locating sites, we want to ensure that they have the opportunity to do both. We think that's important, not only for the longevity of the site, but also for the longevity of the client's health as well, having the optionality to switch between either application that they're utilizing the site for.

Brett Knoblock: Awesome. Perfect. Thank you, guys. I really appreciate it.

Speaker Change: awsome perfect thank yyou log ically appreciate it

Brett Noblock: Thanks, Brett.

Joseph Vafi: Our next question comes from Joseph Vafi with Canon Core Genuity. Please state your question. Hey, everyone. Good afternoon. Nice to see all the progress, and thanks for taking my questions. I guess first one is, you know, on Austin, you're generating HPC-related revenue there now. I know it's still early days in this journey, but the interesting if you could share some of your learnings to date out of that facility in this new line of business. And, you know, potentially what and how it may be kind of helping you plan and get ready for larger deployments, and then all the quick follow-up.

Brett Knobloch: Thanks, Brett.

Operator: Our next question comes from Joseph Vathy with Canon Core Genuity. Please state your question.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Joseph Vathy with Canon Core Genuity. Please state your question.

Joseph Vathy: Hey, everyone. Good afternoon.

Joseph Vathy: Nice to see all the progress, and thanks for taking my questions. I guess the first one is, you know, Austin; you're generating HPC-related revenue there now. I know it's still early days in this journey, but it would be interesting if you could share some of your learnings to date out of that facility in this new line of business and, you know, potentially what and how it may be kind of helping you plan and get ready for larger deployments. And then I'll have a quick follow-up.

Joseph Vathy: everyone good afternoon like to see all the progress and thanks for taking my questions i guess first one is you know on austin you're generating h pc related revenue there now i know it's still early days

Speaker Change: in this journey but you interesting if you could share some of your learnings date out of that facility in this new line of business

Speaker Change: and potentially what and how it may be kind of helping you plan and get ready for larger deployments. And then I'll have a quick follow-up.

Joseph Vafi: Perfect. Thanks, Joe.

Adam: Perfect. Thanks, Joe.

Adam Sullivan: The interesting part about our team is many of our team members actually sat in this facility when they worked for HP. This exact facility sitting very similar places in the office. So we have high familiarity with this site. You know, some of the learnings that were that were going through. I would say both on the client side as well as on the newest generation of GPs that are coming out. You know, some of those requirements are different than this historical data centers that have been developed over the course of the past 20 years. And we've been integral in the design process and working with not only our own client, but also in video on what the design is of these facilities.

Joseph Vathy: The interesting part about our team is that many of our team members actually sat in this facility when they worked for HP, this exact facility, in very similar positions in the office. So we had high familiarity with this site. Some of the learnings that we're going through, I would say, both on the client side as well as on the newest generation of GPUs that are coming out. Some of those requirements are different from the historical data centers that have been developed over the course of the past 20 years, and we've been integral in the design process and working with not only our end client but also NVIDIA on what the design of these facilities is, and that's aiding us in the process as we work through the designs on the future conversions that we're working on today, the next 382 megawatts.

jehely: purfect thanks jehely

Speaker Change: The interesting part about our team is many of our team members actually sat in this facility when they worked for HP. This exact facility, sit in very similar places in the office, so we had high familiarity with this site.

Speaker Change: Some of the learnings that we're going through, I would say, both on the client side as well as on the newest generation of GPUs that are coming out.

Joseph Vathy: Some of those requirements are different than the historical data centers that have been developed over the course of the past 20 years.

Joseph Vathy: And we've been integral in the design process and working with not only our end client, but also NVIDIA on what the design is of these facilities.

Adam Sullivan: And that's eating us in the process as we work through the designs on the future conversions that we're working on today, the next 382 megawatts. So you're absolutely right that there are learnings with these with this newest generation of GPUs, both from a cooling perspective as well as a latency perspective, and all of those things are going to eat us in this conversion process going forward.

Joseph Vathy: And that's aiding us in the process as we work through the designs on the future conversions that we're working on today, the next 382 megawatts.

Joseph Vathy: So you're absolutely right. There are learnings with this latest generation of GPUs, both from a cooling perspective as well as a latency perspective, and all of those things are going to aid us in this conversion process going forward.

Speaker Change: So, you're absolutely right, there are learnings with this newest generation of GPUs, both from a cooling perspective as well as a latency perspective, and all of those things are going to aid us in this conversion process going forward.

Joseph Vafi: Great.

Joseph Vathy: Great! That's a good color.

Adam Sullivan: That's good color. And then if you also, I know it's early days here on the block, three nanometer chipset. But maybe you could remind us here on why you find these attractive. I mean, they're clearly a lot of good minor solutions in the market. And maybe a quick hint into how you see them performing relative to the rest of your fleet when they're deployed. Thanks a lot.

Speaker Change: Great, that's a good color, and then...

Joseph Vathy: I know it's early days here on the block three nanometer chip set, but maybe you could remind us here on why you find these attractive. I mean, there's clearly a lot of good, you know, minor solutions in the market and, you know, maybe, you know, a quick hint into how you see them performing, you know, relative to the rest of your fleet when they're deployed.

Speaker Change: if you also i know it's early dates here on the block three nanometerchipsets

Adam: Thanks a lot.

Speaker Change: But maybe you could remind us here on, you know, why you find these attractive. I mean, there's clearly a lot of good...

Speaker Change: minor solutions in the market and maybe a quick hint how you see them performing relative to the rest of your pleet when they'redeployed thanksful lot

Adam Sullivan: You know, our objective is to build our future facilities with lower cap acts have lower maintenance costs. And we're really focused on developing the next generation of Bitcoin mining infrastructure. And so, as we were evaluating the type of opportunities that were in the market, we realized it was much easier to design a facility around a hash board than it was to design a facility around a machine. And so, as we look forward to what the future of Bitcoin mining looks like, we recognize that form factors were going to continue to evolve over time. And we're going to be at the forefront of that evolution.

Adam: You know, our objective is to build our future facilities with lower CapEx, have lower maintenance costs, and we're really focused on developing the next generation of Bitcoin mining. And so as we were evaluating the type of opportunities that were in the market, we realized it was much easier to design a facility around a hashboard than it was to design a facility around a machine. And so as we look forward to what the future of Bitcoin mining looks like, we recognize that form factors are gonna continue to evolve over time, and we're gonna be at the forefront of that evolution.

Speaker Change: Our objective is to build our future facilities with lower CapEx, have lower maintenance costs, and we're really focused on developing the next generation of Bitcoin mining infrastructure.

Speaker Change: And so as we were evaluating the type of opportunities that were in the market.

Speaker Change: We realized it was much easier to design a facility around a hashboard than it was to design a facility around a machine.

Speaker Change: And so as we look forward to what the future of Bitcoin mining looks like, we recognize that form factors are going to continue to evolve over time, and we're going to be at the forefront of that evolution.

Adam Sullivan: And that's something very unique to Core Scientific. We've operated over 16 different manufacturers in our facilities, over 700 thousand machines. That provides us very unique insight into not only the operational process for machines, but also the repair process. Our repair center would be one of the largest repair centers in the country if we were just a repair business. And so that's something that's very unique to our business. We have a very unique insight, and we're trying to be on the forefront of this industry. And I think people are going to be fast followers to where we're going right now.

Adam: And that's something very unique to Core Scientific. We have operated more than 16 different manufacturers in our facilities, over 700,000 machines. That provides us with very unique insight into not only the operational process for machines but also the repair process. Our repair center would be one of the largest repair centers in the country if we were just a repair business. And so that's something that's very unique to our business. We have a very unique insight, and you know, we're trying to be on the forefront of this industry. And I think people are gonna be fast followers to where we're going right now.

Speaker Change: And that's something very unique to Core Scientific. We've operated over 16 different manufacturers in our facilities, over 700,000 machines.

Speaker Change: That provides us very unique insight into not only the operational process for machines, but also the repair process. Our repair center would be one of the largest repair centers in the country if we were just a repair business.

Speaker Change: And so that's something that's very unique to our business. We have a very unique insight, and we're trying to be on the forefront of this industry. And I think people are going to be fast followers to where we're going right now.

Joseph Vathy: Great. Thanks for those comments, Adam.

Speaker Change: Great. Thanks for those comments, Adam.

Darren Aftahi: Our next question comes from Darren Aftahi with Ross Capital Partners. Please see your question. Yeah, thanks for seeing my questions. First, I guess just diving into site selection a little bit more. You talk a little bit about your source of referral in these local governments and utilities, but I'm curious about that. And then, will you guys ever look at maybe sub-scale legacy data centers as an option? And I'm also curious if this is primarily domestic exercise, or if you guys would look international well. Most of them. The way we look at it right now is there's really two avenues for growth.

Operator: Our next question comes from Darren Avtahi with Roth Capital Partners. Please state your question.

Speaker Change: i shot

Speaker Change: Our next question comes from Darren Avtahi with Roth Capital Partners. Please state your question.

Darren Avtahi: Thanks for taking my questions. First, I guess, just diving into site selection a little bit more. You talk a little bit about your source of referrals, and you said local governments and utilities, but I'm curious about that. And then would you guys ever look at maybe subscale legacy data centers as an option? And I'm also curious if this is primarily a domestic exercise, or if you guys would look international as well.

Darren Avtahi: Yeah, thanks for taking my questions. First, I guess...

Darren Avtahi: Just diving into site selection a little bit more.

Darren Avtahi: Can you talk a little bit about your source of referral, I know you said local governments and utilities, but I'm.

Darren Avtahi: I'm curious about that, and then would you guys ever look at maybe subscale legacy data centers as an option, and I'm also curious if this is primarily domestic exercise, or if you guys would look international as well.

Adam: The way we look at it right now is that there are really two avenues for growth. One is brownfield and greenfield opportunities. The second is something that you mentioned, subscale data centers. I'm going to touch on the second one first here.

Speaker Change: m one

Speaker Change: The way we look at it right now is there's really two avenues for growth. One is brownfield and greenfield opportunities. The second is something that you mentioned, the subscale data centers. I'm going to touch on the second one first here.

Darren Aftahi: One is brownfield and greenfield opportunities. The second is something that you mentioned: the sub-scale data centers.

Adam Sullivan: I'm going to touch on the second one first year. We have been looking at a number of different data center opportunities similar to the deal that we did in Hivitz. I think going forward, one of the things that we're looking at more closely is acquiring those sites and finding data centers that have access megawatt capacity on the substation that will allow us to continue to increase the capacity of that facility, just given that powered entities have increased so rapidly. We have an opportunity to bring a lot more megawatts into a traditional data center. And so that's something that's very attractive to us right now, given our experience already retrofitting existing data centers.

Adam: We have been looking at a number of different existing data center opportunities similar to the deal that we did in Hibbets. I think going forward, one of the things that we're looking at more closely is acquiring those sites and finding data centers that have excess megawatt capacity on the substation that will allow us to continue to increase the capacity of that facility. Just given that power densities have increased so rapidly, we have an opportunity to bring a lot more megawatts into a traditional data center, and so that's something that's very attractive to us right now, given our experience already retrofitting existing data centers.

Speaker Change: We have been looking at a number of different existing data center opportunities similar to the deal that we did in Hibbitts.

Speaker Change: I think going forward, one of the things that we're looking at more closely is acquiring those sites and finding data centers that have excess megawatt capacity on the substation that will allow us to continue to increase the capacity of that facility.

Speaker Change: Just given that power densities have increased so rapidly We have an opportunity to bring a lot more megawatts into a traditional data center And so that's something that's very attractive to us right now given our experience already retrofitting existing data centers

Adam: You know, when we talk about working closely with utilities and local governments, that's just something that we've done over the past seven years on the Bitcoin mining side. And we've formed very close relationships with all of our utilities. And we think that's really important. I would say, over the past seven years, Bitcoin mining has come in and out of favor with governments and with local communities.

Adam Sullivan: When we talk about working closely with utilities, local governments, that's just something that we've done over the past seven years in the Bitcoin mining side. And we've formed very close relationships with all of our utilities. And we think that's really important. I would say over the past seven years, Bitcoin mining has come in and out of favor with governments, with local communities. And really one of the things that we've tried to highlight is that we try to be great community citizens in every jurisdiction that we operate in. We try to be great partners to our utility companies.

Speaker Change: when we talk about working closely with utilities local governments that's just something that we've done over the past seven years in the bitcoin mining side and we've formed very close relationships with all of our utilities and we think that's really important

Speaker Change: I would say over the past seven years, Bitcoin mining has come in and out of favor with governments, with local communities. And really one of the things that we've tried to highlight is that we try to be great.

Adam: And really, one of the things that we've tried to highlight is that, you know, we try to be great community citizens in every jurisdiction that we operate in. We try to be great partners to our utility companies. And all that has paid dividends as we've started to make the shift into HPC and we look towards expansion. That's something that's opened a lot of doors for us, just given how good of an operator and how good of a community citizen we've been in each of our locations.

Speaker Change: community citizens in every jurisdiction that we operate in. We try to be great partners to our utility companies.

Darren Aftahi: And all that has paid dividends as we've started to make the shift from the HPC, and we look towards expansion. That's something that's opened a lot of doors for us, just given how good of an operator and how good of a community citizen we've been in each of our locations. Great.

Speaker Change: And all of that has paid dividends as we've started to make the shift into HPC, and we look towards expansion, that's something that's opened a lot of doors for us, just given how good of an operator and how good of a community citizen we've been in each of our locations.

Darren Avtahi: And then just as a follow-up, on the timeline you guys laid out on slide 15, I'm just kind of curious. Obviously, you laid it out there, so you'd feel confident in it, but if there was to be slippage in that, is there any... penalty to Core Scientific if you don't hit those bogeymen. This is something we're

Adam Sullivan: And then just as a follow-up, on the time mining guys laid out on slide 15, I'm just kind of curious. Obviously, you laid out their seat-go-conference. But if there was to be slippage in that, is there any penalty to Core Scientific if you don't hit those bogus? Thanks. This is something where we work very closely with core on the timelines. We share in our execution risk in terms of getting the facilities and the materials on the site as quickly as we possibly can. So it's less of an issue from a perspective of penalties. It's more of an issue of us ensuring that working together with core we were able to source all of the necessary items. But we've worked really hard to ensure that we not only have our plan A on supply chain, but also a plan B and a plan C.

Speaker Change: Great, and then just as a follow-up, on the timeline you guys laid out on slide 15, I'm just kind of curious, obviously you laid it out there so you feel confident in it, but if there was to be slippage in that, is there any...

Speaker Change: penalty to Core Scientific if you don't hit those those bogeys. Thanks.

Adam: This is something we work very closely with CoreWeave on the timelines, and we share in our execution risk in terms of getting the facilities and the materials on the site as quickly as we possibly can. So it's less of an issue from the perspective of penalties. It's more of an issue of us ensuring that, working together with CoreWeave, we're able to source all of the necessary items. But we've worked really hard to ensure that we not only have our plan A for the supply chain, but also a plan B and a plan C. And so we have all of those lined up, and I think we're excited and confident in the timelines that we've laid out today.

Speaker Change: This is something where we work very closely with CoreWeave on the timelines. We share in our execution risk in terms of getting the facilities and the materials on the site as quickly as we possibly can.

Speaker Change: so it's less of an issue from a perspective of penalties it's more of an issue of us ensuring that working together with cory wewere able to we're able to source all of the necessary items

Speaker Change: But we've worked really hard to ensure that we not only have our plan A on supply chain, but also a plan B and a plan C. And so we have all those lined up and I think we're excited and confident in the timelines that we've laid out today.

Operator: And so we have all those lined up. And we're, I think we're excited and confident in the timelines that we've laid out today. Thanks.

Operator: Thanks, Dan. and a reminder to our audience to ask a question at this time. Press star one on your telephone keypad. To remove yourself from the queue, press star two. Once again, to ask a question, press star one.

Speaker Change: Thanks.

Operator: And a reminder to our audience, to ask a question at this time, press star 1 on your telephone keypad. To remove yourself from the queue, press star 2. Once again, to ask a question, press star 1. Our next question comes from Rosemary Sisson with Odeon Capital. Please state your question.

Turner: Thanks, Turner.

Speaker Change: And a reminder to our audience to ask a question at this time press star 1 on your telephone keypad

Speaker Change: To remove yourself from the queue, press star 2. Once again, to ask a question, press star 1.

Rosemarie Sison: Our next question comes from Rosemarie Sison with Odian Capital. Please state your question. Yes, hello everyone, and thank you for taking the calls. Just had one thought on your expansion, which sounds really interesting from the HPCID with idea with Brownfield and Greedfield expansion. The question comes to mind that I'm just curious as to whether you feel that you have enough infrastructure in your current state to be able to support that. It sounds like it would take a lot of people with expertise in order to effectuate that kind of strategy. I don't know; I think the other caller asked something about whether you might be thinking about going globally or not.

Turner: Our next question comes from Rosemary Sisson with Odeon Capital. Please state your question.

Rosemary Sisson: Hello everyone, and thank you for taking the calls. I just had one thought on your expansion, which sounds really interesting from the HPC ID idea with Brownfield and Greenfield expansion. The question comes to mind that I'm just curious as to whether you feel that you have enough infrastructure in your current state to be able to support that. It sounds like it would take a lot of people with expertise in order to. I think the other caller asked something about whether you might be thinking about going global or not.

Rosemary Sisson: yeshello everyone and thank you for taking the calls just had once one thought on your expansion which sounds really interesting from the the hpc iid with idea with them

Rosemary Sisson: Brownfield and Greenfield expansion. The question comes to mind is that I'm just curious as to whether you feel that you have enough infrastructure in your current state to be able to support that. It sounds like it would take a lot of people with expertise in order to support that.

Speaker Change: afeffectate that kind of a strategy and i don't know i think the other color as something about whether you might be thinking about going loally or not youdidn't address that some' assuming no but you know just the question arises can you in first of all your expertise in the house is theyvery important to keep and to keep happy but also you know how do you look at expanding that in order to facilitate your growth

Rosemarie Sison: You didn't address that, so I'm assuming no. But the question arises: can you, first of all, your expertise in the house is very important to keep and to keep happy, but also how do you look at expanding that in order to facilitate your growth? Thanks for the question, Rosemarie. And just for the national opportunities as well, it's not just domestically. But as we look at our team today, we're set up to execute on additional projects in 2025 and 2026 above what is currently contracted. So we feel very confident in that. Now, that doesn't mean that we're not looking to add a very specific talent to our bench.

Rosemary Sisson: You didn't address that, so I'm assuming no, but the question arises, first of all, your expertise in-house is very important to keep and keep happy, but also, how do you look at expanding that in order to facilitate your growth?

Adam: Thanks for the question, Rosemary. And just to go back, we are looking at international opportunities as well. It's not just domestically. But as we look at our team today, we're set up to execute on additional projects in 2025 and 2026 above what is currently contracted. So we feel very confident in that. Now, that doesn't mean that we're not looking to add very specific talent to our bench. And so that's the process that we're going through today.

Speaker Change: But as we look at our team today, we're set up to execute on additional projects in 2025 and 2026 above what is currently contracted. So we feel very confident in that.

Speaker Change: Now, that doesn't mean that we're not looking to add, you know, very specific talent to our bench.

Adam Sullivan: And so that's a process that we're going through today. And what we've been very lucky in is the fact that we have a great story right now. We're from the leading edge of both Bitcoin mining and HPC infrastructure, two of the highest growth industries in America right now. And so we've been very fortunate to be able to attract talent to our company, who want to be a part of our story. And so that's something that we've been, we've been finding it, I would say, easier to attract talent to the company. And it's something that really excites us is the fact that we've been able to add additional bench strength, even over the course of the past three months.

Adam: And what we're very lucky about is the fact that we have a great story right now. We're on the leading edge of both Bitcoin mining and HPC infrastructure, two of the highest growth industries in America right now. And so we've been very fortunate to be able to attract talent to our company who want to be a part of our story. And so that's something that we've been finding it, I would say, easier to attract talent to the company.

Turner: And so that's a process that we're going through today. And what we've been very lucky in is the fact that we have a great story right now. We're on the leading edge of both Bitcoin mining and HPC infrastructure, two of the highest growth industries in America right now.

Turner: And so we've been very fortunate to be able to attract talent to our company who want to be a part of our story.

Adam: And it's something that really excites us the fact that we've been able to add additional bench strength, even over the course of the past three months, to help aid in the execution process, not only in the first 382, but also in the future sites that we're looking to acquire.

Turner: And so that's something that we've been finding, I would say, easier to attract talent to the company.

Speaker Change: and it's something that really excites us is the fact that we've been able toadditionalben strength even over the course of the p three months just help aid in the execution process not only in the first three eighty two but also in the future it that we're looking to acquire

Adam Sullivan: Just help aid in the execution process, not only in the first 382, but also in the future sites that we're looking to acquire.

Rosemarie Sison: That's great.

Rosemary Sisson: That's great. Thank you. And internationally, where would you think about expanding?

Rosemarie Sison: Thank you.

Adam Sullivan: And internationally, where would you think about expanding? Our objective right now is to work with the potential clients that we're negotiating with domestically to locate in areas where they'll find, or they have a track of opportunities for themselves with their end customers. So it's hard to speculate on where we may go. But we're looking at a number of international markets that we think will be very attractive long-term, not only for existing potential clients that we've learned discussions with, but also attracting and finding new potential clients as well.

Speaker Change: That's great. Thank you. And internationally, where would you think about expanding?

Adam: Our objective right now is to work with the potential clients that we're negotiating with domestically to locate in areas where, you know, they'll find or they have attractive opportunities for themselves with their end customers. So it's hard to speculate on where we may go, but we're looking at a number of international markets that we think will be very attractive long-term, not only for existing potential clients that we're in discussions with but also for attracting and finding new potential clients as well. Okay.

Speaker Change: Our objective right now is to work with the potential clients that we're negotiating with domestically to locate in areas where you know they'll find that or they have a attractive opportunities for themselves with their end customers.

Rosemary Sisson: Thank you very much.

Turner: So it's hard to speculate on where we may go, but we're looking at a number of international markets that we think will be very attractive long term, not only for existing potential clients that we were in discussions with, but also attracting and finding new potential clients as well.

Rosemarie Sison: Okay. Thank you very much. Thank you, Rosemary.

Speaker Change: Okay, thank you very much.

Rosemary Sisson: Thanks, Rosemary.

Kevin Dede: Our next question comes from Kevin Deed with H.C. Wainwright, please take your question.

Operator: Our next question comes from Kevin Deed with HC Wainwright. Please state your name.

Speaker Change: Our next question comes from Kevin Deed with HC Wainwright. Please state your question.

Kevin Dede: Hi, Adam. Thanks for having me. Hi, Denise.

Kevin Deed: Hi Adam. Thanks for having me. Hi Denise.

Kevin Deed: Hi, Adam. Thanks for having me. Hi, Denise. I'm not sure that you really peeled back the onion on...

Adam Sullivan: I'm not sure that you really the locations that you're working to convert. And I understand the first, you know, well, actually it's a second 200 megawatt extension with Core. You committed 80 megawatts to power that. I was wondering if you could offer a little detail on location and additional power you might need in support of HPC. Thanks, Kevin.

Kevin Deed: I'm not sure that you've peeled back the onion on the locations that you're working to convert. And I understand the first, you know, well, actually, it's a second 200, extension with core, you committed 80 megawatts to power that. I was wondering if you could offer a little detail on the location and additional power you might need in support of HPE.

Speaker Change: the locations that you're working to convert.

Speaker Change: And I understand the first, you know, well actually it's a second 200 megawatt extension with core. You committed 80 megawatts to power that.

Speaker Change: I was wondering if you could offer a little detail on location and additional power you might need in support of HPC.

Adam: One of the points I want to emphasize first is that there is a competitive advantage for us right now. We're leading the market in terms of contracts signed this year for HPC and AI, and we're looking at potential expansion opportunities at some of our sites as well. So, where we believe we have a competitive advantage, we're not necessarily trying to give that edge away. And so, we're working diligently with local utilities.

Adam Sullivan: One of the points I want to emphasize versus, you know, there's a competitive advantage for us right now. You know, we're leading the market in terms of contracts signed this year for HPC for AI. And we're looking at potential expansion opportunities at some of our sites as well. So where we believe we have a competitive advantage, we're not necessarily trying to give that edge away. And so we're working diligently with local utilities. We're also looking at potential expansions within the markets. We're currently in as well, given the existing relationships that we have. So, you know, we feel like we're in a very good position.

Kevin Deed: Thanks, Kevin.

Speaker Change: One of the points I want to emphasize first is there's competitive advantage for us right now.

Speaker Change: You know, we're leading the market in terms of contract signed this year for HPC for AI.

Speaker Change: And we're looking at potential expansion opportunities at some of our sites as well.

Speaker Change: So where we believe we have a competitive advantage, we're not necessarily trying to give that edge away.

Speaker Change: And so we're working diligently with local utilities.

Adam: We're also looking at potential expansions within the markets we're currently in as well, given the existing relationships that we have. So, you know, we feel like we're in a very good position. And when the time's right, it's hard to speculate on when, but we will be announcing the locations of the places that we are converting from Bitcoin mining to HPC.

Speaker Change: We're also looking at potential expansions within the markets we're currently in as well, given the existing relationships that we have.

Adam Sullivan: And when the time's right, it's hard to speculate on when, but we will be announcing the locations of the places that we are converting from Bitcoin mining to HPC. And the power required to supplement the additional contract extensions that you've announced since the second one, I guess, the best way to phrase it, Adam, is there any more detail on that you could offer? Kevin, I just want to make sure I understand the question. You're just saying what the total, the total power necessary to service the additional 112 and the additional 70? Exactly. Yeah. I would assume that the 16 is all in Austin is all set.

Speaker Change: so we feel like we're a very good position and when the times right and it's hard to speculate on when but we will be announcing the locations of the places that we are converting from bitick when min two hpc

Kevin Deed: And the power required to supplement the additional contract extensions that you've announced since the The second one, I guess the best way to phrase it, Adam. Is there any more detail on that you could offer?

Speaker Change: And the power required to supplement the additional contract extensions that you've announced since the

Kevin Deed: The second one, I guess, is the best way to phrase it, Adam. Is there any more detail on that you could offer?

Kevin Deed: Kevin, I just want to make sure I understand the question. You're just saying what the total power necessary to service the additional 112 and the additional 70?

Kevin Deed: Yeah, I would assume that the 16 is all in Austin is all set. You don't need additional power there. But in developing these other locations, obviously, you're going to need the power to support them.

Kevin Deed: Exactly, yeah. I would assume that the 16 in Austin is all set, you don't need additional power there. But in developing these other locations, obviously you're going to need the power to support them.

Adam Sullivan: You don't need additional power there. But in developing these other locations, obviously, you're going to need the power to support them. Yeah, a great way to think about that is when we talked about in our investor day about the 700 megawatts needed to service the 500 megawatts to the GPUs. So, a great way to think about it is about a 1.35 to 1.4 PUE that's necessary above what's contracted from a GPU megawatts perspective. And so, if you're trying to calculate, you know, kind of back-of-the-envelope math in terms of what the total megawatt need is. And that's a great metric to use, kind of multiplying the number by 1.35 to 1.4, depending on the location.

Adam: Yeah, a great way to think about that is when we talked about, on our investor day, about the 700 megawatts needed to service the 500 megawatts to the GPUs. So a great way to think about it is about a 1.35 to 1.4 PUE that's necessary above what's contracted from a GPU megawatt perspective. And so if you're trying to calculate, you know, kind of back of the envelope math in terms of what the total megawatt need is, that's a great metric to use, kind of multiplying the number by 1.35 to 1.4, depending on the location.

Kevin Deed: Yeah, a great way to think about that is when we talked about

Speaker Change: In our investor day about the 700 megawatts needed to service the 500 megawatts to the GPUs

Speaker Change: So a great way to think about it is about a 1.35 to 1.4 PUE that's necessary above.

Speaker Change: what's contracted from a GPU megawatts perspective. And so, if you're trying to calculate, you know, kind of back the envelope math in terms of what the total megawatt need is, that's a great metric to use, kind of multiplying the number by 1.35 to 1.4, depending on the location.

Kevin Dede: Okay, fair enough.

Kevin Deed: Okay, fair enough. Thank you. What sort of trends have you seen, and what would be fair to expect?

Denise Sterling: Thank you. Could Denise or yourself help me with understanding the cash generated from the warrant conversion? What sort of trends have you seen, and what would be fair to expect? Yeah, you know, Kevin.

Speaker Change: Okay, fair enough. Thank you.

Speaker Change: Could Denise or yourself help me with understanding the cash generated from the warrant conversion?

Speaker Change: What sort of trends have you seen and what would be fair to expect?

Adam: Thank you for the question, Kevin. We saw a very minimal impact on Q2 from the actual exercise of our tranche one warrants. And so you'll actually be able to see that coming through from a balance sheet perspective. But we've actually, in the last several weeks, seen the conversion of about $35 million of our tranche two warrants. And as you'll remember, those are penny shares, so there has been no significant cash flow. So we really haven't seen the $670 million that we talked about associated with our tranche one warrants to date. But we do have some movement, and we will continue to see some of those roll in, but they're not significant as yet.

Denise Sterling: So, thank you for the question, Kevin. You know, we saw a very minimal impact to Q2 from the actual exercise of our tranche 1 warrant. And so, you know, you'll actually be able to see that, you know, coming through from a balance sheet perspective. But we actually have, we've actually, in the last several weeks, seen the conversion of about 35 million of our tranche 2 warrants. And you'll remember, those are penny shares. So, no significant cash flow. So, we really haven't seen the 670 million that we talked about associated with our tranche 1 warrants to date.

Speaker Change: Thank you for the question, Kevin. We saw a very minimal impact to Q2 from the actual exercise of our tranche 1 warrants.

Speaker Change: And so, you know, you'll actually be able to see that, you know, coming through from a balance sheet perspective. But we actually have, we've actually in the last several weeks.

Speaker Change: Seeing the conversion of about 35 million of our tranche 2 warrants and you'll remember those are penny shares

Speaker Change: So, no significant cash flow, so we really haven't seen the $670 million that we talked about associated with our Tranche 1 warrants to date, but we do have some movement and we will continue to see some of those roll in, but they're not significant as of yet.

Denise Sterling: But we do have some movement, and we will continue to see some of those roll in, but they're not significant as of yet. Okay, okay. You mentioned 30 million and 35 million added to the share cover. Just to kind of put things in perspective, Kevin, we ended the quarter with about 183 million shares. Where we sit today, as of the end of last week, is at 258 million shares, as we mentioned in our prepared remarks. And that's primarily driven by the additional conversion of our convertible notes, so the mandatory piece that was about 40 million shares.

Kevin Deed: Okay, okay. You mentioned $30 million and $35 million.

Speaker Change: okay okay you mentioned thirty million and thirty five million

Adam: Yeah, just to kind of put things in perspective, Kevin, we ended the quarter with about 183 million shares. Where we sit today, as of the end of last week, is at 258 million shares, as we mentioned in our prepared remarks, and that's primarily driven by the additional conversion of our convertible notes, so the mandatory piece that was about 40 million shares, and as I mentioned, the exercise of our Tronch II warrants added about 35 million shares.

Speaker Change: Added to the share cabinet, thank you Denise.

Speaker Change: Yeah, just to kind of put things in perspective, Kevin, we ended the quarter with about 183 million shares. Where we sit today, as of the end of last week, is at 258 million shares, as we mentioned in our prepared remarks, and that's primarily driven by

Speaker Change: The additional conversion of our convertible notes for the mandatory piece, it was about 40 million shares. And as I mentioned, the exercise of our Tronch II warrants added about 35 million shares.

Denise Sterling: And, as I mentioned, the exercise of our Tronch 2 warrants added about 35 million shares.

Denise Sterling: Thank you.

Jack Chan: Our next question comes from Jack Chan with Imperial Capital. Please say your question. Thanks for taking the question. What did I ask on the expansion opportunities? Will you be looking to do deals with these future customers at the same economics as your core we've deal, or could there are different structures being contemplated, and so what those could look like?

Jack Chan: Our next question comes from Jack Chan with Imperial Capital. Please state your question. Thanks for taking the question.

Operator: Thank you. Our next question comes from Jack Chan with the Imperial Capital Police Service. Thanks for taking the question.

Kevin Deed: Thank you.

Speaker Change: Our next question comes from Jack Chan with Imperial Capital. Please state your question.

Jack Chan: Thanks for taking the question. I wanted to ask on the expansion opportunities. Will you be looking to do deals with these future customers at the same economics as your core we've deal or could there are different structures being contemplated and if so what what those could look like?

Adam Sullivan: And thanks, Jack, for the question. The contract is something that's actually something that we're working through today in terms of how do we structure these and have the right give-and-take between the buy-down of CAPX versus the rate that they pay? And so we're working through that based on both the credit risk of the potential customer, as well as what the length and tenor is of that end contract. So we're working through that today. Obviously, the core we've deal was extraordinarily unique. It was something that completely changed the data center industry from a terms perspective. So we're obviously using that as a starting point, but I would say we're expecting the contracts to change based on where we are going for our ability to access the capital markets in different ways to make the potential new contracts that we're signing more efficient.

Adam: And thanks, Jack, for the question. The contract is something that's actually, you know, something that we're working through today in terms of how do we structure these and have the right give and take between the buy-down of CapEx versus the rate that they pay. And so we're working through that based on both the credit risk of the potential customer, as well as, you know, what the length and tenor is of that end contract. So we're working through that today. You know, obviously, the core we've dealt with was extraordinarily unique. It was something that completely changed the data center industry from a terms perspective.

Speaker Change: that

Speaker Change: And thanks, Jack, for the question. The contracts is something that's actually, you know, something that we're working through today in terms of how do we structure these and have the right give and take between the buy-down of CapEx versus the rate that they pay?

Speaker Change: And so, we're working through that based on both the credit risk of the potential customer as well as, you know, what the length and tenor is of that end contract. So, we're working through that today. You know, obviously, the CoreWeave deal was extraordinarily unique. It was something that completely changed the data center industry from a terms perspective.

Adam: So, you know, we're obviously using that as a starting point, but I would say we're expecting the contracts to change based on where we are going forward, our ability to access the capital markets in different ways to make the potential new contract that we're signing more efficient. And so there's a number of opportunities for us, and we're exploring all of them.

Speaker Change: So, you know, we're obviously using that as a starting point, but I would say we're expecting the contracts to change based on, you know, where we are going forward, our ability to access the capital markets in different ways to make.

Speaker Change: the potential new contracts that we're signing more efficient. And so there's a number of opportunities for us and we're exploring all of them.

Adam Sullivan: And so there's a number of opportunities for us, and we're exploring all of them.

Jack Chan: Thank you.

Lucas Pipes: Our next question comes from Lucas Pipes with the Riley Securities. Please say your question.

Speaker Change: Thank you.

Operator: Our next question comes from Lucas Pipes with B Riley Securities. Please state your question.

Speaker Change: Our next question comes from Lucas Pipes with B Riley Securities. Please state your question.

Lucas Pipes: Thank you very much, operator. Thank you for taking my follow-up question. Just really quickly, on slide 15, you show application-specific data centers and 1, 2, 3, 4, 5. Would those be all at different sites, or might there be an overlap, and should we think of those as kind of, call it ASDC-1, an 80-megawatt cluster at one of the facilities? Just wanted to clarify that. Thank you very much.

Lucas Pipes: Thank you very much, operator. Thank you for taking my follow-up question. Just really quickly on slide 15, you show application-specific data centers and a 1, 2, 3, 4, 5.

Lucas Pipes: thank you very much operator thank you for taking a follow-up question just really quickly on slide fifteen show application specific data centers and one to three four five

Adam Sullivan: Would those be all at different sites, or might there be an overlap? And should we think of those as kind of, call it ASDC-1 and 80 megawatt cluster? One of the facilities. Just wanted to clarify that.

Lucas Pipes: Would those be all at different sites or might there be an overlap and should we think of those as kind of call it ASDC 1 and 80 megawatt cluster at one of the facilities? Just wanted to clarify that. Thank you very much.

Adam Sullivan: Thank you very much. Yeah, thanks, Lucas.

Adam: Yeah, thanks, Lucas. A great way to think about this is more on a facility-level basis, not necessarily on a site-level basis. So it doesn't necessarily mean that it's spread across all different sites. It could potentially be across different facilities at specific sites.

Adam Sullivan: A great way to think about this is more on a facility level basis, not necessarily on a site level basis. So it doesn't necessarily mean that it's spread across all different sites. It could potentially be across different facilities at specific sites. Okay, so essentially it's a different 1, 2, 3, 4, 5. It is a different site, but it may not be within one building. It might be so.

Speaker Change: Yeah, thanks, Lucas. You know, a great way to think about this is more on a facility-level basis, not necessarily on a site-level basis, so it doesn't necessarily mean that it's spread across, you know, all different sites. It could potentially be across different facilities at specific sites.

Lucas Pipes: Okay, so essentially, it's a different... 1, 2, 3, 4, 5, are at different sites, but it may not be within one building. It might be several.

Speaker Change: Okay, so essentially it's a different...

Speaker Change: 1, 2, 3, 4, 5 is at different sites, but it may not be within one building, it might be several buildings.

Adam Sullivan: Roberts. Yeah, you know, absolutely right. And you know, we do have multiple sites at some of our sites. And so, you know, it's a great way to think about; it's more on a facility level basis, though, those AFDCs. I appreciate the clarification.

Adam: Yeah, you're absolutely right. And, you know, we do have multiple sites at some of our sites. And so, you know, it's a great way to think about, it's more on a facility-level basis, those AFDCs.

Speaker Change: and

Speaker Change: Yeah you're absolutely right and you know we do have multiple sites at some of our sites and so you know it's a great way to think about it's more on a facility level basis those AFDCs.

Lucas Pipes: I appreciate the clarification. Again, best of luck.

Lucas Pipes: Again, best of luck. Thanks so much, Lucas. Thank you.

Speaker Change: I appreciate the clarification. Again, best of luck.

Steve Gitlin: Thank you, and there are no further questions at this time. I'll turn the floor back over to Steve Gitlin for closing comments.

Lucas Pipes: Thanks so much, Lucas.

Operator: And there are no further questions at this time.

Speaker Change: Thank you and there are no further questions at this time. I'll turn the floor back over to Steve Gitlin for closing comments.

Steven Gitlin: I'll turn the floor back over to Steve Gitlin for a closing comment. Thank you, Diego. Thanks, everybody, for your questions and for your attention today.

Steve Gitlin: Thank you, Diego, and thanks, everybody, for your questions and for your attention today. An archived version of this call, all SEC filings, and relevant company and industry news can be found on our website, courtscientific.com. We wish you a good day, and we look forward to speaking with you again following next quarter's results.

Steve Gitlin: Thank you, Diego, and thanks to everybody for your questions and for your attention today. An archived version of this call, all SEC filings, and relevant company and industry news can be found on our website, CoreScientific.com. We wish you a good day and we look forward to speaking with you again following next quarter's results.

Steven Gitlin: An archived version of this call, all SCC filings, and relevant company and industry news can be found on our website, corkscientific.com. We wish you a good day, and we look forward to speaking with you again following next quarter's results. Thank you.

Operator: This concludes today's conference. You made this connect your lines at this time. Thank you all for your part.

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

Steve Gitlin: Thank you.

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

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