Q2 2024 Bit Digital Inc Earnings Call

Speaker Change: Please stand by.

Operator: Hello, and welcome to the Bit Digital second quarter 2024 earnings conference call.

Operator: Hello, and welcome to the Bit Digital second quarter 2024 earnings conference call.

Operator: Hello, and welcome to the Bit Digital second quarter 2024 earnings conference call. Good morning, good afternoon, and good evening, depending on where you're joining us from. Thank you for being here.

Speaker Change: Hello and welcome to the Bit Digital second quarter 2024 earnings conference call. Good morning, good afternoon, and good evening, depending on where you're joining us from. Thank you for being here.

Operator: Good morning, good afternoon, and good evening, depending on where you're joining us.

Operator: Good morning, good afternoon, and good evening, depending on where you're joining us from.

Operator: Thank you for being here.

Operator: We're just giving a few more moments for attendees to dial in. So thank you for your patience.

Operator: We're just giving a few more moments for attendees to dial in, so thank you for your patience. While we wait, please note that during this call, all participant lines will be in a listen-only mode. Following the officer's update, we'll open the floor for a question-and-answer session. If you have a question at that time, simply press star 1 on your telephone keypad.

Speaker Change: We're just giving a few more moments for attendees to dial in. So thank you for your patience.

Operator: While we wait, please note that during this call, all participant lines will be in a listen only mode.

Speaker Change: While we wait, please note that during this call, all participant lines will be in a listen-only mode.

Operator: Following the officer's update, we will open the floor for a question and answer session.

Speaker Change: Following the officer's update, we will open the floor for a question and answer session.

Operator: If you have a question at that time, simply press star 1 on your telephone keypad.

Speaker Change: If you have a question at that time, simply press star 1 on your telephone keypad.

Operator: Also, as a reminder, today's conference is being recorded.

Operator: Also, as a reminder, today's conference is being recorded.

Cameron Schnier: I'll now hand it over to your host, Cameron Schnier, head of investor relations at Bit Digital. Cameron, the floor's yours. Thank you. Good morning and welcome to the Bit Digital second quarter 2024 earnings call. Joining us on the call today are Sam Tabar, Chief Executive Officer, and Eric Huang, Chief Financial Officer.

Cameron Schnier: I'll now hand it over to your host, Cameron Schnier, Head of Investor Relations at Bit Digital.

Cameron Sneer: Also, as a reminder, today's conference is being recorded. I'll now hand it over to your host, Cameron Schnier, Head of Investor Relations at Bit Digital. Cameron, the floor is yours.

Cameron Schnier: Cameron, the floor is yours.

Operator: Thank you for being here.

Cameron Schnier: Thank you.

Speaker Change: Thank you. Good morning and welcome to the Bit Digital second quarter 2024 earnings call. Joining us on the call today are Sam Tabar, Chief Executive Officer, and Erke Huang, Chief Financial Officer.

Cameron Schnier: Before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that can cause our results to differ materially from those projected in these statements. I therefore refer you to our latest 20-F filing, yesterday's 6-K filing, and our other SEC filings. Our comments today may also include non-GAAP financial measures. Additional details and reconciliations of the most directly comparable GAAP financial measures can be found in our 20-F filing and yesterday's 6-K filing, which are on our website.

Speaker Change: Before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking.

Speaker Change: These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements.

Speaker Change: I therefore refer you to our latest 20F filing, yesterday's 6K filing, and our other SEC filings.

Speaker Change: Our comments today may also include non-GAAP financial measures. Additional details and reconciliations of the most directly comparable GAAP financial measures can be found in our 20-F filing and yesterday's 6-K filing, which are on our website.

Cameron Schnier: After our prepared remarks, we will open the call up for questions. If you'd like to ask a question, please hit star 100 keypad.

Fan: After our prepared remarks, we will open the call up for questions. If you would like to ask a question, please hit star 1 on your keypad. With that important note covered, I will now turn the call over to Sam to discuss our performance. Sam?

Cameron Schnier: With that, in poll, I will now turn the call over to Sam to discuss our performance.

Sam Tabar: Thank you, Cam.

Cameron Schnier: Good morning and welcome to the Bit Digital second quarter 2024 earnings.

Operator: We're just giving a few more moments for attendees to dial in, so thank you for your patience.

Sam Tabar: Ladies and gentlemen, thank you for joining us on the call today. Today, I will dive into our second quarter results, discuss some of our ongoing strategic initiatives, and provide some color on what we envision as the future for Bit Digital. Eric will then provide more detail on our financial results, and then we will open the line for your questions. Our second quarter results were solid. We are encouraged by the progress we've made in background spying our business. Our revenue more than doubled from the prior year. Our gross margins expanded by over 1,000 basis points. Adjusted EBITDA and EPS were impacted by an unrealized loss on our digital asset position.

Fan: Thank you, Cam. Ladies and gentlemen, thank you for joining us on the call today.

Operator: While we wait, please note that during this call, all participant lines will be in a listen-only mode.

Fan: Today, I will dive into our second quarter results, discuss some of our ongoing strategic initiatives and provide some color on what we envision as the future for Bit Digital.

Operator: Following the officer's update, we will open the floor for a question and answer session.

Operator: If you have a question at that time, simply press star 1 on your telephone keypad.

Operator: Also, as a reminder, today's conference is being recorded.

Operator: I'll now hand it over to your host, Cameron Schnier, head of investor relations at Bit Digital.

Cameron Schnier: Cameron, the floor is yours.

Cameron Schnier: Joining us on the call today are Sam Tabar, Chief Executive Officer, and Erke Huang, Chief Financial Officer.

Fan: Eric will then provide more detail on our financial results and then we will open the line for your questions.

Cameron Schnier: Before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements.

Cameron Schnier: Thank you.

Cameron Schnier: I therefore refer you to our latest 20th filing, yesterday's 6K filing, and our other SEC filings.

Cameron Schnier: Good morning, and welcome to the Bit Digital second quarter 2024 earnings call.

Eric: Our second quarter results were solid.

Eric: We are encouraged by the progress we've made in diversifying our business.

Cameron Schnier: Joining us on the call today are Sam Tabar, chief executive officer, and Erke Huang, chief financial officer.

Eric: Our revenue more than doubled from the prior year. Our gross margins expanded by over 1,000 basis points.

Cameron Schnier: Our comments today may also include non-GAAP financial.

Cameron Schnier: Additional details and reconciliations of the most directly comparable GAAP financial measures can be found in our 20-F filing and yesterday's 6-K filing, which are on our website.

Cameron Schnier: After our prepared remarks, we will open the call up for questions, like to ask a question please hit star 1 on your keypad.

Eric: Adjusted EBITDA and EPS were impacted by an unrealized loss on our digital asset position.

Sam Tabar: The first full quarter contribution from our HPC business is well timed. It helps offset the decline coming from the post-having reduction and block rewards. Our balance sheet remains pristine with zero debt. It affords us significant flexibility to prudently invest in the most creative opportunities.

Cameron Schnier: With that important note covered I will now turn the call over to Sam to discuss our performance.

Eric: The first full-quarter contribution from our HPC business is well-timed. It helps offset the decline stemming from the post-halving reduction and block rewards.

Eric: Our balance sheet remains pristine with zero debt.

Eric: It affords us significant flexibility to prudently invest in the most creative opportunities.

Sam Tabar: The groundwork is firmly in place for us to realize our long-term vision of creating a diversified, durable platform that generates consistent cash flows and significant returns. On the mining side of the business, we were most required during the quarter. That was by design. We were keen to wait and see how the environment shook out following the having. Network hash rate proved to be resilient despite the reduction in block rewards, and hash price subsequently fell to new all-time lows. Our active hash rate ended the quarter at approximately 2.6 Hecta hash. This is a slight decrease compared to the end of Q1.

Cameron Schnier: Before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements.

Cameron Schnier: I, therefore, refer you to our latest 20F filing, yesterday's 6K filing, and our other SEC filings.

Cameron Schnier: Our comments today may also include non-GAAP financial measures.

Cameron Schnier: Additional details and reconciliations of the most directly comparable GAAP financial measures can be found in our 20F filing and yesterday's 6K filing, which are on our website.

Eric: The groundwork is firmly in place for us to realize our long-term vision of creating a diversified, durable platform that generates consistent cash flows and significant returns.

Cameron Schnier: After our prepared remarks, we will open the call up for questions.

Cameron Schnier: If you would like to ask a question, please hit star 1 on your keypad.

Cameron Schnier: With that important note covered, I will now turn the call over to Sam to discuss our performance.

Sam Tabar: Sam?

Sam Tabar: Thank you, Cam.

Sam Tabar: Ladies and gentlemen, thank you for joining us on the call today.

Speaker Change: On the mining side of the business, we were mostly quiet during the quarter. That was by design.

Sam Tabar: Thank you, Cam.

Sam Tabar: Ladies and gentlemen, thank you for joining us on the call today.

Speaker Change: We were keen to wait and see how the environment shook out following the halving.

Sam Tabar: Today, I will dive into our second quarter results, discuss some of our ongoing strategic initiatives, and provide some color on what we envision as the future for BitDigital.

Sam Tabar: Eric will then provide more detail on our financial results, and then we will open the line for your questions.

Speaker Change: Network hash rate proved to be resilient despite the reduction in block rewards and hash price subsequently fell to new all-time lows.

Sam Tabar: Today, I will dive into our second quarter results, discuss some of our ongoing strategic initiatives and provide some color on what we envision as the future for Bit Digital.

Sam Tabar: Eric will then provide more detail on our financial results and then we will open the line for your questions.

Speaker Change: Our active hash rate ended the quarter at approximately 2.6 exahash.

Sam Tabar: Our second quarter results were solid. We are encouraged by the progress we've made in diversifying our business. Our revenue more than doubled from the prior year. Our gross margins expanded by over 1,000 basis points. Adjusted EBITDA and EPS were impacted by an unrealized loss on our digital asset position.

Speaker Change: This is a slight decrease compared to the end of Q1.

Sam Tabar: The decline is attributed to cutelments, micement, and energy saving measures on sites where electricity prices were unusually high; reproduced 244 bitcoins during the quarter. This is a 23% decrease from the prior year, driven by increased network difficulty and a reduction in block rewards. For the quarter, our average electricity price per bitcoin was approximately 4.7 cents per kilowatt hour. Our electricity price per bitcoin was 29,300. Our total cost of production, defined as electricity and other hosting fees divided by bitcoin production, amounted to approximately 43,200 for the quarter. Proper sharing fees amounted to around 11,100 per bitcoin for the first quarter.

Speaker Change: The decline is attributed to compelments in Iceland and energy-saving measures at sites where electricity prices were unusually high. We produced 244 bitcoins during the quarter. This is a 23% decrease from the prior year, driven by increased network difficulty and a reduction in block rewards.

Sam Tabar: The first full-quarter contribution from our HPC business is well-timed. It helps offset the decline stemming from the post-halving reduction and block rewards.

Sam Tabar: Our second quarter results were solid. We are encouraged by the progress we've made in diversifying our business. Our revenue more than doubled from the prior year. Our gross margins expanded by over 1,000 basis points. Adjusted EBITDA and EPS were impacted by an unrealized loss on our digital asset position.

Sam Tabar: The first full quarter contribution from our HPC business is well-timed. It helped offset the decline stemming from the post-halving reduction in block rewards.

Sam Tabar: Our balance sheet remains pristine with zero debt. It affords us significant flexibility to prudently invest in the most accretive opportunities. The groundwork is firmly in place for us to realize our long-term vision of creating a diversified, durable platform that generates consistent cash flows and significant returns.

Sam Tabar: On the mining side of the business, we were mostly quiet during the quarter. That was by design. We were keen to wait and see how the environment shook out following the halving. Network hash rate proved to be resilient despite the reduction in block rewards and hash price, subsequently fell to new all-time lows. Our active hash rate ended the quarter at approximately 2.6 exahash. This is a slight decrease compared to the end of Q1.

Speaker Change: For the quarter, our average electricity price per Bitcoin was approximately $0.047 per kWh.

Sam Tabar: The decline is attributed to curtailments in Iceland and energy-saving measures at sites, where electricity prices were unusually high. We produced 244 bitcoins during the quarter. This is a 23% decrease from the prior year driven by increased network difficulty and, a reduction in block rewards.

Speaker Change: Our electricity price per bitcoin was $29,300.

Sam Tabar: For the quarter, our average electricity price per bitcoin was approximately $0.047 per kWh.

Sam Tabar: Our electricity price per bitcoin was $29,300.

Speaker Change: Our total cost of production, defined as electricity and other hosting fees divided by Bitcoin production, amounted to approximately $43,200 for the quarter.

Sam Tabar: Our total cost of production, defined as electricity and other hosting fees divided by bitcoin, production, amounted to approximately $43,200 for the quarter.

Sam Tabar: Profit sharing fees amounted to around $11,100 per bitcoin for the first quarter.

Speaker Change: Profit sharing fees amounted to around $11,100 per Bitcoin for the first quarter.

Sam Tabar: On profit sharing fees, they vary based on the amount of gross profit per Bitcoin we received. This fee accounts for the fact that we don't own our own mining infrastructure. Other companies have charges under different light items that account for the costs of running a mining site, including labor. This is often overlooked by comp sheets comparing production costs. Our average realized bitcoin price during the second quarter was around 65,800. This leaves around 22,700 in gross profit, or a mining margin of around 34%. However, current economics present challenges, especially with the depreciation costs. This makes it difficult to recover the investment in new mining rigs within a reasonable time frame.

Sam Tabar: Non-profit sharing fees vary based on the amount of gross profit per bitcoin we receive.

Speaker Change: On profit sharing fees, they vary based on the amount of gross profit per bitcoin we receive.

Sam Tabar: This fee accounts for the fact that we don't own our own mining infrastructure.

Speaker Change: This fee accounts for the fact that we don't own our own mining infrastructure.

Sam Tabar: Other companies have charges under different light items that account for the costs of, running a mining site, including labor. This is often overlooked by comp sheets comparing production costs.

Speaker Change: other companies have charges under different light items that account for the costs of running a mining site including labor

Austin: This is Austin Overlook by CompSheets, comparing production costs.

Sam Tabar: Our balance sheet remains pristine with zero debt. It affords us significant flexibility to prudently invest in the most creative opportunities. The groundwork is firmly in place for us to realize our long-term vision of creating a diversified, durable platform that generates consistent cash flows and significant returns.

Sam Tabar: Our average realized bitcoin price during the second quarter was around $65,800. This leaves around $22,700 in gross profit, or a mining margin of around 34%.

Austin: Our average realized Bitcoin price during the second quarter was around $65,800.

Sam Tabar: On the mining side of the business, we were mostly quiet during the quarter. That was by design. We were keen to wait and see how the environment shook out following the halving. Network hash rate proved to be resilient despite the reduction in block rewards and hash price subsequently fell to new all-time lows. Our active hash rate ended the quarter at approximately 2.6 exahash. This is a slight decrease compared to the end of Q1. The decline is attributed to compelments in Iceland and energy-saving measures at sites where electricity prices were unusually high. We produced 244 bitcoins during the quarter.

Austin: This leaves around $22,700 in gross profit, or a mining margin of around 34%.

Sam Tabar: However, current economics present challenges, especially with the depreciation costs. This makes it difficult to recover the investment in new mining rigs within a reasonable timeframe.

Sam Tabar: This is a 23% decrease from the prior year, driven by increased network difficulty and a reduction in block reward.

Sam Tabar: For the quarter, our average electricity price per Bitcoin was approximately 4.7 cents per kilowatt hour.

Austin: However, current economics presents challenges, especially with the depreciation costs. This makes it difficult to recover the investment in new mining rigs within a reasonable time frame.

Sam Tabar: We're bullish on the future of Bitcoin, but we are realists. The economics are difficult right now, and we are choosing not to aggressively grow into that backdrop without higher conviction that we can make a justifiable return on new equipment. Our principal bottleneck to ex-a-hash growth right now is our own menu of growth options. We see better investment options in HPC at the moment.

Sam Tabar: Our electricity price per bitcoin was $29,300.

Sam Tabar: We're bullish on the future of bitcoin, but we are realists. The economics are difficult right now, and we are choosing not to aggressively grow into, that backdrop without higher conviction that we can make a justifiable return on new equipment.

Sam Tabar: Our total cost of production, defined as electricity and other hosting fees divided by Bitcoin production, amounted to approximately $43,200 for the quarter.

Sam Tabar: Profit sharing fees amounted to around $11,100 per Bitcoin for the first quarter. On profit sharing fees, they vary based on the amount of gross profit per bitcoin we receive. This fee accounts for the fact that we don't own our own mining infrastructure.

Austin: We're bullish on the future of Bitcoin, but we are realists.

Sam Tabar: Other companies have charges under different light items that account for the costs of running a mining site, including labor.

Austin: The economics are difficult right now, and we are choosing not to aggressively grow into that backdrop without higher conviction that we can make a justifiable return on new equipment.

Sam Tabar: Our principal bottleneck to extra hash growth right now is our own menu of growth options.

Austin: Our principal bottleneck to Exahash growth right now is our own menu of growth options. We see better investment options in HPC at the moment.

Sam Tabar: We see better investment options in HPC at the moment.

Sam Tabar: So based on what we see today, we think it's unlikely that we will hit six ex-a-hash by the year end. Material ex-a-hash growth for us into year end would require either a significantly better view on mining economics or a significant deterioration in the opportunity set we currently see on the HPC side. Near-term, our focus on the mining side is on improving the efficiency of our active fleet and lowering production costs.

Sam Tabar: So, based on what we see today, we think it's unlikely that we will hit six extra, hash by the year end. Material extra hash growth for us into year end would require either a significantly better, view on mining economics or a significant deterioration in the opportunities that we currently see on the HPC side.

Austin: So based on what we see today, we think it's unlikely that we will hit six X a half by the year end.

Austin: Material exerhash growth for us into year-end would require either a significantly better view on mining economics or a significant deterioration in the opportunities that we currently see on the HPC side.

Sam Tabar: Near term, our focus on the mining side is on improving the efficiency of our active, fleet and lowering production costs.

Austin: Near term, our focus on the mining side is on improving the efficiency of our active fleet and lowering production costs.

Sam Tabar: This is Austin Overlook by CompSheets, comparing production costs.

Sam Tabar: Our average realized Bitcoin price during the second quarter was around $65,800. This leaves around $22,700 in gross profit or a mining margin of around 34%.

Sam Tabar: However, Current economics present challenges, especially with the depreciation costs. This makes it difficult to recover the investment in new mining rigs within a reasonable time frame.

Sam Tabar: We're bullish on the future of Bitcoin, but we are realistic. The economics are difficult right now, and we are choosing not to aggressively grow into that backdrop without higher conviction that we can make a justifiable return on new equipment. Our principal bottleneck to ExaHash growth right now is our own menu of growth options.

Sam Tabar: Switching gears, the HPC segment generated $12.5 million of revenue at 63% gross margins during the second quarter. That was the first full quarter of operations for this business.

Sam Tabar: Switching gears, the HPC segment generated $12.5 million of revenue at 63% growth margins during the second quarter. That was the first full quarter of operations for this business. We recently announced a binding term sheet with a new customer, Bruce DeRoyd, the world's third largest cloud gaming provider, following Microsoft, NVIDIA. We believe that this represents a key end-market expansion for our HPC business beyond AI applications or LLM training specifically. This term sheet carries a locked five-year term. It also provides for up to 50,000 GPUs over a five-year period following the signing of the MSA. The entire contract, if Bruce DeRoyd elects to deploy the entire 50,000 GPU allotment, it will be worth more than $700 million of revenue for the digital over the five-year contract, subject to market conditions.

Sam Tabar: We see better investment options in HPC at the moment.

Speaker Change: Switching gears, the HPC segment generated $12.5 million of revenue at 63% gross margins during the second quarter. That was the first full quarter of operations for this business.

Sam Tabar: We recently announced a binding term sheet with a new customer, Boosteroid, the world's, third-largest cloud gaming provider, following Microsoft and NVIDIA.

Sam Tabar: So based on what we see today, we think it's unlikely that we will hit 6x a half by the year end, material exerhash growth for us into year-end would require either a significantly better view on mining economics or a significant deterioration in the opportunities that we currently see on the HPC side.

Sam Tabar: Near term, our focus on the mining side is on improving the efficiency of our active fleet and lowering production costs.

Speaker Change: We recently announced a binding term sheet with a new customer, Boosteroid, the world's third largest cloud gaming provider, following Microsoft and NVIDIA.

Sam Tabar: Switching gears, the HPC segment generated $12.5 million of revenue at 63% gross margins during the second quarter. That was the first full quarter of operations for this business.

Sam Tabar: We believe that this represents a key end-market expansion for our HPC business beyond AI applications, or LLM training specifically.

Speaker Change: We believe that this represents a key end market expansion for our HPC business beyond AI applications or LLM training specifically.

Sam Tabar: We recently announced a binding term sheet with a new customer, Boosteroid, the world's third largest cloud gaming provider, following Microsoft and NVIDIA.

Sam Tabar: This term sheet carries a locked five-year term. Boosteroid also provides for up to 50,000 GPUs over a five-year period following the, signing of the MSA.

Speaker Change: This term sheet carries a locked five-year term.

Sam Tabar: We believe that this represents a key end market expansion for our HPC business beyond AI applications or LLM training specifically.

Speaker Change: It also provides for up to 50,000 GPUs over a five-year period following the signing of the MSA.

Sam Tabar: This term sheet carries a locked five-year term. It also provides for up to 50,000 GPUs over a five-year period following the signing of the MSA.

Sam Tabar: The entire contract, if Boosteroid elects to deploy the entire 50,000 GPU allotment, will be worth more than $700 million of revenue for Bit Digital over the five-year contract subject to market conditions.

Speaker Change: The entire contract, if Boosteroid elects to deploy the entire 50,000 GPU allotment, will be worth more than $700 million of revenue for Bit Digital over the 5-year contract, subject to market conditions.

Sam Tabar: The entire contract, if Boosteroid elects to deploy the entire 50,000 GPU allotment, will be worth more than $700 million of revenue for Bit Digital over the five-year contract, subject to market conditions.

Sam Tabar: The initial deployment will be a test positive. This will likely represent a $2-3 million annualized revenue opportunity in its starting form. We expect that initial deployment to take place over the next few months and expect to scale that contract throughout 2025. We'll be able to provide further details on the timing and build-out of the contract after we execute the MSA, which we are working hard on completing as soon as possible. We look forward to growing alongside Bruce DeRoyd and helping them achieve their goal of becoming the global leader in cloud gaming. This field has great growth potential and aligns with our business model of growing alongside our customers.

Sam Tabar: The initial deployment will be a test positive.

Sam Tabar: The initial deployment will be a test policy.

Sam Tabar: This will likely represent a $2 to $3 million annualized revenue opportunity in its starting form. We expect that initial deployment to take place over the next few months and expect to scale that contract throughout 2025.

Sam Tabar: This will likely represent a $2 to $3 million annualized revenue opportunity in its starting, form.

Speaker Change: The initial deployment will be a test plus T. This will likely represent a $2-3 million annualized revenue opportunity in its starting form.

Sam Tabar: We expect that initial deployment to take place over the next few months and expect, to scale that contract throughout 2025.

Speaker Change: We expect that initial deployment to take place over the next few months and expect to scale that contract throughout 2025.

Sam Tabar: We'll be able to provide further details on the timing and build out of the contract after we execute the MSA, which we are working hard on completing as soon as possible.

Sam Tabar: We'll be able to provide further details on the timing and build-out of the contract after, we execute the MSA, which we are working hard on completing as soon as possible.

Speaker Change: We'll be able to provide further details on the timing and build-out of the contract after we execute the MSA, which we are working hard on completing as soon as possible.

Sam Tabar: We look forward to growing alongside Boosteroid and helping them achieve their goal of becoming the global leader in cloud gaming. This deal has great growth potential and aligns with our business model of growing alongside our customers.

Sam Tabar: We look forward to growing alongside Boosteroid and helping them achieve their goal of becoming, the global leader in cloud gaming. This deal has great growth potential and aligns with our business model of growing alongside, our customers.

Speaker Change: We look forward to growing alongside Boosteroid and helping them achieve their goal of becoming the global leader in cloud gaming.

Speaker Change: This deal has great growth potential and aligns with our business model of growing alongside our customers.

Sam Tabar: Our pipeline and HPC remains strong and continues to grow. The major bottleneck to date in terms of completing incremental contracts has been bandwidth. We simply haven't had the adequate manpower to move highly customized customers' deals through the finish line. But we have begun to solve for that need.

Sam Tabar: Our pipeline and HTC remains strong and continues to grow.

Sam Tabar: Our pipeline in HTC remains strong and continues to grow.

Speaker Change: Our pipeline in HPC remains strong and continues to grow.

Sam Tabar: The major bottleneck to date in terms of completing incremental contracts has been bandwidth.

Sam Tabar: The major bottleneck to date in terms of completing incremental contracts has been bandwidth.

Speaker Change: The major bottleneck to date in terms of completing incremental contracts has been bandwidth. We simply haven't had the adequate manpower to move highly customized customer deals through the finish line.

Sam Tabar: We simply haven't had the adequate manpower to move highly customized customer deals through the finish line.

Sam Tabar: We simply haven't had the adequate manpower to move highly customized customers' deals, through the finish line. But we have begun to solve for that need.

Sam Tabar: But we have begun to solve for that need.

Sam Tabar: We need our first full-time hires in the HPC segment to help lead the revenue process. We will formally announce those hires very soon, and we're excited for them to ramp up and lead the sales charge. These people have had very impressive track records in growing an HPC platform and customer base. We are also working on additional hires to complement our existing strengths and fill in strategic gaps. Beating up our tech stack is a key priority on the hiring front near term. For our anchor customer, we previously announced that we were expecting to install an incremental 2,000 H100 and begin revenue generation on those units in the late third quarter.

Sam Tabar: We made our first full-time hires in the HPC segment to help lead the revenue process. We will formally announce those hires very soon, and we're excited for them to ramp up and lead the sales charge. These people have had very impressive track records in growing an HPC platform and customer base.

Sam Tabar: We made our first full-time hires in the HPC segment to help lead the revenue process. We will formally announce those hires very soon, and we're excited for them to ramp up, and lead the sales charge. These people have had very impressive track records in growing an HPC platform and customer, base.

Speaker Change: But we have begun to solve for that need.

Speaker Change: We made our first full-time hires in the HPC segment to help lead the revenue process.

Speaker Change: We will formally announce those hires very soon, and we're excited for them to ramp up and lead the sales charge.

Speaker Change: These people have had very impressive track records in growing an HPC platform and customer base.

Sam Tabar: We are also working on additional hires to complement our existing strengths and fill in strategic gaps.

Sam Tabar: We are also working on additional hires to complement our existing strengths and fill, in strategic gaps.

Speaker Change: We are also working on additional hires to complement our existing strengths and fill in strategic gaps.

Sam Tabar: Beating up our tech stack is a key priority on the hiring front near term.

Sam Tabar: Beefing up our tech stack is a key priority on the hiring front near term.

Speaker Change: Beefing up our tech stack is a key priority on the hiring front near term.

Sam Tabar: For our anchor customer, we previously announced that we were expecting to install an incremental 2,000 H100s and begin revenue generation on those units in the late third quarter. In late July, our customer brought in some new technical talent that ultimately led to the review of their future hardware portfolio. As a result, our customer asked us to pause the H100 order while they assessed the possibility of upgrading the servers to newer generation models. We've reached an agreement with the OEM to delay our server order and have paid only for certain longer lead time networking equipment.

Sam Tabar: For our anchor customer, we previously announced that we were expecting to install an incremental, 2,000 H100s and begin revenue generation on those units in the late third quarter. In late July, our customer brought in some new technical talent that ultimately led to, the review of their future hardware portfolio. As a result, our customer asked us to pause the H100 order while they assessed the possibility, of upgrading the servers to newer generation models. We reached an agreement with the OEM to delay our server order and have paid only for certain, longer lead time networking equipment.

Speaker Change: For our anchor customer, we previously announced that we were expecting to install an incremental 2,000 H100s and begin revenue generation on those units in the late third quarter.

Sam Tabar: In late July, our customer brought in some new technical talent that ultimately led to the review of their future hardware portfolio. As a result, our customer asked us to pause the H100 order while they assessed the possibility of upgrading the servers to newer generation models. We reached an agreement with the OEM to delay our server order and have paid only for certain longer lead time networking equipment. It's important to note that there is no change in this customer contract. The contract remains in full force and effect.

Speaker Change: In late July , our customer brought in some new technical talent that ultimately led to the review of their future hardware portfolio.

Speaker Change: As a result, our customer asked us to pause the H100 order while they assessed the possibility of upgrading the servers to newer generation models.

Speaker Change: We reached an agreement with the OEM to delay our server order and have paid only for certain longer lead time networking equipment.

Sam Tabar: It's important to note that there is no change in this customer contract.

Sam Tabar: It's important to note that there is no change in this customer contract.

Speaker Change: It's important to note that there is no change in this customer contract. The contract remains in full force and effect.

Sam Tabar: The contract remains in full force and effect.

Sam Tabar: The contract remains in full force and effect.

Sam Tabar: The biggest change from going from a Bitcoin mining to HP services is the customer-facing aspect within HPC. You don't have to worry about keeping your customers satisfied in Bitcoin mining. There are no customers in Bitcoin mining. We're very keen on keeping our customers in HBC happy, and we want to help position them for long-term success. So when our customer asks us to pause an order while they assess their technological needs, we oblige them with that courtesy, despite the potential negative impact that delaying the onset of the revenue may have. We will have greater clarity on the customers' plans over the next several weeks, and we'll provide an update as soon as feasible.

Sam Tabar: The biggest change from going from a Bitcoin mining to HP services is the customer facing aspect within HPC.

Sam Tabar: The biggest change from going from a Bitcoin mining to HP services is the customer facing, aspect within HPC.

Speaker Change: The biggest change from going from a Bitcoin mining to HP services is the customer facing aspect within HPC.

Sam Tabar: You don't have to worry about keeping your customers satisfied in Bitcoin mining.

Sam Tabar: There are no customers in Bitcoin mining.

Speaker Change: You don't have to worry about keeping your customers satisfied in Bitcoin mining. There are no customers in Bitcoin mining.

Sam Tabar: We're very keen on keeping our customers in HPC happy, and we want to help position them for long-term success. So when our customer asks us to pause an order while they assess their technological needs, we oblige them with that courtesy, despite the potential negative impact that delaying the onset of the revenue may have.

Speaker Change: We're very keen on keeping our customers in HPC happy, and we want to help position them for long-term success.

Speaker Change: So, when our customer asks us to pause an order while they assess their technological needs, we oblige them with that courtesy, despite the potential negative impact that delaying the onset of the revenue may have.

Sam Tabar: We will have greater clarity on the customers' plans over the next several weeks and will provide an update as soon as feasible.

Sam Tabar: We will have greater clarity on the customer's plans over the next several weeks, and we'll, provide an update as soon as feasible.

Speaker Change: We will have greater clarity on the customers' plans over the next several weeks and will provide an update as soon as feasible.

Sam Tabar: Reason headline suggests that NVIDIA's Blackwell B200 chips may not be available until early 2025. So there is a chance that if our customer asks to upgrade to the contract, that's like to contract to those chips, the revenue contribution to Bit Digital would be delayed until such time until we can procure those chips. However, we are confident that we can secure an early allotment of those chips based on the conversations we've had with some of our two relationships. There's also a chance that our customer just decides that we'd rather continue forward with the H100s or possibly the H200s.

Sam Tabar: Recent headlines suggest that NVIDIA's Blackwell B200 chips may not be available until early 2025.

Sam Tabar: Recent headlines suggest that NVIDIA's Blackwell B200 chips may not be available until early, 2025.

Speaker Change: Recent headlines suggest that NVIDIA's Blackwell B200 chips may not be available until early 2025.

Sam Tabar: So, there is a chance that if our customer opts to upgrade to the contract, to update, the contract to those chips, the revenue contribution to Bit Digital would be delayed until such time until we can procure those chips.

Sam Tabar: So, there is a chance that if our customer opts to upgrade to the contract to those chips, the revenue contribution to Bit Digital would be delayed until such time until we can procure those chips. However, we are confident that we can secure an early allotment of those chips based on the conversations we've had with some of our key relationships.

Speaker Change: So, there is a chance that if our customer opts to upgrade the contract to those chips, the revenue contribution to Bit Digital would be delayed until such time until we can procure those chips.

Sam Tabar: However, we are confident that we can secure an early allotment of those chips based on, the conversations we've had with some of our key relationships.

Speaker Change: However, we are confident that we can secure an early allotment of those chips based on the conversations we've had with some of our key relationships.

Sam Tabar: There is also a chance that our customer just decides they'd rather continue forward with the H100s or possibly the H200s.

Sam Tabar: There's also a chance that our customer just decides they'd rather continue forward with, the H100s or possibly the H200s.

Speaker Change: There is also a chance that our customer just decides they'd rather continue forward with the H-100s or possibly the H-200s. I would note that the lead times for the H-100s have come down quite significantly, and we're confident that we can procure those units today in about three to four weeks' time.

Sam Tabar: I would note that the lead times for the H100s have come down quite significantly, and we're confident that we can procure those units today in about three to four weeks' time. Lastly, if our customer does decide to press forward with the Blackwell B200 chips, revenue recognition will likely be pushed into 2025, but we would expect the scope of revenue to be greater than the 42 million annual figures stipulating under the H100 contract.

Sam Tabar: I would note that the leave times for the H-100s have come down quite significantly, and we're confident that we can procure those units today in about three to four weeks' time.

Sam Tabar: I would note that the lead times for the H100s have come down quite significantly, and we're, confident that we can procure those units today in about three to four weeks' time.

Sam Tabar: Lastly, if our customer does decide to press forward with the Blackwell B200 chips, revenue, recognition will likely be pushed into 2025, but we would expect the scope of revenue to be greater than the $42 million annual figure stipulated under the H100 contract. Notably, and in case there are any doubts of how serious our customer is, we received, a non-refundable $30 million prepayment from our customer earlier this month.

Sam Tabar: Lastly, if our customer does decide to press forward with the Blackwell B200 chips, revenue recognition will likely be pushed into 2025, but we would expect the scope of revenue to be greater than the $42 million annual figure stipulated under the H-100 contract. Notably, and in case there are any doubts of how serious our customer is, we received a non-refundable $30 million prepayment from our customer earlier this month.

Speaker Change: Lastly,

Speaker Change: If our customer does decide to press forward with the Blackwell B200 chips, revenue recognition will likely be pushed into 2025, but we would expect the scope of revenue to be greater than the $42 million annual figure stipulated under the H-100 contract.

Sam Tabar: Notably, and in case there are any doubts of how serious our customer is, we received a non-refundable 30 million prepayment from our customer earlier this month. Our growth pipeline remains quite strong. We continue to believe that we'll be able to reach our $100 million annualized revenue target by the end of 2024, even if the 2000 GPU expansion deployment with our current existing anchor customer is pushed to 2025. We expect the remainder of the year to be a very busy one for Bit Digital. As previously noted, we believe that having our own infrastructure would help mature our HPC business, and we are actively working on ways to solve for that.

Speaker Change: Notably, and in case there are any doubts of how serious our customer is, we received a non-refundable $30 million prepayment from our customer earlier this month.

Sam Tabar: Our growth pipeline remains quite strong. We continue to believe that we'll be able to reach our $100 million annualized revenue target by the end of 2024, even if the 2000 GPU expansion deployment with our current existing anchor customer is pushed to 2025.

Sam Tabar: Our growth pipeline remains quite strong. We continue to believe that we'll be able to reach our $100 million annualized revenue, target by the end of 2024, even if the 2000 GPU expansion deployment with our current existing anchor customer is pushed to 2025.

Speaker Change: Our growth pipeline remains quite strong. We continue to believe that we'll be able to reach our $100 million annualized revenue target by the end of 2024, even if the 2000 GPU expansion deployment with our current existing anchor customer is pushed to 2025.

Sam Tabar: We expect the remainder of the year to be a very busy one for Bit Digital. As previously noted, we believe that having our own infrastructure would help mature our HPC business, and we are actively working on ways to solve for that.

Sam Tabar: We expect the remainder of the year to be a very busy one for BitDigital. As previously noted, we believe that having our own infrastructure would help mature our, HPC business, and we are actively working on ways to solve for that.

Speaker Change: We expect the remainder of the year to be a very busy one for Bit Digital.

Speaker Change: As previously noted, we believe that having our own infrastructure would help mature our HPC business, and we are actively working on ways to solve for that.

Sam Tabar: We are evaluating opportunities that we think could complement our existing business well. It's hard for us to provide any incremental detail, but I'll say that this is an area that we view as a very attractive potential use of our capital.

Sam Tabar: We are evaluating opportunities that we think could complement our existing business well.

Sam Tabar: We are evaluating opportunities that we think could complement our existing business well.

Speaker Change: We are evaluating opportunities that we think could complement our existing business well.

Sam Tabar: It's hard for us to provide any incremental detail, but I'll say that this is an area that we view as a very attractive potential use of our capital.

Sam Tabar: It's hard for us to provide any incremental detail, but I'll say that this is an area, that we view as a very attractive potential use of our capital.

Speaker Change: It's hard for us to provide any incremental detail, but I'll say that this is an area that we view as a very attractive potential use of our capital.

Sam Tabar: The bottom line is that we've been deliberately strengthening our balance sheet and have considerable drive powder to deploy into opportunities that we view as highly-equative and strategic. We expect to share these exciting developments on the capital deployment plant on our next earnings call.

Sam Tabar: The bottom line is that we've been deliberately strengthening our balance sheet and have considerable dry powder to deploy into opportunities that we view as highly equitative and strategic.

Sam Tabar: The bottom line is that we've been deliberately strengthening our balance sheet and have considerable, dry powder to deploy into opportunities that we view as highly accretive and strategic.

Speaker Change: The bottom line is that we've been deliberately strengthening our balance sheet and have considerable dry powder to deploy into opportunities that we view as highly accretive and strategic.

Sam Tabar: We expect to share these exciting developments on the Capital Deployment Fund on our next earnings call.

Sam Tabar: We expect to share these exciting developments on the capital deployment front on our next, earnings call.

Speaker Change: We expect to share these exciting developments on the Capital Deployment Fund on our next earnings call.

Sam Tabar: Lastly, we materially increased our East position late in the second quarter by a big-point conversion. As of the end of June, we had over $90 million worth of East compared to approximately $37 million worth of Bitcoin. We remain bullish on East long term. We believe the market will soon appreciate its versatility and san monetary policy. As it relates to the recent approval of spot ETFs, we are happy about the institutional inflows that they have brought and will bring into East. We also think they will be helpful in terms of bringing both awareness and education around East to the broader market.

Sam Tabar: Lastly...

Sam Tabar: Lastly, we materially increased our ETH position late in second quarter via Bitcoin conversions. As of the end of June, we had over $90 million worth of ETH compared to approximately $37, million worth of Bitcoin. We remain bullish on ETH long-term.

Speaker Change: Lastly, we materially increased our ETH position late in second quarter via Bitcoin conversions. As of the end of June , we had over $90 million worth of ETH compared to approximately $37 million worth of Bitcoin.

Sam Tabar: We believe the market will soon appreciate its versatility, and sound monetary policy.

Sam Tabar: We remain bullish on ETH long-term. We believe the market will soon appreciate its versatility and sound monetary policy. As it relates to the recent approval of SPOT ETH ETFs, we are happy about the institutional inflows that they have brought and will bring into ETH.

Speaker Change: We remain bullish on ETH long-term. We believe the market will soon appreciate its versatility and sound monetary policy. As it relates to the recent approval of SPOT ETH ETFs, we are happy about the institutional inflows that they have brought and will bring into ETH.

Sam Tabar: As it relates to the recent approval of SPOT ETH ETFs, we are happy about the institutional inflows that they have brought and will bring into ETH. We also think they will be helpful in terms of bringing both awareness and education around, ETH to the broader market.

Sam Tabar: We also think they will be helpful in terms of bringing both awareness and education around AIDS to the broader market.

Speaker Change: We also think they will be helpful in terms of bringing both awareness and education around AIDS to the broader market.

Sam Tabar: However, one key aspect that the ETFs lack is the ability to stack ETH, to stake ETH.

Sam Tabar: However, one key aspect that the ETFs lack is the ability to stack East to stake East. Bit Digital continues to have that advantage over these new vehicles.

Sam Tabar: However, one key aspect that the ETFs lack is the ability to stack ETH, to stake ETH.

Speaker Change: However, one key aspect that the ETFs lack is the ability to stack ETH, to stake ETH.

Sam Tabar: Bit Digital continues to have that advantage over these new vehicles.

Sam Tabar: Bit Digital continues to have that advantage over these new vehicles.

Speaker Change: Bit Digital continues to have that advantage over these new vehicles.

Eric Huang: I'll now hand over the line to Eric to discuss our financial results. Thank you, Sam. I will now discuss certain financial results for the second quarter of 2024. Total revenue was $29 million, a 220% increase compared to the prior year. The revenue increase was driven by the first full quarter of our HPC services business and by higher realized Bitcoin prices. A Bitcoin production decreased 23% year over year to 244.2 Bitcoins. The decrease was driven by an increase in Bitcoin network difficulty and by the reduction in broad rewards following the April happening. Bitcoin mining revenue increased 80% from the prior year to 16.1 million dollars due to higher bitcoin prices.

Sam Tabar: I'll now hand it over, I'll now hand over the line to Eric who will discuss our financial results.

Sam Tabar: I'll now hand over the line to Eric, who will discuss our financial results.

Speaker Change: I'll now hand it over, I'll now hand over the line to Eric, who will discuss our financial results.

Eric Liu: Eric Liu Thank you, Sam.

Erke Huang: Thank you, Sam.

Eric Liu: I will now discuss certain financial results for the second quarter of 2024. Total revenue was $29 million, a 220% increase compared to the prior year. The revenue increase was driven by the first full quarter of our HPC services business and by higher realized Bitcoin prices.

Eric: Thank you, Sam. I will now discuss certain financial results for the second quarter of 2024.

Erke Huang: I will now discuss certain financial results for the second quarter of 2021. Total revenue was $29 million, a 220% increase compared to the prior year.

Eric: Total revenue was $29 million, a 220% increase compared to the prior year.

Speaker Change: The revenue increase was driven by the first full quarter of our HPC services business and by higher realized Bitcoin prices.

Erke Huang: Bitcoin production decreased 23% year over year to 244.2 bitcoins. The decrease was driven by an increase in Bitcoin network difficulty and by the reduction in broad rewards following the April half. Bitcoin mining revenue increased 80% from the prior year to $16.1 million due to higher Bitcoin prices.

Eric Liu: Our Bitcoin production decreased 23% year-over-year to 244.2 Bitcoins. The decrease was driven by an increase in Bitcoin network difficulty and by the reduction in broad rewards following the April happening. Bitcoin mining revenue increased 80% from the prior year to $16.1 million due to higher Bitcoin, prices.

Speaker Change: Our Bitcoin production decreased 23% year-over-year to 244.2 Bitcoins. The decrease was driven by an increase in Bitcoin network difficulty and by the reduction in broad rewards following the April halvening.

Speaker Change: Bitcoin mining revenue increased 80% from the prior year to $16.1 million due to higher Bitcoin prices.

Eric Liu: Our HPC services business recognized $12.5 million of revenue during the quarter. We earned 109.4 Ethereum from native staking rewards during the quarter, representing approximately $374,000 in revenue. Our total cost of revenue was $15.2 million compared to $5.6 million the prior year.

Eric Huang: Our HPC services business recognized $12.5 million for revenue during the quarter. We earned $109.4 Ethereum from native staking rewards during the quarter, representing approximately $374,000 in revenue. A total cost revenue was $15.2 million compared to $5.6 million the prior year. The increase was driven by an increase in our active mining fleet, higher Bitcoin network difficulty. They start of our HPC business. Growth profit increased more than 300% from the prior year to $13.8 million. Mining contributed 5.5 million towards growth profit, and HPC added 7.9 million. The total growth margin expanded 1,100 bits from the prior year to 48% with the addition of the HPC offsetting their Bitcoin mining margins related to increased Bitcoin network difficulty.

Erke Huang: Our HPC services business recognized $12.5 million of revenue during the quarter. We earned 109.4 ETH from native staking rewards during the quarter, representing approximately $374,000 in revenue.

Speaker Change: Our HPC services business recognized $12.5 million of revenue during the quarter.

Speaker Change: We earned 109.4 ETH from native staking rewards during the quarter, representing approximately $374,000 in revenue.

Erke Huang: A total cost of revenue was $15.2 million compared to $5.6 million the prior year. The increase was driven by an increase in our active mining fleet, higher Bitcoin network difficulty, the start of our HPC business.

Eric Liu: The increase was driven by an increase in our active mining fleet, higher Bitcoin network difficulty, the start of our HPC business. Growth profit increased more than 300% from the prior year to $13.8 million. Mining contributed $5.5 million towards gross profit, and HPC added $7.9 million. The total growth margin expanded 1,100 bits from the prior year to 48% with the addition of the HPC offsetting lower Bitcoin, mining margins related to increased Bitcoin network difficulty.

Speaker Change: Our total cost revenue was $15.2 million compared to $5.6 million the prior year. The increase was driven by an increase in our active mining fleet, higher Bitcoin network difficulty, the start of our HPC business.

Erke Huang: The growth profit increased more than 300% from the prior year to $13.8 million. Mining contributed $5.5 million towards gross profit and HPC added $7.9 million. The total growth margin expanded 1,100 bps from the prior year to 48% with the addition of the HPC offsetting lower Bitcoin mining margins related to increased Bitcoin network difficulty.

Speaker Change: Growth profit increased more than 300% from the prior year to $13.8 million. Mining contributed $5.5 million towards gross profit and HPC added $7.9 million.

Speaker Change: The total growth margin expanded 1,100 bps from the prior year to 48% with the induction of

Speaker Change: with the addition of the HBC offsetting lower Bitcoin mining margins related to increased Bitcoin network difficulty.

Eric Liu: The general and administrative costs were approximately $5.5 million compared to $5.4, during the prior year quarter.

Eric Huang: General and administrative costs were approximately $5.5 million compared to $5.4 million during the prior year quarter. Depreciation and reposition expense was $8.4 million for the second quarter compared to $3.7 million last year, with the increase driven by larger mining fleet and GPU fleet that were deployed in early 2024. Adjust the EB that was native $3.8 million for quarter compared to $1.9 million last year, while growth profit increased to year over year, and GIA was roughly flat. We recognize an 11.5 million dollars on realized loss on digital assets, which reduced the adjusted EBITDA number. Gap earnings per share was a loss of license for the quarter compared to a loss of three cents the prior year, with the change in digital assets prices being the primary driver of the decrease.

Erke Huang: General and administrative costs were approximately $5.5 million compared to $5.4 million during the prior year quarter. The depreciation and amortization expense was $8.4 million for the second quarter compared to $3.7 million last year, with an increase driven by a larger mining fleet and a GPU fleet that was deployed in early 2021.

Speaker Change: General and administrative costs were approximately 5.5 million dollars compared to 5.4 during the prior year quarter.

Speaker Change: Depreciation and optimization expense was 8.4 million dollars for the second quarter compared to 3.7 million last year with the increase driven by a larger mining fleet and our GPU fleet that was deployed in early 2024.

Eric Liu: Depreciation, amortization expense was $8.4 million for the second quarter compared to $3.7 million last year with the increase driven by a larger mining fleet or GPU fleet that was deployed in early 2024.

Erke Huang: And just the EBITDA was negative $3.8 million for a quarter compared to $1.9 million last, while gross profit increased year over year and GNA was roughly flat. We recognized an $11.5 million unrealized loss on digital assets which reduced the adjusted EBITDA number.

Eric Liu: Adjusted EBITDA was negative $3.8 million for the quarter compared to $1.9 million last year, while gross profit increased year over year, and GNA was roughly flat. We recognized an $11.5 million unrealized loss on digital assets, which reduced the, adjusted EBITDA number.

Speaker Change: Adjusted EBITDA was negative $3.8 million for a quarter compared to $1.9 million last year, while gross profit increased year over year and GNA was roughly flat.

Speaker Change: We recognized an $11.5 million unrealized loss on digital assets, which reduced the adjusted EBITDA number.

Erke Huang: Gap earnings per share was a loss of $0.09 for the quarter compared to a loss of $0.03 the prior year, with a change in digital assets prices being the primary driver of the decrease.

Eric Liu: Gap earnings per share was a loss of $0.09 for the quarter compared to a loss of $0.03, the prior year, with the change in digital assets prices being the primary driver of the decrease.

Speaker Change: Gap earnings per share was a loss of $0.09 for the quarter compared to a loss of $0.03 the prior year, with a change in digital assets prices being the primary driver of the decrease.

Eric Liu: Turning to our balance sheet, we held approximately $61 million of cash, and we stayed cash as, of June 30th this year, and our digital assets position was worth approximately $130 million. Total assets amounted to $315 million at the end of the quarter, while shareholders' equity, was $295 million.

Eric Huang: Turning to our balance sheet, we held approximately 61 million dollars of cash, and we say cash as of June 30th this year, and our digital assets position was worth approximately 130 million dollars. Total assets amounted to 315 million dollars at the end of the quarter, while shareholders' equity was 295 million. Our balance sheet remains debt-free, but we continue to evaluate potential debt financing options as a means to accelerate growth of our HPC business. Given the strength of our balance sheet, we can afford to be patient on that front. Copax was approximately 5 million dollars during the quarter, and the Copax was used for the purchase of approximately 1,000 and 115 new miners and for deposits on certain HPC equipments.

Erke Huang: Caring to our… We held approximately $61 million of cash, and we stayed cash as of June 30th this year. And our digital asset position was worth approximately $130 million.

Speaker Change: Turn to our balance sheet.

Speaker Change: We held approximately $61 million of cash, and we stayed cash as of June 30th this year. And our digital asset position was worth approximately $130 million.

Erke Huang: Total assets amounted to $315 million at the end of the quarter, while shareholders' equity was $295 billion.

Speaker Change: Total assets amounted to $315 million at the end of the quarter, while shareholders' equity was $295 million.

Erke Huang: Our balance sheet remains debt-free, but we continue to evaluate potential debt financing options as a means to accelerate the growth of our HBCUs.

Eric Liu: Our balance sheet remains debt-free, but we continue to evaluate potential debt financing, options as a means to accelerate the growth of our HPC business.

Speaker Change: Our balance sheet remains debt-free, but we continue to evaluate potential debt financing options as a means to accelerate the growth of our HPC business.

Erke Huang: Given the strength of our balance sheet, we can afford to be patient on that for now.

Eric Liu: Given the strength of our balance sheet, we can afford to be patient on that front.

Speaker Change: Given the strength of our balance sheet, we can afford to be patient on that front.

Erke Huang: COPEX was approximately $5 million during the quarter. The COPEX was used for the purchase of approximately 1,115 new miners and for deposits on certain HPC equipment.

Eric Liu: COPEX was approximately $5 million during the quarter. The COPEX was used for the purchase of approximately 1,150 new miners and for deposits on certain, HPC equipments.

Speaker Change: COPEX was approximately five million dollars during the quarter. The COPEX was used for the purchase of approximately a thousand and one hundred fifteen new miners and for deposits on certain HPC equipments.

Eric Liu: I will now turn the call back to Sam for closing remarks.

Cameron Schnier: I will now turn the Copax to fan for closing remarks.

Erke Huang: I will now turn the call back to Sam for closing remarks.

Speaker Change: I will now turn the call back to Sam for closing remarks.

Sam Tabar: Thank you, Eric. Over the past several months, we've seen a large increase in investors that are now interested in Bitcoin mining stocks because of the HPC angle. Many are curious about AI's future.

Sam Tabar: Thank you, Eric.

Sam Tabar: Thank you, Eric.

Sam Tabar: Over the past several months, we've seen a large increase in investors that are now interested in Bitcoin mining stocks because of the HPC angle.

Sam Tabar: Over the past several months, we've seen a large increase in investors that are now interested, in Bitcoin mining stocks because of the HPC angle.

Eric: Thank you, Eric.

Eric: Over the past several months, we have seen a large increase in investors that are now interested in Bitcoin mining stocks because of the HPC angle.

Sam Tabar: Many are curious about AI's future.

Sam Tabar: Many are curious about AI's future.

Sam Tabar: This is like asking where Bitcoin's price is going to be.

Sam Tabar: This is like asking where Bitcoin's price is going to be. I would believe that AI will transform the global economy, and Bitcoin will be worth significantly more in the future. I just can't predict exactly when or to what magnitude this will play out. What I do know is that both AI and Bitcoin will require significantly higher computing power in the years ahead. We want to be positioned to supply that computational power on the HPC side, while maintaining the flexibility to opportunistically increase our mining output. We might not be the largest Bitcoin producer, but size isn't everything.

Sam Tabar: This is like asking where Bitcoin's price is going to be.

Speaker Change: Many are curious about AI's future.

Sam Tabar: I would believe that AI will transform the global economy and Bitcoin will be worth significantly more in the future. I just can't predict exactly when or to what magnitude this will play out. What I do know is that both AI and Bitcoin will require significantly higher computing power in the years ahead.

Sam Tabar: I would believe that AI will transform the global economy and Bitcoin will be worth significantly, more in the future. I just can't predict exactly when or to what magnitude this will play out. What I do know is that both AI and Bitcoin will require significantly higher computing, power in the years ahead.

Speaker Change: This is like asking where Bitcoin's price is going to be.

Speaker Change: I would believe that AI will transform the global economy and Bitcoin will be worth significantly more in the future. I just can't predict exactly when or to what magnitude this will play out.

Speaker Change: What I do know is that both AI and Bitcoin will require significantly higher computing power in the years ahead.

Sam Tabar: We want to be positioned to supply that computational power on the HPC side, while maintaining the flexibility to opportunistically increase our mining output.

Sam Tabar: We want to be positioned to supply that computational power on the HPC side, while maintaining the, flexibility to opportunistically increase our mining output.

Speaker Change: We want to be positioned to supply that computational power on the HPC side, while maintaining the flexibility to opportunistically increase our mining output.

Sam Tabar: We might not be the largest Bitcoin producer, but size isn't everything. Exahash and production are hollow metrics without the underlying returns profile.

Sam Tabar: We might not be the largest Bitcoin producer, but size isn't everything. Exahash and production are hollow metrics without the underlying returns profile.

Speaker Change: We might not be the largest Bitcoin producer, but size isn't everything. Exahash and production are hollow metrics without the underlying returns profile.

Sam Tabar: Exahash and production are hollow metrics without the underlying returns profile. We're okay with not leading in production because the real value lies in making the right moves at the right time. For now, we're seeing better opportunities than HPC. The barriers to entry and mining aren't that high, and we can scale up when it makes sense for us to do so.

Sam Tabar: We're okay with not leading in production because the real value lies in making the right moves at the right time.

Sam Tabar: We're okay with not leading in production because the real value lies in making the, right moves at the right time.

Speaker Change: We're okay with not leading in production because the real value lies in making the right moves at the right time.

Sam Tabar: For now, we're seeing better opportunities in HPC.

Sam Tabar: For now, we're seeing better opportunities in HPC.

Speaker Change: For now, we're seeing better opportunities in HPC.

Sam Tabar: The barriers to entry in mining aren't that high, and we can scale up when it makes sense for us to do so.

Sam Tabar: The barriers to entry in mining aren't that high, and we can scale up when it makes sense, for us to do so.

Speaker Change: The barriers to entry in mining aren't that high, and we can scale up when it makes sense for us to do so.

Sam Tabar: When it comes to AI, I can't tell you what the next killer AI app is going to be. AI is evolving very fast, and new applications will continue to pop up. People will never have imagined Uber or Twitter or Instagram when the Internet was invented. I am nearly certain that new and unexpected use cases for AI will emerge, and that in five years, the world will require far more high performance computing power than we need today.

Sam Tabar: When it comes to AI, I can't tell you what the next killer AI app is going to be.

Sam Tabar: When it comes to AI, I can't tell you what the next killer AI app is going to be.

Speaker Change: When it comes to AI, I can't tell you what the next killer AI app is going to be. AI is evolving very fast, and new applications will continue to pop up. People would never have imagined Uber or Twitter or Instagram when the Internet was invented.

Sam Tabar: AI is evolving very fast, and new applications will continue to pop up.

Sam Tabar: AI is evolving very fast, and new applications will continue to pop up.

Sam Tabar: People would never have imagined Uber or Twitter or Instagram when the Internet was invented.

Sam Tabar: People will never have imagined Uber or Twitter or Instagram when the internet was invented.

Sam Tabar: I am nearly certain that new and unexpected use cases for AI will emerge and that in five years, the world will acquire far more high-performance computing power than we need today.

Sam Tabar: I am nearly certain that new and unexpected use cases for AI will emerge, and that in, five years, the world will require far more high-performance computing power than we need today.

Speaker Change: I am nearly certain that new and unexpected use cases for AI will emerge and that in five years the world will acquire far more high-performance computing power than we need today.

Sam Tabar: We're not just focused on AI tailwinds.

Sam Tabar: We're not just focused on AI tailwinds. The binding term sheet we announced with Booster today, a cloud gaming company, is a good example of how we're diversifying. That deal also provides for significant growth, which is ultimately the fabric of our business model, to align ourselves with customers and grow in a mutually beneficial way. So I might be disappointed about the temporary delay of our anchor customer GPU expansion, but these things happen in a customer-focused business. Once the revenue comes in, the margins will likely be even better if they decide to upgrade the new hardware models.

Sam Tabar: We're not just focused on AI tailwinds.

Sam Tabar: The binding term sheet we announced with Boosteroid today, a cloud gaming company, is a good example of how we're diversifying. That deal also provides for significant growth, which is ultimately the fabric of our business model, to align ourselves with customers and grow in a mutually beneficial way.

Sam Tabar: The binding term sheet we announced with Boosteroid today, a cloud gaming company, is a good example, of how we're diversifying. That deal also provides for significant growth, which is ultimately the fabric of our business, model, to align ourselves with customers and grow in a mutually beneficial way.

Speaker Change: We're not just focused on AI tailwinds.

Speaker Change: The binding term sheet we announced with Boosteroid today, a cloud gaming company, is a good example of how we're diversifying.

Speaker Change: That deal also provides for significant growth, which is ultimately the fabric of our business model to align ourselves with customers and grow in a mutually beneficial way.

Sam Tabar: Some might be disappointed about the temporary delay of our Anker customer GPU expansion, but these things happen in a customer-focused business.

Sam Tabar: Some might be disappointed about the temporary delay of our anchor customer GPU expansion, but these things happen in a customer-focused business.

Speaker Change: Some might be disappointed about the temporary delay of our Anker customer GPU expansion, but these things happen in a customer-focused business.

Sam Tabar: Once the revenue comes in, the margins will likely be even better if they decide to upgrade the new hardware models.

Sam Tabar: Once the revenue comes in, the margins will likely be even better if they decide to upgrade, the new hardware models.

Speaker Change: Once the revenue comes in, the margins will likely be even better if they decide to upgrade the new hardware models. We remain long-term greedy.

Sam Tabar: We remain long-term greedy.

Sam Tabar: We remain long-term greedy. We're not taking a myopic view on the business. We want to grow alongside our customers for the next decade and renew contract after contract. Long-term, I'm confident that this approach will maximize shareholder value.

Sam Tabar: We remain long-term greedy.

Sam Tabar: We're not taking a myopic view on the business.

Sam Tabar: We're not taking a myopic view on the business.

Sam Tabar: We want to grow alongside our customers for the next decade and renew contract after contract.

Sam Tabar: We want to grow alongside our customers for the next decade and renew contract after contract.

Speaker Change: We're not taking a myopic view on the business. We want to grow alongside our customers for the next decade and renew contract after contract.

Sam Tabar: Long term, I'm confident that this approach will maximize shareholder value.

Sam Tabar: Long-term, I'm confident that this approach will maximize shareholder value.

Speaker Change: Long term, I'm confident that this approach will maximize shareholder value.

Cameron Schnier: We're working on a lot of very exciting things right now, and I wish I could share more details, but at the best of my counsel, all I will say for now is stay tuned. With that, I would like to open the line for some questions. Thank you. If you would like to signal with questions, please press star one on your touchtone telephone. If you're joining us today using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment. You'll hear a tone indicating where your line is open.

Sam Tabar: We're working on a lot of very exciting things right now, and I wish I could share more details.

Sam Tabar: We're working on a lot of very exciting things right now, and I wish I could share more details, but at the behest of my counsel, all I will say for now is stay tuned.

Speaker Change: We're working on a lot of very exciting things right now, and I wish I could share more details, but at the behest of my council, all I will say for now is stay tuned.

Sam Tabar: But, at the behest of my counsel, all I will say for now, all I will say for now is stay tuned.

Sam Tabar: With that, I would like to open the line for some questions.

Sam Tabar: With that, I would like to open the line for some questions.

Operator: Thank you.

Speaker Change: With that, I would like to open the line for some questions.

Operator: Thank you.

Operator: If you would like to signal with questions, please press star 1 on your touchtone telephone.

Speaker Change: Thank you. If you would like to signal with questions, please press star 1 on your touchtone telephone.

Operator: If you're joining us today using a speakerphone, please make sure your mute function is turned, off to allow your signal to reach our equipment. You'll hear a tone indicating where your line is open.

Speaker Change: If you are joining us today using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment.

Cameron Schnier: At that point, please state your name and company name, and then pose your questions. Again, that is star one. If you would like to signal with questions, star one.

Operator: At that point, please state your name and company name, and then pose your questions.

Speaker Change: You'll hear a tone indicating where your line is open. At that point, please state your name and company name and then pose your questions. Again, that is star 1 if you would like to signal with questions. Star 1.

Operator: Again, that is star 1 if you would like to signal with questions, star 1.

Operator: If you would like to signal with questions, please press star one on your touchtone telephone.

Operator: If you're joining us today using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our, You'll hear a tone indicating your line is open.

Mike Rondall: Hey, Sam, this is Mike Rondall.

Operator: Hello, and welcome to the Bit Digital Second Quarter 2024 earnings conference call.

Operator: Hello, and welcome to the Bit Digital Second Quarter 2024 earnings conference call. Good morning, good afternoon, and good evening, depending on where you're joining us from. Thank you for being here. We're just giving a few more moments for attendees to dial in, so thank you for your patience. While we wait, please note that during this call, all participant lines will be in a listen only mode. Following the officer's update, we'll open the floor for a question and answer session. If you have a question at that time, simply press star 1 on your telephone keypad. Also, as a reminder, today's conference is being recorded.

Mike Rondall: Hey, Sam. This is Mike Rondall. First question is really on the 700 million potential Boosteroid contract. It looks like it starts at about 13 million in revenue over five years, and you talked about it scaling in 2025. Is there any minimum levels, or how should we think about that scaling? So we expect to be able to provide greater detail on the growth cadence over time. The initial allotment is a starting quantity, and upon successful deployment, we expect to start fulfillment and incremental deployments. However, this contract is designed for us to grow in tandem with Boosteroid.

Operator: At that point, please state your name and company name and then pose your questions.

Speaker Change: i

Operator: Again, that is star one, if you would like to signal with questions.

Mike Rondall: My first question is really on the $700 million potential Boosteroid contract.

Micke Runddell: Hey Sam, this is Mike Grondahl. First question is really on...

Operator: Good morning, good afternoon, and good evening, depending on where you're joining us from.

Operator: Star 1.

Mike Grondahl: Hey, Sam.

Mike Grondahl: This is Mike Grondahl.

Mike Grondahl: First question is really on...

Speaker Change: the 700 million potential Boosteroid contract.

Mike Grondahl: The 700 million potential Boosteroid contract, You know, it looks like it starts at about $13 million in revenue over five years. And you talked about it scaling in 2025.

Mike Rondall: It looks like it starts at about $13 million in revenue over five years, and you talked, about it scaling in 2025.

Speaker Change: You know, it looks like it starts at about $13 million in revenue over 5 years. And you talked about it scaling in 2025. Is there any minimum levels, or how should we think about that scaling?

Mike Grondahl: Is there any minimum levels or how should we think about that?

Sam Tabar: Is there any minimum levels, or how should we think about that scaling?

Sam Tabar: So we expect to be able to provide greater detail on the growth cadence over time.

Sam Tabar: We expect to be able to provide greater detail on the growth cadence over time.

Speaker Change: So, we expect to be able to provide greater detail on the growth cadence over time. The initial allotment is a starting quantity, and upon successful deployment, we expect to start fulfillment incremental deployments.

Cameron Schnier: I'll now hand it over to your host, Cameron Schnier, head of investor relations at Bit Digital, Cameron, the floor's yours. Thank you.

Sam Tabar: The initial allotment is a starting quantity, and upon successful deployment, we expect the start fulfillment incremental deployment.

Sam Tabar: The initial allotment is a starting quantity, and upon successful deployment, we expect, to start fulfillment incremental deployments.

Sam Tabar: However, this contract is designed for us to grow in tandem with Boosteroid.

Sam Tabar: However, this contract is designed for us to grow in tandem with Boosteroid.

Operator: Thank you for being here.

Cameron Schnier: Good morning and welcome to the Bit Digital Second Quarter 2024 earnings call. Joining us on the call today are Sam Tabar, Chief Executive Officer, and Eric Huang, Chief Financial Officer. Before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that can cause our results to differ materially from those projected in these statements. I therefore refer you to our latest 20F filing, yesterday's 6K filing, and our other SEC filings. Our comments today may also include non-gap financial measures. Additional details and reconciliations of the most directly comparable gap financial measures can be found in our 20F filing and yesterday's 6K filing, which are on our website.

Speaker Change: However, this contract is designed for us to grow in tandem with Boosteroid. We're not looking to deploy the full run rate out of the gates. Our baseline for 2025 is probably to get through around 30% of total deployment.

Sam Tabar: We're not looking to deploy the full run rate out of the gates. Our baseline for 2025 is probably to get through around 30% of total deployment. Roosteroid's growth trajectory and our own capital allocation plans are the key variables to the cadence of that deployment.

Sam Tabar: We're not looking to deploy the full run rate out of the gates. Our baseline for 2025 is probably to get through around 30% of total deployment. Boosteroid's growth trajectory in our own capital allocation plans are the key variables to the cadence of that deployment. Cool.

Sam Tabar: We're not looking to deploy the full run rate out of the gates. Our baseline for 2025 is probably to get through around 30% of total deployment. Boosteroid's growth trajectory and our own capital allocation plans are the key variables, to the cadence of that deployment.

Speaker Change: Bruce Geroy's growth trajectory and our own capital allocation plans are the key variables to the cadence of that deployment.

Mike Rondall: Cool.

Mike Rondall: Okay.

Mike Grondahl: Cool, okay, well hey, 30% is at least something to go on and it's a lot.

Mike Rondall: Well, hey, 30% is at least something to go on, and it's a lot.

Sam Tabar: Okay, well, 30% is at least something to go on, and it's a lot. Secondly, you kind of talked customer one in the pause. I think that's, you know, the right approach, and they already have 2000. Wilson. But you said, too, that you can still reach your 100 million run rate by year and 24 without customer one. Could you talk a little bit about your HPC GPU pipeline? Is it a couple large ones like Boosteroid, or is it numerous small ones? Just trying to get a flavor for that pipeline. Yeah, so we announced Boosteroid yesterday. Other clients are very close to the finish line.

Speaker Change: Cool. Okay, well hey, 30% is at least something to go on and it's a lot.

Mike Rondall: Secondly, you kind of talked customer one in the pause.

Mike Grondahl: Secondly, kind of talked.

Mike Grondahl: Customer one in the pause.

Speaker Change: Secondly,

Speaker Change: You kind of talked customer one in the pause. I think that's, you know, the right approach, and, you know, they already have 2,000.

Mike Grondahl: I think that, you know, the right approach.

Mike Grondahl: And, you know, they already have 2,000.

Mike Rondall: But you said, too, that you can still reach your 100 million run rate by year-end 24 without, customer one.

Mike Grondahl: But you said, too, that you can still reach your 100 million run rate by year-end 24, without customer one.

Cameron Schnier: After our prepared remarks, we will open the call up for questions. If you'd like to ask a question, please hit star 100 keypad.

Speaker Change: But you said, too, that you can still reach your 100 million run rate by year-end 24.

Cameron Schnier: With that in poll, I will now turn the call over to Sam to discuss our performance. Thank you, Cam.

Mike Grondahl: Could you talk a little bit about your HPC GPU pipeline?

Mike Rondall: Could you talk a little bit about your HPC GPU pipeline?

Speaker Change: WithoutCustomer1, could you talk a little bit about your HPC GPU pipeline? You know, is it a couple large ones like Boosteroid or is it, you know, numerous small ones?

Mike Grondahl: you know, is it a couple large ones like Boosteroid or is it, you know, numerous small ones?

Sam Tabar: Is it a couple large ones, like Boosteroid, or is it numerous small ones?

Operator: We're just giving a few more moments for attendees to dial in, so thank you for your patience.

Sam Tabar: Ladies and gentlemen, thank you for joining us on the call today. Today, I will dive into our second quarter results, discuss some of our ongoing strategic initiatives and provide some color on what we envision as the future for Bit Digital. Eric will then provide more detail on our financial results, and then we will open the line for your questions. Our second quarter results were solid. We are encouraged by the progress we've made in background spying our business.

Operator: While we wait, please note that during this call, all participant lines will be in a listen only mode.

Mike Grondahl: I'm just trying to get a flavor for that.

Sam Tabar: Just trying to get a flavor for that pipeline.

Speaker Change: Just trying to get a flavor for that pipeline.

Sam Tabar: Yeah, so we announced Boosteroid yesterday.

Sam Tabar: Yeah, so we announced Boost Heroid yesterday.

Operator: Following the officer's update, we'll open the floor for a question and answer session.

Speaker Change: Yeah, so we announced Boost Heroid yesterday. Other clients are very close to the finish line. Our new hires will help accelerate that closing process, as mentioned.

Sam Tabar: Other clients are very close to the finish line.

Sam Tabar: Our new hires will help accelerate that closing process, as I mentioned. That was a pretty large gating item, just not having the manpower to deal with all these reverse inquiries. And we continue to have that. But we do think we can hit that 100 million dollar mark by the year end, even with that expansion being paused potentially to 2025. And by the way, the decision hasn't been made yet on that. But beyond that contribution from Boosteroid, we do have several clients close to closing, and we'll get to pretty close to that number. So we're pretty confident.

Sam Tabar: Our new hires will help accelerate that closing process, as mentioned.

Operator: If you have a question at that time, simply press star 1 on your telephone keypad.

Sam Tabar: That was a pretty large gating item, just not having the manpower to deal with all these, reverse inquiries, and we continue to have that.

Operator: Also, as a reminder, today's conference is being recorded.

Speaker Change: a pretty large gating item, just not having the manpower to deal with all these reverse inquiries, and we continue to have that. But we do think we can hit that $100 million mark by the year-end.

Cameron Schnier: I'll now hand it over to your host, Cameron Schnier, head of investor relations at Bit Digital, Cameron, the floor's yours.

Sam Tabar: Our revenue more than doubled from the prior year. Our gross margins expanded by over 1,000 basis points. Adjusted EBITDA and EPS were impacted by an unrealized loss on our digital asset position. The first full quarter contribution from our HPC business is well timed. It helps offset the decline coming from the post-having reduction and block rewards. Our balance sheet remains pristine with zero debt. It affords us significant flexibility to prudently invest in the most creative opportunities.

Sam Tabar: But we do think we can hit that $100 million mark by the year-end, even with that expansion, being paused, potentially, to 2025.

Cameron Schnier: Thank you.

Cameron Schnier: Good morning and welcome to the Bit Digital Second Quarter 2024 earnings call.

Speaker Change: Even with that expansion being paused potentially to 2025 and by the way the decision hasn't been made yet on that sure But beyond that contribution from Boosteroid We do have several clients close to closing and we'll get to pretty close to that number. So we're pretty confident We're not revising that target

Sam Tabar: And by the way, the decision hasn't been made yet on that.

Sam Tabar: Other clients are very close to the finish line.

Sam Tabar: But beyond that contribution from Boosteroid, we do have several clients close to closing, and we'll get pretty close to that number. So we're pretty confident.

Sam Tabar: Our new hires will help accelerate that closing process, as mentioned, that was, We have a pretty large gating item, just not having the manpower to deal with all these reverse inquiries, and we continue to have that.

Cameron Schnier: Joining us on the call today are Sam Tabar, Chief Executive Officer, and Eric Huang, Chief Financial Officer.

Sam Tabar: But we do think we can hit that $100 million mark by the year-end, even with that expansion being paused potentially to 2025.

Sam Tabar: And by the way, the decision hasn't been made yet on that.

Cameron Schnier: Before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that can cause our results to differ materially from those projected in these statements.

Sam Tabar: But beyond that contribution from Bruce Troy, we do have several clients close to closing, and we'll get to pretty close to that number. So we're pretty confident.

Sam Tabar: We're not revising that target.

Sam Tabar: We're not revising that target.

Sam Tabar: We're not revising that target. We still feel good about 100 million.

Sam Tabar: We still feel good about $100 million.

Sam Tabar: We still feel good about $100 million.

Sam Tabar: Did your new head of sales actually start, or is that person coming on soon? Nope, he started. Okay.

Mike Grondahl: And did your new head of sales actually start, or is that person coming?

Mike Rondall: And did your new head of sales actually start, or is that person coming on soon?

Cameron Schnier: I therefore refer you to our latest 20F filing, yesterday's 6K filing, and our other SEC filings.

Speaker Change: We still feel good about a hundred million and did your new head of sales actually start or is that person coming on soon?

Cameron Schnier: Our comments today may also include non-gap financial measures.

Sam Tabar: Nope, he started.

Sam Tabar: Nope, he started.

Sam Tabar: Okay, okay.

Speaker Change: Nope, he started.

Mike Grondahl: Okay, and then one more, you know, you talked a little bit towards the end of your prepared remarks, about acquisition and whatnot.

Sam Tabar: And then one more, you know, you talked a little bit towards the end of your prepared remarks about acquisition and whatnot. And in the past, you've, you know, you've mentioned possibly you're looking at a data center. Is that what you were referring to there, kind of? That's been where you've been spending some time, and you couldn't say more. I'm just trying to connect the dots there a little bit. Yeah. Now we understand. Look, this is ongoing. We don't await too much into the details about what we're seeing out there and what we're targeting. We can't provide too much detail on our process, but it's something we're looking at.

Mike Rondall: And then one more, you talked a little bit towards the end of your prepared remarks about, acquisition and whatnot, and in the past, you've mentioned possibly you're looking at a data center.

Speaker Change: Okay, okay. And then one more, you know, you talked a little bit towards the end of your prepared remarks about acquisition and whatnot, and in the past you've, you know, you've mentioned

Cameron Schnier: Additional details and reconciliations of the most directly comparable gap financial measures can be found in our 20F filing and yesterday's 6K filing, which are on our website.

Sam Tabar: The groundwork is firmly in place for us to realize our long-term vision of creating a diversified, durable platform that generates consistent cash flows and significant returns. On the mining side of the business, we were most required during the quarter. That was by design. We were keen to wait and see how the environment shook out following the having. Network hash rate proved to be resilient despite the reduction in block rewards and hash price subsequently fell to new all-time lows.

Mike Grondahl: And in the past, you've, you know, you've mentioned possibly you're looking at a data center.

Cameron Schnier: After our prepared remarks, we will open the call up for questions.

Speaker Change: possibly you're looking at a data center. Is that what you were referring to there kind of that's been where you've been spending some time and you couldn't say more? I'm just trying to connect the dots there a little bit.

Mike Grondahl: Is that what you were referring to there, kind of that's been where you've been spending some time and you couldn't say more?

Mike Rondall: Is that what you were referring to there, kind of, that's been where you've been spending, some time and you couldn't say more?

Cameron Schnier: If you'd like to ask a question, please hit star 100 keypad.

Cameron Schnier: With that in poll, I will now turn the call over to Sam to discuss our performance.

Sam Tabar: I'm just trying to connect the dots there a little bit.

Mike Grondahl: I'm just trying to connect the dots there a little.

Sam Tabar: Thank you, Cam.

Sam Tabar: Yeah, no, we understand.

Sam Tabar: Yeah, no, we understand.

Sam Tabar: This is ongoing.

Sam Tabar: This is ongoing.

Sam Tabar: We don't want to wade too much into the details about what we're seeing out there and what, we're targeting.

Speaker Change: Yeah, no, we understand. This is ongoing. We don't want to wade too much into the details about what we're seeing out there and what we're targeting. We can't provide too much detail on our process, but it's something we're looking at.

Sam Tabar: We don't want to wade too much into the details about what we're seeing out there and what we're targeting.

Sam Tabar: Ladies and gentlemen, thank you for joining us on the call today.

Sam Tabar: Our active hash rate ended the quarter at approximately 2.6 hecta hash. This is a slight decrease compared to the end of Q1. The decline is attributed to cutelments, micement, and energy saving measures on sites where electricity prices were unusually high, reproduced 244 bitcoins during the quarter. This is a 23% decrease from the prior year, driven by increased network difficulty and a reduction in block rewards. For the quarter, our average electricity price per bitcoin was approximately 4.7 cents per kilowatt hour.

Sam Tabar: We can't provide too much detail on our process, but it's something we're looking at.

Sam Tabar: We can't provide too much detail on our process, but it's something we're looking at.

Sam Tabar: Yeah, so I can't say more than that.

Sam Tabar: I can't say more than that, but I can say that owning our own site, certainly on the HPC side of the equation, will allow us to offer different services like publication and on-demand compute.

Sam Tabar: Yeah. So I can't say I can't say more than that, but I can say that owning our own site certainly on the HPC side of the equation will allow us to offer different services like publication and on-demand compute. Got it. Yeah, that would be great.

Sam Tabar: Today, I will dive into our second quarter results, discuss some of our ongoing strategic initiatives and provide some color on what we envision as the future for Bit Digital.

Sam Tabar: But I can say that owning our own site, certainly, on the HPC side of the equation, will allow, us to offer different services like publication and on-demand compute.

Speaker Change: Yeah, so I can't say more than that, but I can say that owning our own site, certainly on the HPC side of the equation, will allow us to offer different services like location and on-demand compute.

Sam Tabar: Eric will then provide more detail on our financial results, and then we will open the line for your questions.

Mike Rondall: Got it, yeah, that would be great.

Mike Grondahl: Got it.

Sam Tabar: Our second quarter results were solid.

Mike Grondahl: Yeah, that would.

Mike Grondahl: And then maybe lastly for Eric...

Mike Rondall: And then maybe lastly for Eric, you know, in Q2, Eric, you guys hit the ATM roughly 16 million shares; since June 30th, about another nine million shares. How are you, you know, attempting to finance this going forward? You know, there's a bunch of cat-backs. I know you've talked about a credit facility in the past, but how are you just thinking about, you know, using the ATM versus getting a credit facility in place? Thanks for a question, Mike. As we always express the use of ATM, we're very cautious, but, you know, as we all know, this requires a large procurement down payment, so it's always good to have the best new balance sheet to support our growth.

Mike Rondall: And then maybe lastly for Eric, you know, in Q2, Eric, you guys hit the ATM, roughly, 16 million shares, since June 30th, about another 9 million shares.

Speaker Change: Got it. Yeah, that would be great. And then maybe lastly for Erick,

Mike Grondahl: You know, in Q2, Eric, you guys hit the ATM, roughly 16 million shares.

Eric: You know, in Q2, Eric, you guys hit the ATM, roughly 16 million shares. Since June 30th, about another 9 million shares.

Sam Tabar: We are encouraged by the progress we've made in background spying our business.

Mike Grondahl: Since June 30th, about another 9 million shares.

Mike Grondahl: How are you, you know, attempting to finance this going forward?

Mike Rondall: How are you, you know, attempting to finance this going forward?

Sam Tabar: Our electricity price per bitcoin was 29,300. Our total cost of production defined as electricity and other hosting fees divided by bitcoin production amounted to approximately 43,200 for the quarter. Proper sharing fees amounted to around 11,100 per bitcoin for the first quarter. On profit sharing fees, they vary based on the amount of gross profit per bitcoin we received. This fee accounts for the fact that we don't own our own mining infrastructure. Other companies have charges under different light items that account for the costs of running a mining site, including labor.

Speaker Change: How are you, you know, attempting to finance this going forward, you know, there's a bunch of CapEx.

Mike Rondall: You know, there's a bunch of CapEx.

Erke Huang: You know, there's a bunch of CapEx.

Erke Huang: I know you've talked about a credit facility in the past, but how are you just thinking about, you know, using the ATM versus getting a credit facility?

Mike Rondall: I know you've talked about a credit facility in the past, but how are you just thinking, about, you know, using the ATM versus getting a credit facility in place?

Speaker Change: I know you've talked about a credit facility in the past, but how are you just thinking about, you know, using the ATM versus getting a credit facility in place?

Eric Liu: Thanks for the question, Mike.

Mike Grondahl: Thanks for the question, Mike.

Eric Liu: As we always express the use of ATM, we're very cautious, but, you know, as we all know, this business requires a large, you know, procurement down payment, so it's always good to have the best, you know, balance sheet to support our growth, and at the same time, we are talking to, you know, wireless, you know, credit facility providers to determine, you know, what's the best term for us to deploy, so we're working on that as well.

Erke Huang: As we always express the use of ATM, we are very cautious.

Speaker Change: Thanks for the question, Mike. As we always express the use of ATM, we are very cautious.

Erke Huang: But, as we all know, this business requires a large procurement down payment, so it's always good to have the best balance sheet to support our growth, and at the same time, we are talking to wireless credit facility providers to determine what's the best term for us to deploy, so we're working on that as well.

Speaker Change: As we all know, this business requires a large procurement down payment, so it's always good to have the best balance sheet to support our growth.

Mike Grondahl: Okay.

Eric Huang: And at the same time, we are talking to your virus, your credit facility providers to determine what's the best term for us to deploy. So we're working on that. Well, if I could just add to that, we continue to evaluate term sheets on debt financing. In terms of the indicative terms that we're seeing, we see some reasonable terms, but nothing for us to be super excited about to accept, and we haven't been forced in the position to accept less than optimal debt financing terms, and that's important. Got it, got it.

Sam Tabar: This is often overlooked by comp sheets comparing production costs. Our average realized bitcoin price during the second quarter was around 65,800. This leaves around 22,700 in gross profit, or a mining margin of around 34%. However, current economics present challenges, especially with the depreciation costs. This makes it difficult to recover the investment in new mining rigs within a reasonable time frame. We're bullish on the future of bitcoin, but we are realists. The economics are difficult right now, and we are choosing not to aggressively grow into that backdrop without higher conviction that we can make a justifiable return on new equipment.

Speaker Change: And at the same time, we are talking to wireless credit facility providers to determine what's the best term for us to deploy. So we're working on that as well.

Eric Liu: We continue to evaluate term sheets on debt financing, and in terms of the indicative, terms that we're seeing, we see some reasonable terms, but nothing for us to be super excited about to accept.

Sam Tabar: Let me, if I could just add to that, Mike, we are, we continue to evaluate term sheets on debt financing and, and, you know, in terms of the indicative terms that we're seeing, we see some reasonable terms, but nothing for us to be super excited about to accept.

Speaker Change: We continue to evaluate term sheets on debt financing, and in terms of the indicative terms that we're seeing, we see some reasonable terms, but nothing for us to be super excited about to accept.

Eric Liu: And, you know, we haven't been forced in a position to accept less than optimal debt, financing terms, and that's important.

Sam Tabar: And, you know, we haven't been forced in a position to accept less than optimal debt financing terms, and that's important.

Speaker Change: And, you know, we haven't been forced in a position to accept less than optimal debt financing terms, and that's important.

Mike Grondahl: Got it.

Mike Rondall: Got it.

Mike Rondall: Hey, thanks, guys. Congratulations. Thank you.

Mike Rondall: Hey, thanks, guys.

Mike Rondall: And congratulations.

Speaker Change: Got it, got it. Hey, thanks guys and congratulations.

Sam Tabar: Thank you.

Sam Tabar: Thanks.

Mike Grondahl: Got it.

Operator: And we'll go – we'll take our next question.

Operator: We'll take our next question.

Speaker Change: Thank you.

Speaker Change: And we'll go, we'll take our next question.

Kevin Dede: Hi, Sam, Erke, Kevin Dede, can you hear me okay?

Sam Tabar: Our principal bottleneck to ex-a-hash growth right now is our own menu of growth options. We see better investment options in HPC at the moment. So based on what we see today, we think it's unlikely that we will hit six ex-a-hash by the year end. Material ex-a-hash growth for us into year end would require, either, a significantly better view on mining economics or a significant deterioration in the opportunity set we currently see on the HPC side. Near-term, our focus on the mining side is on improving the efficiency of our active fleet and lowering production costs.

Kevin Dede: Hi, Sam, Erick, Kevin, Dede, can you hear me okay? Hi Kevin, Latin clear. Good, okay, thanks. Just first, on the Bitcoin side, obviously you spoke to the client in your self-mining hash rate.

Mike Grondahl: Hey, thanks, guys, and congratulations.

Speaker Change: Hi, Sam, Erke, Kevin Dede, can you hear me okay?

Kevin Dede: Hi, Kevin.

Sam Tabar: Thank you.

Sam Tabar: Loud and clear.

Kevin Dede: Good.

Kevin Dede: Okay.

Operator: And we'll go, we'll take our next question.

Kevin Dede: Thanks.

Kevin Latam: Hi Kevin, loud and clear.

Kevin Dede: Just first, on the Bitcoin side, obviously, you spoke to the decline in your self-mining, hash rate.

Kevin Dede: Hi, Sam, Erke, Kevin Dede.

Kevin Latam: Good. Okay, thanks.

Speaker Change: Just first, on the Bitcoin side,

Speaker Change: Obviously, you spoke to decline in your self-mining hash rate. I'm just wondering what you're thinking about with dealing with those machines, and then I think, if I understood or heard correctly, new machine purchase.

Sam Tabar: I'm just wondering what you're just thinking about with doing those machines, and then I think if I understood or heard correctly, new machine purchase, maybe to just fill in the blanks on where you think your hash rate target will be a year end given, you're kind of pulling back on the range there, on economic condition. Sure, yeah, that's a good question; understandable. The long-term plan for Bitcoin mining for us is to remain opportunistic. It's not a business that we believe should be consistently invested into regardless of prevailing economics. We have different levers, so we're in a very fortunate position on that.

Kevin Dede: I'm just wondering what you're thinking about doing with those machines, and then I think, if I understood or heard correctly, a new machine purchase.

Kevin Dede: Maybe you could just sort of fill in the blanks on where you think your hash rate target will, be at year-end, given – you're kind of pulling back on the range there, on economic conditions.

Speaker Change: Maybe you could just sort of fill in the blanks on where you think your hash rate target will be at year-end given...

Sam Tabar: Our revenue more than doubled from the prior year.

Sam Tabar: Switching gears, the HPC segment generated $12.5 million of revenue at 63% growth margins during the second quarter. That was the first full quarter of operations for this business. We recently announced a binding term sheet with a new customer, Bruce DeRoyd, the world's third largest cloud gaming provider, following Microsoft NNVIDIA. We believe that this represents a key end-market expansion for our HPC business beyond AI applications or LLM training specifically. This term sheet carries a locked five-year term.

Kevin Dede: Can you hear me OK?

Speaker Change: You're kind of pulling back on the reins there, on economic conditions. Yeah, Kevin, that's a good question, understandable. The long-term plan for Bitcoin mining for us is to remain opportunistic.

Sam Tabar: Sure.

Kevin Dede: Hi Kevin, loud and clear.

Sam Tabar: Yeah, that – Kevin, that's a good question, understandable.

Kevin Dede: Good.

Kevin Dede: Okay, thanks.

Kevin Dede: Just first on the Bitcoin side.

Kevin Dede: I'm obviously you spoke to decline in your self mining hash rate.

Sam Tabar: The long-term plan for Bitcoin mining for us is to remain opportunistic.

Sam Tabar: Our gross margins expanded by over 1,000 basis points.

Sam Tabar: It's not a business that we believe that should be consistently invested into, regardless, of prevailing economics.

Sam Tabar: It also provides for up to 50,000 GPUs over a five-year period following the signing of the MSA. The entire contract, if Bruce DeRoyd elects to deploy the entire 50,000 GPU allotment, it will be worth more than $700 million of revenue for the digital over the five-year contract subject to market conditions. The initial deployment will be a test positive. This will likely represent a $2-3 million annualized revenue opportunity in its starting form.

Speaker Change: It's not a business that we believe that should be consistently invested into regardless of prevailing economics. We have different levers.

Sam Tabar: We have different levers.

Sam Tabar: So we're in a very fortunate position on that.

Sam Tabar: You could expect potentially some modest growth, but we can't give any guidance on that, because, again, we want to just remain opportunistic. We want to see how the market conditions have evolved, but at current economics, we would likely not spend more than $5 to $10 million on seed upgrades on the current economics, and that's been going sideways for a while, the economics there. Also, on one hand, it would have to see a deep acceleration in the HPC demand that we're seeing, and we're currently seeing a good amount of capital to fund opportunities for the HPC side.

Speaker Change: So, we're in a very fortunate position on that. But, you know, you could expect potentially some modest growth, but we can't give any guidance on that because, again, we want to just remain opportunistic. We want to see how the market conditions evolve.

Sam Tabar: But you could expect, potentially, some modest growth, but we can't give any guidance on, that because, again, we want to just remain opportunistic.

Sam Tabar: We want to see how the market conditions evolve.

Sam Tabar: But at current economics, we would likely not spend more than $5 to $10 million on feed, upgrades on the current economics, and that's been going sideways for a while, the economics there.

Speaker Change: But at current economics, we would likely not spend more than 5 to 10 million dollars on speed upgrades, on the current economics. And that's been going sideways for a while, the economics there.

Sam Tabar: And also, on one hand, it would be – it would have to see a deep acceleration in the, HPC demand that we're seeing, and we're currently – see a good amount of capital to fund opportunities for the HPC side.

Speaker Change: And also, on one hand, it would have to see a deep acceleration in the HPC demand that we're seeing. And we currently see a good amount of capital to fund opportunities for the HPC side.

Sam Tabar: So I think – I mean, that's the answer.

Eric Huang: I don't know if Eric wants to add to that, but that's my thought about it. Yeah, I agree with you. Thank you.

Sam Tabar: I don't know if Eric wants to add to that, but that's my thought about it.

Speaker Change: So, I think, I mean, that's the answer. I don't know if Eric wants to...

Sam Tabar: We expect that initial deployment to take place over the next few months and expect to scale that contract throughout 2025. We'll be able to provide further details on the timing and build out of the contract after we execute the MSA, which we are working hard on completing as soon as possible. We look forward to growing alongside Bruce DeRoyd and helping them achieve their goal of becoming the global leader in cloud gaming.

Speaker Change: I wanted to add to that, but that's my thought about it.

Eric Liu: Yeah, I agree with you.

Eric Liu: Thank you.

Kevin Dede: Yeah.

Sam Tabar: Yeah, so you did make the machine purchase, and then what's the thinking regarding the machines that you've taken offline, the ones that perhaps are at much higher levels of, I guess, inefficiency? Well, if they're not economically viable for certain models, they go into your warehouse, so we sell them, which is something we've done. Very good.

erairre: agree with you sankin

Kevin Dede: So you did make a machine purchase, and then what's the – what's the thinking regarding, the machines that you've taken offline, the ones that perhaps are at much higher levels of, I guess, inefficiency?

Kevin Dede: I'm just wondering what you're thinking about with those doing with those machines.

Kevin Dede: And then I think.

Speaker Change: Yeah, so you did make a machine purchase and then what's the thinking regarding the machines that you've taken offline?

Kevin Dede: If I understood or heard correctly, new machine purchase.

Kevin Dede: Maybe you could just sort of fill in the blanks on where you think your hash rate target will be at year-end, given.., you're kind of pulling back on the reins there, on economic conditions.

Sam Tabar: Sure.

Speaker Change: The ones that perhaps are much higher levels of, I guess, inefficiency.

Sam Tabar: This field has great growth potential and aligns with our business model of growing alongside our customers. Our pipeline and HPC remains strong and continues to grow. The major bottleneck to date in terms of completing incremental contracts has been bandwidth. We simply haven't had the adequate manpower to move highly customized customers deals through the finish line. But we have begun to solve for that need. We need our first full-time hires in the HPC segment to help lead the revenue process.

Sam Tabar: Well, if they're not economically viable for certain models, they go into a warehouse or, we sell them, which is about something we've done.

Speaker Change: Well, if they're not economically viable for certain models, they go into a warehouse and we sell them, which is about something we've done.

Sam Tabar: Yeah, that, that, Kevin, that, that's a good question.

Sam Tabar: Very good.

Eric Huang: Okay, then sort of switching gears and looking at HPC hosting sites, my thinking would be that booster roads, facilities would need to be close to metropolitan areas, versus say, customer one, which I think is mostly... in France. Can you talk about how you're lining up facilities to meet the obligations of the booster ideal? Yeah, I'd like to do a pass that to Erick or Kim. I'll ask you it after. Yeah, we've identified different locations, including locations in the U.S. as the deploy those equipment. Yeah, we've already sourced the data centers, Kevin, and you are right.

Kevin Dede: Then sort of switching gears and looking at HPC hosting sites, my thinking would be that, Boosteroids facilities would need to be close to metropolitan areas versus, say, Customer One, which I think is mostly – Can you talk about how you're lining up facilities to meet the obligations of the Boosteroid deal?

Speaker Change: Very good. Okay, then sort of switching gears and looking at...

Speaker Change: HTC hosting sites, my thinking would be that Boosteroids...

Speaker Change: facilities would need to be close to metropolitan areas versus say customer one which I think is mostly inference.

Sam Tabar: Understandable.

Sam Tabar: Here, here, the long-term plan for Bitcoin mining for us is to remain, to remain opportunistic.

Sam Tabar: It's not a business that we believe that should be consistently invested into, regardless of prevailing economics.

Sam Tabar: So we have different levers.

Speaker Change: Can you talk about how you're lining up facilities to meet the obligations of the

Sam Tabar: So we're in a very fortunate position on that, but, you know, you could expect potentially some modest growth, but we can't give any guidance on that because, again, we want to just remain opportunistic.

Sam Tabar: We want to see how the market conditions evolve, but at current economics, we would likely not spend more than $5 to $10 million on seed upgrades on the current economics, and that's been going sideways for a while, the economics there, you know, and also on one hand, it would be, you know.

Sam Tabar: We will formally announce those hires very soon and we're excited for them to ramp up and lead the sales charge. These people have had very impressive track records in growing an HPC platform and customer base. We are also working on additional hires to complement our existing strengths and fill in strategic gaps. Beating up our tech stack is a key priority on the hiring front near term. For our anchor customer, we previously announced that we were expecting to install an incremental 2,000 H100 and begin revenue generation on those units in the late third quarter.

Kevin Dede: Yeah, I'd like to pass that to Eric or Kim.

Speaker Change: of the Boosteroid deal.

Sam Tabar: I'll add to it after.

Speaker Change: Yeah, I'd like to pass that to Eric or Kim.

Eric Liu: Yeah, we've identified different locations, including locations in the U.S. as well as Europe, to deploy those equipment.

Speaker Change: I'll add to it after.

Speaker Change: Yeah, we've identified...

Speaker Change: different locations including locations in the U.S. as well as Europe to deploy those equipments.

Eric Liu: Yeah, we've already sourced the data centers, Kevin, and you are right. They are close to metropolitan areas.

Eric Liu: It is a lot more akin to the inference side than training.

Sam Tabar: They are close to metropolitan areas. It is like a lot more aching to the infirm side than training, so they're not spread out in very remote areas. They're close to more densely populated regions, which follows in the cloud gaming industry. We're latency, so I'd be like a paramount concern. Yeah, I'll add that. You know, at the size, I was the star, Kevin. Go ahead. No, no, no, go ahead. Sam, you go please, thanks. Well, I was going to say, you know, at the size we're looking at, data-centric capacity hasn't been a major issue. We haven't lost any deal as because we couldn't find capacity.

Speaker Change: Yeah, we've already sourced the data centers, Kevin, and you are right, they are.

Speaker Change: Close to metropolitan areas, it is.

Eric Liu: So, they're not spread out in very remote areas. They're close to more densely populated regions, which follows in the cloud gaming industry, where latency is obviously a paramount concern.

Kevin Latam: like a lot more akin to the inference side than training. So they're not spread out in very remote areas. They're close to more densely populated regions, which follows in the cloud gaming industry where latency is obviously a paramount concern.

Sam Tabar: In late July, our customer brought in some new technical talent that ultimately led to the review of their future hardware portfolio. As a result, our customer asked us to pause the h100 order while they assessed the possibility of upgrading the servers to newer generation models. We reached an agreement with the OEM to delay our server order and have paid only for certain longer lead time networking equipment. It's important to note that there is no change in this customer contract. The contract remains in full force and effect.

Sam Tabar: Yeah, I would add that, you know, at the size – sorry, Kevin, go ahead.

Kevin Gun: Yeah, I would add that, you know, as the size... Sorry, Kevin, go ahead.

Kevin Dede: No, no, no.

Sam: No, no, no. Go ahead, Sam. You go, please.

Speaker Change: Well, I was going to say, you know, at the size we're looking at, data-centric capacity hasn't been a major issue. We haven't lost any deals because we couldn't find capacity. Although we do think owning our own site will make us more flexible, and we're working pretty hard right now on ways to solve for exactly that need.

Sam Tabar: Although we do think on our own site, we'll make us more flexible, and we're working on it pretty hard right now on ways to solve for exactly that need.

Sam Tabar: The biggest change from going from a Bitcoin mining to HP services is the customer facing aspect within HPC. You don't have to worry about keeping your customers satisfied in Bitcoin mining. There are no customers in Bitcoin mining. We're very keen on keeping our customers in HBC happy, and we want to help position them for long-term success. So when our customer asks us to pause and order while they assess their technological needs, we oblige them with that courtesy, despite the potential negative impact that delaying the onset of the revenue may have.

Eric Huang: How would you characterize pricing on the sites that you've located for Boosteroi versus what you did for customer one? I'll pass that to you. In terms of what? Sorry, repeat that, Kevin? Yes, just general cost trends on that. Here, there's huge demand for HPC, and that would obviously raise the flag of cost trends on the power side. Yeah, just before I pass that to Eric, as mentioned, data-centric capacity has not been a major issue. We have not lost any deals because we couldn't find capacity, just to mention. But I'll pass the rest to my colleagues.

Speaker Change: How would you how would you characterize pricing on the sites that you've

Speaker Change: located for Boosteroid versus what you did for Customer One.

Kevin Dede: Go ahead, Sam.

Speaker Change: i'll cost us two americans and trends

Kevin Dede: You go, please.

Kevin Dede: Thanks.

Sam Tabar: It would have to see a deep acceleration in the HPC demand that we're seeing.

Speaker Change: In terms of what? Sorry, repeat that, Kevin. Just general cost trends. Because we hear there's huge demand for HPC.

Speaker Change: that would obviously raise the flag of cost trends.

Sam Tabar: Well, I was going to say, you know, at the size we're looking at, data center capacity hasn't been a major issue. We haven't lost any deals because we couldn't find capacity. Although we do think owning our own site will make us more flexible, and we're working pretty hard right now on ways to solve for exactly that need.

Eric Ked: on the power side. Yeah, well, yeah just before I pass that to Erke. As mentioned, data center capacity has not been a major issue and we have not lost any deals because we couldn't find capacity just just to mention, but I'll pass the rest to you um to my colleagues.

Sam Tabar: We will have greater clarity on the customers' plans over the next several weeks, and we'll provide an update as soon as feasible. Reason headline suggests that NVIDIA's Blackwell B200 chips may not be available until early 2025. So there is a chance that if our customer asks to upgrade to the contract, that's like to contract to those chips, the revenue contribution to Bit Digital would be delayed until such time until we can procure those chips.

Kevin Dede: How would you characterize pricing on the sites that you've located for Boosteroid versus what you did for Customer One?

Eric Liu: I'll pass that to Eric.

Kevin Dede: In terms of what?

Sam Tabar: And we're currently, you know, see a good amount of capital to fund opportunities for the HPC side.

Eric Huang: Yeah, I mean, in terms of the details of the deal, we'll certainly provide more clarity after we find the MSA. So we'll provide shortly. Yeah, we're working pretty hard on completing and executing that MSA very soon, and we'll be mentioning that to the market. Kevin, I think a large language model is a lot more extensive than for cloud gaming purposes. Directionally, you wouldn't expect to be as extensive. Okay, so I'm sorry, Cam, rewind that a bit. You're saying that training is less; the requirements to meet training demands are less expensive, which would be my assumption.

Speaker Change: Yeah, I mean, in terms of the details of the deal, we'll certainly provide more clarity after we sign the MSA.

Sam Tabar: So, I think, I mean, that's that's the answer.

Sam Tabar: I don't know if Eric wants to, wanted to add to that, but that's my thought about it.

Speaker Change: So...

Speaker Change: We will provide shortly.

Erke Huang: Yeah, I agree with you.

Sam Tabar: However, we are confident that we can secure an early allotment of those chips based on the conversations we've had with some of our two relationships. There's also a chance that our customer just decides that we'd rather continue forward with the H100s or possibly the H200s. I would note that the lead times for the H100s have come down quite significantly, and we're confident that we can procure those units today in about three to four weeks' time.

Speaker Change: Yeah, we're working pretty hard on completing and executing that MSA very soon and we'll be mentioning that to the market.

Speaker Change: Kevin, I think directionally you can assume that data center requirements for training a large language model are a lot more extensive than for cloud gaming purposes. Directionally, you wouldn't expect it to be as expensive.

Kevin Dede: Sorry, repeat that, Kevin.

Kevin Dede: Yes, just general cost trends on that.

Kevin Dede: Thank you.

Sam Tabar: Lastly, if our customer does decide to press forward with the Blackwell B200 chips, revenue recognition will likely be pushed into 2025, but we would expect the scope of revenue to be greater than the 42 million annual figures stipulating under the H100 contract. Notably, and in case there are any doubts of how serious our customer is, we received a non-refundable 30 million prepayment from our customer earlier this month. Our growth pipeline remains quite strong.

Speaker Change: Okay, so I'm sorry, Kim, rewind that a bit. You're saying that training is less...

Kevin Dede: Yeah, so.

Kevin Dede: You did make a machine purchase, and then what's the thinking regarding the machines that you've taken off?

Kevin Dede: the ones that perhaps are much higher level.

Kevin Dede: I guess.

Speaker Change: The requirements to meet training demands are less expensive, which would be my assumption.

Kevin Dede: Well, if they're not economically viable for certain models, they go into a warehouse or we sell them, which is something we've done.

Eric Huang: The type of data center and insular equipment you need for a Tier 3 data center to forge for training and LLM are far greater than the data center requirements that you need. You would necessitate for a cloud gaming deployment with sort of the essence of that. So, like, directionally, this deployment would be less expensive than the e-triangle set. Ah, interesting. Why is that? Because the computers in the sky, I mean, it just seems to me that you would want that same low latency and redundancy. Yeah, I mean, certainly, it's just like the CAPAX one to the data center isn't as high necessarily.

Speaker Change: The type of data center and ancillary equipment you need for a Tier 3 data center to forge for training in LLM are far greater than Tier 3.

Speaker Change: the

Speaker Change: Data Center requirements that you would...

Speaker Change: necessitate for a cloud gaming deployment was sort of the essence of that. Directionally, this deployment would be less expensive than the training set.

Kevin Dede: Okay, got it.

Sam Tabar: Because we hear there's huge demand for HPC, and that would obviously raise the flag of cost trends on the power side.

Kevin Dede: Yeah, just before I pass that to Eric, as mentioned, data center capacity has not been a major issue. We have not lost any deals because we couldn't find capacity, just to mention.

Sam Tabar: We continue to believe that we'll be able to reach our $100 million annualized revenue target by the end of 2024, even if the 2000 GPU expansion deployment with our current existing anchor customer is pushed to 2025. We expect the remainder of the year to be a very busy one for bit digital.

Sam Tabar: But I'll pass the rest to my colleagues.

Speaker Change: Ah, interesting. Why is that? Because the compute isn't as high? I mean, it just seems to me that you would...

Speaker Change: You know, you'd want that same...

Speaker Change: Low latency and redundancy.

Sam Tabar: As previously noted, we believe that having our own infrastructure would help mature our HPC business and we are actively working on ways to solve for that. We are evaluating opportunities that we think could complement our existing business well. It's hard for us to provide any incremental detail, but I'll say that this is an area that we view as a very attractive potential use of our capital. The bottom line is that we've been deliberately strengthening our balance sheet and have considerable drive powder to deploy into opportunities that we view as highly-equative and strategic.

Speaker Change: Yeah, I mean, certainly, it's just like the CapEx going to the data center isn't as high necessarily. We can have a long-form discussion of this offline, and we can bring in some heavy hitters for you.

Operator: We could have a long, long form discussion of this offline, and we could bring in some heavy headers for you. Okay, thanks.

Sam Tabar: Now, last question for me is, help me understand the difference between a binding term sheet and the NLAI and the MSA and whatever sort of financial obligations are associated with the fracture of any of them? Yeah, it's worth mentioning this term sheet is binding. It's not just like some sort of intentional aspirational LLAI; it is a binding term sheet. And the MSA we're currently working on so that the binding term sheet has the high level stuff, the economics and so on, and the MSA has the more legal nitty gritty, and that will be announced pretty shortly.

Speaker Change: Okay, thanks. Last question for me is, help me understand the difference between a binding term sheet and an LOI and the MSA and what the...

Speaker Change: Whatever.

Sam Tabar: We expect to share these exciting developments on the capital deployment plant on our next earnings call. Lastly, we materially increased our East position late in second quarter by a big-point conversion. As of the end of June, we had over $90 million worth of East compared to approximately $37 million worth of Bitcoin. We remain bullish on East long term. We believe the market will soon appreciate its versatility and san monetary policy. As it relates to the recent approval of spot ETFs, we are happy about the institutional inflows that they have brought and will bring into East.

Speaker Change: i

Speaker Change: Yeah, it's worth mentioning this term sheet is binding. It's not just like some sort of intentional.

Sam Tabar: Adjusted EBITDA and EPS were impacted by an unrealized loss on our digital asset position.

Speaker Change: aspirational LOI is a binding term sheet and the MSA we're currently working on so that

Eric Liu: Yeah, I mean, in terms of the details of the deal, we'll certainly provide more clarity after we sign the MSA.

Speaker Change: The binding term sheet has the high-level stuff, the economics and so on and the MSA has the more legal nitty-gritty and that will be announced pretty shortly.

Sam Tabar: We also think they will be helpful in terms of bringing both awareness and education around East to the broader market. However, one key aspect that the ETFs lack is the ability to stack East to stake East. Bit Digital continues to have that advantage over these new vehicles.

Eric Liu: So, we will provide shortly.

Eric Liu: Yeah, we're working pretty hard on completing and executing that MSA very soon, and we'll be mentioning that to the market.

Kevin Dede: Does that answer your question? I feel like I missed something, Kevin. What can you? Yeah, there's just one nuance in it.

Kevin Dede: Directionally, you wouldn't expect it to be as expensive.

Kevin Dede: Kevin, I think directionally we should assume that data center requirements for training a large language model are a lot more extensive than for cloud gaming purposes.

Kevin Dede: Okay.

Kevin Dede: So, I'm sorry, Cam, rewind that a bit.

Kevin Dede: You're saying that training is less – the requirements to meet training demands are less expensive, which would be my assumption.

Speaker Change: Does that answer your question? I feel like I missed something, Kevin. Yeah, there's just one nuance in it.

Kevin Dede: The type of data center and ancillary equipment you'd need for a Tier 3 data center or Tier 4 training in LLM are far greater than the type of data center you'd need for a Tier 3 data center.

Kevin Dede: So, the data center requirements that you'd need for a Tier 3 data center are far greater than the type of data center you'd need for a Tier 4 training in LLM.

Kevin Dede: Okay.

Kevin Dede: Yeah, just one nuance in the chain is what would happen if either party decide to not consummate the deal? I mean, there's legal recourse, but we're not in the business of, there's legal recourse, but we don't believe that's going to happen. If we thought that was going to happen, we would not have announced the binding term sheet. Very good. Okay. Appreciate the color sand. Thanks for having me. But you're right. You're right, though; in theory, you'd expect, you know, but we're very confident. And we're very close to the clients. Well, good. Congratulations. We're looking forward to see how that progresses.

Kevin Dede: So, I'm sorry, Cam, rewind that a bit.

Kevin Dede: You're saying that training is less expensive than the type of data center you'd need for a Tier 3 data center or Tier 4 training in LLM, you would necessitate for a cloud gaming deployment, was sort of the essence of that, like directionally this deployment would be less expensive than the training set.

Kevin Dede: Ah, interesting.

Speaker Change: What would happen if either party decided to not consummate the deal?

Speaker Change #100: I mean, there's legal recourse, but we're not in the business of... There's legal recourse, but we don't believe that's going to happen.

Eric Huang: I'll now hand over the line to Eric to discuss our financial results. Thank you, Sam.

Speaker Change #101: If we thought that was going to happen, we would not have announced the binding term sheet.

Kevin Dede: Very good.

Kevin Dede: Okay, then sort of switching gears and looking at...

Speaker Change #102: Okay, appreciate the coverage.

Eric Huang: I will now discuss certain financial results for the second quarter of 2024. Total revenue was $29 million, a 220% increase compared to the prior year. The revenue increase was driven by the first full quarter of our HPC services business and by higher realized Bitcoin prices. A Bitcoin production decreased 23% year over year to 244.2 becoins. The decrease was driven by an increase in Bitcoin network difficulty and by the reduction in broad rewards following the April happening.

Speaker Change #103: But you're right, you're right, and you're right though, in theory, you know.

Speaker Change #103: You'd expect, you know, but we're very confident and we're very close to the clients.

Sam Tabar: The first full quarter contribution from our HPC business is well timed. It helps offset the decline coming from the post-having reduction and block rewards.

Speaker Change #104: Well, good. Congratulations. We're looking forward to seeing how that progresses.

Kevin Dede: Thank you.

Joe Gomez: And we'll take the next question.

Speaker Change #105: Thank you.

Kevin Dede: Why is that?

Joe Gomez: This is Joe Gomez from Noble Capital. Can you hear me? Loud and clear. Thanks, Sam. So I'm the boy Boosteroid contract.

Kevin Dede: HBC hosting sites, my thinking would be that Boosteroid...

Speaker Change #105: i

Kevin Dede: Because the compute isn't as high, I mean, it just seems to me that you would, you know, you'd want that same low latency and redundancy.

Speaker Change #105: This is Joe Gomes from Noble Capital. Can you hear me?

Kevin Dede: Facilities would need to be close to metropolitan areas versus, say, customer one, which I think is mostly.

Speaker Change #105: i

Kevin Dede: Can you talk about how you're lining up facilities to meet the obligations?

Kevin Dede: of the Boosteroid Guild.

Kevin Dede: Yeah, I mean, certainly it's just like the CapEx going to the data center isn't as high, necessarily.

Speaker Change #106: Loud and clear.

Kevin Dede: We can have a long form discussion of this offline and we can bring in some heavy hitters, for you.

Kevin Dede: Okay, thanks.

Speaker Change #107: Thanks, Sam. So, on the Boosteroid contract, maybe just, you know, conceptually, can you kind of relay what kind of, the margin on that versus the Anchor HPC contract margins?

Kevin Dede: Ah, last question for me is help me understand the difference between a binding term sheet, and an LOI and the MSA and what sort of financial obligations are associated with a fracture of any of them.

Sam Tabar: Maybe just, you know, conceptually, can you kind of relay what kind of the margin on that versus the anchor HPC contract margins? How do they compare? The margins are still nice and fat, but they're not as good as the margins on the H 100s. Having said that, if the, if our anchor client, not that you asked, but I do want to emphasize that if our anchor client decides to go with the Blackwell B 200s. I mean, sure, there's a delay, but we're long-term greedy, but we'll have even better economics and even better margins on that particular hardware.

Sam Tabar: Yeah, it's worth mentioning this term sheet is binding.

Eric Huang: Bitcoin mining revenue increased 80% from the prior year to 16.1 million dollars due to higher Bitcoin prices. Our HPC services business recognized $12.5 million for revenue during the quarter. We earned $109.4 Ethereum from Native Staking Rewards during the quarter, representing approximately $374,000 in revenue. A total cost revenue was $15.2 million compared to $5.6 million the prior year. The increase was driven by an increase in our active mining fleet, higher Bitcoin network difficulty.

Sam Tabar: It's not just like some sort of intentional aspirational LOI, it's a binding term sheet.

Speaker Change #107: How do they compare?

Speaker Change #108: The margins are still nice and fat, but they're not as good as the margins on the H100s. Having said that, if the...

Speaker Change #109: If our Anchor client, not that you asked, but I do want to emphasize that if our Anchor client decides to go with the Blackwell B200,

Speaker Change #109: I mean, sure, there's a delay, but we're long-term greedy.

Speaker Change #109: which will have even better economics and even better margins on that particular hardware. But with respect to the hardware related to Boostroid, the margins are still quite good. We will... the MSA is yet to come out, but it will not be as high as the H100s.

Sam Tabar: But with respect to the hardware related to Boosteroid, the margins are still quite good. We will, the NSA is yet to come out, but it will not be as high as the H100s. Okay.

Sam Tabar: And the MSA we're currently working on, so that the binding term sheet has the high level, stuff, the economics and so on, and the MSA has the more legal nitty gritty and that will be announced pretty shortly.

Eric Huang: They start of our HPC business. Growth profit increased more than 300% from the prior year to $13.8 million. Mining contributed 5.5 million towards growth profit and HPC added 7.9 million. The total growth margin expanded 1,100 bits from the prior year to 48% with the addition of the HPC offsetting their Bitcoin mining margins related to increased Bitcoin network difficulty. General and administrative costs were approximately $5.5 million compared to $5.4 during the prior year quarter.

Joe Gomez: Thanks for that.

Eric Huang: And on the mining business, can you talk a little bit about how the gross margin for that segment flowed over the quarter? I was pretty flat over the quarter or where the margin was the gross margin at the end of the quarter, you know, significantly different than what it was at the beginning of the quarter? Can you want to take that? Yeah, I don't know if there's necessarily much variation beyond that. I mean, I guess there could be certain instances where it fluctuates, but really it's pretty steady state. Okay.

Speaker Change #110: Okay, thanks for that. And on the mining business, can you talk a little bit about how the gross margin for that segment

Speaker Change #111: flowed over the quarter. Was it pretty flat over the quarter, or was the gross margin at the end of the quarter significantly different than what it was at the beginning of the quarter?

Speaker Change #112: Cam, do you want to take that?

Speaker Change #112: Yeah, I don't know if there is.

Speaker Change #114: There's not necessarily much variation beyond that, I mean, I guess there could be.

Eric Huang: Depreciation and reposition expense was $8.4 million for the second quarter compared to $3.7 million last year with the increase driven by larger mining fleet and GPU fleet that were deployed in early 2024. Adjust the EB that was Native $3.8 million for quarter compared to $1.9 million last year, while growth profit increased to year over year, and GIA was roughly flat. We recognize a 11.5 million dollars on realized loss on digital assets, which reduced the adjusted EBITDA number. Gap earnings per share was a loss of license for the quarter compared to a loss of three cents the prior year, with the change in digital assets prices being the primary driver of the decrease.

Speaker Change #115: certain instances.

Speaker Change #115: ear inucture with the brilliance pretty steady state

Eric Huang: That's good.

Eric Huang: And then I was going through the filings, and fleet efficiency declined sequentially, and I was just wondering if you could talk to what was behind that. Yeah, I mean, it declined numerically, but I mean, it actually improved. So, I mean, it's our fleet efficiency improved from, I mean, 28 to 27, 9, 7; that just means it's incrementally more efficiently, and that was surely by replacing certain less efficient units with newer models that have a greater energy efficiency. Okay.

Speaker Change #115: Okay.

Speaker Change #116: That's good. And then I was going through the filings and fleet efficiency declined sequentially and I was just wondering if you could talk to what was behind that.

Speaker Change #117: Yeah, I mean, it declined.

Speaker Change #118: numerically, but I mean it actually improved, so I mean it...

Speaker Change #118: are Fleet Efficiency.

Speaker Change #119: improved from I think 28.3 to 27.9 so I mean that just means it's an incrementally more efficient fleet and that was purely by replacing certain less efficient units with newer models that have a greater energy efficiency.

Sam Tabar: Our balance sheet remains pristine with zero debt. It affords us significant flexibility to prudently invest in the most creative opportunities. The groundwork is firmly in place for us to realize our long-term vision of creating a diversified, durable platform that generates consistent cash flows and significant returns.

Eric Huang: Turning to our balance sheet, we held approximately 61 million dollars of cash, and we say cash as of June 30th this year, and our digital assets position was worth approximately 130 million dollars. Total assets amounted to 315 million dollars at the end of the quarter, while shareholders equity was 295 million. Our balance sheet remains debt-free, but we continue to evaluate potential debt financing options as a means to accelerate growth of our HPC business.

Eric Huang: And then one last one for me, you know, on the delay with the client, I understand, you know, it could be resolved in a day; it could be resolved, you know, in the beginning of 2025. But are there any costs associated with that delay for you guys, where you won't be seeing the revenue coming in, but you will have the incurring expenses? So on that front, we ordered certain long lead time network equipment, but we didn't place the order for the H-100 yet, as the lead time to that is not 3 to 4 weeks. So that's good.

Speaker Change #119: i

Speaker Change #120: Okay, and then one last one for me.

Speaker Change #121: On the delay with the client, I understand, you know, it could be resolved in a day, it could be resolved, you know, beginning of 2025.

Speaker Change #122: Are there any costs associated with that delay for you guys where you won't be seeing the revenue be coming in but you will have be incurring expenses?

Speaker Change #123: So, on that front, we ordered certain long lead time networking equipment, but we didn't place the order for the H100 yet, as the lead time for that is now three to four weeks. So that's good.

Eric Huang: Given the strength of our balance sheet, we can afford to be patient on that front. Copax was approximately 5 million dollars during the quarter, and the Copax was used for the purchase of approximately 1,000 and 115 new miners and for deposits on certain HPC equipments.

Eric Huang: Okay.

Joe Gomez: Great. Nice quarter. Thanks for taking my questions.

Speaker Change #124: Okay, great, nice quarter. Thanks for taking my questions.

Operator: Thank you.

Matthew Picking: And we'll take our next question. Hi Sam, good morning. Just a question on HPC. Matthew's picking. Sorry. Matthew's picking.

Speaker Change #125: Thank you.

Sam Tabar: I will now turn the Copax to fan for closing remarks. Thank you, Eric. Over the past several months, we've seen a large increase in investors that are now interested in Bitcoin mining stocks because of the HPC angle. Many are curious about AI's future. This is like asking where Bitcoin's price is going to be. I would believe that AI will transform the global economy, and Bitcoin will be worth significantly more in the future.

Speaker Change #124: And we'll take our next question.

Sam Tabar: Yeah, I'd like to pass that to Eric or Kim.

Speaker Change #124: i

Sam Tabar: On the mining side of the business, we were most required during the quarter.

Speaker Change #126: Hi Sam, good morning. Just a question on HPC. May I ask who's speaking? Sorry, may I ask who's speaking? Oh, this is Chris Sakai from Singular Research.

Sam Tabar: I'll add to it after.

Christopher Sakai: Oh, this is Chris the Kai from Singular Research. Okay. Hi Chris. How are you?

Sam Tabar: That was by design.

Erke Huang: Yeah, we've identified.., different locations, including locations in the U.S. as well as Europe.

Sam Tabar: We were keen to wait and see how the environment shook out following the having.

Sam Tabar: Um, sorry, they didn't announce me, but on the HPC business, is this more of a strategic shift now to HPC than from Bitcoin mining? Well, here's the thing. A lot of pure played Bitcoin miners. There's this old saying that all you have is a hammer. Everything you see is a nail. So all they can do is, um, when you only have one lever is, regardless of the economics, got it grow. Um, we are in a really incredible position to have multiple levers. We have three levers. Bitcoin mining, Ethereum, shaking, and HPC.

Erke Huang: Yeah, we've already sourced the data centers, Kevin, and you are right, they are, close to metropolitan areas.

Speaker Change #126: Okay, hi Chris, how are you?

Sam Tabar: Network hash rate proved to be resilient despite the reduction in block rewards and hash price subsequently fell to new all-time lows. Our active hash rate ended the quarter at approximately 2.6 hecta hash. This is a slight decrease compared to the end of Q1. The decline is attributed to cutelments, micement, and energy saving measures on sites where electricity prices were unusually high, reproduced 244 bitcoins during the quarter. This is a 23% decrease from the prior year, driven by increased network difficulty and a reduction in block rewards.

Speaker Change #128: Sorry, they didn't announce me, but...

Erke Huang: I have a lot more aching to the inference side.

Speaker Change #129: on the HPC business.

Sam Tabar: I just can't predict exactly when or to what magnitude this will play out. What I do know is that both AI and Bitcoin will require significantly higher computing power in the years ahead. We want to be positioned to supply that computational power on the HPC side, while maintaining the flexibility to opportunistically increase our mining output. We might not be the largest Bitcoin producer, but size isn't everything. Excahash and production are hollow metrics without the underlying returns profile.

Speaker Change #130: Is this more of a strategic shift now to HPC than to Bitcoin mining?

Sam Tabar: For the quarter, our average electricity price per bitcoin was approximately 4.7 cents per kilowatt hour.

Erke Huang: So they're not, spread out in very remote areas. They're close to more densely populated regions, which follows in the cloud gaming industry where latency is obviously a paramount concern.

Speaker Change #131: Well, here's the thing.

Sam Tabar: Our electricity price per bitcoin was 29,300.

Speaker Change #132: A lot of pure play Bitcoin miners, there's this old saying, if all you have is a hammer, everything you see is a nail.

Speaker Change #132: so

Speaker Change #133: All they can do is, when you only have one lever, is regardless of the economics, you've got to grow. We are in a really incredible position to have multiple levers. We have three levers. Bitcoin mining, Ethereum shaking, and HPC.

Sam Tabar: Our total cost of production defined as electricity and other hosting fees divided by bitcoin production amounted to approximately 43,200 for the quarter.

Sam Tabar: Proper sharing fees amounted to around 11,100 per bitcoin for the first quarter. On profit sharing fees, they vary based on the amount of gross profit per bitcoin we received. This fee accounts for the fact that we don't own our own mining infrastructure.

Sam Tabar: and so we're able to work creatively since we have different levers in our capital allocation plans and we have been always ahead of the trends and it was respect to HTC, we were one of the first, if not the first to announce material contracts and the sector and and we continue to grow exponentially with a pretty pregnant pipeline, so we were right in identifying and using and leveraging the skills of a Bitcoin miner in the space, we have very deep know how in procuring specialized equipment and have great relationships with the right kind of parties on that and you know we have we've been we've been able to execute really really well for our current clients which makes it even easier to get other clients because we have an incredible track record and we have global reach and we have you know offices around the world including Singapore and we've been able to serve our underserved markets around different regions, not just the last in terms of client sourcing, so we've we've been in a very fortunate position and we're leaning pretty hard on hiring a head of revenue and sell stuff which we've done which we haven't announced yet but that has happened they have started to help just from an organizational design perspective lead the sales language because so far we've done this without as without a sales team so with the sales team we expect to you know bring a lot of these clients through the finishing line so going back to your question whether this is a strategic move it certainly is and we believe we were right and we could see that the sector is following suit and frankly every investor and shareholder and institutional meeting I have we have and are asking about the HPC size which makes a lot of sense you can model out cash flows much better that way to the penny that's a Bitcoin it's a little bit difficult to predict where it's going to be and yet you have to invest all this money into the equipment and you have no visibility on the price of Bitcoin so you know we don't want to run a business based on hope we want to run a business based on alpha and strategy and and this move speaks that in space right under understood and then can you talk about do you see any potential bottlenecks to onboarding new HPC clients and and for for 2025 what do you see can you give color as to what's your pipeline there how many new customers you think would will come on for HPC yes mentioned our pipeline has been bandwidth and manpower we've received plenty of reverse inquiries and we've already built this business with zero sales people so that has been the bottlenecks just manpower and frankly cognitive overload and so we've been able to solve for that and that's that's happening.

Sam Tabar: Yeah, I would add that, you know, as the size, I'm sorry, Kevin, go ahead.

Speaker Change #133: And so we're able to work creatively since we have different levers in our capital allocation plans.

Sam Tabar: Other companies have charges under different light items that account for the costs of running a mining site, including labor. This is often overlooked by comp sheets comparing production costs.

Sam Tabar: We're okay with not leading in production because the real value lies in making the right moves at the right time. For now, we're seeing better opportunities than HPC. The barriers to entry and mining aren't that high, and we can scale up when it makes sense for us to do so. When it comes to AI, I can't tell you what the next killer AI app is going to be. AI is evolving very fast, and new applications will continue to pop up.

Kevin Dede: No, no, no.

Speaker Change #133: We have been always ahead of the trends and with respect to HPC, we were one of the first

Sam Tabar: Our average realized bitcoin price during the second quarter was around 65,800. This leaves around 22,700 in gross profit, or a mining margin of around 34%. However, current economics present challenges, especially with the depreciation costs.

Kevin Dede: Go ahead, Sam.

Sam Tabar: This makes it difficult to recover the investment in new mining rigs within a reasonable time frame.

Speaker Change #133: if not the first to announce material contracts in this sector.

Sam Tabar: You go.

Speaker Change #133: And we continue to grow exponentially with a pretty pregnant pipeline.

Sam Tabar: Well, I was going to say, you know, at the size we're looking at data center capacity hasn't been a major issue.

Speaker Change #134: in identifying and using and leveraging the skills of a Bitcoin miner into this space. We have very deep know-how in procuring specialized equipment. We have great relationships with the right counterparties on that.

Sam Tabar: We haven't lost any deals because we couldn't find capacity. Although we do think owning our own site will make us more flexible, and we're working pretty hard right now on ways to solve for exactly that need.

Sam Tabar: People will never have imagined Uber or Twitter or Instagram when the Internet was invented. I am nearly certain that new and unexpected use cases for AI will emerge, and that in five years, the world will require far more high performance computing power than we need today. We're not just focused on AI tailwinds. The binding term sheet we announced with Booster today, a cloud gaming company, is a good example of how we're diversifying.

Speaker Change #134: And we've been able to execute really, really well for our current clients, which makes it even easier to get other clients.

Speaker Change #134: because we have an incredible track record and we have global reach and we have, you know, offices around the world including Singapore.

Sam Tabar: We're bullish on the future of bitcoin, but we are realists. The economics are difficult right now, and we are choosing not to aggressively grow into that backdrop without higher conviction that we can make a justifiable return on new equipment. Our principal bottleneck to ex-a-hash growth right now is our own menu of growth options.

Sam Tabar: We see better investment options in HPC at the moment.

Speaker Change #134: and we've been able to serve underserved markets around different regions.

Sam Tabar: So based on what we see today, we think it's unlikely that we will hit six ex-a-hash by the year end. Material ex-a-hash growth for us into year end would require, either, a significantly better view on mining economics or a significant deterioration in the opportunity set we currently see on the HPC side.

Sam Tabar: That deal also provides for significant growth, which is ultimately the fabric of our business model, to align ourselves with customers and grow in a mutually beneficial way. So I might be disappointed about the temporary delay of our anchor customer GPU expansion, but these things happen in a customer focused business. Once the revenue comes in, the margins will likely be even better if they decide to upgrade the new hardware models. We remain long-term greedy. We're not taking a myopic view on the business. We want to grow alongside our customers for the next decade and renew contract after contract. Long-term, I'm confident that this approach will maximize shareholder value.

Speaker Change #134: We've been in a very fortunate position and we're leaning pretty hard.

Speaker Change #134: on hiring head of revenue and salle staff which we've done which we haven' amoun but that has often they have destartedted to help just from our organizational design perspective lead the sales chge because so far we've done this how does it as without a sales team

Sam Tabar: Near-term, our focus on the mining side is on improving the efficiency of our active fleet and lowering production costs.

Sam Tabar: Switching gears, the HPC segment generated $12.5 million of revenue at 63% growth margins during the second quarter. That was the first full quarter of operations for this business.

Speaker Change #134: So with the sales team, we expect to bring a lot of these clients through the finishing line. So going back to your question, whether this was a strategic move, it certainly is.

Speaker Change #134: is, and we believe we were right.

Speaker Change #135: and we can see that the sector is following suit. And frankly, every investor and shareholder and institutional meeting I have, we have

Sam Tabar: We're working on a lot of very exciting things right now, and I wish I could share more details, but at the best of my council, all I will say for now is stay tuned.

Speaker Change #135: are asking about the HPC side, which makes a lot of sense. You can model out cash flows.

Speaker Change #136: much better that way, to the penny. Whereas with Bitcoin, it's a little bit difficult to predict where it's going to be. And yet you have to invest all this money into the equipment and you have no visibility on the price of Bitcoin.

Operator: With that, I would like to open the line for some questions. Thank you. If you would like to signal with questions, please press star one on your touchtone telephone. If you're joining us today using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment. You'll hear a tone indicating where your line is open. At that point, please state your name and company name, and then pose your questions. Again, that is star one. If you would like to signal with questions, star one.

Speaker Change #136: So, you know, we don't want to run a business based on hope. We want to run a business based on alpha and strategy and this move speaks that in spades.

Speaker Change #137: Right, understood. And then, can you talk about...

Speaker Change #138: Do you see any potential bottlenecks to onboarding new HPC clients for 2025? What do you see? Can you give color as to...

Mike Rondall: Hey, Sam. This is Mike Rondall. First question is really on the 700 million potential boosteroid contract. It looks like it starts at about 13 million in revenue over five years, and you talked about it scaling in 2025. Is there any minimum levels, or how should we think about that scaling? So we expect to be able to provide greater detail on the growth cadence over time. The initial allotment is a starting quantity and upon successful deployment, we expect to start fulfillment and incremental deployments.

Sam Tabar: We recently announced a binding term sheet with a new customer, Bruce DeRoyd, the world's third largest cloud gaming provider, following Microsoft NNVIDIA.

Speaker Change #139: What's your pipeline there? How many new customers do you think will come on for HPC?

Speaker Change #140: Yes, as mentioned, our pipeline has been bandwidth and manpower. We've received plenty of reverse inquiries.

Speaker Change #141: And we've already built this business with zero salespeople.

Speaker Change #141: So that has been the bottlenecks, just manpower and frankly cognitive overload. And so we've been able to solve for that and that's happening.

Operator: And you know, as mentioned, you know we have geographical reach, including global presence and offices in the various regions that provide us QLH ships and the ability to compete for business in underserved parts of the world. So we do see a, we already have a pregnant pipeline, and frankly, the future is pretty bright in the HPC side of the business for the rest of the year and 2025. Okay, great. Thanks for the answers. Thank you. Thank you for the questions. And that does conclude the question-answer session.

Speaker Change #141: And, you know, as mentioned, you know, we have geographical reach, including global presence and offices in various regions that provides us key relationships and the ability to compete for business in underserved parts of the world. So we do see, we already have a pregnant pipeline.

Mike Rondall: However, this contract is designed for us to grow in tandem with boosteroid. We're not looking to deploy the full run rate out of the gates. Our baseline for 2025 is probably to get through around 30% of total deployment. Boosteroids growth trajectory in our own capital allocation plans are the key variables to the cadence of that deployment.

Sam Tabar: Cool. Okay, well, hey, 30% is at least something to go on and it's a lot.

Speaker Change #141: Frankly, the future is pretty bright in the HPC side of the business for the rest of the year and 2025.

Speaker Change #142: Okay, great. Thanks for the answers.

Speaker Change #143: Thank you. Thank you for the questions.

Sam Tabar: Does that answer your question?

Kevin Dede: I feel like I missed something, Kevin.

Kevin Dede: What can you, is there?

Cameron Schnier: I now turn the conference back over to you for any additional or closing remarks. Well, thank you again for joining us today. We appreciate your continued, continued interest and support. And we do look forward to speaking with you again in the next quarter. Pretty exciting times for us. And this officially concludes our call. Have a great day, everybody. Thank you.

Kevin Dede: Yeah, there's just one nuance in it.

Speaker Change #144: And that does conclude the question and answer session. I'll now turn the conference back over to you for any additional or closing remarks.

Sam Tabar: Yeah, just one nuance in it, Sam, is what would happen if either party decided to not, consummate the deal?

Sam Tabar: I mean, there's legal recourse, but we're not in the business of, there's legal recourse, but we don't believe that's going to happen.

Sam Tabar: If we felt that was going to happen, we would not have announced the binding term sheet.

Kevin Dede: Very good.

Kevin Dede: Okay.

Sam Tabar: Appreciate the color, Sam.

Sam Tabar: How would you characterize pricing on the sites that you've located?

Kevin Dede: Thanks for reminding me.

Mike Rondall: Secondly, you kind of talked customer one in the pause. I think that's you know, the right approach and they already have 2000. Wilson. But you said, too, that you can still reach your 100 million run rate by year and 24 without customer one.

Kevin Dede: versus what you did for, I'll pass that to Erke.

Sam Tabar: But you're right, you're right.

Kevin Dede: In terms of what?

Sam Tabar: And you're right though, in theory, you'd expect, but we're very confident and we're, very close to the client.

Operator: And we'll take the next question.

Kevin Dede: Sorry, repeat that Kevin.

Kevin Dede: Well, good.

Joseph Gomes: This is Joe Gomes from Noble Capital.

Speaker Change #145: Well, thank you again for joining us today. We appreciate your continued interest and support, and we do look forward to speaking with you again in the next quarter. Pretty exciting times for us, and this officially concludes our call. Have a great day everybody.

Kevin Dede: Yes, just general cost trends on that.

Kevin Dede: Congratulations.

Joseph Gomes: Can you hear me?

Kevin Dede: Here, there's huge demand for HPC and, That would obviously raise the flag of cost trends on the power.

Kevin Dede: We look at, we're looking forward to seeing how that progresses.

Sam Tabar: Loud and clear.

Kevin Dede: Yeah, just before I pass that to Eric, as mentioned, data-centric capacity has not been a major issue.

Kevin Dede: Thank you.

Joseph Gomes: This is Joe Gomes from Noble Capital, can you hear me?

Joseph Gomes: Thanks, Sam.

Sam Tabar: We have not lost any deals because we couldn't find capacity, just to mention.

Sam Tabar: Loud and clear.

Joseph Gomes: So on the Boosteroid contract, maybe just conceptually, can you kind of relay what kind, of, the margin on that versus the Anchor HBC contract margins?

Joseph Gomes: And then one last one for me.

Erke Huang: But I'll pass the rest to my colleagues.

Joseph Gomes: Thanks, Sam.

Sam Tabar: How do they compare?

Joseph Gomes: On the delay with the decline, I understand it could, be resolved in a day.

Erke Huang: Yeah, I mean, in terms of the details of the deal, the, well, certainly it provides more clarity after we sign the MSA.

Joseph Gomes: So on the Boosteroid contract, maybe just, you know, conceptually, can you kind of relay what kind of the margin on that versus the Anchor HBC contract margin?

Sam Tabar: The margins are still nice and fat, but they're not as good as the margins on the H100s.

Joseph Gomes: It could be resolved in the beginning of 2025, but are there any costs associated with that delay for you guys, where you won't be seeing the revenue be coming in, but you will be incurring expenses?

Erke Huang: So, we will provide shortly.

Sam Tabar: How do they compare?

Sam Tabar: Having said that, if our Anchor client, not that you asked, but I do want to emphasize, that if our Anchor client decides to go with the Blackwell B200s, I mean, sure, there's a delay, but we're long-term greedy. We'll have even better economics and even better margins on that particular hardware.

Sam Tabar: So, on that front, so we ordered certain long lead time networking equipment, but we didn't, place the order for the H-100 yet, as the lead time for that is now three to four weeks.

Erke Huang: Yeah, we're working pretty hard on completing and executing that MSA very soon, and we'll be mentioning that to the market.

Sam Tabar: The margins are still nice and fat, but they're not as good as the margins on the H100s.

Sam Tabar: But with respect to the hardware related to Boosteroid, the margins are still quite good.

Sam Tabar: So, that's good.

Kevin Dede: Kevin, I think directionally we should assume that data center requirements for training a large language model are a lot more extensive than for.., cloud gaming purposes.

Sam Tabar: Having said that, if our anchor client – not that you asked, but I do want to emphasize that if our anchor client decides to go with the Blackwell B200s, I mean, sure, there is a delay, but we're long-term greedy. We'll have even better economics and even better margins on that particular hardware.

Joseph Gomes: We will, the MSA is yet to come out, but it will not be as high as the H100s.

Joseph Gomes: Okay.

Kevin Dede: Directionally, you wouldn't expect it to be as expensive.

Sam Tabar: With respect to the hardware related to Boostroid, the margins are still quite good.

Joseph Gomes: Okay.

Joseph Gomes: Great.

Kevin Dede: Okay, so, I'm sorry, Cam, rewind that a bit.

Sam Tabar: We will – the MSA has yet to come out, but it will not be as high as the H100s.

Joseph Gomes: Thanks for that.

Joseph Gomes: Nice quarter.

Kevin Dede: You're saying that training is less.

Joseph Gomes: Okay, thanks for that.

Joseph Gomes: And on the mining business, can you talk a little bit about how the gross, margin for that segment flowed over the quarter? Was it pretty flat over the quarter or was the gross margin at the end of the quarter significantly different than what it was at beginning of the quarter?

Joseph Gomes: Thanks for taking my questions.

Kevin Dede: New York Times, and the New York Times.

Joseph Gomes: And on the mining business, can you talk a little bit about how the gross margin for that segment, flowed over the quarter, was it pretty flat over the quarter, or was the gross margin at the end of the quarter significantly different than what it was at the beginning of the quarter?

Joseph Gomes: Ken, do you want to take that?

Sam Tabar: Thank you.

Christopher Sakai: Can you give color as to what's your pipeline there?

Kevin Dede: Thank you.

Sam Tabar: Yeah, I don't know if there's, necessarily much variation beyond that.

Operator: That does conclude today's conference. We do thank you for your participation. Have an excellent day.

Eric Liu: Yeah, I don't know if there's necessarily much variation beyond that.

Operator: And we'll take our next question.

Christopher Sakai: How many new customers do you think will come on for HPC?

Kevin Dede: Thank you.

Joseph Gomes: I mean, I guess they're, certain instances.

Eric Liu: I mean, I guess, there could be certain instances where it fluctuates, but really it's a pretty steady state.

Joseph Gomes: Hi, Sam.

Christopher Sakai: Yeah, as mentioned, our pipeline has been bandwidth and manpower.

Kevin Dede: The type of data center and ancillary equipment you need for a Tier 3 data center to forge for training in LLM are far greater, data center requirements that you, Necessitate for cloud gaming deployment was sort of the essence of that directional.

Joseph Gomes: Thank you very much.

Joseph Gomes: Okay.

Joseph Gomes: Good morning.

Sam Tabar: We've received plenty of reverse inquiries, and we've already built this business with zero salespeople.

Sam Tabar: Well thank you again for joining us today.

Kevin Dede: This deployment would be less expensive than the training set.

Speaker Change #145: Thank you. That does conclude today's conference. We do thank you for your participation. Have an excellent day.

Joseph Gomes: That's good, going through the filings and fleet efficiency declined sequentially.

Joseph Gomes: That's good.

Joseph Gomes: Just a question on HPC.

Sam Tabar: So that has been the bottleneck, just manpower and, frankly, cognitive overload.

Sam Tabar: We appreciate your continued interest and support, and we do look forward to speaking with you again in the next quarter.

Kevin Dede: Why is that?

Joseph Gomes: And I was just wondering if you could talk to what was behind that.

Have an excellent day.

Joseph Gomes: And then I was going through the filings and fleet efficiency declined, sequentially, and I was just wondering if you could talk to what was behind that.

Operator: Have an excellent day.

Operator: May I ask who's speaking?

Sam Tabar: And so we've been able to solve for that, and that's happening.

Sam Tabar: Pretty exciting times for us, and this officially concludes our call.

Kevin Dede: Because the compute isn't as high?

Sam Tabar: We believe that this represents a key end-market expansion for our HPC business beyond AI applications or LLM training specifically.

Sam Tabar: Could you talk a little bit about your HPC GPU pipeline? Is it a couple large ones like Boosteroid or is it numerous small ones? Just trying to get a flavor for that pipeline.

Joseph Gomes: Uh, yeah, I mean it.

Sam Tabar: Yeah, I mean, it declined numerically, but it actually improved. I mean, our fleet efficiency, improved from, I think, 28.3 to 27.9. So, I mean, that just means it's an incrementally more efficient fleet, and that was purely by replacing certain less efficient units with newer models that have a greater energy efficiency.

Operator: Sorry.

Sam Tabar: And yeah, you know, as mentioned, you know, we have geographical reach, including global presence and offices in various regions that provides us key relationships and the ability to compete for business and underserved parts, underserved parts of the world.

Sam Tabar: Have a great day everybody.

Kevin Dede: I mean, it just seems...

Sam Tabar: Klein, numerically, but I mean it actually improved Skyrim in every way, are fleet officiants.

Joseph Gomes: Okay.

Christopher Sakai: May I ask who's speaking?

Sam Tabar: So we do see, we already have a pregnant pipeline.

Operator: Thank you.

Kevin Dede: You know, you'd want that same little leap.

Sam Tabar: Improved from I think 28.3 to 27.9, so that's, means it's an incrementally more efficient way and that was purely by replacing certain less efficient units with newer models that have a greater energy efficiency.

Christopher Sakai: This is Chris from Singular Research.

Sam Tabar: And frankly, the future is pretty bright, in the HPC side of the business for the rest of the year and 2025.

Operator: That does conclude today's conference, for your participation.

Kevin Dede: Redundant, Yeah, I mean, certainly, it's just like...

Joseph Gomes: Okay, and then one last one for me.

Christopher Sakai: Okay.

Christopher Sakai: Okay, great.

Kevin Dede: Kappa X going to the data center isn't as high necessarily.

Joseph Gomes: On the delay with the client, I understand, you know, it could be resolved in a day, it could be resolved, you know, in beginning of 2025, but, Are there any costs associated with that delay for you guys, where you won't be seeing the revenue be coming in, but you will be incurring expenses?

Christopher Sakai: Hi, Chris.

Christopher Sakai: Thanks for the answers.

Kevin Dede: We can have a long form discussion of this offline and we can bring in some heavy hitters for you.

Sam Tabar: So, on that front, so we ordered certain long lead time networking equipment, but we didn't place the order for the H100 yet, as the lead time for that is now three to four weeks.

Christopher Sakai: How are you?

Christopher Sakai: Thank you.

Kevin Dede: Okay, thanks.

Sam Tabar: This term sheet carries a locked five-year term. It also provides for up to 50,000 GPUs over a five-year period following the signing of the MSA.

Sam Tabar: So that's good.

Christopher Sakai: Sorry, they didn't announce me, but on the HPC business, is this more of a strategic, shift now to HPC than from Bitcoin mining?

Sam Tabar: Thank you for the questions.

Kevin Dede: Last question for me is, help me understand the difference between a binding term sheet and an LOI and the MSA and what the, whatever, what sort of financial obligations are associated.

Joseph Gomes: Okay.

Sam Tabar: Well, here's the thing.

Operator: And that does conclude the question and answer session.

Sam Tabar: Fracture of any of them, Yeah, it's worth mentioning this this term sheet is binding.

Joseph Gomes: Great.

Sam Tabar: A lot of pure play Bitcoin miners, there's this old saying, if, all you have is a hammer, everything you see is a nail.

Sam Tabar: I'll now turn the conference back.

Sam Tabar: It's not just like some sort of intentional, aspirational LOI, there's a binding term sheet and the MSA we're currently working on so that, The binding term sheet has the high-level stuff, the economics and so on, and the MSA has the more legal nitty-gritty, and that will be announced pretty shortly.

Joseph Gomes: Nice quarter.

Sam Tabar: So, all they can do is, when you only have one lever, is regardless of the economics, you've got to grow.

Kevin Dede: Does that answer your question?

Joseph Gomes: Thanks for taking my questions.

Sam Tabar: We are in a really incredible position to have multiple levers.

Sam Tabar: I feel like I missed something.

Sam Tabar: Thank you.

Sam Tabar: We have three levers, Bitcoin mining, Ethereum shaking, and HPC, of a Bitcoin miner into this space. We have very deep know-how in procuring specialized equipment and have great relationships with the right counterparties on that.

Kevin Dede: Kevin, what can you can is there one nuance in it?

Operator: And we'll take our next question.

Sam Tabar: And we've been able to execute really, really well for our current clients, which makes it, even easier to get other clients because we have an incredible track record. And we have global reach. We have offices around the world, including Singapore.

Sam Tabar: Yeah, just one nuance in it, Samir.

Christopher Sakai: Hi Sam.

Sam Tabar: And we've been able to serve underserved markets around different regions, not just in the US, in terms of client sourcing.

Sam Tabar: What would happen if either party decide to not contact?

Christopher Sakai: Good morning.

Sam Tabar: So we've been in a very fortunate position and we're leaning pretty hard on hiring a head of revenue and sales staff, which we've done, which we haven't announced yet, but that has happened.

Sam Tabar: I mean there's legal recourse but we're not in the business of, there's legal recourse but we don't believe that's going to happen.

Christopher Sakai: Just a question on HPC.

Sam Tabar: They have started to help, just from an organizational design perspective, lead the sales challenge because so far we've done this without a sales team.

Sam Tabar: If we thought that was going to happen, we would not have announced the binding term sheet.

Christopher Sakai: May I ask who's speaking?

Sam Tabar: So with the sales team, we expect to bring a lot of these clients to the finishing line.

Kevin Dede: Very good.

Christopher Sakai: Sorry, may I ask who's speaking?

Christopher Sakai: So going back to your question, whether this was a strategic move, it certainly is.

Kevin Dede: Okay, appreciate the color, Sam.

Christopher Sakai: Oh, this is Chris Sakai from Singular Research.

Sam Tabar: And we believe we were right.

Kevin Dede: Thanks very much.

Christopher Sakai: Okay, hi Chris, how are you?

Sam Tabar: And we could see that the sector is following suit.

Sam Tabar: The entire contract, if Bruce DeRoyd elects to deploy the entire 50,000 GPU allotment, it will be worth more than $700 million of revenue for the digital over the five-year contract subject to market conditions.

Sam Tabar: Yeah, so we announced Boosteroid yesterday. Other clients are very close to the finish line. Our new hires will help accelerate that closing process, as I mentioned, that was a pretty large gating item, just not having the manpower to deal with all these reverse inquiries. And we continue to have that. But we do think we can hit that 100 million dollar mark by the year end, even with that expansion being paused potentially to 2025.

Kevin Dede: But you're right, you're right.

Christopher Sakai: Sorry, they didn't announce me, but.., on the HPC business.

Sam Tabar: And frankly, every investor and shareholder, and institutional meeting I have, we have, are asking about the HPC side, which makes a lot of sense.

Kevin Dede: And you're right, though, in theory, you know, you...

Christopher Sakai: Is this more of a strategic shift now to HPC than from Bitcoin mining?

Sam Tabar: You can model out cash flows much better that way to the penny.

Kevin Dede: You'd expect, you know, but we're very confident and we're very close to the to the client.

Sam Tabar: Well, here's the thing.

Sam Tabar: Whereas with Bitcoin, it's a little bit difficult to predict where it's going to be.

Kevin Dede: Thank you.

Sam Tabar: A lot of pure play Bitcoin miners, there's this old saying, if all you have is a hammer, everything you see is a nail.

Sam Tabar: The initial deployment will be a test positive.

Sam Tabar: And yet you have to invest all this money into the equipment and you have no visibility on the price of Bitcoin.

Operator: And we'll take the next question.

Sam Tabar: So all they can do is, when you only have one lever is regardless of the economics, you got to grow.

Sam Tabar: So we don't want to run a business based on hope.

Sam Tabar: We are in a really incredible position to have multiple levers, we have three levers, Bitcoin mining, Ethereum shaking, and HPC.

Sam Tabar: We want to run a business based on alpha, strategy and this move speaks that in spades.

Sam Tabar: And so we're able to work creatively since we have different levers in our capital allocation plans.

Christopher Sakai: Right.

Sam Tabar: This will likely represent a $2-3 million annualized revenue opportunity in its starting form.

Sam Tabar: And we have been always ahead of the trends.

Christopher Sakai: Understood.

Sam Tabar: And with respect to HPC, we were one of the first, if not the first, to announce material contracts in this sector.

Christopher Sakai: And then can you talk about, do you see any potential bottlenecks to, onboarding new HPC clients?

Sam Tabar: And we continue to grow exponentially with a pretty pregnant pipeline.

Christopher Sakai: And for 2025, what do you see?

Sam Tabar: So we were right in identifying and using and leveraging the skills of a Bitcoin miner into this space.

Christopher Sakai: Can you give color as to what's your pipeline there?

Sam Tabar: We have very deep know-how in procuring specialized equipment.

Christopher Sakai: How many new customers do you think would, will come on for HPC?

Sam Tabar: We have great relationships with the right counterparties on that.

Sam Tabar: Yeah, as mentioned, our pipeline has been bandwidth and manpower.

Sam Tabar: And we've been able to execute really, really well for our current clients, which makes it even easier to get other clients because we have an incredible track record.

Sam Tabar: We've received plenty, of reverse inquiries and we've already built this business with zero salespeople.

Sam Tabar: And we have global reach. We have offices around the world, including Singapore.

Sam Tabar: So that has been the bottleneck, just manpower and frankly, cognitive overload.

Sam Tabar: And we've been able to serve underserved markets around different regions, not just the U.S. in terms of client sourcing.

Sam Tabar: And so we've been able to solve for that and that's happening.

Sam Tabar: So we've been in a very fortunate position and we're leaning pretty hard on hiring a head of revenue and sales staff, which we've done, which we haven't announced yet, but that has happened.

Sam Tabar: And as mentioned, we have geographical reach, including global presence and offices in various regions that provides us key relationships and the ability to compete for business in underserved parts of the world.

Sam Tabar: We expect that initial deployment to take place over the next few months and expect to scale that contract throughout 2025.

Sam Tabar: They have started to help, just from an organizational design perspective, lead the sales challenge because so far we've done this without a sales team.

Sam Tabar: So we do see, we already have a pregnant pipeline and frankly, the future is pretty bright in the HPC side of the business for the rest of the year and 2025.

Sam Tabar: So with the sales team, we expect to bring a lot of these clients through the finishing line.

Sam Tabar: We'll be able to provide further details on the timing and build out of the contract after we execute the MSA, which we are working hard on completing as soon as possible.

Christopher Sakai: Okay, great.

Sam Tabar: So going back to your question, whether this was a strategic move, it certainly is.

Christopher Sakai: Thanks for the answers.

Sam Tabar: And we believe we were right.

Christopher Sakai: Thank you.

Sam Tabar: And we could see that the sector is following suit.

Christopher Sakai: Thank you for the questions.

Sam Tabar: And frankly, every investor and shareholder and institutional meeting I have, we have, are asking about the HPC side, which makes a lot of sense.

Operator: And that does conclude the question and answer session.

Sam Tabar: You can model out cash flows much better that way to the penny.

Sam Tabar: I'll now turn the conference back over to you for any additional or closing remarks.

Sam Tabar: Whereas with Bitcoin, it's a little bit difficult to predict where it's going to be.

Sam Tabar: Well, thank you again for joining us today.

Sam Tabar: And yet you have to invest all this money into the equipment and you have no visibility on the price of Bitcoin.

Sam Tabar: We appreciate your continued interest and support, and we do look forward to speaking, with you again in the next quarter.

Sam Tabar: So we don't want to run a business based on hope.

Sam Tabar: Pretty exciting times for us, and this officially concludes our call.

Sam Tabar: We look forward to growing alongside Bruce DeRoyd and helping them achieve their goal of becoming the global leader in cloud gaming.

Sam Tabar: And by the way, the decision hasn't been made yet on that. But beyond that contribution from Boosteroid, we do have several clients close to closing, and we'll get to pretty close to that number. So we're pretty confident. We're not revising that target. We still feel good about 100 million.

Sam Tabar: We want to run a business based on alpha and strategy.

Operator: Have a great day, everybody.

Sam Tabar: And this move speaks that in spades.

Operator: Thank you.

Christopher Sakai: Right, understood.

Operator: That does conclude today's conference.

Sam Tabar: This field has great growth potential and aligns with our business model of growing alongside our customers.

Christopher Sakai: And then, can you talk about...

Operator: We do thank you for your participation.

Christopher Sakai: Do you see any potential bottlenecks to onboarding new HPC clients and for 2025, what do you see?

Sam Tabar: Our pipeline and HPC remains strong and continues to grow.

Sam Tabar: The major bottleneck to date in terms of completing incremental contracts has been bandwidth.

Sam Tabar: We simply haven't had the adequate manpower to move highly customized customers deals through the finish line. But we have begun to solve for that need.

Sam Tabar: We need our first full-time hires in the HPC segment to help lead the revenue process.

Mike Rondall: Did your new head of sales actually start or is that person coming on soon? Nope, he started. Okay.

Sam Tabar: We will formally announce those hires very soon and we're excited for them to ramp up and lead the sales charge. These people have had very impressive track records in growing an HPC platform and customer base.

Sam Tabar: We are also working on additional hires to complement our existing strengths and fill in strategic gaps.

Sam Tabar: And then one more, you know, you talked a little bit towards the end of your prepared remarks about acquisition and whatnot. And in the past, you've, you know, you've mentioned possibly you're looking at a data center. Is that what you were referring to there kind of that's been where you've been spending some time and you couldn't say more. I'm just trying to connect the dots there a little bit. Yeah. Now we understand.

Sam Tabar: Beating up our tech stack is a key priority on the hiring front near term.

Sam Tabar: For our anchor customer, we previously announced that we were expecting to install an incremental 2,000 H100 and begin revenue generation on those units in the late third quarter. In late July, our customer brought in some new technical talent that ultimately led to the review of their future hardware portfolio. As a result, our customer asked us to pause the h100 order while they assessed the possibility of upgrading the servers to newer generation models. We reached an agreement with the OEM to delay our server order and have paid only for certain longer lead time networking equipment.

Sam Tabar: It's important to note that there is no change in this customer contract. The contract remains in full force and effect.

Sam Tabar: Look, this is ongoing. We don't await too much into the details about what we're seeing out there and what we're targeting. We can't provide too much detail on our process, but it's something we're looking at. Yeah. So I can't say I can't say more than that, but I can say that owning our own site certainly on the HPC side of the equation will allow us to offer different services like publication and on demand compute. Got it. Yeah, that would be great.

Sam Tabar: The biggest change from going from a Bitcoin mining to HP services is the customer facing aspect within HPC.

Mike Rondall: And then maybe lastly for Eric, you know, in Q2, Eric, you guys hit the ATM roughly 16 million shares since June 30th about another nine million shares. How are you, you know, attempting to finance this going forward? You know, there's a bunch of cat-backs. I know you've talked about a credit facility in the past, but how are you just thinking about, you know, using the ATM versus getting a credit facility in place?

Mike Rondall: Thanks for a question, Mike. As we always express the use of ATM, we're very cautious, but, you know, as we all know, this is requires a large procurement down payment, so it's always good to have the best new balance sheet to support our growth. And at the same time, we are talking to your virus, your credit facility providers to determine what's the best term for us to deploy. So we're working on that.

Eric Huang: Well, if I could just add to that, we continue to evaluate term sheets on debt financing. In terms of the indicative terms that we're seeing, we see some reasonable terms, but nothing for us to be super excited about to accept, and we haven't been forced in the position to accept less than optimal debt financing terms, and that's important. Got it, got it.

Operator: Hey, thanks guys, congratulations. Thank you.

Kevin Dede: We'll take our next question. Hi, Sam, Erick, Kevin Dede, can you hear me okay? Hi Kevin, Latin clear. Good, okay, thanks. Just first, on the Bitcoin side, obviously you spoke to the client in your self-mining hash rate. I'm just wondering what you're just thinking about with doing those machines, and then I think if I understood or heard correctly, new machine purchase, maybe to just fill in the blanks on where you think your hash rate target will be a year end given, you're kind of pulling back on the range there, on economic condition. Sure, yeah, that's a good question, understandable.

Sam Tabar: You don't have to worry about keeping your customers satisfied in Bitcoin mining.

Sam Tabar: There are no customers in Bitcoin mining.

Sam Tabar: We're very keen on keeping our customers in HBC happy, and we want to help position them for long-term success. So when our customer asks us to pause and order while they assess their technological needs, we oblige them with that courtesy, despite the potential negative impact that delaying the onset of the revenue may have. We will have greater clarity on the customers' plans over the next several weeks, and we'll provide an update as soon as feasible.

Sam Tabar: Reason headline suggests that NVIDIA's Blackwell B200 chips may not be available until early 2025.

Sam Tabar: The long-term plan for Bitcoin mining for us is to remain opportunistic. It's not a business that we believe that should be consistently invested into regardless of prevailing economics. We have different levers, so we're in a very fortunate position on that. You could expect potentially some modest growth, but we can't give any guidance on that, because again, we want to just remain opportunistic. We want to see how the market conditions have evolved, but at current economics, at current economics, we would likely not spend more than $5 to $10 million on seed upgrades on the current economics, and that's been going sideways for a while, the economics there.

Sam Tabar: So there is a chance that if our customer asks to upgrade to the contract, that's like to contract to those chips, the revenue contribution to Bit Digital would be delayed until such time until we can procure those chips.

Sam Tabar: However, we are confident that we can secure an early allotment of those chips based on the conversations we've had with some of our two relationships.

Sam Tabar: There's also a chance that our customer just decides that we'd rather continue forward with the H100s or possibly the H200s. I would note that the lead times for the H100s have come down quite significantly, and we're confident that we can procure those units today in about three to four weeks' time.

Sam Tabar: Lastly, if our customer does decide to press forward with the Blackwell B200 chips, revenue recognition will likely be pushed into 2025, but we would expect the scope of revenue to be greater than the 42 million annual figures stipulating under the H100 contract. Notably, and in case there are any doubts of how serious our customer is, we received a non-refundable 30 million prepayment from our customer earlier this month.

Sam Tabar: Our growth pipeline remains quite strong. We continue to believe that we'll be able to reach our $100 million annualized revenue target by the end of 2024, even if the 2000 GPU expansion deployment with our current existing anchor customer is pushed to 2025.

Sam Tabar: Also, on one hand, it would have to see a deep acceleration in the HPC demand that we're seeing, and we're currently see a good amount of capital to fund opportunities for the HPC side. I don't know if Eric wants to add to that, but that's my thought about it. Yeah, I agree with you, thank you.

Sam Tabar: We expect the remainder of the year to be a very busy one for bit digital.

Sam Tabar: Yeah, so you did make the machine purchase, and then what's the thinking regarding the machines that you've taken offline, the ones that perhaps are at much higher levels of, I guess, inefficiency? Well, if they're not economically viable for certain models, they go into your warehouse, so we sell them, which is something we've done. Very good.

Sam Tabar: Okay, then sort of switching gears and looking at HPC hosting sites, my thinking would be that booster roads, facilities would need to be close to metropolitan areas, versus say, customer one, which I think is mostly.., in France. Can you talk about how you're lining up facilities to meet the obligations of the booster ideal? Yeah, I'd like to do a pass that to Erick or Kim. I'll ask you it after. Yeah, we've identified different locations including locations in the U.S, as the deploy those equipment.

Sam Tabar: Yeah, we've already sourced the data centers, Kevin, and you are right. They are close to metropolitan areas. It is like a lot more aching to the infirm side than training, so they're not spread out in very remote areas. They're close to more densely populated regions, which follows in the cloud gaming industry. We're latency, so I'd be like a paramount concern. Yeah, I'll add that. You know, at the size, I was the star, Kevin, go ahead.

Sam Tabar: No, no, no, go ahead, Sam, you go please, thanks. Well, I was going to say, you know, at the size we're looking at data-centric capacity hasn't been a major issue. We haven't lost any deal as because we couldn't find capacity. Although we do think on our own site, we'll make us more flexible, and we're working on it pretty hard right now on ways to solve, for exactly that need.

Sam Tabar: As previously noted, we believe that having our own infrastructure would help mature our HPC business and we are actively working on ways to solve for that.

Sam Tabar: We are evaluating opportunities that we think could complement our existing business well.

Sam Tabar: How would you characterize pricing on the sites that you've located for Boosteroi versus what you did for customer one? I'll pass that to you. In terms of what? Sorry, repeat that, Kevin? Yes, just general cost trends on that. Here, there's huge demand for HPC, and that would obviously raise the flag of cost trends on the power side. Yeah, just before I pass that to Eric, as mentioned, data-centric capacity has not been a major issue.

Sam Tabar: It's hard for us to provide any incremental detail, but I'll say that this is an area that we view as a very attractive potential use of our capital.

Sam Tabar: The bottom line is that we've been deliberately strengthening our balance sheet and have considerable drive powder to deploy into opportunities that we view as highly-equative and strategic.

Sam Tabar: We have not lost any deals because we couldn't find capacity, just to mention, but I'll pass the rest to my colleagues. Yeah, I mean, in terms of the details of the deal, we'll certainly provide more clarity after we find the MSA. So we'll provide shortly. Yeah, we're working pretty hard on completing an executing that MSA very soon, and we'll be mentioning that to the market. Kevin, I think a large language model are a lot more extensive than for cloud gaming purposes.

Sam Tabar: We expect to share these exciting developments on the capital deployment plant on our next earnings call.

Sam Tabar: Lastly, we materially increased our East position late in second quarter by a big-point conversion. As of the end of June, we had over $90 million worth of East compared to approximately $37 million worth of Bitcoin.

Sam Tabar: We remain bullish on East long term.

Sam Tabar: We believe the market will soon appreciate its versatility and san monetary policy.

Sam Tabar: Directionally, you wouldn't expect to be as extensive. Okay, so I'm sorry, Cam, rewind that a bit. You're saying that training is less, the requirements to meet training demands are less expensive, which would be my assumption. The type of data center and insular equipment you need for a tier 3 data center to forge for training and LLM are far greater than the data center requirements that you need. You would necessitate for a cloud gaming deployment with sort of the essence of that.

Sam Tabar: As it relates to the recent approval of spot ETFs, we are happy about the institutional inflows that they have brought and will bring into East.

Sam Tabar: We also think they will be helpful in terms of bringing both awareness and education around East to the broader market.

Sam Tabar: However, one key aspect that the ETFs lack is the ability to stack East to stake East.

Sam Tabar: Bit Digital continues to have that advantage over these new vehicles.

Eric Huang: I'll now hand over the line to Eric to discuss our financial results.

Eric Huang: Thank you, Sam.

Sam Tabar: So, like, directionally, this deployment would be less expensive than the e-triangle set. Ah, interesting. Why is that because the computers in the sky, I mean, it just seems to me that you would want that same low latency and redundancy. Yeah, I mean, certainly, it's just like the CAPAX one to the data center isn't as high necessarily.

Eric Huang: I will now discuss certain financial results for the second quarter of 2024. Total revenue was $29 million, a 220% increase compared to the prior year. The revenue increase was driven by the first full quarter of our HPC services business and by higher realized Bitcoin prices.

Operator: We could have a long, long form discussion of this offline and we could bring in some heavy headers for you. Okay, thanks.

Kevin Dede: Now, last question for me is, help me understand the difference between a binding term sheet and the NLAI and the MSA and whatever sort of financial obligations are associated with the fracture of any of them? Yeah, it's worth mentioning this term sheet is binding. It's not just like some sort of intentional aspirational LLAI is a binding term sheet. And the MSA we're currently working on so that the binding term sheet has the high level stuff, the economics and so on and the MSA has the more legal nitty gritty and that will be announced pretty shortly.

Kevin Dede: Does that answer your question? I feel like I missed something, Kevin. What can you? Yeah, there's just one nuance in it. Yeah, just one nuance in the chain is what would happen if either party decide to not consummate the deal? I mean, there's legal recourse but we're not in the business of, there's legal recourse but we don't believe that's going to happen. If we thought that was going to happen, we would not have announced the binding term sheet.

Kevin Dede: Very good. Okay. Appreciate the color sand. Thanks for having me. But you're right. You're right, though, in theory, you'd expect, you know, but we're very confident. And we're very close to the clients. Well, good. Congratulations. We're looking forward to see how that progresses. Thank you.

Operator: And we'll take the next question.

Joe Gomez: This is Joe Gomez from Noble Capital. Can you hear me? Loud and clear. Thanks, Sam. So I'm the boy Boosteroid contract. Maybe just, you know, conceptually, can you kind of relay what kind of the margin on that versus the anchor HPC contract margins? How do they compare? The margins are still nice and fat, but they're not as good as the margins on the H 100s. Having said that, if the, if our anchor client, not that you asked, but I do want to emphasize that if our anchor client decides to go with the Blackwell B 200s.

Joe Gomez: I mean, sure, there's a delay, but we're long term greedy, but we'll have even better economics and even better margins on that particular hardware. But with respect to the hardware related to Boosteroid, the margins are still quite good. We will, the NSA is yet to come out, but it will not be as high as the H 100s. Okay. Thanks for that.

Eric Huang: A Bitcoin production decreased 23% year over year to 244.2 becoins. The decrease was driven by an increase in Bitcoin network difficulty and by the reduction in broad rewards following the April happening. Bitcoin mining revenue increased 80% from the prior year to 16.1 million dollars due to higher Bitcoin prices.

Eric Huang: And on the mining business, can you talk a little bit about how the gross margin for that segment flowed over the quarter? I was pretty flat over the quarter or where the margin was the gross margin at the end of the quarter, you know, significantly different than what it was at the beginning of the quarter? Can you want to take that? Yeah, I don't know if there's necessarily much variation beyond that. I mean, I guess there could be certain instances where it fluctuates, but really it's pretty steady state. Okay. That's good.

Eric Huang: Our HPC services business recognized $12.5 million for revenue during the quarter. We earned $109.4 Ethereum from Native Staking Rewards during the quarter, representing approximately $374,000 in revenue.

Eric Huang: And then I was going through the filings and fleet efficiency declined sequentially, and I was just wondering if you could talk to what was behind that. Yeah, I mean, it declined numerically, but I mean, it actually improved. So I mean, it's our fleet efficiency improved from, I mean, 28 to 27, 9, 7, that just means it's incrementally more efficiently, and that was surely by replacing certain less efficient units with newer models that have a greater energy efficiency. Okay.

Eric Huang: And then one last one for me, you know, on the delay with the client, I understand, you know, it could be resolved in a day, it could be resolved, you know, in beginning of 2025. But are there any costs associated with that delay for you guys, where you won't be seeing the revenue be coming in, but you will have the incurring expenses? So on that front, so we ordered certain long lead time network equipment, but we didn't place the order for the H-100 yet, as the lead time to that is not 3 to 4 weeks. So that's good. Okay.

Operator: Great. Nice quarter. Thanks for taking my questions. Thank you.

Matthew Picking: And we'll take our next question. Hi Sam, good morning. Just a question on HPC. Matthew's picking. Sorry. Matthew's picking. Oh, this is Chris the Kai from singular research. Okay. Hi Chris. How are you?

Eric Huang: A total cost revenue was $15.2 million compared to $5.6 million the prior year. The increase was driven by an increase in our active mining fleet, higher Bitcoin network difficulty.

Sam Tabar: Um, sorry, they didn't announce me, but on the HPC business, is this more of a strategic shift now to HPC than from Bitcoin mining? Well, here's the thing. A lot of pure played Bitcoin miners. There's this old saying that all you have is a hammer. Everything you see is a nail. So all they can do is, um, when you only have one lever is regardless of the economics, got it grow. Um, we are in a really incredible position to have multiple levers.

Sam Tabar: We have three levers. Bitcoin mining, Ethereum, shaking, and HPC, and so we're able to work creatively since we have different levers in our capital allocation plans and we have been always ahead of the trends and it was respect to HTC, we were one of the first, if not the first to announce material contracts and the sector and and we continue to grow exponentially with a pretty pregnant pipeline, so we were right in identifying and using and leveraging the skills of a Bitcoin miner in the space, we have very deep know how in procuring specialized equipment and have great relationships with the right kind of parties on that and you know we have we've been we've been able to execute really really well for our current clients which makes it even easier to get other clients because we have an incredible track record and we have global reach and we have you know offices around the world including Singapore and we've been able to serve our underserved markets around different regions, not just the last in terms of client sourcing, so we've we've been in a very fortunate position and we're leaning pretty hard on hiring a head of revenue and sell stuff which we've done which we haven't announced yet but that has happened they have started to help just from an organizational design perspective lead the sales language because so far we've done this without as without a sales team so with the sales team we expect to you know bring a lot of these clients through the finishing line so going back to your question whether this is a strategic move it certainly is and we believe we were right and we could see that the sector is following suit and frankly every investor and shareholder and institutional meeting I have we have and are asking about the HPC size which makes a lot of sense you can model out cash flows much better that way to the penny that's a Bitcoin it's a little bit difficult to predict where it's going to be and yet you have to invest all this money into the equipment and you have no visibility on the price of Bitcoin so you know we don't want to run a business based on hope we want to run a business based on alpha and strategy and and this move speaks that in space right under understood and then can you talk about do you see any potential bottlenecks to onboarding new HPC clients and and for for 2025 what do you see can you give color as to what's your pipeline there how many new customers you think would will come on for HPC yes mentioned our pipeline has been bandwidth and manpower we've received plenty of reverse inquiries and we've already built this business with zero sales people so that has been the bottlenecks just manpower and frankly cognitive overload and so we've been able to solve for that and that's that's happening.

Eric Huang: They start of our HPC business.

Eric Huang: Growth profit increased more than 300% from the prior year to $13.8 million. Mining contributed 5.5 million towards growth profit and HPC added 7.9 million. The total growth margin expanded 1,100 bits from the prior year to 48% with the addition of the HPC offsetting their Bitcoin mining margins related to increased Bitcoin network difficulty.

Eric Huang: General and administrative costs were approximately $5.5 million compared to $5.4 during the prior year quarter. Depreciation and reposition expense was $8.4 million for the second quarter compared to $3.7 million last year with the increase driven by larger mining fleet and GPU fleet that were deployed in early 2024.

Sam Tabar: And you know as mentioned you know we have geographical reach including global presence and offices in the various regions that provide us QLH ships and the ability to compete for business and underserved parts underserved parts of the world so we do see a we already have a pregnant pipeline and frankly the future is pretty bright in the HPC side of the business for the rest of the year and 2025.

Eric Huang: Adjust the EB that was Native $3.8 million for quarter compared to $1.9 million last year, while growth profit increased to year over year, and GIA was roughly flat. We recognize a 11.5 million dollars on realized loss on digital assets, which reduced the adjusted EBITDA number.

Sam Tabar: Okay, great. Thanks for the answers. Thank you. Thank you for the questions.

Eric Huang: Gap earnings per share was a loss of license for the quarter compared to a loss of three cents the prior year, with the change in digital assets prices being the primary driver of the decrease.

Eric Huang: Turning to our balance sheet, we held approximately 61 million dollars of cash, and we say cash as of June 30th this year, and our digital assets position was worth approximately 130 million dollars. Total assets amounted to 315 million dollars at the end of the quarter, while shareholders equity was 295 million.

Eric Huang: Our balance sheet remains debt-free, but we continue to evaluate potential debt financing options as a means to accelerate growth of our HPC business.

Eric Huang: Given the strength of our balance sheet, we can afford to be patient on that front.

Eric Huang: Copax was approximately 5 million dollars during the quarter, and the Copax was used for the purchase of approximately 1,000 and 115 new miners and for deposits on certain HPC equipments.

Operator: And that does conclude the question answer session. I now turn the conference back over to you for any additional or closing remarks. Well, thank you again for joining us today. We appreciate your continued, continued interest and support. And we do look forward to speaking with you again in the next quarter. Pretty exciting times for us.

Cameron Schnier: I will now turn the Copax to fan for closing remarks.

Cameron Schnier: Thank you, Eric.

Cameron Schnier: Over the past several months, we've seen a large increase in investors that are now interested in Bitcoin mining stocks because of the HPC angle.

Cameron Schnier: Many are curious about AI's future.

Cameron Schnier: This is like asking where Bitcoin's price is going to be.

Cameron Schnier: I would believe that AI will transform the global economy, and Bitcoin will be worth significantly more in the future. I just can't predict exactly when or to what magnitude this will play out. What I do know is that both AI and Bitcoin will require significantly higher computing power in the years ahead.

Operator: And this officially concludes our call. Have a great day, everybody. Thank you.

Cameron Schnier: We want to be positioned to supply that computational power on the HPC side, while maintaining the flexibility to opportunistically increase our mining output.

Cameron Schnier: We might not be the largest Bitcoin producer, but size isn't everything. Excahash and production are hollow metrics without the underlying returns profile.

Cameron Schnier: We're okay with not leading in production because the real value lies in making the right moves at the right time.

Cameron Schnier: For now, we're seeing better opportunities than HPC. The barriers to entry and mining aren't that high, and we can scale up when it makes sense for us to do so.

Operator: That does conclude today's conference. We do thank you for your participation. Have an excellent day.

Cameron Schnier: When it comes to AI, I can't tell you what the next killer AI app is going to be. AI is evolving very fast, and new applications will continue to pop up.

Cameron Schnier: People will never have imagined Uber or Twitter or Instagram when the Internet was invented.

Cameron Schnier: I am nearly certain that new and unexpected use cases for AI will emerge, and that in five years, the world will require far more high performance computing power than we need today.

Cameron Schnier: We're not just focused on AI tailwinds.

Cameron Schnier: The binding term sheet we announced with Booster today, a cloud gaming company, is a good example of how we're diversifying. That deal also provides for significant growth, which is ultimately the fabric of our business model, to align ourselves with customers and grow in a mutually beneficial way.

Cameron Schnier: So I might be disappointed about the temporary delay of our anchor customer GPU expansion, but these things happen in a customer focused business.

Cameron Schnier: Once the revenue comes in, the margins will likely be even better if they decide to upgrade the new hardware models.

Cameron Schnier: We remain long-term greedy.

Cameron Schnier: We're not taking a myopic view on the business.

Cameron Schnier: We want to grow alongside our customers for the next decade and renew contract after contract.

Cameron Schnier: Long-term, I'm confident that this approach will maximize shareholder value.

Cameron Schnier: We're working on a lot of very exciting things right now, and I wish I could share more details, but at the best of my council, all I will say for now is stay tuned.

Cameron Schnier: With that, I would like to open the line for some questions.

Operator: Thank you.

Operator: If you would like to signal with questions, please press star one on your touchtone telephone.

Operator: If you're joining us today using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment.

Operator: You'll hear a tone indicating where your line is open.

Operator: At that point, please state your name and company name, and then pose your questions.

Operator: Again, that is star one.

Operator: If you would like to signal with questions, star one.

Mike Rondall: Hey, Sam.

Mike Rondall: This is Mike Rondall.

Mike Rondall: First question is really on the 700 million potential boosteroid contract.

Mike Rondall: It looks like it starts at about 13 million in revenue over five years, and you talked about it scaling in 2025.

Mike Rondall: Is there any minimum levels, or how should we think about that scaling?

Sam Tabar: So we expect to be able to provide greater detail on the growth cadence over time. The initial allotment is a starting quantity and upon successful deployment, we expect to start fulfillment and incremental deployments.

Sam Tabar: However, this contract is designed for us to grow in tandem with boosteroid.

Sam Tabar: We're not looking to deploy the full run rate out of the gates. Our baseline for 2025 is probably to get through around 30% of total deployment. Boosteroids growth trajectory in our own capital allocation plans are the key variables to the cadence of that deployment.

Mike Rondall: Cool.

Mike Rondall: Okay, well, hey, 30% is at least something to go on and it's a lot.

Mike Rondall: Secondly, you kind of talked customer one in the pause.

Mike Rondall: I think that's you know, the right approach and they already have 2000.

Mike Rondall: Wilson.

Sam Tabar: But you said, too, that you can still reach your 100 million run rate by year and 24 without customer one.

Sam Tabar: Could you talk a little bit about your HPC GPU pipeline?

Sam Tabar: Is it a couple large ones like Boosteroid or is it numerous small ones?

Sam Tabar: Just trying to get a flavor for that pipeline.

Sam Tabar: Yeah, so we announced Boosteroid yesterday.

Sam Tabar: Other clients are very close to the finish line.

Sam Tabar: Our new hires will help accelerate that closing process, as I mentioned, that was a pretty large gating item, just not having the manpower to deal with all these reverse inquiries.

Sam Tabar: And we continue to have that. But we do think we can hit that 100 million dollar mark by the year end, even with that expansion being paused potentially to 2025.

Sam Tabar: And by the way, the decision hasn't been made yet on that.

Sam Tabar: But beyond that contribution from Boosteroid, we do have several clients close to closing, and we'll get to pretty close to that number.

Sam Tabar: So we're pretty confident.

Sam Tabar: We're not revising that target.

Sam Tabar: We still feel good about 100 million.

Sam Tabar: Did your new head of sales actually start or is that person coming on soon?

Sam Tabar: Nope, he started.

Sam Tabar: Okay.

Mike Rondall: And then one more, you know, you talked a little bit towards the end of your prepared remarks about acquisition and whatnot.

Mike Rondall: And in the past, you've, you know, you've mentioned possibly you're looking at a data center.

Mike Rondall: Is that what you were referring to there kind of that's been where you've been spending some time and you couldn't say more.

Mike Rondall: I'm just trying to connect the dots there a little bit.

Sam Tabar: Yeah.

Sam Tabar: Now we understand.

Sam Tabar: Look, this is ongoing.

Sam Tabar: We don't await too much into the details about what we're seeing out there and what we're targeting.

Sam Tabar: We can't provide too much detail on our process, but it's something we're looking at.

Sam Tabar: Yeah.

Sam Tabar: So I can't say I can't say more than that, but I can say that owning our own site certainly on the HPC side of the equation will allow us to offer different services like publication and on demand compute.

Sam Tabar: Got it.

Mike Rondall: Yeah, that would be great.

Mike Rondall: And then maybe lastly for Eric, you know, in Q2, Eric, you guys hit the ATM roughly 16 million shares since June 30th about another nine million shares.

Mike Rondall: How are you, you know, attempting to finance this going forward?

Mike Rondall: You know, there's a bunch of cat-backs.

Mike Rondall: I know you've talked about a credit facility in the past, but how are you just thinking about, you know, using the ATM versus getting a credit facility in place?

Eric Huang: Thanks for a question, Mike.

Eric Huang: As we always express the use of ATM, we're very cautious, but, you know, as we all know, this is requires a large procurement down payment, so it's always good to have the best new balance sheet to support our growth.

Eric Huang: And at the same time, we are talking to your virus, your credit facility providers to determine what's the best term for us to deploy.

Eric Huang: So we're working on that.

Eric Huang: Well, if I could just add to that, we continue to evaluate term sheets on debt financing.

Eric Huang: In terms of the indicative terms that we're seeing, we see some reasonable terms, but nothing for us to be super excited about to accept, and we haven't been forced in the position to accept less than optimal debt financing terms, and that's important.

Mike Rondall: Got it, got it.

Mike Rondall: Hey, thanks guys, congratulations.

Operator: Thank you.

Kevin Dede: We'll take our next question.

Kevin Dede: Hi, Sam, Erick, Kevin Dede, can you hear me okay?

Kevin Dede: Hi Kevin, Latin clear.

Kevin Dede: Good, okay, thanks.

Kevin Dede: Just first, on the Bitcoin side, obviously you spoke to the client in your self-mining hash rate.

Kevin Dede: I'm just wondering what you're just thinking about with doing those machines, and then I think if I understood or heard correctly, new machine purchase, maybe to just fill in the blanks on where you think your hash rate target will be a year end given, you're kind of pulling back on the range there, on economic condition.

Sam Tabar: Sure, yeah, that's a good question, understandable.

Sam Tabar: The long-term plan for Bitcoin mining for us is to remain opportunistic.

Sam Tabar: It's not a business that we believe that should be consistently invested into regardless of prevailing economics.

Sam Tabar: We have different levers, so we're in a very fortunate position on that.

Sam Tabar: You could expect potentially some modest growth, but we can't give any guidance on that, because again, we want to just remain opportunistic.

Sam Tabar: We want to see how the market conditions have evolved, but at current economics, at current economics, we would likely not spend more than $5 to $10 million on seed upgrades on the current economics, and that's been going sideways for a while, the economics there.

Sam Tabar: Also, on one hand, it would have to see a deep acceleration in the HPC demand that we're seeing, and we're currently see a good amount of capital to fund opportunities for the HPC side.

Eric Huang: I don't know if Eric wants to add to that, but that's my thought about it.

Eric Huang: Yeah, I agree with you, thank you.

Sam Tabar: Yeah, so you did make the machine purchase, and then what's the thinking regarding the machines that you've taken offline, the ones that perhaps are at much higher levels of, I guess, inefficiency?

Sam Tabar: Well, if they're not economically viable for certain models, they go into your warehouse, so we sell them, which is something we've done.

Sam Tabar: Very good.

Kevin Dede: Okay, then sort of switching gears and looking at HPC hosting sites, my thinking would be that booster roads, facilities would need to be close to metropolitan areas, versus say, customer one, which I think is mostly.., in France.

Sam Tabar: Can you talk about how you're lining up facilities to meet the obligations of the booster ideal?

Eric Huang: Yeah, I'd like to do a pass that to Erick or Kim.

Eric Huang: I'll ask you it after.

Eric Huang: Yeah, we've identified different locations including locations in the U.S, as the deploy those equipment.

Eric Huang: Yeah, we've already sourced the data centers, Kevin, and you are right. They are close to metropolitan areas.

Eric Huang: It is like a lot more aching to the infirm side than training, so they're not spread out in very remote areas.

Eric Huang: They're close to more densely populated regions, which follows in the cloud gaming industry.

Eric Huang: We're latency, so I'd be like a paramount concern.

Eric Huang: Yeah, I'll add that.

Sam Tabar: You know, at the size, I was the star, Kevin, go ahead.

Sam Tabar: No, no, no, go ahead, Sam, you go please, thanks.

Sam Tabar: Well, I was going to say, you know, at the size we're looking at data-centric capacity hasn't been a major issue.

Sam Tabar: We haven't lost any deal as because we couldn't find capacity.

Sam Tabar: Although we do think on our own site, we'll make us more flexible, and we're working on it pretty hard right now on ways to solve, for exactly that need.

Kevin Dede: How would you characterize pricing on the sites that you've located for Boosteroi versus what you did for customer one?

Eric Huang: I'll pass that to you.

Kevin Dede: In terms of what?

Kevin Dede: Sorry, repeat that, Kevin?

Kevin Dede: Yes, just general cost trends on that.

Kevin Dede: Here, there's huge demand for HPC, and that would obviously raise the flag of cost trends on the power side.

Sam Tabar: Yeah, just before I pass that to Eric, as mentioned, data-centric capacity has not been a major issue.

Eric Huang: We have not lost any deals because we couldn't find capacity, just to mention, but I'll pass the rest to my colleagues.

Eric Huang: Yeah, I mean, in terms of the details of the deal, we'll certainly provide more clarity after we find the MSA.

Eric Huang: So we'll provide shortly.

Eric Huang: Yeah, we're working pretty hard on completing an executing that MSA very soon, and we'll be mentioning that to the market.

Kevin Dede: Kevin, I think a large language model are a lot more extensive than for cloud gaming purposes.

Kevin Dede: Directionally, you wouldn't expect to be as extensive.

Kevin Dede: Okay, so I'm sorry, Cam, rewind that a bit.

Kevin Dede: You're saying that training is less, the requirements to meet training demands are less expensive, which would be my assumption.

Kevin Dede: The type of data center and insular equipment you need for a tier 3 data center to forge for training and LLM are far greater than the data center requirements that you need.

Kevin Dede: You would necessitate for a cloud gaming deployment with sort of the essence of that.

Kevin Dede: So, like, directionally, this deployment would be less expensive than the e-triangle set.

Kevin Dede: Ah, interesting.

Kevin Dede: Why is that because the computers in the sky, I mean, it just seems to me that you would want that same low latency and redundancy.

Kevin Dede: Yeah, I mean, certainly, it's just like the CAPAX one to the data center isn't as high necessarily.

Kevin Dede: We could have a long, long form discussion of this offline and we could bring in some heavy headers for you.

Kevin Dede: Okay, thanks.

Kevin Dede: Now, last question for me is, help me understand the difference between a binding term sheet and the NLAI and the MSA and whatever sort of financial obligations are associated with the fracture of any of them?

Kevin Dede: Yeah, it's worth mentioning this term sheet is binding.

Kevin Dede: It's not just like some sort of intentional aspirational LLAI is a binding term sheet.

Kevin Dede: And the MSA we're currently working on so that the binding term sheet has the high level stuff, the economics and so on and the MSA has the more legal nitty gritty and that will be announced pretty shortly.

Kevin Dede: Does that answer your question?

Kevin Dede: I feel like I missed something, Kevin.

Kevin Dede: What can you?

Kevin Dede: Yeah, there's just one nuance in it.

Kevin Dede: Yeah, just one nuance in the chain is what would happen if either party decide to not consummate the deal?

Kevin Dede: I mean, there's legal recourse but we're not in the business of, there's legal recourse but we don't believe that's going to happen.

Kevin Dede: If we thought that was going to happen, we would not have announced the binding term sheet.

Kevin Dede: Very good.

Kevin Dede: Okay.

Kevin Dede: Appreciate the color sand.

Kevin Dede: Thanks for having me.

Kevin Dede: But you're right.

Kevin Dede: You're right, though, in theory, you'd expect, you know, but we're very confident.

Kevin Dede: And we're very close to the clients.

Kevin Dede: Well, good.

Kevin Dede: Congratulations.

Kevin Dede: We're looking forward to see how that progresses.

Kevin Dede: Thank you.

Joe Gomez: And we'll take the next question.

Joe Gomez: This is Joe Gomez from Noble Capital.

Joe Gomez: Can you hear me?

Joe Gomez: Loud and clear.

Joe Gomez: Thanks, Sam.

Joe Gomez: So I'm the boy Boosteroid contract.

Joe Gomez: Maybe just, you know, conceptually, can you kind of relay what kind of the margin on that versus the anchor HPC contract margins?

Joe Gomez: How do they compare?

Sam Tabar: The margins are still nice and fat, but they're not as good as the margins on the H 100s.

Sam Tabar: Having said that, if the, if our anchor client, not that you asked, but I do want to emphasize that if our anchor client decides to go with the Blackwell B 200s.

Sam Tabar: I mean, sure, there's a delay, but we're long term greedy, but we'll have even better economics and even better margins on that particular hardware.

Sam Tabar: But with respect to the hardware related to Boosteroid, the margins are still quite good.

Eric Huang: We will, the NSA is yet to come out, but it will not be as high as the H 100s.

Eric Huang: Okay.

Joe Gomez: Thanks for that.

Eric Huang: And on the mining business, can you talk a little bit about how the gross margin for that segment flowed over the quarter?

Eric Huang: I was pretty flat over the quarter or where the margin was the gross margin at the end of the quarter, you know, significantly different than what it was at the beginning of the quarter?

Eric Huang: Can you want to take that?

Eric Huang: Yeah, I don't know if there's necessarily much variation beyond that.

Eric Huang: I mean, I guess there could be certain instances where it fluctuates, but really it's pretty steady state.

Eric Huang: Okay.

Eric Huang: That's good.

Eric Huang: And then I was going through the filings and fleet efficiency declined sequentially, and I was just wondering if you could talk to what was behind that.

Eric Huang: Yeah, I mean, it declined numerically, but I mean, it actually improved. So I mean, it's our fleet efficiency improved from, I mean, 28 to 27, 9, 7, that just means it's incrementally more efficiently, and that was surely by replacing certain less efficient units with newer models that have a greater energy efficiency.

Eric Huang: Okay.

Eric Huang: And then one last one for me, you know, on the delay with the client, I understand, you know, it could be resolved in a day, it could be resolved, you know, in beginning of 2025.

Eric Huang: But are there any costs associated with that delay for you guys, where you won't be seeing the revenue be coming in, but you will have the incurring expenses?

Eric Huang: So on that front, so we ordered certain long lead time network equipment, but we didn't place the order for the H-100 yet, as the lead time to that is not 3 to 4 weeks.

Eric Huang: So that's good.

Eric Huang: Okay.

Eric Huang: Great.

Eric Huang: Nice quarter.

Eric Huang: Thanks for taking my questions.

Eric Huang: Thank you.

Operator: And we'll take our next question.

Chris Sakai: Hi Sam, good morning.

Chris Sakai: Just a question on HPC.

Chris Sakai: Matthew's picking.

Chris Sakai: Sorry.

Chris Sakai: Matthew's picking.

Chris Sakai: Oh, this is Chris the Kai from singular research.

Chris Sakai: Okay.

Chris Sakai: Hi Chris.

Chris Sakai: How are you?

Sam Tabar: Um, sorry, they didn't announce me, but on the HPC business, is this more of a strategic shift now to HPC than from Bitcoin mining?

Sam Tabar: Well, here's the thing.

Sam Tabar: A lot of pure played Bitcoin miners.

Sam Tabar: There's this old saying that all you have is a hammer. Everything you see is a nail.

Sam Tabar: So all they can do is, um, when you only have one lever is regardless of the economics, got it grow.

Sam Tabar: Um, we are in a really incredible position to have multiple levers.

Sam Tabar: We have three levers.

Sam Tabar: Bitcoin mining, Ethereum, shaking, and HPC, and so we're able to work creatively since we have different levers in our capital allocation plans and we have been always ahead of the trends and it was respect to HTC, we were one of the first, if not the first to announce material contracts and the sector and and we continue to grow exponentially with a pretty pregnant pipeline, so we were right in identifying and using and leveraging the skills of a Bitcoin miner in the space, we have very deep know how in procuring specialized equipment and have great relationships with the right kind of parties on that and you know we have we've been we've been able to execute really really well for our current clients which makes it even easier to get other clients because we have an incredible track record and we have global reach and we have you know offices around the world including Singapore and we've been able to serve our underserved markets around different regions, not just the last in terms of client sourcing, so we've we've been in a very fortunate position and we're leaning pretty hard on hiring a head of revenue and sell stuff which we've done which we haven't announced yet but that has happened they have started to help just from an organizational design perspective lead the sales language because so far we've done this without as without a sales team so with the sales team we expect to you know bring a lot of these clients through the finishing line so going back to your question whether this is a strategic move it certainly is and we believe we were right and we could see that the sector is following suit and frankly every investor and shareholder and institutional meeting I have we have and are asking about the HPC size which makes a lot of sense you can model out cash flows much better that way to the penny that's a Bitcoin it's a little bit difficult to predict where it's going to be and yet you have to invest all this money into the equipment and you have no visibility on the price of Bitcoin so you know we don't want to run a business based on hope we want to run a business based on alpha and strategy and and this move speaks that in space right under understood and then can you talk about do you see any potential bottlenecks to onboarding new HPC clients and and for for 2025 what do you see can you give color as to what's your pipeline there how many new customers you think would will come on for HPC yes mentioned our pipeline has been bandwidth and manpower we've received plenty of reverse inquiries and we've already built this business with zero sales people so that has been the bottlenecks just manpower and frankly cognitive overload and so we've been able to solve for that and that's that's happening.

Sam Tabar: And you know as mentioned you know we have geographical reach including global presence and offices in the various regions that provide us QLH ships and the ability to compete for business and underserved parts underserved parts of the world so we do see a we already have a pregnant pipeline and frankly the future is pretty bright in the HPC side of the business for the rest of the year and 2025.

Sam Tabar: Okay, great.

Sam Tabar: Thanks for the answers.

Sam Tabar: Thank you.

Sam Tabar: Thank you for the questions.

Operator: And that does conclude the question answer session.

Cameron Schnier: I now turn the conference back over to you for any additional or closing remarks.

Cameron Schnier: Well, thank you again for joining us today.

Cameron Schnier: We appreciate your continued, continued interest and support.

Cameron Schnier: And we do look forward to speaking with you again in the next quarter.

Cameron Schnier: Pretty exciting times for us.

Cameron Schnier: And this officially concludes our call.

Operator: Have a great day, everybody.

Operator: Thank you.

Operator: That does conclude today's conference.

Operator: We do thank you for your participation.

Operator: Have an excellent day.