Q3 2024 MARA Holdings Inc Earnings Call
[inaudible]
Greetings. Welcome to Mara's third quarter 2024 earnings call.
At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded.
Speaker Change: I will now turn the conference over to your host, Robert Samuels, Vice President of Investor Relations. Thank you. You may begin.
Robert Samuels: Thank you, Operator. Good afternoon and welcome to Morris' third quarter of 2024 earnings call. Thank you for joining us today. With me on today's call are our Chairman and Chief Executive Officer Fred Thiel and our Chief Financial Officer Salman Khan.
Robert Samuels: Certain statements made during this call may be considered forward-looking statements within the meaning of the federal securities laws. In particular, any statements about our future growth plans and performance, our liquidity position, our growth opportunities, and our future financial performance are forward-looking statements.
Robert Samuels: These statements are often identified by the use of words such as anticipate, believe, estimate, intend, design, may, plan, project, would, and similar expressions or variations.
Robert Samuels: Investors are cautioned not to place undue reliance on these forward-looking statements. All forward-looking statements made on today's call involve risks and uncertainty. While we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law.
Robert Samuels: Our actual results and outcomes may differ materially from those included in these four looking statements as a result of risk factors, including but not limited to the factors discussed under the heading risk factors in our most recent annual report on Form 10-K and any other periodic reports that we may file with the Securities and Exchange Commission.
Robert Samuels: Finally, please note that on today's call, we will refer to certain financial measures that were not prepared in accordance with generally accepted accounting principles in the United States, including adjusted EBITDA and non-GAAP total margin.
Speaker Change: Mara believes these non-gap financial measures are important indicators of its operating performance because they exclude certain items that we do not believe directly reflect our core operations and may not be indicative of our recurring operations.
Speaker Change: Please refer to the earings release for a full reconciliation of the non-GAAP financial measures for the most comparable GAAP financial measures.
Speaker Change: We hope you've had the chance to read our new shareholder letter and look forward to your feedback.
Today's poll will be a little bit different.
Speaker Change: We'll begin with some brief prepared remarks from Fred and Salman.
Speaker Change: After their comments, we are going to be conducting an analyst interview with management.
Speaker Change: We are going to be doing this on a rotating basis, and our inaugural session will be conducted by Kevin Deedy, Analyst at H.D. Wainwright. Once Kevin is finished, we will go through some of the more popular questions from our retail administers.
Speaker Change: And with that out of the way, I'm going to turn the call over to Fred to kick things off. Fred? Hello, everybody. Yesterday, we announced the addition of approximately 372 megawatts of owned and operated capacity across three sites in Ohio.
Speaker Change: These additions include the acquisition of two data centers, offering a combined 222 megawatts of interconnect approved capacity, and the development of a third greenfield data center, which is expected to add another 150 megawatts of compute capacity.
Speaker Change: We acquired two operational data centers in Hannibal and Hopedale, Ohio, with 222 megawatts of combined capacity.
Speaker Change: These sites have 122 megawatts of current capacity and approved to expand by another 100 megawatts.
Speaker Change: in 2025. Simultaneously, MARA has begun developing a 150 megawatt operation in Finley, Ohio, which already has 30 megawatts of capacity.
Speaker Change: These three facilities have a combined interconnect approved capacity of 372 megawatts, which MARA intends to fully energize by the end of 2025. Compute for these sites is purchased, secured, and ready for deployment.
Speaker Change: These data centers contribute to the resilience of MARA's flexible compute portfolio.
Speaker Change: This initiative increases MARA's exposure to PJMs, one of the largest and most sophisticated independent system operators, or ISOs.
Speaker Change: Once energized, our data centers will be further diversified across multiple jurisdictions, ensuring that no single ISO contains more than 50% of our owned and operated capacity. We intend to further expand and diversify our portfolio of owned and operated sites, which we expect to yield significant cost savings.
Speaker Change: These growth initiatives align with our strategic goal to position Mara as one of the most cost-effective and cost-efficient operators in the industry. And with that, I'll hand it over to Salman. Thank you, Fred.
Salman Khan: Through our proven discipline and data center expertise, we acquired these assets at a multiple of approximately 270,000 per megawatt based on improved capacity and after customary adjustments.
Salman Khan: This is one of the lowest disclosed multiples amongst our larger publicly traded peers.
which demonstrates our unmatched ability to deliver accretive acquisitions.
Salman Khan: As the largest, best capitalized company in our space, Mara has the privilege of reviewing every potential M&A opportunity on the market.
Salman Khan: We have been at the table for every scalable transaction announced this year, and if those opportunities traded to our peers, it was because we passed on them.
Salman Khan: Our M&A track record reflects our discipline in organic growth and our focus on maximizing shareholder value.
Salman Khan: Furthermore, these data centers will increase our total owned and operated compute capacity by over 70 percent.
Salman Khan: Owning the sites will provide us with greater operational control and could further reduce our operating costs at Oakdale Data Center, which is part of this acquisition, up to 50%.
Salman Khan: Much of the future capacity is alongside operating generation, power opportunity, providing opportunities for cost reduction, power redundancy, and development optionality.
Salman Khan: I want to remind, in 2024 so far, MARA has secured approximately 1 gigawatt of namespade capacity through acquisitions and greenfield site developments.
Salman Khan: As a result of strategic expansion, the company's total nameplate capacity has increased to just under 1.5 gigawatts, with approximately 65% of this capacity proudly owned and operated by Mara.
With that, I will hand it back to Rob.
Speaker Change: Thanks, Salman. Thanks, Greg. Now I'm going to turn the call over to Kevin Dede from H.G. Wainwright to begin our interview. Kevin?
Kevin Dede: Thanks, Rob. Hi, Fred, Salman. Thanks so much for having me on.
Kevin Dede: I think maybe Fred, it probably makes sense to start with the deal you just closed. Why don't we talk a little bit about how you see it sort of folding into Mara's overarching thesis in driving energy costs to near zero.
[inaudible]
Sure, so as you look at
Kevin Dede: Any acquisition we do, we're focused on, obviously, lowering our cost of operations. These particular sites, one of which we had some capacity operating at, allow us to lower our cost of operating pretty significantly.
Kevin Dede: Our goal over time, as we continue to grow our capacity, is to focus on sites
Kevin Dede: We're both continually able to lower our cost to operate. So in by way of example, if you look at the on-site generation that we recently announced through our partnership with NGON, we're able to generate electricity at a cost somewhere around one cent per kilowatt hour.
Kevin Dede: which is significantly lower than the typical market price of around four cents per kilowatt hour paid for by miners using grid energy.
Kevin Dede: And as we continue to expand those opportunities, and by the way, that type of stranded gas opportunity in gigawatt hours
measured is over a million gigawatt hours.
Kevin Dede: per year of capacity when you look at the overall market availability of gas.
Speaker Change: And so we believe that you'll see miners, like Mara, go after these types of opportunities where we own and control our own power generation. And over time, Mara will be building more and more owned and operated generation capacity.
and find ways in partnering with AI companies, hyperscalers,
Speaker Change: providing services around energy management which will allow us to subsidize our cost to operate as we co-locate with them.
Speaker Change: And I think over the next few quarters, you'll see us expose a little bit more our plans in those areas, what we're doing, the partnerships we have.
Speaker Change: and I think it will make it very clear what our vision is as we transition from a traditional mining company
that have been
Speaker Change: predominantly dependent on third-party operators, to a mining company that's very focused on owning and operating its own resources, and a mining company that really focuses on providing energy transition capabilities to companies way outside of mining.
Speaker Change: Specific to the Ohio sites and their connection to PJM, what sort of flexibility do you have in your use of power and maybe an ability to resell it back to the grid?
PJ Abbey gives us the opportunity to leverage
Speaker Change: Power trading gives us the opportunity to leverage hedges, gives us the opportunity to do all the things that as a large load consumer we would want to be able to do.
Speaker Change: And I think, you know, the benefits of what we've learned of how we can operate in Texas, now being able to operate with PJM being one of the largest ISOs.
Speaker Change: in the space will give us a lot of flexibility in managing power costs. As we continue to grow and expand our footprint there, it'll be more and more powerful over time.
Speaker Change: I know you mentioned the next couple of quarters as probably being more demonstrative of your zero power push, but if you if we took a look at
Speaker Change: The progress Mara made in the third quarter, are there any highlights that you could point to? The multi-tentacle facet strategy that Mara has implemented, that could point to power reduction?
Power possibilities!
Speaker Change: Sure, I mean the NGAN partnership is a very early first step where you see us essentially going after micro data centers at the edge and as I said the opportunities there are very deep and very broad across
Speaker Change: oil and gas fields domestically as well as internationally. And the domestic opportunities themselves are huge. And we believe we now have a core competency in being able to do this and execute it at scale.
Speaker Change: And as we continue to grow, we'll become a bigger and bigger portion of our fleet and owned and operated data centers.
[inaudible]
Okay
Speaker Change: Let's switch gears a little bit and talk about, I think it's almost 27,000 Bitcoin marathons at this point. Can you talk a little bit about your hodl strategy?
Mara
Speaker Change: how it views it as an adjunct to building the company's presence.
Speaker Change: where Mara might be able to take it, what sort of financial...
Speaker Change: implementation might drive greater yield on it. Maybe a little more insight on on how you see your HODL strategy.
Speaker Change: Sure, so I think one way to look at it is, you know, we have
Speaker Change: purchased roughly 6,400 BTC at an average cost of around $60,000 per BTC. And you think about the convert transaction we did in
late August
where we purchased a little over 4,000 Bitcoin.
That transaction has netted a huge IRR to our shareholders.
Speaker Change: over a very short period of time because of where the price of Bitcoin is today. And if you recall,
Speaker Change: At the time, we said the reason we go into the market and opportunities to buy Bitcoin is because we believe that there will be a price inflection point where it is of huge value to our shareholders for us to go buy Bitcoin versus investing.
Speaker Change: assets into building mining capacity which won't generate Bitcoin for potentially 12 to 18 months.
Speaker Change: and so here is a very good proof point of that strategy playing out very positively for our shareholders and for Marathon. If you look over the
Speaker Change: multiple purchases of Bitcoin we've done over the years. It has netted a very healthy return for our shareholders and we believe that we will continue to execute a strategy of a hybrid of buying Bitcoin when it makes sense
and mining Bitcoin when it makes sense.
Speaker Change: Our average cost of the Bitcoin in our hovel today is somewhere under $50,000.
Speaker Change: when you average our cost to mine of the Bitcoin that we've mined in our treasury and the Bitcoin that we have acquired.
and so...
Speaker Change: If you look at that compared to today's price of Bitcoin, it's a very significant
Speaker Change: appreciation and value. And today, I think we hold a little over $2.2 billion, almost $2.5 billion in Bitcoin in the balance sheet. And now to the latter part of your question.
So what do you do with that Bitcoin?
Speaker Change: Well, there are ways to generate yield on that Bitcoin Such that we can generate income from it. That income can generate either cash to buy more Bitcoin, cash to subsidize SG&A expenses, cash to lower power costs, cash to fund equipment purchases.
Speaker Change: With this current jump in the price of Bitcoin, we believe the period of low-cost growth is likely coming to an end.
Speaker Change: and companies will now be forced to compete for capacity in a very different way than they have in the past, and growth will become more and more expensive, and these smaller miners will become more and more challenged, which will make consolidation a more attractive option. However,
Speaker Change: We are not in the business of going out and paying 1.6 million dollars a megawatt for capacity like some of our peers have done. Look at this transaction. $277,000 a megawatt. Almost half of what we paid at the beginning of this year for the other assets that we acquired.
We are going to be very smart, we have
taking advantage of the pricing of machines in order
Speaker Change: more machines than we needed for our 50x a hash goal such that we would be ready for the growth spurts that come next year.
Speaker Change: And we believe the market next year will be capacity constrained for some miners.
Speaker Change: and those of us who have planned in advance, who have machines in inventory, on order, and optioned at attractive prices, and have the ability to build their own miners.
Speaker Change: There are very few of our peers who are able to build their own miners and have access to chip supplies for it.
Speaker Change: will be the ones that over the next years leading into the next halving will dominate this marketplace. And we think between our tech stack, our ability to build custom miners,
Speaker Change: our two-pick immersion technology which lets us run miners with significant levels of overcloth and optimize our use of energy together with our focus on near zero-cost energy will make us the predominant miner in this industry from a cost perspective.
Speaker Change: Owned and operated data centers and in collaboration with large scale AI Hyperscale.
Speaker Change: We have a very well defined plan around our technology stack and how we're going to deploy it.
Speaker Change: You will see next generations of RF to pick miners.
Speaker Change: <unk> specifically for AI.
Speaker Change: Also combined functionality AI in mind.
Speaker Change: Youll see different form factors of those specifically designed for edge inference locations.
Speaker Change: Where it will be able to.
Speaker Change: Essentially operate anything from for you up to 48 U.
Speaker Change: In a single to face immersion container.
Speaker Change: These systems will continue to get more and more efficient.
Speaker Change: And more and more able to leverage the ever increasing power and heat densities.
Speaker Change: <unk> <unk> from the overall and as we move up the stack.
Speaker Change: Towards our pool and software systems for energy balancing I think youll continue to see over the next year to two years, a series of announcements, which start positioning Mara is one of the leading solutions providers in the area of essentially optimize the Idaho.
Speaker Change: Electrons no matter, where they spend.
Speaker Change: The.
Speaker Change: The Ohio deals very compelling Fred.
Speaker Change: Was there any sort of special negotiation sort of behind the scenes that.
Speaker Change: We were able to elicit such such favorable terms and how how much more.
Speaker Change: Supply at that.
Right do you think exists in North America.
Speaker Change: Given the huge demand for HBC and AI.
Speaker Change: Well I think it comes down to some sites are suitable for AI and <unk> seen some sites arent.
Speaker Change: It's like that old commercial sometimes do think like sometimes you don't.
Speaker Change: And there are sites that really only are good.
Speaker Change: Suited for.
Speaker Change: Bitcoin mining because they have load that has to be curtailed they don't have access to.
Speaker Change: High speed Internet connection or fiber connectivity.
Speaker Change: Or there are lots of other reasons.
Speaker Change: And so we believe that if you look at the.
Speaker Change: Multitude of bitcoin mining sites that have been built over the years in the amount of projects for power there are lots of low hanging fruit.
Speaker Change: In this.
Speaker Change: This type of price range the challenge is scale.
Speaker Change: Laura is of a scale today, where we're not interested in $20 $30 $40 50 megawatt sites. Our focus is on the 100 megawatt and larger scale, especially around what we call utility scale mine.
Speaker Change: For the onsite generation, we're very focused on micro.
Speaker Change: Data centers, because we have the technology to do it because of our emerging technology in our container technology and software our ability to deploy miners that are very fault tolerant and can operate without cumulus system and the fact that we can generate our own energy, which means our overall cost to operate.
Speaker Change: Very very low.
Speaker Change: And then as we look more towards the future.
Speaker Change: Ultra high scale for what I would call hyper scale comes from relationships with Hyperscale as well.
Speaker Change: Where there is a very symbiotic relationship to be had between bitcoin miners.
Speaker Change: And large loads and the AI HBC space.
Speaker Change: I think what Youll continue to see is more of a scaling.
Speaker Change: From power all the way through.
Speaker Change: <unk> energy management fully across that spectrum.
Speaker Change: Across a variety of solutions.
So you've mentioned to pick a couple of times thread.
Speaker Change: That letter referred to some tanks that you.
Speaker Change: You intend to shifting shipped in Q4.
Speaker Change: I'm wondering aside from the ones that you have running and test facility.
Speaker Change: What you might be able to say about them and how you viewed up production I know the letter alluded to a.
Speaker Change: Order rate like a third party order already.
Speaker Change: How how are you allocating resources to meet that demand.
Speaker Change: As well as.
Speaker Change: Upgrading some of your own sites.
Speaker Change: Sure so.
Speaker Change: We are blessed with the fact that we have one very large customer call tomorrow.
Speaker Change: Who is a very nice customer, but there are hard negotiator on price.
Speaker Change: And then we have third party of minors and <unk>.
Speaker Change: Data center operators, who are very interested in the technology and so have been willing to place orders with us to test technology.
Speaker Change: See its applicability and deploying across their systems and so those systems.
Speaker Change: In shifts I think.
Speaker Change: Nearly 40 systems between what Moura is using third parties will be delivered by the end of this year and installed.
Speaker Change: Our currently operating.
Speaker Change: Two picked in production not just in test and.
Speaker Change: And getting some very good results in some cases, we're seeing overclock, well over 20% and systems very efficiently.
Speaker Change: And getting very good results.
Speaker Change: The additional advantage of <unk> gives us a very low <unk>, which means the mechanical load for cooling is very very low.
Speaker Change: So the overall power draw the facility comes down which means you now have even more energy that you can apply to many victims.
Speaker Change: And so the initial results seem very attractive and we will continue to ramp production at the same time, we're iterating. The design we have gone from the two fixed solution that was designed specifically for bitcoin miners.
Speaker Change: Moving towards a <unk> solution that is designed for a hybrid application of a mix in the same chang of minors and AI rigs.
Speaker Change: Two a <unk> solution that allows for hot swap ability.
Speaker Change: AI rigs or miners in.
Speaker Change: In multiple form factors for large scale deployment, all the way down to micro data centers.
And what we're seeing is a very significant amount of interest in people looking to test this and see how it works two phase immersion is still a new technology.
Speaker Change: Toothpaste technology is something that not all systems can you just be dropped in and operated and so we're working with Oems to make sure that the systems that they manufacturer work appropriately.
Speaker Change: Laura has built and designed its own custom miners for to pick.
Speaker Change: Which are ultra high density such that we can operate in what would normally be a.
Speaker Change: 300 kind of.
Speaker Change: Kilowatt.
Speaker Change: Implementation over a megawatt of miners.
Speaker Change: In a single <unk>.
Speaker Change: And we're seeing really good results. So we will continue to be more and more vertically integrated and what we do and become less and less dependent on supply chain from offshore manufacturers, providing technology that is really designed for the average bit minor as opposed to a highly optimized slightly integrated minor like ourselves.
Speaker Change: The miners themselves reference here Fred are they the result of the work that you've done with <unk>.
Speaker Change: And if you wouldn't mind, commenting maybe you could give us a little insight on how you see wafer source.
Speaker Change: In pulp.
Speaker Change: Pablo above the controversy surrounding <unk> and AI partner TSMC.
Speaker Change: So in regards to <unk>, obviously, yes, we are using Oregon miners, both their standard miners as well as down at the silicon level and optimize it for our own application.
Speaker Change: That being said, we have designed our toothpick minor unit to be able to use.
Speaker Change: Ash boards from third party providers as well.
Speaker Change: And this is not a product we're looking to sell to anybody.
Speaker Change: This is a product we're keeping for ourselves sorry to be selfish, but the advantages of the power densities and what we do in these systems such that we believe it is better that we use it for our own purposes.
Speaker Change: That being said.
Speaker Change: We have optional optimal flexibility that we can use Florida and chips, we can use Oregon Nash sports, we can use third party dashboards and these devices, which we then modified for specific use case as you look at wafers.
Speaker Change: Three nanometer wafers.
Speaker Change: Are in short supply because of what's going on in the GPU space.
Speaker Change: However, we have not seen any indication from TSMC.
Speaker Change: That bit means supplier access to wafers has been impacted.
Speaker Change: We are seeing.
That certainly <unk> has ample access to wafers.
Speaker Change: And it is getting all the supply that they need.
Speaker Change: As we look at next generation technologies.
Speaker Change: I think.
You won't see two nanometer appear on the marketplace, most probably for closer to three years.
Speaker Change: And I think what youre going to see before that is a reengineering of how miners actually look and operate.
Speaker Change: Such that the geometry will be much less important than.
Speaker Change: And then how the hash board is designed such that you could even take seven nanometer chips.
Speaker Change: Run them.
Speaker Change: At lower power and higher frequency and get the energy efficiency.
Speaker Change: <unk> expense at three nanometer parts and not have any of the supply chain constraints and so I think youre going to see a lot of innovation around minor technology by third parties and this market is going to really start becoming very exciting.
Speaker Change: Relative to the options that miners are going to have which will mean less control from the hardware vendors.
Speaker Change: As times are long.
Speaker Change: Well, that's long overdue happy to hear that supply.
Speaker Change: For our suppliers and constrained.
The shareholder letter made it explicitly clear that Meera harbors no ambition to run AI sites.
Speaker Change: We have two new board members that have great experience in both data centers and energy.
Speaker Change: I guess.
Speaker Change: What I'm curious to hear your perspective on as how you might be able to capitalize on that experience and incorporate their consultation and input and meera as day to day operation.
Speaker Change: Kevin.
I'm, obviously not going to share our five year strategic plan with you on the phone right now.
I'm sure there'll be maybe next quarter.
Speaker Change: Yes, I'm sure that our friends at clean Spark and drive would love for us to do that but we're not going to do that today.
Speaker Change: What I will share is that.
Speaker Change: If you look at the hosting business or the GPU is our rental service business.
Speaker Change: H 100 rental prices have dropped by 75% in the last six months. If you think that the technology obsolescence of bitcoin mining as aggressive welcome to the world of Gpus.
It is even more aggressive.
Speaker Change: Anybody who.
Speaker Change: It comes from the Bitcoin mining side, who is excited about going into the <unk>.
Speaker Change: Hyper scaler or large scale datacenter for AIA HBC hosting business.
Speaker Change: Is in for what I believe will be an abrupt surprise come two or three years.
Speaker Change: When the hyper scaler.
Deployments of the data centers they have in production today start coming online and there is no way for third party independent providers to compete on price or capability or functionality. The hyper scaler, who will have first choice of hardware for hyperscale as well that the first choice of power in the Hyperscale is we'll have first choice of customers.
Speaker Change: And so I think.
Speaker Change: Companies that are able to tie up agreements in the very short term today as long as those agreements was hosting agreements can be enforced and the customers that are behind them are able to pay over the long term.
Speaker Change: I think theyre lucky and I congratulate them.
Speaker Change: I think anybody else trying to go into this business today.
Speaker Change: Is looking at a race to the bottom from a cost perspective, and a very challenging capital market. Once people wake up to the fact that the difficult that really is to run an AI HBC hosting business when youre another hyperscale yourself.
Speaker Change: So not to take up more time users.
Speaker Change: Think of it.
Speaker Change: We're a technology company, we are a company that is focused on bringing to market high value solutions.
Speaker Change: That will generate a great return for our shareholders. We are not chasing the next type of trend we're not chasing the next fab, we're focused on delivering extreme value to the marketplace.
If you look at the team we have built and continue to build we look at what we're doing in adding talent and knowledge to our board you can start getting an idea for the direction of the types of technologies that Mara will begin to continue to bring to market.
Speaker Change: And the solutions that we plan to bring to market that will position us very differently from anybody.
We look at us as just a bitcoin Mike.
Fred Thiel: Fair enough Fred Thanks.
Speaker Change: We'd be remiss, if we weren't to discuss the events of last week and the subsequent reflection in bitcoin price I'm not wanted to opine on on politics, a mall, but I am certainly curious to your perspective.
Speaker Change: Only once.
Speaker Change: Some discussion the Merrell letter made it pretty clear that.
Speaker Change: You folks have been involved in the process.
Speaker Change: I guess I'm wondering whether or not you think that continues how how you see the changes.
Speaker Change: Anticipated.
Speaker Change: Reflected in the industry going forward.
Speaker Change: Aside from perhaps Mr Gensler looming.
Speaker Change: Losing his job what else are you looking forward to as U S government moves toward a more crypto friendly stance.
Speaker Change: And how do you see taking advantage of it.
Speaker Change: Absolutely.
Speaker Change: One of the great advantages of the United States.
Speaker Change: Form of government is that we have three branches of government.
Speaker Change: What I'll focus my comments on the legislative and the executive branch.
Speaker Change: If you look at the results of this election.
Speaker Change: 200 members of the house of Representatives and close to 18 Senators.
Speaker Change: Our joining the Legislative branch, who are all pro crypto.
Speaker Change: The crypto industry spent over $100 million.
Speaker Change: And targeted campaigns and Mara together with two other of our peers Cofounded, the big point voter project, which specifically targeted campaigns and individuals who felt crypto was important and got them to go out and vote for candidates that were tripped up there.
Most significant race of which was the shared brown Bernie Marino rates, where the crypto.
Speaker Change: Activists, we're able to unseat sherrod brown.
Speaker Change: One of Elizabeth Warren's co.
Speaker Change: <unk> and trying to drive the Yankee Crypto arm. So we believe the legislative branch will have a much more open.
Speaker Change: Perspective on crypto and we fully expect the Republican.
Speaker Change: Majority in the Senate.
Speaker Change: And we will see how the house turns out.
Speaker Change: To put forth legislation.
Speaker Change: We believe president Trump Holstein.
Speaker Change: That provides for market structure provides for stable points and provides for a regulatory regime.
Speaker Change: Quoted in crypto that will enable banks to custody and collateralized crypto bitcoin assets and Youll see other forms of.
Speaker Change: Etfs and other types of securities come to market that will provide institutional investors with a plethora of options. So that they can take advantage of bitcoin and other crypto assets as investment in schools in regards to the executive branch.
Speaker Change: If you look at the two campaigns.
It was quite obvious from Vice President Harris was comments I believe it was on the view when asked what are you going to do differently, if anything to president Biden.
Speaker Change: And the Vice President answered.
Speaker Change: But she would do nothing different.
Speaker Change: That was a clear indication that the war on crypto was going to continue and.
And it was a clear indication that the bitcoin mining community needed to rally around the Republican call.
Speaker Change: President elect Trump.
Speaker Change: Clearly stated at the National conference not only his support for bitcoin, but his belief in bitcoin as being something that should be mined in the U S and the U S should hold the strategic reserve of such that they could project power within crypto markets and specifically in.
Speaker Change: The use of Bitcoin is this international trade settlement assets.
Speaker Change: And hold a strategic significant amount of bitcoin.
Speaker Change: Similar to how the U S government bold goal.
Speaker Change: Now Senator <unk> has put forth a bill specifically to establish a strategic reserve.
Speaker Change: And the belief two things one is the ability to project power, but more importantly, if bitcoin continues to appreciate as it has.
Speaker Change: In the past weeks are a great example of how it can.
Then a significant amount of bitcoin held by the U S government could be used as an offset to the federal debt.
Speaker Change: The only other alternative to pay that debt is to allow inflation to run wild and then fleet down the debt, which is not something I want with children or grandchildren to have to experience.
Speaker Change: So I know I personally will do anything to support.
Speaker Change: Government initiatives that promote the ease in use.
Speaker Change: A big point as an investment asset.
Speaker Change: And provide tax legislation around allowing bitcoin to be used for transactions at those transactions be taxed allow miners to operate freely and have equal access to power in the U S without being targeted.
Speaker Change: And to allow more and more bitcoin to be mined in the U S. Such that the U S is able to ensure that it has a significant amount of block space to protect.
Speaker Change: The freedom of transactions in bitcoin.
Speaker Change: Regardless of the use application as long as its lawful.
Speaker Change: Within the U S and by people investing in the U S.
Speaker Change: I'm going to switch over to Solomon for my last question.
Salman Khan: It's aman.
Speaker Change: Taking a step back and looking at Mara as overall financial performance.
What do you see as the highlights.
Speaker Change: What worked well.
Speaker Change: As well as you would hoped.
Speaker Change: And where do you think you need to move to improve performance.
Speaker Change: What do you think we could expect to see going forward.
Speaker Change: Thank you Kevin for the question.
Speaker Change: As we reported today are energized ash rate as increased 93% to $36 <unk> per second.
Q3 of this year versus Q3 of last year and as you know in this sector are production is public information after the quarter end as well. So we have more than 40 ex ash already and we are driving towards the 50 <unk> target that we had set for ourselves.
Speaker Change: That was revised minimal to here this year.
Speaker Change: Now in terms of total block space.
Speaker Change: Another great highlight for us despite having.
Speaker Change: <unk>, 32% higher compared to Q2 of 2024 and Thats a significant increase quarter are from a sequential quarter standpoint.
Speaker Change: In addition to that obviously that impacts our revenues our revenues increased.
Speaker Change: 35% compared to the same quarter of last year.
Speaker Change: There is an impact on <unk> pricing.
Speaker Change: An impact of having.
Speaker Change: And then there is an impact of.
Speaker Change: Off global cash rate.
Europe as we all know global hash rate has gone up considerably.
Speaker Change: Over this period of time as a result of that difficulty level has gone up considerably.
Speaker Change: Despite all of those challenges, we have persevered and our revenues have gone up considerably compared to last year the same time.
Speaker Change: On the on the cost side.
Speaker Change: A similar story to our cost of revenue as we measure from.
Speaker Change: Cost per potash a game perspective, that's the kpis that we have set for ourselves at.
Speaker Change: Has improved consistently throughout this year and one of the reasons.
Is the acquisitions that <unk> acquisitions that we did those are driving our costs down.
Speaker Change: But also in addition to that is the organic growth the.
Speaker Change: Additional capacity that our teams have successfully.
Speaker Change: Deploy it we are very proud of that.
That has consistently declined.
Speaker Change: <unk> and decline of our.
Speaker Change: Cost of revenue. So if you look at.
Speaker Change: Cash cost of revenue as we call it without depreciation that has gone down and that reminder, that is a non-GAAP measure as we disclosed in our financials.
Speaker Change: Our shareholder letter as well it.
Speaker Change: It has gone down 18%.
Speaker Change: From a 45 $2 in the third quarter of 2023% to $37 $1 per pet Ashford, Inc, and the FERC over a 2024 and thats the estimate of our strategy.
Speaker Change: Driving towards new.
Speaker Change: Near zero energy cost, but as you know that we were.
Speaker Change: Asset light company, a year ago, just a year ago.
Speaker Change: <unk> gigawatt additions in capacity approximately once it's fully energized.
Speaker Change: Through acquisitions and organic growth both both acquisitions.
Speaker Change: Reap benefit over a period of time and we're starting to see those benefits.
Speaker Change: We wanted to continue.
Speaker Change: Continue to continue to.
Speaker Change: Yes.
Speaker Change: Reduce our cost so if you look at sequential quarter from Q2 to Q3.
Speaker Change: A 10% reduction at the same kpis that we just talked about.
Speaker Change: And then on the balance sheet side, obviously as Fred mentioned already.
Have over 27 midpoint.
Speaker Change: Mid point at this stage post quarter end and that the value of that is obviously it has gone up considerably as anticipated.
Speaker Change: When the transaction I want to touch a little bit more on the convert transaction that we did and we have access to multiple sources of capital Kevin at this stage, which.
Speaker Change: Which is encouraging.
Speaker Change: Yet it is a little bit premature in this industry as we evolve as an industry and as we become more mainstream per se total banking and financial services perspective, we expect to see more sources of capital to open up to the sector, having said that the decision to two.
Speaker Change: To <unk> point on top of producing Big point was highly accretive for us.
Speaker Change: Just looking at the 6400 over 6400 midpoint that we purchased this year at an average price of 60000 $60000 per pick point that has resulted in as of today. It has a resulted in approximately 50% increase in our BTC yield per share and remember this.
Speaker Change: Per share calculation is based on assumed diluted share calculation.
Speaker Change: Based on our best estimate at this stage.
Speaker Change: So in terms of value creation and value driver.
That purchase.
Speaker Change: Is a great example, and assets that are in our convertible debt.
Speaker Change: It made a lot of sense for us to execute that that we did in August out going back to combine restricted cash and BTC. Our balance sheet continues to be extremely strong one of the strongest in the sector.
Speaker Change: When the midpoint that we hold on the balance sheet and from a long term perspective, the whole bit holding strategy.
Speaker Change: It is already paying off.
Speaker Change: You look at these rate of returns.
Speaker Change: A quick reminder, a big point price is a commodity price, we don't control it fluctuates and investors should expect.
Speaker Change: Spect that it will fluctuate over a period of time, but with the amount of hardware that we have the second largest.
Worldwide as a public company space.
Speaker Change: That we believe is going to create significantly more value than it has already created for us at this stage.
Speaker Change: Thanks, Omar and thanks for the detail on the mining cost per credit has it.
Omar: It was 37.
Speaker Change: I imagine we will see that decline again through the fourth quarter as the Ohio sites come online.
Speaker Change: Thank you very much for entertaining my questions gentlemen, I really appreciate it and Fred Thanks for.
Fred Thiel: Digesting the questions.
Fred Thiel: Offering a shorter answer then then you may have wanted to otherwise I appreciate that I'll turn the call back to Rob. Thanks, again for having me on.
Speaker Change: Thank you. Thanks, Kevin we really appreciate all the questions we get as usual we did take some get some questions from our retail investors most of them hit on some of the some of the questions that you asked and Kevin. There is one thing that people asking I just would like to address the Fred is how involved do you think.
Speaker Change: We're involved we expect us to be more to be in the shaping of USD point and bitcoin mining slash energy policy with the incoming administration.
Speaker Change: Members of the incoming administration have been engaging with the big point miners regarding.
Speaker Change: Early thoughts.
Speaker Change: On a variety of policies and we will continue to advise and consult we provide our input.
When asked.
Speaker Change: We're obviously going to take as active a role as is appropriate.
Speaker Change: But we're very focused on working with all branches of government, whether it be the executive branch the legislative branch or even the department, such as FERC and others such that the broader government civil servants for parts.
Speaker Change: Parts of the government that run and operate independent of elected or appointed officials become educated the benefits.
Speaker Change: POW bitcoin mining in our industry can benefit the energy grid.
Speaker Change: The deployment and trend of energy to a more electrified nation. This country is going to have to spend trillions of dollars to upgrade its grid as it continues to deploy more renewable and intermittent energy generation and until we have more broadly.
Speaker Change: Broad acceptance or further nuclear energy in this country.
Speaker Change: All renewable energy will be intermittent in nature, which means you need the ability to load balancer needed dispatch will load and that is something that breakpoint mining is uniquely positioned to do that.
Speaker Change: There'll be we're going to be working with all government departments to try and get them to realize the benefits such that as they plan and build out the grid.
Speaker Change: Considerations for large dispatch will load pick one mind me are taken into account.
Speaker Change: Thanks, Brad and thanks, Tom on and thank you everyone for your time today. If you have questions that were not answered during today's call. Please feel free to contact our investor relations team in IR at <unk> com, thanks, very much and enjoy the rest of the day.
Speaker Change: Thank you all parties may disconnect.