Q3 2024 LM Funding America Inc Earnings Call
Thank you for watching!
Speaker Change: Greetings and welcome to the LM Funding America Incorporated third quarter 2024 business update conference call.
Speaker Change: At this time all participants are on a listen-only mode and a question and answer session will follow the formal presentation.
Speaker Change: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.
Please note, this conference is being recorded.
I will now turn the conference over to your host.
Mr. Ted Ayvas of Investor Relations.
Sir, you may begin.
Speaker Change: Bruce Rodgers, the company's chief executive officer, will not be able to attend the call this morning due to a family emergency.
Speaker Change: This morning, the company announced its operating results for the quarter ended September 30, 2024, and its financial condition as of that date.
Speaker Change: If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at 212-671-1020.
Speaker Change: Before management reviews the company's operating results for the three months and nine months ended, September 30, 2024, and its financial condition as of that date, we would like to remind everyone that this conference call may contain forward-looking statements.
Speaker Change: All statements other than statements of historical facts contained in the conference call, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements.
Speaker Change: These forward-looking statements are based largely on the company's current expectations and projections about future events and trends that it believes may affect its financial conditions, results of operations, strategy, short-term and long-term business operations and objectives, and financial needs.
Speaker Change: These forward-looking statements are subject to various risks, uncertainties, and assumptions as described in the company's Form 10-K filed with the U.S. Securities and Exchange Commission on April 1, 2024.
Speaker Change: Because of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this conference call may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
Speaker Change: You should not rely upon forward-looking statements as predictions of future events. Although the company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, level of activity, performance, or achievements.
Speaker Change: In addition, neither the company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The company disclaims any duty to update any of these forward-looking statements.
Speaker Change: All forward-looking statements attributable to the company are expressly qualified in their entirety by these cautionary statements, as well as others made in this conference call. You should evaluate all forward-looking statements made by the company in the context of these risks and uncertainties.
Speaker Change: In addition, today's discussion will include references to non-GAP measures. The company believes that such information provides an additional measurement and consistent historical comparison of its performance.
Speaker Change: A reconciliation of the non-gap measures to the most directly comparable gap measures is available in today's news release on our website.
Speaker Change: With that, I will now turn the call over to Ryan Duran. Ryan?
Ryan Duran: Thanks, Ted. Good morning and thanks to everyone who joined us today. We have a lot of positive developments to share with you today as we continue to strengthen our position in the Bitcoin mining landscape. Following the Bitcoin mining halving earlier this year, there has been a strategic shift in our mining approach to more cost-effective operations.
Ryan Duran: The halving event coincided with the expiration of several high-cost hosting contracts, providing us with opportunities to relocate our machines to more cost-effective facilities.
Ryan Duran: Thank you, Ryan. As of September 3rd, 2024, the company had approximately 3,700 Bitcoin mining machines in operation and engaged in Bitcoin mining at various hosting sites.
Ryan Duran: with an additional 2,200 miners at a third-party warehouse waiting to be redeployed. In total, our 5,900 miners provide the company with approximately 639 petahash of mining capacity.
Ryan Duran: We mined 18.5 bitcoins in the third quarter of 2024, generating approximately $1.1 million in revenue at an average bitcoin price of $61,000.
Ryan Duran: Total revenue for the 34th of 2024 was approximately $1.3 million, a decrease of 2.1 million from the same period last year.
Ryan Duran: I would now like to turn the call over to Ryan for our strategy overview. Thanks Rick.
Ryan Duran: I would now like to focus our attention on our overall strategic shift in our mining operations post-halving. Following the April halving event, the company strategically pivoted away from the infrastructure-light approach that we had employed pre-halving to a strategy of vertical integration.
Ryan Duran: This strategy is centered on securing mining sites with low-cost, sustainable power sources and significant expansion potential, positioning the company and enhanced operations efficiency and growth.
Ryan Duran: As we continue to build out our infrastructure, we remain committed to identifying additional cost-effective hosting sites. We believe these investments will drive substantial growth and create long-term value for our shareholders, positioning the company as a key player in the digital mining sector. I would now like to turn the call over to Rick Russell for a wrap-up.
Rick Russell: Moreover, we are enthusiastic about our recent vertical integration initiatives, which we anticipate will continue to lower our direct mining costs as compared to the prior year.
Rick Russell: I would now like to open up the call for questions. Operator, can you assist us with that?
Yes, sir. Thank you.
Speaker Change: At this time, we'll be conducting our question and answer session.
Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
Speaker Change: and you may press star 2 if you would like to remove your question from the queue.
Speaker Change: For those participants using speaker equipment, it may be necessary to pick up your handset before pressing the stir keys.
One moment, please, while we poll for questions.
Thank you.
Speaker Change: Our first question is coming from Kevin Deedee with HC Wainwright. Your line is live.
Kevin Deedee: Thanks. Hi, Rick, Ryan. Thanks for having me on the call. Appreciate it.
Kevin Deedee: Lots of questions because there weren't many details. Obviously you were moving miners. Can you give us an indication of what you have mining now, where it is, and where you think your hash rate goes by the end of the year?
Thank you very much.
That's 800 over at a core facility in Kentucky.
And that's at about 7 cents or so per kilowatt.
Kevin Deedee: We have about 2,200 machines in a warehouse in Oklahoma and we're working on
Kevin Deedee: being able to place those machines at that location in Oklahoma, hopefully by year-end, if not the first of January.
. . . . .
Thank you.
Speaker Change: During the quarter, we were probably at 60% capacity, give or take.
Has that changed through the month of October?
Speaker Change: entered some additional contracts to put those remaining machines by year-end if not by the 1st of January.
Speaker Change: What would, could you please remind me what your available power is in Oklahoma?
The total site has 15 megawatts. We're only using 10.
Thank you. Thank you.
They're going into containers, if I remember correctly.
Greg
Okay, now there was some talk about a
No, that is still...
Speaker Change: has some requirements for power validation before we, you know, if you remember that had a 12 megawatt side with 60 expansion.
Speaker Change: And we, before we move forward on that, we want the 60 megawatt expansion to be solidified, and they're still working on that.
So, let's kind of wait and see on that one.
Speaker Change: Any insight on timing? Is it a three-month process, a six-month process?
Thank you. Thank you.
I think by year-end we'll know.
Oh, okay.
whether it's go or no-go, how's that?
Fair enough.
Speaker Change: Can you offer any indication on where or how you're thinking about new rig purchases?
Speaker Change: Brian? Yeah, it all comes back to, uh, obviously machines are...
Speaker Change: consistently rolling out new models. When it comes time to make that purchase, we basically look at what options are available, what potential deals we could get directly through Bitmain, which we normally do, and it comes back to payback period.
Speaker Change: And I know we've looked at the S21, what, Pro's are fairly expensive.
Speaker Change: Some of the older K-models look more enticing, so once we have the space and we start refreshing our older machines, those will be the main criteria.
Rick, since you're intimately more familiar with the...
you know the condo business can you give us
Speaker Change: Just sort of a view on how you see it, how you see the Florida real estate market and what you think your opportunities are.
Speaker Change: Well, you know, I think there are opportunities there given the new laws, but with the legislature coming in...
In the spring, some of those
Speaker Change: Demand upon the condos may lessen a little bit and give them more breathing room. We think regardless
The condos will need help.
and we're trying to work with them.
in that manner.
I know that's not a lot, but it's kind of...
We'll see a lot of increases.
Speaker Change: and assessment and later assessment, is that correct, Brian? Yes, special assessments are being assessed.
at a very large rate.
Speaker Change: And we're looking to solve that problem that's slowly rolling out, as Rick indicated, may be delayed a little bit longer down the road than originally planned.
Speaker Change: But there's definitely going to be opportunity there as associations continue to special assess and fill their reserve requirements.
So the past...
potentially involved in more
deals helping the associations manage these assessments.
has
Speaker Change: Tenor, the tenor of business changed? I guess this is sort of the root of the question.
Speaker Change: Not really, because the requirements are not quite as urgent as they have to be, right?
Bye.
Speaker Change: I mean, I would like to have it to pick up more, but, you know, we're willing to take the opportunity to expand that if it comes about, but, you know.
Speaker Change: Richard Russell, Bruce Rodgers, Bruce Rodgers, Bruce Rodgers, Bruce Rodgers, Bruce Rodgers,
We can only push it so far.
Speaker Change: So, would it be fair to assume then, Rick, that the emphasis now is on expanding the vertical integration aspect of your Bitcoin mining, and it's kind of a wait-and-see, really, on how legislation changes the profile of the condo business. Is that fair?
Speaker Change: Yes, that's fair. I mean, we're, Ryan and his group, you know, are searching for additional sites, right, in that four cents power. And we've got some
Good leads on those.
in addition to what we have already.
Speaker Change: and we think we can get funding to help acquire those sites.
do loans and then use equity rates to help.
put machines in there.
Last question for me.
Speaker Change: have you looked at sort of the M&A side of things?
with
you know pre-established privately held mining companies that
Speaker Change: might be hitting a roadblock given, you know, the hash price was so low for so long? We've talked to a few firms in those situations. Nothing has come about of it yet.
Speaker Change: and we do get introduced to other people who know such firms and we're open to discussions but
It depends on their situation.
and willingness to trade, right?
Speaker Change: Absolutely. All right, well thanks for your candor, Rick. I appreciate it.
Thank you.
Speaker Change: Thank you. Once again ladies and gentlemen if you do have any questions or comments please press star 1 on your telephone keypad.
Speaker Change: Our next question is coming from Matthew Galinko with Maxim Group. Your line is live.
Matthew Galinko: Hey, thanks for taking my question. I wanted to look back at Oklahoma for a second What what is the power rate you're currently paying and is it sustainable for I call it might have been
Matthew Galinko: something that you've wanted to cite through maybe nine months, or can you just refresh me on what the power rate is and how long you have it locked in for?
Speaker Change: yeah it's a we're roughly in the four cent range it floats with cost of power each month but we have projections and expectations it's going to be in anywhere from 3.8 to 4.2 so that's why we continue to say the four cent numbers right in that range
Speaker Change: And we do not see that changing for better or for worse. That is our expectation for the foreseeable future.
Speaker Change: Got it. And do you have expansion past the, I think you mentioned 5 megawatts is currently the target in Oklahoma, but is there capacity on-site to add to the site or do you have more expansion beyond the 5 in Oklahoma that has potential?
Yes, that site can be expanded with some substation.
So it's an additional 60 megawatts, right?
Speaker Change: nine months, you know, once you put this expansion substation stuff there.
Speaker Change: And we're looking heavily at that since the price of electricity is reasonable for us.
Speaker Change: Gotcha, so I mean I guess last question for me in terms of decisioning if I think you mentioned earlier in the call that
Speaker Change: You might know by the end of the year whether you can get the expansion in Texas or not so if that that The Texas expansion doesn't come your way would
expanding Oklahoma be your primary direction for the non-deployed?
Machines currently
Speaker Change: Yeah, we were looking primarily at Oklahoma and also looking at a few other sites out there to take advantage of.
Speaker Change: Do you think you'd move more quickly on another site than sort of wait the nine months for expansion? Or just how do you think about timing?
Yeah, we would do dual prong that we would
definitely look hard at
Speaker Change: ready-to-go sites right now or something that could be pop up in you know three months, while also exploring the 60 megawatt expansion also.
Thank you.
Speaker Change: As we have no further questions on the lines at this time, I'd like to turn it back over to management for any closing remarks.
Thank you.
Speaker Change: We are thrilled to see Bitcoin recently reach an all-time high above $92,000, a milestone that we believe strongly validates our long-term strategy of mining and holding Bitcoin.
Speaker Change: The price moving toward our projected target of over $100,000 in 2025.
Speaker Change: with the current initiatives providing cost-effective locations to power existing machines.
Speaker Change: We are extremely excited about what the future holds for LM Funding and its shareholders.
Speaker Change: We are grateful for the ongoing support from our shareholders and look forward to updating you on our future progress. Thank you.
Speaker Change: Thank you ladies and gentlemen. This does conclude today's conference call. You may disconnect your lines at this time and have a wonderful day and we thank you for your participation.