Q3 2025 HIVE Digital Technologies Ltd Earnings Call
Hello, everyone welcome to today's webcast on Hot digital technologies financial results for the quarter ended December 31, 2024. My name is Nathan fast I'm, the director of marketing and branding at Hyatt and I'll be your moderator for today's call.
Before we get started on slide two I would like to briefly note that disclosures for today's presentation.
For statements of historical fact, this presentation contains forward looking information within the meaning of the applicable Canadian and U S Securities regulations.
Forward looking statements are based on expectations estimates and assumptions as of the date of this presentation.
Further in.
In addition to discussing results that are calculated in accordance with international financial reporting standards or Ifr S. We will also make references to certain non <unk> financial measures such as adjusted EBITDA.
For more detailed information on our non <unk> financial measures. Please refer to our management's discussion and analysis of our financial results that was published earlier today, which can also be found on our Investor Relations website.
Unnamed Presenter: On the next slide I am pleased to introduce today's presenters Frank Holmes Executive Chairman item, Killik, President and CEO, and Darcy Bubaris Chief Financial Officer.
Speaker Change: I would now like to hand, the presentation over to Mr. Frank Holmes for a macro recap of the quarter.
Speaker Change: Frank Thank you Nathan and a welcome to the team so I'm going to try to go through before we get into the granularity of the Nitty.
Speaker Change: Nitty gritty of the financials.
Speaker Change: And.
Speaker Change: But some of the other.
Speaker Change: Harsh race and factors that we look at.
Speaker Change: I wanted to give a bigger picture of what's driving this industry in some really significant events that have taken place in the past three months, but before I do that I always like to talk about the DNA of volatility is life is all about managing expectations and understanding. This visual is basically saying one standard deviation of one six.
Speaker Change: Bob.
Speaker Change: Is that something event happens almost 70% of the time. So it means that as a non event. The S&P 500 to go up or down 1% in a day and over 10 days, it's 2% when we take a look at bitcoin is normal DNA of volatility 70% of the time is up or down.
Speaker Change: 3%.
Speaker Change: But over 10 days, it's 8% and then we can take a look at news stocks that are really trailblazers and their DNA volatility starts to really expand so when we look at the AI and the GPU chip Buildout within video you can see the one day DNA is the same as bitcoin, but over 10 days is too.
Speaker Change: Lesser minus 10%. So a lot of external factors are whipping around the volatility of this particular stock and Tesla is even more volatile with a daily volatility of 4% and over 10 days, 13% and hive digital is plus or minus 6% of the day.
Speaker Change: And over a 10 day period is 17% and the ultimate of a speculative volatility is micro strategy.
Speaker Change: Since they are continuing to leverage our balance sheet by more and more big client there daily volatility of 7%, which is more than double bitcoins daily volatility and over 10 days. It's three times the volatility of what bitcoin is so it's important for investors to understand.
Speaker Change: Then what the DNA of volatility is before you take make an investment in any of these different asset classes. So quite often we hear by the dip stock your share stock your coins on auto.
Speaker Change: And this these are filled with means all over read it.
Speaker Change: They are on Twitter or X today other on Instagram and I, just think it's pretty funny, when when I see that but I do not see this commitment to other stocks or coins.
Speaker Change: For this ecosystem and that's important for investors to recognize that this brand new and I like to call. It also another burst of which started as gamers.
Speaker Change: Balding into what does the crypto global ecosystem and today there are 194 countries in the world, but there are over 20000 nodes validating.
The Bitcoin network all over the world.
Speaker Change: So by the depth stocking hurdle bitcoin ecosystem, what does that mean well it means a bitcoin falls.
Speaker Change: More than one Sigma 3% of the day is probably a better time to buy it and have high falls more than 6% of the day is probably a better time to buy it and for those or traders quite often when it jumps to 3% Bitcoin and a day you take some profits that have high jumped 6% of the day. It takes some profits that is the DNA.
Speaker Change: Hey.
Speaker Change: We experienced in the capital markets and the correlation of high with Bitcoin is extremely high they run in tandem like birds of a feather flock together, we all move by the minute in a similar direction.
Speaker Change: So one of the things is really interesting for me in talking to registered investment advisors that are now coming into the ecosystem to buy bitcoin Etfs is really not knowing.
Speaker Change: Some of the simple math and one bitcoin is equal to one.
Speaker Change: So Toshiba so if you go to Robin Hood to buy $5000 worth of Bitcoin and Youre buying a slice of it well I'm going to walk you through that youre buying about a million supposed instead of how this is calculated and that's really important to understand that a satoshi is so tiny.
Speaker Change: And what gives us the upside and to understand the math between bitcoin and also toshi.
Speaker Change: So if one's a toshi.
Speaker Change: It is worth a penny than one big point is worth a million dollars and this is very very important to recognize I have said that bitcoin has all the capacity and capability of going to a million dollars and it can be faster than you think with the adoption.
Speaker Change: And in this adoption takes place in many different forms which are going to work through but we know at high <unk> that we've been offer for what are called special numbers.
Speaker Change: Unique.
Speaker Change: So toshi numbers and those numbers are greater value such as the day of the inauguration of President Trump.
Speaker Change: Day off.
Speaker Change: Our pizza de they like to calculate when someone gave up all their bitcoins well servicing <unk> can have incredible value, where we have been offered up to $10 also toshi.
Speaker Change: <unk> 000, 97 cents and that's important to recognize that how bitcoin is broken down into these fractions.
Speaker Change: So one big claim is trading at approximately $97000 per day, then once a toshi is 0.000971 sets and it.
Speaker Change: Bitcoin is about $100000 in bitcoin goes towards a million that means satoshis are worth only a penny.
Speaker Change: And that's important to grass. So when we look at the next visual with Bitcoin say at 100000 investing a $1000 on a robinhood basically buys you 1 million, so toshiba or 1 million Penny stock. If you can think of it that way because bitcoin is the visible so you can own a fraction.
Speaker Change: And this is part of the global adoption.
Speaker Change: That is happening with the bitcoin Etfs, so the Bolton by total H O D L which is that.
Speaker Change: Next a bitcoin ETF and you buy only a $1000 worth well you should be getting close to a call on a million so toshiba.
Speaker Change: And this is what I found a lot of our registered investment advisors, we're not aware and when you limit the supply of 21 million coins and you have this adoption than what's called net caps law kicks in and the prices can grow exponentially and that is.
Speaker Change: It is really simple of mid caps law, saying that it can go to a penny or that means breakpoints a million or a bitcoin when it hits a million euro. So Tulsa is gonna be worth a penny. So that's the 10 bagger and that is the exponential move that people can better understand what's taking place. So let's talk about this beginning because in.
Speaker Change: July.
Speaker Change: Earlier last year, President Trump showed up to a packed crowd and he talked about how we learnt and he's embraced bitcoin and he understands about the element of freedom of private property and the freedom up rights and the capacity to be digital.
Speaker Change: And to be able to be able to send anywhere in surety, where we're becoming very valuable but behind all of this you must understand that the crypto ecosystem through super packs basically contribute about $130 million to Congress races people that are running for Congress that were.
Speaker Change: Part of the Bitcoin blockchain ecosystem and this resulted in the election of numerous probe crypto lawmakers and that is the big change.
Speaker Change: So now it's a new dawn for U S digital asset policy.
Speaker Change: And a clear focus on crypto Trump's executive order Trump learned a lot from this first for four years.
Speaker Change: Being absolutely before coming to this firm. He basically has two years to move quickly to enact all the changes he wants and it's very disruptive to the markets.
Speaker Change: Last week.
Speaker Change: Bitcoin was down because of tariffs.
Speaker Change: Trumping. This week bitcoin was up because of Trump's tariffs and you hear this with gold and it's all over the board.
Speaker Change: It's just lots of nuances you have to recognize people are unused to Trump's executive order, but if you studied global capital markets the way I do.
Speaker Change: You would take a look at Argentina, and Chile, when he came into power and how he cuts.
Speaker Change: Deep and wide a lot of government agencies for wasting capital and jobs and what he did with that was to that.
Speaker Change: This sort of executive decision, making a he dropped inflation dramatically in this country and many other things are basically theres been no huge unemployment. All these government workers are we're doing nothing all of a sudden found new jobs. So I think theres something thats a foot here MLA it was at the inauguration.
Speaker Change: For President Trump just like the president of.
Speaker Change: Paraguay, which I'll mention a few minutes, but it's understanding that the success of Argentina and the experience of what's taking place with President Trump is that he is supporting the blockchain networks mining activities and self custody of digital assets is strengthening our global position of the U S dollar by promoting the stable coin.
Speaker Change: He's providing clear and fair regulations for the crypto industry with well defined rules for oversight and trumps goal is to make the use of the.
Speaker Change: Capital of the World and repeal SAB 121, the FCC Crypto task force headed by a poll crypto FCC Commissioner Hester peers, so lots of things are happening and they're happening very quickly.
Speaker Change: And there is a reset button, it's not waiting three months for something that's happening by the day and by the week. So I think this is important for you to recognize and this also gave a hype the confidence and for many reasons to move its head office from Vancouver to to San Antonio.
Speaker Change: And to start the the audit process to be able to come up with GAAP accounting, which Darcy will give you more color on but we feel safer as a company have we have in the head office in San Antonio now that we have a government that is pro crypto, but Basel.
Blockchain next please.
Speaker Change: Trouble points formatted Paypal executive David <unk> is AI and triples, our new role to help reshape U S policy and digital currency early evangelists for crypto currency move comes after bitcoin surge over 100000 for the first time.
Speaker Change: And now we have all this tariff stuff going on but I think it's just a lot of noise.
Speaker Change: And I think that.
Speaker Change: We're seeing some of the changes that have taken a look at block chain to become into the Treasury Department. So that there's a better way to audit, especially when we look at U S. A and the abuse of all the money that where the money was going at.
Speaker Change: A lot of this probably half of the money was going to Ngos that had a political agendas that were really not all align with U S aid to help the poor countries or countries are unfortunate.
Speaker Change: Uh huh.
Speaker Change: A storm or earthquake are starving children.
Speaker Change: It was being abused and I think when you put this all in the blockchain is much easier to do an audit I think that's the direction, we're going to have with this new thought leadership next please.
Speaker Change: So let's take a look at the daily trading and I want you to remember that Bitcoin has no CEO no CFO No board of directors. It's we the people by the people around the world have been adopted and adapted early type was the first crypto mining company to go public. It was the first company we're really adopt.
Speaker Change: And adapt to this changing global ecosystem Bitcoin was only $3000 at the time.
Speaker Change: And the trading volume was quite low on a relative basis, but today, it's averaging using Bloomberg and Yahoo about $42 billion a day I mean this is a big number when you take a look at an industry of a couple of trillion dollars next please and I always like to compare it to J P. Morgan that always.
Speaker Change: <unk> wants to attack the bitcoin ecosystem.
Speaker Change: They want to find fault was it because they want to control all financial movement of money. So that they can turn around and charge more fees and bitcoin is much faster more fluid to send money between countries.
Speaker Change: And we've seen the growth of stable coins, we've seen unprecedented growth of other.
Speaker Change: Around the world that now has more U S treasuries in the country of Germany.
Speaker Change: They are a major player when it comes to the U S. Treasury auction. So things are changing and these are important points that bitcoin trades, a magnitude of six times greater than.
Speaker Change: As you can see here.
Speaker Change: Then J P. Morgan and is just under Apple.
Speaker Change: But it's just a matter of time that bitcoin will surpass apple around the world for daily trading as this adoption continues and once again I believe that's really important to understand Moore's law understand met caps law. There is some real technological laws to understand.
Speaker Change: When youre buying equipment.
Speaker Change: And particularly when we look at AI or we look at buying chips of ASIC, how much more efficient they are really applying that's moore's law, but the adoption process is much more traction with net caps law that talks about this adoption and how prices will increase.
Speaker Change: Please.
Speaker Change: So Blackrock launched and remember I tried to watch a bitcoin ETF in 2017 and realize it wasn't going to happen. So launch the creation of the first crypto mining company high and and it was fortunate that we did it early but you can see how long it took to finally get a bitcoin etfs after.
Speaker Change: Brown and Black rock launched its bitcoin ETF on January 11, 2020 for about a year ago, and it's a greatest launch an ETF history.
Speaker Change: By the comments by year by ETF store, but when we look at all the assets that are basically gone into bitcoin Etfs is from zero to $120 billion in assets.
Speaker Change: Half of that or close to half of that is Blackrock next please.
Speaker Change: Yeah.
Speaker Change: So this is another visual of looking at a 115 billion with just the volatility is measuring when this snapshot just recently took place but.
Speaker Change: But I think it's really important for you to recognize that this huge adoption is taking place and I believe that as more alright, A's and brokers et cetera, really understand the scarcity value of big clients.
Speaker Change: The growth.
Speaker Change: And the need of Bitcoin and it's all based on the block chain that we're going to see big changes being ushered in very positively over the next four years next please.
Speaker Change: So Blackrock now is expanding its footprint by launching a bitcoin exchange traded products in Europe. After the success of his $58 billion of U S. E T F <unk>.
Speaker Change: Next please.
Speaker Change: The adoption only grows there we have Costco you can now find <unk> Atms in and some of them are no. It's supposed to be now in all of the stars.
Speaker Change: And so it's gone from <unk> to all the Costco stores and I think that that's what's really important in this rollout.
Speaker Change: Next please.
Speaker Change: So strengthening our relationship with the President and top government officials in Paraguay. This is myself last May June meeting with the president of Paraguay, San Diego, Kenya, Kenya.
Speaker Change: Studied in America with the University of Columbia in New York.
Speaker Change: Worked in Washington D C.
Speaker Change: Hi, Ben.
Speaker Change: <unk> ratings.
Speaker Change: As a sovereign currency.
Speaker Change: As bond rating for the country is stellar on a relative base of other emerging countries.
Speaker Change: I think it's important to recognize Theres a few countries in Latin America, which are really Pro America.
Speaker Change: And in Paraguay is one of those and now with the leadership of melee in Argentina. They are pull America, but nothing like Paraguay, and that's what's most interesting Uh huh.
Speaker Change: How old they look at their country was almost wiped off the face of the Earth and 18 to 70 until precedent as came in and settled and protected the sovereignty of the country are Paraguay and so one of the large states in the country of Paraguay is as after named after the President.
Speaker Change: So it is interesting to see the strong tradition.
Speaker Change: Of this particular country, which is rich and fertile farmland and rich on hydro electricity and that's why we're there they are generating massive surplus electricity for the largest dam in the western hemisphere.
Speaker Change: It's been paid off.
Speaker Change: A partnership between the countries of Brazil, and Paraguay, and what we do and the bitcoin ecosystem is really how they're they're utility company earn U S. Dollars every month they get paid on time, because they were selling energy to Argentina, Argentina has paid back out of 200 and some odd million.
Speaker Change: $1 $100 million under the new president, but they still owe more money to them and it's really difficult run your country. When your one of your biggest exports as electricity and you don't get paid on time, but when you have bitcoin mining you do get paid on time every month. So this helps the overall country.
Speaker Change: And this helps five in its journey to really focus on sustainable Green Energy next please.
Speaker Change: So the Big news, we allow now it's an item is going to go into more granular detail on it but how did those sort of technologies announces the acquisition a bit farm's.
Speaker Change: Facilities it enhances our operating capacity in Paraguay to 300 megawatts. Upon completion it plans to expand mining high grade four X from <unk> to 'twenty, five X, which is a huge increase and based on bitcoin around 100000. It gives us a run rate a global.
Speaker Change: They are pushing the $500 million based on the technology and the difficulty today next please.
Speaker Change: Just a simple visual highest future of harsh rate growth from six <unk>, a day to 25 extra harsh and that against all of our peers is the fastest growing this year announcement.
Speaker Change: When you compare to all the other peers and.
Speaker Change: I am going to give you some great brain hilarity of what makes us a unique value proposition.
Speaker Change: Moving to the U S. Also makes us quantified through our process, there's no guarantee but it does set the stage to qualify for many of the indexes that are out there like the Russell 2000, and if you look at many of the other bitcoin mining companies.
Speaker Change: There are biggest holders are index related they're not active technology funds there.
Speaker Change: They are predominantly those funds that are indexed and I think that we're trying to position the companies in that in that pathway next please.
Speaker Change: So our research coverage on hive has grown substantially over the past year has been a lot of work by our peers it used to be.
Speaker Change: Predominantly.
Speaker Change:
Speaker Change: Canaccord and Stifel.
Speaker Change: But we can see now that we have other people that have come along with Cantor and Roth.
Speaker Change: We have Northland H C Wainwright.
Speaker Change: Otherwise you see a keefe.
Speaker Change: Brent and Woods is really a Stifel company. So that's the Stifel research and most of these companies are calling between $911. That's the re rating and I think after Darcy gives you an analysis of our financials and you look at our run rates.
Speaker Change: And I think the important part for investors that will look as a data center business and data center business trade at multiples of 10 to 20 times EBITDA.
Speaker Change: And when you look at that we have the potential to put this great potential to go to $800 million on.
Speaker Change: On a run rate today.
Speaker Change: Two.
Speaker Change: One 6 billion and if you do it on a pro forma basis, it's more like $3 billion. So that's it makes the value proposition our high business is showing itself for this growth next please.
Speaker Change: So I mentioned this earlier the highest relocation of San Antonio aligns with the operations of the America first agenda, enhancing local engagement and operational efficiencies transition to U S. GAAP reporting and fiscal year end March 30, <unk> to enhance transparency and comparability, it's really important to other.
Speaker Change: Big coin miners, so it's easier for any investor retail institutional to to do relative valuations and and visit us if you're in a local area and Texas Thursday April 17th I was having retail investor day, and ribbon cutting ceremony incentive Tonio, Texas and a meet up to talk about <unk>.
Speaker Change: And where we're going in this world next please.
Speaker Change: So now I'm going to turn it over to our CEO and president <unk> to give you.
Speaker Change: A more granular update on the financials of where we are.
Speaker Change: Financial operation more like the operations a comparative not on.
Analysis of our value proposition.
And then our CFO.
Speaker Change: Darcy diverse he will give us a detailed financial analysis of the company now I'd like to turn it over to Eitan alright.
Eitan: Alright, thanks for that introduction that was a phenomenal macro overview of the industry. So now we're going to have a closer look at the executive summary highlights for this quarter, let's kick it off.
Eitan: It was a great quarter for us so $29 million of revenue with a $6 1 million gross operating margin were accepted 21% operating margin for the company. This quarter in addition to that.
Eitan: $17 3 million of adjusted EBITDA.
Eitan: And Furthermore.
Eitan: 2800 client bitcoin on the balance sheet.
Eitan: Mine with Green and clean energy unencumbered no debt on those breakpoints another metric I'm very proud of when we started tracking this.
Eitan: As we hit an annualized ROIC of 37% this quarter, which I think is phenomenal and the attractiveness of whole industry going to look.
Eitan: Get some comtrex leaders see how we stack up against our peers and by the way right. Now is the best Bang for your Bucks full stop for every high share that you purchased you were getting 7% bitcoin per share 70% decline per share and later in the presentation, we actually have a comp people that dynamic did.
Eitan: Tracking this and we let the whole sector. So I think all the smart money now is going to high because he clearly see we provide the best value proposition in terms of your exposure to bitcoin for every share that you're buying.
Eitan: The biggest growth in the sector right now which forex.
Eitan: And that's our NOI, but.
Eitan: But more on that in the following slide let's jump into the next one.
Eitan: So how do we do this it's our differentiated growth strategy.
<unk> ROIC would be deploying our capital.
Eitan: And either way even January.
Huddle was 2657, we deployed some capital.
Eitan: To acquire the different exciting he once you once we sold some that they can be very strategically.
Eitan: For that purpose, but nevertheless, we're still up 37% year over year. So we are putting our balance sheet to work.
Eitan: Whether it's using proceeds from the ATM.
Eitan: Where in certain cases big points, we always wanted to make sure its accretive.
Eitan: It is something that will provide the best value to our shareholders and the lowest cost of capital.
Eitan: And as a result of that we are demonstrating the best enterprise value to bitcoin mining and the most attractive enterprise value to adjusted EBITDA in this sector.
Eitan: Our target is to hit 3% of the global kind of street this year, which will be 25 X and harsh by September 2025, we're going to have some slides that demonstrate what cash flow where that looks like and it's very attractive.
Eitan: Of course, our HBC and AI business.
Eitan: A lot of institutions are very excited about that.
Eitan: Bitcoin miners are pivoting.
Eitan: <unk> Street it.
Eitan: Our position in the market, we get $10 million annualized revenue this year, sorry this quarter.
Eitan: And we are on track to get to $20 million, but more on that later by the way when indeed cloud partner, we're going to be attending the UBS Global Tech Conference. This March to see the Jensen on keynote meet with some of our Oems and technology partners, if you're there come stay high.
Eitan: Next slide.
Eitan: Alright. So this is the big sexy bitcoin slide everybody wants to do.
Eitan: Talk about so we have a binding yellow line.
Eitan: To acquire the 200 megawatt Saint <unk>.
Eitan: <unk> phenomena, we were there in December it was very well on its way to completion you can see here an aerial photo.
Eitan: Joining substation and what is it gets us.
Eitan: Is a formative step towards our strategy F. 'twenty <unk> hash by September and by the way as we are populating our expansions with the latest generation here.
Eitan: Gets us to a global fleet efficiency of $16 five children Care Act, which will give us.
Eitan: First.
Eitan: Sweet efficiencies in the industry.
Eitan: You know the lower that number it means the less energy need for every cash you produce which means a lower cost of declining production. So we're going to have one of the most modern.
Eitan: Efficient fleets.
Eitan: And the power costs in Paraguay lowered our global average cost of electricity, so very excited about that.
Eitan: It rules known as summarized here on the bottom. So the first 100 megawatts is forecasted to be air cooled and.
Eitan: And that'll be six ex ash those air cooled machines are 16, five joules per care harsh and then the second 100 megawatts is actually our balance we were saying that we press released a few months ago. Those will be hydro those are 15, Georgia care ash and that means you could say six <unk> in the 100 megawatts.
Eitan: And then the third tranche of 100 megawatts is the second phase of the USA site, another $6 five ex ash.
Eitan: So you're counting that up and that is how we get towards 2020 target now we actually announced two orders from didn't mean came in in December which secured 15 extra hash of high Street.
Eitan: By the way those purchases both a phenomenal prices. So that did mean order was a $14 of Taro Nash for F. 'twenty, one plus hydro's and it worked out to about a 10 month <unk> NAFTA.
Eitan: After opex after Opex phenomenal deal.
Eitan: And the Canyon, we werent allowed to see what the dollar per <unk> price was but it was a great deal and it was sub one year ROI.
Eitan: After cost as well so we're thrilled about that and of course, we will be announcing other strategic case of quarters to get us to the 20 <unk> pipeline, let's jump to the next slide.
Eitan: So for all the analysts out there and all the investors that have their spreadsheet here. It is by the numbers. So our global existing footprint works out to 140 megawatts between Canada, and Sweden, and the additional 300 megawatts compared where it gets us to 440 megawatts.
Eitan: So currently we're at six sets of Hodgkin installed hatchery.
Eitan: And our pipeline once everything is completed is 25 X actually now if you add up the numbers here you actually get to $25 five extra hashed.
Eitan: But just to keep things simple for the street the target is 25.
Eitan: Patient need that we have two two megawatts tier three.
Eitan: Operating in Stockholm in Montreal more on that later.
Eitan: But again, you've got the status, what's online and whats.
Eitan: Prescribed for the interchange Asian dates of the.
Eitan: <unk> next.
Eitan: And by the way, 100% Green energy.
Eitan: Next slide.
Eitan: So this is really what this translates to is a forex growth.
Eitan: In our current cash rate of six X the hatch rates and so again you see here in this bar chart.
Eitan: It's a visual representation of that growth. So the six to six five ex the hatch is an internal web create although it's a modest upgrade on the increasing by half ex <unk> you actually see.
Eitan: Our efficiency increased from 22% to 19, that's the accretive those cadence that we ordered air cooled going into New Brunswick, and Sweden next up we add.
Eitan: $6 five extra cash from the high growth that will go in the first 100 megawatts. Another six act hashed air cooled in the second hundred megawatts and of course, another six five ex ash in the final 100 megawatt tranche ending us with a global fleet efficiency of 16 point by <unk> <unk>. So for all the analysts out there they are doing their models and forecasts. We hope this mine is very helpful.
Eitan: Any questions feel free to reach out.
Eitan: Slide please.
Eitan: Now this is what the projected cash flows look like once the 25 ex ash is operational so we've done sort of.
Eitan: A three scenario cash flow projection be acquainted either 100125 or $150.
Eitan: So in this scenario of 25 eggs hash youre at 3% of global network, which works out to $13 five <unk>.
Eitan: Claims per day, so using that on a pro rata basis, Youre doing either one <unk> 4 million of daily revenue up to $2 million now, let's just zoom out and look at it macro really what this works out to.
Eitan: It's an annualized mining margin of approximately $330 million in the base case.
Eitan: $450 million and by the way. This is after assuming that electrical cost of production before and have since for the model here.
Eitan: $450 million.
Eitan: The coin is that 125000.
Eitan: Over $500 million of cash flow from operations from gross mining margin if.
Eitan: If they couldn't get to $150 keep in mind.
Eitan: Our market cap today is a little under $400 million and so I think there's immense upside.
Eitan: With bitcoin to a 150000, if we're throwing off over 500 million cash flow from operations.
Eitan: You know what a <unk> multiple on cash flow, it's a $2 billion.
Eitan: <unk> is what it is by the way we have.
Eitan: It will as well.
Eitan: Which is over.
Eitan: Over $250 million of bitcoin onto balance sheet. So it's going to be a very exciting year historically by the way we've seen every bond market come.
Eitan: The full force and effect a year after the having so little history lesson in 2016.
Eitan: Having in April and <unk> really started to take off in summer of 2017 shutting its all time high of 20000 in December of 2017 rates. So the following year in 2020, we saw the having in May.
And the bull market well it really kicked off in February of 2021, you saw an all time high of 65000, and then again in November It was a twin peaks bull market.
Eitan: $2000 of Bitcoin now in 2024, we had are having again in April and in.
Eitan: Sort of December January we saw a bitcoin hit 100000 for the first time ever which is very momentous.
Eitan: And so we look to the balance of calendar year 2025, or we can see a 120000 big point of 180000, Bitcoin I think everybody has a different opinion, especially with.
Eitan: The tailwind with the New Trump administration, which we're so excited about and we feel is great for America next slide.
Eitan: No.
Eitan: Okay.
Eitan: Hi are now.
Eitan: Leading the industry in growth for calendar 2025.
Eitan: Again, I just want it back up and remind the street bets.
Eitan: <unk> has made really big plays you go back to 2020, when we acquired the shoot a 30 megawatt facility was the largest in Canada at the time 2021, when I joined typhoons to oversee the acquisition of New Brunswick to 70 megawatts again, the largest single site acquaint Knight in Canada at the time until we can.
Eitan: Waiting it's the road less traveled to get Green energy, but we found that inherently through adding 300 megawatt smart portfolio. That's a four X growth just calendar year tier peers are sort of in the one two to one eight range for the most part.
Eitan: Of course state farm, who by the way we think they also did a great deal they're focusing on their gigawatt of growth in the U S who are looking at three five X growth. So.
Eitan: A clear clearly heightened bit firms, who are leading the sector in terms of growth prospects.
Eitan: There are two seven but then we're going to look at the other aspects, we're going to look at <unk> and we're going to look at G&A and Theres other fundamentals of the business that.
Eitan: It'll be very interesting, but again, we lead the sector.
Eitan: With the biggest growth for 2025, it's going to be great year for hike next slides.
Eitan: Okay. So if you look at the enterprise value relative to our projected tax rate. We are very very attracted by Michigan Allstate I believe the smart money to Savi money invested in it really does work and understand the mining industry.
Eitan: He's hired as the best that you.
Eitan: You could see.
Eitan: At $5 per exited gosh 5 million I guess, it's millions I should say.
Eitan: By a long shot in our peers are trading at anywhere from four eight to 16 times our value for <unk> based on current growth. This year. So again, because we have the biggest growth this year, where such an attractive value proposition and this is why I think it's a very strong case for.
Eitan: Savvy investor that's looking for value stocks in bitcoin mining.
Eitan: Thanks, Mike.
Eitan: So again, just a reminder.
Eitan: We are very data driven it's all about.
Deploying our capital for the best dollar per carat harsh when we're buying <unk>, which by the way you have to keep in mind that <unk> <unk> <unk>.
Eitan: So you have to model the variability of hach price and understand net of cost when are you going to <unk>. If you are not outperforming.
Eitan: The market and by that what I mean, if you are not generating more yield and returns from your mining operations and if you just bought bitcoin thing should just be buying bitcoin otherwise what's the point.
Eitan: Until we see a lot of capital get sort of.
Eitan: Deployed some would even see destroyed in the mining industry. When people are raising a lot of capital and just expanding we have slower upgrade cycles with our ASIC why because we want to mine for their full economic lifecycle. So for example, what that means is easy.
Eitan: Useful economic life of three maybe four years, if youre lucky.
Eitan: And you Wanna be are aligned in that first year to year and a half so for the mountain to be two years or one and a half years and that Asics lifecycle, you went back to be free cash flow. However.
Eitan: The ladder seasons of that piece ex light will have lower margins and so when you look at the quarterly 90 economics, if you're free cash flowing on older machines. Your gross mining margin might be sooner, but that's free cash flow in the industry doesn't really track that so we just wanted to remind the street to really pay attention but were to show up.
Eitan: Our ROIC.
Eitan: And of course, this is where we continue to lead the sector and by the way we've got best in class uptime as well so when we talk about efficiency, we talk about having the best uptime.
Eitan: And also we're going to be leading industry, which most energy efficient fleet is about $16 five <unk>. So let's hop to the next slide and see some numbers.
Eitan: So here it is so for the quarter nine 3% ROIC annualized 37% and so far on the heightened clean spark have reported because.
Eitan: This is not our year and we have a march 31st year and of course create record September and so these numbers will populate, but just look at the past quarters as well.
Eitan: You see we've led the industry head and shoulders with the best ROIC quarter over quarter that comes from our disciplined deployment of capital being very data driven.
Eitan: And here's the results and are very proud of the team and the hard work that we do to deliver value for shareholders.
Eitan: Which I think is very strongly represented here next slide please.
Eitan: Yeah.
Eitan: No.
Eitan: Cost management Lewis.
Lowest G&A predict <unk> mined as well you could see in the sector some of our peers.
Eitan: Look at the previous in the current quarter again, we just have seen spark the data.
Eitan: But you can compare those two data points and in previous quarters, you could see that we are a mere fraction.
Eitan: Even even in a bear market right. When margins are thin you see our G&A was 27% of revenue that percentage is higher because it was a better quarter PCR peers, 50%, 60%, 40% in some cases, 98%.
Eitan: So it's about like high it is the longest standing bitcoin mining the first to go public eighth year of operation. We further three bear market. So you'll have that discipline and understanding you have to have a very lean operation <unk> offer a good value for shareholders, but be to make sure you.
Eitan: Can weather tough quarters, and so we have that discipline in which we prove.
Eitan: Quarter over quarter year on year out.
Eitan: So very proud of my team, we all worked Super hard we huddled.
Eitan: Every day at seven Am My time, Vancouver, 10 am Toronto time for PM suite in time, and we pretty much run $24 seven just a crypto markets.
Eitan: That's the highest advantage for our shareholders.
Eitan: Yeah.
Eitan: So again, we've talked about our hurdle if you look at that year over year, It's gone up almost forex right. So that's 2805 bitcoin on the balance sheet mine with Green energy unencumbered, we Havent board against it or anything like that very little to no debt a hive as well.
Eitan: A very clean balance sheet as well as having profitable operation, so again discipline and growth and by the way.
Eitan: 2024.
Eitan: Not exactly the most bullish year overall for bitcoin mining. So again very proud of you able Kronos huddled very substantive Lee.
Eitan: While also scaling our accretion and upgrading our fleet to more energy efficient miners talk to the next slide.
Eitan: So this is also a metric we wanted to revisit.
Eitan: Because even though we've been growing the business and upgrading our fleet, we still manage to have the lowest dilution across the peer set so.
Eitan: Let me recap, we had the highest growth prospects in.
Eitan: In the industry, we announced $120 million order with between $36 million of that has been paid up and our initial deposits to secure that we announce our grinding NOI a bit firms 20 million thats been paid towards that so we're using our ATM very judiciously and when it's strategic and accretive to us So we will sell.
Eitan: A little bit of bitcoin.
Eitan: We announced our January <unk> 2650.
Eitan: And so we.
Eitan: Still we do all of this it's a symphony of strategy.
Eitan: So we had the lowest.
Eitan: Dilution and so you could see here.
Eitan: Quarter over quarter as our year over year, we've managed to have the lowest dilution in the industry by a long shot while also happening.
Eitan: The highest growth so again proud of my team greater capital efficiency and earnings per share.
Eitan: Protection, So again, having this disciplined going into a year of growth and what we expect to be a bull market for bitcoin mining it if the past.
Eitan: Cycles of having anything to go by which again, we have three having events. We believe that this is going to be a.
Eitan: Great year for high <unk>.
Eitan: Next slide.
Eitan: Anthony power is very good if you've ever met Anthony in person. He is so passionate about numbers. He is a CPA with U K and he does he does a great job and you could see here, we're neck and neck again.
Speaker Change: Bit firms and hasn't been.
Eitan: Amongst the longest standing crypto miners both.
Eitan: Going public during the Canadian Air of 2017, and so we lead the sector here, we're neck and neck for first place.
Eitan: And this by the way this is for the full calendar year just for the full calendar year of 2024, we lead the sector and you could see that.
Eitan: At waterfall rolls off pretty substantive fleet.
Eitan: Some of the peers are sub 30 day.
Eitan: <unk>.
Eitan: But again, we not only want to offer shareholders. The best Bang for your Buck, but that's performance. So I can confidently say.
Eitan: As president and CEO of <unk>, I really think that comfort count we are the best fit quite minor in the sector.
Eitan: And it's the numbers that really back it out but again, we're very diligently work extremely hard to keep this level of performance and.
Eitan: And we want to scale this level of performance as well.
Eitan: Let's talk to the next slide.
So I alluded to this it's a very interesting summary by banner.
Eitan: And so what they're looking at as bitcoin value per exit harsh.
Eitan: Look at the enterprise value and value of the Treasury's et cetera.
Eitan: And really what you could see here if you look at the right most column we lead the sector.
Eitan: 67%.
Eitan: <unk> value.
Eitan: As a percentage of our enterprise value and you've seen marathon. Its number 263 humira on has gone out and I think they've raised quite quite a bit of money just to buy bitcoin, but we've managed to organically from our own operations strategically hardly while also having the lowest dilution in the space.
Eitan: This is a testament to our discipline.
Eitan: Every data driven when we deploy capital we keep costs low so we have cash flow positive operations.
Eitan: This slide alone I think says a lot.
Eitan: But any way to and this is on their website to I think the euro is down there at the bottom <unk>, they're a great ETF I think theyre going to be doing a new discretionary ETF where there'll be.
Eitan: Able to deploy capital more capital into the crypto mining sector.
Eitan: Very grateful to have them as shareholders next slide.
Eitan: Okay.
Eitan: And this is miss revisits the hype ratio. So look at the January production report, you've got everybody's press releases as tabulated here for convenience again. This is all market data can.
Eitan: When you look at our market cap can you back with the data we have the highest <unk> got what you call value, excluding cod or fair value or just it's called enterprise value for convenience for $117 million.
Eitan: 102, bitcoin. So if you annualize that we're trading at a value per bitcoin 90, 96000, which is basically the price of bitcoin.
Eitan: And you look at what our peers are trading at.
Eitan: Some of them are trading.
Eitan: 200000, and 400000, but some of their team over a million dollars per bitcoin mine and you can kind of normalize that to a ratio and because we have the most attractive value.
Eitan: If we are trading at a one X our peers are trading anywhere from one five to $2 five to eight to 10 to 12 X.
So again, we believe the smart money will start funneling its suite of high we are at the best value contract count the best.
Eitan: Minor in terms of uptime lowest dilution those G&A per bit quaint, Mike again, I'm, an engineer by training. So its all about numbers for me I'm, a numbers guy and I'm sure everybody.
Eitan: Everybody else's that enjoys crypto mining because it's a numbers game and this is another metric.
Eitan: We need to say, it's very clear.
Eitan: We're an incredibly attractive value proposition right now.
Eitan: Let's see the next slide.
Eitan: Of course, so we're going to talk about AI, we hit $10 million of annualized revenue this quarter $2 $5 million and Thats coming from our 4008 series cards, which are operational in.
Eitan: Montreal in Stockholm, Sweden, but very exciting we just ordered.
Eitan: <unk> <unk> hundred cluster with Infiniband and that was actually.
Eitan: By shifting it arrived in December and it was configured over the following six weeks. So its now accretion we're looking to hand that over to a client in the next week or two.
Eitan: And that will add $4 million of topline revenue and then the H 200, Questar, We also announced.
Eitan: <unk> is currently being configured and should be ready in about four to five weeks I believe super Micros.
Eitan: Datacenter next week.
Speaker Change: Sure testing and configuring.
Speaker Change: Everything and of course as with Infiniband as well. So we're building in video reference architecture by the way multi.
Speaker Change: Multiples of 32 nodes as Wilson PTO prescribes with Infiniband of course and that each 200 question. We expect to add 9 million topline revenue. So can you add for you at nine gets us to about $23 million of annualized revenue target is 'twenty just to keep it simple for the street.
Speaker Change: And we're focused on hitting that in the next quarter.
Speaker Change: So we standby for updates on that.
Speaker Change: And the $100 million annualized revenue target is still there.
Speaker Change: And always said is thats going to be focused more on the infrastructure side would be.
Building and converting our.
Speaker Change: Our green energy data centers to support tier three where we can either build more GPU clusters or.
Speaker Change: Provide colocation surfaces more on that.
Speaker Change: But right now the focus and the recent news is that we've got the <unk> 180 to 200 clusters.
Speaker Change: In our data centers again, H 100 ready to be turned over to clients very soon and each 200 should be ready to turn it over and hopefully four to five weeks.
Speaker Change: We've alluded to this we are focusing our next generation video compute and by the way we realize it's no secret that black oil is going to be liquid cooled and so if youre going to be building tier three infra well it better support.
Speaker Change: The next generation.
Speaker Change: Of compute which will be 130, 130 kilowatts per rack, if you look in NBL 72.
Speaker Change: So it's about understanding where the market is going and preparing that so anyways.
Speaker Change: We've commented about that just sort of acknowledging that again will help to the next slide. So again the focal point here is to hit the $20 million annualized revenue once the <unk> hundred <unk> hundred clusters are rented and were planning to rent these questions to a single customers.
Speaker Change: And then if Thats in addition to the cash flow from our existing Chi piece of the $10 million.
Speaker Change: Next slide please.
Speaker Change: And it is time for Mr. Darcey diverse the longest standing.
Speaker Change: Fo in crypto mining industry has got more audits under its belt and anybody else.
Hubertus: And we're having events under its belt any other CFO in the crypto mining missing Hubertus, it's all yours.
Hubertus: Thank you Arden.
Speaker Change: At this point in the presentation.
Taking you through a snapshot of the period.
Speaker Change: Looking at the most recent completed quarter and some financial indicators.
Speaker Change: We are providing certain non <unk> measures in our presentation. Today company believes that these measures while not a substitute for measures of performance.
Speaker Change: In accordance with higher for us provide investors an improved ability to evaluate the underlying performance of the company.
Speaker Change: These measures do not have any standardized meaning prescribed under audit for us and therefore may not be comparable to other issuers.
Speaker Change: Further details are found in the management discussion and analysis for the three and nine months ended December 31 2024.
Speaker Change: As you can see on the slide Hype ended December 31, 2024 quarter with $140 2 million common shares $3 3 million auctions, $6 2 million Skus and $3 2 million warrants outstanding.
Speaker Change: Onto the next slide during this most recently completed quarter of December 31, we recorded $29 2 million of revenue.
Speaker Change: And a $17 3 million profit measured in adjusted EBITDA. This was driven by production of 322 <unk>.
Speaker Change: Bitcoin equivalent being produced.
Speaker Change: Onto the next slide.
Speaker Change: Always in hub since day, one taken pride in maintaining a healthy balance sheet.
Speaker Change: Our cash position was $9 8 million.
Speaker Change: December 31, 2024 in addition to 268.
Speaker Change: $8 million in digital currencies, a healthy increase from the prior quarter, driven by higher balances and higher bitcoin prices.
Speaker Change: As we know are.
Speaker Change: It'll is consistent.
Speaker Change: Good point.
Speaker Change: We also had $8 9 million in amounts receivable and prepaid. This is an increase from the prior period.
Speaker Change: Total market value of our strategic investments increased by 26% from the prior quarter to $37 million.
We have a strong net cash position and healthy working capital to support our operations and growth objectives.
Speaker Change: With a current ratio of 10 four calculated as current assets divided by current liabilities.
Speaker Change: Yeah.
Speaker Change: Moving onto the next slide let's shift our focus to our gross operating margin on a year over year basis.
Speaker Change: We'll be comparing the third quarter of this year to the third quarter of last year.
Speaker Change: Our gross mining margin, which is calculated as total revenues minus direct operating and maintenance costs.
Speaker Change: High performance computing service fees decreased in absolute terms to $6 1 million or 21% in the most recent quarter compared to $11 3 million in the same quarter last year.
Speaker Change: One significant factor to consider and remember.
Speaker Change: Is the impact of the having event that occurred in April 2024.
Speaker Change: Led to rewards earned by miners in the third quarter of this year being halved compared to the same period last year.
Speaker Change: The gross mining margin is influenced by several additional external factors. These include the high mining difficulty currently being experienced.
Speaker Change: And the reduced amount digital currency rewards receipt by minors.
Speaker Change: Mentioned, which is now half of what it was a year ago.
Speaker Change: And the market price of the digital currencies at the time of mining, which is how our revenue is recorded which has been higher compared to the previous quarter.
Speaker Change: Taking a look at basic income or loss per share in the most recently completed quarter. We are reporting a net profit one per share compared to a net loss of eight cents per share reported for the quarter ending December 31 2023.
Speaker Change: And looking at the nine month period year to date, we are reporting a net loss of <unk> <unk> per share compared to a net loss of 55 per share in the nine months ended December 31 2023.
Speaker Change: The net loss reported by high is in accordance with the regulatory requirements of ire for us as we are Canadian listed entity.
Speaker Change: Rather than following U S GAAP.
Speaker Change: However, we are going through the process to get it.
Speaker Change: Transition to U S. GAAP one of the things that we will do is allow our investors and our listeners of this session to have greater comparability of ourselves to our peers.
Speaker Change: Onto the next slide and looking at our year over year revenue, we generated total revenue in the third quarter of fiscal 2025 of 29.
Speaker Change: <unk> 2 million versus $31 3 million in the previous year's quarter.
Speaker Change: The steady revenues compared to the same quarter in fiscal 2024 can primarily be attributed to the higher average good point price, which was more than double what it was last year.
Speaker Change: However, this increase was offset by a rise in bitcoin difficulty HOPPS rates over the past year as well as the impact of having a bench on the current periods results.
Speaker Change: It's.
Speaker Change: Huge.
Speaker Change:
Speaker Change: Badge of honor for our operations team and the company as a whole to be able to maintain these high revenues.
Speaker Change: Even with receiving half of the rewards that we were receiving a year ago.
Speaker Change: Of the having event.
Speaker Change: As previously mentioned, our gross mining margin, which equates smart revenues minus direct operating and maintenance costs and HBC service fees decreased to announce we have dollars to $6 1 million or 21% in the most recent quarter compared to $11 3 million or 36% in the prior year.
Speaker Change: Here.
Speaker Change: Moving on to the next slide comparing our current fiscal Q3 quarter to the previous Q2 quarter. We generated revenue in this third quarter of fiscal 2025 of $29 2 million versus $22 6 million in the previous quarter.
Speaker Change: This increase in revenues versus the prior quarter was impacted by an increase in the price of bitcoin, resulting in higher revenue from digital currency mining. We also saw a 35% higher HBC revenues quarter over quarter.
Speaker Change: Gross operating margin also went up smoot dollars decreased to $6 1 million or 21%.
Speaker Change: And the most recent quarter compared to $1 2 million.
Speaker Change: 5%.
Speaker Change: That increase is great on a quarter over quarter basis.
Speaker Change: And it was greatly due to the higher comparative bitcoin prices and resulting revenues.
Speaker Change: Looking at our adjusted EBITDA on the next slide in the third quarter of fiscal 2025 was $17 3 million versus an adjusted EBITDA of $5 6 million in the prior quarter I.
Speaker Change: I will highlight again that adjusted EBITDA is a non for us figure.
In the third quarter of fiscal 2025, we experienced a net profit of $1 3 million compared to a net loss of $7 7 million in the prior quarter.
Speaker Change: At this point as I always like to do I want to thank our loyal shareholders and there have been with US over this period of time. It has been an incredible journey. It has been incredible with how its been able to achieve and announced over the last three months and at this time I would like to pass it to Nathan.
Nathan: Who will running our Q&A portion.
Speaker Change: Our covering analysts Nathan.
Nathan: Yeah.
Nathan: I am not sure if I've been on muted where that question but.
Nathan: It seems like I have been with respect to the Paraguay expansion strategy.
Nathan: I'm curious if you guys could share some details in terms of whether you see further opportunity to expand in the region now that you establish a foothold in the market with the 300 megawatts expected to come online roughly eight months. Thank you.
Nathan: Yes.
Bill: Bill I don't know.
Nathan: Yes.
Nathan: I can't hear anything on my end can you repeat the question I apologize.
Speaker Change: Yeah no worries.
Speaker Change: Morning, everyone. Thanks for.
Speaker Change: Here are.
Speaker Change: So my first question was with respect to the Paraguay strategy I'm, just curious to hear the teams thoughts on.
Speaker Change: Further opportunity to expand in the region now that.
Speaker Change: A 300 megawatt foothold will be established in roughly eight months, just curious to Huron Gerald box on Paraguay. Thank you.
Speaker Change: No. Thanks for the question Bill and I apologize for the silence I wasn't sure. If it was just on my end.
Speaker Change: I think with the team that we've had gone down there you know Frank has been down there items has been down there Lou.
Speaker Change: Our chief operating officer.
Speaker Change: It's opening up some other opportunities people are we're seeing more of the region.
Speaker Change: We're having conversations with existing.
Speaker Change:
Speaker Change: Existing miners down there so I think that there's potentially a lot of opportunities in Latin America to do some additional bitcoin mining, but right now because this is as everybody on the call knows. This is the biggest transformational announcement that hive has made since its inception back in 2000.
Speaker Change: <unk> team.
Speaker Change: We're laser focused to to get these done.
Speaker Change:
Speaker Change: I don't think that we want to overburden ourselves with going after another 300 megawatts or whatever.
As a conservative CFO I think the team wants to make sure that we get this done get it done properly get it up all up and running.
Speaker Change: And with the bid farms, one because it was already once we close.
Speaker Change: Be able to get this one up and running the timelines locked tighter we're.
Speaker Change: We're going to learn a lot, but it's like any country you can have all of your plans.
Speaker Change: Or Asian steam finance team everybody.
Speaker Change: But until you energize not.
Speaker Change: That's when the excitement really starts.
Speaker Change: So we are continuing to take a look we are always whether it's in Latin America or other places taking incoming.
Speaker Change: Opportunity questions. So we're continuing to look and have closed our eyes.
Speaker Change: And with the access to the Green energy from these large dams that have stranded power I think that there is going to continue to be opportunities, whether we take them or not.
Speaker Change: Continuously be part of our corporate development.
Speaker Change: Strategy, taking a look on seeing if it makes sense, but the big thing. We're looking at through calendar 2025 is getting these operations up and running so that he can.
Speaker Change:
Speaker Change: But bitcoin on our balance sheet.
Speaker Change: Awesome. Thank you for the color there and then if I may ask a second one how should we think about the ramp in SG&A expense going forward.
Speaker Change: Impact of operating leverage as the business scales here.
Speaker Change: Yes, I think the SG&A is going to continue to be very lean, it's not going to be linear from a standpoint of us having six X. The ash now and then you're getting a four times too.
Speaker Change: Twenty-five extra house that our SG&A is going to increase by four times mirrors can be economies of scale and the great thing that I've.
Speaker Change: In might head Bill, it's not the operations side, but I would much rather have.
Speaker Change: One 200 megawatt facility like we're looking at in.
Speaker Change: In Paraguay with the LOI with good farms, then have 10 20 megawatt ones.
Speaker Change: You can keep your overhead a lot lower you can get a lot more economies of scale.
Speaker Change: As we've talked about before we are going to be adding some people on the strategy side more per the accounting and auditing and we'll obviously have to add some people down in Paraguay to run the operations.
Speaker Change: But it's not going to be a four time that we're going to continue to keep it lean.
Speaker Change: And this is where.
Speaker Change: It's you can.
Speaker Change: You know maintain a very low SG&A, while your revenues go four times.
Speaker Change: Really appreciate the color congrats again on the quarter great. Thanks, Bill I appreciate you calling in.
Speaker Change: Bill. Thank you for the question for our for our next question will go to the line of Darrin from Roth. Please please on mute.
Darrin: Hey, guys can you hear me.
Speaker Change: Yes, Darren great. Good morning, Thanks for taking my questions Congrats on the progress.
Speaker Change: So I guess my first question I appreciate a narrower stuff sort of occurs linearly can you just walk through.
Speaker Change: What logistically needs to occur in order to one closed the Paraguay site from bit farms, and then two with respect to the aggregate 300 megawatt project kind of what are the biggest obstacles between.
Speaker Change: You know once you close a bit farms transaction and getting up to 35 exit hashed by the third quarter target.
Speaker Change: I think the targets 25, but I don't know where the extra 2020 final get to.
To get to 35.
Speaker Change: I think it's well on its way we're having.
Speaker Change: Numerous calls.
Speaker Change: With with good farms every week.
Speaker Change: We've got a very good.
Speaker Change: Relationships are very good.
Speaker Change: Open communication with them because both ourselves and good farmers want to make this transaction successful to be able to close on time. So they have been incredibly accommodating.
Speaker Change: Sharing information with us on what's happened.
Speaker Change: We are working with.
Speaker Change: People that have already built and are continuing to build down there. So the synergies that we've been able to have been very.
Speaker Change: A very beneficial I don't see any big.
Speaker Change: No rocks are stumbling blocks that we need to get over you to continuing Mac communication with good forms.
Speaker Change: To be able to get to the enter energized Asian, we already had a good relationship with the energy provider Andy down there when we hooked up bar and had that relationship for the 100 megawatts.
Speaker Change:
Speaker Change: So.
Speaker Change: It's more just a.
Speaker Change: Working with the existing team that's there.
Speaker Change: Continuing to.
Speaker Change: Check things off the box from.
Speaker Change: From both a due diligence point of view and making sure that we've got operational people that are ready to run the facility.
Speaker Change: <unk>.
Speaker Change: From what I understand are imports that.
Speaker Change: But we have to to come in for the remaining equipment get caught.
Speaker Change: Facility up and running is all working well we.
Speaker Change: We are looking at the.
Speaker Change: Purchases of basic equipment that we already made for our existing facility and taking a look at both our 200 megawatt with good farms and our 100 megawatt that we had announced for our own once the most strategic and best utilization of that equipment to get energized <unk>.
Speaker Change: <unk> as quickly as possible.
Speaker Change: Across the two facilities in Paraguay.
Speaker Change: Great I appreciate the detailed response, if I could sneak one more in just finished for eitan on the on the AI cloud business.
Speaker Change: You know since the deep seek stuff kind of came out I mean have you seen any changes in the demand environment, good bad and different just kind of curious on your thoughts there. Thanks.
Speaker Change: I did item might be having some.
Speaker Change: Audio problems unless he is talking and I can't hear him.
Speaker Change: Yeah.
Unnamed Presenter: Alright, we'll go we'll go ahead to our next question apologies for the audio difficulties Brett from cancer or if you would please on mute yourself and proceed.
Speaker Change: With your question.
Speaker Change: Alright.
Unnamed Presenter: We will move to Nick <unk> from B Riley Nick Please on mute yourself and proceed with your question.
Nick: Hey, Nathan Thanks, a lot my first question.
Speaker Change: <unk> got congrats on the progress so far first of all but <unk>.
Frank Holmes: Frank you talked about the change in administration.
Frank Holmes: Giving you the comfort to move the head office to San Antonio Obviously, you have an impressive growth.
Speaker Change: That way in Paraguay, but has the change in administration impacted your desire to own operating assets in the U S.
Speaker Change: No I don't think Frank was able to want to make it on the call this morning, but.
Speaker Change: It definitely has changed.
Speaker Change: Hives viewpoint on the United States.
Speaker Change: Prior to the current administration's came out come in as everyone is aware.
Speaker Change: It was challenging to not know what was around the corner with any regulation in the United States.
Speaker Change: You had denzler going after everybody that either had blockchain crypto.
Speaker Change: Or anything in there in their name they made it extremely difficult through choke point to point or two to get anything done.
Speaker Change: Having the new administration.
Speaker Change: Have.
Speaker Change: It's very clear that you do it makes Jason loves crypto theyre, putting out their own I'm trying to put out their own etf's.
Speaker Change: Be brought in a future that's a lot more.
Speaker Change: Friendly to the blockchain and cryptocurrency environment may actually have a cryptos or so.
Speaker Change: Any kind of additional.
Speaker Change: Spotlight.
Speaker Change: That can be put on the sector a lot more adoption will be happening in the United States and I think it becomes a lot more main stream. So when you've got states, taking a look at how they're going to handle crypto.
Speaker Change: Having the national <unk>.
Speaker Change: Environment is a little bit more friendly can only benefit.
Speaker Change: What some.
Speaker Change: What can be useful for forbid coin miners.
Speaker Change: You know over the last seven years that I've been with the company.
Speaker Change: Hi, just taking a look at different things in the United States.
Speaker Change: We've moved and we're the first ones to be dual listed.
Speaker Change: There was always an underlying.
Speaker Change:
Speaker Change: I'll speak for myself discomfort, because you didn't know where the lines were drawn operating in the United States.
Speaker Change: Over the next four years Theres, a great opportunity for the United States to get regulation in making a lot more mainstream so no matter who is in power four years from now.
Speaker Change: We'll have the the guard rails to make this industry incredibly special and incredibly booming.
Speaker Change: Pass it trumps presidency.
Speaker Change: And now from a from a CFO point of view.
Speaker Change: E.
Speaker Change: I welcome.
Speaker Change: Regulation, sometimes you don't like it but at least you know where the guardrails are and you know where where you can go and where you can't go in prior administration, you didn't know where those guardrails were because they would just come in and make up the rules as they came along.
Speaker Change: Other they were.
Speaker Change: Lawful or not.
Speaker Change: Okay. Thanks for those comments my second question, if I may was.
Speaker Change: Correct me, if I'm wrong, but I think you alluded to the potential pursuit site conversion.
Speaker Change: In the existing portfolio.
Speaker Change: We're geared towards H P. C side, So just was.
Speaker Change: Hoping to get any additional color on what kind of work has been done.
Speaker Change: Where a potential co location opportunities or you know have you come up with any capex per megawatt estimates any any additional color you might add thanks a lot.
Speaker Change: On that Nick in terms of the actual numbers I'd have to defer to the operations team, but I know that we have been looking at our flagship.
Speaker Change: Facility.
Speaker Change: Embolden, Sweden, there is a small accident beside R. R.
Speaker Change: Our flagship facility.
Speaker Change: We've been doing analysis, we brought in a consultant to take a look at what it would cost to repurpose not from.
Speaker Change: Piecyk mining doing crypto currency to doing the HBC.
Speaker Change: And we've also taken mature that in our new Brunswick facility.
Speaker Change: To be able to.
Speaker Change: Look at the energy that is available to the company and make the best use of it.
We could just say you know.
Speaker Change: Keep it completely separate and say, okay were only going to work.
Speaker Change: Work with outside parties for our tier three but.
Speaker Change: But using our existing facilities and saying, what's the best purpose of that electricity that we have and is that better used to do high performance computing or for bitcoin mining.
Speaker Change: One thing that we need to take into account.
Speaker Change: As if we're doing H P. C. It has to be up 100% of the time. So we have to in addition to the Capex It would take to get it to a tier three.
Speaker Change: Level, including the redundancy of power redundancy of the fiber optics hold out we've got to make sure that it's an environment, where we can have.
Speaker Change: Useful low cost energy, but its stable energy, we can't have denoted in a location, where we're going to be curtailed.
Speaker Change: Because we just can't afford to have the power going down you got to make sure that you've got at 99.97% or whatever the amount is to meet you you can get good keep up there, but we have had.
Speaker Change: Engineers come in.
Speaker Change: Do some analysis and provided us with some <unk>.
Speaker Change: Estimates in terms of what that would take so we'd love to be able to do those in our own facilities and then outside of our own facilities, we're continuing to look for sourcing.
Speaker Change: Locations to do our own HBC owning the property owning our own facility. So that we don't have to rely on any landlords.
Speaker Change: Okay.
Speaker Change: Thanks, again, Darcy and keep up the good work.
Darcy Diverse: Thanks, Nick.
Darcy Diverse: Nick Thank you for that question in the interest of time, we will except one more question from the line of Joe <unk> from Canaccord. Please go ahead and Unmeet yourself Joe.
Speaker Change: And our see and I'm not sure if eitan and Frank are still on but yeah I'm here Joe.
Speaker Change: Oh great.
Speaker Change: Nice to see jewelry tactical question comments I'm glad I'd Miss here I mean, I may or May not go into a technical question, but nice to see all the progress and the expected ramp here on X <unk>, maybe I'll just throw one question in.
Speaker Change: You know as the business is about to get a lot larger and it looks like it's going to be throwing off more profit.
Speaker Change: I'm just wondering how you consider maybe the use of that moving forward as a funding mechanism to grow the business.
Speaker Change: You know relative to you know for example, using the a T. M. N. You know more you know it's working but you know if you know if you were to employ some that maybe you could grow a little more accretively and with a bigger P&L you'd be able to service. Some debt. So just wondering what the most updated thoughts are on.
Speaker Change: Using a little bit more of the cap structure of the balance sheet here. Thanks a lot.
Here, we saw a lot of convertible debt deals done in the last quarter of 'twenty 'twenty four.
Speaker Change: And we've spoken to different institutions on those lines, but what we noticed was a lot of those debt deals had use of proceeds that were diminished from the total.
Speaker Change: <unk> borrowed so for example, we see convert deal Sun for five 600 million, but cap calls and share buybacks were also included in that structure and as you know these are detailed in today's press releases and so on.
Speaker Change: 600 million dollar deal might only have $350 million to $400 million of.
Speaker Change: Proceeds to say buy bitcoin, if that's what the debt was four.
Speaker Change: And so down the road at the end of the term you're still gonna have to repay the 600 million. So we it seem to be.
Speaker Change: The trend of your popular because it was a lot of.
Speaker Change: Liquidity that that was opening like doing those secure securitized debt deals with opening up but.
Speaker Change: What if what if things don't pan out like commodities that deals were done to buyback coin.
Speaker Change: And so what if that doesn't pan out perfectly, but if they can't difficult to to underground so right.
Right now we've got a strong balance sheet and we've got a I think.
Speaker Change: Little under 100 million left on the ATM 100 million beyond that on the base shelf add on as well we've got.
Speaker Change: Roughly.
Speaker Change: $250 million little over $250 million decline on the balance sheet. So.
Speaker Change: We always look at the the cheapest cost of capital and if Theres, a good debt deal, which by the way in the H P. Seaworld is a different ecosystem, it's it's different than than financing bitcoin expansions or operations. So.
Speaker Change: There are potential opportunities there that are more conventional sort of.
Speaker Change: Debt financing options.
Speaker Change: But yeah, well, we always look for the lowest cost of capital.
Speaker Change: Great. Thanks, very much eitan congrats on all the progress.
Speaker Change: Thank you Joe Thank you to all of our analysts all of our attendees that concludes our Q&A session and our Q3 2025 earnings call. Thank you very much for joining we look forward to speaking to you again soon.
Speaker Change: Okay.
Speaker Change: Goodbye.