Q4 2024 Bitdeer Technologies Group Earnings Call
Speaker Change: Good day, and thank you for standing by. Welcome to VITAR's fourth quarter and full year 2024 earnings conference call. At this time, all participants are on a listen-only mode.
Speaker Change: And are subject to risks and uncertainties.
Speaker Change: Which may cause actual results to differ materially.
Speaker Change: For a more complete discussion of forward looking statements and the risks and uncertainties related to the kids business. Please refer to <unk> filings with SEC.
Speaker Change: Further in addition to discussing results that are calculated in accordance with international financial reporting standards or <unk>.
Speaker Change: We will also make references to certain non <unk> financial measures such as adjusted EBITDA and adjusted profit.
Speaker Change: For more detailed information on non <unk> financial measures.
Speaker Change: You should refer to our earnings release that was published earlier today.
Speaker Change: Which can be found on <unk> Investor Relations website. Thank you I will now turn the call over to Harriss Harriss.
Harriss Harriss: Thank you Jack and good day everyone.
Harriss Harriss: Welcome to our Q4 and full year 2024 earnings conference call.
Harriss Harriss: I'm excited to share the many developments happening a bit here and walk you through the progress we've made since last quarter.
Harriss Harriss: Before diving in I would like to briefly highlight our Q4 financial results.
Jeff: Which Jeff will provide more details in a few minutes.
Harriss Harriss: Starting on slide three.
Speaker Change: For Q4, 2024 total revenue was $69 million.
Speaker Change: Gross profit was $5 1 million and adjusted EBITDA was negative $3 8 million.
Speaker Change: This lower performance compared to Q4 2023.
Speaker Change: Primarily driven by the impact of the April 2020 for having <unk>.
Speaker Change: Increased global network cash rate.
Speaker Change: Lower hosting and cloud mining revenue and higher R&D costs.
Speaker Change: These negative impacts were partially offset by higher year over year average self mining hatch rate and higher bitcoin prices.
Speaker Change: Over the last year, we made a deliberate decision to prioritize resources on the development of our own ASIC technology.
Speaker Change: This limited our hatch rate growth.
Speaker Change: It gives us massive advantages going forward that differentiates our business from the rest of the sector.
Speaker Change: Our mining machines become available in volume in the coming months.
Speaker Change: We will be able to rapidly increase our shelf mining hash rate.
Speaker Change: Significant cost advantage as.
Speaker Change: As well as sell our machines to external customers to begin penetrating that's $4 billion to $5 billion annual ASIC market.
Speaker Change: A core pillar of our strategy is to develop internal technologies and capabilities driven by our belief that this is the best way to maximize long term shareholder value.
Speaker Change: To secure long term success, we are committed to building a fully vertically integrated business.
Speaker Change: Includes developing our own power generation assets globally.
Speaker Change: Globally diversified data centers, and leading edge mining hardware.
As seen on slide five of our supplemental presentation and in pursuit of our vertical integration initiative.
Speaker Change: We successfully acquired a 19 acre site that is fully permitted for construction of a 101 megawatt gas fired power plant.
Speaker Change: This project is near Fox Creek, Alberta, Henry required earlier, this month for $21 $7 million in cash.
Speaker Change: It also includes approval for a 99 megawatt grid interconnection with Alberta electric system operator.
Speaker Change: We plan to develop and construct the power plant in partnership with a leading engineering procurement and construction firm with completion and energy station expected by Q4 2026.
Speaker Change: In parallel to the gas fired generator, we plan to develop a 99 megawatt data center for Bitcoin mining as the first phase of this site development.
Speaker Change: We estimate the total capital expenditure for constructing the gas fired power plant to be approximately $19 million.
Speaker Change: With an additional $30 million allocated for electrical and data center infrastructure.
Speaker Change: Upon completion, we intend to deploy approximately nine axa hash.
Of our seal minor eighth reminding machines.
Speaker Change: Spect it to deliver industry, leading efficiency of 11% to 12 joules per tower ash.
Speaker Change: We estimate energy production costs at this gas fired power plant to range between 20 to $25 per megawatt hour based on current gas prices.
Speaker Change: Additionally, as part of the acquisition, we plan to implement a carpet and utilization system that captures cotwo, making this project a net zero carbon producer.
Speaker Change: This initiative is expected to help offset Canadian carbon tax obligations, while also creating potential future revenue opportunities through the sale of carbon credits.
Speaker Change: Further as part of our energy optimization strategy, we plan to curtail and sell power back to the Alberta grid during periods of peak demand.
Speaker Change: This approach is expected to enhance cost efficiency, while contributing to grid stability with minimal impact on bitcoin production.
We are extremely excited about this acquisition.
Speaker Change: This newly acquired site and power generation project represents a big step for bit tier positioning us as the world's first fully vertically integrated bitcoin miner at scale.
Speaker Change: With this development, we are on a path to achieve one of the lowest bitcoin mining cost in the industry.
Speaker Change: In terms of our <unk> business, which is highlighted on slide six through eight of our supplemental presentation. We continue to execute on our advanced chip roadmap positioning ourselves for a transformative 2025.
Speaker Change: Owning and deploying our own mining Asics is an integral part of our full vertical integration strategy.
Speaker Change: It will provide us distinct advantages such as the lower cost structure enhanced capital efficiency and a dramatically improved supply chain compared to the broader industry.
Speaker Change: In addition, commercializing seal minor Asics allows us to diversify our revenue streams into the rapidly growing <unk> market.
Speaker Change: Where we see strong demand for alternative suppliers of ASIC solutions.
Speaker Change: I will now provide a detailed update on our ASIC roadmap.
Speaker Change: Starting with steel minor a one.
Speaker Change: To date, we have energized 0.4 extra hash of our sealed miner miners.
Speaker Change: And they have demonstrated solid performance.
Speaker Change: The mass production of the remaining three three X. The hash remains on schedule and is expected to be completed in March 2025.
Speaker Change: For steel minor a to this.
Speaker Change: This minor represents a significant advancement in our technology roadmap.
Speaker Change: Bridging our proprietary seal Oh two chip.
Speaker Change: In Q4, we commence mass production at TSMC to deliver approximately 35 X a hash I'll steal miner <unk> by October 2025.
Speaker Change: This represents a delay of approximately one month compared to our original expectation due to a six four magnitude earthquake that struck Taiwan on January 21 2025.
Speaker Change: <unk> <unk> is our first commercial miner available for sale to external customers.
Speaker Change: So far we have allocated seven <unk> of the card 35 X the hatch for external sale.
Speaker Change: Initial customer demand has been extremely strong with preorders for the seven extra hash being oversubscribed by a factor of six.
Speaker Change: We have already received 20% of the total price is down payments on all seven extra cash.
Speaker Change: Volume shipments to these customers will commence in March 2025.
Speaker Change: The remaining 28 <unk> of <unk> capacity is currently intended to be used for our own self mining.
The first batch of air cooled machines have been delivered to our mining data centers for testing and are running stably.
Speaker Change: Building on the success of <unk>, our R&D effort for sealed miner <unk> III are progressing smoothly.
Speaker Change: This next generation model will feature the CLO three chip.
Speaker Change: Which is expected to deliver industry, leading energy efficiency of tangible per cash at the chip level finished wafers from the initial tape outs are expected in March 2025 with production readiness targeted for later this year.
Speaker Change: Achieving 10 fuels <unk> chip efficiency would mark a major milestone for the industry positioning seal miner <unk> III has the most advanced and energy efficient ASIC on the market.
Speaker Change: As energy efficiency remains the most important single metric influencing buying decisions, we believe having the most efficient ASIC is the key factor to winning market share.
Speaker Change: Unlike other industries, such as smartphones, where switching costs include significant ecosystem friction.
Speaker Change: Mining <unk> operate in a highly fluid market, we're transitioning to alternate machines creates little or no friction.
Speaker Change: In this space, the most efficient and reliable machines win.
Speaker Change: With that in mind, we are eagerly awaiting the return of CLO III sample wafers scheduled for March.
Speaker Change: Looking ahead to the second half of this year, our field miner <unk> project is a testament to our commitment to maintaining technological leadership and pushing past perceived limitations of ASIC design.
Speaker Change: The CLO four uses a revolutionary new digital chip architecture that significantly enhances energy efficiency and is projected to have a chip level energy efficiency, a five joules per chair hash.
Speaker Change: Tape out is planned for Q3 2025.
Speaker Change: We believe seal minor a four along with our third generation chip will position <unk> as the leading supplier of the world's most energy efficient mining machines Cigna.
Speaker Change: Significantly strengthening our market position and unlocking substantial value for our customers and shareholders.
Speaker Change: As we look to the remainder of 2025.
Speaker Change: We are fully committed to executing a successful entry into the multibillion dollar ASIC market, while also rapidly ramping our self mining hash rate.
Speaker Change: On slide eight of our supplemental investor presentation, we have laid out our expectations for self mining cash rate into Q4 of this year.
Speaker Change: Given the significant amount of power capacity, we have coming online. Our plan is to initially prioritize our current ASIC production toward self mining.
Speaker Change: We plan to energize the remaining seal minor <unk> and 28 extra hash axial minor <unk> on top of our existing eight seven extra half of self mining hatch rate as of January 31, 2025.
Speaker Change: Therefore upon deployment of a combined 31, three extra hash of steel miner, <unk>, one and <unk> machines, we expect our total self mining hatch rate to be approximately 40 extra cash.
Speaker Change: We expect to be able to deliver that with machines fully racked and energized by Q4 2025.
Speaker Change: Please note that this forecast does not include anticipated additional wafer allocations for cielo to offer CLO III.
Speaker Change: Depending on the exact manufacturing schedule. These anticipated additional wafer allocations could increase our self mining cash rate well above the 40 <unk> guidance for Q4 2025.
Speaker Change: In addition, I'd like.
Speaker Change: To address the recently published U S Department of Commerce Bureau of industry and security ruling regarding advanced computing integrated circuits.
Speaker Change: Based on our preliminary review, we do not expect that the application of the Pis rules.
Speaker Change: Have any impact on the delivery of <unk> chips has the outsourced semiconductor assembly and test <unk> companies for sale chips are approved or SaaS companies under Pis regulations.
Speaker Change: Next I'd like to talk about our energy infrastructure and pipeline that is highlighted on slides nine and 10 of our supplemental investor presentation.
Speaker Change: We have secured one of the largest globally diversified power portfolio in the industry with over two six gigawatts of total power capacity.
Speaker Change: About one gigawatt is scheduled to be newly energized over the course of 2025.
Speaker Change: This massive powered portfolio allows us to deploy our field miner machines for self mining and also capitalize on the significant demand for HBC and AI data Center power.
Speaker Change: Based on a third party feasibility study many of our sites are suitable for HBC in AI data centers.
Speaker Change: In particular, our clearing Eaton, Ohio site is a strong contender given its near term access to power scale and fiber and water resources.
Speaker Change: We are actively working with leading data center developers on long term partnerships for selected sites.
Speaker Change: The shortage of reliable power for AI data centers, it's a critical challenge for the industry and we believe <unk> can play a significant role.
Speaker Change: We look forward to providing an update to our shareholders in the near future.
Speaker Change: In summary, we made significant strides across all of our strategic initiatives to close out 2024, and we couldnt be more proud of the entire bit dare team.
Speaker Change: We expect 2025 to be a pivotal year as our efforts start to bear fruit and we look forward to sharing updates on our progress.
Speaker Change: I'll now turn it over to Jeff <unk>, our head of capital markets and strategic initiatives to go over our financial results for the quarter.
Jeff: Thank you Harriss before I go over this year's fourth quarter and full year 2024 results I'd like to remind everyone that all figures I refer to today are in U S dollars and that all comparisons are on a year over year basis unless stated otherwise.
Jeff: I would like to also note that these results are unaudited and preliminary and we're working to file our 2024 annual report in 20-F with the SEC by the end of March 2025.
Starting with Q4 results consolidated revenue was $69 million versus $114 $8 million.
Jeff: <unk> revenue was $41 $5 million down 11, 5%, primarily due to impact from the April 2024, having and higher global network cash rate. This was partially offset by an increase in our average self mining hash rate to $8 four eggs hash from 700 acres of hash and higher year over year.
Jeff: Prices.
Jeff: Cloud <unk> revenue was $2 3 million versus $16 $2 million. This decline was primarily due to your long term Ashford contracts rolling off and our decision to reallocate nearly all of the tax rate to our self mining operations over the course of 2024.
Jeff: General hosting revenue was $8 $5 million versus $25 $2 million.
Membership hosting revenue was $12 4 million versus $23 4 million.
Jeff: The decrease in hosting revenue was mainly due to the exploration of certain hosting contracts as well as the removal of older and less efficient machines by other hosting customers following the having in April 2024.
Jeff: Compared to Q3, 'twenty four total hosting revenue and gross profit improved by seven 2% and 106, 7%, respectively due to higher margins of profit sharing in Q4 and more efficient mining rigs.
Jeff: Total gross profit for the quarter was $5 1 million versus $27 million and gross margin was seven 4% versus 23, 5% the.
Speaker Change: The decrease in our gross margin was primarily a result of the April 2024, having and the expiration of contracts from our high margin cloud business.
Speaker Change: Going forward as we begin to rapidly grow our hatch rate with new much more efficiency all miners, we expect our margins to improve significantly assuming all else equal in terms of big quite price and network of difficulty.
Speaker Change: Total operating expenses for the quarter were $42 $5 million versus $27 4 million. The increase was primarily driven by higher engineering staff and other costs related to the R&D of our ASIC roadmap and noncash amortization expenses of intangible assets related to the acquisition of free chain.
Speaker Change: Sequentially versus Q3 dollars 24 total operating expenses decreased by approximately 1%. This was primarily due to no takeout costs in Q4, which was almost entirely offset by increases in the noncash amortization expense related to the acquisition of free chain yearend bonuses.
Speaker Change: And consulting expenses for capital markets activities and compliance activities.
Speaker Change: Other net gain loss for the quarter was a net loss of $479 8 million versus a net gain of $1 $1 million due to a $55 $8 million noncash derivative loss on the tethered warrants and $413 $7 million noncash derivative loss on the convertible notes.
<unk> issued in August and November.
Speaker Change: This loss was caused by the significant increase in our stock price during the quarter.
Speaker Change: Net loss for the quarter was $531 $9 million versus $5 million.
Speaker Change: Adjusted profit and adjusted EBITDA for the quarter was negative $36 $9 million and $3 $8 million respectively.
Speaker Change: This quarter as losses were primarily due to the year over year revenue declines in our cloud hash rate and hosting businesses and lower gross profit margins and our self mining business.
As a result of the April 2024, having and higher R&D expenses as described previously.
Speaker Change: Quickly touching on our full year 2024 results.
Speaker Change: Revenue was $349 8 million gross profit was $66 4 million and adjusted EBITDA was $39 $4 million a detailed breakdown of our full year results by business line can be found in our earnings press release that was issued today.
Speaker Change: In terms of Q4 2024, and the balance sheet. There were several notable items that I would like to highlight.
Speaker Change: Prepayments and other assets were $310 2 million up from $97 1 million.
Speaker Change: This change was primarily driven by our advanced payments to TSMC for our CLO to mass production.
Speaker Change: Inventories were $64 9 million up from essentially zero. This mainly included wafers chips width and finished steel minor inventory.
Speaker Change: Intangible assets of $83 $2 million in goodwill of $35 8 million are mainly from our 2020 for acquisition of Norway and fruit chain.
Speaker Change: In liabilities derivative liabilities were $763 9 million, which relates to the tethered warrants in August and November convertible senior notes.
Speaker Change: These are noncash fair value adjustments driven by the significant increase in our stock price and do not impact our liquidity or operations.
Speaker Change: If RFS certain derivative instruments, such as warrants and convertible debt are required to be revalued at fair market value each reporting period.
Speaker Change: As our stock price increases the fair value of these instruments rise, resulting in a higher reported liability.
Speaker Change: The recorded liability will ultimately be netted at settlement either upon conversion to equity or exploration of the underlying securities and do not represent an actual cash outflows.
Speaker Change: With respect to liquidity, we ended the year in a strong financial position with $476 $3 million in cash and cash equivalents $77 $5 million in crypto currencies and $208 1 million in borrowings excluding derivatives.
Speaker Change: In Q4, we began to hold a portion of our bitcoin mind and we anticipate to continue this strategy for the foreseeable future at management's discretion.
Speaker Change: Note, our P&L and adjusted EBITDA does not include any fair value gains or losses related to crypto currencies on our balance sheet due to the IRS accounting rules that require crypto currencies holdings to be accounted for on a cost basis net of impairments rather than fair value basis.
Speaker Change: Moving onto our cash flow statement Q4, 2020 for cash used in operations was $325 $1 million compared to $67 $1 million. This material change was primarily driven by payments of $196 million to TSMC for cielo to wafers, which rare.
Speaker Change: Present more than half of the required wafers for the previously announced 35 to exit hash and payments of $52 $8 million to TSMC for tape out of CLO III, including initial risk wafers.
Speaker Change: Please note that while the CLO III tape out costs were paid in Q4 2024, it will be expense on the Q1 2025 P&L.
Speaker Change: Further I think it is important to highlight that our cash inflow from the sale of bitcoin related to our mining business are classified in the investing section of our cash flow statement.
Speaker Change: Net cash used in investing activities was $10 million, including $48 4 million of capital expenditure for infrastructure construction and mining rigs offset by $38 $8 million of proceeds from the sale of crypto currencies received from our principal business.
Speaker Change: Net cash generated from financing activities for the quarter was $522 $8 million.
Speaker Change: And was primarily related to the proceeds from our convertible note issued in November and our ATM program.
Speaker Change: In terms of our 2025 capital expenditures, we anticipate capex, including Fox Creek, Alberta to be in the range of $340 million to $370 million and could be fully funded by the existing balance sheet.
Speaker Change: It should be noted that this infrastructure spend assumes the sites are developed for bitcoin mining and does not include Capex for senior miners used for self mining.
Speaker Change: Finally, I'd like to provide some context on the $1 billion ATM shelf registration that we filed on January 3rd 2025 I.
Speaker Change: I want to emphasize that we will continue to utilize our ATM in a disciplined manner that we believe will add value to existing shareholders.
Speaker Change: Our management team's ownership in the company is among the highest in the industry, thus aligning our interest with our shareholders.
Speaker Change: On slide 12 of our supplemental Investor presentation, you can see our ATM usage for 2024 and January of 2025, notably we did not begin meaningfully utilizing our ATM until the fourth quarter of 2024, when our stock price has risen significantly as a result, our total ATM usage.
In 2024, plus January 2025 accounted for only 14, 4% of our shares outstanding as of January 31, 2025, the primary.
Speaker Change: Objective of this ATM is two enhanced balance sheet flexibility and provides us with the necessary liquidity to secure additional wafer allocations from TSMC, which typically require large advanced payments.
Speaker Change: This flexibility will enable us to significantly scale CMI and our production to meet growing demand and position us to capture significant market share in the multibillion dollar ASIC market.
Speaker Change: Thank you everyone that concludes the prepared remarks sections of our earnings call. Operator, Please open the call for questions.
Speaker Change: Finally, ladies and gentlemen to ask a question at this time you limit star one on your telephone and wait.
Speaker Change: Your name to be announced Billy Joel Your question simply press Star one again.
Please standby, while we compile the Q&A roster.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Our first question coming from the line of my.
Speaker Change: Economies with H C. Wainwright your line is now open.
Speaker Change: Hi, Good morning, guys, great update today and thank you for taking my.
Speaker Change: And we are going to be focused on the mining rigs here. So there have been several media reports out there that suggests some U S. Based miners are experiencing delays in receiving their asics from your biggest competitor made the trade tensions between the U S and China here it would be great to hear your thoughts on this.
Speaker Change: This has changed the demands for yourself.
Speaker Change: So I'll take a quick.
Speaker Change: It that way.
Speaker Change: Are just watching the news the same as Q4 in terms of.
Speaker Change: What's happening with other folks miners we have not.
Speaker Change: Had.
Speaker Change: Any direct experience about ourselves so I don't know if jihad and if you want to elaborate on that.
Speaker Change: Yeah.
Speaker Change: Uh huh.
Speaker Change: Well.
Speaker Change: I think that this.
Speaker Change: So according to the recent news has been soft.
Speaker Change: Quite good.
Speaker Change: Yes.
Speaker Change: Hi.
Speaker Change: And the lobbyists.
Speaker Change: Industrial.
Speaker Change: Industrial association's efforts to communicate it with debt.
Speaker Change: White House.
Speaker Change: I think consensus is as well because.
Speaker Change: Our modeling Rick.
Speaker Change: We will need to explore the market over the United States.
Speaker Change: Hopefully that.
Speaker Change: So it can be resolved.
Speaker Change: Quite a seamlessly.
Speaker Change: Got it thanks for the color there and staying on the proprietary mining rigs here. So how should we think about manufacturing capacity you have available to produce your next passerby twos and the Nextgen 83 rigs I know Youre shipping 35 Bucks to hash VH Houston share just trying to stay through total capacity.
Speaker Change: B to produce certain that next batch of rates here.
Speaker Change: We do expect the capacity to continue to go up.
This is really a trusted and very good partner for us on this but.
Speaker Change: We don't really pre announce any of those.
Speaker Change: So as we got more allocation from TSMC, we will we will make those announcements in the future we are optimistic.
Speaker Change: And our relationship with TSMC remains strong.
Speaker Change: Got it helpful and just one more to slip.
How do we think about the revenue recognition on basic sales I know you received a 20% down payment for the full <unk>, but how does the payments progress.
Speaker Change: The stages of the delivery.
Speaker Change: Sure. So I'll take that so our revenues are going to be recognized upon delivery of the asics.
Speaker Change: So the payments are now are held off just on the balance sheet and will be recognized once they're fully delivered to the customer.
Speaker Change: Great. Thanks for taking my questions.
Speaker Change: Thank you.
Speaker Change: Our next question coming from the line of Nick <unk> with B Riley. Your line is now open.
Speaker Change: Good morning, everyone. This is further shabalin asking question on behalf of Nik Giles.
Speaker Change: I wanted to touch on Capex outlook for 2025.
Jeff: Jeff you mentioned.
Speaker Change: Some number.
Speaker Change: Could you outline the allocation just kind of if you want if you may specify the sites involved.
Speaker Change: So this part in.
Speaker Change: And intended uses of funds.
Speaker Change: So what's the breakdown between self mining capex spend say HTC or AI spending thank you.
Speaker Change: Sure. So the Capex numbers that we discussed on the call are specifically for assuming the sites or use perfect quite mining and that reflects the just the infrastructure costs.
All of those so that.
Speaker Change: That infrastructure, you're asking obviously change if we were to pivot it to for example, HTC AI.
Speaker Change: It also does not include the cost of the steel miners that we would put in there.
Speaker Change: Therefore for self mining so of the debt.
Speaker Change: Numbers that we reference earlier those will cover our expansions in Rockdale, Texas Hydro expansion there.
Speaker Change: Build out in boots full buildout in Bhutan.
Speaker Change: Massillon, Ohio.
Speaker Change: And clearly the phase one of carrots in Ohio and will also cover the.
Speaker Change: The generation portion of the.
Speaker Change: <unk> facility in Alberta.
Speaker Change: And again it seems all of those will be going to be quite mining. Obviously, if one of them worked because its something else that would change.
Speaker Change: Got it thank you for that.
Speaker Change: Then on client side.
Speaker Change: Yeah.
Speaker Change: What we will be ready by developed blind date in <unk>, 2020 five and so this year.
Speaker Change: The same question.
Speaker Change: Massillon side.
Speaker Change: Just infrastructure wise to what will be done by base.
Speaker Change: So the clarity site.
Speaker Change: Phase one of 266 megawatts is expected to be available.
Speaker Change: In 2024, excuse me 2025.
Massillon, Ohio, all 221 megawatts should be available there as well.
Yes, yes.
Speaker Change: But.
Speaker Change: So it's going to be Charles so subsequent substation in place or.
Speaker Change: What about for sales for data center.
Speaker Change: So that would just cover the infrastructure our infrastructure. So again, we are under construction in Massillon, Ohio that.
Speaker Change: That will be ready.
Speaker Change: It is targeted for the second half of this year again, if we continue with the court.
Speaker Change: In mining, we should have that completed by the end of the year.
Speaker Change: And the clarity and subsidization.
Speaker Change: It's still in the development stage right now so we would expect construction on the substation this year.
Speaker Change: Got it thank you for color.
Speaker Change: I'll turn it over for now thanks best of luck.
Speaker Change: Thank you.
Speaker Change: Our next question coming from the line of Darren <unk> with <unk> capital. Your line is now open.
Speaker Change: Hey, good morning, good evening, Thanks, taking my questions just.
Speaker Change: Just kind of curious with the full vertical integration with the acquisition in Alberta.
Speaker Change: Are you guys kind of strategically thinking about good coin mining.
Speaker Change: For sites, we currently have where you are maybe.
Speaker Change: Sure.
Speaker Change: I guess the question is in the grain full vertical integration are behind the mirror versus not and then my second question, how do we kind of think about you.
Speaker Change: Your strategic decisions about self mining versus selling those rigs to third parties, just given <unk> comments about six times oversubscription. Thanks.
Speaker Change: Okay, I think I can take a first crack at that.
Speaker Change: So.
Speaker Change: With regards to <unk>.
Speaker Change: Our existing sites.
Speaker Change: We haven't changed our position there we are still very bullish on bitcoin mining and.
Speaker Change: For the most part you can assume that we will continue.
Speaker Change: Continue allocating bitcoin mining resources to our existing sites as we pivot any one of those sites will we'll definitely announce that but.
Speaker Change: It Hasnt really the acquisition of the site in Canada, or Alberta has not really changed our thoughts on the other sites.
Speaker Change: The allocation between selling the machines versus using them.
Speaker Change: Until we have.
Speaker Change: Satisfied most of our own.
Speaker Change: Their capacity.
Speaker Change: We'll have a strong preference for using the machines for self mining.
Speaker Change: But as our capacity fills up and especially with the a three.
Speaker Change: We will.
Speaker Change: Leanne further and further towards sales versus self usage. So you can expect that transition to.
Speaker Change: To happen.
Speaker Change: Time.
Speaker Change: Yeah.
Speaker Change: <unk> 26 per probably where will it.
Speaker Change: More emphasis on sales then on self usage, but.
Speaker Change: For now we're focusing very much on using the <unk> in particular for our self mining.
Helpful. Thank you.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Next question coming from the line of <unk>.
Speaker Change: Kevin Cassidy with Rosenblatt Securities. Your line is now open.
Speaker Change: Thank you for taking my question My question also around the <unk>.
Speaker Change: Meaning.
Speaker Change: Rigs.
Youre going to start shipping in March for the H two how long will it take your customers. They are qualified.
Speaker Change: Hey.
Bill: Thanks Bill.
Speaker Change: I have accepted it.
Speaker Change: Yes.
Speaker Change: What's the mix things up with that.
Speaker Change: Okay.
Yes.
Speaker Change: Yes.
Speaker Change: So.
Speaker Change: Typically it doesn't take very long for binding where it can be qualified but maybe I'll ask either mattrick jihad too.
Speaker Change: Who are closer to some of these customers that are qualifying it if they have a timeframe in mind.
Speaker Change: Okay.
Speaker Change: I think that time, we committed has already included the time to do everything.
Speaker Change: Including the qualification.
Speaker Change: Acquired.
Speaker Change: A committee of the time.
Speaker Change: Shipping out.
Speaker Change: Murray.
Speaker Change: Okay, maybe as a follow up.
Speaker Change: Yes, I was just wondering as you go through the eight three if thats going to be the larger.
Speaker Change: Model.
Speaker Change: Sales.
Speaker Change: Is that a quicker as well.
Speaker Change: Patients.
Speaker Change:
From a verification of the chip to mass production.
Speaker Change: Two really happens you would need to take.
Speaker Change: Memphis.
Speaker Change: This is.
Speaker Change: Quite fast.
Speaker Change: Speed in the industry.
Speaker Change: Bringing that chip.
Speaker Change: <unk>.
Gas production.
Speaker Change: Okay great.
Maybe just one other question how many.
Speaker Change: Customers.
Speaker Change: Will you be shipping.
Speaker Change: The <unk>.
Speaker Change: Hey, David.
Speaker Change: Paul.
Speaker Change: Got it.
Speaker Change: Exactly.
Speaker Change: I think we have said in earlier earnings calls.
Speaker Change: More than 60 customers.
Speaker Change: Yeah.
Speaker Change: Okay, great. Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question coming from the line of Brian.
Chris: Chris <unk> with Alliance Global Partners. Your line is now open.
Brian: Great. Thanks, so much for taking my questions.
Speaker Change: As it relates to external sales for Xian miner.
Speaker Change: How are you thinking about the short term pricing strategy and medium term given the efficiency.
Speaker Change: And then can you call out the maybe total expected tape out costs by quarters. If you know of them roughly for 2025.
Speaker Change: Okay. So.
Speaker Change: Our existing pricing for the <unk>, we announced earlier was $15 per tire hash and we think thats, a very competitive price based on our being a new entrant into the market and.
Speaker Change: Just wanting to be.
Get a large market presence initially so.
Speaker Change: I think as we get our a three <unk> and our energy efficiency is leading.
Speaker Change: Other vendor we have much more.
Speaker Change: Flexibility in our pricing and we expect that our pricing will reflect the energy efficiency of the machine. So you can expect to see that.
Speaker Change: And then what was the second part of your question. It was just the tape out cost.
Speaker Change: I think you mentioned that first quarter is when youll see some.
Speaker Change: Maybe for modeling purposes, you can kind of discuss what you are.
Speaker Change: Yeah, so the tape out costs for <unk> and <unk> three are already paid for.
Speaker Change: Those are obviously already been paid.
Speaker Change: The tape out cost looking forward.
Speaker Change: <unk>, primarily for the <unk> four.
Speaker Change: And so we.
Speaker Change: That should be in line with.
Speaker Change: <unk> III costs.
Speaker Change: We will incur that most likely in Q3 so.
Speaker Change: There may be other small tape out costs for other things, but I don't think thats going to be as meaningful as what we've already incurred for the <unk> III.
Speaker Change: Great.
Speaker Change: Alright.
Speaker Change: We take it out to.
Speaker Change: Type of designs simultaneously.
Speaker Change: Three.
Speaker Change: R&D.
Speaker Change: Maybe extra spending expenditure.
Speaker Change: On the design.
Speaker Change: R&D.
Speaker Change: Cost.
Speaker Change: <unk>.
Speaker Change: I'm not sure whether this has been delivered to the <unk>.
Speaker Change: An area or not so.
Speaker Change: Expenditure.
Speaker Change: R&D expenses.
Speaker Change: Got it yeah, just to emphasize that that 83, we had two.
Speaker Change: Different competing designs and so.
Speaker Change: Tape out costs for the <unk> III or <unk>.
Speaker Change: Almost double because of that.
Speaker Change: Makes sense and then my other question.
Speaker Change: Yes.
Speaker Change: Our larger HBC AI question that Im sure investors are thinking about.
Speaker Change: Since that deep seek moment, if you will.
Speaker Change: <unk>.
Speaker Change: Obviously, suggesting anyway that.
Speaker Change: They were able to perform at unusually low caution power and then we've seen some of the hyperscale or kind of.
Speaker Change: Have some uncertainty about their plans have you seen any changes in conversations about <unk> opportunities or has there been zero change.
Speaker Change: So we have after each of those events queried our connections and the people that were discussing partnerships with and we have not seen any pullback.
Speaker Change: From the people that we're speaking with.
Speaker Change: Great. Thank you so much.
Speaker Change: Thank you.
Speaker Change: Our next question coming from the line of Mike Grondahl with Northland Capital markets. Your line is now open.
Speaker Change: Hey, guys too.
Speaker Change: Two questions.
Speaker Change: At a high level, how would you describe the demand environment.
Speaker Change: For HP.
Speaker Change: See AI.
Speaker Change: Sure.
Speaker Change: And specifically.
Speaker Change: How many megawatts of your power are you offering.
Speaker Change: And then too.
Speaker Change: Post the 35 ex ash for eight two.
Speaker Change: Do you have a rough season, when we should expect.
Speaker Change: The next batch of when you'll get some insight.
Speaker Change: As to when you'll get another batch.
Speaker Change: I'll take the first part of that.
Speaker Change: For how many megawatts, we're looking at for HBC AI, it's more about weather, which sites. We're looking at and once the site is allocated to HBC AI, it's likely to be the entire site one of the first sites we're really.
Speaker Change: Looking at us.
Speaker Change: Our claim to an Ohio site.
Speaker Change: So you can.
Speaker Change: The size of that site. The initial phases 266 megawatts that total is.
Speaker Change: 260, <unk>, plus 304 570 megawatts.
Speaker Change: Those are still in discussion.
Speaker Change: So it's really site by site basis, rather than.
Speaker Change: Partitioning of the megawatts.
Speaker Change: And I think that your next question was about the next allocation of a tooth or <unk> III correct.
Speaker Change: Correct. When do you I mean is it a spring summer I know you don't know exact timing, but I don't know how youre thinking about it at a high level.
Speaker Change: So.
Speaker Change: We have said that we could have 40 <unk> by the end of this year and that we're.
Speaker Change: Optimistic that that might be.
Speaker Change: Increased so we expect that there may be more allocation that hits.
Speaker Change: Even this year in order to increase that so.
Speaker Change: But as we said earlier.
Speaker Change: Really don't want to pre announce anything until we have it.
Speaker Change: Currently in hand.
Mike Grondahl: And Mike just to clarify that 40 acre has is includes the 35 and the <unk>.
Speaker Change: Three five or four.
Speaker Change: The ones that we already have allocated that allocation is already.
Speaker Change: Given to us and others are in production right now.
Got it okay. Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question coming from the line of Greg Lewis with <unk>. Your line is now open.
Speaker Change: Hey, Thank you and good morning, and good evening everybody.
Speaker Change: Thanks for taking my question.
Speaker Change: I just was hoping to talk a little bit more about the decision to go vertically integrated with the acquisition in Alberta.
Speaker Change: I guess as you think about building out your.
Speaker Change: Sure.
Speaker Change: Your bitcoin mining footprint, and maybe Youre HBC footprint should we kind of look at this as kind of a one off or is this something where.
Speaker Change: This was the first one that kind of.
Speaker Change: Net net all met all of our wants and needs and.
Speaker Change: But don't be surprised if we're back in the market acquiring more infrastructure to do this longer term.
Speaker Change: Yes.
Speaker Change: When we look at it.
Speaker Change: Hey, Dan.
Speaker Change: Is that.
Speaker Change: This site is not only about the 100 megawatt.
Speaker Change: Quite a show right now.
Speaker Change: We can build.
Speaker Change: The license.
Speaker Change: Almost everything Redwood, we just need to sell.
Speaker Change: For the money and time and team.
The types of construction yet but.
Speaker Change: We also are very passionate about the potential felicia to bid.
Speaker Change: Gigawatt level.
<unk>.
Speaker Change: Data center or Miami facility.
Speaker Change: And so our stress on that side of it because that side.
Speaker Change: Lots of.
Speaker Change: Gas production is that right now.
Speaker Change: Hello, Rabih pipe to sell to outside of work.
Speaker Change: Potentially.
Speaker Change: Potentially we can expand there that's added two really large.
Speaker Change: Operations our strategy.
Speaker Change: Will like.
Speaker Change: A very.
Speaker Change: Large.
Speaker Change: Okay, Google him any operational or can you guys cite to gain.
Speaker Change: The economic upscale.
Speaker Change: So.
Speaker Change: I think we will be quite careful to expand into that.
Speaker Change: I think we will always be interested.
Speaker Change: You're looking for.
Speaker Change: Sites to develop.
Speaker Change: Alright.
Speaker Change: Okay, Great Super helpful. Thanks, Oh go ahead.
Greg: Greg I would just add to that too, but what's unique about this I'd also is that not only do we have the ability to produce behind the meter for ourselves, but it also comes with the interconnection to the grid, which is increasingly more difficult to define so that gives us the ability to sell power back to the grid helped balance the Alberta grid and potentially reduce our power costs, even further there so.
Speaker Change: We think it's a very unique asset.
Speaker Change: Uh huh.
Greg: Yes.
Speaker Change: Chime in there that Alberta is a location that has really a surplus of engineering and construction talent related to the to the energy industry and so it's a.
Speaker Change: Easy place to build these kinds of assets because there's a lot of engineering and construction talent available locally.
Speaker Change: Okay, Great and then just one quick one for me.
Speaker Change: So you've mentioned all the customers that we're going to be getting the seal miners is there plans or are there thoughts around selling Briggs two companies, which then you will then host or is it really just going to be.
Speaker Change: Third party other companies that are going to go to then take those rigs and mine them elsewhere.
Yes, we have no objection to that.
Speaker Change: But those are two separate businesses.
Speaker Change: There is some advantage in this vertical integration that we can and.
In many cases sell mining rigs and possibly host them as well.
Speaker Change: I don't think its going to be a major thrust that we're going to try to get a lot of that business, but I think that we're open to it.
Speaker Change: Okay, Great Super helpful. Thank you very much.
Speaker Change: Sure.
Speaker Change: Thank you. Our next question coming from the line of Brian <unk> with Needham <unk> Company. Your line is now open.
Speaker Change: Great. Thanks, guys.
Speaker Change: Purchase orders for new Asics could you remind us just how much folks are paying for the deposits maybe want to commence so far and then on HBC would you guys be open to partnering with another peer in the space to develop the Ohio great.
Speaker Change: Thank you.
Speaker Change: Yes, so we collected pointed out 20% deposit from from all everybody. That's ordered so that's already been collected and will.
Speaker Change: The balance or shipment.
Speaker Change: And on the ECC side, I mean look we're always open to any strategic opportunity that makes sense that would add value to our shareholders. So.
Speaker Change: I don't think we've closed out any any potential partnerships.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: And as a reminder, if you have a question. Please press star one on your Touchtone phone.
Our next question coming from the line of Rocky Wang with <unk> asset management. Your line is now open.
Rocky Wang: Okay. Thank you good morning, and good evening.
Speaker Change: First question.
Speaker Change: Can you tell us how long its OLED fab.
Speaker Change: And then cycle for that.
Speaker Change: TSMC I mean, how many months.
Speaker Change: You are.
Speaker Change: 200, <unk> kind of on payment correspond to the TSMC inventory.
Speaker Change: Can you repeat that one more time.
Speaker Change: Kind of Brooklyn.
Speaker Change: I mean, how long life.
Speaker Change: Our premium site.
Speaker Change: And then payment cycle to the challenge.
Speaker Change: Sure.
Speaker Change: It's four months.
Speaker Change: Yes.
Speaker Change: So 200 million advance payment is.
Speaker Change: As for four months.
Speaker Change: Thanks for implant.
Speaker Change: Yes, Tim.
Speaker Change: <unk>.
Speaker Change: Okay.
Speaker Change: Have the payment the lungs that format.
Speaker Change: So okay. Thank you. So my second question is.
Speaker Change: So I see you'll have 1 billion ATM plan.
Speaker Change: Dr Baum Carlin.
Speaker Change: Sure.
Speaker Change: Stock price.
Speaker Change: Right.
Speaker Change: If you're allowed to get all of the financing from the ATM plan.
Speaker Change: Each will dilute the stock price great today so.
Speaker Change: So well go value our ability to obtain cash.
Speaker Change: Uh huh.
Speaker Change: Opex you are processing acquiring the wafer capacity from TSMC.
Speaker Change: And what are the main factors.
Speaker Change: I'd say that by TSMC why you obtain.
Speaker Change: Wafer capacity from Janssen.
Yeah.
Speaker Change: So.
Speaker Change: I guess with respect to the ATM is your question are we planning to use the ATM to finance this or.
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: I mean.
Speaker Change: Our recently.
Speaker Change: The.
Speaker Change: Art.
Speaker Change: Your stock price that affects you are.
Speaker Change: On.
Speaker Change: Obtain the money fund market and will that be.
Speaker Change: Okay.
Speaker Change: Although relative to our prior data.
Speaker Change: Passkey from TSMC.
Matt: If you don't have that Matt My cash <unk> got the <unk>.
Speaker Change: <unk> <unk> from JMP.
Speaker Change: The way, we finance the wafer.
Speaker Change: It's not owning.
Speaker Change: Huawei, because selling shares at a market.
Speaker Change: There are multiple ways to finance this refinancing and comfortable that we can borrow money.
Speaker Change: <unk> already got a $17 million.
Speaker Change: Quality of life from Singapore Bank.
It can also sell on <unk>.
Speaker Change: Okay, Although we already got 30 <unk> from the market.
Speaker Change: We can also deploy those <unk> in our mind decline to sell it on the market and then we can go to the cash flows.
Speaker Change: To finance the future.
Speaker Change: The ordering and fun.
Speaker Change: Finance App.
Speaker Change: So we are not.
Speaker Change: Oney.
Speaker Change: We have more than one way to finance.
Wafer ordering.
Speaker Change: So what I think.
Speaker Change: Thank you essentially is because if you look at it.
Speaker Change: Mine activity with our advanced design and.
Speaker Change: So pretty effective.
Speaker Change: Mining rate of production.
Speaker Change: A very high return on assets business.
Speaker Change: I think of course, there can be challenges for example, so that they can.
Speaker Change: Crashes and our stock price crashes.
Speaker Change: But.
Speaker Change: If you look at our cash balance.
Speaker Change: And at the end of the year.
Speaker Change: What are the final so lots of money.
Speaker Change: <unk>.
Speaker Change: I know, we've already built up inventories.
Speaker Change: And no we already have a lot of money capacity already so.
Speaker Change: It will be okay.
Speaker Change: <unk> two.
Venture into the future and to see.
Speaker Change: How that discussion goes.
Speaker Change: We will need to go.
Speaker Change: Finance.
Speaker Change: Miami throw motorways.
Speaker Change: But by the way not to solely rely on the ATM.
Speaker Change: Okay. Thank you that's all my question.
Speaker Change: Thank you.
Speaker Change: And there are no further questions at this time. This concludes today's conference call. Thank you all for participation.
Speaker Change: And you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
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Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: So.
Speaker Change: Hum.
Speaker Change: [music].
Speaker Change: Okay.