Q1 2025 TeraWulf Inc Earnings Call
Speaker Change: Greetings and welcome to the terrible of 2025 first quarter earnings conference call. At this time, all participants aren't our listen only mode.
Speaker Change: A brief question and answer session will follow the formal presentation.
Speaker Change: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad As a reminder, this conference is being recorded. It is now my pleasure to introduce your host John Larkin, Senior Vice President Director of Investor Relations. Thank you, sir, you may begin. Thank you very much.
Speaker Change: Thank you operator. Good morning and welcome to Terrible's 2025 First Quarter Erning School. Joining me today are Chairman and CEO Paul Prager and CFO Patrick Fleury. Before we get started, please note that our remarks today may include forward-looking statements.
Speaker Change: These statements are subject to risk and uncertainties and actual results may differ materially.
Speaker Change: During this call, we may use words like, anticipate, could enable, estimate, and tend to expect, believe, potential, will, should, project, and similar expressions which indicate forward-looking statements
Speaker Change: For a more comprehensive discussion of these and other risks, please refer to our filings with the SEC available on SEC.gov and in the Investor section of our website at terawolf.com.
Speaker Change: We will also reference certain non-GAAP measures today. Please refer to our 10K and 10Q filings and our website for a full reconciliation of these non-GAAP measures to the most controlled both GAAP measures .
Speaker Change: We will start this morning's call with prepared remarks from Paul Patrick, followed by a Q&A session. I'll now turn the call over to our CEO , Paul Prager.
Speaker Change: Thank you, John . Good morning, everyone. We appreciate joining us to review our first quarter of 2020-25 results.
Speaker Change: It was another active quarter for Terrible, as we continued to build on the strong momentum from 2024.
Speaker Change: The Cross Boat, Eric Bitcoin Mining, and High Performance Compute, or HPC Businesses. [inaudible]
We remain committed to executing our strategy.
Maximizing the value of our megawatts through scalable, sustainable infrastructure.
Speaker Change: Before turning to the business highlights, I want to take a moment to thank you, our shareholders.
Speaker Change: especially those of you who have supported us since the very beginning. [inaudible]
We are positioning Tarot Wolf to lead.
at the intersection of energy and compute.
It's a long-term effort.
Speaker Change: But one that we believe will create substantial value over time [inaudible]
Speaker Change: Starting with Wolf Mining, our sustainable Bitcoin mining platform at our Lake Mariner Facility in upstate New York.
Speaker Change: During the quarter, we successfully energized Minor Building 5, bringing total operational capacity to 245 MW.
Speaker Change: We exited the quarter with a self-binding hash rate of 12.2 ex a hash and fleet efficiency of 18 joules per derailleur.
Thank you.
Speaker Change: As we mentioned on our February call, extreme weathering January and February temporarily
Speaker Change: However, by March and well into April , pricing normalized and our mining operations returned to positive EBITAS in the month of April .
Speaker Change: I also want to confirm that we received and installed all of our S21 Pro Miners before any potential tariff implications, ensuring uninterrupted deployment.
Turning to Wolf's computer, our high-power compute hosting platform.
Speaker Change: Our mission here is to scale our purpose-built liquid-cooled infrastructure to meet the growing demand for AI and compute intensive workloads.
Debeard remains strong. [inaudible]
Speaker Change: especially from enterprises seeking secure high density infrastructure over the next 12 to 18 months.
Speaker Change: We are focused on working with prospective partners that have capital to deploy.
Secured GPU Allocation. [inaudible]
and Credit Profiles that support Project Level Financing.
Speaker Change: Today, we are actively executing on three dedicated buildings for HPC Anchor Tenant, Corps 42.
DeWolf Den, CB1 and CB2.
These facilities are our top construction and operational priority.
Speaker Change: following five months of close collaboration with our partner and their integrator and many consultants.
Speaker Change: The Wolf Den is operational and will begin generating revenues in Q2, and we expect CV1 to go live in Q3 and CV2 in Q4.
Executing on these initial facilities. [inaudible]
Speaker Change: will drive further demand for our site, and further interest in partnering with the Terrible
Albert Partnership with Core 42 is progressing exceptionally well. [inaudible]
Speaker Change: We collaborate daily to align on technical specifications and deployment timelines.
Speaker Change: To give a sense of the scale and sophistication involved, Dell, Core 42's integrator, expects to have over 180 personnel on site during the GPU tuning phase.
Speaker Change: We are optimizing design elements every day to ensure our infrastructure meets both current and future demands.
Speaker Change: These refinements may accelerate or delay timing and could affect overall infrastructure costs.
Speaker Change: Our goal is to design infrastructure that will support future generations of TPUs.
Speaker Change: Jones, so we are committed to getting it right the first time.
Speaker Change: A successful launch will not only position us for further potential expansion with Corps 42 but also establish Terrels as a leader in next-generation data center development.
Success here will also accelerate a broader HPC hosting strategy.
Speaker Change: Additional prospective tenants are closely watching our progress, and we are actively engaged in discussions to secure new commitments as we build out our capacity.
Let me touch on a few additional updates.
First, Capacity [inaudible]
Speaker Change: and April . We received approval from NISO for an additional 250 megawatts of capacity at Lake
Bringing the current total to 500 megawatts.
Speaker Change: We intend to request an additional 250 megawatts that will bring our total power at Lake Mariner to 750 megawatts.
Thank you very much.
Speaker Change: We appreciate the support and collaboration of NISO as we scale this site.
Second, Tara's
We're monitoring the evolving tariff landscape. Okay.
Speaker Change: Based on current information, we estimate a 5-10% impact to build closons.
Speaker Change: We remain committed to underwriting projects to midteens, unlevered returns, and will adapt as needed to protect project economics.
Speaker Change: III, Project Financing. We remain on track for mid-year execution of the Project Financing of our 72-and-aft Beguot Corps 42 buildout.
Speaker Change: We are scheduled to officially launch the process next week with our advisors at J.P. Morgan and Morgan Stanley , and early feedback from potential lenders has been positive.
Finally, our growth pipeline [inaudible]
Speaker Change: Beyond our 750 megawatts road map at Lake Mariner, we continue to pursue expansion opportunities.
Speaker Change: At the top of the list is the Kayuga site, a sister facility to Lake Mariner located on Lake Kayuga in upstate New York.
Speaker Change: It shares the same strategic advantages in land power and fiber access.
Speaker Change: That process is progressing with our board and we'll share more when we have firm updates.
Speaker Change: We're also evaluating additional sites with strong time to power potential and opportunities for on-site generation. This is an area where our energy infrastructure expertise truly differentiates us.
Speaker Change: Lastly, I want to address the company's services agreement with Baal Electricity and Data, a private company owned by me that currently provides electricity and digital infrastructure services to Carewolf.
We believe the time is right to simplify the structure.
Speaker Change: We are currently pursuing a full integration of Baywolf and Terrorwolf to eliminate related party disclosures, streamline operations, and better line incentives across the organization.
Speaker Change: The process is driven by our board, and guided by rigorous governance protocols and independent oversight to ensure transparency and shareholder alignment.
Speaker Change: To summarize, our key near-term priorities are 1. Optimize our self-mining platform following the energization of M.B. 5.
Speaker Change: Two, deliver all three core 42 buildings on time and on budget.
Three, Lease Additional HPC Hosting Capacity at Link Mariner.
Speaker Change: and four close to project financing for the Corps 42 build out.
Speaker Change: With that, I will turn it over to our chief financial officer, Patrick Fleury.
Patrick Fleury: Thank you, Paul. The first quarter of 2025 presented challenging market conditions for our Bitcoin mining operations.
Patrick Fleury: for the temporary spike in power prices and increasing network difficulty. The impacts of which are reflected in our financial results through the corner.
Patrick Fleury: Well, our epithop is slightly negative for the quarter. It's important to emphasize we are carrying significant incremental costs related to our expansion into high power compute hosting without any current revenue contribution.
Patrick Fleury: As I'll discuss later in my remarks, this temporary burden will soon be addressed as our HPC hosting buildings come online in 2Q3Q and 4Q2025 as depicted on page 15 of our May Investor presentation.
Patrick Fleury: In the first quarter of 2025, we self-minded 372 Bitcoin and Lake Nanook.
Patrick Fleury: for approximately 4 Bitcoin per day, a 12% decrease over the 423 Bitcoin mines in 4Q24.
Patrick Fleury: Our gap revenues are flat, Code of Recorder, at 34.4 million, and 1,225, from 35 million, and 4,224.
Patrick Fleury: Our value per Bitcoin self-mind in 1225, a non-governed metric, average 92,600 per Bitcoin as compared to 82,739 in 4Q24.
Patrick Fleury: Our gap cost of revenue, exclusive of depreciation, for one Q25 was 24.5 million, a 25 percent increase over 19.6 million and four Q24.
Patrick Fleury: The coder-over-colder increase was due to a 37% increase in realized power prices.
Patrick Fleury: from 5.9 cents per kilowatt hour and 4224 to 8.1 cents per kilowatt hour in 1225. Offset by demand response proceeds of 1.3 million and 4224 versus 2.8 million in 1225.
Patrick Fleury: Our power cost or cost of energy, particularly mine, a non-gab metric was $66,084 in 1,225 compared to $46,328 in 4,224
As mentioned previously, the temporary spike in power prices.
Patrick Fleury: which began in December and persisted through mid-February 2025, was historic as it resulted in a 1.76 standard deviation spike in New York ISO Zone A West average energy prices from January and February versus the average for this period over the last 10 years.
Patrick Fleury: We expect the remainder of 2025 to be in line with historical power for IZM Lake Mariner.
Patrick Fleury: with guidance of 5 cents per kilowatt hour for 2Q through 4 Q2 5, which is in line with New Europe by Sozone forward power curves as of May 5th, 2025.
Patrick Fleury: Operating expenses entry 6% quarter over quarter from 2.7 million in 4Q24 to 2.9 million in 1Q25 following a 69% increase from 3Q24 to 4Q24.
Patrick Fleury: This trend higher is primarily the result of increased staffing levels of Lake Mariner necessary to support our mining expansion as well as our entry into each PC hosting activities.
Patrick Fleury: SVNA expenses increased quarter over quarter, from 32.3 million at 4224 to 50.1 million at 1225, primarily due to stock-based compensation in 1225.
Patrick Fleury: Adjusting for Stock-based Compensation, SCNA decreased quarter over quarter from 15.5 million to 11.5 million in 1Q25.
Patrick Fleury: Depeciation increased slightly corridor recorder from 14.99 to 4224 to 15.6 million and 1225.
Patrick Fleury: Lawson Fair values digital currency in 1225 was 0.9 million compared to a gain of 0.6 million in 4224
Patrick Fleury: Gap Inter-6 expense in 1-2-25 was 4 million compared to 3 million in 4-2-24 and we recognize interest income of 2.2 million in 1-2-25 compared to 2.6 million in 4-2-24.
Patrick Fleury: Cass Interest paid during 1-2-25 and 4-2-24 was negligible as the 2.75% interest on our 500 million convertible notes is accrued and table on May 1st and November 1st.
Thank you.
Patrick Fleury: Our gap net loss in 1-2-25 was 61.4 million compared to a net loss of 29.2 million in 4-2-24.
Patrick Fleury: Arnon Gaffa, Justin Ebert, Dr. 1,225, with negative 4.7 million, down from positive 2.5 million and 4.224.
Patrick Fleury: Turning our attention to the balance sheet. As of March 31st, we held 218 million in cash with total assets amounting to 841 million and total liabilities of 670 million.
Patrick Fleury: Through March 31st, 2025, we spend approximately 130 million of capital expenditures on Wolf and C.B. 1 and C.B. 2.
Patrick Fleury: As disclosed on page 17 of our May Investor presentation, we achieved a BCC segment cost of production of approximately 72,000.
Patrick Fleury: and 1-2-25, and our guidance for 2-3-4-2-25 is anticipated to be well below this at approximately nearly 47,500, primarily due to the aforementioned decrease in forecasted power prices.
Patrick Fleury: The Guarding Fixed Operating Expense Guidance for 2025, KJ Team details are anticipated FGNA, Operating Expense and Interest Expense Provisions.
Patrick Fleury: These cost-reflects significant increases in the number of employees at both Terrell and Lake Mariner as we grow our business and expand in the high power compute hosting.
Patrick Fleury: On page 12 of the May and Vaptive presentation, you'll find our updated total cost to build and then yield on cost analysis.
Patrick Fleury: Since signing the Core 42 leases in December , we've worked hand in glove with Core 42 and our respective partners, including Dell, Ramble, and T5 among others to refine our preliminary data sensor designs into a final, high quality product. [inaudible]
Patrick Fleury: The result of this tightly knit partnership and design process is an increase in total capital expenditures for approximately 65 million from 365 million to 430 million, along with a commensurate increase in initial rent.
Patrick Fleury: from approximately 1.5 million per megawatt to approximately 1.6 million per megawatt.
Patrick Fleury: The next result of these changes is a slightly lower net yield on costs, but a 14% increase in year
Patrick Fleury: The incremental spend takes our tax per critical megawatt from $6.1 million to $7.2 million.
Patrick Fleury: Well within our long-standing guidance range of 6 to 8 million, and well below industry peers
Patrick Fleury: This page highlights the unique value of the existing infrastructure and site-specific advantages of building and operating high-power compute loads at Lake Mariner.
Patrick Fleury: regarding their capital position to growth plans for their Maynard 2025s.
Cage 14 provides that capital sources and uses bridge. [inaudible]
Patrick Fleury: Our data center financing led by J. B. Morgan and Morgan Stanley will officially launch next week.
Patrick Fleury: We have a high degree of confidence in executing an approximately 300 million debt raise in the middle of 2025.
and an anticipation of a sizable unallocated 2025 task balance.
Patrick Fleury: The board is authorizing a new 200 million share repurchase program, or an incremental approximately 150 million to the remaining approximately 50 million on our pre-existing program.
Patrick Fleury: We also intended to file an updated ATM perspective supplement of 200 million, which is a housekeeping exercise as the current ATM, with approximately 87 million remaining, has last that year end.
Patrick Fleury: While some may find it unorthodox to have active buyback and ATM programs.
Patrick Fleury: Given Terrible's historical realized stock volatility of approximately 130 and current macroeconomic conditions, the management team and board find it prudent to have every tool in the tools you have available and at our disposal.
Patrick Fleury: Finally, as a management team, we are repeatedly at how we value a megawatt of long-term
Patrick Fleury: One simple analysis we regular reference internally is depicted on page 16.
Patrick Fleury: In summary, the core 42 visas for 16 megawatts of critical load are worth approximately $2
Patrick Fleury: and every incremental 50 megawatts of capacity contracted at similar economics is worth an additional bus 30 or so per fully deleted chair.
Patrick Fleury: We hope you find this slide useful and a simple reference tool to measure our success as we announce further high-power compute deals.
Patrick Fleury: With that, I'll turn it back to the operator and we look forward to answering your questions.
Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handsets before pressing the star keys.
One moment please while we pull for questions.
Our first question.
Speaker Change: Our first question comes from Nick Giles with B. Riley's Securities. Please proceed with your question.
Nick Giles: Hey thank you operator and good morning everyone. My first question, it's good to see the integration of tarot wolf and bail wolf and so how should we think about any potential cost savings for the parent and what does the timeline look like there. Thank you very much.
from a timeline perspective, Ed. [inaudible]
Speaker Change: This is a, you know, this is a very rigorous process because it's a related party transaction.
so the
Nick Giles: The Independent Directors of the Board have hired, you know, independent council, independent financial advisors.
have negotiated an arrangement with...
Nick Giles: The Ownership of Beowulf, and until those independent directors approve the transaction and the Audit Committee approves the transaction is required by our, you know, the operating companies, articles as well as by insurance.
Nick Giles: You know, I can't comment on that. That's a process they run independently. We think it's something that...
Nick Giles: We'll be very enabling two tarar wolves, shareholders, long-term to just have everybody in one place, and ultimately it will drive.
Real Value in terms of development and...
of additional sight as well as...
Nick Giles: Construction of High Power Compute on our existing site. So we're pretty excited about this opportunity and we think it's near term but again it's really up to the independent directors of the board of the company.
Speaker Change: Paul, it's very helpful. I appreciate those comments. My second question...
One thing that's always stood it. [inaudible]
Speaker Change: Out about your economics is really the lower capital intensity, and you mentioned the tariff impact of 5% to 10%. So my question is what are your expectations for build costs more broadly, particularly as you look to Cayuga or other potential sites? Could some of these other sites have? What are your expectations for build costs more broadly, particularly as you look to Cayuga or other potential sites?
the same capital intensity that Mariners afforded.
Speaker Change: Patrick, do you want to feel that he would like me to? [inaudible]
Speaker Change: I'll go ahead and I'll back clean up. I think we've guided the markets to $8 million to McWatt. You know, our range was...
Speaker Change: Basically 5-8, we tightened it up to 6-8. The answer is we're working very closely with Corps 42, and the integrated Dell, and we've had...
Speaker Change: Several design changes that have had some cost implications but you know that is A is a mechanism within our agreement to capture that and so nobody should be concerned there but B you know we think it enables us to get to a better standard design.
Speaker Change: for a 50 MW gross building, 42 net MW building, that we could just replicate over and over again for...
Speaker Change: Both the existing customer core 42 and other customers that come to our site, so...
Speaker Change: By the way, I look at that, learn knowledge if you will of the slightly higher price of the finalized design is pretty much optimal leading edge data center design that gives us a competitive advantage going forward.
Speaker Change: We're pretty much hit that range, 6-8 million, and it could be at the high end of that range, but I'm good with that.
Patrick Fleury: Yeah, Nick, if I may add a little bit to that. So, you know, as you can see at our new page, 13 in our deck.
I think this page really highlights.
Patrick Fleury: A, the uniqueness of Lake Mariner and the other power sites that we have and also our ability to take those sites, remediate them. I mean, I think this really encompasses...
Speaker Change: All of our strategic advantages. And I think what Paul just said of, you know, this close-knit partnership with Corps 42 and all the consultants we're working with, really put us in a competitive advantage via our peers because now we have...
what I would call a close to a perfected design.
Speaker Change: at a cost that is very attractive. So, yeah, I think it's, again, even if you take TeraWulf on top of that sort of 7.2 million critical build cost that we talked about a 5 to 10 percent, you're still within the range that we've been guiding to for a long time of 58.
and many more. Thank you. Thank you.
Speaker Change: Great, well, Patrick Puy, I really appreciate all the color and continue best of luck.
Speaker Change: Our next question comes from Darren Aftahi with Ross Capital Partners. Please proceed with your question.
Darren Assidy: Good morning Alex, taking my questions. Just two if I may, on page 10.
Darren Assidy: There's commentary I think around EBITDA margins of being incrementally higher on future capacity, so there's two questions around that. I guess the first one is, in terms of...
Darren Assidy: in an additional tenant, or an existing tenant expanding into future capacity. What sort of bogeys need to be seen in order for that to happen? Is it getting, you know...
Darren Assidy: Operation Buildings and Scale, and people can take the next step. And then I guess the question around incremental, but just to be able to, what kind of gives you confidence on that? Is it just at least rates, and you think that CapEx can say the same, so yields will be higher, just any kind of color will be helpful. Thanks.
Speaker Change: Hey Patrick, it's okay I'll answer the first part of the question you could get the second.
Some good time.
Yeah.
or Ungoing. They've been …
Speaker Change: that we've been having them since we signed up Core 42 or in advance of that even, and we're talking to both Core 42 and additional customers.
and so, you know, I think. [inaudible]
Speaker Change: What we've tried to share with people is that, you know, we sense, you know, by the way, our stock is priced in the market. Some people still don't sort of believe that
Speaker Change: and you know, that we're very much showing the story and we're really comfortable with that. You know, I think if you want to bet on anything, you want to bet on the execution and capabilities of DeraWulf. And so, I think that it is natural for customers who are trying to...
Speaker Change: whether it's neoclouds or hyperscalers or enterprise folks. I think it's natural for them to while they are organizing what their needs are.
Speaker Change: To want to be able to look at something, you know, it's the difference between, you know,
Thank you.
Speaker Change: It's being able to go in and touch it and see it and hear it and you have all those machines
Speaker Change: It's just a pretty fantastic thing when you get into one of our data halls. So, while I agree with you that, you know, we built Wolfden in order to be able to achieve that, and in fact we did, we landed...
Speaker Change: the preeminent customer in the space in Corps 42. I think what we energize CB-1, it will be even more profound.
Speaker Change: in terms of how people want to react to us and get to the place where they're finally willing to contract.
here.
Speaker Change: Will be even busier if that's possible in sort of a discreetly determining who the right customers are and signing them up to the appropriate contract. So I think that's where we are in terms of landing our next expansion. Patrick.
Patrick Fleury: Yeah, Darren, with regard to the margins, I think we've had this page in our deck, I think since last about a year ago, last May. And there was some confusion because we initially had...
Speaker Change: set margin 65 to 75 percent. And then I think I had spoken publicly, Paul, Nazar, others about.
Speaker Change: was actually, we thought about it as effectively cash available for debt service, so meaning
Speaker Change: and so what I've done here is just to reduce that confusion and put in like we this is an EBITDA margin. We expect it after lots of work with our partner, our operating partners. We're going to work with our partners.
Speaker Change: Other consultants are hiring plans actually executing on the ground that that EBIT dot margin will be at about 75% on the first 72 and a half megawatts.
Speaker Change: We do expect we'll have, you know, going forward maintenance of about 3% and then the call out on the right of page 10 to your point of higher incremental EBITDA margins.
This is the benefit of a big site.
Speaker Change: Matt, versus having multiple sites all over the country. I only have to hire, for example, one or two security guards. I don't have to hire ten because I don't have five different sites. So there's really significant and most of the cost.
Speaker Change: that go into that EBITDA margin for the high power compute business, our labor. It's just that simple. We got to have a bunch of people on the site. And so once you have that base
Speaker Change: Cross, which we already have, as I mentioned in my remarks, everything beyond that is incremental and comes in at a much higher margin. So, I'm not going to tell you what that margin is today, I'll tell you when we announce additional capacity, but expect it will be much greater than 75%.
That's helpful, appreciate all the details. Thanks.
E-E-E.
Speaker Change: Our next question comes from Mike Grondahl with Northland Securities. Please proceed with your question.
Mike Grondahl: Hey guys, thanks. And I wanted to ask, you know, you've spent a lot of time, many months with Corps 42. What has been two or three of the biggest learnings for Wolf, you know, through all those discussions?
For more information, visit www.fema.gov
Speaker Change: Nazar Khan, are you on and do you want to address that?
I don't know.
if the operators. [inaudible]
Allowing...
and Kent Irwin.
Speaker Change: Well, why don't I feel it, and if Nazar can get on, I'm happy to. Listen, it's been tremendous. The
Speaker Change: The team that Corps 42 has brought to bear would indicate that we're in the very, very early stages.
of these data centers. And...
of CHIPS.
Has Their Own
Has Their Own Particular Inherent
and the requirements in terms of the design of the rack.
Speaker Change: Cooling in the building. Some focus more cooling on the racks. Some...
That it would have it would have been a far more confrontational kind of a thing but here. It's been just a real collaboration very cooperative and you know.
Speaker Change: These design changes we had.
Speaker Change: They weren't changes as much as like we had it wrong. It was just an evolution of design. If you will we had a mechanism within our agreement in core 42 has been totally stand up about it so.
Speaker Change: I think I.
Speaker Change: Think the lesson learned is you know pick the right partner and you'll you'll get to the dance in the right place and you'll have a great time and so that's been the lesson for me.
Patrick Fleury: Patrick anything you want to add.
Patrick Fleury: I think now there's on muted neither.
Speaker Change: He's now there's certainly more.
Speaker Change: Better suited to answer this question than I am go ahead now.
Mike Grondahl: Good morning, Mike.
Speaker Change: So those are here.
Paul Prager: As Paul said I think you know when we signed the agreement with <unk> 42 in December.
Speaker Change: They've gone through.
Speaker Change: 40% or so of all of the design specs and since that time, we've had the chance to go through every single component of the design and the size of every single about the location of every single type deals.
Speaker Change: The location of every single kind of you know.
Speaker Change: Busway. So so now we've had a chance to go through a 100% of the design with them and through that we've come up with a whole host of things that we're working with them on kind of incorporating into future buildings as Paul So as Paul had mentioned earlier you know we.
Speaker Change: We're in the early stages of the evolution of this business and what we build and kind of see do you want it to be to likely will not be what we bill for CB, <unk> and CB <unk> and so that process of really working with our customer and partner called 42 and being able to go through every single component of the design and thinking through what.
Speaker Change: The tradeoffs are and you know for a lot of these decisions. There's no perfect answer it's always a tradeoff right youre, giving something to get something.
Speaker Change: And so having that discussion with them and being able to then take those learnings and reflect that on what we want to do next I think has been a.
Speaker Change: A very important part of the process and as we think about going forward those learnings are.
Speaker Change: Are going to be invaluable.
Speaker Change: Both just the way the business is evolving but also the way the underlying hardware equipment is evolving all of those tradeoffs and those decisions that we made so we're gonna have to revisit what as Ruben rolls out and as I was kind of future generations of those gpus rollout as well. So so thats for me is kind of been the biggest is the importance of having a partner.
Speaker Change: To work with and not just simply a customer can kind of sounds a piece of paper.
Speaker Change: Great Hey, thanks for the insight.
Brett <unk>: Our next question comes from Brett <unk> with Cantor Fitzgerald. Please proceed with your question.
Brett <unk>: Hi, guys. Thanks for taking my question Congrats on getting the additional 250 approved for like Mariner East.
Speaker Change: It seems like this year is definitely be focused on energizing. The three buildings for core 40 to two.
Speaker Change: 250 capacity in the chart show you know next year, you kind of really allocate additional capacity would you look to start breaking ground on sage to be three or four before signing and additional tenant and is that something that you would look to start doing this year or was that be a.
Speaker Change: 2026.
Speaker Change: Yeah.
Speaker Change: Paul you want me to take that one.
Speaker Change: Yes.
Speaker Change: Yes, Brett so I think that the short answer to that.
Speaker Change: Is yeah, we do do some spend you know mostly preparing so pad.
Speaker Change: But it's it's it's it's relatively minor and it's getting us whether it's site.
Speaker Change: Site prep or site electrical so it's getting us into a position so that.
Speaker Change: When the customer is ready to execute we can go right away. So I'd say, there's some site level expense that we kind of constantly our spending and if you look at our presentations.
Speaker Change: You can see that like we have like on page 14, we have a site electrical and infrastructure column. So we've.
Speaker Change: We've had that you know in every single one of our decks. So there are some site specific things that we constantly are doing for example, you gotta get electricity right high voltage electricity around the site to the various build building from the substation. So there.
To that and then like I said there.
Speaker Change: Preparing buildings and pouring pads and things in the the appropriate weather. So there's those types of things, but I think anything that's significant and major we would not extend without a signed agreement.
Patrick Fleury: Perfect. That's helpful and then Patrick maybe just a follow up on maybe capital allocation priorities.
Patrick Fleury: Re ups or increase the buyback.
Patrick Fleury: Obviously, there is a need for a lot of capex to be spent over the next few years, how do you weigh.
Patrick Fleury: Buying back shares versus spending that on infrastructure too.
Patrick Fleury: Find additional tenants.
Patrick Fleury: Is there a point, where one is more attractive to you or does that point or is that just kind of like an AD hoc ongoing discussion that you guys look at.
Paul Prager: Yeah look I E. You know I'll answer that and then Paul can chime in but it's a management board level decision that we constantly evaluate and as you know.
Paul Prager: The purpose of having the buyback and again I think as you'll see as you heard in my remarks. We also had about 87 7 million left on our ATM and and so as part of that process. We increased it from 87 to 200 million. So you know, we don't intend to use that but I want.
Paul Prager: Every tool in the tool shed just like I want a buyback because as you know and we've come to realize Brett like Bitcoin mining in particular is incredibly dynamic business right like profitability can change dramatically on every day and so we can go from making you know.
Very small amounts of free cash flow to very significant amounts of free cash flow very quickly. Other things can change also for example, you know project financing, we've been targeting 70% loan to cost many of our peers that are out there doing 80, 90% right. So that's a lot of money that would come back to us.
Paul Prager: If that changes so again, it's really just like my job in particular in advising the management team and the board is to make sure. We had every single tool available and given the volatility in our stock I want them all at my disposal policy disposal and the board's disposal.
Patrick Fleury: Awesome really appreciate of Patrick's. Thank you guys.
Paul Prager: Okay.
Speaker Change: Our next question comes from Brian Dobson with clear Street. Please proceed with your question.
Brian Dobson: Hey, good morning, so as you're as you're out in the market speaking with other potential clients. What are you hearing from.
Speaker Change: Enterprises, and Hyperscale or is and.
Speaker Change: What do you feel about the near term demand environment, but also the medium term.
Paul Prager: This is Paul Thank you for your question.
Paul Prager: From a near term demand.
Paul Prager: Perspective.
Paul Prager: I see.
Paul Prager: People are.
Speaker Change: Our very cool very keen to sort of get a power now so we've seen a lot of energized land deals in the market.
Speaker Change: And so you know I think that demand is real.
Speaker Change: I think from a data center perspective.
Speaker Change: The hyperscale or is are still out there they're refining.
Speaker Change: What they're looking for I think there was initially this sort of global.
Speaker Change: You know lets tie up everything we can now I think they're focused on okay. They have a better sense of their needs and better sense of what makes the site a great site.
Speaker Change: Lake Mariners certainly that so.
Speaker Change: We have a lot of incoming.
Speaker Change: All the time and we have in comings on.
Speaker Change: Development sites that that the that we're close to as well. So I think near term demand is real if you have proximate energy. If you can demonstrate that you have you know a few hundred mm megawatt.
Speaker Change: Near term, our with the ability to scale after that the demand is real and you know you have to understand these customers a lot of them don't understand energy. So when he you know most of the world is out there advertising.
Speaker Change: One gig in two gig sites, which sounds really really great. They need to Wade through a lot of that if you will crap.
Speaker Change: Appreciate that.
Speaker Change: You know, bringing you know the five nines of quality and in terms of electricity to a data hall.
It's tough on the grid operators and so you've got a you've got a really studied the site where where she is in the grid.
Speaker Change: How robust is the grid you gotta do a lot of work. So I think the Hyperscale orders are getting smarter every day and and.
Speaker Change: Starting to lean towards higher.
Speaker Change: Higher quality sites with higher quality.
Speaker Change: The owners that understand energy and infrastructure enterprise customers or you know the demand has been a constant and.
Speaker Change: Neil Clouds I think.
Speaker Change: They're running around trying to.
Speaker Change: Allocate their book.
Speaker Change: And then figure out what their needs are and how that scales. You know not only in terms of capacity, but in terms of calendar scheduling.
Speaker Change:
Speaker Change: From a midterm perspective, I am and we have said this all along.
Speaker Change: We're less sanguine on the likelihood of increased generation hitting the market at the scale that it needs to within the next few years you know it just takes a long time to develop.
Speaker Change: Power plant and and and so you know we think that you know.
Speaker Change: Enables higher values for us because we have what we have and where energy infrastructure folks that can develop things in a really efficient.
Speaker Change: From a cost and time perspective.
Speaker Change: So then I think any of our peers. So we see a lot of demand.
Speaker Change: So much.
Speaker Change: So much so that you know I think you know.
Speaker Change: We are starting to sort of try and categorize you know the customers that are coming in on the basis of.
You know we want to sell.
Speaker Change: Data Hall by data Hall, and we're seeing a lot of interest now as well for for people that want to come in and take half of the data Hall. So we're thinking those enterprise customers is starting to show up in the marketplace.
Speaker Change: We're pretty constructive and we just need to continue to execute.
Okay.
Speaker Change: Okay. Thanks, that's really helpful just shifting over to the mining business.
Speaker Change: We've seen elevated global hatch rates throughout the last quarter.
Speaker Change: Now what's your outlook there.
Speaker Change: How do you plan to come back that as we head into the next having over the next couple of years.
Speaker Change: So.
Speaker Change: You can't do a whole lot to combat the hatch rate, we have to live with it I think.
Speaker Change: We are happy that.
Speaker Change: The higher price of Bitcoin and hopefully wanted to go higher.
Speaker Change: You know benefits, those who have bitcoin and and guys like us who have really low cost and generating bitcoin you know we brought on.
Speaker Change: Most recent generation of miners.
Speaker Change: And we're back to really low costs.
Speaker Change: From an energy perspective, and we operate that as efficiently as anybody ever could.
So.
Speaker Change: You know, it's a tough business being in mining and we've we've we've guided the market to the belief that at this point in time, especially given what we see as the demand for our product in H P. C N a I.
Speaker Change: We want to really continue to focus on that.
We're certainly enjoying the benefit of having a mining operation now.
Speaker Change: But that in time prior to the next having we'll probably look to take those megawatts in.
Speaker Change: And deploy them in.
Speaker Change: And the highest value and we think it's likely to be H P. C.
Speaker Change: As an additional benefit to that as we've seen with Patrick has spoken about which is you know you predictable revenues over a long period of time and you could you could get good project financing terms on that so.
Speaker Change:
Speaker Change: We're excited about bitcoin go and hire them.
Speaker Change: We have a real bitcoin zelle at Nazareth Con you know on our management team and and we'll continue to mine.
Speaker Change: So long as we can make lots of money doing it.
Brian Dobson: Hey, Paul it's Brian.
Paul Prager: Just to address your question a little bit more specifically from the finance side I mean, we just came through a really tough quarter, where we had.
Paul Prager: For us a one in 10 year type event on power prices and even with that you know we've gone through our fleet upgrade we didn't bring.
Paul Prager: Minor building five on until the very end of March early April so really kind of fighting with a hand tied behind our back and we still had.
Paul Prager: Hmm.
Paul Prager: And if when you consider that the entire business right now is burdened with the cost structure of high power compute and we don't have any revenue yet. So so the results actually were not what we wanted but but pretty darn. Good. When you consider again, we were running with that whole cost structure, we had really high power.
Speaker Change: Prices and now as Paul mentioned in his remarks, we've really seen in April that's all subsided and price has kind of ticked up and where we're making money. So I think as we know.
Speaker Change: A quarter or a year and bitcoin mining can be a lifetime and I think our assets at the efficiency of our fleet is among the lowest of our peers. I think were about 18 joule for Taro has now so I think we are positioned well to reap the castle rewards of that business should pick one move higher.
Speaker Change: Yes.
Speaker Change: Thanks.
Speaker Change: Our next question comes from Steven Chalcolite with Jones trading. Please proceed with your question.
Speaker Change: Hi, Thanks for the question Paul.
Speaker Change: Thanks for your color on sort of the core 42 design discussions and I was hoping you could elaborate on if the current delay for additional capacity is primarily related to Corp, 42 cut.
Speaker Change: Customer visibility or are they waiting to see how the first 72 five megawatt build out goes and then I had a follow up.
Yeah.
Speaker Change: I don't like the word delay because I don't think that's that's a real word.
Speaker Change: The discussions with core 42 or you.
Speaker Change: You know going exactly as it's supposed to go because they are really focused as we are on delivering what we have contracted right and it's pretty intense and its collaborative effort, it's a constructive effort.
Speaker Change: And the end result is going to be.
Speaker Change: You know, we're hitting the ball out of the park and the reason for that is that when she'd be wanting to be too are energized and they're up and running.
Speaker Change: That enables core 40, twos ability to aggregate customers as well.
Speaker Change: Is it enables our ability to talk to other parties interested in the site because there's something they could see and touch and here and get excited about.
And you know Theres a lot of you know.
Speaker Change: Listen people have said they were building data hauls and they turned out to be you know.
Speaker Change: Big buildings that cost a lot of money that didn't achieve their intended purpose. That's not what we're doing we're building something that we cannot only replicate and continue to improve upon and evolve over time.
Speaker Change: But something that will truly fulfill the contractual requirements of our customer and their contractual requirements to their customers. So we're doing it right and as a result of that we're focused on that and I think having CB one in CB two energized enables us to get better terms better pre.
Speaker Change: Rising so I.
Speaker Change: I, just don't feel that I had a deadline by which I had to sort of land and other customer we had a.
Speaker Change: A option within an agreement for them to have more because they they wanted that option, but quite rightly.
Speaker Change: They never talked about it we never talked about it we've just talked about how do we grow together and so you know I remain very very constructive on your ability to sign up you know an additional 100 to 150 megawatts and put it in the ground you know each year.
Speaker Change: And that's that's what we're about right now.
Speaker Change: Okay. Thanks, Paul I appreciate that and then Patrick on Slide 15 of the presentation. The hosting timeline do you anticipate the 170 gross megawatt capacity plans for 'twenty six to be brought online gradually throughout the year all of that with a full 178 come online towards the end of the year.
Speaker Change: Thanks.
Speaker Change: Yeah, So there's no.
Speaker Change: There is no customer for that right now that we're announcing today. So that's what we have sort of you know the arrow in the quiver so to speak so as we've mentioned I mean, I think we're trying to perfect. The 50 megawatt design so that capacity is effectively <unk>.
Speaker Change: Three different buildings and I think as we move forward in time, Stephen you'll see from sort of signing a lease to bringing a building online I think a reasonable timeframe is 12.
Speaker Change: 12 months.
Speaker Change: So you know I think over the next.
Speaker Change: Six to seven months here before year end, obviously to bring that capacity online by fiscal year end 2026, which is what the chart. A bar chart says on page 15, we would have to announce contract for that capacity and start on it by yearend.
Speaker Change: Thanks, Patrick.
Speaker Change: Our next question comes from John Tomorrow with Needham <unk> Co. Please proceed with your question.
John Tomorrow: Hey, guys. Thanks for taking my question first one.
John Tomorrow: As you start to deliver for our core 42, do you think that gives us quite a bit more comfort to either enterprises are major hyperscale or is for some of that additional capacity is that kind of the white right way to be thinking about it and then I have a follow up question.
Yeah, I I've been saying that this entire call I mean.
John Tomorrow: Listen it's one thing to think about what you want to have for breakfast if youre my right I'm, a short fat Guy and I like breakfast. It's another thing when I walk walk into a bakery and I look at the center roles and I get really really worked out and I am a buyer. The answer is when we build and energize This data hall.
John Tomorrow: It's moved from the stage of talking about something in talking about design to actually delivering to a customer who is also delivering onwards to their customer base. It's a huge deal and it makes a tremendous difference in terms of our ability to sell our capacity at the terms and <unk>.
John Tomorrow: Rice that we require.
John Tomorrow: So I think again, Patrick you know likes to say that you know we're bummed about our stock price you know the management team here serious holders of the stock and we're bummed about it but we got to manage the company in the best interest of the shareholders and in order to do that we must recognize that we're a little bit of a show me story.
John Tomorrow: Because we're building the data center for the top customer in the business.
John Tomorrow: And this is new technology, new business for everybody you know Frac for four core 42 for Nvidia. This is all new these kinds of the rack density and so you know we recognize that until we energized CB one there'll be some doubters out there, but that's okay. We don't care about that.
John Tomorrow: We care about execution and once we deliver an energized data haul I think you know we're ready to roll. So I think it's an important element that we must energize CB, one and have a happy customer because that changes.
John Tomorrow: The entire profile of the market.
John Tomorrow: Yeah fair enough that makes sense and I would think about it.
John Tomorrow: Two there are only two customers right now in this space to two not customers companies that have made this transition out of mining into H P. C. A R.
John Tomorrow: Core to us right and so the market is is.
John Tomorrow: You know the market is tough and in the current economic environment and so people are instead of saying the glass is half full the standards have M D and that's okay to being skeptical, but once you deliver an energized CB one that all goes away. So I think that our shareholders will benefit by seeing greater value.
John Tomorrow: Just outright and then separately will all benefit because the customers will say Wow. That's great core 42 is so lucky I want that too or customers will go to core 42, and say Wow, that's great I want to be.
John Tomorrow: One of your customers can you get some additional capacity from Taro Wolf and and we'll be ready to go and that's what's happening.
Speaker Change: Got it. Thank you and then maybe one for Patrick.
Speaker Change: Was there kind of would there be a point, where you'd look to buyback the converts I think they've got pretty discounted at one point just wondering how you think about the capital management strategy long term.
Speaker Change: Yeah look I think we'll look at anything and everything on the table right. So I've gotten a bunch of calls from convert investors about that I think the it's certainly a consideration that being said right that the 2030 maturity the long way out and it's a low two two.
Speaker Change: And three quarter percent cash interest like very low cost of capital. So not certainly not the top of my priority list I think like Paul said right now again, I view, the buyback and the ATM as tools to put away in the toolshed, we have got to execute number one we're executing on C. B one CBT.
Speaker Change: Number two we are executing on a project financing, which we talked about today and then once that is done we will reevaluate because I think to Paul's point, you know there may be demand for that cash in growth or otherwise. If there are not then you know as long as we have ample liquidity then yes, we will look at the stock we will look at the converts.
Speaker Change: Ever makes the most sense. So anything is on the table, but I think you know.
Speaker Change: Stating the obvious like that is a very long term low cost of capital so not my number one priority.
Speaker Change: Got it understood. Thank you Bob.
Speaker Change: Our next question comes from Christopher <unk> with Rosenblatt Securities. Please proceed with your question.
Christopher: Hi, Thanks, and good morning.
Speaker Change: My first question is.
Speaker Change: Patrick you actually already alluded to this in one of your answers was just how rare the.
Speaker Change: Sort of power conditions were in the first quarter I think you said once in a decade was that mostly weather or are there other factors at play that caused such a.
Speaker Change: Unusual spike in power prices and are.
Speaker Change: Are there ways in the future to potentially hedge that risk from these blocks.
Speaker Change: Black Swan events.
Speaker Change: So that was weather.
Speaker Change: As you know we are located in the northeast.
Speaker Change: About 35 miles east of Buffalo.
We had a very cold December in the northeast and then like everyone else really sort of from the Plains, Texas East had a very cold January that kind of went into February. So it was strictly power related Chris I mentioned in my remarks. It was a 1.76 I think.
Speaker Change: Standard deviation event for both January and February over the last 10 years that is really significant.
Speaker Change: And with regards to your last question.
Mike Grondahl: And I think this kind of shows how long. This team has been together, which Paul always likes to talk about but you know in my prior life at Blackstone I own this power plant and Paul another and Stephanie where the management team that ran it and we all owned it together.
Mike Grondahl: And at once every 10 years, it would rain money and the rest of the time it was a difficult plan to own and so for that precise reason of having all of that that experience in the specific power market.
Mike Grondahl: 90, plus percent of the time the power prices are really really benign here because we're in a region, where there's about 5000 megawatts of generation and on average only around 2000 megawatts of demand now.
Mike Grondahl: Now all of that power tried to make its way down in New York City and so during times of.
Mike Grondahl: Significant demand in the winter when people write need heat and in a couple of weeks in the summer when people want air conditioning.
Mike Grondahl: Otherwise it is a really really benign power environment.
Mike Grondahl: The cost of hedging.
Mike Grondahl: Hang up cash or otherwise just isn't worth it because it only happens once every 10 years. So unfortunately that literally just happened to us, but I can tell you from personal experience, we are really comfortable with lake Mariner long term.
Mike Grondahl: No I don't think we will look to hedge that.
Mike Grondahl: That's fantastic color. Thanks, so much Patrick My second question would be on the project financing for that.
Speaker Change: The first leg of this HBC strategy do you think success of the project financing side will help with additional.
Speaker Change: Client prospect because I do think there is a bit of concerns sometimes when when larger cap hyperscale or in particular are dealing with smaller companies.
Speaker Change: Who potentially don't have the balance sheet or the side they're used to.
Speaker Change: Dealing with you know there's been a little bit of friction there picking.
Speaker Change: Picking up so you know how how important will probably say that's a b.
Speaker Change: To your future.
Speaker Change: H P C prospecting.
Speaker Change: Yeah, So I'm not.
Speaker Change: Maybe I could start Patrick I don't like the premise of the question because I'm not I'm not sure I agree that project financing is is really sensitive to the size of our company I mean, I think ultimately the project lenders are underwriting G 42, right the ultimate credit and so I don't I.
Speaker Change: Don't have it.
Speaker Change: I think that's consistent with the advice, we've gotten from J P. Morgan of Morgan Stanley. So so I don't have quite the concern about our ability to get.
Speaker Change:
Not only get the financing done, but more importantly get the absolute best terms that would be available in the market I think Patrick sticking a real conservative approach do our financing in terms of leverage.
Speaker Change: Our credit.
Speaker Change: You know as you really unique out there in terms of core 42, and and and and it's scaring towards your 42 and more importantly, you know its already you know I think there was a deal done in the market on the on the back of the credit core 42 at 90% leverage really good terms so.
Speaker Change: We're very very bullish about our ability to execute on the project financing and.
Speaker Change: And so.
Speaker Change: Is it important to US absolutely I mean, we made a conscious decision to move forward using our own equity.
Speaker Change: To build on behalf of that customer and it was the right thing to do because it put us in a time zone that the customer needed for for his and her customers. So it's important.
Speaker Change: And it will enable us to continue to grow at the pace that we want to grow given the real customer demand that we have.
Speaker Change: But we are also highly confident of our ability to execute on it at really good terms.
Speaker Change: I mean, Patrick I apologize Paul.
Paul Prager: I was actually I was I was not.
Paul Prager: It suggested that it would be difficult to get project financing I was more suggesting that.
Paul Prager: Our project financing would help.
Paul Prager: And your next deal.
Speaker Change: Yeah, I think but I think it's in the market right I mean, when you look at the announcements made by some of the folks whether its galaxy or.
Speaker Change: Core's they all guide towards their intent to do project financing I think in this case.
Speaker Change: We've got a guy in Patrick and his team that have only done at about 1 billion times and B, we're taking a very conservative approach to it.
Speaker Change: And we have you know we were slightly different in the sense that we spent all our arrow in equity to build out. This facility. So it's it's a less of a challenge for the project lenders to see.
Speaker Change: What their financing as opposed to somebody that's drawing money to build out the project you know from a greenfield site. So I think that market demand for project finance product is real very significant super quality lenders and it's important for us to get that done.
Speaker Change: Done.
Speaker Change: Because we want to continue to be able to take that cash out recycling and build the next data Hall and the next day at all in the next table. That's our business model. So again I appreciate that you're not.
Speaker Change: You can see it we'll be able to do it I think we'll be able to do it at really great terms it really good timing.
Patrick Fleury: And its near term as Patrick said, we're launching.
Speaker Change: Maybe Tuesday next week.
Speaker Change: And I can't will yell at me now for giving you a day as opposed to saying early next week, but but we're excited about it and we think it is critical to achieve so that we could recycle that cash will continue to go out and build.
Speaker Change: Yes, Chris I would just add to that.
Speaker Change: We are looking for a financial partner that can grow with us and so yes, I do think executing on that which has been part of our business plan from day, one as Paul said. He is a show me story, but I'm excited I mean look I was a credit investor for 20 years like this is where I shine.
Speaker Change: My wheelhouse, so yeah, I'm excited to get that going and then I've got a very high degree of confidence that we'll find the right partner and a partner that not only does this first.
Speaker Change: Call. It 300 million, but then grows with us as we do additional buildings.
Speaker Change: That's fantastic color guys. Thanks.
Speaker Change: Our next question comes from Martin Toner with ATB capital markets. Please proceed with your question.
Martin Toner: Hey, guys I didn't and thanks for taking my questions.
Martin Toner: Catch what's what's the launch Tuesday of next week.
Speaker Change: Our project financing.
Speaker Change: Basically once you proceed with all state.
Speaker Change: Perfect. Thank you.
Speaker Change: Only one for me is as you have gone back to our prospective customers with higher build cost.
Speaker Change: Have you learned about their price sensitivity.
Speaker Change: Well the margin I mean.
Speaker Change: And that's where do you want to take that.
Speaker Change: Yeah.
Speaker Change: Okay.
Is the.
Speaker Change: We've been very open with our customers on kind of what the build cost is right. We've been guiding the market, where we're at both cost business. Our customers are aware and as I've mentioned to you earlier.
Speaker Change: When we went through with core 42 every single design decision. We've made you know there's close kind of.
Speaker Change: There's a cost component that often comes with it as well so we've been very open with.
Speaker Change: All of the various customer discussions that we're having where we are kind of coming out when you look at what the customer is doing with it.
Speaker Change: Or how they use that compute capacity oftentimes drives kind of their ultimate sensitivity. So if you're a niche player.
Speaker Change: Player.
Speaker Change: The cost of moving.
Speaker Change: I have or $10, one way or another on your monthly co op.
Speaker Change: Lease rates are some impact, but when you look at their total cost of compute that they're delivering at two bucks three bucks a GPU hour. It's a fairly small component when you have an enterprise customer that you're having this discussion with and you kind of look at it they've got a big kind of finance team and Theyre looking at every single dollar and where it's going.
Speaker Change: And sometimes you know theyre more often sensitive to kind of post those changes and.
Speaker Change: And then you know and for others, it's just kind of how they're looking at it. So for US I think people are aware that you know to the extent that there are increases from tariffs that someone's going to have to pay for it they understand kind of there's a business that we run.
Speaker Change: I did the bulk of the market and our customers on where we want to end up in terms of the margins that we have so that's been a pretty I'd say constructive discussion with those folks and again, depending upon what the end use is you know sometimes you see different sensitivities horizon.
Speaker Change: That's great. Thank you for that that's all for me.
Speaker Change: Our next question comes from Bill <unk> with <unk>. Please proceed with your question.
Speaker Change: Good morning, gentlemen, thanks for taking my questions for my first one just given the increased attention towards landing additional capacity and diversifying your customer base. What would you say the top two to three milestones that should be monitored when evaluating your progress of securing new contracts as you build out continues through 2025.
Speaker Change: Again.
Speaker Change: I I don't know if there are ways to sort of guide the market to how our discussions are going because we've got customers where we've negotiated.
Our contract to the point of their satisfaction, but theres still try to figure out their capacity requirements. We've got customers, who are certain about their capacity requirements, but want to wait for the next generation chip, we've got customers, who we've negotiated.
Speaker Change: Their requirements are.
Speaker Change: From a capacity perspective, and the schedule, but there you know wanted to talk about terms and.
Speaker Change: And so I.
Speaker Change: I can't give you a magic bullet here on how we can inform you on our progress other than to say one we're having lots of conversations to you really intense three.
Speaker Change: You know we're on top of our general counsel to manage your legal costs, because we're negotiating on so many different fronts.
Speaker Change: And for I think the most important element would be when we energized CB, one I think that'll be a big day.
Speaker Change: The core of 42.
Speaker Change: Antero Wolf will celebrate we hope our shareholders celebrate it because it will reflect that we were able to deliver that we executed and it will be a great day for 42 crystal their phone will be ringing off the hook.
Speaker Change: With new customer demand and we would expect our phones will be ringing off the hook because people will want to take the conversations we're having and convert to a contract.
Speaker Change: That's the only real hard milestone I could give you.
Speaker Change: Yeah.
Paul Prager: I appreciate that Paul for giving the best color you can provide and then just secondly.
Paul Prager: With respect to the Bitcoin mining segment should we expect further expansion to that previous 13.1 extra hashed target I'm not sure. If you guys provided commentary that I Miss but is that still in play in the coming quarters or was there some sort of larger replacement fleet upgrade just curious if there's any power capacity that's it.
Paul Prager: Idle that you guys could.
Paul Prager: Capitalize on in Q2 or going forward. Thanks.
Paul Prager: Yes.
Paul Prager: Enough for now Bill I mean, I think from an infrastructure perspective, we've got about 250 megawatts of infrastructure available to us.
Paul Prager: If you look at the composition of our fleet, we are constantly looking at ways to optimize the mine fleet I think you know.
Paul Prager: 60.
Paul Prager: 60% or so of our capacity is below 20 joules per tier harsh in terms of efficiency. So.
Paul Prager: I think in the near term, we continue to always evaluate ways to optimize our mining fleet and we've kind of continuously done that over the past year and so in the near term nothing changes any changes to the assay it will likely come through that kind of activity.
Paul Prager: Thank you.
Speaker Change: Our next question comes from Joe Flynn with Compass point Research and trading. Please proceed with your question.
Joe Flynn: Hi, Thanks for the question and you guys kind of ultimately answer it but there's just a lot of time to find the side.
Speaker Change: It's as if like the corporate guarantee is there'll be a lot of interest in that in pretty tight spreads, but maybe just talk about like what the appetite is and where you ultimately know what do you hope to partner with them.
Joe Flynn: So any color would be great.
Joe Flynn: Yeah look I think there's you know there's a lot of chatter out there in the marketplace. You can see where deals are pricing and generally hyperscale or risk is still for plus 200.
Joe Flynn: Core we've risk is kind of so for plus 400.
Joe Flynn: 500, but tightening.
Joe Flynn: So I would expect you know our customer in my opinion, I think is the better credit quality than core, we've but as not as well known but so I would expect Joe we're kind of targeting somewhere probably around that same pricing of so for our kind of 400 to 500 night.
Joe Flynn: Hope to do better than that but I think for our first financing that.
Joe Flynn: That's kind of I think a good target range.
Speaker Change: There are no further questions at this time I would now like to turn the floor back over to Paul Parker for closing comments.
Paul Parker: I want to thank all of you again for joining us.
Speaker Change: <unk> is very well positioned at the convergence of energy and compute.
Speaker Change: Our scalable sustainable infrastructure attractive cost profile and strong project pipeline provide for a foundation for long term value creation.
Speaker Change: As we move through 2025, our focus remains on execution.
Speaker Change: The deployment of our initial H P. C buildings will mark a major inflection point shifting us from promise to proof and unlocking new revenue streams for the company.
Speaker Change: As a significant shareholder myself I want to reaffirm that our actions are aligned with long term shareholder interests. We appreciate your continued support and confidence in Terribles. Thank you.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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