Brett Knoblauch

Brett Knoblauch asked about the current institutional momentum in Solana, specifically inquiring about the growth of the pipeline, expectations for validator revenue beyond the reported $5 million, how new deals compare to existing institutional clients, and whether the demand has increased recently or grown steadily.

Answer

Interim CEO Michael Hubbard confirmed a steady increase in institutional demand over the last six to nine months, citing the Morgan Stanley Solana ETF announcement as positive news. He explained that the pipeline includes various products targeting ETFs and mid-sized financial companies interested in Solana beyond vanilla staking, positioning SOL Strategies as an intermediary and gateway to the Solana ecosystem and DeFi space. He noted that conversations are evolving beyond simple staking relationships.

Brett Knoblauch asked about the increasing institutional momentum for Solana, the growth of Sol Strategies' pipeline, expectations for validator revenue beyond the reported $5 million, and how new deals compare to existing institutional client partnerships, as well as the trend of demand increase.

Answer

Michael Hubbard, Interim CEO of SOL Strategies, explained that institutional demand has seen a steady increase over the last six to nine months, citing the Morgan Stanley Solana ETF announcement as an example. He noted that the pipeline is consistently growing with inquiries evolving beyond simple staking to broader intermediary services for the entire Solana ecosystem and DeFi space. He also mentioned that specific partnership announcements would be made as they evolve.

Brett Knoblauch asked about the cost of CleanSpark's new Texas site, the difficulty and expense of acquiring turnkey land and power, and the overall availability of such sites in the market.

Answer

Matt Schultz, Chairman and CEO of CleanSpark, declined to disclose the exact cost of the Texas site to maintain market advantage but stated it was a combination of equity and cash at the low end of market range. He highlighted CleanSpark's competitive edge in securing land and power due to its Bitcoin mining flexibility, which allows for quick monetization of megawatts while AI infrastructure is developed. Schultz also emphasized the speed to market facilitated by modular deployments and the Submer partnership.

Brett Knoblauch asked about the acquisition cost of CleanSpark's new Texas site and the difficulty, expense, and availability of turnkey-ready land for expansion, especially given that peers and hyperscalers are also seeking such opportunities.

Answer

Chairman and CEO Matt Schultz declined to disclose the exact acquisition cost for the Texas site to avoid influencing the ERCOT market, but stated it was a combination of equity and cash, aligning with the low end of market ranges. He emphasized CleanSpark's advantage in securing land and power due to its continued Bitcoin mining operations, which allow it to monetize megawatts quickly for utilities. Mr. Schultz highlighted that CleanSpark's speed to market is enhanced by its modular deployment approach (e.g., with Submer) and its ability to use Bitcoin to acquire power immediately.

Brett Knoblauch of Cantor Fitzgerald inquired about the relationship between increasing scale and the ability to sell less Bitcoin to cover cash costs. He also asked for management's expectations on network hash rate growth to better model the company's expansion.

Answer

CFO Gary Vecchiarelli confirmed that operating leverage is a key competitive advantage, as each new exahash drops primarily to the bottom line, reducing the amount of Bitcoin needed to be sold for OpEx. President and CEO Zachary Bradford noted a general slowing in network hash rate growth as some peers pivot away from mining, expressing confidence in CleanSpark's ability to outpace the global rate through organic growth and potential M&A.

Brett Knoblauch asked about CleanSpark's power capacity pipeline for expansion beyond 2025 and how the company manages operating expenses while delivering strong growth.

Answer

Executive Zachary Bradford identified Tennessee and Wyoming as the primary areas for future growth due to their power potential and favorable utility environments. Executive Gary Vecchiarelli stated that OpEx is expected to remain relatively flat due to a strict budgeting process, with investments focused on operations. Bradford added that early investments in scalable technologies like remote management help control headcount during expansion.

Brett Knoblauch of Cantor Fitzgerald asked about the new Coinbase credit facility, questioning its strategic purpose and interest rate. He also requested details on the expansion timeline for Wyoming and the unit economics, specifically the ROI and payback assumptions, that support the company's new three-year fleet upgrade strategy.

Answer

CFO Gary Vecchiarelli described the Coinbase facility as another 'tool in the toolbox' for opportunistic growth with a cost of capital below 10%. CEO Zachary Bradford added that the Wyoming expansion to several hundred megawatts is a 2025-2026 goal. Regarding fleet upgrades, Bradford clarified the three-year cycle is a flexible guideline, not a fixed rule, with upgrades planned opportunistically during bear markets to maximize ROI by leveraging the company's scale.

Brett Knoblauch asked about the expected impact of the Clarity Act (or similar market structure bill) on Bullish's business, particularly liquidity services, and sought insights into the faster-than-expected U.S. launch and adoption post-BIT License.

Answer

CEO Tom Farley expressed optimism for bipartisan support for a market structure bill, highlighting its potential benefits for infrastructure providers like Bullish through preemption and legal certainty. He explained the rapid U.S. adoption was due to Bullish's strategic decision to secure comprehensive global regulatory approvals and operate a single global order book, allowing immediate liquidity for newly onboarded U.S. customers.

Brett Knoblauch with Cantor Fitzgerald asked about the anticipated impact of the Clarity Act (market structure bill) on Bullish's business, especially liquidity services, and inquired about the reasons behind the faster-than-expected US launch and adoption, along with future expectations for the US business.

Answer

CEO Tom Farley expressed optimism for the Clarity Act's passage, citing bipartisan support, and highlighted its potential benefits for the crypto industry through regulatory preemption and legal certainty, which would attract institutions and tokenization participants. He attributed the rapid US launch and adoption to Bullish's strategic decision to secure the toughest global regulatory approvals for a single global order book, allowing immediate access to existing liquidity for newly onboarded US customers.

Brett Knoblauch asked about the progression of asset-linked fees from CoinDesk Indices, specifically the CoinDesk 5 and CoinDesk 20, and potential catalysts like a CoinDesk 5 ETF to accelerate flows, as well as the broader indices business.

Answer

CEO Tom Farley expressed excitement about the $41 billion in AUM benchmarked to their indices, noting that while fees are small basis points, the business is growing. He highlighted the trend of institutional investors moving beyond Bitcoin to broader multi-token products like CoinDesk 5 and 20. Farley announced the SEC approval of a Grayscale product on the CoinDesk 5 index, which is expected to become the largest multi-token ETF globally, and mentioned signed but unannounced agreements with major global futures and U.S. equities exchanges, as well as a U.S. ETF arrangement.

Brett Knoblauch inquired about the progression of asset-linked fees for CoinDesk 5 and CoinDesk 20 indices, potential catalysts like a CoinDesk 5 ETF, and the broader outlook for the indices business, noting the quarterly increase in AUM.

Answer

Tom Farley, CEO and Chairman, confirmed excitement for the indices business, highlighting $41 billion in AUM generating fees. He explained the market trend of institutional investors moving from single-token to multi-token exposure, positioning CoinDesk 5 and 20 as key products. Farley announced the SEC approval of a Grayscale product on the CoinDesk 5 index, which is expected to become the largest multi-token ETF globally, and mentioned signed but unannounced agreements with major global futures and U.S. equities exchanges, as well as a U.S. ETF arrangement.

Brett Knoblauch asked about the future progression of asset-linked fees from Bullish's CoinDesk Indices, inquiring about catalysts such as a potential CoinDesk 5 ETF, and the overall outlook for the indices business.

Answer

Tom Farley, CEO and Chairman, confirmed that Bullish earns fees on the $41 billion AUM benchmarked to its indices. He explained that growth will be driven by institutional comfort with investing in a broader range of crypto products beyond Bitcoin, leveraging CoinDesk 5 and CoinDesk 20. Farley also announced that the Grayscale private trust vehicle on the CoinDesk 5 Index, approaching $1 billion AUM, was just approved by the SEC to convert to an ETF, which will likely be the largest multi-token ETF globally. He also mentioned signed but unannounced agreements with major global futures and U.S. equities exchanges for CoinDesk 5 and 20 products.

Brett Knoblauch, a Managing Director at Cantor Fitzgerald, asked for a breakdown of the $5.8 billion Dell order between GPUs and auxiliary equipment, and whether auxiliary equipment would need retrofitting for future GPU generations. He also inquired about the capital efficiency of the 40,000 GPU deployment in Canada, comparing it to previous cost-per-megawatt figures.

Answer

Co-Founder and Co-CEO Daniel Roberts clarified that GPUs form the majority of the Dell order, with significant allocation to backend networking. He noted that while data centers are future-proofed for rack densities, the reusability of specific auxiliary equipment for future GPU generations is uncertain. Regarding the Canadian deployment, Daniel Roberts explained the highly capital-efficient process of converting existing data centers, involving minimal CapEx for rack and PDU replacement, with redundancy additions costing around $2 million per megawatt.

Brett Knoblauch asked for a breakdown of the $5.8 billion Dell order between GPUs and auxiliary equipment, and if auxiliary equipment would need retrofitting for future GPU generations. He also sought details on the capital-efficient build for the new 40,000 GPU order in Canada, comparing its cost per megawatt to previous builds.

Answer

Daniel Roberts (Co-Founder and Co-CEO, IREN) stated that GPUs constitute the vast majority of the Dell order, with substantial amounts for top-tier InfiniBand networking. He noted that while data centers are future-proofed, reusability of specific cluster equipment for future GPUs is uncertain. For the Canadian expansion, Daniel Roberts explained the conversion involves minimal CapEx for removing ASICs and replacing racks/PDUs, taking weeks, with redundancy costing around $2 million per megawatt if needed, making it highly capital-efficient.

Brett Knoblauch questioned whether IREN's strategy is to secure customers before purchasing GPUs or to buy them speculatively. He also requested a metric for the power consumption per B200 GPU, similar to the one provided for the GB300.

Answer

Co-CEO Daniel Roberts explained that due to immediate customer demand for compute, the company orders hardware ahead of securing contracts, a strategy validated by the rapid uptake of newly commissioned capacity. Chief Commercial Officer Kent Draper addressed the power question by providing examples: the 50MW Prince George site can accommodate over 20,000 air-cooled B200s, while the 50MW Horizon 1 site fits about 19,000 liquid-cooled GB300s, illustrating the increasing power density of newer GPUs.

Brett Knoblauch asked if the recent 'DeepSeek' market event influenced the timing of the Horizon 1 announcement and whether Horizon 1 is intended to function as a 'model home' to demonstrate capabilities to potential large-scale tenants for the Sweetwater site.

Answer

Chief Commercial Officer Kent Draper confirmed that the uptick in demand for liquid-cooled capacity post-DeepSeek factored into the decision, highlighting IREN's competitive advantage in delivering this capacity in 2025. He agreed that Horizon 1 serves as a tangible demonstration of their advanced infrastructure capabilities, which is beneficial for conversations regarding larger projects like Sweetwater.

Brett Knoblauch asked about the impact of the recent FERC announcement on demand, the future plans and CapEx view for the AI cloud business, and any concerns regarding BITMAIN hardware shipments.

Answer

Co-CEO Daniel Roberts acknowledged increased perceived demand post-FERC but reiterated that only signed deals matter. He stated that IREN is taking a measured approach to further GPU investment due to cost of capital and a potential market pause ahead of new NVIDIA chips. He expressed confidence in their relationship with BITMAIN, noting they've had a fantastic experience and expect final miner deliveries shortly.

Brett Knoblauch asked how Hut 8 expects to split its power portfolio between AI data centers and Bitcoin mining, especially given American Bitcoin's target to reach 100 exahash.

Answer

CEO Asher Genoot explained that while Hut 8 is developing large-scale platforms for AI and data centers, it also has pipeline assets well-suited for Bitcoin mining, providing ample runway for American Bitcoin. He noted that next-generation data centers are being designed to be malleable, allowing quick transitions between Bitcoin and AI, which would benefit both entities. Genoot emphasized that American Bitcoin's primary goal is increasing Bitcoin per share, not just exahash at all costs, and currently, there are no large competing interests between data centers and AI for power.

Brett Knoblauch asked how Hut 8's power portfolio is split between AI data centers and Bitcoin mining, especially given American Bitcoin's target to reach 100 exahash.

Answer

CEO Asher Genoot stated that Hut 8 is developing large-scale platforms for AI/data centers, with many upcoming deals on that front, but also has pipeline assets well-suited for American Bitcoin's mining needs. He highlighted the design of next-gen data centers to be malleable for quick transitions between Bitcoin and AI, noting American Bitcoin's primary goal is increasing Bitcoin per share, not just exahash at all costs.

Brett Knoblauch asked if the new HPC deals would impact the existing Bitcoin mining capacity, requested an update on the remaining CapEx for the Core42 build-out, and questioned why the CapEx for the FluidStack project is higher.

Answer

CSO Carrie Langlais noted that the Cayuga site acquisition is crucial for meeting future HPC demand without impacting mining. CFO Patrick Fleury stated that approximately $230 million in CapEx remains for the Core42 project, with spending being back-end loaded. CTO Nazar Khan attributed the higher FluidStack CapEx to its larger scale and more customized design.

Brett Knoblauch inquired if TeraWulf would consider breaking ground on future data center buildings before securing a tenant and asked about the company's capital allocation priorities, specifically weighing share buybacks against CapEx for growth.

Answer

CFO Patrick Fleury clarified that while minor site preparation might occur, the company would not undertake significant construction spending without a signed tenant agreement. Regarding capital allocation, he explained that the management and Board constantly evaluate priorities and find it prudent to have both a buyback program and an ATM available to provide maximum flexibility given the stock's volatility and the dynamic nature of the business.

Brett Knoblauch of Cantor Fitzgerald asked about the geographic markets TeraWulf is targeting for expansion beyond the Cayuga site and how use cases like training versus inference might influence that strategy. He also requested an update on the revenue generation timeline for the initial Core42 deal.

Answer

CEO Paul Prager identified Montana and the Mid-Atlantic region (Maryland and Virginia) as key areas for future expansion, citing the company's expertise in those energy and regulatory environments. He reiterated that specifics on the Core42 energization timeline would be shared only after discussions with the customer are finalized, emphasizing a focus on meeting their evolving requirements.

Brett Knoblauch asked about the development pipeline for the second half of 2025, the immediate revenue-generating plan for the operational Wulf Den facility, and the status of the next 250-megawatt utility approval.

Answer

CFO Patrick Fleury explained that formal 2025 guidance will be issued in February and that future buildout cadence depends on customer demand. He clarified that the Wulf Den's capacity is being reserved for the anchor HPC customer(s) rather than for TeraWulf's own use, as it represents the highest value. He also confirmed the next 250 MW utility approval is expected by late Q4 2024 or early Q1 2025 and is not a prerequisite for signing the initial customer contracts.

Brett Knoblauch of Cantor Fitzgerald questioned why eToro's crypto volume declined more than the broader market and asked about the initial user uptake of the expanded crypto offering in the U.S.

Answer

CEO Yoni Assia explained that eToro's users often shift their trading activity from crypto to capital markets when equities are volatile, as seen in April. He added that since expanding to 100 crypto assets in the U.S., the company has seen significant growth in its U.S. business, which was also boosted by strong crypto markets in July.

Brett Knoblauch of Cantor Fitzgerald asked about the trend in crypto volumes during the quarter, which declined more than the broader spot market, and inquired about the initial user uptake of the expanded crypto asset offerings in the U.S.

Answer

CEO Yoni Assia explained that when capital markets are exciting, as they were in April, active traders on the platform often shift focus from crypto to stocks. Regarding the U.S., he noted that expanding the offering to 100 crypto assets has driven significant growth in the U.S. business, a trend amplified by the strong crypto market environment in July.

Brett Knoblauch from Cantor Fitzgerald asked for Riot's high-level outlook on the Bitcoin network hashrate and whether maintaining a 4% network share is a long-term goal. He also sought feedback on whether the Corsicana site is perceived as a premier location for AI/HPC development.

Answer

CEO Jason Les clarified that the 4% network share is an estimate, not a mandate, and noted that power constraints could impact future network growth. He affirmed that Corsicana's large, ready-for-service power capacity is a significant draw for customers with robust demand forecasts, positioning it as a highly attractive site.

Brett Knoblauch questioned whether the entire one-gigawatt capacity at the Corsicana site is available for a hyperscaler deal and asked if the existing power agreements need to be altered to support AI/HPC loads, particularly concerning demand response program participation.

Answer

CEO Jason Les confirmed that if a deal for the full gigawatt at Corsicana were accretive to shareholders, Riot would 'definitely look at that.' He clarified that the power supply agreements do not need to be altered, as participation in demand response is voluntary and not a contractual requirement for its power strategy.

Brett Knoblauch inquired about the urgency to secure additional power sites beyond the current portfolio. He also asked whether Riot has been actively marketing its Corsicana capacity to AI/HPC clients or if the interest has been purely inbound.

Answer

CEO Jason Les clarified that while Riot is always seeking high-value power assets, there isn't an increased sense of urgency because its existing 2-gigawatt pipeline provides a significant runway for organic growth. He confirmed that Riot has not conducted an active marketing process for its power capacity; the interest from blue-chip HPC counterparties has been inbound, driven by Riot's reputation and large-scale power access.

Brett Knoblauch from Cantor Fitzgerald questioned the potential for Bitcoin mining growth beyond the stated 23.5 EH/s Q3 target and how future expansion depends on the strategic decisions for Black Pearl Phase 2.

Answer

CEO Tyler Page responded that further Bitcoin mining growth is contingent on the pace of HPC tenant negotiations for Black Pearl Phase 2. While the primary goal is leasing to HPC clients, the company retains the flexibility to deploy miners if market conditions are attractive, likely through spot market purchases rather than long-term contracts.

Brett Knoblauch asked for more details on the Fortress financing announcement for the Barber Lake site, including the joint venture structure and terms. He also inquired about the impact of recent tariff announcements on the pace of conversations with potential HPC tenants.

Answer

CEO Tyler Page explained that the Fortress deal is a joint venture where Fortress unconditionally backstops the full data center construction cost. Cipher can own up to 49% of the JV by contributing its existing assets, like land and the substation, without investing additional cash, and expects to receive about 40% of the economics. Page stated that the pace of tenant conversations has not slowed but has actually increased since the tariff announcements.

Brett Knoblauch from Cantor Fitzgerald asked about crypto staking, inquiring what percentage of eligible assets are being staked and how Robinhood plans to grow that figure over time.

Answer

CFO Jason Warnick stated that Robinhood has about $6 billion of stakable assets, with the majority located in states where staking is permitted. He noted that customers have responded quickly and that the broader opportunity lies in continuing to win market share in the overall crypto space.

An analyst on behalf of Brett Knoblauch at Cantor Fitzgerald asked about the adoption of smart exchange routing for crypto trades and its expected impact on the blended take rate.

Answer

CEO Vladimir Tenev responded that it's still in the early stages of rollout but that results look good, particularly for active traders. He explained the feature gives more choice and the ability to offer preferential pricing to higher-volume customers. CFO Jason Warnick added that tiered pricing doesn't necessarily mean a lower blended rate, as the goal is to attract new, high-volume trading that is not currently on the platform.

Brett Knoblauch questioned the future mix between the purchase and pure subscription models, asking if the company was shifting its focus entirely to subscription. He also asked whether the 12 new customers for the eXpedite product were net new to Evolv or existing customers adding the new solution.

Answer

CEO John Kedzierski explained that while the company is encouraged by the customer-driven shift towards pure subscription, both ownership models will continue to be offered. He clarified that the 12 new eXpedite customers were a mix, including existing customers expanding their deployments as well as brand-new customers, which he viewed as an optimistic early sign for the product.

Brett Knoblauch of Cantor Fitzgerald requested an update on the regulatory front, asking about the status of FTC and SEC inquiries, their impact on sales cycles, and the deployment of units in the New York City subway system.

Answer

President and CEO Peter George stated that the company continues to collaborate with the FTC towards a resolution, noting such investigations typically last 12-18 months. He clarified that while sales cycles have elongated, they have not worsened since Q1, and close rates remain high. Regarding the NYC subway, he confirmed they are still in a trial phase with the NYPD, leveraging their long-standing presence in New York City.

Brett Knoblauch of Cantor Fitzgerald asked for clarification on the full-year guidance, questioning if Q1 represented a low point for unit installations. He also inquired if the lengthening sales cycles were specific to certain end markets and sought an update on the New York City subway opportunity.

Answer

CFO Mark Donohue confirmed that management views Q1 as a low point for installs, with signs of a Q2 pickup, but noted the full-year unit forecast is now in the 1,600-1,900 range due to regulatory overhang. President and CEO Peter George stated the sales cycle lengthening is across the board but highlighted a near-100% win rate in healthcare. Regarding the NYC subway, George confirmed Evolv is supporting the NYPD's testing phase, and executive Brian Norris added that any public transit opportunity would be accretive to the company's stated TAM.

Brett Knoblauch asked about Galaxy's primary strategic focus between its data center and crypto businesses and inquired about the company's interest in M&A activity within the crypto space.

Answer

Founder and CEO Michael Novogratz asserted that Galaxy is focused on both 'monster trends' of AI data centers and crypto, clarifying that the company is 'doubling down' on its crypto business and focusing on innovation in areas like tokenization. Regarding M&A, he stated that the NASDAQ listing and a more fairly valued stock will allow them to consider acquisitions more seriously, expecting a mix of organic growth and strategic acquisitions.

Brett Knoblauch from Cantor Fitzgerald asked about a rumor regarding a potential change of control at Circle and whether a change of control clause exists in the Coinbase-Circle partnership agreement that would be triggered by an acquisition.

Answer

CFO Alesia Haas provided a direct and clear answer, stating that the commercial arrangement with Circle would persist through an acquisition and that there would be no change to their contract.

Brett Knoblauch asked for clarification on whether the full-year guidance increase, excluding the Q1 beat, was entirely attributable to FX. He also questioned if the recent cooling of the 'AI trade' in public markets has slowed down AI implementation discussions with customers.

Answer

CFO James Caci confirmed that the full-year guidance raise beyond the Q1 beat is due to FX, reflecting a prudent approach given the uncertain geopolitical and macro environment. CEO Tianyi Jiang stated that they have not seen any slowdown in customer AI implementation plans, emphasizing that businesses feel a sense of urgency and view AI adoption as mission-critical and more real than ever.

Brett Knoblauch questioned the 2025 operating income guidance, which implies minimal margin expansion despite accelerating ARR growth, and asked about the outlook for free cash flow.

Answer

CFO James Caci reiterated that the margin guidance reflects a strategic choice to reinvest in the business for long-term growth in 2026 and beyond. He stated that while free cash flow is expected to improve in 2025, the rate of acceleration will likely not be as dramatic as it was from 2023 to 2024, as the company balances investment with profitability.

Brett Knoblauch asked for the key factors behind the company's broad-based growth and sought details on the recent uptick in gross retention, including the timeline to reach the 90% target.

Answer

CEO Tianyi Jiang identified sustained demand for data governance, control, security, and resiliency as primary growth vectors, with data migration serving as a significant door-opener. CFO Jim Caci explained the 90% gross retention target is a medium-term goal for the next couple of years. He attributed the recent improvement to 88% to strong public sector performance and successful initiatives, like pooled Customer Success, to better serve the long-tail customer base.

Brett Knoblauch inquired about the drivers behind the increased optimism for the large enterprise opportunity, the expected timing of new site announcements, and whether energizing the first megawatts for CoreWeave would serve as a proof point to help close deals with new tenants.

Answer

CEO Adam Sullivan explained that large enterprises are solidifying their AI needs, creating a strong pipeline of 50-100 MW deals with faster contracting timelines than hyperscalers. He anticipates announcing new sites with new customers in 2025. COO Matt Brown added that successful execution on current projects will build market confidence and attract new clients.

Brett Knoblauch sought clarification on the revised 2025 HPC capacity target of 250 megawatts and asked about the impact of recent 'DeepSeek' news on customer demand and conversations.

Answer

CEO Adam Sullivan confirmed the 250 MW year-end target includes the existing 16.5 MW and reflects a delay of one building into early 2026. He characterized the market reaction to the DeepSeek news as a 'head fake,' stating that actual customer demand remains strong and conversations continue to progress well, with clients wanting to move faster.

Brett Knoblauch asked how HPC lease rates have trended since the initial CoreWeave deal was announced and inquired about the acquisition and retrofit costs per megawatt for distressed data center assets.

Answer

CEO Adam Sullivan responded that lease rates for capacity delivering in 2025 and 2026 are significantly higher than previously expected, particularly as clients are willing to contribute to CapEx. For distressed assets, he estimated acquisition costs at $3 million to $6 million per megawatt, with retrofit costs ranging from $1 million to $3 million per megawatt, depending on the existing infrastructure.

Brett Knoblauch of Cantor Fitzgerald inquired about the current market for HPC lease rates compared to when the CoreWeave deal was signed and asked for the estimated acquisition and retrofit costs for distressed data center sites.

Answer

CEO Adam Sullivan noted that market lease rates for 2025-2026 capacity are "much higher than we expected," particularly as clients are willing to co-invest in CapEx. For distressed data centers, he estimated acquisition costs in the $3-6 million per megawatt range and retrofit costs between $1-3 million per megawatt, depending on the existing infrastructure.

Brett Knoblauch inquired about the regulatory timeline for converting Stronghold sites to AI/HPC, the level of partner interest prior to approvals, and the specific breakdown of the sub-$100 million CapEx budget for 2025.

Answer

CEO Ben Gagnon clarified that existing power capacity requires no further approvals, while expansion and redundancy configurations face a 12-36 month regulatory process. He noted strong interest from partners due to the multi-year growth potential. CFO Jeff Lucas detailed the ~$95 million CapEx plan, with only ~$7 million allocated to finalize miner upgrades and the balance dedicated to infrastructure development, primarily at the Stronghold sites.

Brett Knoblauch of Cantor Fitzgerald asked if proximity to metropolitan areas is a key characteristic for future site acquisitions in the PJM region, given the AI/HPC opportunity. He also inquired about the profile of an ideal colocation customer for the AI/HPC business.

Answer

CEO Ben Gagnon confirmed that proximity to metro areas is now one of several factors evaluated for new sites, as the company seeks locations suitable for multiple applications. He stated that the ideal customer for an HPC/AI facility would be a single, large-scale partner, such as a hyperscaler with a strong credit profile, who would take all the capacity. This allows Bitfarms to focus on its strength in building and operating energy infrastructure rather than developing a sales force.

Brett Knoblauch asked if the increase in SMS adoption to over 18% met, exceeded, or fell short of the company's internal expectations for the year.

Answer

Co-Founder and CEO Andrew Bialecki stated that while the company is happy with the adoption, they always aim to grow faster. He emphasized that the 26% attach rate for SMB and mid-market customers is a more indicative metric of success. CFO Amanda Whalen added that customers who adopt SMS see significant revenue uplift, citing a 20% increase in e-commerce revenue during Black Friday Cyber Monday for those who added the channel.

Brett Knoblauch of Cantor Fitzgerald conducted an extensive interview covering MARA's strategic direction. He inquired about the company's AI strategy compared to peers, plans for accelerating vertical integration through power acquisition, the scalability of owning energy assets, progress on the NGON partnership, and views on the Bitcoin ecosystem and market cycle. He also questioned the rationale for using convertible notes to buy Bitcoin and sought clarity on 2025 hash rate growth targets and potential government actions to lower industry energy costs.

Answer

CEO Fred Thiel and CFO Salman Khan addressed the questions by outlining MARA's strategic shift towards becoming a vertically-integrated energy and technology company. Thiel emphasized a focus on high-margin inference AI over commodity data center leasing, a dual strategy for international energy partnerships and domestic asset acquisition, and using owned energy to improve capital efficiency by extending miner lifespans. He confirmed the NGON project is on schedule. Regarding capital strategy, both executives described the convertible note issuance as an opportunistic, high-yield investment in Bitcoin. For future growth, Thiel prioritized capital efficiency and a flexible U.S.-centric supply chain via Auradine over specific hash rate targets, stating that removing governmental friction on energy generation would be a key industry catalyst.

Brett Knoblauch asked about the scope of Macquarie's Right of First Refusal (ROFR), whether Macquarie receives common stock in the parent company, and if lease terms have improved enough to generate returns above the preferred equity's cost.

Answer

Executive Wesley Cummins explained that the ROFR applies to financing at the asset level, not to public equity of the parent company. He clarified the 15% equity is in the HPC subsidiary only. He also stated that when blended with other financing, the company's total cost of capital is expected to be well below the project returns.

Brett Knoblauch of Cantor Fitzgerald & Co. sought details on the $250-$275 million CapEx forecast, including site allocation and scope, the working capital requirements for mass-producing SEALMINER ASICs, and clarification on the Rockdale facility delay's impact on SEAL01 rig deployment.

Answer

Head of Capital Markets Jeff LaBerge clarified the CapEx is for infrastructure build-out (everything except rigs) at Tydal, Rockdale, Bhutan, and Ohio sites, primarily for self-mining. Executive Jihan Wu explained the 6-month working capital cycle for ASICs due to TSMC's upfront payment policy and confirmed the deployment delay was due to construction and port labor strikes. Jeff LaBerge estimated the capital requirement for the 18 exahash of SEAL02 to be in the $125-$175 million range.

Brett Knoblauch of Cantor Fitzgerald questioned what specific changes to the go-to-market motion would improve productivity and reignite growth, given the high marketing spend relative to revenue growth. He also asked about plans for a new share buyback program.

Answer

Co-CEO Trac Pham acknowledged the need to optimize the cost structure and stated that improving internal execution, discipline, and operational rigor is the key to driving better productivity and growth, rather than relying on the macro environment. He added that the company will continue to evaluate the best use of its cash and strong balance sheet but did not announce a new buyback program.

Questioned the drivers behind the record gross margin and its potential for future expansion, and also asked for the outlook on operating cash flow for the second half of the year, given the recent working capital dynamics.

Answer

The company attributed the record gross margin to significant efficiencies in cost of sales, which are down 30% from pre-pandemic levels, and the increasing use of AI, with hopes for further improvements. Regarding operating cash flow, they expect a significant rebound in the second half of the year, which is a typical seasonal trend, and noted that the negative working capital impact from Q2 sales campaigns should unwind and have a positive effect going forward.

Asked for a breakdown of the contribution from 2023's acquisitions to the 2024 growth guidance and inquired about the company's cash position, expected operating cash flow for 2024, and plans to reduce the interest burden through refinancing.

Answer

Executives stated that 2024 growth is considered 100% organic as acquisitions are fully integrated. Pro forma organic growth is consistent at around 20%. Regarding cash flow, they expect improvement in 2024 due to the absence of one-time divestiture costs, lower working capital needs, and reduced interest payments from a planned debt refinancing. The refinancing aims to lower the interest rate and potentially convert some cash interest to PIK.

The analyst asked for clarification on the revised revenue guidance, the change in terminology from gross revenue to gross bookings, and the outlook for transaction growth and average revenue per transaction (ARPT).

Answer

The company explained the guidance change is a pro forma adjustment to retroactively exclude the divested LBF unit for the full year, not a change in outlook. The term 'gross bookings' is a label change for industry consistency, with no change to the calculation. They expect continued strong transaction growth and an increasing take rate, which will help offset the impact of declining airfares on ARPT.