GRYP Q3 2024: Pivot to HPC/AI hosting to diversify revenue
- Cost Optimization: Management is actively evaluating lower-cost power alternatives—having noted recent power costs averaging $0.062–$0.063/kWh and planning a relocation update by year-end—which could bolster margins as they secure more affordable power sources.
- Efficient Operational Positioning: The Q&A highlighted that even with a mix of fixed and profit-sharing contracts, the current fleet is effective; with Bitcoin prices above $65,000, they are breaking even and positioned to capture upside at higher prices (e.g., around $90,000), indicating resilient operational efficiency in a favorable market.
- Strategic Expansion into HPC & AI Hosting: Management confirmed plans to add power and HPC experts to facilitate a transition into high-performance computing for AI—presenting an opportunity to diversify revenue streams and tap into a rapidly growing market segment.
- Fleet transition uncertainty: The Q&A highlighted ongoing efforts to relocate the fleet to secure lower power costs, but the timeline is uncertain, raising concerns over potential operational disruptions in the near term.
- Rising power costs: Analysts noted that average power costs increased from $0.058–$0.059 to about $0.062–$0.063 per kilowatt hour, which could pressure margins and impact profitability.
- Cost sensitivity to Bitcoin price: Part of GRYP's contract involves profit sharing that escalates with rising Bitcoin prices. This structure means that as Bitcoin increases, the costs follow suit, potentially compressing margins.
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Production Outlook
Q: What’s your production forecast this quarter?
A: Management expects production to remain steady as the current Coinmint agreement runs through year-end, ensuring continuity despite upcoming infrastructure changes. -
Power Costs
Q: Have your power costs changed recently?
A: Costs have modestly increased to an average of $0.062–$0.063/kWh from around $0.058–$0.059/kWh, reflecting market adjustments. -
Profit Share Impact
Q: Does higher Bitcoin pricing affect your expenses?
A: A portion of the contract is fixed while another has a profit share, so rising Bitcoin prices lead to increased costs due to the profit share structure. -
Fleet Efficiency
Q: Is your current mining fleet efficient?
A: The fleet, comprising roughly 6,000 S19j Pros, is expected to remain efficient with full depreciation over the next 12 months and performs well even at higher Bitcoin prices. -
HPC Facility
Q: Are you developing a new facility for HPC/AI?
A: No new facility is being converted; instead, the focus is on identifying external spaces for launching AI services, leveraging existing mining strengths. -
Update Timing
Q: When will further relocation news be announced?
A: Management has committed to providing an update on fleet relocation by the end of the year. -
Board Expertise
Q: What value does Dan bring to your board?
A: Dan, with extensive mining expertise from Anchorage, offers strategic insights on cost efficiencies and power sourcing, reinforcing the company’s financial transformation. -
Team Expansion
Q: Will you add specialists for HPC and power?
A: Yes, as power deals are secured, the plan is to recruit power and HPC experts with over 20 years’ experience to support the AI hosting strategy.
Research analysts covering GRYP.