Hut 8 - Q4 2025
February 25, 2026
Transcript
Sue Ennis (Head of Investor Relations and Government Affairs)
Good morning, welcome to Hut 8's full year 2025 financial results conference call. Joining us today are our CEO, Asher Genoot, and our CFO, Sean Glennan. Following the presentation, we will open the line for questions. This event is being recorded, and a transcript will be made available on our website. In addition to the press release issued earlier today, our full annual report on Form 10-K is available at hut8.com, on our EDGAR profile at sec.gov, and on our SEDAR+ profile at sedarplus.ca. Unless otherwise indicated, all figures discussed today are in US dollars. Certain statements made during this call may constitute forward-looking statements within the meaning of applicable securities laws. These statements reflect current expectations and are subject to risks and uncertainties that could cause actual results to differ materially.
Certain key risks are detailed in our Form 10-K for the year ended December 31st, 2025, and our other continuous disclosure documents. Except as required by law, we assume no obligation to update or revise any forward-looking statements. During the call, management may reference non-GAAP measures such as Adjusted EBITDA. We believe these metrics, alongside GAAP results, provide valuable insight into our performance. Reconciliations of GAAP and non-GAAP results are included in the tables accompanying today's press release, available on our website. We will begin with a moderated Q&A session with our CEO, Asher Genoot, followed by a detailed financial review from our CFO, Sean Glennan. Okay, everyone, let's get started. First, Asher, fiscal 2025 was a big year for Hut 8.
We executed on several important milestones, including the carve-out of our legacy Bitcoin mining business and the execution of our first AI data center transaction. What were the guiding principles that enabled us to achieve these outcomes in your mind in 2025?
Asher Genoot (CEO)
2025 was about rebuilding Hut 8 around capital efficiency and durable cash flow. Two years ago, we rebuilt the company from a first principles approach after our merger with Hut 8 and going public, and everything started with the electron. We chase megawatts, not chips, and we want to control the power layer first. We don't view electrons as a commodity, but rather strategic assets. The ABC carve-out shifted us from cyclical CapEx exposure to contracted infrastructure-like cash flows. That was a big theme of last year. We also reallocated capital from volatility to long-duration agreements, and with ABC being able to self-fund itself on the mining and Hut 8 providing the infrastructure. River Bend validated that model. We had a true greenfield development. We didn't convert a site, we developed the site from the ground up by power-first thinking.
It was really the first domino to fall under an AI infrastructure platform, and we focus only on what compounds: power control, scalable campuses, disciplined capital structure, and repeatable execution. 2025 was about building the right foundation, and now we compound and we scale going into 2026.
Sue Ennis (Head of Investor Relations and Government Affairs)
In your mind, what specific operational and strategic milestones were prerequisites before the business could meaningfully accelerate?
Asher Genoot (CEO)
2024, as I showed a little earlier, was about restructuring. We started a company, we merged with Hut 8. I took over shortly after, and it was restructuring the business and creating the ability for us to create a foundation. 2025 was about building credibility. Credibility started with our shareholders. In 2024, when I took over the helm, our institutional ownership was sub 10%. We're at approximately 70% today, and some of our earliest shareholders who invested in us when we started the companies 5 years ago, still hold a large percentage of the stock. We've given shareholders disciplined capital allocation they've seen through us in the years with us in the public markets and then, honestly, transparent execution.
We told people what we were going to do, and we focused on getting that done and delivering a fully built solution, and we executed, and we intend to do the same. We built credibility with team members. We scaled intentionally. We institutionalized processes while maintaining an entrepreneurial speed. I think that's critical. As you grow, you naturally build bureaucracy, and having the mindset to say, "You know what? We will continue to operate as a lean startup culture, even as we build an institutionalized process." I spend a lot of my time thinking about that in terms of how do we scale at the same rate that we have historically. Credibility with financing partners was really important for us to secure Tier 1 lenders with J.P. Morgan, Goldman Sachs, to lock in non-recourse project financing. It was harder, but we believe it's the better path.
We believe early investors in us, like Coatue, they backed us before the theme was a consensus, and I'm glad that they're happy, right? Me and Philippe spoke on a panel the other week, and I'm glad that we're able to drive a good return on their investments. Lastly, credibility with our partners. That's local partners, for example, at River Bend, with Entergy Louisiana, West Feliciana Parish, the governor's office, and being able to deliver on them and our commitments to them when they took a bet on us. Acceleration only happens when credibility is earned, and we would like to compound on that as the years go by.
Sue Ennis (Head of Investor Relations and Government Affairs)
You were under a lot of pressure last year to talk about a deal and guide the market to when it would come, what it would look like, but we kept our cards very close to our chest. Can you talk about why we were patient and what we wanted to see come together first?
Asher Genoot (CEO)
I'll separate my role speaking to the public markets and our shareholders, and my role in running the operating business and making sure we're able to build that over the long term. In my role in the public markets, I knew what shareholders wanted. They wanted a deal. They wanted to know that we can build a data center infrastructure platform, and they wanted to see what that would look like and to build the first domino as a part of the platform. For the business itself, we weren't waiting to announce a deal. We were really building a fully locked and executable program. For us, we didn't feel like there was a reason to add public market complexity while negotiating a super complex structure with a lot of moving pieces. We didn't want to just announce a headline.
We wanted a complete financial program. We wanted demand secured, financing secured, execution partners aligned on construction, delivery, engineering, so long lead time items. We wanted our power path defined. We want our risk allocated properly across counterparties. Instead of guiding towards a deal was coming, which everyone knew we were working hard at, we optimized for building the right structure for the company in the long term. When everything was negotiated and aligned, we announced the full framework in one step, and I think that discipline hopefully reinforces the credibility that we're building with our shareholder base. As we move forward, we're going to be really thoughtful about what we share with the markets versus how we think about those impacts to our customers as well.
Sue Ennis (Head of Investor Relations and Government Affairs)
Our first AI data center transaction generated significant market attention. How should investors think about this transaction in the context of our broader strategic evolution, without over-indexing on a single data point?
Asher Genoot (CEO)
I think this was a fair market deal. It was designed to compound relationships and not to maximize one transaction. We structured at market-clearing economics. A lot of private deals are getting done, we believe are done in a similar range. We focused on long-term, credit-worthy counterparties that can grow with us, and we built to scale the program beyond just the first phase, across our customers and across our financing counterparty's execution partners, supply chain partners. It took a very customer-centric approach on how do we de-risk, execute, and give them confidence. We're not optimizing for headlines. We're trying to build repeatable partnerships because that's going to be the secret sauce in our ability to grow and scale.
Sue Ennis (Head of Investor Relations and Government Affairs)
Let's drill down into River Bend then. As we look at River Bend even more holistically as well, can you update us on the progress of some of those power expansion discussions with Entergy, and how is construction tracking?
Asher Genoot (CEO)
Look, 2026 is a 1,000% going to be about execution and delivery. That's going to be the theme of the market, in my opinion. We're super hyped for it. Construction right now is tracking according to plan. We have tight coordination with Jacobs Engineering and Vertiv. Long lead time procurement is progressing and getting manufacturing delivered. Our customer engagement is really, really high with Fluidstack and Anthropic. We have many working sessions a week, multiple stand-ups on site in their offices, and really strong collaboration as we move towards delivery. The 1 GW expansion plan at River Bend, the power is there. It's not about if, it's about when. Now we're optimizing on delivery timelines and cost scenarios in terms of collateral upfront to make sure the rate base doesn't get impacted.
We're working through different structuring paths to maximize efficiency and speed, meanwhile, solving for what we're looking for and also what Entergy is trying to solve for their constituents. The focus now is simple: execute, deliver, and de-risk.
Sue Ennis (Head of Investor Relations and Government Affairs)
How should investors think about long-term expansion opportunity at some of our other sites, like Corpus Christi? Obviously, we've been seeing an uptick in pushback with respect to data centers getting done. We've seen new rules proposed out of ERCOT. How should investors think about the expansion?
Asher Genoot (CEO)
Something I've been saying for years is we're building an energy infrastructure platform on digital infrastructure. Our edge is power first development, and oftentimes in markets that others overlook. Our Corpus Christi site that we announced, we have an approved interconnect in ERCOT that's increasingly valuable, and it was put in before all of these recent changes in batch studies. It was put in in 2023. In a changing regulatory environment, permitted power and transmission access matter more than ever. The interconnect and the permitting matrix at Corpus Christi, I think, gives us a structural advantage to be able to build quickly and gain access to power quickly.
If we were using the traditional developer playbook, we wouldn't have a low, redundant data center solution for Bitcoin security as our tool for underwriting as-assets, and we probably would have passed on this 1 gigawatt interconnect, like many others did. We didn't, because we have multiple use cases of our megawatts as we develop the platform. It's really similar to what happened about a year and a half ago in Louisiana. When we first talked about the site, started marketing the site, people thought we were crazy. I thought we were early, and I think we were right. River Bend validated the thesis of what we believe in terms of the value and the assets and the power, and how much you can get at scale in the local regulatory environments that you're building this infrastructure at.
Now you see that in Louisiana, you have other hyperscalers like Meta and AWS that have announced projects there as well. I don't want the market to forget that alongside our River Bend announcement, we also announced a strategic partnership with Anthropic, and so they're a partner that we continue to look at opportunities with, alongside other demand signals that we've built along the last two years as well. If you look at our development pipeline, we have 8.5 GW across various stages of development. We are energy developers first. We understand grid dynamics, regulatory shifts, and permitting realities, and that's what gives us confidence that we can navigate the evolving environments.
It's a lot easier to go and build a large-scale data center with the dollars that we're bringing into these in economies than it was developing Bitcoin mining facilities when no one wanted Bitcoin in their neighborhoods. We've navigated through different environments. We've gone through changing ERCOT procedures. We've done this for the last 5 years since we started the business, and this is just another hurdle that comes along the way as demand continues to increase and we continue to show our competitive edge in developing power assets.
Sue Ennis (Head of Investor Relations and Government Affairs)
You often reference first principles and value engineering and innovation as a core edge for HUT. Can you walk us through how Vega, AKA delivering 180 kilowatts direct liquid to chip at $455,000 per megawatt from scratch, and our co-developed infrastructure design with Vertiv that we're using at River Bend, how do those two things reflect that philosophy and effectively position us for the future?
Asher Genoot (CEO)
We think that no one has fundamentally challenged how data center infrastructure, and I guess now AI infrastructure, is built, and that's our opportunity. We reject the status quo. In the short term, there's a huge supply and demand imbalance that allows us to get deals done from a power perspective, and that's our competitive mode. In the medium term, the differentiation will come from value engineering and the infrastructure stack innovation as supply and demand reach equilibrium. Vega is a great example, too, because Vega we developed 180 kilowatts per rack direct-to-chip cooling technology earlier last year, when NVIDIA was only at 120 kilowatts per rack. The reason we did it was to show the markets we could develop that type of infrastructure, as you see on the screen here.
Most importantly, we were able to develop that for $455,000 per megawatt. I like to tell customers that when we show them the site, that that includes the office furniture, the whiteboards and everything, and the fit out in the data center. The reason we were able to do that is because we built the site from a grass field from scratch. There were no legacy constraints. We figured out what areas of the infrastructure stack, switch gears, PDUs, the rack and vane structures that we want to vertically integrate, design ourselves, and contract manufacture, what areas of the construction we want to self-perform and manage ourselves. That's what I'm really excited for.
Once we get the next couple of deals done, and we get to a large multi-gigawatt platform in terms of data center, how do we think about the next phase of our competitive mode? That's around innovation, and that's around value engineering. The Vertiv partnership is a good example of our early kind of stages into that. We co-designed the approach, the architecture with them and with Jacobs, to show not only supply chain visibility, but how do we take risk off of the site? How do we speed the efficiencies of these development, these builds, so we can have them in controlled environments for a lot of the infrastructure that we're building, and how do we have long lead time and mitigation risk?
I had the opportunity to keynote Vertiv's main event, earlier in January this year, because we believe that that's where the edge will live in the second phase as we monetize the power assets in our pipeline in this first phase. When demand and supply normalize, infrastructure efficiency will matter more and more, and I think we're perfectly positioned for that, and it's a story and a theme that people haven't really even dove in under the hood today.
Sue Ennis (Head of Investor Relations and Government Affairs)
We're executing on large and complex infrastructure projects that require significant capital and coordination. Obviously, with that kind of scale comes risk. How are we structurally mitigating down that exposure and protecting equity if things don't go according to plan? How has your experience shaped how you got here and how you think about things like this? You talk a lot about being a credit guy. Can you elaborate on that?
Asher Genoot (CEO)
I actually don't talk a lot about being a credit guy. Sean talks a lot about me being a credit guy, and he's like, "You know, for your age, you're really more of a credit guy than anything else," when we talk about underwriting these sites. I think the scars that I've gained from living in kind of the business and building infrastructure around Bitcoin has really rooted us in how we think about underwriting opportunities, how we think about building the business long term. We lived through cycles, for example, in 2022, where Bitcoin prices crashes, our only revenue, energy prices skyrocketed because Russia attacked Ukraine, and profits were squeezed, and we had fixed debt and amortization payments. I sat as a chair at UCC committees of companies going through restructuring and bankruptcy.
We were the planned sponsor of taking Celsius out of taking a business segment they had out of bankruptcy and turning into a company. I learned firsthand, meeting with creditors on what could go wrong when you're building in a hyper-growth environment and the music stops singing. That sticks with me, honestly, forever. As we think about these projects, what I always told the team is, if we have the privilege to sign a data center deal, that contract is a liability until we deliver and start generating cash flow. That's why we're so thoughtful in how we structured this deal. We didn't just want to announce a deal and then figure out the rest afterwards.
We wanted to announce a deal that was able to have financing, execution, manual labor, steel for the buildings, long lead time items, regulatory permitting, all secured when we announced it to the market. That was a key part of the timing and the things we wanted to get done. As we think about debt obligations, construction risk, power risk delivery, counterparty risk, those were all the things that we've mitigated through on long lead time contracted cash flows, creditworthy counterparties, structuring non-recourse financing, and really disciplined underwriting as we look at kind of the Ts and Cs of how we thought about the overall risk framework between us and our current parties and what we were committing and what we were all receiving. I think durable credit really compounds.
If you want to build a business over the long term, it's about compounding value over time and about continuously doing that. I feel like over the last 2 years, we've done that, and we've already seen the rewards of those actions, and we're really just getting started. Another element that I'd like to note is, if you look at our balance sheet, I think we have one of the cleanest balance sheets in the markets today. If we think about the debt structure that we have, we have 3 pieces of paper at the parent level. The first is our Coature convertible note that we did about almost 2 years ago. That's heavily in the money and most likely gets converted out this year. That's the only parent recourse piece of debt we have.
The other two pieces of debt that we have is one Coinbase, which is recourse against the Bitcoin only without parent recourse, and the next one is the one we have with NextEra at King Mountain, which is recourse against our equity stake in that 50% JV on the Bitcoin mining facility, and it does not have parent recourse. If you really think about it, with CO-2 heavily in the money, we have no recourse debt on our balance sheet. We're bringing on great financing in terms of the projects. As we think about growth, we're thinking about growth and credit really well managed through these markets. Hopefully be able to grow at a faster and faster rate.
Sue Ennis (Head of Investor Relations and Government Affairs)
Sean's gonna walk us through our results shortly. We're gonna do a little Q&A with him, let's touch on a few areas in our results. G&A, for example, what drove that this year?
Asher Genoot (CEO)
Stock-based compensation aligns everyone with the long term and long-term value creation. At the company, every single person has equity, from our site-level team members to the CEO, myself, and the CFO, Sean. Real ownership culture and skin in the game is something we've optimized from day one and continue to do so even in the public nature that we have. Total G&A was about $122.8 million this fiscal year, compared to $72.9 million. Stock-based comp was around $57.8 million versus $20.8 million in the year prior, and that has to do with a lot of the upscaling that we had in the investment in our engineering development, institutional infrastructure team.
Cash as G&A only rose from $52 million to about $65 million in the year, and that includes all of those transactions we did, from the carve-out of American Bitcoin to the deals that we've done. Our belief is that we're building the team and investing in the team for the future financial profile of where we're going. A lot of the dollars we're spending are on growth, not on managing the current business, not on even executing River Bend, on the growth of all of the sites that we're looking to execute and commercialize. We don't believe you can scale a multi-gigawatt infrastructure platform without building and training that team in advance. We're right-sizing for where we believe the company is going.
Sue Ennis (Head of Investor Relations and Government Affairs)
We, before we wrap up with you and move on to Sean, is there anything we haven't covered that you want investors to keep in mind? Specifically, there's been a lot of internal discussion around moving from simply building infrastructure for AI to actually building infrastructure with AI. How are you thinking about that evolution, and why is it strategically important for us over the long term?
Asher Genoot (CEO)
We're sequencing the business pretty deliberately, the next layer of advantage is technological convergence. Phase 1, which is about 1-2 years in my mind, is lock in the right deals, establish durable counterparties, build the right financing framework, and monetize our power capabilities. Phase 2, in the 2-5 year range, is value engineering the infrastructure stack, driving costs down per megawatt, improving speed, efficiency, and repeatability. Then phase 3 is more in the 5-10 year range, which is be at the forefront of how AI and robotics reshape infrastructure development. We're not just building infrastructure for AI. We have to be building infrastructure with AI and leveraging it to change in how we think about charging our innovation cycles.
We're deeply thinking about how AI integrates into our business, from a workforce perspective, increasing productivity across the organization, and from a design and engineering perspective, I mean, hundreds of thousands of engineering hours go into these builds. AI is going to fundamentally change the way that that work can be done. We can model, simulate, and optimize every variable before capital is deployed. In the build process, we're in the early stages of exploring robotics and automation embedded directly into construction workflows. This is not a distraction. It's an awareness of where the technology curve is heading, and we intend to meet it at the moment of real inflection when it meaningfully changes how infrastructure is built at scale. That will be the next compounding layer of advantage after the first two I've spoken about earlier in this call.
Sue Ennis (Head of Investor Relations and Government Affairs)
That's super exciting. With that foundation set, 2026 shifts us from proof to scale, right? What should investors look to from us moving forward?
Asher Genoot (CEO)
2026 is about execution and delivery, full stop. Converting the pipeline to additional contracted revenue, advancing power origination, delivering River Bend on time and on budget, maintaining capital discipline, no trend chasing. The foundation is built. Now we execute, and we scale.
Sue Ennis (Head of Investor Relations and Government Affairs)
All right, now let's move on to Sean. Sean, let's walk through the results. Maybe we can start with what defined fiscal 2025 performance?
Sean Glennan (CFO)
Yeah, thanks, Sue. I think there's two main things that really defined fiscal 2025. First, I want to talk about margin expansion and operating leverage, and second is bottom line results. On the first topic, revenue grew 45% to $235.1 million, driven primarily by our compute segment, while cost of revenue grew by 24% to $107.8 million. This resulted in gross margin expansion from 47% to 54%. I also want to highlight sequential Q4 2025 over Q4 2024 results, where revenues grew by 179% and gross margin expanded from 36%-60%. I think each of these data points highlights and is indicative of enhanced operating leverage in the business.
The foundation is sound, and what we've set in place will compound over time. Moving to bottom line results, net loss was $248 million, and we had an Adjusted EBITDA loss of $135.4 million, compared to net income of $331.4 million and Adjusted EBITDA of $555.7 million in 2024. The thing to note, that swing was largely due to a $220 million, primarily unrealized mark-to-market loss in 2025 of our Bitcoin stack, versus a $509.3 million gain of the prior year.
Sue Ennis (Head of Investor Relations and Government Affairs)
Thank you. Let's walk through segment by segment. Can you walk us through the power digital infrastructure and then compute segment results?
Sean Glennan (CFO)
Absolutely. In our power layer, revenue was $23.2 million versus $56.6 million in 2024. Cost of revenue declined to $20.5 million from $21.5 million the year prior. The revenue decline reflects the termination of our Ionic Digital agreement in managed services. This was somewhat offset by increased revenues in our foreign owner segment due to increasing power market tightness, which I think that power market tightness is kind of some of the fundamental underpinnings of the business, so it's showing up in other places, too. In digital infrastructure, revenue was $9.6 million compared to $17.5 million last year. Cost of revenue declined to $8.9 million from $15.6 million last year.
Margins improved sequentially as Vega entered commercialization, and we transitioned to co-location based payments from American Bitcoin. Finally, Compute. Revenue more than doubled to $202.3 million from $80.7 million the year prior. Cost of revenue increased to $78.4 million from $45 million in the year prior, and this is driven by infrastructure upgrades, higher deployed hash rate, and a full year of steady state operations of Highrise AI, which added $7.4 million year-over-year. I think important to note also as we talk about operating leverage, here segment margins expanded from 44% to 61%.
Sue Ennis (Head of Investor Relations and Government Affairs)
Thank you. Now let's get into capital structure and strategy. How are we thinking about our capital structure evolution?
Sean Glennan (CFO)
I think 2025 was an incredibly important year for capital structure evolution. Spinning out our Bitcoin mining business through our American Bitcoin subsidiary shifted us from a very high cost of capital, high CapEx cyclicality business, to a much lower cost of capital, business, with a lot more focus on infrastructure, low cost of capital, lower risk, and longer duration.
Sue Ennis (Head of Investor Relations and Government Affairs)
Okay, heading into 2026, what are some of your top financing priorities?
Sean Glennan (CFO)
Yeah, I think about this as what I spend most of my days thinking about. As I think about looking into 2026, there's four main things I'm really focused on. One is protecting shareholder value through disciplined equity use. Two is minimizing enterprise risk. Three, diversifying liquidity sources, including private markets. Four, maintaining a strong balance sheet that allows for strategic flexibility and a path towards an investment grade rating. I think one thing that's important to note is we continue to evaluate all financing options. We say no to a lot of things. We're not just trying to get capital wherever it's available.
We're looking for the lowest cost of capital, and, you know, I probably get 10 things across my desk every day, most of which I say no to, because we wanna continue to drive that and be innovators on capital structuring rather than just following the pack.
Sue Ennis (Head of Investor Relations and Government Affairs)
To wrap up, how would you, as the CFO, summarize our position heading into 2026?
Sean Glennan (CFO)
I mean, it's amazing to think relative to when I joined a year and a half ago, where we are entering 2026. We have greater scale, both from an exahash market cap and future cash flow position. We have improved margin durability, which I think the numbers speak for themselves. We have declining cost of capital, and I think the project financing we're working on with J.P. Morgan and Goldman Sachs is indicative of that. That's the lowest cost of capital that anyone in our sector has raised to support AI infrastructure growth to date. I think, as I kind of mentioned in the in your first question in this section, a capital structure that's aligned with long-term value creation.
I think those are the things that are really kind of setting us apart, and it's very exciting to be in this position, and we feel grateful to our shareholders for entrusting us with their capital as we go into 2026. With that, I think we'll go into Q&A.
Sue Ennis (Head of Investor Relations and Government Affairs)
Yeah, let's go into the Q&A here.
Asher Genoot (CEO)
While Sue looks at some of the questions, we want to shake things up this earnings a little bit, go on a video style, so we'll get feedback from our investors if they enjoy today or not. We're also, if we keep the video format, I wanna be able to hear people when they ask questions, and we talked a bit about that. As we set up this first structure, Sue's gonna kind of read the answers that people are submitting. We weren't able to, with the platform today, be able to allow for that for today. If people like this current format, then I really wanna hear them and see them, if possible, as well. We'll look at that on the next earnings calls.
Hopefully you guys enjoy the new shake-up here and approaching this from first principles as well. Our goal was to use this call to have you to really get to know us, get to know how we think about the world, how we think about problem-solving. You guys can look at our financials and our business through our public filings, but the purpose of this call, when we really broke it down from first principles, was speaking to our shareholders in a very direct, honest, transparent way, and we hope this new format helps drive closer to that as well.
Sue Ennis (Head of Investor Relations and Government Affairs)
Let's get into it. From Greg Miller at Citizens: "Will the company be defining what portion of its pipeline will be allocated to Bitcoin mining, and what % will be allocated to HPC, as the two represent very different value propositions?
Asher Genoot (CEO)
That's very fair. If we look at our existing capacity under management, in the gigawatt that we're managing today, we have 300 megawatts of power generation that we've told the markets that we're selling to TransAlta, and we have, and that, we've closed on that transaction, and we have 700 megawatts of compute that currently support American Bitcoin. In our capacity under construction, we have 330 megawatts of utility, that's River Bend phase one, then we have a multi-gigawatt pipeline as you go further and further up the development cycle. Currently, the core focus is converting those sites for AI use cases.
Having Bitcoin as an alternative use case allows us to continue to develop confidently in building the substations on the land that we acquire and interconnections, knowing that we'll have a consumer there in all scenarios, rather than just have risk development capital, and I think that's a unique edge that we have. Our key focus around our current full development pipeline is around AI utilization and development, and we're seeing more and more focus on just power at scale, and location really being a lower and lower factor in that as well. As we talk about all of the sites that we're developing right now, the primary goal is development around traditional data centers for AI computing.
Sue Ennis (Head of Investor Relations and Government Affairs)
Okay, George Sutton from Craig-Hallum: "Can you give any detail behind the $163 million deposit for future sites?
Asher Genoot (CEO)
Yeah. Sean, do you want to jump into that?
Sean Glennan (CFO)
Sure. As we look at kind of developing some of the future sites, we have lots of land options, and we're also procuring long lead time equipment at some of these sites. I don't want to get into the detail as to how much dollars are for which sites. I think that'll give away some of our secret sauce to our competitive industry, but effectively, that's kind of what the those dollars are allocated towards.
Asher Genoot (CEO)
One key thing to know in how we approach development, historically and moving forward, when we think about risk dollars out there, whether it be land options or it be developing, we've historically been very, very low up front until there's real feasibility, right? A big portion of those long lead time items are malleable pieces of equipment that we can allocate specifically around high to medium voltage breakers at the substation, different transformers once we step things down to 34.5 kV. Malleable infrastructure that we can allocate across multiple campuses, and then the investments we do at the early stage of development are really lower in terms of development, unless it's a CapEx payment or an infrastructure upgrade as we lock in the power.
As we see collateral payments kind of increasing, we're also looking at other kind of project-level financing and balance sheet borrowing that we're looking at doing to drive down our cost of capital as well. We're very, very thoughtful in what dollars we're spending, what's truly at risk, and what's malleable.
Sue Ennis (Head of Investor Relations and Government Affairs)
All right. From Brett at Cantor: "You guys effectively set the market with your Fluidstack Anthropic deal. Can you talk about how pricing has changed since then? Do you think the next deal will see a step up in economics?
Asher Genoot (CEO)
I don't think we set the market. I think the majority of transactions in the market happen in the private markets. Everyone's kind of focusing on public companies, but I feel like 80% plus of the transactions are happening in the private markets with kind of the private equity-funded development platforms on the data center side. I think our deal was market, it was middle of the fairway, and it was structured appropriately. As we continue to talk to customers about the deal and deal economics, we think that these are kind of market terms in the private markets, and we've held ourselves to the standard of a blue chip data center development company. I think I've brought in the partners to validate that thought process and that approach as well.
Sue Ennis (Head of Investor Relations and Government Affairs)
From Steven Kwok at KBW: "A recent job posting pointed to a potential scale-up of the Highrise AI GPU platform from roughly 1,000 GPUs to 20,000. Can you provide more detail on your growth plans for the Highrise AI cloud business, and how do you envision scaling that trajectory?
Asher Genoot (CEO)
Hut 8, the parent company, builds in the power layer and builds in the digital infrastructure layer. Front of the meter, behind the meter interconnects, obviously, we own power generation, and we build digital infrastructure on top of that, i.e., the River Bend campus we announced. In a lot of these deals, there's an opportunity where we can fund the compute as well. Funding compute in ASICs on the American Bitcoin side or in GPUs on the AI side are fundamentally different cost and risk profiles, which is why those businesses are separate companies. APTC being a public company now on its own, and then Highrise AI still being a private company that is growing. What's really unique about Highrise AI, we've been pretty quiet about it because we've been building the foundation of that business. It's not just...
the story isn't we're managing a little over 1,100 GPUs. The story is we built a cloud network, we built a software stack, we offer bare metals, we offer multi-tenant solutions. We announced this in one of our press releases in Highrise, but the current CTO of that business ran AI in the IDF and was there for a decade and a half. As we look at different opportunities, there are opportunities in these data center deals where Highrise can come in and provide the financing around the GPU stack, provide the services and technologies that I can build on top of the chip stack as well. Highrise is our new cloud business.
It's one that we haven't spoken much about, because as everyone knows, we're much more about talking about things when they come into fruition, rather than what's on the come. Across the whole board, we are building the company and hiring people to the place that we're going, and that's where you see a lot of that investment and talent into the business that we're going to be building and scaling into.
Sue Ennis (Head of Investor Relations and Government Affairs)
Okay, another one from George here, that I really like, 'cause I don't think we talk enough about this in the market. Anthropic is a mega disruptor in the space. How important is our existing relationship with them as part of the phase 2 and phase 3 opportunities?
Asher Genoot (CEO)
They're great, right? They're very open to thinking about things from a first principles approach. It's not a company where we have to do it this way just because. It's a company where we can talk about what are we trying to solve for, and what is the best way to be able to solve for that? If you think about phase one, give additional capacity, get additional power converted for our customers. Phase two is, how do we drive down costs with really thinking about value engineering? Value engineering is two ways. One is, how do we engineer and more efficiently drive the cost down for our existing infrastructure stack? The second is, how do we think about the actual demands that a customer has?
Which is also why we have Highrise, to understand the full stack from electron to compute, from megawatt to token. By understanding that, we can more optimize the infrastructure to support for really what's needed, and we can have open discussions. Discussions with Anthropic have been great in terms of solutions and malleability over how things are built to get to the final outcome. The last one, in terms of AI and robotics, obviously, that they're at the forefront of building the technologies that support all industries, and so we're excited to continue to build those relations and compound, but I'm really, really excited for phase three.
We have to build phase one and two to have the privilege for me to work on phase three. This year will be focused on phase one and really scaling up our data center platform.
Sue Ennis (Head of Investor Relations and Government Affairs)
I got one here from Kevin Dede at H.C. Wainwright. Trump, in his State of the Union last night, asked big tech to commit to building their own power. How do you think your customers, partners, and Hut 8 will react to that, should it become law?
Asher Genoot (CEO)
It's a natural progression of where things are going. If we think about the overall sentiment and what should happen right now is, when a data center is built, that should be net positive to the community and the environment and the actual energy grids that you're impacting, right? When we think about sites like River Bend or Corpus Christi, we pay for the system upgrades that pull the power to where we are. We commit to the capacity on the energy side. That's kind of table stakes in my mind in the world that we're developing today, and smaller utilities have gotten infinitely more sophisticated on that, which is where you see kind of collateral coming in.
I think in some places it's getting overindexed, and we'll kind of come back to the mean, but in general, that's the general sentiment. As power generation gets constrained, as more and more demand comes onto the grid, I think what you'll see more often is not islanded generation or bridge generation, where you kind of wait for the interconnect, but when you're building a load asset, you want the redundancy from the grid. There is value in that. When building a generation asset, you want the grid and the demand that's in the grid for the power.
What I think more and more what will happen in the markets is, people will bring load and people will bring generation. They'll try to kind of have a net equal impact into the grid, but interconnect that all in the long term. You'll have power generation increasing in the grid, you have load increasing. A lot of that will be financed and capitalized through the demand of the end, customers and users, and we think that's the best way to be able to scale and compete in the AI race on a global markets.
Sue Ennis (Head of Investor Relations and Government Affairs)
From John Todaro at Needham: "Can you walk us through where you stand on the OSA negotiations with Fluidstack, and more broadly, give us an update on construction cadence? How many data halls are in the initial phase, and are you seeing any supply chain or contractor bottlenecks?" Maybe we can talk about where we're at as well, on the procurement side at River Bend.
Asher Genoot (CEO)
Sure, happy to do so. When we announced the deal, everything we locked in, from people, contractors, long lead time items, equipment, all that was locked in. There was nothing open when we announced the deal at the end of last year. On the delivery and the execution itself, as we mentioned and we guided towards, in the beginning of Q2, we'll have the first data center coming online, we'll have a data center coming online every 60 days thereafter. There are 4 data centers in this data hall. As we think about the actual construction right now, everything's going really, really well. People are very excited. There's a lot of local talent in Louisiana because of the heavy industry that was there before, that's really, really great. Jacobs has been a great partner.
Vertiv is fully cranking on the long lead time items that they're delivering and procuring for this project. Overall, from a constructability and delivery perspective, feel very, very good, and we gave ourselves a healthy timeline to deliver this as well. We're not scrunching every single thing. We put buffer in. We hope to deliver earlier if we can. That's how we've really developed this program. From a financing perspective, things are going very well as well. We announced that we're gonna target 75% L- 85% LTC at a SOFR plus 225 rate. We've recently been able to improve that to 90% LTC at SOFR plus 240 to account for the increased loan-to-cost ratio. We've been able to get more project financing on the project.
Something that Sean and I like to talk about, even when a deal is done, we still like to further improve and figure out how to make it better. Overall, in terms of delivery, feeling very good. We're currently in active negotiations on the OSA in terms of operations and delivery, but we have some time until we actually are operating the campus, so working through those kind of contracts now as well.
Sue Ennis (Head of Investor Relations and Government Affairs)
Maybe just to quickly piggyback on that, from one of our new friends, Robert Buck at Newbrook: "In considering future deals, do you require credit enhancements, as with Google on the Fluidstack deal, or would you be willing to have one of the LLMs be a counterparty? How much of a gating issue would this be?
Asher Genoot (CEO)
I think overall, it's really thinking about our overall platform that we're building and the exposure that we're taking on investment-grade counterparties, on non-investment grade counterparties, and really everything kind of in between. As we think about developing our platform, we want to make sure that the cash flows that we have and that we're projecting to be able to fund the growth and the expansion of our business are durable and are reliable. Obviously, that affects cost of capital and financing and LTCs as well. As we look at future growth opportunities, we're obviously optimizing towards investment-grade counterparties, but it's really about, like any portfolio anyone has, including all the shareholders on this call, it's about risk allocation. What percentage of your platform is on high growth, high risk companies that have a ton of upside?
What % is on stability on the platform as well? I think for us, it's not binary, it has to be this or that, but it's around risk allocation. Obviously, as we've kind of told and shown the market, we have a heavy lenience towards folks with investment-grade counterparty, and as we think about financing on the debt and the equity investments as well. There's always a place in the portfolio for high growth companies as well, but it's all about % exposure that we have to them. Every time we announce a deal, we'll walk through the thought processes in those. Right now, we continue to be focused on investment-grade counterparties that we're financing towards.
Sue Ennis (Head of Investor Relations and Government Affairs)
Okay, question from Mike Grondahl at Northland: "Can you describe the demand environment and how it's evolved over the last 90 days for HPC? Obviously, there's a few new dynamics that have transpired in the market. How has that evolved in terms of your guys' customer conversations?
Asher Genoot (CEO)
It's really interesting. I mean, last year, around the same time, this DeepSeek news came out, right? Everyone was scared that the demand is gone, and the markets were scared. The market stock has traded down a lot. The reality is, at that time, we were still seeing the demand and demand signals, and you saw a heavy uptake towards the end of the year. I think right now, especially with the agentic AI, I mean, the Mac Minis are sold out across the U.S.. If we looked at Highrise, the utilization on our cloud is at record highs, and so the actual applications and use cases are continuing to grow and increase and pick up. I think that will result in the compute that's needed.
Where we are today is also a little bit different than where we were last year. We have much deeper relationships with a variety of counterparties because of the last 2 years of relations that we built. We've gone through a lot of negotiations on the actual contracting of multiple counterparties. We've gone through engineering, design drawings for months with multiple counterparties. River Bend wasn't one counterparty that we worked with for a year and a half. We went through multiple iterations with multiple counterparties, and we had one that got to the finish line first. So those relationships are stronger than ever. What's nice for where we are today and the credibility that we have as well, is we can have a lot more frank and meaningful discussions around what is their capacity demand over the long term? How do we play into that?
How do we support them? For us, I'm honestly paying less attention to the stock market these days and spending way more time on the customers, what are their demands, and how do we build a competitive moats, because that is what's going to drive our business and grow and compound over time. I think all the noise you're seeing, we're seeing really the exact opposite. The demand is still there. The demand is still strong. People are still growing. You see that with some of the announcements, like yesterday with Meta and AMD, in terms of additional capacity. They just announced a deal with NVIDIA before that. Overall, I think demand is healthy. A bigger theme that we're seeing that's real is that power is becoming more constrained, right?
You're seeing every utility, every transmission operator trying to go through and restudy and change the approach that they're going in towards the studies. I think that's healthy as well, because you have so many developers that may not have the balance sheet or the capabilities to actually develop sites, and all they're trying to do is lock in an interconnect and then flip it to someone else to buy it. Sean talks about getting 10 inbounds on financings, probably get 100 inbounds on sites for us to look at from an M&A perspective. Clearing out some of that FUD, I think, will actually make the queues better. Then also from a development perspective, in terms of land development, you're seeing some places that don't want this in their backyards and some places that do.
I think you're seeing consistent, strong demand on the demand side, and then I think you're seeing kind of volatility on the supply side in the markets, which make us excited.
Sue Ennis (Head of Investor Relations and Government Affairs)
Yeah, agree. We support any sort of initiative that helps trim some of the fat in these queues. Also, education is key in some of these new markets where we're seeing stakeholder pushback for data center development. From our friend, Gregory Lewis at BTIG, he wants to know what I'm sure a lot of people want to know, is, "Any update on the power that is under exclusivity and steps and processes needed to move that into development?" Doesn't seem like we saw a lot of that happen in the current queue.
Asher Genoot (CEO)
Yeah. Currently working through it. We obviously have a pretty big amount of capacity in development right now, so trying to move that into commercializing and signing those agreements and signing them, 'cause if you think about our stages in the pipeline, we go from capacity under diligence, which is we have a large energy origination development team, and they're out there, they're hunting, they're negotiating, and they're looking at opportunities that make sense for us. We get into capacity under exclusivity. That's where we're investing more dollars from a team perspective and legal dollars perspective as well. In those scenarios, we have exclusivity, land options, we're investing into legal resources, preconstruction resources, high-voltage transmission engineering resources. When we get into capacity under development, that's when we're actually.
buying the land or locking in the kind of contractual agreements on the power and putting in the kind of payments or any collateral obligations. Then from there, we go into commercialization, construction, and then ultimately management and operations. I think we have a strong amount of megawatts, over 1 gigawatt in capacity into development right now that we're working on commercializing, and the capacity exclusivity will kind of be following that as well. If you think about timing, capacity and exclusivity, we have an exclusive access on that opportunity, whether it be the land, the power, or both. In that scenario, like, why go and spend the money if you still have option value there and work on commercializing the things that you already spent money on?
When you think about those two and how they interplay together, that's a kind of a big part of it. From a timing perspective, it's really getting more sites commercialized and having that funnel continue to grow and increasing the capacity under exclusivity from the capacity under diligence. As we continue within this year, there'll be a lot more conversations about the pipeline, how we think about conversion, more transparency into the sites that we have under capacity, under development, as well. We're excited. As we've mentioned, we're building a robust energy infrastructure platform in the digital infrastructure world.
River Bend, again, to remind everybody, was a site that started at capacity under diligence and made it all the way through to capacity under construction within the last 2 years, during the theme and during the market rush of power. This was not a site that we converted from the Bitcoin mining days when it was less competitive to get power. We've shown that we can do it once, and we will continue to do it.
Sue Ennis (Head of Investor Relations and Government Affairs)
Thank you. From our friend, Chris Brendler at Rosenblatt Securities: "On funding River Bend CapEx, any early read on the project-level financing deal, given the recent volatility in the market, and how do you view your Bitcoin holdings as a potential source of funding for the equity portion?
Asher Genoot (CEO)
We feel very good. The equity, as of right now, is already fully funded. Because we've had to fund the projects, our deposits with Vertiv, and so forth, so when the project financing actually completes, we're going to get a multi-hundred million dollar cash out of the transaction, then we'll fund our 10% on an ongoing basis. As we mentioned, we went from 85% LTC to 90% LTC on the financing. We're pushing aggressively towards closing. JP Morgan and Goldman are committed. They wouldn't have given us quotes and put us on the press release when we announced if it was a just an idea. We're very excited, we're very committed, and we have connectivity at the highest levels.
I've had lunches with the CEOs of the firms, and so I'm very excited that we have partners not only to finance this project, but on go-forward projects to replicate this program on a go forward. From a Bitcoin perspective, our balance sheet and our Bitcoin on the balance sheet in the beginning of last year was core to us executing on throughout last year. Being able to tell customers, "Don't worry about our ability to finance," with this amount of Bitcoin on the balance sheet was really important. Where we are this year, Bitcoin, you know, on the balance sheet is not the focus, it doesn't matter. It's just an asset on our balance sheet.
The reality is, we're going to remove Bitcoin exposure on our balance sheet as we move forward, and how we do it is what we're focused on right now, and our exposure will be through the equity ownership, where we have an American Bitcoin. Bitcoin on the Hut 8 balance sheet is not going to be a thing that we continue to hold for the long term. The beauty is, we're able to hold that exposure through the equity that we were able to create in American Bitcoin for incubating and building that business. I think we're really good at creating value, and our focus is, how do we drive down cost of capital and continue to create value by building businesses? What we're excited for, building Hut 8, building ABC, building Highrise.
That, that's a big change in focus on kind of the importance of Bitcoin on our balance sheet and our perspective on it on a go-forward basis. River Bend, currently, from an equity portion, we don't need any more equity funding. We've already funded the projects. We're actually getting cash back once the financing closes, and hopefully we can talk about it in our upcoming earnings call.
Sue Ennis (Head of Investor Relations and Government Affairs)
Great. Okay, let's talk about... We touched on this a little bit, but what don't we talk about where is the... Hang on, I'm just trying to find where Brett was asking us a question. Okay, it seems like co-locating generation on-site with data centers is going to be more prevalent. We did touch on this a little bit. What are we doing specifically to participate in this trend?
Asher Genoot (CEO)
Sorry, repeat. Co-location data centers, like traditional co-lo, you mean, instead of single-tenant campuses?
Sue Ennis (Head of Investor Relations and Government Affairs)
No, single-tenant campuses. Yeah.
Asher Genoot (CEO)
Sorry, repeat the question.
Sue Ennis (Head of Investor Relations and Government Affairs)
It seems like co-locating generation, single-tenant campuses on-site.
Asher Genoot (CEO)
Got it.
Sue Ennis (Head of Investor Relations and Government Affairs)
Yeah, is gonna be more prevalent.
Asher Genoot (CEO)
Okay.
Sue Ennis (Head of Investor Relations and Government Affairs)
What's that doing to participate in this trend?
Asher Genoot (CEO)
Let's use River Bend. That's a perfect example. The Entergy Louisiana has given us a plan in terms of when they can deliver power, right? We're talking about the full gigawatt. They wanna build generation, add it to their rate base, have us be able to make sure we commit to it, so they're not taking spec dollars at play here. We're having discussions around them of, maybe we can bring the generation faster to the site to drive the full gigawatt at a faster timeframe, right? We don't wanna wait 5 years. What if we brought it in a lot earlier? As you think about the sequencing, what % of the gigawatt can we pull from the open markets in terms of capacity, and what % do we have to build in that new generation, right? That's first.
The full gigawatt is not treated as the same. The discussions we're having is, how do we think about bringing generation to this campus? We have a lot of land. We have the ability to scale to almost 3,000 acres. We have access to pipelines and the ability to generate and to produce. As I mentioned in earlier Q&A or in the actual Fireside chat, bringing generation with load, we think is gonna be a bigger part of the story, a bigger part of the development, and luckily, we have those capabilities in-house. We managed four natural gas power plants with Macquarie as a partner, and we not only managed those, that's another asset.
Those were four assets that we bought out of bankruptcy, we turned around, we signed long-term offtake agreements with the utility in Ontario, and we sold them to TransAlta, which is a large utility in Canada. We have the expertise in-house. We're continuing to build and compound on the expertise we already have, but it's going to be a bigger and bigger part of the story. I don't think it's gonna be around island generation, I think it's gonna be around bridging and having load and generation interconnected to the grid at your campuses.
Sue Ennis (Head of Investor Relations and Government Affairs)
Okay, we are coming up on the hour here, so we're gonna do one more-
Asher Genoot (CEO)
Crazy, we have, like, 31 questions in the queue so, and I think we'll maybe reduce that number when we get people to come on stage with us next time.
Sue Ennis (Head of Investor Relations and Government Affairs)
That's right. We talk a lot about the importance of our energy origination team, of diversifying the pipeline, of not being overweighted to a single market. Can you and maybe Sean talk about some of the areas where we are still finding pockets of opportunity? For example, in a previous conference, we talked about how we were interested in studying a development in Pennsylvania. Maybe just talk a little bit about sort of some of the areas that we're looking at well outside of ERCOT.
Asher Genoot (CEO)
We're looking across the whole US. Every single area in the US, as we mentioned, power and land in a regulatory environment that allows for building this infrastructure at scale are the key pieces in building, right? Fiber has been less of a bottleneck. We've been able to bring fiber to a lot of the campuses that we're developing and that we're building. It's following the power, taking a first principle approach to where is there power? Using River Bend as another example, 'cause I think is our first fully kind of vetted case study, and we can do the same with our future sites that we announce, that project was around the transmission lines. That project was around the generation near that campus.
We came together, and we pieced multiple pieces of land that were held for generations as kind of hunting properties by people, and we built this 3,000 acre opportunity to go build a large-scale mega campus. We're looking at those similar characteristics as we look across the whole United States, and we look at its ability to scale power, its ability to build with a friendly regulatory environment that wants this project there and sees the impact and the benefit that we can bring. A place that we can have talent to actually execute and build these projects and do so with the speeds that we're looking to build them at. Our team, the reason why we're scaling is we're continuing to increase the breadth and the depth across our energy origination pipeline, across the full United States.
There are some areas that are more complex than others, obviously, that aren't kind of traditional data center markets. We're kind of focusing on tier one, tier two, and tier three markets, and there's a little bit of a different allocation of priority risk capital that we put onto each of them based on our confidence level of commercializing them. In some sites, we know that we'll always have kind of another market through American Bitcoin as a demand of a captive consumer that we have of the power, where the energy prices work. In other areas, we know that this is primarily built, and there is no backup option for developing this campus. Overall, we're excited.
I think we're one of the first to talk about our development pipeline, our energy pipeline, 'cause that was a core focus, and now we're two years into that journey. We've been able to take one project fully through the beginning to almost near the end of the process. Now we gotta get it to capacity under management, but we'll start having more sites kind of coming through that pipeline, and it takes time to develop these projects, and you're starting to see some of those come to fruition as they move down the pipeline as we start talking about them more.
Sue Ennis (Head of Investor Relations and Government Affairs)
Awesome, we've got-
Asher Genoot (CEO)
Some more projects, similar, I guess, to River Bend. We've had a lot more projects get into the press than, we've shared with the markets because of all the local zoning and, panels that we do. You guys will see that as well, if you, keep your, news alerts on on Hut 8.
Sue Ennis (Head of Investor Relations and Government Affairs)
Yeah. Okay, we've got one minute left in this call. Maybe any closing thoughts, Sean and Asher, that you want to leave our audience with?
Asher Genoot (CEO)
I've talked a lot. Sean, why don't you close us out?
Sean Glennan (CFO)
Yeah. Happy to. Thanks, Asher. look, I think Asher said a lot of it, but, you know, this is a year about execution. It's a year about growth and scaling the company. We're excited about the foundation we've built. like, when I started, I told Asher I felt like where we are now is inevitable, and I feel like the growth of the company is inevitable. We've put together a really good development business, a really good funding mechanism, and we're looking to continue to repeat and compound that over time. We're excited to have you along as shareholders. We hope we've done you well so far, and we look forward to continuing to do so in the future.
Sue Ennis (Head of Investor Relations and Government Affairs)
Thanks, Sean. Operator, you can close the line.