LM FUNDING AMERICA, INC. (LMFA)·Q2 2024 Earnings Summary

Executive Summary

• Q2 2024 reflected halving-related pressure: revenue was $3.01M, Bitcoins mined were 44.1 (≈$2.9M at ~$65.6K/BTC), net loss attributable to LMFA was $6.07M (basic/diluted EPS $(2.44)), and Core EBITDA was a loss of $2.18M, as depreciation rose and a $1.27M fair value loss on Bitcoin ran through operating expenses .
• Management is reconfiguring the cost base: several expensive hosting contracts expired, ~3,000 S19j Pros were moved to a new 15 MW Arthur Mining site at cost for ~10 months, and the company signed an LOI to acquire a Texas site (12 MW initially, up to +60 MW expansion) with immersion capacity; a $5M secured, non-convertible loan will support miners and infrastructure .
• Operational capacity remains sizable with ~639 PH/s potential hash rate and 160.4 BTC held at 6/30/24 (≈$10.0M), while the miner fleet repositioning during June temporarily impacted production and revenue .
• Versus prior quarters: Q1 2024 delivered $4.75M revenue and $1.90M net income (boosted by adoption of Bitcoin fair value accounting); Q2 decelerated QoQ given the April halving and transition downtime, despite higher BTC prices .
• Wall Street consensus (S&P Global) for Q2 2024 EPS and revenue was unavailable via our feed at this time; estimate comparisons are therefore not shown (we attempted retrieval but hit a data access limit).

What Went Well and What Went Wrong

• What Went Well

  • Hosting cost relief and footprint optimization: “several unfavorable hosting contracts have now expired,” enabling relocation to cost-effective sites, including a 15 MW Oklahoma facility with ~3,000 S19j Pros hosted at cost for ~10 months .
  • Scalable growth pipeline: LOI for a Texas site with 12 MW (immersion) and potential for +60 MW, plus exploration of an adjacent 60 MW near Oklahoma for future expansion .
  • Balance sheet/treasury: 160.4 BTC held at 6/30/24 (~$10.0M), working capital $8.4M, and positive Core EBITDA for H1 2024 ($2.24M) despite a negative Q2 .

• What Went Wrong

  • Halving/downtime pressure on topline: Q2 total revenue was $3.01M vs $3.20M in Q2 2023; management cited the April 2024 halving and June miner repositioning as key drivers .
  • Higher operating costs: Q2 operating expenses rose to $7.75M (vs $6.35M YoY) due to a $1.27M loss on Bitcoin fair value and higher D&A; Core EBITDA turned to a $(2.18)M loss in Q2 .
  • Profitability reset: Net loss attributable to LMFA was $(6.07)M with basic/diluted EPS of $(2.44) in Q2, reversing the Q1 net income tailwind from the fair value accounting change .

Financial Results

Summary P&L and non-GAAP

Revenue mix

KPIs and operating stats

Balance sheet highlights

Guidance Changes

No formal numerical revenue/EPS/EBITDA or margin guidance was provided; management focused on capacity/hosting footprint, cost structure, and site pipeline .

Earnings Call Themes & Trends

Management Commentary

• “Despite [the halving] transition, we successfully mined 44.1 Bitcoins valued at roughly $2.9 million. Fortunately, several unfavorable hosting contracts have now expired, and we are currently in the process of relocating our machines to cost effective mining sites including a potential 72 MW site in Texas that we have under LOI.” — Bruce Rodgers, CEO .
• “We mined 44.1 Bitcoins in the second quarter of 2024, generating $2.9 million in revenue… Total revenue… was approximately $3.0 million… Operating expenses… rose to $7.8 million… due to a $1.3 million loss in Bitcoin fair value and a $1.2 million increase in depreciation… net loss attributable to shareholders of approximately $6.1 million… core EBITDA loss was $2.2 million… [but] positive core EBITDA for the first half of 2024 of $2.2 million.” — Richard Russell, CFO .
• “We believe [the Texas] site… is projected to yield about 1,000 Bitcoin annually at current network difficulty rates” with immersion containers and staged buildout; the Arthur Mining 15 MW site hosts ~3,000 S19j Pros at cost for ~10 months to reduce opex .
• “We closed the quarter with approximately $10.2 million in cash and Bitcoin, and our working capital stood robust at $8.4 million.” — Richard Russell, CFO .

Q&A Highlights

• Texas and Oklahoma build-out: Texas will use immersion containers; some transformers are already on site; both sites will require tranche-based capex to add MWs .
• AI/HPC hosting: Not priced or pursued now; focus is on securing power for BTC mining (72 MW Texas; potential +60 MW in Oklahoma) .
• Oklahoma hosting economics: ~3,000 S19j Pros hosted at cost for ~10 months; thereafter, hosting reverts to market pricing with intent to have migrated capacity by then .
• Transition timeline: Moving ~3,000 miners took ~45 days; all installed at the Arthur site by the time of the call .
• Fleet/hosting mix and growth capex: ~800 S21/XPs are at Core (Kentucky); exited GIGA; $5M loan to fund the mix of infrastructure and miners (“10 MW… doesn’t do you any good if you don’t have any machines to plug into it”) .

Estimates Context

• We attempted to retrieve S&P Global consensus for Q2 2024 EPS, revenue, and EBITDA to compare against actuals, but the data feed was unavailable at this time due to a request limit. As a result, estimate comparisons and beat/miss analysis are not shown. We will update when S&P Global data becomes accessible.

Key Takeaways for Investors

• Near-term pressure, medium-term optionality: Q2 showed halving and repositioning headwinds, but the Texas LOI (12 MW + 60 MW potential) and 15 MW Oklahoma at-cost hosting should lower unit costs and support output as sites ramp .
• Watch the cost curve vs BTC price: Higher D&A and Bitcoin fair value volatility impacted Q2 results; improved hosting terms and immersion efficiency will be key to restoring Core EBITDA momentum if BTC price holds .
• Capacity path exists without heavy dilution: The closed $5M secured loan provides capital to add miners and infrastructure, potentially accelerating hashrate utilization at new sites .
• BTC treasury remains a lever: 160.4 BTC at quarter-end offers incremental financial flexibility but also introduces volatility under fair value accounting .
• Legacy finance optionality: Florida’s reserve funding mandate could provide a secondary growth vector in 2025 as associations seek solutions; this is not core to the mining thesis but could add optional earnings streams .
• Near-term catalysts: Execution on the Texas acquisition/immersion deployment, completion of further relocations from legacy hosts, and stabilization of opex per BTC mined are the operational catalysts likely to drive sentiment .
• Risk checks: Power pricing, network difficulty, and BTC price sensitivity remain primary risks to margin recovery; execution on site buildout and timely miner deployments are critical mitigants .