APLD - Earnings call transcript Q3 2022 | Applied Digital Corporation

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Operator

Good morning and welcome to Applied Blockchain's Fiscal Third Quarter 2022 Conference Call. My name is Doug, and I'll be your operator today.

Before this call Applied Blockchain issued a financial results for their fiscal third quarter ended February 28, 2022, in a press release. A copy of which will be furnished in a report on Form 8-K filed with the SEC, and will be available in the Investor Relations section of the company's website.

Joining you on today's call are Applied Blockchain's Chairman and CEO, Wes Cummins; and CFO, David Rench.

will call we questions. remarks, their open for the Following

Group Grampp a please Before Jeff Gateway proceed. will Grampp, we begin, Mr. from make statement. brief introductory

Jeff Grampp

Thank welcome. you. everyone Good morning and

their today may considered remind begins Before involve need law under be remarks, risks a statements making some number forward-looking to of management we're everyone formal securities that and statements we uncertainties. and

results of which we are materially described a factors actual many there could differ caution control, number our that which events you result, beyond from a in As statements. are to the and cause of those forward-looking

For relating occur made obligation except after statements required to statements update please earnings statements, more that Commission. the uncertainties, to detailed in are forward-looking made, and or undertaking reflect release risks, Exchange and any with to our our disclaim the disclosures events the assumptions law. the for Securities forward-looking or filings as of circumstances public date and see We by

IPO Exchange financial as but encourage risks of as and our you applicable metrics. non-GAAP our detailed with for business, carefully GAAP release discuss as to Prospectus. also refer identified under you circumstances our uncertainties and Factors well and earnings We disclosures our not Risk metrics Securities uncertainties the in measures tables read will variables you Commission our consider and reconciliation other to and filings We in and the descriptions disclosures to to including, limited caption the these

being section that via available and I is recorded Blockchain's like made the by a the @www.sec.gov. visiting Applied Applied call would will replay You Investor free in for be Securities everyone SEC remind Blockchain's Exchange Relations website. link Commission and may for of filings available get to website this

Blockchain's I Wes and CEO, Sir, like turn Applied to Chairman to the Cummins. would please over proceed. call Now,

Wes Cummins

it'd our appreciative to new I'd you and we welcome newer and inaugural of crypto We start completing of after this as business we're got us on traction an operation last initially Since for and hosting IPO thought in month. with a names Ethereum assist everyone. you such development saw beneficial datacenter of for be XXXX, Jeff, In shareholders of joining mining middle in I business like building In history SparkPool, company, brand support. Thanks, began first are our our early assets, massive in and morning, our and refocused the Thank business. business. business good to partnering and your many call GMR earnings our to with the our of existing a XXXX, starting opportunity. opportunity crypto focused resources quickly on to as mining. by in our Bitmain, industries the and we overview

development, by be we computing are power. reliable that on time need low also As increase a now saw opportunity being ban some for mining the crypto of capital recall, in instituted designed this cryptocurrency Applied may new North We're China permanent cryptocurrency also with the Concurrent -- massive building just to has world's find cost mining. as the raised datacenters low capacity you leading would to power. who to reliable Applied At the amount cost of to leading and Blockchain to massive need datacenter leader we miners, to an next-gen a find power. provider establish in that was we provider homes was China of also mining, American significant a provide

counterparties chip contracts maintaining currently services to contracts with recurring three a business but while facilities our a stability. colocation provide have provide long-term to we fee. years fixed for operational mostly customers full long-term larger future hardware datacenters, margin, we place hosting next-gen plan for We these five maximize at model facilities our customers, their maintenance and mix of of blue With where to contracts XX of to and short-term we years and and five customers smaller XX months have our with a

our by to results of price revenue these in provide datacenters than traditional expect developing long-term data for costs. hosting provide optimized secure and the contractual structure any unique revenue retention directly computing flow retrieval. are crypto the cash large given our The recurring not growth correlated predictable next-generated datacenters power demand of participate industry yet; the we expected both business can exposure we're differentiated are We industry model more This and as cryptocurrency that model structures with the investors to and will optimized and massive of for and power participants. power require our to are required

have connection accommodate and layouts, datacenters to requirements, customer very different cooling Next-gen demands power and requirements. internet different designs

be are So as our more machine and host business other cost our But Blockchain miners. we Bitcoin graphics disadvantaged to will we difficult easily density the challenged areas especially convert also into expect datacenters operators. such as be believe networks image move in learning, usually processing, found core to rendering, for and artificial with facilities team high competency will in replicate, operators applications to are we've like they We host future. primarily because they traditional high they other next-gen to traditional developed our with will geographically that believe the intelligence, a populations. generally datacenter hardware Initially, cannot for datacenter ours,

Glove by see provide time customers margin to opportunities We expansion also for aim over our value-added and services. providing Service White

contracts Since hosting is that given stages, ability business capacity over The scarce. sites access also power our cryptocurrency scalable of in for particularly power the low That's of attractive nascent up naturally five mining. not megawatts capacity hosting We industry allows can its us pool to deep. to long-term one is XXX provide to rates expect to scarcity in still realize the crypto cost years. availability talent span is our be to differentiators primary the as

And XXXX, energy property with our in August agreements provided our this our to in costs. have utility experts will capacity partnerships. and Dakota, have Five-year stable put customers. of North agreement against datacenter as us site. our facility. XXXX of located GMR These I pivoting first of megawatts. of then the datacenters. this services With training. we backdrop, agreement purchased the we of up have operating in with After in assembled team We been We local said our Bitcoin strength and us and facility believe out including XXXX prefilled the which before goals. in visibility as Fortunately, we've building, expertise, and XXX mining provide resources to and now executing business cohosting industry. the build leading here advantage for Bitmain with the pleased into began megawatts strong model. is to our design, our business a hosting hosting competitive with to partners infrastructure company that our hardware validation and business in energy also access various power plant our first XXX on September and Jamestown quick plant have report hosting in a quickly an a anyone signed has capacity with both on repair We construction we our advisory middle invested our cost structure, manufacturer next-gen company dedicated another in of maintenance additional we design, we found services, groundbreaking, and operational power team this I'm refer proficiency

at we to The few stand megawatts over online began in megawatts weeks. operational. the Today next first February XX with Jamestown early at being XX just the come online brought remaining over

assets a X.X and an expertise for business. owned have goals near an Bitmain asset They look at option an them venture of is game working of convert of infrastructure. tremendous for to Lastly, We and XX% We grow perhaps hosting to affiliate our operate common JV their to to believe within and the scale equity Antpool next-generation that JV of in by a term. the most our with we capacity a having Blockchain entered our share with datacenters affiliate leveraging The in ownership importantly, into aligned and the up Bitmain into own directly of in and Antpool Applied. XXXX, Applied will for skin January Applied own with having while price. and current is XX% develop gigawatts premium joint the forward to

CFO, to you Rench, this financials David my through closing walk I'll Now providing over David? to before our turn remarks.

David Rench

XXXX, morning, from reflect towards My Thank only began and quarter XX, contribution comments you, which ramping everyone. the quarter. our third fiscal will operations results, as modest facility Wes, end February up ended the of that brief Jamestown our good relatively be

in the year ago did period. not operations also We have comparable

operations. deferred fiscal Hosting excludes any So year-over-year as we'll are comparisons. attributable million quarter third $X hosting providing the entirely payments, were recorded upfront to not in our be Revenues revenue revenue. which

business count on operations was million operations and seized mining diluted weighted sale service. month quarter. crypto continuing sale consisting our revenues of $X.XX to proceeds share crypto loss a loss quarter were prior from completed $X fiscal loss loss keep incurred the facility, during $X.X the Total classified personnel as and first equipment during at We average quarter for $X.X operational. electricity count million, and quarter for and the in of to average began attributable diluted realized selling On a $X.X for to the selling, the during sale. quarter share operations fully from Jamestown a or employees becoming important million, costs our operating per our expense of fiscal Jamestown, to include primarily were a facility. to of was including the share, costs in revenue Jamestown for a in diluted equipment. a of all Legacy almost and in on million in recognize we the of facility for of share X, expenses than in full $X third the the third of per that $X.X were net based quarter quarter. mining EBITDA, We on loss the depreciation quarter $X.XX loss loss We operations quarter were all $X.X million. million Cost hosting from was hosting started the or measure Adjusted of the administrative March fiscal during of a Other mining third non-GAAP for of directly working Adjusted the third the our XXXX, discontinued XX.X based a operations costs, equipment million. which less service fully the is for million, revenue million. the Net mind a weighted million all quarter North a Ethereum as loss costs equipment discontinued the of contributing fiscal diluted general costs. February XX.X expect facility. thereby of for on of generated we $X.X It All third Dakota fiscal

approximately in will reflecting preferred in On count XXXX interest. all our with on at sheet, IPO, stock, Proceeds a into million, Texas fiscal we million of these site. XX, and XX.X of for X offering share we third used with outstanding approximately loan per Subsequent from common $X.X conversion six ended to be balance debt. share, we stock common with million a one $XX loan our changes quarter cash $X fund stock in stock our to the no completed stock equivalents fiscal NASDAQ X% Vantage and operations million. Jamestown of proceeds is Bank third our exchange, Lastly, completed issued five-year now uplisted XXXX, million. the generating a previously shares for Concurrent March shares our reverse entered we term current loan split quarter, net the at at we into the $XX agreement and this

our to fiscal guidance. turning quarter Now fourth

at We million of to million million the $X.X revenue or in range expect midpoint. $X.XX $X.X the

generate to EBITDA to $X.X my adjusted million financial an completes of That summary. loss $X.X million $X million expect We or midpoint.

call Now over Wes for I turn to the closing remarks.

Wes Cummins

beyond. and wind Texas. when ramped. with prepared We've West David. in a farm broken Texas of co-located you, will remarks be a over our will strategy another ground covering of calendar total in remainder XXX have to out which been site down fully I on XXXX operational. our by facility also be wind megawatts milestones We months, our XXX and This location look next a for growth fully close to few the plan megawatts want Thank break on to

robust further our in by pipeline five total continue XXX of provided calendar strategy to goal be X.X experience of ultimately in the In other to operations. a the this developed scaling expect scale and of Texas XXXX at We states our up three addition to and to sites, end of May three first other to facility the of over sources repeatable year. to We've our we next including combined Dakota, of XXX for our megawatts May the North construction, with being potential and capacity business before megawatts sites significantly plan at blueprint a has gigawatts a five over by us XXXX for years. power gigawatts

to XXXX, May in of and fiscal run this into $XX $XXX ends an over million EBITDA expect translate EBITDA We XXXX in company our exiting rate. which calendar at million generating

for previously, miners, capacity of who power. mentioned sources I almost low cryptocurrency As we lack hosting for insatiable demand see cost reliable

companies North publicly of over megawatts capacity the between XX and Our of relationships mining the America in And the the is going come opinion, industry. companies stated I this online In private think the in that close future. for with. the meet hosting capacity goal X,XXX to next is remain have the X,XXX to is internal to my the plus estimate months foreseeable hosting we traded bottleneck case needs publicly

Regarding mining risks industry you power stable and costs expect us with maintaining for particular geographic reduce criteria, have crypto on states our and that region. laws while selection to regulations diversity low the should focus favorable to and in site

footprint. conscious are also our We environmental of

higher the renewable represent be renewable and We with a next-generation portion our for infrastructure. of assets So energy a can focused and demand power datacenters load low renewables. energy generating we'll out carbon unique believe accelerate power increase build on of our

converting relatively entity we CapEx more to business model needs estate cash be positive happy a of cash we structure. we our REIT At to investigating, expand, REIT questions. trust real scale, free traditional become operations have flow, high believe several streams from your applicable structure, to REITs. margin cash traded that publicly we coming the as will co-hosting with consumer or now our of believe years. provide We're flow We're transition a which expect similar can low to a datacenter to may distributable capital recurring as conducive take Lastly and investment maintenance a to steady flow over high-level Operator?

Operator

now Instructions]. time, will be you. [Operator at Ladies gentlemen, and a this Thank we conducting question-and-answer session.

Our line B. Lucas first your the Please question. Riley. with proceed from question comes with of Pipes

Lucas Pipes

the congratulations the XXXX try of NASDAQ everyone Wes, the helpful data you points, very Thank XXXX very much also two then, to onion backend the XXXX, assume and $XX I $XXX million on weighted. a -- is EBITDA a you of and on million, morning, wanted good and million. listing. fiscal I of kind on provided bit, to $XX end that calendar run rate fiscal would peel

EBITDA. of I a say $XX in XXXX divide of I if the rate XX, months I $XX is $XXX is, the year, million, of calendar kind that's And month. monthly million if if about that generated five million of So first $XX end $X million that's that's by say million that the run

I $XXX of XXXX EBITDA that about million million calendar out, if average monthly EBITDA. times then XX and $XX that's So gets about

a we'd to course, So calendar you this reasonable it, really way look compare appreciate your very to that's because XXXX on wondered EBITDA space. much. color across about investors valuations go of much Thank just if

Wes Cummins

thanks, thank Yes, for Lucas question. and the you

of kind and EBITDA business the million. So the think end about megawatts, that you is of our per should megawatts we're XXX if you economics and the EBITDA about the per end, lower of the is way I about about think $XX ramp targeting XXX the think way think for that the I lower

in we're month be -- you those kicking come or walked so of $XXX calendar and fully end then a should EBITDA, XXX kicking that year and through of about, of remarks, off, of that starting the the in $X.X prepared the megawatts, the million kind we're megawatts I at per either think fall, to and And kind XXX online, should early get year. ramped, next calendar this million

those then coming first about half the of running should get XXX online and year you assumption at more bring year. those to and the we a with think continue of $XX you're million that so in online, I so, as And that online, calendar EBITDA

And be individually megawatts. stage about, the megawatts of how we of way of around I'm how XXXX, XXX comes million for year so per to want calendar that up or you for And, should the can is. we averaging little a think full-year. make Does sorry, that or full-year if for XXXX, thinking the kind where walk that thinking we're XXX around ends the schedule year calendar that about what at sense? we're through our $XXX But online, I average the

Lucas Pipes

you much to of number level. if Thank on sort that's scalable value term how to an very wondered super very that. this as sort maybe give to financing helpful. easier might Thank Yes, loan see switching The have the that. That's great you asset get super topics Bank helpful. you the loan, earlier, access to Vantage that so much. you'd to you outlined I targets at what a very on That's there's of capital but Thank to specific much for way And and color be? I could a elaborate same

Wes Cummins

Yes, absolutely.

you in our And So to history. put no first operating this context, right, was was our if that facility, first one. this just

was end about And to a looking on in XXX fact, so And from megawatts. at which XX%, next really at loan that. XXX rate value for up the of happy a expansion we we're I attractive with of there, with Vantage, interest

we've XXX, on to value you're the attractive depending state in. are really and already that our loan XXX, interest XX% rates, which and first next sheets So seen term

a of Dakota, bit kind of the in X.X% we're rate So with And from of North in in seeing help a subsidized our a site. kind banks really example, little crypto bank get goal they've rates. job for the team X% and XX% But XX you're X% done, I pump. I XX in that of priming lot first a X%, Texas, of the the it's look that rates would of Dakota, to of to has for more and that a around in we out after get seeing that. months, like kind kind don't am done think But seeing look, for to our X.X% going at is next XX% industry North to looking finance then then kind the anywhere LTVs. But of we're really the happy good general. to with And

Lucas Pipes

on Then from squeeze one I'll that's one, that's terrific. work Good that. Now in -- final me.

remind say it may missed where signups? and could Thank you agreements, hosting for So call then as what of have you us that timing for additional I very stand remarks color. would you the you in today, prepared it on leases much

Wes Cummins

kind of we little agreements. you'll for under as few today, next hosting we've on so finalized but XXX And the think see the weeks, Yes, as another XXX megawatts of stand XXX in sites. our plans to I a want ESA. coming expect weeks, in of some those I you concurrently the through. of we of should then would next But And those sign the PPA say -- in or the with see couple kind to the however you

Lucas Pipes

right. and for all of Great, much detail luck. the thank best you very Well, all

Wes Cummins

Thanks, Lucas.

Operator

question line John question. your next Please with with Your Needham. of Todaro proceed comes from

John Todaro

two One taking on on everyone Great. for supply the my the side. thanks one and question. the and on Congrats, then here. I demand side, quarter here have

Chinese public this in is that has hosting sales about any we're pipeline still it your current there or been is the commentary most of to fair U.S., migration integration, of the and thinking in private agreements, these makeup, side the there? On companies when demand some customer some with some say

Wes Cummins

it's say migration. Yes, still I that most of would

John Todaro

Okay.

Okay, great. Thanks.

in a a supply speaking, we it question, little to fair. broadly a And we that And intensive the to economically broader speaking, bit, that's of capital bit see And the got bit you if start more markets here? about guys bit Okay, side, if economy do of a is the business. slowdown it a markets, of global just capital anything have outside slowdown see little do just kind been still into a on crypto we but last the then little little here, side? moving on of of is a there think fundraising forward, just activity starting

Wes Cummins

just I guess build Do exactly fund specific, do mean, the maybe more mean, outs demand? slow out? do our be we build we I'm I down if trying to not to there's down what. drill you how

John Todaro

do Yes, exactly so sides, almost -- demand. where you insatiable is on both one

healthy think If is Bitcoin like there's see sounds forward? we some be XXK, crypto, on any prices margins your around moving continuing so it moving grands, commentary do outside there even breakeven If there. a this XX would still XXXX capital it lot Now, is general of forward? is that a then still you market and a just fundraising more, of But plans slowdown?

Wes Cummins

Yes.

very $X,XXX does I even new there think probably Obviously, the to sense you're already a at where with But is, you're XXXX a over that's machines the for at down. the to right pertinent I far as adjust. it's in going on range. week. of question we machines, the a mean, us always be what's people purchased talking So other price kind as But and make question, numbers about, our XXXX continuing they've things buy think I looking around obviously, shutting operate thought last these on not think would to probably you're that before it site, Bitcoin those of

rate so. it week equipment happens actually adjustment those pricing network or pretty that see or bit. a could cash You probably also adjustment, lags generally, see down quickly, numbers you'll takes little But a

about us, we're we're not one, are; I already. site things a think the contracted So think doing that unless we for fully

build So in we unless long-term or contracts contracts. site effectively pay place the take are have that the won't we

would capital would we for first -- at that these bank be seem fine as just one an these already secondly, be issue are doing. additional bank I with items, we're if options. building debt be what team that that your give those we project on lot is spending financings if far -- on of those I'm is full were started us. time us, fine. to the would for the out answers don't to debt whole as happy that, here we question. And to of the there I process not, up signing moment. a that primary if markets, finance outside our to focused the -- If so stopped and level then, contracts, know to think -- types were follow-up If us pretty So -- pause we But if we the then guess. people I --

John Todaro

No, no, that answered was clearly. that perfect pretty it actually

the questions. that. So, so Thanks that great. your main was Appreciate Yes, -- my those for are answers on those.

Wes Cummins

Sure. Thanks.

Operator

comes Grondahl Our of with the from Securities. Please next question line question. Mike your with proceed Northland

Mike Grondahl

one thanks, up the Hey, maybe pull biggest that you from Could us that learning two one you've of guys. or Dakota as projects, and can you the you've to, with of facility Just two so learnings takeaways big what's state you just kind share or had curve? North other of Texas -- sort the apply far had?

Wes Cummins

for thanks learning Dakota. curve North Mike, for steep, the steep a Hey, question. been It's

of now. through things of for thing to now we apply. us think what I so would development the and really how doing a now who were to on And our -- everything. here. procurement. design first. well was five what at is we for there, we team Jeff but walk was of time, and When employed to We that can sites. at that project we team developed lot doing North versus the in have really But we're we kind developed time. full he these us that is that a we've I on all on kind really of a well really We these runs him seven consulting do the us brought kind like same Dakota, of the there's brought So the really did there started And of And team developed multiple

to things think the and network of us I Dallas of going February going Dakota we've in is think fairly, So we've the expanded But think But two, up site. of out that so are going like geography. really insulated the a operation a we really kind were be I finding the that where you and there's for curves the team then, tell I it's chain we've in Also and kind kind buildings who need I But again, is those that mean, to of be in of really only site doing burst up supply transformers big, here to ramp it forward. with -- use these the think finding them delivers I And a it, we're this workers right. need be locally, chaotic will that, super operations and more our things because lot I hired real would lastly, then and in, also of doesn't. of the up in word lot easy. of we lot part-time all thought weeks. when this as different and racking well, started North plug a that, networking, people We that doing a all of of by did And few in will the big I are ramp you're things so miners, wasn't part one. then, February, do switchgear. for mostly who built We it were the big level and we say And we would But efficient. on one that side a there labor, to easier center you make of kind was that much of will of but use management. was these put procurement good figured changed that all stuff of learning and you

around all for centralized centralized and be watch monitoring be those So of lot They a it'll more will country. networking the these functions. of locations

Mike Grondahl

seems like bit? Bitmain Demand colocation. a customers are How strong. you? your customers here. of Can their Great. refer for advantages a really And to one nice is to you And can that us you -- I more. little the it's in their you're think through walk partner pointed just one been Bitmain out hosting so Bitmain is the have you using How finding are customers.

Wes Cummins

But people And Yes. I I of lot on dominant that daily been There mean, a I hardware, in. And I of big then or directing for could follow better are a marketing to know providers machines think a maker seller been new us that just they there's, that having customers think building able part through and mean a our us, the industry. finding of the that's to of has their and promises is preferred been follow when of haven't plugging route, this. about on us, that. weekly right. the you company us than build hosting made marketing a guys and And have -- participants don't one also being I finding the lot I that are out services, by arm the capacity basis. in people being

I So there's think, in right machines, sitting a of lot warehouses now.

to capacity it's we out time to new And proactively when deliver. to easy sell versus about and don't trying right just to lot to customer find talk them a marketing a customers trying now. for fairly going find and because have deliver We really more spend trying so it's can about realistically we the

Operator

with of line the Please Capital. comes your Brown with Our next proceed Lake question Street Rob from question.

Rob Brown

progress last in morning there's Hi, months. few and good

demand wanted now? the the recently how's market an with with And the it supply strong, environment changed more update on the to pricing right has environment Just changes? get to relative so pricing

Wes Cummins

And site specific give first Jamestown site, about and pricing we think fairly So our numbers, that don't see now. doing what don't significantly I first the changing. we're but our talked to we increased from pricing, this, we've

don't no And if the for crypto there's months, I week. even required much to plugged there's markets think machines these many to capacity new that. change that We next XX,XXX. there's expect last as way at any a been purchased, haven't get were to six there to I lot I any the earlier mentioned all you're on I Bitcoin we Like yet. sideline, and sitting so really the want still that think haven't said, be change going of volatility in so to that But I the seen obviously; in the to in there even down,

first facility in week. just our and from last pretty up in given we it, the go seen significantly, volatility pricing seen we've haven't the any So softness

Rob Brown

the great in us kind of a you you could And of end developing, of is key need? said in the open? And chain supply getting hear. of by at give wind facility, the the that when the how's but materials the that Okay, on you point year, to milestones then what sense Texas getting how this terms

Wes Cummins

Yes.

a that's great So question.

I So And we think basically it a And takeout now there, Dakota, the we're and we've North is putting up. in cotton, was we're cornfield. the site there. broken a one this were site mostly, ground then building watching when

the to little get up. our the game Dakota, still and took of was across work experience, more ahead being and then to is it is time some in last get North So industry of this buildings board switchgear buildings the to transformers We In think dirt take transformers. you'll the months maybe last three that side. on us up the it'll a I time; it hear this electronic were on done. one. And months point and the a few the And the

wind early the and we're shortly the and for but supply probably timeframe good that in some the to actually bottleneck. kind think really it'll we biggest ahead of I in through the the we're transformer have so delivered next week, switchgear and so all that transformers still one chain it'll facility the that. bringing site online, out fall be summer, being But then are of shape way to thereafter be other And Texas the

Operator

Our your comes D. with A. of Brendler next with Please Chris line question. proceed question from Davidson. the

Chris Brendler

Hi, thanks. Good morning.

quick not demand, at projections their sure about the pricing last sure or about from one or ability both not I power to for down your environment. hosting even a on hosting competitors taking fund follow-up the night heard least of infrastructure. hosts that's fund Just rigs

long it So could really this there difficulty like, ask first just backup is a things in has still last bridge, like XXX, guess to for to rise committed the of the But there cross were been for given that financing fee in fully I year? XXXX. Bitcoin so get just or you given a to wanted because lot tight demand of you're sounds so the significant change, fiscal

Wes Cummins

significantly we're know for in demand have have demand in discussions of these specifically on with. have machines talking U.S. these at side, plenty I we more of now right a Yes, like think that the for most XXX. us already that we're we And for sitting these then But least the are the I and to, are ones them purchased, that than the

this still I And So machines even there's being going the to well. those, the the as good miners publicly as are moved. IPO position they're so mostly out think fund a machines that of that, us that the the go and build And know mean, other trying the online when we It's customers it's volatile put industry. buy ourselves we facilities. that I to not equipment contract, with have financing financing machines new and this. then that's like they're, financing far And is proceeds, the as for to they the I need infrastructure But into think with or XXX as to in going -- is demand to we're there. obviously, traded debt financing, that. far pay that's do as go really the they're their an have some extremely to our

where over we But things stand so, right change can time. that's And now.

Chris Brendler

able becoming the that, some I today, you're noise this change Yes, market? of could of given How difficult, will out from if hearing won't conditions, these Is of little the very real Applied sort there Bitmain I be equities question, better but the Bitmain a debts that Bitmain like. some change I'm around a to quick positive more way the looks market floating probability be like feel and/or and at break orders hopefully, does temporary, and this? equipment they into think there's now, take tight for that, of rising bit to fit excess for least any rigs advantage there's that delivered. can

Wes Cummins

that want have can we we some if that, I that customers we advantage still Yes, which that for us, take think want find customers that, of that.

consolidation, I see in the for that marketplace, some that kind running opportunities which -- you those if get a are we're of we're I going of as running, maybe of markets type for think of capital born the much running is some other are is maybe what be other a sale opportunities those really doing, thing arrived, typical, facilities us, that hopeful we from tighter environment. already the people. kind for on or that think, you much would leaseback But a business and that think us to capital there's it'll in more kind model obviously markets, tighter for bring about

Chris Brendler

and in that I Yes. guess take of take the advantage up what machines deal Like, facilities? like? look my -- -- does is would the your Bitmain of like, was ramp point is more potentially how excess question put them that, available to the they Bitmain

Wes Cummins

mean, I don't they it's speak haven't about would for I for -- don't their -- buy specifically. And that. what them talked do I generally, can't But Bitmain, hosting So equipment. I to know customers what I we're you for Bitmain's right. when Bitmain, to

advantage equipment anything as take of Bitmain say environment. far in how just a I would answer I as So don't to try slack the to want

Chris Brendler

North trying Texas and Is what of out? perspective what get a spin Yes, question. I in your to And Dakota start here. transaction the build positive North different next Dakota? makes from A -- your anything did versus for you just sense. next cons Texas pros in Makes sense. like, was doing are probably your

Wes Cummins

Yes.

North price low contract. we're Dakota provided long-term our It a had the we cost that power one it's been for, went the that Governor. a ribbon primary found with really of reasons there really cutting great partner, us. good Dakota great, to was we North a which tastes a week or the And So us is number thing looking is one power that with last good. stable We with to

we the found actual want you climate, there, climate, to also actually And a the business and but were colder both that in run climate. these the then so climate

of all air assets interesting facility. And really power they're with out they're well So finding some their opportunities curtailed; not, renewable getting cooled of Texas, it's of built we're Texas, being then where an West for they're owners really in not kind generation purchased. in

they significantly can And by with their return them. so co-locating enhance us

seeing, very and the that just we're welcoming are those also of is well. Texas opportunities so industry our And as

us more looking So both supply do the Texas of in is as But far It's as there's massive I But states states. interesting, other think in Texas. at too. power well. as that see we're those you'll

power, surplus it's it's and low population, a Dakota that they even not big One of North it's a but power, the just, only issues you it's a great run huge is state, of a into in surplus of have just amount. big

Chris Brendler

great. Yes,

already self-monitor, the start it's as this think say, pretty fast in One shift space. be market your I I can change host the to a is one than Sufficed Okay. it questions, a to at my this sort last to mentioned be strategy is, environment of conditions of in off? paying is better

Wes Cummins

higher also Bitcoin, But upside we margins, good on great way is, as Look security level, take hosting, can the I security from contracts business we we we level more, sit we or I still guess higher much have still of customers, pay capital. have so don't as our in get far long-term equipment, get on think at XX,XXX. a the generate the to industry, with get these we the security our about returns

security for So we more more kind and that give of up stability.

more model I is overall. So a much this in a industry, volatile attractive think

our as As far of as it. for stability level, their kind as capital as the the security commitment the far far and return, as predictability of

this this volatility kind recent think self-mining the the I highlights So the of of model benefits model. versus really

Chris Brendler

seeing the Yes, Thanks. Congrats, thing. same Wes.

Wes Cummins

Thanks.

Operator

[Operator to closing to further like Instructions]. There for the management in call remarks. queue. back are questions the I'd no hand

Wes Cummins

job to but the up a everyone's first and want get joining these our here. call really to everyone in other great employees. I our lined look Great. and facilities online push been It's Also, of to hard our conference a first forward just earnings future. Thanks thank for done facility all more

and just want thanks, to few you we'll to months. say talk So a in

Operator

today's gentlemen, Thank teleconference. your does for conclude participation. this and you Ladies

lines your and disconnect day. may a at time wonderful have You this

Applied Digital (APLD) 13 May 222022 Q3 Earnings call transcript