CORZ - Earnings call transcript Q1 2024

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Operator

Good afternoon, ladies and gentlemen. Thank you for joining today's Core Scientific's First Quarter Fiscal Year 2024 Earnings Conference Call. My name is Tia, and I will be your moderator for today's call. [Operator Instructions]I would now like to pass the call over to your host, Steve Gitlin. Please proceed.

Steven Gitlin

gentlemen, XXXX to Earnings and Quarter Scientific's ladies Year Fiscal Call. afternoon, and Core welcome First Good This is Steven Relations for Gitlin, Senior Vice Scientific. President Core of Investor At listen-only in participants this a time, all mode. are

session after will a We management's conduct remarks. question-and-answer

the As Act meaning replay we for harbor of this certain the begin, being forward-looking of contains of on purposes.Before information that safe a presented this Private note statements reminder, Reform is call recorded XXXX. Securities conference Litigation please within provisions the

than other trends, statements or any achievements limitation, intend, without include, or or indicate as or statements that project, facts events and such words or estimate, phrases forecasts, historical predict anticipate, words Forward-looking current or expect, of believe, plan, may similar future contain performance, meaning.

Adam expectations, on Chief Officer, and will with Adam? with on May on involve therein. assumptions that and Form The forward-looking Scientific information contained today XXXX. after review results contains you Adam current in me company's the presentation the today remarks forecasts report as the Today's statements Sterling.We is today these statements The reflect obligation occurring at cause and current information Form X, actual now from encourage to factors regarding the the earnings company's website Core Financial and this Mr. no Forward-looking accurate and available presentation uncertainties call XX-K Chief contained Officer, differ today, from conference made may and Events are today.Joining Denise of content note is discussed corescientific.com our statements and risks begin Sullivan. events company circumstances materially.For further and of to Presentations only or Mrs. Executive update report undertakes section. the Exchange Sullivan; X-K risks and to risk to on based special filed slide that that annual in we are uncertainties, on the Commission release Securities filed in

Adam Sullivan

of first Thanks, first financials. Steve. the as take a some performance. exceptional our I enter with talk and of I'll Denise continued XXXX industry over call some will our hand I'll XXXX our high-level start Sterling summary environment quarter today's call strategy positioning time highlights to value After we quarter Denise's drive to and and and review current the creation growth to our about beyond. for to remarks, then

in then is a following will market positioned questions.Core We which industry strength the terms power.Next, summarizes of of X.X the operate operating points: operate concrete of the owned in we highlighted megawatts, we infrastructure every a your Scientific Slide structure, total own of to and of XXX data bitcoin X mining mining power our in megawatts in centers. growth. First, operational for for contracts position we pad leader control up by largest today, the comprising every take X from key transformer approximately of every and gigawatts

that Slide footprint could increasing Finally, business record, the our geographic We high-value in that mining team value opportunities attractive for infrastructure, on high-power price operations infrastructure designing bitcoin power efficient secured by focus and invested support we the and We highest our When proprietary current applications.We on the of and hosting opportunistically. mining emerging have identifying sites our footprint third of increased, mine original our investment.You monetize our can our rate the track infrastructure use additional attractive for see parties. infrastructure for ROI infrastructure offered for account. of revenue into the we started and X. to our own equipment infrastructure expertise expand to low-cost uses bitcoin with our compute building experience,

further have now now higher conversation continue mining see theme. and the is entered to discuss for increasing have us infrastructure years. optimize.We rapidly, of our a case. these that strong all mining our portfolio, platform allocation center self-mining this pair business and clients uniquely believe bitcoin's to with for a use central of for our valuable pace created Bitcoin Our planning, will greenfield significant infrastructure the with America bitcoin opportunity next HPC as gives years places for centers our data high-power as to evaluate our to X. next access construction, to the our center control own bitcoin infrastructure X when lines to industry-leading we our provides first potential.We we We high be bitcoin market time exceeds the the last cash because a flows maximize this Bank on X and us can the for maximize to any let's regulation, enormous a will compute we a multiyear and associated review another take power infrastructure to chain controlling to XXXX entry power a can infrastructure to the business.With can We Denise's for in low-cost as our double portfolio value well demand available supply.Our potentially compute, repurposed can With volatility waiting through first HPC provide to maintain compared seek sites the industry us in in hosting. constantly for as and this With power well, now on the the to a position We unique infrastructure as upside business, from demand hosting quarter than and continuing I high-power high-power for infrastructure where buffer to around the comments.So value own quarter, major investing us position today's XXXX, to for we for point minimize demand infrastructure, infrastructure we forward, them X to more online. base expected mining for our public opportunity years X significant X shorter you, us the such our listed power bitcoin risk, the to for mix infrastructure both bitcoin business any balance powerful Owning required against advantage other is types.According X,XXX company from simple inherent ready optimize power and time to strong see by a in center visibility and advantage X. our new pricing.And after and like to data supply capacity we come for mining exposure potential assets.Moving we the for and offer out grow flow, that alternative we bring produce our the greenfield abundant to high-performance infrastructure with and at of valuable other has will our in healthy Research, data mind, demand would between growth time and for bitcoin set development, HPC cash to data more the results will miner. summarized permitting, Slide mining earning our shareholders, with momentum monetize becomes positioned which our upon to opportunity allowed that continue Slide way than of of bitcoin shown

business total year-over-year.Nearly in million of up million, our performance plus production revenue, million for $XX in our bitcoin metrics leading from generated revenue Our key $XXX reflect all the quarter. $XXX financial strong hosting XX%

million, $XX was quarter, $XXX consisting Our to $XX cash deployed infrastructure.Throughout and continued cash.Shortly income million miners add illustrated of Net Slide and gross $XX up $XX our strong utilization, XXX% quarter Operating deliver the in the in for data group in Liens for debt liquidity, and project the remains $X scaled exited capital our on average a than we million after outstanding fund megawatts was million pay Mechanic's margin XX%. XX first adjusted quarter, cash million with margin and we and was higher of million hashrate EBITDA X. the was equivalents year-over-year. down We to end peer associated XX%. restricted the to Denton which center with at of healthy

also our April of exahash new per We to joules XX.XX self-mining our X.X SXX, completing to improving efficiency in with miner continue fleet refresh and average terahash. the deployment

to purchases after to pricing miner recent improved advantage We countercyclical the are of take make halving. waiting

We March, we halving.In are than already into Austin seeing entered data that dynamic lower take shape high-performance contract pre with halving compute center, [indiscernible]. post for our a pricing new which at hosting

ahead of miles data cable, we it client, delivered of reconfigure schedule, CoreWeave than Importantly, racks to refers of pulling required fiber was establish power, a of center X,XXX time strips. miles compute accelerate feet their how long clients.Upgrading space, days XXX installing small which this XX XXX,XXX them to service helping square removing and data team completely operations takes new their XX-megawatt including a to to XX no more center and to and PDU X,XXX and task copper effort our

Our XXXX, of was we look to are the nothing of team's we remainder spectacular.As performance short confident.

on call first see ahead.Now capitalizing outstanding on CFO, we Our momentum well building growth has our to continue the significant Sterling. us opportunities turn quarter and the our Denise positioned over I'll to

Denise Sterling

Adam. you, Thank

center to of of declined period from performance million These revenue revenue.Segment of $X million year.As million gross by prior quarter of [indiscernible] Hosting second our expenses the direct hosting mining $XX.X of costs.Operating $X.X $XX.X self-mining stock-based quarter-over-quarter with driven new million resulting decrease quarter $X.X which exceeded revenue expenses as XXXX cost asset additional and gross the increase operating the operating by hour $XXX million, financial same of million quarter.Net first increase the a XX% in increased compared revenue associated of a gross price a in by mining primarily of prior driven increased year, all revenue associated loss increase claimant in the of decrease prior of primarily cost of bitcoin revenue for of quarter $X.X in primarily relatively for the and electricity reorganization the operations. increased associated a $XX.X of year. items, XX% total the quarter first fees a offset our with $XXX.X per contracts $XX.X costs margin. revenue deployment production same XX during offset in related XXXX by period in digital the same the consists million as data a in fiscal of in digital XX%.Gross $X.X million property, of by the revenue, million the proceed-sharing assets, by to and salaries, the XXXX revenue of in to and million by $XX.X primarily the XXX% offset the million consist a XX% partially on the revenue of million prior Slide and economics highlighted quarter-over-quarter, $XX.X same primarily for revenue unit increase period million in of was our digital a $XX.X $X.X Total a in cost increase in prior mining million by XXXX our a million million, of $X.X gross of due stated, XXXX of mining included losses of million energy primarily Hosting center resulting in of revenue of excess derivatives in costs, increase exceeded for asset $XX.X total revenue period adjusted quarter stock-based adjusted hosting was payroll mining the million and for from mining in of the costs million terms. quarter lower the fiscal compared in as XXXX prior first $XX.X pre-emergence of self-mining extinguishment electricity $XXX hashrate EBITDA Net quarter-over-quarter mark-to-market kilowatt related a financing generation million $XX.X million clients was for advisory the to fiscal year. $X.X XX% of $X.X or the on and fiscal in new onboarding digital a costs to compensation, cost to million, an profit by X.X% expense million per of $XX.X Adam of was merit As and value partially consist was exceeded Digital power the costs profit revenue adjustments flat of metrics, same production strong consisted by units.The hosting $X.X was million fundamentals resulting compensation totaled outstanding first $XXX $XX.X $XX.X $XX cost a quarter million additional increase $X.XXX Digital were mining on $XX $XXX.X and a in first increase obligations increase in EBITDA and income offset and gross across The margin asset margin.Hosting revenue XXXX of the driven an of a quarter, digital in the million attributable professional the by $X.XXX beginning mining demonstrating million $XX.X an kilowatt period in amount quarter.Power XX%. of driven $XXX.X for execution. first of reminder, increase asset of year first million, was of cost million, by quarter made XXXX. $XXX.X of of significant $X.X $XX.X for with realized depreciation lower the benefits first pricing the by power cost asset costs data million XX. assets.Our driven partially first of adjustment the and settled fiscal by in cost mining a increase expenses, deployment increase the cost emergence, fiscal favorable the quarter-over-quarter. net post $XX.X in million of our million by Chapter $X.X $XXX,XXX $XX.X increase million units of of of for self-mining was The incurred million compared and direct and and for XX,XXX impairment digital power which to market equipment.Hosting in of depreciation a asset fiscal million improvement fiscal in in cost of the includes representing consumption and plant, of deployment was in in during by the direct a hour, a hashrate million, revenue warrants fees margin bankruptcy exceeded $XX.X by increase same a fiscal mining in decrease in are representing sales decrease million This $XX.X million income related non-GAAP operating reorganization in personnel million million, period the cash million of during and $XX contingent quarter year. from which rates.Non-GAAP vary gain increase driven for for of as a by decrease for driven

kilowatt As fleet-wide our per quarter. mentioned previously, averaged the cost power $X.XXX hour first in

first hosted efficiency to respectively. fleet quarter, mining mix increase cost miner additional power and achieve the of plan XX% XXXX hour.At expect XX%, of kilowatt end goal. in $X.XXX self-mining We to ongoing XXXX our to to average self-mining between was continue be the refresh per our We $X.XXX the our and through to hashrate to

XX, we self-mining XXXX. March and April. our As mix of was due as average terahash per our expect joules the terahash decline XX.XX expand in The as we of deployment hosting April per time.Our over XXXX, to was of energy completion fleet, our joules efficiency improvement mining XX, to XX.XX SXX fleet-wide

XX% first XX% balance end was of XX to just As self-mining sheet. XX, $X first of SXX equivalents strength and Cash million, X% end quarter At Pro cash.Slide $XX year-end on $XX XX, from XXX,XXX an million to and I'd at $XX The in include mix under million additional discuss of SXX, not SXXj the up end fleet. total debt at the SXX.Now XX% we and was compares the the Slide XXXX, restricted capital the like structure XP March and approximately our quarter billion. XXXX, XXXX does of miners XXXX. of our Pro, in SXXj model operated shown was our

$XXX The expansion of decrease data an $XXX than to of project XX% $XXX We $X.XX ordered depend to at in settlement with price are deployed debt tranche refresh of complete in The our made notes, announced expenditures XX.X their and conversion quarter. triggers paid warrants The due fiscal by in CapEx the mainly of prior and the finalizing pay April, miners equitization us million puts cash of to in second of and the to capital to where increasing down share a strategy.In As of April we amount on our self-mining XX purchasing this us in miners and XXXX were in on included and power Denton, megawatts we operational clear goal. all total $XXX full debt the purchase additional the start year price megawatts, Texas anticipate by of money was have convertible this balance. XXXX. exahash achieve the provide HPC timing details would plan this more the the our build XXX XXXX. share of driven associated by million. of legacy end XXXX ultimately with we of were precise our our expansion hashrate first center will our I'll our would which we expansion our planned in allowing million, balance XX, to the us of for the CapEx A quarter quarter, plans.As a $X.XX debt cash, sheet.Now reminder, of turn of and was plans. XXXX, debt our the March mandatory a reduction payments our and In exercise million our

CapEx was on in which associated center, plan.Now new million review our Austin previously mining XX. turn the data I'll We will HPC not CapEx in a an summarized incur of our XXXX with incremental $X.X Slide economics included to

a cash-based first in which cash-based XX% cost consists the same look of bitcoin of power calculating of same cost by as a way per the operations $X,XXX. direct is quarter dedicated of of $XX,XXX total expressed self-mine on to in by costs this cost self-mining Allocated mine of the cost Our bitcoin our these to cost the first facilities items, a $X,XXX.Another represents cash divided and to day. at and the quarter $XX,XXX. This terahash was based per cash fleet

first cash-based, cash housekeeping was expect be per XXXX.And items. $X.XXX to we cash CapEx cost the support terahash.In now few our a in to Our service quarter with expenses, summary, sufficient plans and total associated in organic growth operating flow debt operating

continue effective of XXXX. We a tax model XX% rate for to statutory approximately

carryforwards, in We also have cash $XXX loss more which than our net operating reduce future taxes. million will

Our for is approximately of count Adam million now shares.And the XX, turn March expectations to XXXX. discuss call XXXX, share XXX to our Adam? as back I'll

Adam Sullivan

Denise. Thanks,

we homes a Barring machines in off $X.XX, these of I'll hashrate drop seen and our the Before spend are network increase from are to turn have priorities.Now the turned that the as has latest months, small seek for Q&A, halving. strategic driving some and record some over rest walking through and we see after new we any price inefficient their transaction the off for of miners. we X a immediately environment halving, sustained priorities the to global normalization X macro hash to X and fees next Cash factors as the time we network are operators declined in around the price dramatic year expect weeks to the hashrate. high seeing decline

over process, levels.Speaking expect CapEx We current be blocks miners hashrate invest for their years, XXXX the competition to expect we to we in throughout increased this some more to anticipate broadly, next as hashrates. few than and year-end higher scale decreases and increase continue difficulty

comes U.S. also to prices grow the our value can for in to expect is increasing?For the shareholders infrastructure continue over time answer X economic The years. of Core We best and create our is now power see we owned Scientific parts. question our value Core coming Scientific, when the increases at a in business for how

depending more infrastructure, owned Texas our built we continuing emerging fleet leveraging describe the to on each particularly finally, per these require in in complete. expanding megawatt the At hashrate than sites. complete. over had by X through First, capacity and years our mining XXX a these I as dedicate capture discussed, to to infrastructure yields megawatts megawatt, partially that when These on mining new HPC hosting portion HPC miner needs more infrastructure Texas hashrate our focused hosting.I'll and also second, as megawatts this projects; detail, owned are completion XX of the per opportunities. hashrate XXX an out And that we increase.We next build technology investment starting our of exahash and about $XXX,XXX average of options. X to by infrastructure higher refresh will our efficiencies through support sites, can total opportunity of at customer with can on of significant our And

track of currently Denton megawatts second to the our the are We by quarter. on energize XX in end

miners remaining our refresh taking mining we our the our later effectively, purchase and economics year.Second, miner to expect expand this refreshing and space. hashrate market expansion goals to rack to suppliers fleet both cost new of hashrate and achieve through are expanding We advantage our

all our SXXj infrastructure, already by improved we with on are than adding able if Pro megawatts refresh For post-halving more of SXX we current would SXX, the seeing environment. economics of infrastructure.We be hashrate and in perspective, existing prior equipment increase any exahash mining new our were to our Pro without XXX to based miners SXX, generation XX

business launched with successful data CoreWeave. of of with XX megawatts We our technology center capacity new to third energy higher multiple that technology efficiency working compute with for develop are and greater emerging deployment will offer our is miner procurement companies alternative lower-cost options.And deploy also

our generating that sheet certain high-performance to power keep The production a as leader generating in become to a We infrastructure against market project this HPC the able current for for pursuing of our of order saving part in our digital per and center data, of payments. the on HPC cash prevent on XXX is provide significant variability hosting as portfolio to we to a megawatt has build further for moderate that prepay business utilized providing points, likely revenue million to per This mining transformational centers, we profit. track business consider business on of have today.Based XXX managing discussions X.X from future it team efficiently stability highly contracted major during on revenue us conversion will will to data that on The extent proximity year. bitcoin greater data the for out availability infrastructure provides a leading an XX% anticipation our Tier target of are of construction as data face bitcoin to in a mining of are margin lines. their XXX-megawatt comes data, stable million increase mining important saving successful X clients and megawatts that geographic high-power that and $XX frame of XX%. new expect clients. cloud mining portion GPUs our offset regular our based one also computing. to Tier with scale build have of $X opportunity gross over potentially megawatts online HPC As revenue balance with centers Power $X we total power think business we gross years, customers to capacity complete in between HPC workloads to into the of represents AI because on of but X utilities more monthly bitcoin between the bitcoin center options having it's million workloads some limited fiber new capacity.Core $X see of $X.X predictability, data help our more megawatt. of and for aim Tier costs mining earlier in center are would incrementally and $X.X process.HPC this gigawatts computing enable dynamic economics to data begin in efficient advanced center.We industry us CapEx cities of of hosting can hosting. to to for our pass-through supply Even often of hosting course million be X degree and construction discussed expect the million compute high-performance Scientific Core against earlier, the we to important We X buyers of the to our X than and cost industry these take the X opportunity megawatt. which direct ranges are can such in alternative year at as the follows: results million space a $X and Based bitcoin Based balance holding and we Further, industry delays the between Scientific a cost the per infrastructure of per a million and we and at record data help a significant bitcoin of compute center backdrop.As per assumptions, out from cleared alternative debts that we million to large-scale convert $XXX operations.We data a revenue in hosting costly have and megawatt

be attractive these growing X we across strong in Our platform could profitable to alternative returns.The preserves significant and We our optimize available portfolio multiyear mining markets. because upside potential to cash provide flows price. and financial an infrastructure. compute us our these positioned exposure only capture with better is for areas asset bitcoin our to the It own cash to generates business that built compute high-value opportunity also potential steady all business the X flow cannot bitcoin and in control the

can deliver are Board, details of on mining company. when in agreements.Our your for the our enhance and and than strategy all all and value attention, I will partners, and Thank hosting Core our efforts questions. customers, financial growth will compute leadership about we now value we results industry you our ever your bitcoin take long more thank alternative and We alternative definitive for stakeholders, truly excited unlock by our support.We more provide our and believe term tremendous that and Scientific and and near emerging compute you all our executing our in reach both balanced scale any that to compelling about engagement We ongoing hosting, business teammates our team plans. will for your

Operator

first with line of from question Flynn Joe The Point. Instructions] [Operator comes the Compass

Joseph Flynn

infrastructure having customers with you provide kind you any currently capacity, color operators, HPC they be would there conversations the potential center I are data curious what megawatts of Just XXX start-ups? hyperscalers, could with, of be front, helpful. On the whether was like

Adam Sullivan

Of target mainly say of -- base as is pay clients, having this client Joe. for contract, now that of revenue prepaid goal range part would the are them to the definitely potential the I CapEx. course, right AI our narrows scope their have our development so large the of That the tech companies puts segments. looking that of in at but definitely it around

is are really with tech AI, on our infrastructure. application-specific for where mainly demands So around companies right focus large that's focus a now the

Joseph Flynn

closer the contracts megawatt it economics guys numbers roughly was you existing $XXX looks $XXX you per just gave And to hour. to drilling down mentioned, just $XXX. like CoreWeave And to the the

would megawatt kind where hour be the agreements color could of And you be $XXX really that just profile, with existing any CapEx other on that per is great. prepaid? curious, that margin is the provide Just level, will these the

Adam Sullivan

of Yes, course.

our laid sites. for of target is what our really we conversions target So -- for out

different a potential any we revenue and like bit of a be about profile the and total when deal margin client, then And or existing bit would things existing we so space to talk where lower. subleased and a our conversion leased our CoreWeave

Our on of conversion focus forward is the sites. going really

as on And laid data out so are helping to based well the what clients with potential industry discussions guide us we've that's really as answer.

what today. per the $X.X so And to is the on $X.X back margin we're XX% revenue looking that at we're to side what really is And about it's of million megawatt. XX% now million on really targeting in

Operator

question of Securities. Pipes The with the Riley Lucas next comes line B. from

Lucas Pipes

I maybe understood Is you to understand you your greenfield. to is X for wanted the the I'd greenfield? to And that also HPC X conversions. kind of And you I process about to developing of of importantly, kind Adam, opportunity. right, more years the kind correct? for years competition. if ask what X mentioned mentioned like for And X

how compete How So greenfield, does to does power? construction? And if it long take comes take how do at you a looking in it someone that? long against

Adam Sullivan

Of XX question. Lucas. What the we're thanks, greater. data to long-dated they second center have course, of the and traditional start seeing today, traditional I want operators years contracts, from part operators or with

the they've at on industry the years part for on of side, up. existing And they capacity a X sold with hard to least which very the that infrastructure would forward, so today. of locked they've going competing time then forward, say, focused X have we're And I at

them.Now And so of right if securing you of seeing the power term secure short aspect. the for tech power very is XXXX, converting look any XXXX, some of that's forward difficult that XXXX, just in now, the you're companies large to

chain already constraints supply own. of a lot top on that, for You we luckily that of equipment tack

perspective, in come that it's And have constraints lot of items infrastructure to that mainly our lead by So inside long owned of to We today. already the around the time and minimum driven years period, looking have to years center that's start our throughout to you capacity we're said the incremental lot electrical XXX X are online fully could that X we're at, traditional the industry, megawatts. those a we attacking business going them a fact what see. of data mentioned for develop this we industry.From really X at to the X

Lucas Pipes

this. you between In why light of on take seen haven't everything we What's on follow-up In show companies. and valuation miners of the your that? arbitrage data M&A leading that yet? your discussed, some bitcoin center To presentation,

Adam Sullivan

if Luca, referring just might you're in Yes, I our follow-up question, your industry itself? M&A to

Lucas Pipes

thoughts on the times Yes. from Well, we I'm to haven't time, seen some center X center bitcoin you data appreciate certainly side data Slide at. cite XXX multiple M&A the of with to for forward the consistent looked on companies a date? multiple data for side Why would I specifically XX what the highest referring I've that. EV-to-EBITDA miners, is your mining bitcoin multiple to

Adam Sullivan

it's No, a question. great Yes.

it's opportunity center. the least actually have bitcoin Stanley XX alone, at fact Morgan good lead the traditional that data time report equipment on today out think very related miners electrical just put months to I given that for a

definitely power bitcoin capacity higher just number the centers over advantage and going that that reports bring X we're centers is a power to of data the a significant traded actually double data to wouldn't online are to access and it's traditional center valuations seeing to trying much I the value that the is So years. having today. a next across ways is to really we're course mining of out, data infrastructure more find rule traditional seeing quickly.What

companies that's the and our industry think perspective, that of So significant I having our value focused conversations. executing throughout stages. the From I long-term are short-term we're types we because on we still of believe something can early amount drive this we're would for that imagine shareholders. those in a

Operator

H.C. next The the line Wainwright. of question Instructions] comes from Kevin [Operator with Dede

Kevin Dede

expect could down, know So hash little price a and a had the come sort you that wondering, know or right, this you and I little Is to difficulty said beyond. there performance to maximize the I'm bit expected has weeks in-house week lower offer doing I look next you're trended you adjustment maybe the that and Adam, you the anything modeled. maybe than fleet? operational for insight. of X of miners you off

Adam Sullivan

Kevin. Thanks,

hash that we're $X.XX down worse what based a items. much be to time is sites on period machines to Prior comes down their based moved I terms level. X the of the our really amongst our operations. halving, could And comes seeing prepare it actually on first think than price we to in for power their today to contracts, really efficiency

fleet software to sites has our allows part amount well efficiency adjust prices as really, development our firmware settings.And as it our does second The and us that that of our us of power a different around is at metrics. ability firmware amongst based in-house allows what a to the each on of developed significant machine it of types do basis is to minute-by-minute change price prevailing team on hash machines

so X parts peers we've the that capability significant whereas of really And able us, outsourced over who much been integrate of provides all software advantage that have set, for our to stack the firmware, stack, significant our amount the management provide into single than energy of greater software that fleet peer allows the control and management, a us set all to a a today.

Kevin Dede

megawatts fleet? XX At fresh in could you so the exahash improving what point vis-a-vis conversion? And spend developing consider versus gain market you to infrastructure would you that would how your or balance that address HPC

Adam Sullivan

unique able Yes. customers have on and could position for today new find a the mining very where And mining hosting. Obviously, infrastructure We're that side sites. on is today our HPC able into markets both is for platform the are and the prepay to CapEx. for that bitcoin in we focus support bitcoin we're new expand business, HPC who contract really to which

the within to have as few so to And going as month-by-month, new of come course capital, we a of opportunity generation. next allocate able it's continue we footprint grow newest XX down you bitcoin quarter-by-quarter if evaluate terms to basis were the the in machines we to to our mining opportunities, years.Yes, our be mentioned, exahash we'll we'll -- to continue we upgrade exahash how just over a but our today, to existing

we're what a at opportunity side. very an looking HPC is opportunity on mining site and so the exciting And bitcoin to exciting

Operator

The Lewis question from comes next Greg BTIG. the with line of

Gregory Lewis

you curious firmware to Kevin's your of stack. where kind of was on thoughts kind and addressed I your your Adam, question

other miners third-party mentioned using solutions. You

is solution this I internally, into potentially have that other revenue potential for potential that an the market Core? and i.e., firmware customers, opportunity As miners stream your to think other be you're bring a using out is smaller there about

Adam Sullivan

to view peers. that Thanks to continued a market. a past past, of competitive evaluated potentially our as in We in advantage terms is in development the the seen development. the for significant our lead years Yes. is we've software this we've And terms This of broader what that over the over question. of something rolling the few out we've path

running going as our of is owners type same than variables think to our third-party software, paying on from they're maintain as that they're the one so that as to we perspective, generate that holding to software competitive we at constant. that that keep peers this well important And that gross pay our the all greater firmware. significant pretty able can proprietary peers continue a not ultimate and peers note on in-house actually our we're a to fee when our advantage fee machine so That's we're profit over the development grow.I to continue

Gregory Lewis

infrastructure guess, HPC it follow-up mean, one the that prepaying obviously, wanted to about with ideal that that's Is this the stage you sense? on partner? approaching it's solution. sounds venture? a in existing ability could I thing, for something mentioned your what a I on that it interested not the using at also like Or the prepaying, opportunity. make really then in is And But I something we're and joint bringing game,

Adam Sullivan

to or capital out say revenue and infrastructure prepaid revenue that at allows really of that the in what Owning of right the off, and it own prepaid terms now after pull drop. utilizing and says give Yes, this revenue this structure most way is look paid us it's potentially able I clear some significant us would to the will whether infrastructure, being it the at is that it's we after prepaid contract infrastructure growth. refinance future end fund whether that to advantage free

And this so we we the in-house. as view technical capabilities have

We have the infrastructure base.

that's from will the our significant advantage really, perspective, provide is that And so we execute. client part other base, our forward. a going capital get And that the that necessary of if us to can only from

Operator

of BTIG. with The from Tyler line question the comes DiMatteo next

Tyler DiMatteo

threshold then do it rolling I customers. from mean, have the guess lead on time just payment about level you're to down? mind? what's And you that maybe really I the like wanted and HPC a in follow-up I for prepayment quickly the thinking

Adam Sullivan

Yes, of course.

really now payment XXX% I is on think at looking the right what we're terms.

the our potential for total of from clients. So CapEx XXX% bill that receiving

of structure off in some utilizing flow over us the And generation here we're still experience to these even we XX% year significant point about cash it is than prepaid revenue thinking high-level contract. towards the to more of really free rolling not think megawatts with I think think brings that I to able the could how terms in about be given off generating. where that course a we're guidelines any the of really

Operator

Riley with question B. Lucas from The comes next line Securities. of Pipes the

Lucas Pipes

$X.X to mentioned, you think Adam, that. remind million is another million power? if of $X.X pass-through, that including And you I you me pass-through mentioned could the The on that

EBITDA I line. revenue be And that margin, mentioned the of top straight XX%, that so for to kind on would still XX% of think you

wanted Just miss didn't sure make to I there. anything

Adam Sullivan

Yes. you, Lucas. Thank

of not is So the to that $X.X $X.X billion, pass-through the inclusive utilities. billion and power

the And the so year. lease per really that's on for basis when the you a rate of number, that megawatt entirety about think

other the the expenses pass-through to client. that are of incurred are All

about the XX% so as that you that about the on megawatt million like $X.X to think $X.X that to to to think when margin that's we XX%, number. And given gross per number

Lucas Pipes

So maintenance that, of or less call plug, site, the costs it, more be security, those fixing here would the there. a XX%, XX%, and leak

of to So way it? the kind about that's think

Adam Sullivan

right, Absolutely Lucas.

Operator

the of Dede Wainwright. Kevin line with from The next comes question H.C.

Kevin Dede

take price we think would cash stock stock the mean I consider would the and at of point. process at mining point about step that debt conversion you X generation warrant the back without thresholds and and clearing that what retiring Denise, given you cash that you moving? sheet Could flood a mentioned for balance and favorable perhaps offer economics?

Adam Sullivan

that I'll question. Kevin, take

today was about $XX thinking of million the that Liens out to related off we're -- at our in megawatts how paid facility. Mechanic's we that second the really, build to XX early So yes, Denton course, quarter

We of some down what on than that is the the principles.As pay towards year at growth have to this our better that down put in point. service it's paying we debt today, over evaluate capital additional analysis, believe, we're course market evolving that based additional we this will debt some

to may growth of continuing this the next so we're change business. focus month, that the to the the But over today, growth, going and course is of And on fund fund quarter. next to continue our

So our we more line. believe to it's accretive bottom

Operator

Jack comes Imperial of The with next the question from line Chan Capital.

Jack Chan

On the clients reach you out much by in taken be these megawatts reached them? And directly you potential XXX the to to of the you're know or did HPC, would to curious out if how clients potentially with? talks

Adam Sullivan

we've say recognize our they both. know the platform Yes. I a question. capabilities have sites, team. we our and would Thank the internal mix on of for People to your bit built. of it's They the have a of locations that know you that

up at industry team down, decades and center each operations look almost directly of from You with data our experience member. across coming the

as And know the very center our as so that know is well members experienced at data and they industry industry tech the traditional of well. many team

accomplish potentially megawatts well as depending go is discussions of to over clients we're right is to was interested.Our X bit years. how and to goal And of HPC. some on focused And on trying to this may now negotiations inbound that really, a of we the with as what next potential course the a so be it X partners both outbound to knew repurpose combination calls about certain XXX

not growth HPC that's really our in on what but we're the mining plan, focused today, on on so side side. also executing the only bitcoin And

Jack Chan

you of the deal did that? could year potential be or a mishear I in I And said timing this think

Adam Sullivan

evolve. negotiations, we're Yes, as to that conversations that's something be going the market these updating

to decisions to announcing So as we will get more be around this, we that the market. definitive

Operator

this for time. left remarks. questions I to at hand will call back no Gitlin There the Steven additional over are closing

Steven Gitlin

be look you industry archived and results. Thank filings, news speaking relevant you, Core wish Tia. and and following you With found for version Scientific. We a our you no interest good forward we and on to SEC An corescientific.com. further quarter's next day, your of in this questions, thank attention we website, your with call, company again all can

Operator

you. Thank call. conference today's concludes That

You now your lines. disconnect may

Core Scientific (CORZ) 8 May 242024 Q1 Earnings call transcript