Core Scientific, Inc.

Greetings and welcome to the Core Scientific Second Quarter Fiscal Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow a formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, and Steve Gitlin, Senior Vice President, Investor Relations. Thank you. You may begin.

Good afternoon, ladies and gentlemen, and welcome to Core Scientific's second quarter fiscal year 2024 earnings call. This is Steven Gitlin, Senior Vice President of Investor Relations for Core Scientific. At this time, all participants are in a listen-only mode. We will conduct a question and answer session after management's remarks. As a reminder, this conference is being recorded for replay purposes. Before we begin, please note that on this call, certain information presented contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement other than historical or current facts that predict or indicate future events or trends, forecasts, performance, or achievements, and may contain words such as believe, anticipate, expect, estimate, intend, project, plan, or words or phrases with similar meaning. Forward-looking statements are based on current expectations, forecasts, and assumptions that involve risks and uncertainties that may cause actual results to differ materially. For further information on these risks and uncertainties, we encourage you to review the risk factors discussed in the company's annual report on Form 10-K filed with the Securities Exchange Commission and the special note regarding forward-looking statements contained in the company's current report on Form 8-K filed today and the earnings release and slide presentation contained therein. Today's presentation is available on our website at CoreScientific.com in the events and presentation section. The content of this conference call contains information that is accurate only as of today, August 7, 2024. The company undertakes no obligation to update statements made today to reflect events or circumstances occurring after today. Joining me today from Core Scientific are Chief Executive Officer, Mr. Adam Sullivan, and Chief Financial Officer, Mrs. Denise Sterling. We will now begin with remarks from Adam Sullivan.

Adam? Thanks, Steve. Today I'll summarize the incredible progress we've made this year before quickly highlighting our second quarter financial performance. Denise will then review our second quarter financials before I discuss what distinguishes Core Scientific from other companies in our industry and provide a look ahead at the key catalysts and milestones that will demonstrate continued progress towards achieving our goals. We will then take your questions. We've achieved exciting milestones this year, illustrated on slide four. We announced a contract with CoreWeave to lease a 16-megawatt data center in Austin for HPC hosting, and we delivered that data center more than 30 days ahead of schedule and began generating revenue from it in the second quarter. We successfully executed our plans for the April halving, maintaining strong operational performance and favorable cash costs to mine. We have now signed HPC hosting contracts with CoreWeave for a total of 382 megawatts, an aggregate total potential revenue of $6.7 billion over the 12 years beginning in 2025 and 2026. We completed 72 megawatts of partially built infrastructure at our Denton, Texas site, bringing our total to about 830 megawatts of operational infrastructure highlighted on slide five. We began build-out of partially completed 100-megawatt facility in Pecos, Texas. Stock price appreciation triggered mandatory conversion of secured convertible notes, eliminating $260 million in debt from our balance sheet. We signed an agreement with Block to procure 15 exahasts of their new 3-nanometer ASIC chip to refresh and expand our self-mining fleet beyond 2024. Stock price appreciation triggered the ability to exercise our tranche 2 warrants. and we are now preparing some of our sites for HPC hosting, migrating miners from HPC designated sites and redeploying them to Bitcoin mining sites. Our ability to achieve all of this is a testament to the dedication and tenacity of our best in class team. We are executing on our strategy and remain focused on making continued progress while creating a new category in the digital infrastructure industry. While we expand our hosting business for HPC, We remain one of the largest and most efficient Bitcoin mining companies as illustrated on slide six. Our Bitcoin mining business continues to produce operating cash flow and will become even stronger as we migrate our miners to dedicated sites with more favorable power pricing. Slide seven highlights our strategic, operational, and financial achievements in the second quarter. Note that for the first time, we are now reporting HPC hosting as a separate segment in our financial statements to provide greater visibility to this growth driver for our business. We earned 1,680 Bitcoin in the second quarter and generated total revenue of $141 million, including $5.5 million in HPC hosting revenue from our Austin data center. Gross profit of $39 million increased by 5%, while operating income of $7 million declined by 31%. Our $805 million net loss was mainly driven by the significant quarter-over-quarter appreciation in share and warrant prices that required us to make mark-to-market adjustments to the value of our equity. Denise will explain this in more detail shortly. Adjusted EBITDA of $46 million in the second quarter increased by 2% over the prior year and reflects continued strong cash generation from our core business. Our team has worked exceptionally hard to deliver these strong results. and while we are proud of what we have done, we are just getting started. Now I'd like to turn the call over to Denise Sterling, our CFO, for more details on our financial performance and positioning. Denise?