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Operator
Welcome to HUT8's second quarter analyst and investor call. In addition to the press release issued earlier today, you can find HUT8's financial statement and MD&A on CDAR and shortly on both EDGAR and the HUT8mining.com. Unless noted otherwise, all amounts referred during this call are denominated in Canadian dollars. Any comments made during this call may include forward-looking statements within the meaning of applicable securities legislation regarding the future performance of Hut 8 Minings Corp. and its subsidiaries. The statements made reflect current expectations and, as such, are subject to the variety of risks and uncertainties that could cause actual results to differ materially from current expectations. These risks and uncertainties include but are not limited to the factors discussed in the quarterly MDNA for the three months ended June 30, 2022, as well as the company's MDNA and annual information form for the year ended December 31, 2021. Any forward-looking statement speaks only as of the date on which it is made, and the company disclaims any intent or obligation to update any forward-looking statement unless required by law. I would now like to turn the call over to HUD-8 CEO, Jamie Leverton.
Jamie Leverton
Thanks, Michelle. Good morning, everyone, and thank you for joining us to discuss HUD-8's financial results for the second quarter of the year. In our first full quarter, generating fiat-based monthly recurring revenue through our five data centers and an increased mining capacity that grew to 2.78 exahash by June 30th, we generated strong quarterly revenue while also increasing our Bitcoin holdings. Notably, we continue to ramp up mining activities at our third mining site in North Bay, Ontario, and installed nearly 7,200 new miners across all three of our mines. We increased our hash rate by more than 9% since the end of Q1 as our sites continue to generate strong revenue and support the continued vitality of the company. Looking forward, we anticipate organically growing our mining capacity to approximately 3.55 exahash by the end of 2022, while being ready, as we always have, to be opportunistic about any inorganic opportunities that might arise. HUT8 is one of the only digital asset miners that hasn't sold down or encumbered our stack of Bitcoin, which speaks to our financial acumen and commitment to our balance sheet first approach. Maximizing the value of the Bitcoin on our balance sheet is very much a priority for us and a key pillar of our business. We were very intentional in recalling the 2000 Bitcoin that we had in our yield programs into our possession in mid-May before the contagion spread across the industry and plan to resume working our stack as soon as it's prudent to do so. To that end, we continue to explore opportunities that will allow us to generate additional income in a responsible manner, and anticipate that as markets stabilize, we will see compelling options materialize. We are one of the only digital asset miners that is diversified into the infrastructure space, and while we continue to be bullish on Bitcoin, we also believe strongly in the high-performance computing industry and the potential opportunities that lie ahead for HBC and the nascent blockchain and Web 3.0 industry. We spent much of the second quarter rationalizing our HPC business and eliminating products and services that weren't delivering meaningful returns for us. We've completed the cleanup and are now ready to increase capacity and invest in building out the HPC infrastructure with the latest technology that will attract high-margin clients going forward. We have a long-term vision to execute a business strategy with three pillars. One, continuing to mine Bitcoin in a pool environment, two, maximizing the value of our Bitcoin reserves, and three, growing our HPC data center business. Our long-term vision is to generate enough revenue from our high-performance computing business and working the stack to fund our digital asset mining operations without being reliant on capital markets, which can be both expensive and at times unreliable. We have intentionally and successfully abstained from selling Bitcoin to fund our mining operations business, unlike many of our peers. We believe current Bitcoin prices are repressed and we're taking a long view on our reserves. For us, it doesn't make sense to sell Bitcoin at low prices only to fund additional Bitcoin mining. And we're cognizant that the halving is not too far away. I have mentioned this before, but it bears repeating. We have been anticipating and preparing for possible market volatility for approximately a year. We were thoughtfully conservative in the back half of 2021 to operate prudently and avoid becoming swept up up into the bull run we saw last fall and winter, and I'm confident that we've managed to downturn well to this point and will continue to successfully navigate the market by maintaining a balance sheet first approach going forward. Before I turn it over to our CFO, Shane Downey, who will review our key financial results, I would like to thank our board for their support and guidance, our executive team for their leadership, and our team for their execution across the business. To our investors, thank you. We know it has been a very dynamic time for the broader industry, and your support of HUD-8 is very much appreciated. Shane, over to you.
Michelle
Super, thanks, Katie, and good morning, everyone. Given the challenging macro environment, we produced a solid result for Q2 2022. We achieved strong revenue of $43.8 million for the quarter, a 31% increase over the prior year quarter of $33.5 million. This performance was driven by strong digital asset mining activity, with a solid contribution from the first full quarter of operations from the high-performance computing business, which we acquired earlier this year. We achieved revenue of $39.1 million from digital asset mining activities as we mined 946 new Bitcoin. This compares with $31.4 million of digital asset mining revenue in the same quarter in 2021, when we mined 553 Bitcoin. Additionally, this, sorry, operationally, Significant 71% increase in Bitcoin mined reflects the substantial increase in hash rate and efficiency as we've upgraded and expanded our entire fleet of ASICs and came despite the increase in year-over-year Bitcoin network difficulty. Our newly acquired data center business contributed an additional $4.7 million of revenue, reflecting a full quarter's worth of revenue since we acquired the business at the end of January 2022. Cost of revenue for the quarter was $47.7 million compared to $16.6 million in the prior year and consists of site operating costs and depreciation. The increased depreciation expense from $3 million in Q2 2021 to $20.9 million in Q2 of 2022 was driven by the addition of approximately $178 million of new mining equipment and infrastructure over the past 12 months, as well as approximately $25 million of data center fixed assets through the previously mentioned acquisition. Site operating costs increased by $13.1 million to $26.8 million. Within the digital asset mining operation, site operating costs increased by $10.8 million, driven by electricity costs, which stem from a combination of higher power prices and a modest increase in consumption. $2.3 million of operating costs related to the high-performance computing operation, all of which are incremental year over year. We have now substantially onboarded the team we need to drive profitable growth in our high-performance computing business. This includes sales, networking, and cloud and data center operations personnel. In terms of margins, our digital asset mining operation generated mining margins of approximately 38% versus 62% in the prior year period, reflecting the combination of lower Bitcoin prices and the increased electricity costs. In light of these external factors, we were generally pleased with operating performance in the core. Margins in our high-performance computing business were strong, and we continue to expect to fall into the 35% to 40% range as previously communicated. And as Jamie mentioned, in completing the integration of our HPC business, we identified certain low-margin products and services and have rationalized these offerings as a result. Following that exercise, we've withdrawn the revenue growth guidance provided as part of our Q1 2022 results, but want to emphasize that we believe these rationalizations were prudent and positioned us well to realize profitable revenue growth in 2023. General and administrative costs in Q2 were $12.3 million compared to $8.8 million in the prior year. The increase was primarily driven by sales tax expense, share-based compensation expense, higher insurance premiums, and then salaries and benefits costs related to ongoing build out of our team. Insurance expense reflects increased premiums driven by tight global insurance markets, combined with an expansion of director and officer liability insurance, and then the incremental coverage related to our high performance computing operations. Sales tax expense increased by $1 million, primarily related to equipment purchases and imports during the quarter. SG&A expense related to the high performance computing business were $1.9 million. We recorded a net loss of $88.1 million for the quarter compared to a net loss of $4 million in the prior year period. This net loss was substantially the result of non-cash revaluation losses during the quarter. Firstly, we recognized a $43.3 million gain on our warrants liability stemming from the revaluation under the Black-Scholes valuation model. And then secondly, the revaluation gain was more than offset by a revaluation loss on digital assets as a result of the decline in Bitcoin price during the quarter. The company incurred a total non-cash loss of $217.8 million on the revaluation of our Bitcoin holdings. $112.9 million of the loss was offset against accumulated gain recorded in other comprehensive income and the remaining $104.9 million non-cash loss was recorded as an expense in the statement of operations. HUD-8 achieved adjusted EBITDA of $6.8 million for Q2 2022, reflecting our ability to maintain profitability despite a challenging macro environment for digital asset mining. This compares with $14.4 million in the prior year period. To address financial position, our balance sheet remains healthy with a cash balance of $60.1 million at the end of the quarter. As previously announced, we entered into a U.S. $65 million at the market offering program in February of 2022. We raised approximately U.S. $61 million during the first six months of the year, which is approximately Canadian $77 million. Subsequent to quarter end, we completed the remainder of the program and raised an additional U.S. $4 million, or approximately CAD $5 million. The proceeds from these issuances were and will continue to be invested in the growth of the company. In light of the challenging capital markets environment generally, combined with ongoing volatility impacting the digital asset space, we remain committed to our conservative approach to balance sheet management. We are pleased with the modest level of non-recourse equipment financing in place and that our substantial digital asset holdings remain fully unencumbered. Our Bitcoin holdings are marked at fair value and totaled $188.8 million as of June 30, 2022, based on 7,406 Bitcoin held in reserve. Our conservative approach to balance sheet management means we've been able to continue our long-term hodl strategy. We have not sold any Bitcoin since early 2020-21. With that, I will turn the call back to our operator, Michelle, for analyst Q&A.
Operator
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a three-tone prompt acknowledging your request and your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the hands up before pressing any keys. One moment please for your first question. Your first question comes from Chris Bendler of DA Davidson. Please go ahead.
Chris Bendler
Hi, thanks. Good morning, and congrats on the results. I guess I'll start with the cost per coin and the increase there. Can you talk about, you know, sort of just in general terms, what your power cost did in the second quarter, and then perhaps most importantly, you know, what it looks like going forward as North Bay ramps up And then, along with that, just sort of give us some guideposts on how big, as part of your operation, North Bay will be at the end of this quarter.
Joe Vaffey
Absolutely. Do you want to start there? Thanks, Chris.
Jamie Leverton
We expect North Bay to be at the full 35 megawatt capacity of phase one by the end of this quarter. So I'll take your questions in reverse order. From a power perspective, we actively manage power at our sites in Alberta on a kind of 15-minute increment cycle. meaning we're always watching where power prices are, and when power prices get too high, we adjust operations accordingly. And that's a process that has always been in place and will continue to be in place as we pay close attention to the energy market. So I really can't speculate on where energy prices are going, but that's how we dynamically manage the sites that are grid-connected. in those 15-minute increment windows. And just as a reminder, we have our site in Drumheller is connected to the Alberta grid, whereas our site in Medicine Hat is connected directly to the Medicine Hat grid, which is separate from the broader Alberta grid. And we have different PPAs in place between those two sites. And then, as you know, our site in North Bay is behind the meter. It's not grid-connected.
Chris Bendler
Right. I guess I wasn't really looking for a forecast of where energy prices are going, but just like the idea that we've talked about, I think, for months, that this third site will have a much better power cost. So your cost per coin should start to fall even regardless of what power costs do. And I think power costs this quarter became problematic for many folks, just given where energy prices went. We weren't expecting sort of the spike in natural gas prices. So not that surprised to see your site operating costs go up this quarter, but hoping that for the next couple of quarters, we'll see that start to stabilize as North Bay ramps up.
Jamie Leverton
Yes, exactly. Assuming we don't have more surprises on the grid side.
Chris Bendler
Got it. Okay. And just from a growth perspective in the mining operations, it looks like there's some additional deposits. So You know, can you talk about what new equipment or new mining rigs you have coming and maybe what you paid for them relative to what you may have paid in the past and prices have probably come down?
Jamie Leverton
So we haven't made any incremental orders from a mining equipment perspective. The remaining deliveries that we have are from a prior order that we made towards the end of last year, beginning of this year with micro VTEs. And they come in, we get 1,000 units a month from that order through the balance of 2022, but we haven't made an incremental order.
Chris Bendler
Okay. Is that something that you think will be part of the plans in the second half? Like how much capacity do you have to expand beyond where you are today?
Jamie Leverton
So as it stands today, we've placed the orders that we need to maximize the power that we have built out at the three sites.
Chris Bendler
Okay, and how much of the – when you get there, how much of the operation will be North Bay, just roughly, percentage-wise?
Jamie Leverton
Yeah, so phase one of North Bay maxes out at 35 megawatts. Drumheller is 42 megawatts, and Medicine Hat is 67 megawatts.
Chris Bendler
Is there a second phase for North Bay at some point?
Jamie Leverton
It is under contemplation.
Chris Bendler
Okay, great. I'll let other folks ask questions and get back to you. Thanks, Jamie.
Jamie
Okay, no worries. Thanks, Chris.
Chris Bendler
Thank you.
Jamie
Thank you.
Operator
The next question comes from Joseph Bafi from Canaccord. Please go ahead. Good morning, Joe.
Joseph Bafi
Hey, guys. Hey, good morning, Jamie. How are you? Good morning. Nice to see the emergence of kind of this three-pillar strategy, just kind of a very differentiated approach, I think, at this point relative to peers. To start with, as the high-performance compute business starts to move forward into growth mode, how do you look at investment costs and returns in the mining business versus high-performance compute if you look out over the next year and where you want to invest or why you would deploy more investment capital into? one side of the business or the other, and then I'll follow up.
Jamie Leverton
Yeah, so great question, Joe. As I think we've proven over the past 18 months, we like to be opportunistic when we look at growth opportunities. So we run models based on, of course, projected returns, and I think this market environment is going to provide some unique opportunities for that continued opportunistic approach to growth, but really difficult to say what opportunities are going to present themselves in which pillar. We continue to look at growth in both and analyze the opportunities as they come forward.
Joseph Bafi
Fair enough. I guess it's fair to say it's evaluate opportunities in real time based on all the dynamics and on the economics and the mining side and, and, um, what's going on in high performance compute. Could you think of on high performance, you know, just give us a, a broader view of where you, where you believe the demand environment is on the HPC side of the business at this point, say you did, you know, can start to ramp capacity there. Um, How do you see that capacity being put to work and what kind of tempo or cadence or even growth rate, I guess?
Jamie Leverton
Yeah, so we have five data centers, as you know, and each of them have addressed different market segments and have different capacity availables. So we are looking at each of them and making determinations on where we want to invest, how we want to grow them out based on the demand that we're seeing in each geographic market. But at a high level, we're very active and engaged in conversations in the Web3 ecosystem. We see a lot of really positive momentum coming in that segment with respect to our data centers and our offerings. It's It's a very unique position for us to be in to have this full stack of infrastructure from mining all the way up to two tier three traditional data center assets, which really allow us to provide infrastructure for that Web3 ecosystem that's unique in the space for us as a digital asset native company. So we see increasing momentum coming out of that ecosystem, but also continued strength in growth from the existing base of enterprise customers that we have today and are incredibly, incredibly grateful for.
Joseph Bafi
Okay, that's great. And then just on the balance sheet cash, which is kind of a nice amount in addition to your hodl, is equity. Is some of that cash committed on that order flow on the micro BT units, or would part of it at least theoretically kind of could be deployed or used for other initiatives that haven't already begun? Thanks a lot, guys.
Jamie Leverton
I'll let Shane answer that one with some specificity.
Shane
Yeah, perfect. we're substantially paid up on that final micro BT order.
Michelle
So certainly the intention all along is that that $60 million cash balance is at the end of the quarter. Yeah, it gives us an appropriate level of flexibility as we think forward through the balance of the year and looking towards the start of 2023.
Joseph Bafi
Got it. Thanks, Gene. And thanks, everyone. Great job.
Gene
Thanks, Joe.
Operator
Thank you. The next question comes from George Sutton of Craig Halem. Please go ahead. Good morning, George.
George Sutton
Good morning, and very nice to see the HODL strategy starting to really pay off the last handful of days. So I was fortunate to listen to elevator music instead of your presentation for the first several minutes. So if you discuss this, I apologize. But I'm just curious, can you talk about the scope of the rationalization that you mentioned relative to the HPC? and how quickly do you think you can refill the square footage that you're talking about?
Jamie Leverton
The rationalization was more specific to lower value product offerings that existed. And so we rationalized two of those product offerings that were not in our target range. margin window, as opposed to specifically white space rationalization.
George Sutton
I understand. Okay, thank you. That's helpful. And I know you've been, in my words, slow playing the machine purchases a little bit going out, given the fact that the prices have been coming down. Where do you think things sit from a broader perspective here with Bitcoin prices starting to strengthen?
Jamie Leverton
There's a lot of mining hardware available that is landed in North America. We haven't seen the price move much over the last few weeks. But as I think I've touched on before, we have the mining equipment that we need for the power that we have built out or ramping for the balance of the year. So at this point, I'm not really... looking at mining equipment for 2022.
George Sutton
I understand. If we look out a year from now, let's say, are we more likely to hear you've expanded more aggressively into additional HPC areas or Bitcoin mining areas?
Jamie Leverton
Yeah, so Joe Vaffey just asked me a similar question, and I'll give you a similar answer. It's really difficult for me to predict where the right opportunities for growth are going to arise over the next six to 12 months when we're in really unique market conditions. And we like to be incredibly opportunistic when we deploy capital, as you saw from us last year. So it's If the right opportunity doesn't present itself in one pillar or the other, then we're not going to move forward with it. So impossible for me to say where the right opportunities are going to evolve over the next six to 12, but we actively are pursuing in both categories.
Joe Vaffey
Great. Thank you very much. Thank you.
Operator
The next question comes from Kevin DD, HCW. Please go ahead.
Kevin DD
Good morning, Jamie. Good morning, Kevin. Thanks. Thanks for having me. Jamie, did power prices ever go high enough in Alberta that you felt compelled to wind machines down at all? Or were you struck by heat at all there in the quarter?
Jamie Leverton
We did have some peak power pricing during some of the hotter days. And when we see peak power pricing, we do power down. We don't mind when power prices are too high. In the case of our site in Drumheller, we do participate in ancillary services, and that program remains active. So, yeah, Kevin, we monitor power pricing every 15 minutes and react accordingly.
Kevin DD
Yeah, right. Yeah, I heard you made that comment, hadn't realized it. That's why I thought I'd ask. Is there any way to quantify that at all for us?
Gene
I can have Shane's team take that away for you, Kevin, no problem.
Kevin DD
Okay. In the meantime, could you give us a little insight on On the investments you have to make on the five HPC centers that you have running, it's unclear to me how fully utilized they are, how fully stacked they are with equipment. Given you sort of reset things, does that mean old equipment left and gives you an opportunity to move new equipment in?
Jamie Leverton
The rationalization comment was specific to a couple of low-margin product lines as opposed to equipment. We have white space available at a few of the sites, so we're actively looking at how do we best sell or utilize that white space. Those activities are actively underway, led by our SDP of operations, James Spear.
Kevin DD
So how – granted $60 million in cash, how do you see spending going in building out the white space that you have available?
Jamie Leverton
We haven't gotten into any specifics on where the growth is going to come, but I assure you we will let everybody know when those specifics are – are nailed down.
Kevin DD
Okay. Just another, I know you've talked to us a little bit, but just help me understand the sort of the sales and marketing effort and the, you know, on the, on the HPC side, just how are you, how are you building that out and how are you taking HUD-8 to the market?
Jamie Leverton
Yeah, so we've got an incredible sales leader that is responsible for go-to-market for the HPC side of the business, Josh Rayner. He joined us earlier this year. As you know, when we made the acquisition from Tarago, it came with a full team that supported it. So we did bring over some great sales resources, and then we've added a number of – sales team members to Josh's group as well. The new hires have been more specific to their skill set is more aligned to driving into the Web3 ecosystem. So in total, we're up to just about 10 people that are in that sales team. And then we also have Aaron Dermer who joined our team earlier this year to lead marketing and public affairs. And so in that marketing team, we now have three resources that are focused on the overall go-to-market strategy for HUD-8 and including the marketing message and the lead generation work for the HPC side of the business.
Kevin DD
Okay. And could you talk a little bit about how you were able to tie into the you know, other companies sort of in the digital mining space understand working something with Foundry, but I didn't really understand how that sort of came to pass.
Jamie Leverton
Yeah, so that's really, Foundry, we've had a longstanding strategic relationship with Foundry. As you know, there are They're our largest mining pool partner on the Bitcoin mining side. We've done purchase financing with them before. We work closely with their sister company, Genesis, as well. And then when we purchased these data center assets and Foundry made a decision to put some of their core infrastructure into our data center facilities as well. So they are now... a client of ours as we have historically and we are also a client of theirs.
Kevin DD
Okay. Understood. Was that new equipment or were you just able to spool up servers you had?
Jamie Leverton
It was existing infrastructure that we had that they're moving into in our data center.
Kevin DD
Gotcha. Gotcha. Thank you so much, Jamie. Thank you very much.
Jamie
Appreciate it. My pleasure. Anytime, Kelly.
Joe Vaffey
Okay.
Jamie
Thank you.
Operator
The next question comes from Bill Pepinastasou of Stifle. Please go ahead.
Bill Pepinastasou
Hi, good morning. Thanks for taking my question.
Gene
No problem. Good morning, Bill.
Bill Pepinastasou
Yeah, my first question is related to the huddle strategy that HUD 8 has. Obviously, you guys are one of the few public liners that have not sold in this bear market. So hands off to you. Just wondering how you guys are looking at potentially reentering a lending program later this year. I know that you guys concluded that in May. Are you considering kind of loaning out your Bitcoin again or have market conditions not kind of improved to the level that you're liking?
Jamie Leverton
So I did address that a bit in my remarks and I'll have Shane go into a little bit more color on it. We absolutely intend to revisit and evolve our work, the stack strategy, as we call it. I think we're not quite comfortable with where everything sits in the market from a counterparty perspective, but it's absolutely something that we expect to move into again, and we're exploring a variety of opportunities around how we can best work the stack without taking undue risk on those Bitcoin reserves. But I'll turn it over to Shane to add a little color because he's leading that project on our side.
Shane
Yeah, thanks, Jamie. I mean, overall, Bill, I think Jamie said it well. We've been intentionally, we're quite selective, very selective throughout 2021 with the counterparties that we
Michelle
uh, that we worked with being, being Genesis and Galaxy to, you know, highly reputable, well-capitalized firms that, you know, that we continue to sort of engage in and really just ongoing discussions as, as part of, you know, being active participants in that digital asset space. So, you know, it was, as we've said, and then sort of in a, in an abundance of, of caution, we, we made that determination back in, in May to, you know, sort of the, if nothing else put on pause, the, the, the yield program. Um, Yeah, looking at sort of our thinking around and explorations around how we re-engage around working the stack. I guess maybe more specifically that would mean, from our perspective, generating yield, generating income associated with our substantial and unencumbered Bitcoin holdings. So, yeah, that'll range from sort of direct yield programs, very similar to what we've done in the past, to explore a more sort of algorithmic approach to trading against a small portion of our stack, perhaps. And then, of course, something we've been exploring for some time, and again, intentionally being, you know, cautious, I suppose, is, you know, is employing a derivative strategy where we can, yeah, look to drive yield with, again, with acceptable risk associated with counterparty. So that's where we're at now and continue to do some of that work as we hopefully continue to look towards a relative stability within the broader digital asset space.
Bill Pepinastasou
Great. Thank you for the color and apologies. I wasn't able to get in on the call. I was waiting as well in the whole period. I guess my next question, and hopefully you didn't address this either, is related to Ethereum is proof of stake. The company had about 11% of total Bitcoin equivalent, I guess, coming from Ethereum operations. Wondering how you guys are looking at this potential upgrade and the strategy behind the update.
Gene
Yeah, obviously something we're paying very close attention to.
Jamie Leverton
There's a lot of talk right now about a hard fork and a new Ethereum proof of work chain. So we're obviously paying close attention to see how that evolves. One of the things we love about our GPU suite is is that we put it in enterprise-grade chassis, which ultimately today the Ethereum mining is done at our mining site in Medicine Hat. But over time, we will look to move some, if not all of that compute into our data center environment. And then having that compute in the data center environment allows us to really look at other types of workloads that we can apply apply that compute to and the team's been doing a ton of work on looking at other available workloads in addition to continuing to mine the next most profitable proof of work chain, whether that's a new hard fork, or Ethereum Classic or any of the other proof-of-work chains. So I think our strategy will be to parse that compute into a few different areas. But again, we're very happy with the mining economics today. Ethereum continues to perform very, very well. So we'll stick with the strategy that we have until we get more clarity on a post-merge world from a proof-of-work chain perspective.
Bill Pepinastasou
Great. Thank you so much for the color. That's all the questions I have for today.
Operator
Okay, great. Thank you so much. Thank you. Our last question comes from Gusto Gala of Tour Securities. Please go ahead.
Gusto Gala
Hey, thanks for taking our questions. Good morning. This is Julian for Gus, but most of my questions have been answered. But one thing I would say is, are there any, is there a total BTC holding that you're comfortable holding or is it, you know, like a moving target? I know you said you haven't sold anything since early 21, but we're just wondering, you know, how do you, how do you make those decisions between hold and selling and if there's like a target holding, core holding that you're particularly looking at?
Jamie Leverton
No, there is no, there's no target. Our commitment is, to hold the Bitcoin unbalanced, particularly at these levels. I don't think it makes sense to sell Bitcoin and then reinvest in equipment that's going to have a payback period that extends post-having. And so ultimately, the math would suggest if you sell Bitcoin now, it's going to cost you more to mine it later. So that's really how we're thinking about it today. And that thinking will always be tested and evolve as market conditions change and as Bitcoin price adjusts as well.
Gusto Gala
Got it. And just from Shane's comments, I was going to ask a question about maybe an asset management overlay strategy, but it seems like you are already thinking about that or have done it in the past, particularly around maybe hedging or non-correlated type exposure or DeFi. And it seems like you are all exploring that now after this, obviously. a blow up of Luna and some of the other counterparties that we've seen on the space. So is that fair to say that you're looking at that, you know, at this moment to kind of step back into that or when would you be thinking about that?
Jamie Leverton
So, yeah, Shane just touched on that. He and his team are actively exploring potential strategies to work with that going forward, but no doubt. We haven't settled on timing or strategy at this point. It's an ongoing active investigation.
Gusto Gala
Got it. All right. Thank you for taking the questions. Appreciate you.
Jamie
No problem. Have a great day. Michelle, are there any questions left?
Operator
There are no further questions at this time. Please continue with closing remarks.
Jamie
Okay. Well, thank you again, everyone, for joining the call and for your support. And have yourself a wonderful day. And thanks, Michelle, for your help.
Operator
Thank you. Ladies and gentlemen, this does conclude our conference call for today. We thank you for participation and ask that you please disconnect your lines.
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