Hut 8 Corp.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the HUD 8 second quarter 2025 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star 1 1 on your telephone keypad. We kindly ask that each participant limit themselves to one question, as during our last earnings call, we weren't able to address all inquiries. This approach helps ensure that as many participants participants as possible have the opportunity to engage and ask their questions. At this time, I'd like to turn the conference over to Ms. Sue Ennis. Ma'am, please begin.

Good morning, and welcome to HUD-8's second quarter 2025 financial results conference call. Joining us today are our CEO, Asher Ghanout, and our CFO, Sean Glennon. Following the presentation, we will open the line for questions. This event is being recorded and a transcript will be made available on our website. In addition to the press release issued earlier today, our full quarterly report on Form 10-Q is available at hud8.com on our EDGAR profile at sec.gov and on our CEDAR Plus profile at cedarplus.ca. Unless otherwise indicated, all figures discussed today are in U.S. dollars. Certain statements made during this call may constitute forward-looking statements within the meaning of applicable securities laws. These statements reflect current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. Certain key risks are detailed in our Form 10-Q for the quarter ended June 30, 2025, our Form 10-K for the year ended December 31, 2024, and our other continuous disclosure documents. Except as required by law, we assume no obligation to update or revise any forward-looking statements. During the call, management may reference non-GAAP measures such as adjusted EBITDA. We believe these metrics, alongside GAAP results, provide valuable insight into our performance. Reconciliations of GAAP and non-GAAP results are included in the tables accompanying today's press release, available on our website. With that, I'll turn the call over to our CEO, Asher Vinod.

Thanks, Sue, and good morning, everyone. The second quarter marked a decisive step forward in the execution of our 2025 strategy. As we accelerated the development flywheel we set in motion at the end of 2024, we delivered tangible results across our operations, asset commercialization profile, and infrastructure pipeline. That progress is anchored in three core themes. First, the investments we made earlier this year have begun yielding measurable returns, validating both the timing and strategic focus of our capital allocation decisions. Second, our asset commercialization profile has undergone a structural evolution, with a growing share of assets now commercialized under longer-term contracts. And third, our Power First innovation-driven strategy has unlocked significant near-term growth potential which we are now executing against at scale. Taken together, these themes not only frame our performance during the period, but also represent significant progress towards our broader ambition to build an enduring generational business at the intersection of energy and technology. Let's begin with the first theme, the financial return on our first quarter investment cycle. In the second quarter of 2025, we delivered $41.3 million in revenue, a 17% increase year over year, driven by the infrastructure and ASIC fleet upgrades we executed ahead of the launch of American Bitcoin, a purpose-built Bitcoin accumulation vehicle and majority-owned subsidiary of Hut8. These investments catalyzed a $16.4 million uplift in Bitcoin mining revenue for the quarter reflected in our compute segment. Net income attributable to Hut 8 was $137.3 million versus a loss of $71.9 million in the prior year period. An adjusted EBITDA was $221.2 million versus a loss of $57.5 million in the prior year period. These metrics reflect a $217.6 million gain on digital assets versus a loss on digital assets of $71.8 million during the prior year period, both recorded in accordance with FASB's fair value accounting guidance. Yet, the most consequential developments of the quarter is not captured by these headline results. On April 1st, 2025, American Bitcoin commenced Bitcoin mining operations as a distinct commercial entity leveraging managed services and ASIC co-location services from HUD-8. As a consolidated subsidiary, its economics are reported entirely within our compute segment. Meanwhile, the infrastructure and services it consumes from HUD-8 across managed services and ASIC colocation are treated as intercompany transactions and eliminated in consolidation despite representing real and recurring economic activity. As a result, what appears in compute today reflects only the surface layer of a robust commercial engine fueled by our power and digital infrastructure businesses. This context is essential as we turn to the second theme, the evolution of our asset commercialization profile. In the second quarter, we executed a deliberate shift from merchant exposure to contracted assets. This transformation was underpinned by three major milestones. First, we executed contracts with American Bitcoin for 130 plus megawatts of managed services delivered by our power segment and 130 plus megawatts of ASIC co-location delivered by our digital infrastructure segment. Second, we initially energized our Vegas site where upon full ramp we expect to provide up to 205 megawatts of ASIC co-location capacity to Bitmain and through the execution of our purchase option, American Bitcoin. And third, we secured five-year capacity agreements for 310 megawatts of power generation capacity across our portfolio of four natural gas-fired power plants in Ontario, which we own and operate through Far North, our joint venture with Macquarie. These agreements represent a step change in contracted capacity, improving predictability, asset bankability, and more disciplined long-term capital planning. As of quarter end, nearly 90% of our energy capacity under management was commercialized under executed agreements with terms of one year or longer. up from less than 30% at the end of Q2 2024. Crucially, we achieved this transformation without deploying material growth capital, a testament to the strength of our commercial model and the value embedded in our asset base. More fundamentally, it speaks to the power of deeply aligned partnerships. The commercial outcomes we delivered in the second quarter were not simply a function of execution. They were the product of relationships built on trust, conviction, and shared vision. Eric Trump and the American Data Center team, Bitmate, Macquarie, Coinbase, Anchorage, each played a foundational role in our progress this quarter, and each remains deeply integrated in our platform strategy. Take Anchorage, for example, an early backer in U.S. Bitcoin Corp. They became equity holders in HUD-8, expanded their position as we executed on our strategy, and supported American Bitcoin's Go public transaction through their stake as a major shareholder of Griffin. More than transactional, this is a long-term partnership grounded in strategic alignment and reinforced by a track record of execution. Internally, we often say that we're long-term greedy. It's a mindset that captures our willingness to walk away from short-term gains in favor of partnerships we believe will compound value over time, and it is foundational to how we operate. This brings us to the third theme, the significant near-term growth potential we've unlocked and are now executing against through the acceleration of our development flywheel. A high-velocity, utility-scale power origination program remains central to to our Power First strategy. At the end of the period, our development pipeline spanned approximately 10,800 megawatts under diligence and approximately 3,100 megawatts under exclusivity. Since the beginning of the year, we have not only continued to optimize the scale and velocity of our origination efforts, but have also evolved the process by which sites suitable for AI workloads advance through our pipeline. The most meaningful evolution has been in our engagement model with prospective AI data center development partners. As these relationships have matured, we have begun embedding prospective partners earlier in the site identification and diligence process. A shift we believe enhances alignment and execution velocity by enabling us to shape origination efforts around our partners' most critical requirements. This model now informs our approach to long-term scalability. We believe that a partnership-driven approach not only strengthens our ability to deliver individual projects, but also positions us to cultivate long-term partnerships that compound over time and underpin sustained growth. This philosophy is reflected in our ongoing work to commercialize development projects like Riverbend, where we are in active discussions with investment-grade tenants While interest remains strong, we maintain a disciplined posture as we pursue what we believe to be the right partnership under the right terms. This selectivity also applies to our broader AI pipeline, where we are taking an intentional and methodical approach as we strive to optimize for long-term value creation. As we engage with counterparties, our innovation-driven approach continues to be another defining differentiator. Nowhere is this more evident than at Vega. Partially energized at quarter end, the site represents the latest iteration of our first principles approach to digital infrastructure, with initial customer discussions supporting the viability of this architecture for future iterations of high density, direct-to-chip, liquid-cooled infrastructure to support emerging AI workloads and customer needs. Designed in-house, It demonstrates our ability to deliver innovative infrastructure with speed and capital efficiency, capabilities that continue to resonate with prospective partners as we strive to build long-term relationships in next-generation data center development. That said, we have no interest in retracing the paths of incumbents. Our ambition is to redefine what is possible. just as we did in Bitcoin mining when we demonstrated that performance optimized infrastructure could be delivered rapidly and cost effectively without sacrificing quality. We believe our power first innovation driven approach enables us to compete and win. It is why we continue to attract exceptional partners, build a high performing team and sustain what we believe to be a differentiated value proposition in every market we enter. And as we scale our infrastructure platform across existing and emerging verticals, we believe it will remain the foundation of our long-term advantage. With that, I'll turn to American Bitcoin. In short, the reception from both the retail and institutional communities to what we are building at American Bitcoin has been overwhelmingly positive. We completed an oversubscribed private placement that included participation from the Winklevoss brothers who invested with Bitcoin rather than cash. The momentum we have generated is early validation of the strength of our thesis and the caliber of investors who believe in what we are building. Today, we continue to execute on the Go public transaction through which American Bitcoin will become NASDAQ listed VA stock-for-stock merger transaction with Griffin Digital. We reached a major milestone last week as the form S4 for the transaction was declared effective by the SEC, and we remain on track to complete the listing in the coming weeks, subject to customary approval and closing conditions. We're excited by what this business represents for our shareholders and what it is positioned to become. Critically, American Bitcoin enables us to scale our exposure to Bitcoin while embedding a dedicated anchor tenant within our core power and digital infrastructure platform. I'll end my remarks today with a few words on our new brand. Over the past year, as we've delivered proof of execution on our Power First innovation-driven strategy, it became clear that our brand needed to evolve, not only to reflect who we are today, but also to articulate where we are going. Our new brand captures what we are building, ambitious in scale and scope, institutional in posture, and grounded in the conviction that there is a generational opportunity to be captured at the intersection of energy and technology. It reflects the scale of our ambition, the discipline with which we operate, and the intensity with which we execute. It is aligned with the caliber of our partners, the expectations of our investors, and the exceptional talent that continues to join our team. Above all, it reflects our belief that we are positioned to build a business that defines the future of energy and digital infrastructure at its highest and most transformative potential. What hasn't changed is our name. HUD-8 was the building at Bletchley Park where Alan Turing and his team of codebreakers cracked the Enigma code, supported Allied victory in World War II, and laid the foundation for modern computing. Today, we carry forward that legacy of conviction, ingenuity, and ambition as we build at the intersection of energy and technology. In Turing's words, we can only see a short distance ahead, but we can see plenty there that needs to be done.