IREN Limited

Thank you for standing by and welcome to the Iris Energy Limited March quarter earnings conference call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. And I'd like to hand the conference over to Mr. Cain Doyle, Senior Manager, Investor Relations. Please go ahead.

Good afternoon for those of you in North America and good morning for those of you in Australia. And welcome to the Iris Energy Earnings Conference call for the third quarter ended March 31, 2022. I am Cain Doyle, Senior Manager, Investor Relations. And with me on the call today is Daniel Roberts, co-founder and co-CEO, Lindsay Ward, President, and Anne Hayes, our Interim Vice President of Finance. Before we begin, please note this call is being webcast live with an accompanying presentation. It includes the ability for participants to ask a question via the live chat box. For those that have dialled in by phone, you can elect to ask a question via the moderator after our presentation. I'd like to remind you that certain statements that we make during the conference call may constitute forward-looking statements, and Iris Energy cautions listeners that forward-looking information and statements are based on certain assumptions and risk factors that could cause actual results to differ materially from the expectations of the company. Listeners should not place undue reliance on forward-looking information or statements. Please refer to the disclaimer on slide two within the accompanying presentation. Thank you, and I'll now turn the call over to Dan Roberts. Dan.

Thanks, Cain. Hi, everybody. Thank you for joining us on our earnings call. What a day to have an earnings call, hey? It's certainly been interesting out there over the last few days to a week. In terms of where I'd like to start is just discussing where we're at in terms of the hash rate build-out. As you'll be aware, We conducted our IPO on the NASDAQ November last year and spoke about the execution and expected operational ramp up. And it's another opportunity today to reiterate that we are delivering against what we said we would deliver. If we see the bottom left-hand side, our first site at Canal Flats, we forecast that to be completed by December last year, it was completed around mid-September ahead of schedule. The original forecast capacity for that site was 700 petahash. It's now operating today at around 850 petahash. If we then look to the next bar, we've now hit operational commencement at our second site as of April the 12th in Mackenzie, Australia. British Columbia, the first nine megawatts was energised in mid-April, again ahead of schedule. In terms of the look forward, Lindsay will go into a little bit more detail around the specific sites and their specific ramp-up profile. But again, we reiterate previous guidance around the expected construction ramp-up and installation of our chips. 10 exahash by early next year, and then the full 15 exahash deployed in accordance with deliveries under the Bitmain contract. If we move on to the next slide. In terms of a little bit more about the team, many of you would have seen a slide like this or similar. Yes, it's about a billion dollars US of capex required to deliver our 15 exahash, but that should be looked at. Also in the context, not only of our track record within IRIS, but the team's track record outside of IRIS. Collectively, we have over 100 people globally now under the IRIS banner, and the leadership and management team has delivered over $25 billion of energy and infrastructure projects uh not just in australia and the asian pacific region but globally as well david bartholomew who many of you have met previously obviously a decade of experience running a listed energy and infrastructure business on the australian stock exchange uh lindsay ward our president who will talk next about the operations and more site level information. He's obviously got decades of experience building, managing and operating infrastructure businesses. So, yes, it's a task in the context of the industry that we operate, being Bitcoin mining data centers. But ultimately, we're just building hard assets, data centers, infrastructure, energy infrastructure. And it's not overly foreign for the team, having done it many times before in similar guises. In terms of what we're building, again, just to recap, we're building for the long term. We believe in Bitcoin. We believe it's here to stay. Yes, it's volatile, as we continue to see. Will and I have been in the sector since 2013, so we've seen it go up, we've seen it go down, but it tends to go up over an extended period of time. At the end of the day, it's very difficult to see how Bitcoin doesn't continue to thrive beyond the near day-to-day volatility and we're building a platform with a multi-decade lens to monetize that we've spoken a lot previously around the proprietary design of our data centers we don't do shipping containers we don't do warehouses with industrial transformers and retrofitting programs we build own and operate our own data centres with our own proprietary ventilation and airflow design. And we're seeing that come through the benefits in terms of operational performance and importantly for us is also asset life. These computers, the ASICs, they're extremely valuable, as we all know, and looking after them for the long term to get the most economic asset life out of them as possible is a really important focus for us. Recapping where we're at with financing, as we've mentioned before, we conducted our IPO on the NASDAQ last November. JP Morgan, Canaccord, Citi led that IPO with a number of other players mentioned on that screen assisting. We continue to have a good relationship with all of those parties and they've been very supportive over the last six months. um in terms of where we're at uh in funding to deliver the 15x hash as i mentioned previously it's about a billion dollars of capex in totality so that's from start to finish 1 billion in total we've secured through equity a little bit of debt and reinvest in some operational cash flow we're looking at around 750 of that billion already accounted for and the balance underway in terms of seeking additional debt and funding to complete it. We're not immune to the current market and what's happening out there day to day at the moment, but we can say that we have multiple formal debt processes underway. We haven't seen them impacted by the volatility over the last week or two. That's not to say that they won't be at some point. We're realistic. But sitting here, right here, right now, the strength of our balance sheet, our operational performance, the daily cash flows that we're generating, we're feeling pretty good about it. And maybe just to recap, the debt that we have today is all on a non-recourse, ring-fenced basis, secured against some of the computers that we've procured. The balance is all equity. So it's a very clean balance sheet. It's a strong balance sheet. It was done very deliberately. Now is the time to layer in debt funding on top of that, recognising that we've now demonstrated a track record, building out multiple sites, generating daily cash flow, as we said we would, and now looking to use that cash flow to service businesses. dead products. So stay tuned. We're obviously focused very heavily on it at the moment, but very pleased with where it's at sitting here today. In terms of where we're at as a listed company, it's been an interesting journey, to say the least. We do have a large hash rate ramp, as I've alluded to earlier in this presentation, and as many of you on this call would already be aware, we are delivering. We're doing what we said we would do at the IPO, and that's our intention. We will endeavour to continue doing that. What we say we will do, we publish detailed monthly reports, not just with our monthly operating metrics, but also in terms of individual site by site updates on the status of construction, lead item procurement and expected operational commencement date. As you can see from the chart, we are trading a discount to the comps. I'll never seek to guess what an equity market does day to day. But even on the basis of just the 10x hash in early 2023, um let alone the 15 that we have under contract for delivery by september next year we're obviously sitting in a fairly interesting position sitting here today but we'll continue to keep our head down keep doing what we said we'd do and execute and deliver these projects We've shown this slide a couple of times over the journey, and I would encourage everyone to spend a little bit of time in it. At the end of the day, we are treating this as a cashflow business today. As you're all aware, we're liquidating the Bitcoin daily in some ways that decision continues to be vindicated with others now considering selling the bitcoin on their balance sheet we've been selling at 60 grand a coin selling at 50 grand a coin we will continue to sell here at 30 grand a coin we are reinvesting that cash flow in building out the 15 exahash we have under contract. And if we zoom out, ignore the noise and the day-to-day gyrations of the market and pricing, at the end of the day, the cashflow that this business will be producing at 10 exahash, let alone 15 exahash is extremely exciting for us and everyone involved with the business. There's a link to a calculator in the notes there where you can input your own assumptions around Bitcoin price, global hash rate, power costs, et cetera. Again, that's essentially the essence of a Bitcoin mining business model. Strongly encourage everyone to understand it and digest it. On that note, I'm pleased to now pass to Lindsay Ward, our president, who will go through the individual sites and a little bit more about the operations.