IREN Limited

Greetings. Welcome to Iris Energy's second quarter results conference call. This time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press store zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Lincoln Tan. You may begin.

Thank you. Good afternoon for those of you in North America. and good morning for those of you in Australia, and welcome to the Irish Energy second quarter FY23 results presentation. My name is Lincoln Tan, Senior Manager of Investor Relations, and with me on the call today are Daniel Roberts, co-founder and co-CEO, and Belinda Nusifora, CFO. Before we begin, please note this call is being webcast live with an accompanying presentation. For those that have dialed in via phone, you can elect to ask a question by the moderator after our presentation. I would 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 will now turn the call over to Dan Roberts.

Thanks Lincoln. Welcome everyone. Thanks for dialing in to our results presentation. I'm very pleased to be speaking with you today. So I guess jumping right in to it. And we've just got a new technology, so I'm making sure the slides scroll correctly. So straight into the business update. Many of you would have seen our announcement on Monday. We have successfully increased our operating capacity from 2 exahash to 5.5 exahash as a result of a transaction with Bitmain and a third party. This brings to a head and a conclusion an outcome around the 10x a hash contract we have had on foot with Bitmain over the last 18 months or so. It was fair to say it was a good result. We're very pleased with the relationship and the partnership we have with Bitmain. That five and a half exahash will be installed progressively. It will all be shipped, is our expectation, in February. And then it's a matter of getting it to site, managing the 44,000 odd machines, which the 40.4 exahash requires. represents and installing them from there. So in terms of specific guidance on that ramp up, look, we expect to start installing machines in March and then it will take however long it takes, but rest assured we're all motivated to get them installed in that full capacity in the very short term. In terms of the underlying transaction and how it came to happen, we spoke to you in December We explained it had been a difficult year. We had a lot of challenges thrown at us. But at that point, we felt like we were in a good position. We had the infrastructure. We had the prepayments with Bitmain. We had cash. We had some operating capacity. We had a clean balance sheet as a result of wiping the debt facility. And we urged people to be patient. Let us work through the options. We always had hosting there as a backstop. But we also had time, and I think we've gone through the right process, which is the most important thing, and the outcome has been a good one for the business. In terms of what the transaction involved, there was 6.7 exahash of remaining units to acquire under that 10 exahash contract, against which the $67 million of prepayments, so cash we had already paid to Bitmain, represented about $10 per terahash as a deposit. So really simply, we sold 2.3 of that 6.7 exahash, got real cash in the process, directed that cash to Bitmain, that unlocked 4.4 exahash of units for ourselves for zero cash outlay. It was a tripartite arrangement. It was all locked up in parallel. We didn't take risk on any specific counterparty. It was a three-way agreement and successfully concluded pursuant to the announcement on Monday. So it's a good result and we're very pleased to now have a substantial operating base and move forward from here. In terms of what we're looking at now and where we're going, quick update on Childress. To recap this, this is our next site in Texas. It's a 600 megawatt total capacity site. So day one on energization, we will have access to 600 megawatts of electrons. That's really important because it provides us with a growth pathway that is essentially locked in. As we've told you previously, the first 20 megawatts has been under construction in terms of the data centers. That's now nearing completion. As part of the site energisation, not only have we built the full 600 megawatt substation in addition to the AEP switchyard, we're also commissioning a 100 megawatt substation of which the first 20 megawatt data centre will draw from. What that does is give us an even shorter runway to the next 80 megawatts of data centres, which we've now started working on. Now, to recap what this means, as we've previously articulated, we have 160 megawatts of data centers already built and commissioned in British Columbia, into which the majority of those bitmain machines will be plugged in over the next month or two. We then have 20 megawatts at Childress almost completed, which will round out the first 5.5 exahash. We're now working on the next 80 megawatts at Childress, utilising that 100 megawatt substation that has been the process of being energised, which will support roughly another two and a half exahash, assuming the same high efficiency miners that we have today, being the S19J pros. This is the culmination of now a couple of years of work on this site. These high voltage, large scale infrastructure energy projects do take time. They take time to negotiate with the utilities, connection agreements, integration into the energy market, and they also require capital. We've had to put down a substantial amount of capital, get the site to this point. But what that has allowed us to do is to now scale rapidly, efficiently, and in the relatively short term, just given the investment that we've made. in that site. So our focus is absolutely there, as well as plugging in the 5.5x hash over the next couple of months and continuing the momentum that we've seen at the start of 2023. That's it from me for now. I'll pass you back to Lincoln to give you a further update.