IREN Limited

Good afternoon to those of you in North America, and good morning to those of you in Australia. Welcome to the Iris Energy FY23 Earnings Conference Call. My name is Lincoln Tan, Senior Manager of Investor Relations, and with me on the call today is Daniel Roberts, Co-Founder and Co-CEO, and Belinda Nusifora, CFO. I would like to remind you that certain statements that we make during this call may constitute forward looking statements and Irish 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.

Thank you, Lincoln. Dan Roberts, co-founder, co-CEO. Welcome back to another results presentation. We're thrilled to be here. It's been a year of consolidation, building and putting ourselves in a position where, as an organisation, it's fair to say that we're rather excited about what lies ahead. Talking about exciting, there are two quite powerful and exciting numbers on the slide in front of us. They do come with caveats and context, which we'll go into, but we do believe we've laid a very powerful foundation to build upon. And today we'd like to present that to you. So moving through the slides, there's the disclaimer that Lincoln referred to, encourage you all to read it. Why Iris Energy? In very simple terms, we've now established a platform which is ready to scale and continue the growth that we've delivered, particularly over the last 12 months. As we'll discuss today, we've established an extremely powerful power dynamic at Childress, our 600 megawatt Texas side, and we'll go through that today. We've got 30 exahash of Bitcoin mining capacity so far as power availability, the land and the program to execute upon that. And as we've previously mentioned, we're exploring next-gen generative AI computing and are quite excited about the upcoming deployment of our NVIDIA H100 chips. 1.4 cent power at Childress. Again, caveats. This is based on actuals since inception. As you can see, we've delivered around two cents once we adjust for ERS, which we assume that we'll receive given we have fulfilled all the requirements to receive that. We weren't eligible for 4CP given our first year of operations. So if we adjust for that, we're looking at 1.4 cents of power. That's extremely powerful. It is lower than what we were expecting, quite frankly. It is a function of volatility in the market. Having located close to the source of low-cost wind and solar, congested transmission lines, there are periods of substantial power market volatility. Given the way we've established our operations, the end-to-end control of systems, technology and infrastructure, we've been able to dynamically interface with those energy markets and throttle between Bitcoin mining, and power market trading to optimise that cost of power. However, it may vary significantly from that 1.4 cents, as we saw in August. In August, we delivered a net cost of electricity at Childress, our Texas site, of minus eight cents per kilowatt hour. So rather than the 1.4 that we mentioned on the previous slide, There was volatility in the market that led to a substantially different outcome. Eight cents per kilowatt hour was effectively the equivalent of being paid $28,000 a Bitcoin to mine Bitcoin, which we then sold for another $28,000 per Bitcoin, delivering $56,000 per Bitcoin in mining profit. Childress and this power market dynamic is the basis upon which we can now scale rapidly and we can start working towards 30x a hash of overall mining capacity. It involves a single site expansion at this Childress site. As we've previously advised, there's 600 megawatts of power and about total organisational power capacity of 760 megawatts. 20 megawatts is operating. Another 80 megawatts is under construction and due to be commissioned early in the new year. And we've started working through long lead items and construction timeframes to continue scaling that up towards the full 600 megawatts and take our business towards that 30 exahash target. It's an ongoing delivery and construction process. We've got teams on site. They continue to build. We envisage them moving from one data centre to the next data centre, continuing to build out capacity on the site. In addition, we've been thinking very carefully around funding and how we're going to fulfil this. And while we will continue to be respectful of market conditions and throttle up and down our fundraising efforts in line with market conditions, we have put in place a $626 million funding plan at a minimum. That involves the $69 million of existing cash in bank. We still have $57 million under the ELOC facility previously announced. In addition, we're going to establish a $500 million shelf of which $300 million will be dedicated towards an ATM. and another $200 million will be put aside for other products. Finally, we continue to envisage reinvesting our operating cash flow in the growth of the business. As we've previously advised and differentiated from other miners, we don't believe in holding Bitcoin on our balance sheet. We believe that creates a lazy balance sheet, we believe that that lowers risk-adjusted returns for shareholders. When we have the capacity to reinvest that static asset in additional capacity and compound returns for shareholders to deliver more and more Bitcoin equivalent exposure, we believe that's a far superior outcome for shareholders and that they should not be paying us to hold Bitcoin on their behalf. Down the bottom, you can see the trajectory that we're on. We've already grown substantially in the last 12 months, and we expect that to continue. Lincoln, I'll pass back to you.

Thanks very much, Dan. So this page just maps out the peer landscape and particular outlines two specific key metrics from August. So in the darker blue shaded columns that represents Bitcoin production in August and overlaid on top of that in the light blue outline that represents disclosed exahash capacity across the sector. And as you can see shaded in the green column, that's Iris Energy. third largest production of Bitcoin on the NASDAQ with 410 Bitcoin mined in August. So if we just take a quick step back here, in terms of the relationship that you would expect to see between disclosed exahash capacity and Bitcoin production, the greater hash rate that you have, means you've got a greater share of the global hash rate and therefore you would expect that your Bitcoin mining production should be higher. So really it should come down to relatively simple math and probability. However, as you can see from the chart, it appears quite evident that not all of the disclosed hash rate capacity is being utilized to mine Bitcoin. something's not quite matching up as we look across the peer landscape. And to Dan's point earlier, even if we do consider the impact of curtailment, particularly in deregulated markets like Texas, from an Iris Energy perspective, We just use our capacity to mine the Bitcoin and it's our experience that we are still operating at very close to full output over that four or five month period. So, you know, in terms of what this means, a few key takeaways from our perspective. Firstly, in terms of how Bitcoin mining companies generate revenue. We don't get paid based on our disclosed exahash capacity. We get paid based on our actual Bitcoin production. And that is purely a function of exahash that is on the ground, actually operating and hashing within our facilities 24-7. But the second key point here is I think this clearly highlights some potential differences in operating models across the sector and potentially exposes some of the challenges that might be associated with, for example, third party hosting, old shipping containers, abandoned warehouses, single source generation and behind the meter arrangements. and other business models which may prioritize speed or other factors over sustainable levels of Bitcoin production. And just finally, before I hand back over to Dan, we don't see this as a particularly recent phenomena. This is nothing new. We've been tracking these metrics fairly closely and the same sort of monthly data across the sector since our IPO. And we don't really get it. We just think that this is potentially overlooked by the market and potentially something that investors should pay a bit of closer attention to. Over to you, Dan.