LM Funding America, Inc.

Good day and thank you for standing by. Welcome to the LM Funding America Think First Quarter 2025 earnings conference call. At this time, we'll participants on a listen-only mode. After the presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Cody Fletcher, for installations. Please go ahead.

Thank you, operator, and thank you all for joining LM Funding America's First Quarter 2025 earnings conference call. Joining us today are chairman and CEO Bruce Rogers, President of US Digital Mining Ryan Duran, and CFO Richard Russell. For today's call, we have uploaded an accompanying supplemental investor presentation, which can be found under the events section of LM Funding's investor relations website. Before we get started, please note that our remarks today may include forward-looking statements. These statements are subject to risks and uncertainties, and actual results may differ materially. We will also reference certain non-GAAP financial measures today. Please refer to our 10-Q filing and our website for a full reconciliation of these non-GAAP performance measures to the most comparable GAAP measures. For a comprehensive discussion of these and other risks, please refer to our filings with the SEC, available on sec.gov, and in the investor section of our website at .lmfunding.com backslash investors. I will now turn the call over to our CEO, Bruce Rogers. Bruce.

Thanks, Cody. Good morning, and thank you for joining us today. The first quarter of 2025 marked another period of strong execution and strategic progress for LM Funding. Since entering the Bitcoin mining business in 2021, we have transitioned from an asset-like model to a vertically integrated operator, gaining full control of our fleet, improving margins, and reducing operational risks. We mined 24.3 Bitcoin for the quarter, continuing to scale our production capabilities while improving our operational efficiency. In parallel, we've begun monetizing our curtailment energy sales by selling energy back to the grid during periods of peak demand, creating a natural hedge against Bitcoin price volatility and further reducing our cost of operations. Our disciplined approach to cost management also drove a meaningful reduction in operating expenses as we continue to build a leaner, more agile, vertically integrated business without compromising performance. Rick will cover this in more detail shortly. We're seeing progress in margin improvements and cost control, furthering our disciplined growth strategy. Finally, we again call attention to the disparity between the value of our Bitcoin held versus our market cap. On April 30th, we held 148.7 Bitcoin. Given a market price of $104,000 per Bitcoin, our Bitcoin holdings would be worth $15.5 million, or approximately $3.01 per share when our stock is trading at $1.87 as of May 13th close. I'll now turn the call over to Ryan Duran, our president of US Digital Mining, to review our operational highlights in more detail. Ryan.

Thank you, Bruce. In the first quarter, we focused on maximizing the operational efficiency of our existing infrastructure while targeting strategic growth opportunities. We achieved 560 petahash at the end of March, deployed LuxOS upgrades across our Oklahoma fleet, and executed our first power sales back to the grid. In May, we ordered two one-megawatt immersion mining containers for our previously announced two-megawatt expansion of our Oklahoma site. We expect to complete construction and energization by the end of third quarter, pending international shipping timelines.

We believe

the shift to immersion cooling marks a meaningful advancement in our operational strategy. This technology will allow us to operate in crowded and harsh environments that offer access to lower cost power. Immersion technology reduces dust, heat, and humidity, leading to a more consistent performance with longer equipment lifespan and improved reliability. We expect immersion technology to expand our operational horizons and add shareholder value. Our shift to immersion cooling led to the strategic decision to sell the 256 Bitmain S21-plus machines ordered last December and delivered this April. Machine prices have been relatively stable throughout this period, so we anticipate this transaction to be cash neutral. Lastly, as mentioned in our April production update, we began relocating our 800 machines from our hosting partner site to our wholly-owned Oklahoma site. Once installed, these machines will operate with lower power costs, enabling us to mine Bitcoins more cost-effectively. Our CFO, Rick Russell, will now provide a review of the financial highlights for the first quarter of 2025. Rick?

Thank you, Ryan. In the first quarter of 2025, we mined 24.3 Bitcoins at an average price of $93,500, which was 12% more Bitcoin mined sequentially. Bitcoin mining revenue for the quarter was approximately $2.3 million, up 25% sequentially, reflecting the success of our infrastructure investments in improved machine efficiency from the Lux OS upgrades. Year over year, revenue declined 50.5%, largely due to the impact of the April 2024 Havi. Additionally, we have made significant strides in our operational strategy. As Bruce mentioned, during the first quarter, we generated approximately $150,000 from power cells back to the grid, off-stating our mining cost of revenue. This contributed to an improvement in mining margins from .2% in Q4 2024 to .5% in Q1 2025. In April, we generated approximately $120,000 in power cells, demonstrating early momentum in this initiative. By incorporating development into our operational models, we aim to stabilize operating costs by establishing a partial hedge against Bitcoin price volatility. As Bruce also mentioned, another highlight for the quarter was reduction in our staff costs, professional fees, STA and other costs by .7% year over year. This improvement was driven by our transition to a leaner operational model while maintaining output and efficiency. Net loss for the quarter was $5.4 million with a core EBITDA loss of $2.8 million, both driven by a $1.8 million Bitcoin non-cash write-down for fair market value of our Bitcoin, held as of March 31st, 2025. However, as of the date of this call, the $1.8 million write-down has nearly reversed given Bitcoin's price recovery to approximately $104,000 as of May 13th, 2025. We finished the quarter with a million dollars in cash and our Bitcoin holdings increased to 160.2 Bitcoins valued at 13.2 million as of March 31st, 2025, or approximately $2.58 per share. Using our April month-end holdings of 148.7 Bitcoin and a Bitcoin price of 104,000 as of May 13th, 2025, the calculated value of our holdings would be approximately $15.5 million or about $3 per share compared to our May 13th stock price, $1.87 on the same date. Bruce will now provide some thoughts on our outlook and strategy heading into the remainder of 2025.

Thanks, Rick. Looking ahead, as Ryan mentioned, we're excited to begin immersion mining with the expansion of our Oklahoma site. We believe immersion mining will produce immediate returns in Oklahoma and open up unique mining site selection opportunities to us. We're seeking to deploy immersion technology at Greenfield and Brownfield sites offering five to 20 megawatts, facilities that typically fall below the acquisition thresholds of larger operators or offer environments best suited for immersion mining. In Oklahoma, curtailment and energy sales complement our mining revenue and provide a natural hedge against Bitcoin price volatility. By treating Bitcoin mining sites like ours as power producers, our energy agreement in Oklahoma allows us to sell curtailed energy back to the grid at market prices. We hope to build a sustainable business model around similar sites that can thrive in various market conditions, mining Bitcoin with greater flexibility and at lower costs. We remain bullish on Bitcoin and committed to our long-term Bitcoin accumulation strategy. We hodled. We began our treasury strategy in 2021. Holding and mining Bitcoin remains a logical continuation of this strategy. Recent news reports indicate we're not alone in our thinking. In 2024, we borrowed $5 million secured by our Bitcoin holdings. So like others in the news, we may want to add Bitcoin to our balance sheet with debt and or equity. In closing, we believe this approach to Bitcoin treasury management will create substantial long-term value for our shareholders, particularly given that our Bitcoin holdings are currently valued at more than one and a half times our market capitalization. Thank you for your time this morning and your continued support.

Thank you, Bruce. Ladies and gentlemen, as a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A roster. Our first question coming from the line of Michael Donovan, which is even right, your line is open.

Hi, Bruce, Rick, Ryan, thank you for taking my question. This is Michael Donovan calling in for Kevin Deedy. Can you guys talk a little bit more about the Oklahoma site build out and what you're thinking about currently in Texas?

Sure. Texas has got a counterparty issue, so I don't think that there's anything in the short-term horizon for us at this point. Oklahoma, we are up and running, and we will continue to convert containers to expected. And that is on the timetable that we discussed earlier. And we'll update you as the quarter progresses.

Now,

the

Texas-Oklahoma area, the two megawatts

we expect, I think, Ryan, the machines to be ready to

ship to us from China and North. Okay,

I appreciate that. Now, after that April sales of the S-21, so does that take care of all the machines that were in inventory and not plugged in?

I'm taking care of it. I don't know what that means. So we did sell S-21s and... Oh, the S-21s. Yeah, the S-21s, right. And then they went through that, so they're trading over and we... Okay, now... I think Ryan, we're going to put the end to the hosting side and pull out some of the older S-21s so that the net revenue will be about the same after the sales cost. That's the only way we can get the results. Okay, then maybe we'll work on that.

Okay, now then for, I guess, just a ,000-foot perspective question with the new sites, do you have any geographies in mind targeting the five to 20 megawatt greenfield, brownfield buildouts? Are you exploring? Still want to explore. Michael,

the geography... The rules... ...are... ...full of power. We can't do that to our energy providers. How about inside the five to 20 megawatt constructs of the light we found? That's taking us right now a lot. This is in Oklahoma. Other places in Pennsylvania. At the University College from Texas. We have a lot of power in Texas that has this kind of power arrangement. Okay, great. Well, thanks guys, and best of luck.

Thank you. As a reminder, if you have a question, please press star one, one. And since there are no further questions in the queue, I would like to thank everyone for joining us on LM Funding America's Inc. First Quarter Earnings Call. Thank you for your participation, and you may now disconnect.