MARA Holdings, Inc.

Greetings and welcome to the MARA First Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow a formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Robert Samuels, Vice President of Investor Relations. Thank you. You may begin.

Thank you, operator. Good afternoon, everyone, and welcome to MARA's first quarter fiscal year 2026 earnings call. Thanks for joining us today. With me on today's call are our chairman and chief executive officer, Fred Thiel, and our chief financial officer, Salman Khan. Today's call includes forward-looking statements, including those about our growth plans, liquidity, and financial performance. These involve risks and uncertainties, and actual results may differ materially. We disclaim any obligation to update these statements, except as required by law. For more details, see the risk factor section of our latest 10-K and other SEC filings. We'll also reference non-GAAP financial measures like adjusted EBITDA, which we believe are important indicators of MARS operating performance because they exclude certain items that we do not believe directly reflect our core operations. Please see our earnings release for reconciliations to the most comparable GAAP measures. We hope you've had the chance to read our shareholder letter and look forward to your feedback. We'll begin with some prepared remarks from Fred and Salman. After their comments, we will open the call to Q&A. I'm going to turn the call over to Fred to kick things off. Fred?

Good afternoon, everyone, and thank you for joining us. Q1 2026 was a redefining quarter for Mara, not an incremental one. This was a quarter where we executed deliberately across multiple fronts at once and moved the company decisively forward. During the quarter, we moved the Starwood joint venture from announcement to execution, closed our acquisition of a majority interest in Exxon, and retired about 30% of our outstanding convertible debt, all while realigning the organization to fit the business strategy. Shortly after quarter end, we announced a definitive agreement to acquire Long Ridge Energy and Power from FTAI Infrastructure. These were not isolated events. They are connected pieces of a strategy that is now fully in motion. That strategy starts with a single conviction. The next phase of digital infrastructure value creation will be shaped by the control of power, where it is located, when it's available, and how it can best be monetized. AI adoption is accelerating faster than power can be brought online to meet demand. That is not an opinion. It's the defining constraint of this market. Available, connected energy is the bottleneck on AI compute growth. The ability to source control and dynamically allocate that power is a structural advantage. And the lack of available power will negatively impact semiconductors related to AI. If there's not sufficient capacity to absorb ship supply, some semiconductor vendors are investing directly and locking up demand as evidenced by NVIDIA's recent investments. Mara has positioned itself squarely in the bullseye. with already energized power to enable hyperscalers to, in the near term, energize compute. With our previously 1.9 gigawatts of power capacity and now with the addition of Longridge, we're having advanced conversations with multiple prospective tenants across multiple sites. Let me start with Longridge. We view Longridge as a land and power acquisition to develop a premier compute campus. It is a strategic enabler for our existing Hannibal operations, adding to the site 1,600 acres with a path to grow the existing 200 megawatts of power to over 1 gigawatt. It will establish a leading AIHPC data center campus in the PJM interconnection, one of the most active data center and power markets in North America. In a market where power and infrastructure constraints take years to solve, Long Ridge gives us exactly what is needed to deliver value to shareholders upon closing. This is not a greenfield site. It is a site that is already operational, already generating cash, and that gives us immediate access to the infrastructure, interconnection, and physical footprint required to scale to over one gigawatt. The power is there, the land is there, the water is there, the fuel supply is there, and the interconnection is there. The centerpiece of the campus is an approximately 505 megawatt nameplate, combined cycle gas turbine, one of the most efficient in the entire PGM interconnection. It generated 144 million of annualized adjusted EBITDA in the second half of 2025 with 76% contracted capacity. This is stable, visible cash flow from the moment we close the transaction. Beyond the power plant, the campus consists of over 1600 continuous acres and includes the 200 megawatts of Mars existing capacity at Hannibal. As of signing, we have already submitted plans to augment the Hannibal interconnect, and we will move quickly post-close to further expand power capacity at the power plant. At close, we plan to retain Longridge's skilled team consisting of about 25 full-time employees that have deep operational knowledge of the facility. They will supplement our existing energy asset operating expertise. Here's what matters most about the scarcity of this asset. If you tried to build this from scratch today, the land, the power, the permitting, the water, the interconnection, you're looking at $2 to $3 billion of capital and 7 to 10 more years of development time. We're stepping into a platform that is already built, already operational, and already generating cash flow. Assets like this are very hard to come by. Some might even call it a unicorn. So when they do, you move. In total, Longridge gives us over one gigawatt of total potential capacity and a path to scale to 600 gross megawatts of AI and critical IT load over time. This transaction increases our owned and operating capacity by approximately 65%, taking us from about 1.3 gigawatts of energized capacity today to roughly 2.2 gigawatts by closing and including expansion capacity to 2.4 gigawatts. We've been actively engaged with multiple top-tier potential tenants around this asset. These conversations are now accelerating since announcing this transaction. And the current plan calls for an initial 200 megawatts of AI build-out, with construction beginning around the first half of 2027 and initial capacity coming online in mid-2028. The power plant is not the end product. It's the enabler. It provides reliable control over an increasingly scarce input at a cost of approximately $15 per megawatt hour. This is a cost position that very few can match, as well as a positive cash flow to Mara. And to be clear, our existing Bitcoin mining operations at Hannibal will continue without interruption until such time as the data center campus needs the power. Mara does not expect to reduce Longridge's current supply of power into the PGM grid. As we develop compute capacity behind the meter, we will pair that demand with incremental generation over time. Our goal is to continue to operate Longridge Energy and ensure that consumers continue to benefit from the reliable power they have been accustomed to. Taken together, Longridge gives Mara a scaled power advantage platform, immediate and durable cash flow, and a clear path to build one of the leading digital infrastructure campuses in this market. Next, I'd like to talk about our strategic partnership with Starwood, which has made meaningful progress during the quarters. We moved from announcement to execution, advancing permitting and site preparations across our portfolio, and entering active tenant discussions with multiple counterparties, including hyperscalers, across 90% of our existing owned and operated sites, including the Longridge campus. I want to take a moment to explain why the structure of this partnership matters, because it's fundamentally different from a traditional lease, and that distinction has real economic benefits for Mara and its shareholders. First, Starwood is a trusted institutional counterparty with global investment expertise and a dedicated data center development platform. Their team has developed, built, and put into operations more than 7 gigawatts of data center capacity worldwide for premier tenants. This means Starwood is a trusted counterparty, having negotiated multiple leases with premier tenants, which we believe accelerates the timeline for site evaluation and lease signing, something we have already seen. Second, Starwood brings captive development and EPC capabilities. They lead design, development, construction, and facility operations, giving MARA an experienced execution partner without having to source and manage third-party contractors. Additionally, their prior experience for constructing sites for premier tenants provides an enhanced certainty regarding their ability to develop on-tenant timelines and technical requirements. This trust factor provides prospective tenants more confidence that their timelines and specifications will be met. Our peers who have never done this before still need to build trust with prospective tenants because they lack a proven track record. Third, the structure is capital efficient. When MARA contributes to sites, its value is determined using pre-agreed site-specific economics tied to power, land, interconnection, and development attributes. That value gives MARA equity credit in the project before joint venture cash contributions are required. To put this in context, on an illustrative 200 megawatt project, MARA could generate approximately $50 to $100 million of net annualized stabilized cash flow based on a 9% to 15% yield on cost range with little to no incremental equity required beyond the value of the site we contribute. As projects scale, the structure naturally evolves. MARA's site contribution is fixed, so for larger developments, the incremental growth capital becomes more proportionate between the partners. At that point, the funding model starts to look more like a traditional data center development structure, including the use of construction financing that can support roughly 80% loan to value. The key point is that this model allows MARA to monetize the value of its powered land portfolio, preserve significant upside in long-term cash flows, and manage capital exposure in a disciplined way. Most critically, this is not designed to be a one-time transaction. As we continue to aggregate land and power assets, our goal is to contribute sites into the structure repeatedly. Starwood is a capital-efficient engine for turning Mara's powered land portfolio into contracted, institutional-grade digital infrastructure at scale. We expect to sign multiple tenant leases by year-end. As the pipeline converts, we'll disclose contracted megawatts. While the Starwood joint venture addresses the large-scale, hyperscale end of the AI infrastructure market, Exxon addresses a different but equally important segment, sovereign enterprise and private cloud AI compute. Together, they give Mara two distinct pathways into AI, both grounded in the same foundation of energy-backed infrastructure, both serving real and growing demand. Governments and enterprises, particularly across Europe and Canada, are increasingly unwilling to rely solely on hyperscale platforms for their AI infrastructure due to data sovereignty and cost. They want control over compute, data autonomy, jurisdictional compliance, security, and independence. This is not a niche requirement. As AI policy evolves and data sovereignty standards tighten, a meaningful share of AI workloads will require infrastructure that is compliance-ready, jurisdictionally controlled, and trusted. Exxon is built to serve exactly that demand. We continue to build on our proven success in UAE, Finland, and our recent launch in Oman. We are in active discussions with major energy companies in France, Brazil, and Saudi Arabia across energy-rich regions where reliable, scalable power supports long-term digital infrastructure development. We are still early, and we will share a more detailed roadmap as this effort develops. The simplest way to think about it is Starwood and Exxon are different expressions of the same thesis. The JV pursues large-scale co-location for hyperscalers. Exxon pursues private cloud, sovereign AI, and enterprise deployments. and regulated markets, where these are critical criteria. Both depend on Mara's core capability of controlling the monetizing energy-backed infrastructure. Together, they expand our addressable market across two large and growing segments of the AI infrastructure opportunity. Finally, Bitcoin mining is the operational foundation we're building from. Our strategy is to co-locate new infrastructure with our existing mining operations. This allows us to monetize power assets immediately while building on the operational discipline and infrastructure expertise that mining demands. Mining generates revenue today. It preserves the option to redirect capacity toward AI and critical IT loads as those opportunities mature on the same sites. That flexibility is deliberate. It's not incidental to our strategy. It is central to it in that it allows us to best monetize our power and compute. We continue to believe Bitcoin is supported by institutional demand. In our view, that creates a constructive setup over time with a bias to the upside of institutional buying continues and retail demand returns. We continue to believe Bitcoin will appreciate beyond its current levels. We also took deliberate steps to strengthen the balance sheet during the quarter. We retired about 30% of our outstanding convertible debt at a discount, reducing potential dilution and increasing our financial flexibility. This was a decision to reduce the capital structure's drag on equity value and give us greater capacity to pursue the highest return opportunities across the business with discipline and without being forced to dilute shareholders.