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spk03: Ladies and gentlemen, the conference will now begin. I would like to turn the call over to management.
spk01: Hello, everybody, and thanks for taking the time to hear about Mawson Infrastructure Group.
spk02: My name is Nick Hughes-Jones, Chief Commercial Officer of Mawson, and I'll be taking you through the investor presentation today. But first, I need to read you a short disclaimer around forward-looking statements. Please be aware today we'll be making forward-looking statements. These statements are based on current expectations and assumptions and are subject to risks that could cause actual results to differ materially from those expected. Please be sure to refer to the cautionary text regarding forward-looking statements contained in this presentation on slide two. Okay, with that out of the way, Mawson at a glance. As of Friday night's close, Mawson has a market cap of approximately $340 million, It's listed on the NASDAQ under the code MIGI, M-I-G-I, and has four Bitcoin mining sites across the USA and Australia. Now, for those of you that aren't aware of what an exahash is, abbreviated as E-H in these slides, crudely speaking, an exahash is a measure of computing power. The more exahash you have online, the more Bitcoins you produce on a daily basis. As at the end of March 2022, we expect to be producing at approximately 1.5 exahash or approximately 7 Bitcoin per day. Based on current network difficulty and a Bitcoin price of $40,000, this equates to around $102 million in annualized revenue. Today, we are pleased to announce we are upgrading our exahash targets from 3.35 exahash in Q2 of 2022 to 4 exahash in Q3 2022, and from 5 exahash in early Q1 2023 to 5.5 exahash by the same date. You can see the respective number of Bitcoin produced per day at 4 and 5.5 exahash on slide 3 based on current network difficulty. We've also upgraded our contracted energy infrastructure capacity from 220 megawatts to 350 megawatts, and we are a net zero carbon miner, something I'll touch on later in the presentation. With that, I'll hand over to CEO and founder James Manning. Thanks, Nick. Q4 was an incredibly busy period for the Mawson team. Financially, we had a very solid quarter with revenue of $19.6 million, up 79% compared to Q3 2021. Gross profit rose to $16 million, up 89% compared to Q3 2021, And EBITDA rose $10 million, up 203% compared to Q3 2021. Operationally, we hit several major milestones in Q4. Our self-mining hit a record of 0.83 of an exahash in December. We added 200 megawatts of energy infrastructure capacity. And we purchased an additional 4,000 latest generation ASIC Bitcoin miners. And in very exciting news post-period end, we announced the expansion of our Sandersville, Georgia facility to 230 megawatts, which is capable of producing up to 7.5 exahash of operational capacity. We also materially expanded our hosting co-location business, led by a 12-megawatt hosting contract with Foundry Digital and a 100-megawatt hosting contract with Celsius Mining. We will host their miners at our Bitcoin mining facilities, generating additional revenue streams for Mawson. We also secured a $20 million debt facility with Celsius Mining to accelerate the rollout of our energy infrastructure. Turning to the full year results, 2021 was a transformational year for Mawson. Mawson generated a record of $43.9 million in revenue in 2021, up 886% compared to 2020. Our gross profit came in at a record $34 million, up 2,526% compared to 2020. And pleasingly, our EBITDA also came in at a record 17.9 million. Some of our operational highlights in 2021 included contracted hash rate grew up to 3.35 exahash. We expanded our energy portfolio by 220 megawatts. We added over 33,000 ASIC Bitcoin miners to our fleet, with our current fleet sitting at approximately 45,000 Bitcoin miners. We generated $850,000 in hosting co-location revenue off approximately two megawatts of hosting customers. And as a reminder, we have recently signed hosting for a total of 116 megawatts, or 58 times the 2021 number, providing additional revenue stream for the business as we head into 2022. Turning to the strategic highlights of 2021, at Mawson, we signed a 100 megawatt facility in Midland, Pennsylvania. capable of accommodating approximately 3.3 exahash of Bitcoin mining capacity, which in turn is capable of producing 15 Bitcoin per day based on the current network difficulty. We kicked off the 100 megawatt expansion of our Sandersville, Georgia facility, which is pictured here on slide five. I'm also proud to say we delivered our first Australian Bitcoin mining facility in late 2021 in partnership with Quinn Book Infrastructure Partners. As many of you know, we listed on NASDAQ in September of 2021 and joined the Bitcoin Mining Council shortly thereafter. I encourage you to have a look at this sustainable energy use data that the Bitcoin Mining Council produces on a quarterly basis. Something else we will touch on later in this deck. And with that, I'll hand over to our CFO, Hedl Magicia, to run through the financials in a little bit more detail.
spk00: Thanks, James. Okay, turning to the balance sheet. Property and equipment rose to $76.9 million in Q4, up from $7 million 12 months ago, reflecting our ongoing expansion of our Bitcoin mining fleet and energy infrastructure across our Australian and US facilities. Equipment deposits rose to $51.4 million in Q4, up from nil 12 months ago, reflecting the ramp up and investment in our future Bitcoin mining capacity. The mining deliveries related to these deposits have been delivered consistently throughout Quarter 1 to date in 2022, with a batch of Avalon A1246s delivered in February. Our total assets grew materially from $9.8 million in Quarter 4 2020 to $145 million at the end of Quarter 4 2021. Borrowing and other liabilities rose in Quarter 4 from $300,000 to $18.7 million and from nil to $4.3 million respectively, split between an equipment finance facility and a corporate-level debt facility entered into over the period. We expect to continue to use equipment finance facilities where appropriate. This is a very capital-efficient way of expanding our Bitcoin mining fleet and expanding our facilities, and in turn increasing the number of Bitcoin we produce on a daily basis. Subsequent to the cool trend, we've also secured a $20 million debt facility with Celsius Mining LLC, the proceeds of which will be used to accelerate the rollout of our energy and hosting co-location infrastructure. With that, I hand back to CEO James Manning.
spk02: Thanks, Hetal. Okay, I'll spend some time on these sliders, and an important one to understand. As you can see, between March 2022 and Q3 of 2022, Mawson will deliver a large increase in our operational footprint, moving from 1.5x a hash to 4x a hash. That's a 166% increase in our hash rate in just over six months. As slide seven demonstrates, this would increase the daily Bitcoin production from approximately seven Bitcoin per day at the end of March to approximately 18 produced per day by the end of Q3 2022. It's important to note that this is based on current network debility, Bitcoin at $40,000 and current expectations around our miner and energy infrastructure deployment. What's really exciting to us is as we move out into early Q1 2023, we expect to hit our 5.5 exahash target. At the 5.5 exahash level, we would expect to be producing approximately 25 Bitcoin per day. or $365 million in annualized revenue based on the current network difficulty and Bitcoin at $40,000. Pleasingly, our hosting co-location business has continued its rapid expansion. At Mawson, we have focused on building up our energy infrastructure from very early on in the journey. It's in our DNA. Given we have energy infrastructure surplus to our own self-mining requirements, we are able to use this surplus infrastructure to generate additional revenue streams for the group. You might say we are turning our competitors into our customers. We now have 116 megawatts of hosting customer agreements in place, making us one of the larger NASDAQ listed hosting co-location providers and expect this to expand further to 140 megawatts by the end of 2022 and then up to 220 megawatts in 2023. In terms of hosting economics, we are permitted to reveal the individual metrics of our underlying customers given their size. But we have been and will continue to report our hosting revenue and cost of hosting revenues at the end of each quarter, enabling you to work out just how positive and profitable this additional business segment is for Molson infrastructure. Further, in 2021, we generated $850,000 in hosting revenue from just two megawatts of customer hosting contracts. As of today, with 116 megawatts of customer contracts, we have a healthy pipeline of future customer demand. Turning back to our own self-mining business, at Mawson, we have a very disciplined approach to infrastructure to ensure that we can deliver expansion on time and on budget. Slide 9 shows in more granular detail our expected ramp-up schedule after Q3 2022 and then on to early 2023. Having focused on securing energy infrastructure early, this has ensured we are now amongst the lowest quartile cost producers of Bitcoin. as well as one of the lowest cost deployers of infrastructure in our NASDAQ list of peers. The Mawson team is now focused on substantial operational expansion ahead of us. Turning to slide 10, at Mawson we spent considerable time and resource focusing on our energy and energy infrastructure. In an industry where energy infrastructure is in very high demand, this puts us at a strategic advantage. Central to our infrastructure first thesis We spent a lot of time focusing on securing long-term, high-quality and low-cost energy infrastructure, evidenced by the seven to 26-year terms we have across our global facilities, with the option to buy facilities in some locations. Our current energy infrastructure sits at 350 megawatts, with a pipeline of over 1,000 megawatts, providing Wilson with one of the largest genuine energy pipelines in the industry. It's no accident we're at the front of the pack in the energy infrastructure space, given the depth of experience at both board and management levels inside of Mawson. As a reminder, our chairman, Greg Martin, was the CEO of Australia's largest energy infrastructure company, AGL, for five years and was with AGL for 25 years. At Mawson, we understand the importance of building a solid infrastructure platform upon which to expand our Bitcoin self-mining and hosting co-location, evidenced by today's upgrade of our self-mining targets. Now, securing our infrastructure pipeline is about more than just locking in land and energy. Slide 11 illustrates how we are focused on locking in the ancillary energy infrastructure required to stand up large-scale, low-cost, and highly efficient data centers in the Bitcoin mining industry. We are in a very strong position to not only deliver on our guidance, but critically, we have the underlying infrastructure in place to take us to 5.5 exahash and beyond. We now have agreements in place for over 45,000 ASIC Bitcoin miners. We have purchased over 250 modular data center units, which could accommodate up to 20 exahash of ASIC Bitcoin miners. And we have purchased over 160 low-side electrical transformers, which could accommodate up to 13 exahash of ASIC Bitcoin miners. As you can see, we had the infrastructure in place to scale well beyond our 5.5 exahash. With that, I'll hand back to Nick to take you through our current mining facilities profile, as well as our ESG and community engagement priorities. Thanks, James. Expanding on our established energy pipeline from slide 10, our current exahash capacity plus potential brownfield expansion opportunities at current sites sees us with the potential to be producing at approximately 17.8 exahash over time. Critically, Molson is committed to being a long-term sustainable Bitcoin miner. We target carbon-free and renewable energy at our sites, with our current mix of over 75 percent carbon-free energy. In Pennsylvania, we're using 100 percent nuclear energy, and we source our nuclear power from Energy Harbor, who own three of the local nuclear power plants in Ohio and Pennsylvania, Beaver Valley, Davis-Bessey, and Perry Nuclear Plants. The Beaver Valley Nuclear Power Plant is a mile from our Midland, Pennsylvania facility. In Georgia, the vast bulk of our energy comes from nuclear and hydro. Importantly, at our largest facility in Sandersville, Georgia, which at the end of March will be operating at 80 megawatts, was recently approved for expansion to 230 megawatts, which would make it one of the largest Bitcoin mining facilities in the state of Georgia and in the United States. As a reminder, there are two brand new nuclear reactors coming online in the state of Georgia in the next 12 months, Vogel 3 and Vogel 4, two 1,100 megawatt Westinghouse pressure water reactors. One of the major reasons why we selected this site is we expect a lower carbon footprint and potentially lower energy prices as these new reactors come online. To give you an idea of how difficult it is to bring on large-scale energy infrastructure in this industry, and while we think having a large energy infrastructure pipeline is such a strategic advantage, Vogel 3 and 4 are budgeted at $14 billion in capex, and are 10 years and counting on the construction side. Our third facility is located in Australia, and it is a 100% renewable energy asset where we are co-located next to the power generation asset. As we've said before, Queenbrook is a green energy infrastructure fund, and they have 17 gigawatts of green energy across their global portfolio. They're a fantastic partner for us to be jointly developing green energy sites with over the coming years. Turning to slide 13, Our strict selection process ensures we are targeting long-life, low-cost, and high-quality sites. We have long-term leases on all of our sites, 26 years in Sandersville, Georgia, 15 years in Midland, Pennsylvania, and seven years in Australia. We use our internally designed modular data centers, which makes us one of the lowest-cost employees in the industry, and we look at all our sites through our net zero-carbon 2030 and ESG strategy lens, ensuring our energy mix is low carbon. At Mawson, ESG is a core priority for us. Our integrated model is based on long-term strategy to assist in the global transition to a digital and decarbonised society. We've already touched briefly on our focus on carbon-free energy. In addition to this, we offset any residual carbon footprint using carbon offset credits. In 2020, we offset over 22,000 tonnes of carbon, supporting wind and native biodiversity projects in the process. We are now in the process of assessing and offsetting our 2021 carbon footprint. By the end of 2022, we will have planted over 100,000 trees across the US and Australia, with 75,000 trees planted in 2022 alone. That's approximately 1.5 trees planted every time a block is created on the Bitcoin blockchain. Mawson is also a very active member of the local communities in which we operate. We sponsored both the school football teams in Sandersville, Georgia, have academic scholarship programs in place, and are active supporters of the Washington County Regional Medical Center for COVID Relief, as well as the local Chamber of Commerce. In late 2021, we sponsored Buell Park in Midland, Pennsylvania, as well as supporting the local community college of Beaver County, the Lincoln Park Performing Arts Center, Beaver Falls Park, as well as the Heritage Valley Health System. Importantly, in Pennsylvania, we recently announced a partnership with Voltus, whereby Mawson has committed to deliver up to 100 megawatts back into the local electricity grid in times of need, further supporting the local communities in which we operate. Slide 15 touches on our team briefly. Our US team is led by our Chief Operating Officer, Liam Wilson, and a recent high-quality addition is Craig Hibbard, who oversees development of our portfolio facilities in the US. Joining our CFO, Hedl Majithia, in the Sydney office, two recent additions to our expanding team are Tom Hughes, our General Counsel, who joins us from Macquarie Bank, AZ Bank, Hub24, and Heath Donald, our Chief Marketing Officer, who joins us from No Names Digital and brings within 20 years' experience across IT, telco, and marketing. Our board is chaired by Greg Martin, who is the CEO of Australia's largest energy business, AGL Energy, Michael Hughes, another of our independent non-executive directors who has extensive experience across capital markets, governance and audit, and Yossi Kerat, who has substantial experience across NASDAQ listed businesses. With that, I'll hand it back to James to bring the presentation home and run through the last couple of slides. Thanks, Nick. Slide 16 spells out some of the achievements we've had recently across our innovation portfolio. As we alluded to earlier, In February, we announced two large co-location customers, 100 megawatt agreement with Celsius Mining and 12 megawatts with Foundry Digital. These two deals illustrate the tightness in the industry around energy infrastructure at present and how well-placed we are to capitalise on them. Secondly, following on from the listing on Cosmos Asset Management's first product in the Australian market in late 2021, the Cosmos Global Digital Miners ETF, Cosmos recently announced announced a partnership with Purpose Investments Inc, a $14 billion asset manager who listed the world's first spot Bitcoin ETF. For our penultimate slide, I wanted to highlight just how aligned Mawson's board and senior management are with our fellow shareholders. Board of management currently own approximately 24% of Mawson. So we all have huge amount of skin in the game. This is unique among our NASDAQ listed peers and ensures we're extremely focused on shareholder returns. And lastly from me, before we move to questions, in summary, why invest in Mawson Infrastructure Group? Well, over the next 12 months, we expect to grow our operational footprint 400%. We are an infrastructure-first business, a strategic advantage in the current environment. We are one of the most sustainable Bitcoin miners on the NASDAQ, with over 75% of our energy coming from sustainable sources. We have strategic partnerships in place with Quimbook Infrastructure, Purpose Investments, Celsius Mining, Canaan, and Foundry Digital. We are one of the most efficient and lowest cost operators in the industry, and we have very high insider ownership, meaning we are incredibly focused on shareholder returns. With the bulk of the presentation now complete, we wanted to take this opportunity to thank all of our shareholders for their ongoing support in 2021. I'll now hand back to the floor for any questions.
spk04: And that's our final slide. Before we will hand it back to questions. Thank you.
spk03: Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad and a confirmation tone will indicate your line is in the queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, It may be necessary to pick up your handset before pressing start. Our first question comes from Kevin Deed with HC Wearing Right. Please proceed.
spk01: Gentlemen, James, Nick, thanks so much for having me. Thanks, Kevin. We always love to hear from you. Okay. Could you just talk a little bit about your hosting objectives, James? I think you said, if I understood correctly, that you're targeting 220 megawatts. Is that by the end of 2023? And if so, can you talk about what you might need to do to facilities beyond what you've discussed in order to accommodate that?
spk02: Sure. So, yeah, the 220 megawatts of hosting is the 2023 target. As we alluded to, we currently have a pipeline of sites in late-stage negotiations or under LOIs that we'd be looking forward to bringing to the market and, you know, letting everyone know about in the near future. And, you know, the combination of the existing infrastructure we've got on order plus these additional sites that we've got near this term that we envision bringing on between now and the end of 2023 gets us well and truly comfortable to that 220 megawatts but it also gives us the expansion capacity for our own self-monitoring at the same time.
spk01: Okay. Now, I understand that, at least I think I understand, James, that you wanted us to maybe sit back and see financials as they come up in order to get a better read on the profitability. But I was wondering if you could speak to some of the deals that you've announced, Celsius and Foundry, Are they rev share at all, or how do they sort of work in a broad light?
spk02: Yes, they're not revenue shares. They're traditional hosting co-location agreements, much like a traditional data center you'd see. We have a cost-plus model where we understand our costs and our infrastructure costs. We seek a cost recovery and a healthy margin on those to ultimately develop our hosting business. We very much look at them on a conservative basis, the hosting business. And while we won't go out to contract specifics, we're really comfortable building out the first 116 megawatts that we've got between Celsius and Foundry. And in fact, we've already delivered for Foundry a bunch of that equipment's already online. And Celsius will be coming online this month as well, some of that equipment. So there's staggered deploys over the next couple of months. And we're very comfortable about what they'll do and what they'll add to the bottom line. And I think that'll help, you know, diversify our revenue streams and reduce some, you know, any just pure Bitcoin risk, you know, attached to a traditional hosting business.
spk01: Last question for me, James. Thank you for that. Last question for me. Just on Quinn Brook, your relationship there. How has Quinbrook embraced the flexibility that Bitcoin mining offers a power producer and maybe reducing your costs in exchange for the flexibility that you can offer in controlling their load?
spk02: That's a great question. The way the Quinbrook PCA works, and I think you've seen this evolve in a lot of in a lot of mining PPAs is that ability to curtail. And we have an ability to curtail and that curtailment helps the value proposition from both us as a miner and from Quinbrook as a power provider. So they understand that and that ability to curtail power and hit spot demand. And I think it's not just about a power and the power price. It's also about how miners interact with the community because You know, when power prices are high, you know, it's a good thing to be able to, you know, give that power back to the grid in times of need. And I think you've seen that with our Voltus agreement in the US, and we've definitely got that with Primbrook in Australia. So that Catawba process, I think, is important, not just from an economics perspective, but from a good active perspective in the broader industry, because you don't want to see yourself pitched as the guy that's keeping, you know, mum and dad's power bills high at night.
spk01: Oh, excuse me. I lied, James. One last one. Could you just offer a little more insight on, I guess, just for those of us who are less familiar with Quinbrook, what their core competencies are and how you think they might be looking at expanding their own power development operations?
spk02: Sure. So, Quinbrook are a Global Green Energy Infrastructure Fund. They've got approximately 17 gigawatts of energy that they manage or own and operate. I'd encourage you to jump on their website. They have quite comprehensive information about what they have in their pipeline. They're in the US. They're in Australia. They're truly global. They're in the UK. They're around the world. So working with them to develop some future sites out that are green renewable energy projects is, you know, is key, you know, one of our key focuses in 2022 and 2023.
spk01: Thanks very much, James. Appreciate the opportunity to speak with you again. Congratulations on the results.
spk04: Thanks, Kevin. Our next question comes from Michael Corrasani with Orion. Please proceed. Michael, your line is now live.
spk03: There's nobody on Michael's line and there are no further questions. So I'll hand the call back to management.
spk04: Thank you. We might take a couple of questions that have popped up on the chat here.
spk02: So there's a big jump in hash rate in June. What drive is this?
spk04: Sure.
spk02: So in June, we see delivery of some equipment that we've already contracted coming online and some deliveries arriving. So come June, we'll see that large jump and that's equipment that will be installed in, you know, is installed or is being installed in May. So we expect that to be fully online and operational in June. Okay, and we've also got, what are you seeing in terms of minor pricing and delivery schedules? What we're seeing in terms of minor pricing and delivery schedules. So I think from a delivery schedule perspective, we're seeing lower tariff hash prices than spot was historically, and we're definitely seeing early delivery. So we're getting our deliveries coming through from existing orders with Canaan, you know, on time and on budget, obviously, because they're contracted. But we're seeing more of those, more opportunities to pick up additional TerraHash at appropriate pricing as well. Okay. And then we've also got recent news articles have brought attention to noise issues impacting other crypto mining facilities. Has Mawson encountered this at any of their sites? Yeah, that's a great question. We haven't had any noise issues at our mining facilities That's partly to do with the way we approach planning on the site. We make sure our Georgia site, if you've seen any of the videos online, you'll see that they're in a large forest, so there's a lot of tree buffers. We do use specialist fences to buffer noise. Up in Kodong, we've got appropriate earth mounding and fencing in place, as well as some modifications to our traditional container designed to baffle noise. And then in Pennsylvania, we're in industrial sites where we're not neighboring residential areas, and that helps manage that noise risk as well.
spk04: All righty.
spk02: Can you comment on Georgia's proposed energy tax incentives for Bitcoin mining? Does it change or accelerate your plans in Georgia? That was from Curtis. Thanks, Curtis. Look, the energy tax incentives are really interesting, and there's already some existing incentives to operate in Georgia, but You know, everything that, you know, helps with the tax and tax effectiveness of operating in a jurisdiction makes it more competitive in the long term. We're really fortunate to be, you know, our primary site was in Sandersville in Georgia, and we've got a very strong relationship there. And we recently announced that, you know, we've commenced work to expand that next stage of the Georgia facility. We had some opportunities to take that well and truly past that, you know, at least to the 230 megawatts that's already approved and expand that over time. There are other opportunities that we've got within Georgia as a result of that phenomenal relationship we have there, and we'll be looking to pursue those over the next 12 months as part of our energy pipeline. Okay, and last question before we hand it back to the moderator. I see four sites mentioned in the first page of the deck, but only detail on three. What's the fourth site? That's a good pickup there from you, Matthew. Thank you. We signed a lease for a second site in Pennsylvania. We've completed a preliminary load study, but we haven't finalised that. Until we've got that load study finalised and locked in in a PPA, we won't be publicly discussing the total capacity of the site, but we're very happy with the preliminary results and it definitely goes to part of the pipeline and our ability to expand and take additional hosting and mining on in the near future. And that's all the questions there. We'll hand it back to you. Thank you, moderator.
spk03: Thank you. This concludes today's conference. Thank you very much for your participation. You may now disconnect.
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