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spk01: Ladies and gentlemen thank you for your patience.
spk06: The conference will begin in just a few minutes. Again thank you for your patience. Thank you. Thank you.
spk03: Thank you. Thank you. Thank you. Thank you. Thank you.
spk01: Greetings and welcome to Mawson Infrastructure Group, Inc. first quarter 2022 earnings results conference call. At this time, all participants are in listen-only mode. Question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Nick Hughes-Jones, Chief Commercial Officer. Please go ahead, sir.
spk04: Hello, everybody, and thank you for taking the time to hear about Mawson Infrastructure Group. My name is Nick Hughes-Jones, Chief Commercial Officer of Mawson. Joining me today is James Manning, our Chief Executive Officer and Founder, and Hedl Majithia, our Chief Financial Officer. We look forward to 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 will 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, Mawson at a glance. As of last Friday night's close, Mawson has a market cap of approximately $180 million, is listed on the NASDAQ under the code MIGI, M-I-G-I, and has five Bitcoin mining sites across the USA and Australia. Now, for those of you that aren't aware of what an exahash is, abbreviated as EH 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 May 2022, we expect our Bitcoin self-mining to be operating at approximately 1.8 exahash, producing approximately eight Bitcoin per day. Based on current network digitally and a Bitcoin price of $30,000, this equates to around $88 million in annualized revenue. Today we are pleased to announce a new 120 megawatt Bitcoin mining facility in Texas in collaboration with JAI Energy and Texas Pacific Land Corporation, one of the largest land owners in Texas with over 880,000 acres in their land portfolio and listed on the New York Stock Exchange under the ticker TPL. As a result of this new Texas facility, we are today upgrading our energy infrastructure capacity available for Bitcoin mining by 35%, from 350 megawatts to 470 megawatts. This is a significant strategic advantage for Mawson, given the very high levels of demand for energy infrastructure in the Bitcoin mining industry today. We are also reiterating our targets of four exahash online by Q3 2022 and 5.5 exahash by early Q1 2023. This would see us producing 18 Bitcoin per day and 24.5 Bitcoin per day, respectively, based on current network difficulties. Mawson is also proudly a net zero carbon miner and hosting co-location provider, something I'll touch on later in the presentation. With that, I'll hand over to CEO and founder, James Manning.
spk06: Thanks, Nick.
spk05: Q1 was an exciting period for the group. Our hosting co-location business expanded materially as we signed major hosting customers, Celsius Mining and Foundry Digital, generating new revenue streams for Mawson, which is all paid in US dollars. Our team has expanded with the Mawson family, now over 50 hardworking individuals based in the USA. we continued the rapid scale-up of our self-mining operations. Turning to the Q1 results, Q1 was a solid quarter financially and operationally for our business. Mawson generated $19.4 million in revenue, up 178% compared to Q1 2021. Revenue was flat in Q1 2022 versus Q4 2022, a good result in an environment where Bitcoin price fell from a high of 69,000 in November to a low of 33,000 in January. This is a result of the substantial increase in our self-mining operations between Q4 21 and Q1 2022. And we've seen this rapid scale up continue into Q2. Gross profit came in at 11 million, up 138% compared to Q1 2021. And non-GAAP EBITDA came in at 4.5 million. up 160% versus Q1 2021. Some of our operational highlights in Q1 include, we completed the build-out of our 80 megawatt facility in Georgia, and in very exciting news, we gained approval to expand this facility nearly threefold to 230 megawatts, which is capable of operating at 7.5 exahash. We expect this expansion to come online in Q3 2023. We signed our largest hosting co-location customers today, Celsius Mining for 100 megawatts and Foundry Digital for 12 megawatts, generating significant additional revenues for Mawson in addition to our Bitcoin self-mining revenue. In Q1, we upgraded our self-mining exahash targets to 4 exahash in Q3 2022 and 5.5 exahash in early Q1 2023. We secured a $20 million debt facility from Celsius Network. And exciting news today, we've announced a new Bitcoin mining facility in Texas in collaboration with JAI Energy and Texas Pacific Land Corporation, one of the largest landowners in Texas, which is listed on the New York Stock Exchange under TICO TPL. With that, I'll hand over to our CFO, Hetal Majithia, to run through the financials in a little more detail.
spk00: Thanks, James. Okay, turning to the balance sheet. Cash and cash equivalents in Q1 2022 rose to $5.8 million from $5.5 million in Q4 2021. In addition to this modest rise in cash, we also paid down approximately $3.2 million of our Foundry Digital debt facility over the course of Q1 and have continued to pay this down in Q2. We currently expect this debt facility to be paid off in full in Q3 2022. Property and equipment rose to $102.5 million in Q1, up from $76.9 million in Q4, reflecting the ongoing expansion of our Bitcoin mining fleet and energy infrastructure deployment across our Australian and US facilities. Equipment deposits declined to $41.7 million in Q1, down from $51.4 million in Q4, as Bitcoin miners continued to be delivered to our facilities and no major Bitcoin miner purchases were made in Q1. Bitcoin miner hardware deliveries related to these deposits have been delivered consistently throughout quarter one and have continued on into quarter two. Our total assets grew to $166 million in quarter one, up from $145.3 million at the end of quarter four. Total liabilities rose to $62.1 million in quarter one, from $30.7 million in quarter four, which was predominantly the result of a new $20 million debt facility secured with Celsius Network LLC. We expect to continue to use debt facilities and equipment finance facilities where appropriate. This is a very capital efficient way of expanding our Bitcoin mining fleet and expanding our infrastructure, in turn increasing the number of self-mined Bitcoin we produce on a daily basis, as well as increasing our ability to bring on additional hosting co-location customers. With that, I'll hand it back to CEO James Manning.
spk05: Thanks, Hetal. As you can see, between May 2022 and Q3 of 2022, Walton will deliver a substantial increase in our Bitcoin self-mining operational footprint, moving from 1.8 exahash to 4 exahash, a 122% increase in our self-mining hash rate in just over six months. As slide six demonstrates, This would increase daily self-mining Bitcoin production from approximately eight Bitcoin per day at the end of May to approximately 18 Bitcoin juice per day by Q3 2022. It's important to note that the revenue numbers on this slide are based on current network difficulties, Bitcoin at 40,000 and their current expectations around our miner and energy infrastructure deployment. What's genuinely exciting is as we move to early Q1 2023, we expect to hit our 5.5 exahash target, producing 24.5 self-mined Bitcoin per day and generating $357 million in annualized revenue. Turning to side seven, pleasingly, our hosting co-location business has continued to its rapid expansion. At Mawson, we have energy infrastructure capacity surplus to our own self-mining requirements. we're able to use this surplus infrastructure to generate additional revenue streams, where we are paid in US dollars for providing hosting services to third-party customers. The revenue and the cash flows from this business are highly predictable, and the vast majority of our customers are very large businesses. We now have 116 megawatts of hosting co-location customer agreements in place, making us one of the largest NASDAQ listed hosting co-location providers. and we expect to expand this further to 140 megawatts by the end of 2022 and then up to 220 megawatts in 2023. As at the end of May, we expect our hosting co-location business to be operating at approximately 52 megawatts, nearly halfway to a fully contracted deployment of 116 megawatts. We will continue to report our hosting revenues at the end of each quarter, enabling investors to work out just how positive this additional revenue stream is for Mawson Infrastructure Group. Turning back to our own self-mining business, at Mawson we have a very disciplined approach to infrastructure to ensure that we can deliver our expansion on time and on budget. Slide 8 shows in more granular detail our expected deployment out to Q3 2022 and then on to early 2023. Reaching these targets would make us one of the largest Bitcoin self-mining businesses on the NASDAQ. Further having focus on securing our energy infrastructure early, this has ensured that we're now amongst the lowest quartile cost producers of Bitcoin, as well as one of the lowest cost deploys of infrastructure of our NASDAQ listed peers. The Mawson team is focused on substantial operational expansion ahead of us in both Bitcoin self-mining and hosting co-location businesses. Turning to slide nine, at Mawson, we spend considerable time and resources 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 focus 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, we option to buy the facilities in some locations. Pleasingly, today we have added Texas to our portfolio of Bitcoin mining facilities. providing us with not only additional megawatts in a very tight market, but also further geographic diversification of our facilities. Our current and available energy infrastructure capacity sits at 470 megawatts, with a pipeline over 1,000 megawatts, providing Mawson with one of the largest genuine energy pipelines in the industry. And we have demonstrated today with the signing of our Texas facility, our ability to convert pipeline into reality. It's no accident that we're at the front of the pack in energy infrastructure, given the depth and experience of our board and manager inside of Mawson. At Mawson, we understand the importance of building a solid infrastructure platform upon which to expand our Bitcoin self-mining and hosting co-location business. Now, securing our infrastructure pipeline is about more than just locking up land and energy. In slide 10, we illustrate how we have focused on looking at ancillary 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 in self-mining and 116 megawatts of hosting co-location and beyond. As of 31 March 2022, We have agreements in place for over 45,000 ASIC Bitcoin miners. We purchased over 250 modular data center units, which could accommodate up to 20 exahash of ASIC Bitcoin mining operations. And we purchased 160 low-side electrical transformers, which could accommodate up to 13 exahash of ASIC Bitcoin mining operations. As you can see, we have the infrastructure in place to scale well beyond 5.5 exahash of self-mining and 116 megawatts or 3.8 exahash of hosting co-location. With that, I'll hand back to Nick to take you through our current mining facility profile as well as our ESG and community engagement priorities.
spk06: Thanks, Nick. Thank you, James.
spk04: Expanding on our established energy pipeline from slide 9, our current exahash capacity, plus potential brownfield expansion opportunities at current sites, sees us with the opportunity to be producing at approximately 21.8 exahash over time, split appropriately between self-mining and hosting co-location operations. And of course, the speed in which we expand beyond our guidance will be subject to market conditions. As always, the best idea wins. Critically, Mawson is committed to being a long-term, sustainable Bitcoin miner. We target carbon-free and renewable energy at our sites, with our current mix at over 75% carbon-free energy. In Pennsylvania, we are using 100% nuclear energy, and we source our nuclear power from Energy Harbor, who own three of the local nuclear power plants in Ohio and Pennsylvania. The Beaver Valley nuclear power plant is just a mile from our Midland, Pennsylvania facility. In Georgia, where we have recently been approved to expand our facility threefold to 230 megawatts, the vast bulk of our energy comes from nuclear and hydro. And importantly, there are two brand new nuclear reactors coming online in the next 12 months, Vogel 3 and Vogel 4, two 1,100 megawatt Westinghouse pressure water reactors. This is one of the major reasons we selected this site, as we expect a lower carbon footprint and potentially lower energy prices as these new reactors come online. We are excited today to include Texas in our investor presentation, where we have secured a site that is capable of operating at up to four exahash. And importantly, at this facility, we have collaborated with JAI Energy and Texas Pacific Land Corporation, one of the largest landowners in Texas with 880,000 acres across their land portfolio, providing us with substantial opportunity to expand into the state of Texas over time. Our third operational facility is located in Australia, where our energy is 100% renewable. At this site, we are co-located next to the power generation asset. This renewable energy power plant is owned by Quinbrook Infrastructure Partners, a multi-billion dollar global green energy infrastructure fund who are developing approximately 17 gigawatts of green energy assets across their global portfolio. Turning to slide 12, 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, 15 years in Sharon, Pennsylvania, 15 years in Texas, and seven years in Australia. We use our own internally designed modular data centers, enabling us to be one of the lowest cost operators in the industry. And we look at all of 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. We have 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 new trees across the US and Australia, with 75,000 trees planted in 2022 alone. That's approximately 1.5 new 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 sponsor both the local school football teams in Sandersville, Georgia, and have academic scholarship programs in place in the local county. 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 Centre, Beaver Falls Park, as well as the Heritage Valley Health System. Importantly, in Pennsylvania, we recently announced a partnership with Baltus, 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 we operate in. In Australia, we recently became major sponsor of the Far North Coast Men, Women and Juniors Rugby Union Teams. Slide 14 touches on our board and management team. The Mawson family has now expanded to over 50 hardworking individuals, with the vast bulk of our team residing in the United States. Our U.S. team is led by our Chief Operating Officer, Liam Wilson, with Chief Development Officer, Craig Hibbard, overseeing the development of our portfolio facilities in the United States. You've already heard today from CFO, Hetal Majithia, The other high-quality components of our engine room comprise Tom Hughes, our General Counsel, and Heath Donald, our Chief Marketing Officer. Our board is chaired by Greg Martin, who was the CEO of Australia's largest energy business, AGL Energy, for five years, and Greg was at AGL for 25 years in total. Michael Hughes, another of our independent, non-executive directors, has extensive experience across capital markets, governance, and audits, and Yossi Kerat, who has substantial experience across NASDAQ listed companies.
spk06: With that, I'll hand it back to James to bring the presentation home. Thanks, Nick.
spk05: Slide 15 spells out some of the achievements we've had recently across our innovation portfolio. As we alluded to earlier, in March we announced two large hosting co-location customers, a 100 megawatt agreement with Celsius Mining and a 12 megawatt agreement with Foundry Digital. These two deals illustrate the tightness in the industry around energy infrastructure at present and how well placed we are to capitalize on this high demand. Secondly, following on from the listing of Cosmos Asset Management's first product in the Australian market in late 2021, the Cosmos Global Digital Miners ETF, Cosmos recently announced a partnership with Purpose Investments, a multi-billion dollar asset manager who listed the world's first spot Bitcoin ETF 12 months ago. As a reminder, Cosmos Asset Management was spun out of Mawson, but however, Mawson remains Cosmos' largest shareholder. In very exciting news last week, the Cosmos Purpose Bitcoin Access ETF launched in the Australian market, making access to Bitcoin significantly easier for all Australians. For our second last slide, I wanted to highlight just how aligned Mawson's board and senior management is with all our fellow shareholders. Border management currently earn approximately 24% of Mawson, so we all have a huge amount of skin in the game. This is unique amongst our NASDAQ listed peers and ensures we're extremely focused on shareholder returns. Lastly from me, and before we move on to questions, in summary, why invest in Mawson Infrastructure Group? Well, over the next nine months, we expect to grow our self-mining business threefold and continue to expand our hosting co-location business. We are an infrastructure-first business, with a significant amount of energy infrastructure in place and strategic advantages 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, predominantly nuclear energy. We have strategic relationships with Quimbook Infrastructure Partners, Purpose Investments, Celsius Mining, Canaan, Foundry Digital, JIA Energy, and now Texas Pacific Land Corporation. We're one of the most efficient and lowest cost operators in the industry, and we have very high insider ownership at 24%, meaning we're incredibly focused on shareholder returns. With the presentation now complete, we want to take this opportunity to thank all of our employees and shareholders for their ongoing support in 2022.
spk02: I'll now hand the floor back for any questions.
spk06: Thank you.
spk01: Ladies and gentlemen, at this time, we will be conducting our question and answer session. If you'd like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. We have a first question from the lineup. Kevin Teddy with HC Wendright. Please go ahead.
spk06: Hi, James, Nick, Edel. Thank you very much for taking my questions. Thanks for hosting the call. James, apologies for this first one. I understand the target for X-September and five and a half sometime early next year, but I lost you. What was the hash rate at the end of the March quarter? Was that the 1.8 number or is the 1.8 number the current number?
spk05: 1.8 is our current. That's our May number.
spk06: Okay, that's May. Okay, what was March end?
spk02: Nish, have you got that by hand? Yep.
spk06: Hey, Kev, how are you going? Great. Thanks, Nick. How are you? Full speed ahead.
spk04: So the end of March self-mining exahash number. Sorry, beg your pardon. The average hash rate for March was 1.2 exahash. The end of month hash rate was 1.35 exahash. And then, as James has alluded to, we'll be at 1.8 exahash on the self-mining at the end of May.
spk06: Okay. The... Can we talk a little bit about the Texas location? What's the climate like? What sort of work do you have to do with ERCOT? Or are you behind the meter? What condition is the site in? Just some background there.
spk05: Sure. I'll keep it pretty high level, Kevin. But one of the things that really attracted us to this opportunity was that the substations were in place. It's actually a series of smaller sites all within close proximity of each other. No single site's greater than 30 megs, but not less than 20. It's a series of sites all within five to 10 minutes of each other that we'll build out. The upside of that is, as you're no doubt aware in Texas, they've changed the rules about bringing large load generation on, and we're under that threshold as well with these sites and these scales. We'll be able to turn on these sites pretty quickly. Substations are in place and ready to be energized. So it's just low-side transformers. And then, you know, climatically, we believe we've got the modular container solution will work in that climate based on the work we've done.
spk06: Okay. Listen, I know you have firsthand experience with immersion, but you're thinking that's not going to be a requirement here.
spk05: Look, we're not going to rule it out, Kevin. We might put some in, and it's a great spot to do some testing on immersion. You know, it'll scale up one of our immersion plants. But the economics, you know, the economics immersion are getting there, you know, so historically we've not really wanted to, but, you know, they're starting to look attractive, but I think in the short term we'd definitely be pursuing the air cold at this point.
spk06: Okay. The... The power agreement is through JAI and then to ERCOT, or how does that work?
spk05: No, we've got a separate power agreement, and the, you know, we're not, I can't disclose the terms of the power, the PPA or what we're doing there yet, but JAI facilitated the transaction with Texas with the land over.
spk06: I see. Okay. Just looking at the network overall, the MASA network overall, where is your, on average, where is your cost per power, and how is that going to change as more Georgia comes online and as more Pennsylvania comes online?
spk05: So our Pennsylvania power is, you know, partly hedged already. and some of that will flow through. Some of that flows through to the end customer where it's in hosting. So we're on a cost plus type arrangement for the component of that power. Some of that's hedged, some of that's floating. So we'll see some volatility in, I guess, some of the hosting revenue attached to that as well as it will flex with the power rates. We are looking to lock in and hedge out as much of the power long term as as we can, but over the last couple of months, you've obviously seen a lot of volatility in edgy markets. So we're taking a cautious approach to locking anything in too quickly now, because as you look further out, the prices are looking cheaper further out. So we're just trying to weigh up what we hedge and what we don't hedge. Obviously, some of the Texas pricing is more attractive at the moment that we've got, and some of that existing PA contract is really attractive as well.
spk06: Can you give us sort of a ballpark on where the overall MASA network cost per kilowatt hour is?
spk05: I haven't got a weighted average one at the moment, but I'm happy to come back to you separately on that, Kevin.
spk06: Okay, fair enough. Thank you, James. Now, how about the timeline on your hosting customers' deployments?
spk05: Yeah, so as we mentioned, we're on track to have about 50 megawatts deployed, 50 to 60 megawatts deployed in PA, and we're at the end of month, and we're really powering along there. So we're currently deploying about four containers there a week, four to five containers a week. So between 8 and 12 megawatts a week are going online in PA at the moment. So the team's working really hard to get that deployed. And I think we're pretty comfortable with that deployment rate at the moment. So we've got ability to flex that up a little bit more. But I think we'll get up to about six containers a week.
spk06: And that's 12 to 15 megawatts a week that we can deploy at that rate.
spk02: Okay.
spk06: So all the hosting will be at your two PA sites? Yes, at this stage. Okay. Okay. Then just to touch on the increase in facility size in Sandersville. Having been there, with Liam's direction, I understand you're going to clear Forest, I think, if I understand it correctly. And I'm just, I guess you mentioned that you expect deployment there to begin sort of the tail end of next year. Is that, did I hear that all correctly? Yeah, we'll be looking to start building that facility, the expansion of that facility next year, starting probably Q1. Okay. Can we talk a little bit about your philosophy on holding and spending and capital sources and what you think you're going to need to build that and Texas out? Sure.
spk05: So we're currently, you know, I think we're one of the lowest cost, I guess, infrastructure players in the space at the moment. And I think that's probably been one of our key advantages in deploying what we've deployed to date. So, you know, we're going to continue to be focused on costs and getting a very efficient, you know, low cost operation and continue to build that out. As far as, you know, capital requirements for building out additional sites. We've made it very public and we're very clear that we're looking to do a mix of both our hosting clients and our self-mining. The self-mining we're looking to fund organically through cash flow as well as short-term facilities. We've typically done a 12-month facility on equipment and amortized those things over 12 months where we buy attic miners and so forth. That's the way we'd approach this. And we'd cash flow the infrastructure as we went. Where we're looking at taking on larger hosting customers like we did with Celsius, Given the tightness in the hosting market at the moment, we'd be looking to those hosting customers or to other debt providers to lock in some facilities around that infrastructure build-out for that customer so we can make a very clear economic case about not only bringing on that infrastructure, but the return on that customer over the period and if that's the best use of our capital.
spk06: And, Kevin, as you're aware, we're also selling Bitcoin daily, which generates cash flow for us.
spk04: We are.
spk06: Right, right, right, right, right. Yeah, thank you for reminding me. I appreciate that, Nick. Okay, let me hop back in the queue. Thank you for entertaining my questions. Thanks, Kevin. Thank you. Thanks, Kevin. Thank you.
spk01: Again, to ask a question, please press star 1.
spk06: Operator, we've got a bunch of questions that have come through on email. I might read those out if you're happy with that. Yes, sir. Please go ahead. Okay, so Matt asks, what have Bitcoin mining hardware prices done recently with the market sell-off? I might take that one, James and Hedl.
spk04: So mining hardware prices, happily for us, have come right back. So if you're looking at a Watts miner M30, M30S, that was $80 or $90 a terahash at the beginning of the year. we're seeing prices around the sort of $50, $60 per tera hash mark. So hardware prices tend to have a fairly high correlation with the Bitcoin price. So the market's sold off and that's made hardware much more attractive for us.
spk06: Next question is, are you seeing any impact on minor deliveries out of China? James, did you want to take that one? Sure.
spk05: So far, we haven't seen any impact on deliveries. All our freight and everything's been working fairly well. We always assumed there was going to be a delay in some extended shipping times, and we always modeled that in. We are seeing freight, air freight's difficult, and it's hard to get things up in the air at the moment out of China. Last month's been particularly difficult, but we haven't seen any material slippages. And definitely no slippages relative to our current deployment projections.
spk04: I think the other important point there is we've only got a couple more shipments left of mining hardware coming out of China. And then we'll be looking at spot orders here in the US. And hardware prices have come right back. And that's the gear that's landed in the US. And so that's obviously a much better outcome because you don't have any of the supply chain issues that you're seeing globally at the moment. Okay, next question. Where do you see the global hash rate going over the next 12 months? I'll say that one. So I think we sort of, we expected or guesstimated to be around 300 exahash by the end of this year. That's looking a little bit less likely at the moment because you've seen, obviously, it's at the margin harder to mine Bitcoin in Russia, you would imagine. Likewise, Ukraine, likewise, Kazakhstan. I think given energy prices in Europe, it's probably harder or less profitable to mine Bitcoin in Europe. And then you've seen from a bunch of other US-based miners that they have a lot of Bitcoin miners sitting in boxes at present. So it's very difficult to get energy and energy infrastructure online in the US. So I think that global hash rate has probably got some downside to it versus our sort of expectations of a couple of quarters ago, which is obviously great for installed miners that are adding hash rapidly like we are. Next question, why do you sell Bitcoin instead of HODL? I think we sort of touched on that just around generating cash flow to fund our operations and our capex. And the last one here is, what will your split on self-mining hosting be going forward, given you now have such a large energy and infrastructure pipeline? James, did you want to take that last one?
spk05: Sure. I think we've always said that we'd explore up to a 50-50 hosting and self-mining. As our portfolio expands, we'll consider that mix. At the moment, we're prioritizing obviously the highest margin and the best use cases for us, which is self-mining. But we're conscious we'd like to continue to partner and build out with the right partners that hosting model. While I don't want to put a firm percentage on it, we're really looking at the infrastructure and the counterparties on a case-by-case basis, especially given the recent volatility in the market. We really want to make sure we've got really strong hosting customers where we do take hosting customers on, and it makes sense from an infrastructure deployment perspective that that's the best use of capital for the business.
spk06: Great. Okay, operator, that's all the questions that we had there.
spk04: I might pass it back on to you to wrap up.
spk01: Thank you. We have another, we have a next question from the line of Kevin Dede with HCUN, right? Please go ahead.
spk06: Sorry, James Heddle, it's me again. Kevin Dede. There's still a lot of questions, right, to be asked. You talked about a one gigawatt pipeline. I was wondering if you could offer some color on the visibility there. Is that through your partnership with JAI, Quinbrook? How are you sort of getting to a number that large?
spk05: Yeah, I'll take that one. We've got – what I could say to you is we're very comfortable around that pipeline. I think what you've seen is we've locked one site away, you know, this month. We've got another site that's a couple hundred megawatt site that we've got under a – under an exclusive arrangement that we're looking through to contract at the moment. We've got Sharon, which we've contracted the lease on, but we're yet to complete the load studies on. So I think where we're sitting there on that pipeline, Kevin, is we've got some sites there that we're very comfortable around the energy being there. We're in the process of firming up those energy contracts the ability to contract that energy, um, and locking it in. And I think, you know, you can see in, in, in Georgia, you know, we slowly upgraded that, you know, period by period as, as we've locked away, you know, certain upgrades on, on lines and transformers and substations and so forth. Um, we're doing that in Sharon at the moment, you know, we'd, I'm, I'm really looking forward to coming to market and telling everyone, you know, just how great that site really is. Um, We've got Texas obviously came out, and we're firm around that number. And then we've got another site that we're really firm on as well. And we know what's available there, but until that's finalized, we won't be coming to market and really bringing that forward. And I think between the two sites that I can't mention at the moment, that goes a long way to the gap between that one gigawatt and where we are today. You know, they're the existing stuff that's in the pipeline. And then, you know, with our partnership with Quinbrook, we've got a large site that we're looking at with them. And there's some other partners that we've got that we're looking at, we're in advanced stages of discussions with for large sites as well.
spk04: The other thing that's important to mention is the Texas site we announced today is in partnership with Texas Pacific Land Corporation, which is one of the largest landowners in Texas. I think it's 880,000 acres under their portfolio. and so there's substantial opportunity to expand into that relationship as well. But I think the overarching comment is that we're going to be very disciplined and very aware of market conditions and certainly not overreach ourselves, which is possibly where you were heading with that question.
spk06: Oh, no, no, no. I wasn't concerned about that. I know you guys are savvy managers. I just – the word pipeline is – And I just was looking for a little more granularity, which you offered. So thank you very much. The site in Texas is, I guess, ERCOT supplied. I was wondering if you could talk to the local power sources there and how you might consider the power mix. in terms of natural gas or renewables?
spk04: Yeah, for sure. So we're going through that process with priority power at this point. So we will probably defer answering that question until we've got a little bit more granularity around that, Kev.
spk06: No problem. Thank you.
spk05: What I would add to that, Kevin, is we've got our strong ESG mandate, and we're not going to defer from that. So whatever we do there, we'll be looking to either match out with credits or ensure that we contract the right mix.
spk06: Okay, fair enough. Thanks, James. Your team at Mawson's had a close affiliation with Canaan for a long time. I'm wondering... given a host of new entrants, what you've investigated in terms of exploring alternative machine sources?
spk05: We've got quite a few of the Watts miners within our portfolio, not just the Canaan units. I'll say this about the Canaan units. Canaan's been a great partner for us, and I think we've been a great partner for Canaan. You know, we went out on a limb with Canaan when no one else was really buying at large scale from them. And we did that, you know, with the benefit of a lot of knowledge. So we pulled down their unit. We did a lot of reverse engineering and checks to make sure we were really comfortable with them. We asked a lot of tough customs, and we realized the Canaan team were, you know, they were building really good gear, and it's phenomenal. It's really standing up. You know, we're having as good, if not better, uptime out of it than we get out of the, you know, the Watts miners and the Bitmain units. So... You know, I think that, you know, they're a top-tier manufacturer and we've got a great relationship with them. And I hope that, you know, our early support of them at scale when, you know, everyone else wasn't is going to really reflect in our long-term relationship together. So, you know, that's what I'd say about the Canarm relationship. As to other equipment manufacturers, look, we're closely watching, you know, obviously where Intel's entering the market and we're looking and we'd like to look and explore that. look, we're acutely aware of some other manufacturers that have entered the market without naming names. You know, we bought some test units to test and we weren't satisfied. So we've walked away from a couple of those players. I'm very aware that, you know, other market participants have bought those units in scale and have performance issues. So, you know, I guess the benefit of being a miner that's been around for, you know, a little bit more than a couple of years, which some of these miners definitely are only, you know, a couple of years old in the market is, We've seen some of the bad routes in machine manufacturing and I definitely remember dealing with the 2019 batch of Bitmain units that had 30% to 50% value rates and working through that resolution. So we're a lot more cautious and we've got a lot more processes now about how we quality control equipment and deployment. So we're very aware of new equipment coming into the market and we're always looking at it, always testing new equipment and always exploring this sort of stuff. but we're very also cautious about it and some things just don't pass muster for us as far as we're concerned.
spk06: Perfect. Thank you. Thank you very much for taking my questions again. Anytime, Kevin.
spk01: Thank you. Ladies and gentlemen, we have reached the end of the question and answer session, and I'd like to turn the call back to the management for closing remarks. Over to you, gentlemen.
spk05: Well, I'd just like to say on behalf of the entire Mawson team, to all our shareholders and anyone else that are on the call, whether it's employees, my board, if you're on the call, it's been a great start to 2022. We've got a lot to deliver, and we're really focused on delivering that this year. And we hope you're all along for the ride, and we're looking forward to delivering on what we promised moving forward for the later half of the year.
spk06: Thank you, gentlemen. Thank you.
spk01: Thank you very much, sir. Ladies and gentlemen, this concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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