Mawson Infrastructure Group Inc.

Greetings and welcome to the Mawson Infrastructure Group fourth quarter and year-end 2022 earnings results call. At this time, all participants are in a listen-only mode. A brief 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. It is now my pleasure to introduce your host, Tim Broadfoot, Chief Corporate Officer. Thank you, Tim. You may begin.

Thank you and hello everyone.

Welcome to Mawson Infrastructure Group Inc's annual and fourth quarter 2022 earnings call. Joining me today on today's call are our founder and CEO James Manning, our COO Liam Wilson and our CFO Ariel Sivakovsky. We look forward to taking you through the investor presentations today. Firstly, I need to bring to your attention 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 risk that could cause actual results to differ materially from those expected. We may also make forward-looking statements as a part of our Q&A at the conclusion of this presentation. We'll also discuss certain non-GAAP financial measures about performance during today's presentation and Q&A. You can find the reconciliation of GAAP financial measures at the rear of our presentation, which is available on our website. Please be sure to refer to the cautionary text regarding forward-looking statements contained in this presentation on slide two, as well as the risk factors in our annual report in Form 10-K, filed March 23, 2023. under the subheading, Risks Relating to Our Business.

With that, I'll hand across to our CEO, James Manning. Thanks, Tim, and welcome, everybody.

Q4 was a transitionary period for Molson as we closed the sale of a Georgia facility to Clean Club and moved all our attention to our Pennsylvania facility expansion.

During this time, our industry in particular and the economy more broadly faced significant macro-events. Boston has combated these headwinds with a continued focus on our diversified and flexible revenue model consisting of three revenue strips. One being self-mining, two being hosting co-location and three, our market leading energy markets program. Our model has provided significant support to the company's revenue and gross profit through Q4 and through 2022. Some key highlights from the period include the closing of our Georgia sale for over $40 million, completion of the build-out for Phase 1 of Midland, PA, for 120 megawatts of capacity, securing some additional sites for growth, including firming up our 120-megawatt facility in Sharon, PA, and the entry into a binding sale agreement for the Texas facility for $8.5 million, enabling us to continue our strategic focus on the PA region. With that summary, I'm going to hand over to Ariel Sivakoski, our CFO, to run through the financials for the year.

Thanks, James, and thank you to everybody who has joined the call. Touching on some highlights of the full year results of 2022, Mawson has generated record revenue for year-to-date of $84.3 million, up 92% year-on-year. Gross profit of $36.6 million, up 8% year-on-year. Non-GAAP EBITDA of $30.4 million, up 70% year-on-year. and Bitcoin produced for self-mining increased 66% to 1,343 coins. Importantly, with the large depreciation shield afforded to us, we have almost no tax burden in this EBITDA number. Pleasingly, our hosting co-location business also generated solid growth, rising 1,464% from 2021 to 13.3 million in 2023. In addition to this, Mawson had a new source of revenue in 2023, being the Energy Markets Program that generated $13.7 million in revenue at a gross margin of 91%. Mawson received $20.6 million of proceeds from the sale of the Georgia facility in Q4, with additional share-based payments hitting the balance sheet subsequent to year-end. These funds have been partially used to reduce debt, as shown on the balance sheet, with debt reduction payments of $11.93 million in quarter four. Some other balance sheet highlights from the quarter include an addition of $11.3 million in assets associated with energy contracts, referred to here as derivative assets, a $3.2 million increase in marketable securities, and a $5.4 million increase in assets held for sale. At the end of 2022, our net assets were 76.1 million. Based on shares on issue, as at March 6, 2023, at 14.1 million, our net assets per share sit at $5.34 per share versus a share price of $2.50. Turning to our income statement, some other highlights from 2022 versus 2021 include A 37% reduction in our selling, general and administrative expenses from the first half of 2022 to the second half of 2022. Now $12 million increase in year-on-year in hardware sales to $14.2 million in 2022. Critically, and with the challenge of 2022 behind us, Mawson is focused on ensuring that we have a strong balance sheet for 2023. Through strategic asset sales, increases in our operations and the capital raised in 2022, we are well placed to grow in 2023. I'll now hand over to Chief Operating Officer, Liam Wilson, to provide an operational update.

Thanks, Ariel. As James touched on earlier, Mawson has developed a diversified and highly flexible operating model. Through 2022, we saw this model pay dividends as extreme weather events coupled with global social issues caused power prices to peak worldwide. Our infrastructure-first approach was highly favourable through 2022.

Due to these events and the operating model, Mawson had the ability to

2022 included an average of 0.8 of an exahash online for the year with the top of 1.63 exahash online to self-mining reached in June 2022. We look forward to our self-mining ramping up significantly through Q2 and Q3 as our 120 megawatt Midland PA facility and the first 12 megawatts of our 120 megawatt facility in Sharon PA come online We are actively watching the market for purchasing opportunities to add to and upgrade our self-mining fleet. The second arm of our diversified model, hosting, continued to pay dividends during 2022, which further justified our mining hosting split. A record $13.3 million of hosting revenue was earned through 2022, which ran at a 24% margin. Mawson views hosting as stable revenue and an option to hedge against full Bitcoin exposure and will continue to look for favourable and appropriate hosting partners in the future. Our third revenue stream, the Energy Markets Program, was a resounding success story of 2022. $13.7 million in revenue was earned during a period when our competitors would have otherwise been offline. This program ran at a 91% margin. On top of this, our grid stability contribution was significant, particularly during the pre-holiday period winter storm which hit across the US. In Q4, Mawson exited the Australian facility at Condon. This decision was made so that Mawson could focus all of our attention on Pennsylvania and Ohio. We firmly believe the climatic conditions in these areas are perfect for mining and hosting. They also provide the opportunity to participate in the energy markets program. With regards to the climate, winters are cool with some rare freezing events, summers are mild with very few extremely warm days. What you are left with is highly favourable air-cooled mining weather for 99% of the year. Mawson now has our eyes firmly on what can be achieved in 2023 and this is underpinned by our secure energy pipeline. Our infrastructure-first model and existing strategic relationships have given Mawson first access to multiple attractive sites, and we look forward to announcing further growth in the near future. We will continue to search for, deal on, and develop sites which we believe will be highly lucrative for either self-mining, hosting, or a mix, and will look to add to our energy markets program where applicable as well. Mawson's ESG program is something we are incredibly proud of and will continue to look for opportunities to further the program through 2023. Our proximity to the Beaver Valley Nuclear Station is a strategic advantage and we are very proud of our 100% nuclear certification. During 2022, we were welcomed to the Midland PA community and we're extremely proud to have contributed to their arts, education and healthcare facilities with grants. On top of this, we have been active supporters in the Sandersville community prior to our sale for three years and have recently become involved in the Sharon PA community. With that, I will pass back to James.

Thanks, James. Well said, Liam.

Continuing on, an important part of our success today and to the future is our employee team. Our operational team is led by our COO, Liam Wilson, driving the operations and performance of the company. Craig Gibbard, our CDO, is overseeing the development of our portfolio facilities in the United States. We then have our corporate team consisting of Tom Hughes in General Counsel, Tim Broadfoot, our CCO, Ben Hurtel, our CTO, and Ariel Fibikoski, our CFO. This team brings a wealth of experience, knowledge, and know-how from many industries that helps Malton reach its goals now and into the coming years. With this combination of personnel and structure, we're confident and excited to take on any challenges into 2023. Finally, we want to acknowledge the market price of our share versus several other metrics. 2022 for Mawson shareholders observed material decline in the share price. And in taking into consideration the current market price versus our peers and other external factors, such as Bitcoin, we prepared this final slide to help everyone reflect upon the value proposition we at Mawson C in the share price. In summary, 2022 was a pivotal year for the Mawson team. We simultaneously expanded our large-scale and low-cost Pennsylvania facilities, which today stand at 240 megawatts of capacity or approximately 8x the hash of computing power We also completed the start of one of our non-core facilities to Cleans Park for approximately $40 million. And we intend to expand our Pennsylvania facilities with a mixture of self-mining and hosting throughout 2023 and into 2024 and look forward to sharing more information on this expansion in the early future this year. With that, I just want to take a moment to thank shareholders for their continued support of Mawson, and we look forward to answering any questions and giving you updates in the future. Thank you.

Thank you, gentlemen. With this presentation now complete, we wanted to take this opportunity to thank all of our employees, suppliers and shareholders for their ongoing support in 2022 and into 2023. We'll now answer any questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 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 key. One moment, please, while we poll for questions. Thank you. Our first question is from Josh Siegler with Cantor Fitzgerald. Please proceed with your question.

Yes. Hi, guys. Thanks for taking my question today. I think for my first one, I'd love to get an update on what you're seeing in terms of hosting demands and the progress you've made in finding a hosting partner moving forward. Thank you.

Hey, Josh. Good to hear from you. I might pass that one to Liam, who's sort of been dealing with the day-to-day hosting inquiries. He'd be best positioned to answer that.

Thanks, Josh. Thanks for the question. I guess the simplest answer is there's a ton of inquiry coming through. We're seeing plenty of the large miners looking for hosting now that the other facilities through the market have dropped off through 2022. And we're seeing plenty of new demand for hosting come through from players that we previously hadn't heard of before. So in short, there's a large pipeline of hosting customers ready. With regards to us nailing down a hosting partner, we're going through some pretty stringent DD with a number of parties at the moment, and we hope to be announcing some exciting news on hosting in the near future. But we're in the final stages of that now.

Understood. That's helpful, Color. And then I'd love to, you know, circle back to the build-out at Sharon and kind of what CapEx are you assuming will be required to finish, you know, construction of that site?

James, do you want to take that? Hey, Josh, it's James. Yeah, if you're more than welcome to do that.

Thanks. Josh, the first 12 megawatts for that facility are already fully funded. So that's the first six MDCs, the transformers, and all the poles and wires to get that online. The balance of the 108 megawatts, we'll be looking for a partner to execute that site on.

All right, understood. Thank you. Thank you.

Our next question is from Kevin Didi with HC Wainwright. Please proceed with your questions.

Hi, gents. Thanks for taking my call. Your objectives look pretty appetizing, and I was wondering what all was behind them. We're at 50 megawatts now, hoping to go to 4.5x to hash and then 8 on a mix of self-mining and hosting. Can you give us a little more detail on how you expect that mix to break down?

Sure. So what I'd say is we're at 50 megawatts online, and within sort of the next 30 days, we expect to be 120 megawatts online. So that's the first one. The thing about it is 50 megs is probably... not giving us full credit where credit's due the the balance of the facilities built out um at midland the whole 120 meg of infrastructure is there and we're just in commissioning phase on that so you know we probably need to you know we were intending to come to market and when we start turning turning those those cans on over the over the next couple of weeks um but you know the containers are on on site the substation is built and we're in the testing phase of commissioning So to think about it as more 120 megs online is probably close to the mark of where we are, and that's obviously been funded and built out to date. The next one is Sharon, which we're obviously, as Liam alluded to, is currently already in the process of being finalised from a construction perspective, but is also fully funded. So we're more like 132, 135 megawatts of built-out infrastructure. That obviously gives us a good head start on total infrastructure build and where we are. I think on one of the slides we allude to, I think it's slide 10, you'll see there's sites one, two, and three. There are some other sites that we've got a very low capex, but in some sites, you know, we can turn on another, you know, almost 50 megawatts there very quickly for very, very little small capital outlay. And we've got those sites locked up already with some LOIs and some binding agreements. So, you know, we're well down the track of having the infrastructure in place and the infrastructure is funded. So I think that's the important piece. So then really what it leaves us with is, picking the mix between do we self-mind or do we host? And I think that was part of the question you asked. And really that's about us trying to optimise both profitability and risk as a company. And so we're looking for strong counterparties in hosting that we feel comfortable with that will continue to, you know, obviously pay bills on time, fund their relative proportion of any capex or provide a security around that and be good profitable counterparties or failing that, you know, we're looking at, you know, what's the mix of self-mining and we would like to do a bit of both ultimately. And really it's just, It's about balancing. Do we have a really strong hosting partner? We're more like just a data center business, but we also like the profitability of Bitcoin mining. So we're just trying to find that balance there. And really, that's a delicate balance that we manage based on you know, decisions around when the facility is going to be ready, what our capex is, and what the cost of that additional infrastructure might be, or mining rigs are, and what the market is, and what the return of payback profile is ultimately around that stuff. You know, you'll see in our release that, you know, we've got the equipment. We've just moved over from Australia. We've got some equipment we've moved up from Georgia. So we have gear to turn on fundamentally. And with that turned on gear, you know, we get closer to the 2X hash mark. So, you know, we've got gear to bring on in our existing facilities. As we bring our gear on, then we'll look forward to, you know, what's the additional gear and what's that mix moving forward.

Very helpful, James. Thank you.

Would you mind going through, I guess, sort of two different calculations? One is the choice to sell out of Texas versus buying two facilities in Ohio. And the other is balancing energy sales versus consumption for mining and hostings.

Yeah, I'm really happy to go through both of those.

So sort of mid last year as a group, we did a, you know, we sat down, we had a real soul searching and strategy session. And as a company and as a board, we established a clear strategy about where we wanted to be located, what we wanted to be focused on and how we wanted to operate the business. And the big outcome of that was, you know, we really wanted to be focused in a region. We wanted to be – we didn't want our execs traveling all over the U.S. and managing, you know, multiple sites, which are multiple days of trips between each one. So we decided we really liked Pennsylvania. We liked the PJM energy market. We found the pricing there to be, you know, competitive with the Texas market. And it has huge climate benefits. So – The idea was, although we'd originally committed to going to Texas, we decided we wanted to leave the Texas market. We realized that we could sell those Texas assets in the market and refocus our energy really up in the Ohio and Pennsylvania region where the power is competitive and the climate's a little bit more forgiving. So that was the real focus of why we wanted to move ultimately up into that region. So does that answer that portion of your question, Kevin?

Yeah, that helps a lot change. Yeah. Thank you.

And what was the other component? Sorry.

Yeah. Just as you look at Pennsylvania and developing a sites in Ohio, how do you, how would you recommend we look at your prospects and, and deciding how you'll allocate. You'll have, what, 240 in PA and, what, about 50 in Ohio? How will you balance the use of that power between your energy market strategy versus your host and self-mining strategy?

So I guess ultimately we're always optimizing that for the greatest gross profit margins. So because we don't have a whole strategy, we sell our Bitcoin, everything we do, we're about maximizing profitability ultimately. And so if it's most lucrative ultimately to be selling energy back to the market we'll look to do that if it's more lucrative to be mining bitcoin we'll be doing that and and we have a um we have an internal model and algorithm which we look at daily uh which ultimately helps drive that decision so you know i know that's not great from a modeling perspective for you kevin but what we're looking to do is ultimately be as profitable as we can be in as a business so we really make it we make the jump between you know energy markets, revenue and mining or hosting ultimately to make the most margins possible.

Okay.

Just peeling the onion back a little bit on Josh's question on hosting partners. Could you give us an idea of what you're looking for and, and I guess sort of the, your partner, your expectation, your partner's flexibility, given the flexibility that you want to have in making that energy consumption decision. And then if you're able to find someone that, that can fit that bill, how do you compensate them?

Yeah, so it's a great question. Most of our contracts are open book cost plus power contracts. So that has some huge advantages because we're not I guess we're not exposed to price risk like you saw Core was where they had unprofitable power inputs with fixed price power. And I think you've seen some other hosting companies come across with similar arrangements where they committed to a cost per kilowatt hour of power and their prices spiked and they subsequently failed, I guess, ultimately. so you know we we've always been transparent in our pricing model so we do a cost plus model where we've got a charge for infrastructure recovery we've got a margin component for the business and then obviously power is power so you know we're very transparent with our customers on that and we think that's uh that's while they're our customers we think that forms a partnership type arrangement where you know they get the benefits of seeing it when power spikes you know Typically, people don't want to be operating because they're on a cost-plus basis, so they're very happy to turn off, and that's built into, I guess, how we see what our margins are. As part of what we consider our margin to our customer, we ultimately say we might get the benefit of any curtailment on any new hosting contract that we get. We think they're important parts of a contract negotiation and making sure the relationship's right ultimately. And it's about getting that mix right with our customers because they don't want to pay high power prices and we need to manage that.

Okay.

Yeah, for fear of hogging the call, James, last question. Given your and Liam's view of the climate in Ohio and Pennsylvania, I get the sense that you're not going to explore immersion in dealing with those few hot days. Or am I not making the right assumption there?

Look, we've got a viable emerging product. The reality is on a cost per megawatt basis, it doesn't compete with air, you know, to build this stuff out at the moment. And, you know, until those economics changes, especially with what has historically been through 22, you know, depressed Bitcoin prices, it's very hard to make the economic stack. But I think if you're sitting in, you know, if you're sitting in a hotter climate, then you have to explore that. And there's a very logical reason to do that. But I think it's all a trade-off between OPEX and CAPEX. And I guess given where we are, you know, we're pretty comfortable with that OPEX-CAPEX balance. I'd also say that typically when you see, you know, the hottest days in somewhere like PA or Ohio, you wake up and realise that they're also the highest peak pricing of power. And so switching off for those few hours in a day for the few days in a year, you know, makes a lot of economic sense as well. So, you know, when you consider it, Overall, we just don't see, given the region and climate we're operating in, that it makes a huge amount of economic sense.

Perfect. Yeah, thanks for that, Collar. Appreciate it, James. Not a problem. Thank you.

So I don't think we have any calls left, questions on calls. Oh, sorry, I've got a couple more came in. And then I've got some email questions as well. We've got one here from Burke, who's a great supporting shareholder.

Burke, how are you? Hello. Great to hear from you.

So first, congrats on closing out the year very strongly with obviously a lot of moving pieces. I just want to clarify a few things. you talked about the Texas agreement, $8.5 million. Did you talk about the closing expectation and time of that? Is that within a few months or a few weeks? How should we think about that?

Yeah, I think we'd expect that to close in April at this point in time. Okay.

Okay. So that's $8.5 million of cash that It's obviously not reflected in Q4 yet, but it will be on most likely second quarter, it sounds like. And just clarification on the CleanSpark earn-out shares. Other than what you show on Q4 2022, there were other considerations received in Q1 2023 in the form of stocks or either you sold them and they became cash or they sit as a stock on your balance sheet as of now? Is that a fair assumption?

Correct. I'm happy to confirm that we've sold the vast majority of all those clean stock shares.

Okay. So, basically, there is a pretty substantial strength in form of cash on the balance sheet that it's not even showing in Q4 yet. So...

The position strengthened between, I guess, 31 December and today. We're in a much stronger position overall.

That's great to hear. My question is on your targets. You're basically targeting 200 megawatts for average capacity going from 34 on self-mining to and 0.8 to 7, and from a revenue perspective, $43 million to $200 million or $199 million, to be more specific, in this year alone. Could you walk me through, I mean, those are obviously pretty substantial increases. Could you walk me through how you're going to get there? I mean, I could see what's going to happen with Midland very, you know, in the short order, as you talked about in the call, and obviously you already have the hosting demand from your existing partner. And I imagine while you guys were taking calls, Bitcoin pricing going up 60-70% since the beginning of the year, and your focus on infrastructure only gives you a stronger hand to be able to negotiate those contracts. So I could see what's going to happen in Midland and share them, but maybe talk me through about how you get to a 200 megawatt average for the year, which would assume that obviously your exit rate for the end of the year is higher than that number for that to be an average. So could you maybe give more granular information on that? How are you going to execute on that?

Sure. I'll let Liam take this one.

Sure. Thanks, Burke, for the question. I think the first thing to consider is that the Midland facility is about to turn on another 70 megawatts So when we look at Mawson at the moment, we're looking at 50 megs to Kevin's question earlier on. The reality is that in a couple of weeks, realistically, we're going to be at 120 megawatts and then 132 megawatts straight away after that. So the ramp up is rapid over the next period. Post that, we have the sites that we have mentioned in the deck, and then we have a number of other sites which we have various levels of commitment on. All the sites that Mawson looks at, and Kevin, this is probably an answer for you too, but all the sites that Mawson looks at do not require substation work. So these smaller sites that we look for, we look for sites that don't require substation work. And the reason we look for those is that A, it dramatically reduces the capex could be it dramatically cuts down the time needed to actually get those facilities online. So for some of the facilities that we're looking at at the moment, from the time that we actually do the initial walkthrough to getting power online is somewhere within 90 days. So that's how we get to what could be perceived as quite eye-opening numbers. But it's actually very easy for Mawson to ramp up there. And so once we get off the mark with our 70 megawatt expansion at Midland, the 12 megawatt expansion in Sharon, I think you will see Morrison quickly roll numerous other facilities, which do not require, A, a ton of capex, or B, a ton of time to get done.

Perfect. Thanks for that clarification. And I'm also assuming that you are, between what you ship from Australia and what you have on hand, you're sitting on fairly sizable amount of exahash that you can immediately or in a very short period of time connect in Pennsylvania here in weeks or months, and obviously your hosting partner is already ready and able to come up on their end. So you have visibility into how you're growing both sides of that business, at least in kind of a short order. Is that a correct assumption? Yeah, that's correct as well.

That's definitely the case. Yeah, we have somewhere in the vicinity of 1.5 to 1.6 exahash of equipment ready to go to be turned on, that self-mining gear. And then we have the remainder of our hosting partners, the balance of their gear ready to go as well. So we've got, you know, hitting that initial number for Mawson, I think it's 4.5 exahash. We don't feel that's going to be a struggle at all.

Okay. And another question here. Obviously, last year... You have created a brand-new business with 91% margin. I forgot the revenues in the $12 million to $13 million range, which is very substantial. That gives you the flexibility. Does the Ohio sites that you're talking about, are they going to – I'm familiar with what's going on in Pennsylvania, but are the Ohio sites could be part of the similar plan as well or not necessarily?

I'll take that one. So, yeah, the – You are right, Burke. The energy market's revenue has been a phenomenal success for us. We saw even $4 million worth of revenue in December. Ohio will have a similar program, and we're really excited about that. The short answer is yes. I think the more important thing is, given that we're going to go from 50 megawatts worth of infrastructure to $120 in mid-loan and $132 with sharing coming online in the near term, we'll be able to grow that revenue stream as well. So that NHG markets revenue has the opportunity to grow substantially as well.

Yeah, I mean, that's exciting. I'm just looking at your deck you guys just put out, talking about 400 megawatts. I mean, that's eight times the size of if you get there on what you had and you were able to generate $12 million or so of EBITDA. So that's certainly exciting. My last question is another slide that you put on your deck that I'm just looking at. Talking about the discount to your net asset value and obviously by selling the sites that you're not using and converting that into your core competency, you are navigating that very successfully. But What I didn't realize is that the stock was $15 equivalent when Bitcoin was basically where it was today. And I imagine that Bitcoin was on its way down from the mid-60s to 30 when market sentiment was lower versus you have a completely flip of a positive market sentiment right now. So long, I mean, it's a long question, but what, in your opinion, is creating that disconnect there? You have some analyst coverage already that they were on the call today and they do a great job following you. What do you think is the disconnect on everything else being equal, Bitcoin pricing $30,000 and you're sitting at an 80% discount to that or 70% discount to that on your share price today?

Thanks, Bert. I mean, yeah, it's

A long question, and I think there's a complex set of answers to which I don't know all of them. Ultimately, I think 22 was tough for us. I think there was a lot of concern about our hosting part from being Celsius, but they continue to pay. They continue to pay on time, and we've got good security, but I think a lot of people got very concerned about that and I think everyone's seen that, you know, that's less of a concern than everyone realises it is. And, you know, we continue to get paid and we continue to operate the facility with them. So, you know, we're pretty comfortable around that. Look, obviously, all miners had a tough year last year, but I think we just got put into the unloved section of the market, unfortunately. And I don't think it's a fair price reflection. You know, I think there's a big disconnect there. between ultimately where we think value is and where the market thinks value is. And I think the discount to NTA is evident of it. I think pound for pound, we've put on more infrastructure with less capital than just about anyone else in the market. So I think we've been good stewards of capital and we've delivered on what we said we deliver. And I just don't think we've been rewarded in share price action for that accordingly. If we'd raised a similar amount of capital to the other peer group, I think you'd see we'd be number one or number two today. I think you call out a problem that is one that's hard for us, but we don't control capital markets ultimately. What we can do is focus on being a profitable business and getting a high return on our capital and squeezing every last drop out of what we have on our balance sheet to get the most greatest return and the greatest profitability that we can.

Sure. I understood that. And obviously you guys have a high level of inside ownership as well. So certainly you have a skid in the game, but keep up to great work. And it's, it's pretty exciting. And what do you have planned for 23 and, and execution should, should take care of hopefully the share price and value for shareholders.

But thank you. That's all I have. Thanks, Burke. Thank you. One more from Kevin Deed, I believe. Kevin, you may proceed with your question.

Thank you. Thanks for taking me back, James. Appreciate it. I want to get back to your infrastructure first strategy and your view of development and sale. And I think this came up in discussion a couple of times last year as you guys worked through the discussion of the Georgia facility sale. And I'm wondering how close you're keeping that to your strategic thinking at this juncture, or whether or not maybe you're shifting back to maybe what I perceived as the original Mawson when it was Cosmos, where you were building to take over the world. Maybe you could kind of reset our thinking there.

Yeah, thanks, Kev. I think, look, we're doing a little bit of both. And, you know, what we recognize is we're very good, you know, very good builders, ultimately. We understand how to build the infrastructure. We understand how to build it at scale, build it efficiently at a good cost per megawatt. And in many sense, you know, we think, you know, there's an opportunity as part of our hosting business to, you know, expand that business as well as, you know, where we see strategic opportunities opportunities to either partner with hosting customers or, you know, sell and manage those sites, you know, for a profit. So importantly for us, you know, we recognize where we are in our capital stack and where we are in the market. So, you know, we can only do so much, but, you know, I think we're very well regarded within the industry and a lot of, you know, counterparties would like to deal with us. So, you know, we see good deal flow and good site flow, um, And the ability to take some of those on, potentially build, you know, identify a contract, develop them, and then move them on is an attractive option to us as well, where we can, you know, do that for a customer or do it on our own balance sheet, you know, and recycle some of those transactions. So we... You know, we're very much looking at all angles, ultimately, Kevin, but, you know, the focus is on building a larger, sustainable business with recurring revenues and you don't get recurring revenues, ultimately just selling sites. So, you know, it's about doing a combination of the hosting, the mining and the energy program. And then, you know, optimizing the portfolio as we go. So, you know, as we acquire some of these sites, you know, maybe we identify some sites in the portfolio once built, you know, would be better operated by a third party and we can focus on the next site that we identify. So, you know, we're very realistic about, you know, what we can build and run given our capital, you know, capital structure. And I think Burke pulled it out, you know, we're probably the largest, you know, we're largest or one of the largest, you know, high concentration of management team that owns, you know, management team with a high concentration ship of ownership in the business. And because of that, we're really focused on that return on capital and return on equity. So we're very much, you know, don't want to see, you know, heaps of delusion for capital growth sake. So we're very, very focused on making sure we've got the right return profiles.

Great answer, James. Thanks for taking the time. Yeah. Yeah. Yeah. It was a great answer.

with a focus on return on capital. Appreciate hearing that. Perfect.

I've just got a couple of, you know, written queries, questions. I'm just going to take a couple of those before we wrap up. I know we're getting a bit long in the tooth from a time perspective. So I've got the first one here I've got from Dave. You have a large amount of infrastructure capacity in Pennsylvania. What's the total amount of exahash you could have across these sites, assuming you use the latest generation NASX? My math has it at over eight exahash based on the latest generation main XBs. I might let Liam run that. And thanks, Dave, for your message.

Thanks, James. Thanks, Dave, for the question. so for 132 megawatts we could expect to get roughly just under 39 000 units online um i'm just working out the math now but if you're looking if you're using an xp um then that would be 5.4 exahash on the 132 megawatts if we look at the two car the two public sites which are sharon and midland at 240 megawatts which is their nameplate capacity then you're just under 71,000 units, and you're actually at 9.9 exahash if you run the XPs. If you run just the standard S19, you're at 7.8 exahash, or 9.9 if you run the XPs. So that's what those numbers are looking like. 71,000 units is approximately what we can fit in our sites at the moment.

Great, thanks, Liam. Thanks, John.

Next one's from John. Next one's from John. I read in the analyst report, CLSK have a ROFA on MIGI USA assets. When does this expire? How long do they have on this? From memory, it's 12 months from September this year. Given the recent M&A in the space with HUD 8, et cetera, could this become relevant? I might take that one. Yes, there was a structure with a first right of refusal, first right of offer with CLSK over select assets in the USA. It's part of that, those rights expire at six months and September was the date. So some of them are just coming up to expiry and some have a longer tail, which is the 12 month tail. So you are correct in that, but there was six and 12 months tail. Look, you know, it, it, You know, I can't talk for CLSK. We have great respect for Zach and his team over there. They've obviously acquired our Georgia facility, which we think, you know, we've built a world-class facility there. And, you know, I'm sure they would like to have a look at our other facilities in due course. But, you know, I don't want to preempt or, you know, cause any speculation on that. But, you know, there's obviously a lot of M&A, you know, potentially on the cards this year and in the industry. And, you know, Morton wants to be part, you know, be at the table playing with everyone and, you know, we'll obviously make sure that, you know, if anything's occurring in that space, we're out there talking to everyone and making sure, you know, we're looking at the right deals with counterparties to see if there's any other opportunity to create value for shareholders. And I think, you know, back to Kevin's point, you know, it's all a focus of internal capital. So, you know, and making sure we squeeze, you know, every last drop out of it. So we're very much focused on identifying anything we can to create extra value.

I've got one from Aaron.

What's the current debt and liability situation? I might pass that one to Ariel to take off.

Hi, it's Ariel from CFO of Mawson. Welcome to everybody. The current debt, just reading off the balance sheet, is $35.5 million. That's a combination of trade payables and borrowings. Borrowings being about $23 million

year-end and trade payable is about 10.5 thanks Aaron for that question and then I might I've got one last question which was your low cost of energy in Pennsylvania what is the power and how long do you have this in place from my analysis of the sector this is among the lowest in the industry it's green nuclear power if I recall thanks Andrew The Pennsylvania power, we've got a combination of PJM market power and a hedge. So our hedge is locked in at 3.6 cents. And then the PJM market is spot market power. Currently in the market, PJM power is, you know, in the, you know, high teens per megawatt to the mid $20 per megawatt. So between one and two cents per megawatt hour. Um, and you know, it's very competitive power and that's why I say it's competitive power anywhere else within the USA. Um, we have a hedge for approximately four, that's got approximately four years left to run on it. Um, And, you know, you're right. It is 100% green power. It's nuclear and, you know, it's all zero carbon. So, you know, that's very important point for us from an ESG perspective is that we're on zero carbon power. And, you know, we believe that it's really important for the entire industry to be moving towards that because it'll ultimately change. you know result in us being considered as a sustainable business and a sustainable industry so um you know we'd like to think that we're we're leading the charge on that and you know it's important part of our investment criteria from an esg lens is you know when we're looking at new sites you know what's the generational mix of the power and what's that going to do and it's not to say we won't look at a site with some negative generation, but we'll always need to look at a site and say, what's the path to being carbon neutral on this site? And that's what makes sites important for us in our site selection. I think with that, I'd like to wrap up today's presentation. I'd really like to thank all our shareholders for their continued support. I'd like to thank the people that participated in this call for their great questions. I didn't get too many real curveballs today. So with that, I'd like to sign off and thank everyone and look forward to keeping everyone in the loop for 2023 as we continue to grow.

Thank you.

This concludes today's conference.

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