TeraWulf Inc.

Greetings and welcome to TerraWolf 2024 first quarter earnings 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, Mr. Jason Asad, Director of Corporate Communications, Thank you, Mr. Asad. You may begin.

Thank you, operator. Good afternoon, and welcome to Chair Will's first quarter earnings call. With me today are Chairman and Chief Executive Officer Paul Prager, Chief Operating Officer Nazar Khan, and our Chief Financial Officer Patrick Fleury. Before we get started, I'd like to remind everyone that our prepared remarks may contain forward-looking statements which are subject to risk and uncertainties, and we may make additional forward-looking statements during the question and answer session. These forward-looking statements are subject to risk and uncertainties, and actual results may differ materially. When used in this call, the words anticipate, could enable, estimate, intend, expect, believe, potential, will, should, project, and similar expressions as they relate to care will are such forward-looking statements. Investors are cautioned that forward-looking statements involve risk and uncertainties, which make may cause actual results to differ materially from those anticipated by TerraWolf at this time. In addition, other risks are more fully described in TerraWolf's public filings with the U.S. Securities Exchange Commission, which may be viewed at SEC.gov and in the Investors section of our corporate website at TerraWolf.com. Finally, please note that on today's call, we'll refer to certain non-GAAP financial measures. Please refer to our company's periodic reports on Form 10-K and 10-Q and on our website for a full reconciliation of these non-GAAP performance measures to the most comparable gap financial measures. I'd like to also inform investors of our new investor deck, which may be found also at terawolf.com. We'll begin today's call with prepared remarks from Paul, Nazar, and Patrick, then we'll proceed to Q&A. My pleasure to now turn the call over to Terawolf CEO, Paul Prager.

Paul? Thank you, Jason, and good afternoon, everyone. We appreciate your attendance today as we dive into our first quarter 2024 financial results. Just a couple of months ago, our last earnings call, we highlighted TerraWolf's significant growth and accomplishments throughout the fiscal year 2023. We experienced robust organic growth at existing sites, achieved substantial debt repayment, and bolstered liquidity. These achievements underscore the strength of our foundation and set the stage for the growth we are excited to talk to you about today. For those unfamiliar with TerraWolf, We specialize in energy infrastructure, drawing from over three decades of experience. Our primary focus presently centers on Bitcoin mining, where we employ sustainable practice utilizing zero-carbon energy resources while also contributing to grid stability. Operating from our two principal data centers, Lake Mariner in upstate New York and Nautilus Cryptomine in Pennsylvania, a joint venture with Talon. We take great pride in sourcing 95% of our power from clean energy sources. Our expansive mining facilities currently have a combined self-mining hash rate of 8 exahash per second. Powered by approximately 64,000 deployed miners with a fleet efficiency of 24.6 joules per terahash, we utilize 210 megawatts of infrastructure capacity. Notably, our miners consistently operate at an impressive 98% of installed nameplate capacity. We're actively expanding our mining operations at Lake Mariner, with Building 4 scheduled to be complete at the end of June and Building 5 commencing construction. These expansions are projected to raise our total operational capacity to over 10 exahash per second by mid-year with a fleet efficiency of 22.7 joules per terahash and subsequently to more than 13 exahash per second with a fleet efficiency of 20.9 joules per terahash. We have one of the most efficient miner fleets in the industry. As Patrick will elaborate, we finalized a new miner purchase and option agreement with Bitmain for S21s and S21 Pros. solidifying our growth trajectory. This contract not only ensures the prompt delivery of machines to occupy Building 4, but also secures favorable pricing for up to six of potential future deliveries. Looking forward, our plan is to achieve a 300 megawatt infrastructure capacity by year end 2024, with the goal to further expand to 600 megawatts of deployed infrastructure in 2025. As an energy infrastructure business, we are committed to ongoing development and identifying optimal applications for our megawatts, whether it's Bitcoin mining or high computing endeavors. The significance of owning infrastructure and scalability cannot be overstated. Our optionality extends well beyond that of our peers, thanks to our energy backgrounds and existing digital infrastructure. In fact, I believe no miner is better positioned than TerraWolf when it comes to owning scalable, low-cost, and zero-carbon energy infrastructure assets. Over the last nine months, Wolf Compute, our internal innovation hub, has been focused on researching, developing, and deploying our extensive and scalable digital infrastructure. Following a successful pilot phase involving a compact NVIDIA GPU system, We allocated a 2-megawatt power block at our Lake Marana facility, which could support over 1,000 H100 GPUs as part of a broader high-performance computing initiative aimed at diversifying our revenue streams. Terrell's large-scale energy infrastructure, coupled with access to zero-carbon low-cost power, is invaluable for meeting the growing demand from Bitcoin mining and AI applications. Our sites fulfill demanding specifications of hyperscalers, offering direct access to extensive contiguous land suitable for constructing data centers, as well as access to abundant water for cooling and adherence to a sustainable ESG framework. In a few moments, NASRA will provide more detail how we are strategically and carefully approaching the AI HPC opportunity. The immense value of our available scalable, and sustainable energy infrastructure is undeniable, as demonstrated in recent research reports from both Morgan Stanley and Goldman Sachs. We believe the market is improperly attributing the inherent and significant value of our owned infrastructure in our current market valuation. Turning to our financial position. We remain steadfast in leveraging our resilient, low-cost infrastructure to maximize profits, repay debt, and return value to shareholders. Our performance in the first quarter highlights TerraWolf's consistent achievement of industry-leading profitability. We delivered a GAAP gross margin of 66%, which increased to 71% inclusive of Dauntless and non-GAAP-adjusted EBITDA of $32 million, which translates to an EBITDA per exahash of approximately $4,100 among the highest of our public peers. Additionally, our quarterly SG&A of $8 million and stock-based comp of $7 million are far below all of our peers. Why are these statistics important for management and shareholders to consider? Because they highlight Terrell's competitive advantages versus all other public Bitcoin miners. One, low cost, zero carbon power. Two, profitability. We generate more EBITDA per exahash than our larger public peers and therefore require less capital and future growth to achieve the same level of profitability as our peers. And three, efficiency. Our team is lean, mean, and we manage TerraWolf to achieve maximum profitability for our shareholders. We are not a lifestyle company for management. We estimate our cost to mine a Bitcoin at approximately $40,000 per Bitcoin post-having, utilizing a network hash rate of 600x hash, positioning us as one of the lowest cost producers in the industry. Looking forward, we remain squarely focused on capital efficiency, ensuring that every dollar we spend on CapEx creates shareholder value. This approach underscores our commitment to maximizing returns and driving long-term sustainability in our business. Before I conclude my remarks today, I want to underscore the significance of capital efficiency within our strategic framework. At Wolf, we firmly believe that our success hinges not merely on the speed of our expansion, but on the discerning allocation of capital to generate sustained returns for our shareholders. So what precisely do I mean by capital efficiency? I'm referring to the prudent utilization of funds, whether derived from free cash flow, debt, or equity, to operate and expand with a keen focus on the relationship between capital deployed and the resulting returns. This distinction is crucial. It enables investors to differentiate between the companies that are growing profitably versus simply growing. At Terrawolf, we firmly believe that not all exahash is created equal. And guess what? The same is true for dilutions. As we have demonstrated quarter after quarter, our approach is one of prudence, ensuring minimal dilution to maintain alignment with our stakeholders. Remember, this management team, including yours truly, is among the largest shareholders, which underscores our entire alignment with you, the investor. So beyond the exhaustive analysis and modeling, what truly defines our strategy is capital efficiency. You should rest assured that when we decide to utilize the ATM, it is with the absolute undeniable conviction that every dollar invested will yield a substantial return. It is clear that some of our competitors aren't focused on profitability when announcing expansion plans, and that is what differentiates Terawolf. Capital efficiency serves as the cornerstone of our decision-making process, guiding us to make investments that not only fuel growth, but also ensure that every dollar spent generates substantial long-term value. This disciplined approach empowers us to maintain a lean and adaptable business model, while seizing opportunities that align with our core objective of delivering sustainable growth and returning value to our shareholders. It is also why TerraWolf delivers more profitability with less dilution than any of our peers. Now I'll hand the call over to my partner and friend, Nazir Khan, to elaborate on Wolf Compute's initiatives before our CFO, Patrick Fleury, provides a detailed review of our financial results for the first quarter.