TeraWulf Inc.

Greetings and welcome to the TerraWolf 2024 second 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. Should anyone 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, Jason Assad, Director of Corporate Communications. Thank you. You may begin.

Thank you, operator. Good afternoon. Welcome to Tara Wolf's second quarter earnings call. With me today are Chairman and Chief Executive Officer Paul Prager 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. When used on this call... The words anticipate, could enable, estimate, intend, expect, believe, potential, will, should, project, and similar expressions as they relate to TerraWolf are such forward-looking statements. Investors are cautioned that results may differ materially from those anticipated by TerraWolf at this time. In addition, other risks are more fully described in our public filings with the U.S. Securities and Exchange Commission, which may be viewed at FCC.gov and in the investor section of our corporate website at TerraWolf.com. Finally, please note that 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 GAAP financial measures. An updated version of our new investor deck may also be found at terawolf.com. We'll begin today's call with prepared remarks from Paul and Patrick, and then we'll proceed to Q&A. It's my pleasure to now turn the call over to Terawolf's CEO, Paul Prager. Paul?

Thank you, Jason. and good afternoon, everyone. We appreciate your attendance today as we review our second quarter of 2024 financial results. To start, let me provide an overview of who we are and highlight some key aspects of our business. For those new to TerraWolf, we are an energy and digital infrastructure company dedicated to utilizing predominantly zero carbon energy to power our operations. Our two premier data centers or the Lake Mariner facility in upstate New York, which utilizes over 91% zero-carbon energy sourced from the grid, and the Nautilus Cryptomine in Pennsylvania, a joint venture with Talon that is directly powered by nuclear energy. We believe our strategic focus on scalable, zero-carbon energy infrastructure gives us a unique and competitive edge. In our last earnings call, we identified a significant shift in the industry, emphasizing that low-cost clean energy, operational efficiency, and profitability are becoming more critical than simply scaling operations. This insight will frame our discussion today as we review our second quarter results and strategic positioning. In the second quarter of 2024, we achieved several milestones that significantly strengthened our position as one of the most efficient public Bitcoin miners and digital infrastructure owners. First, we successfully completed the construction of Building 4 at Lake Mariner, pushing our total mining capacity to over 10 exahash per second. With a fleet efficiency of 23.7 joules per terahash and industry-leading power costs projected, at 3.5 cents per kilowatt hour for 2024. We have solidified our position as one of the sector's most efficient public miners. Second, we strategically amended our Bitmain purchase agreements to specify the delivery of S21 pro miners. We opted to acquire approximately 5,000 of the 30,000 miners available under the option purchase agreement. monetizing our option at an attractive rate of $16 per terahash. Third, we made significant progress in our AI and high performance computing initiatives through the Wolf DEN project. We committed to purchasing a 128 GPU cluster from NVIDIA financed by an industry leading OEM. This arrangement minimizes the equity required from the company preserving capital for future strategic investments. And finally, we achieved a pivotal milestone by streamlining our capital structure, eliminating debt, and converting approximately 29 million out of 41 million lender warrants into common shares. This deliberate restructuring strengthens our balance sheet and positions us for sustained future growth. With that in mind, let me touch on our operational expansion. At Lake Mariner, we currently deploy approximately 200 megawatts of operational infrastructure for Bitcoin mining, achieving industry-leading unit economics, as disclosed in our updated investor presentation found on our website. We also have an additional 300 megawatts of near-term expansion capacity to meet the growing demand from HPC and AI data centers. Lake Manor's location offers the ideal trifecta for scaling operations, low cost power, ample land, and abundant water for cooling. At the Nautilus CryptoMine, we currently have 50 megawatts of operational capacity for Bitcoin mining. And earlier this year, we announced plans to expand to 100 megawatts in 2025. Our partnership with Talon underscored by the recent sale of the cumulus data portion of the campus to Amazon Web Services, highlights the strategic value of our direct connection to a baseload nuclear power station. Amazon's acquisition not only validates the importance of leveraging sustainable energy, but also signifies the inevitable convergence of sustainable energy with the growing demand for high performance computing. From day one, our model has been to strategically locate our operations where we have access to scalable, low cost, predominantly zero carbon power. Both of our sites embody this approach. Recently, market participants and analysts have emphasized the importance of bringing data center capacity to locations that have access to power. This has been our strategy for many years. bringing our operations to locations with access to predominantly zero carbon generation resources. In addition to our current operations, we are exploring a pipeline of opportunities outside of the company, including certain properties owned by Beowulf Energy, a private company wholly owned by me. While our primary focus today is creating value with the organic scalability within TerraWolf, we are continuously assessing the contribution of additional assets. Any such contributions will be made in a fair and reasonable manner consistent with our board and committee charters. Moving on to our financial performance, Terawolf continues to leverage our low-cost infrastructure to drive profitability and create value for shareholders. Our commitment to shareholders has always been to deliver on our promises, and we've been successful in doing so quarter after quarter. In July, we fully repaid our debt well ahead of maturity and are now completely debt-free. This significant milestone not only strengthens our balance sheet, but optimizes our strategic flexibility. This is particularly advantageous as we aim to deploy our Lake Maranatha facility to support the surging demand for data centers driven by the proliferation of data-intensive applications such as artificial intelligence, machine learning, and big data analytics. In the second quarter, we achieved a GAAP gross profit margin of 61% and non-GAAP adjusted EBITDA of $19.5 million, translating to an EBITDA per exahash of approximately $2.4 million, Our SG&A expenses totaled $11.9 million and only $7.1 million excluding stock-based compensation expense materially lower than our peers. Looking ahead, as Patrick will detail shortly, our growth plans for the remainder of 2024 are fully funded. This underscores our commitment to capital efficiency and ensures the continuation of our strategic initiatives without the need for additional equity financing in the near term. As regards dilution in the second quarter, we took advantage of the favorable stock price and market liquidity to safeguard our future valuation creation path and to facilitate our entry and growth in the HPC AI sector in the most capital efficient manner. These data points highlight TerraWolf's competitive advantages. Low cost, zero carbon power. Access to some of the lowest cost, predominantly zero carbon energy in the industry. Profitability. Higher EBITDA per exahash than any other player in the space, requiring less capital for growth. Efficiency. A lean team and efficient management drive maximum profitability for shareholders. and scalable infrastructure for AI HPC. Wolf has access to over 300 megawatts of infrastructure to scale into high value and high performance compute data centers. The true value in TerraWolf lies not only in the Bitcoin we mine profitably, but in the quality of our asset base and our ability to generate industry leading profits while expanding into HPC AI. Even in times of market volatility, as we all have experienced in the last week, our focus on maintaining robust infrastructure and profitable operations ensures sustainable growth and long-term returns. With that segue, I'd like to now address our strategic advancements in AI and HPC. Wolf Compute is in the final stages of our two-megawatt proof-of-concept project, the Wolf Den. which is on track for completion in early September. This state-of-the-art project is designed to support the latest generation GPUs, featuring advanced liquid cooling systems and high rack density. In addition, we are advancing the development of CB1, a co-location project set to deliver 20 megawatts gross and 60 megawatts of critical computing power. This building will be tailored to support the next generation of GPUs and is projected to be operational by the end of the year. We are actively engaging with several co-location customers regarding the 300 megawatt expansion capacity at Lake Mariner. Our team is thoroughly evaluating each opportunity to maximize the potential of what we believe is one of the premier data center locations in the country. Our primary focus here is on securing the most suitable customers to achieve the highest possible valuation multiple for Terawolf common shareholders, among whom management is one of the largest groups. As we look ahead, Terawolf is at a pivotal moment, as strategic positioning and substantial infrastructure scale offer significant opportunities for value creations. With our large-scale facilities, we are well equipped to meet the growing demands of the data center market, positioning us to capitalize on emerging opportunities and drive substantial growth. We are excited about leveraging our infrastructure and expertise to enhance value for our stakeholders in the coming quarters. Now, I'll turn it over to Patrick to discuss our financial performance.