DMG Blockchain Solutions Inc.

Let's go, thank you.

I think so, yeah. Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the DMG Blockchain Solutions Q3 2024 update conference call. Participants on this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A webcast replay of the call will be available on the company's website. Joining us today from DMG Blockchain Solution is Sheldon Bennett, the company's chief executive officer, and Stephen Alisu, chief operating officer. During this call, management will be making forward-looking statements, including statements that address DMG blockchain solutions expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in DMG Blockchain Solutions' most recently filed periodic reports and the company's press releases, particularly the cautionary statements within. The content of this call contains time-sensitive information that is accurate only as of today, August 27, 2024. Except as required by law, DMG Solutions' disclaimed any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to Sheldon and Stephen. Sheldon.

Thank you, Louis, and good afternoon, and thanks to everyone who has joined the call today. My name is Sheldon Bennett, and I am the CEO and founder of DMG Blockchain Solutions. With a similar format as recent quarters, first I will provide an overview of the company's achievements in the past quarter. I will then pass the call to Steven who will review the company's performance. We will end the call with our Q&A session based on questions submitted to us prior to the call, as well as those from using the Zoom chat function. So now to highlight our recent achievements. First, regarding our core plus strategy, which is DMG's software strategy. As an update on Systemic Trust, we achieved a major milestone towards building a qualified digital asset custodian. On August 6, 2024, we received approval from the Alberta Treasury Board for the incorporation of Systemic Trust, a wholly owned subsidiary of DMG. Systemic Trust is now working with the Alberta Treasury Board to obtain a certificate of registration that will enable them to provide secure custody of digital assets to third parties. Our target remains to achieve this goal by the end of this calendar year. Although we are dependent on the regulatory body's ability to approve our application, we also expect to receive SOC 2 certification next month. DMG plans to utilize this platform to store some of its Bitcoin in Systemic Trust cold storage wallets while waiting for final regulatory approval. Systemic Trust is a centerpiece of DMG's Core Plus strategy and gives us the vehicle by which institutions can hold and transact carbon neutral Bitcoin. We are encouraged by the Systemic Trust team's pace combined with our own software team's pace who have delivered from scratch this year, an institutionally ready platform that is now going through the regulatory review process. Next on TerraPool. For TerraPool, we have utilized the best practices of our software team, which they developed for systemic trust to revamp out our TerraPool software, sporting both a fresh new UI and highly scalable enterprise grade backend that should be SOC 2 type 2 compliant soon. Like other major pools, it pays out utilizing FPPS, which is full paper share with competitive fees. A key benefit of TerraPool is that miners on our pool will be able to mine carbon neutral Bitcoin, which we believe may sell at a premium. We also believe there are many additional revenue opportunities for TerraPool members, exemplified by our collaboration with PayPal, where an additional bounty on top of the standard transaction fees that can only be unlocked by carbon neutral pools can be split among pool members. Regarding our relationship with PayPal, as the original collaboration was a proof of concept, we are continuing to work together to help them deploy a successor version of this proof of concept for institutional applications. As well, Helm has been our internal line management software platform that is also being revamped to enable rules-based facility management. While this concept isn't new, what DMG will bring to TerraPool members is highly scalable mine management software that is built on a modern tech stack, supporting even the largest mine operations. We expect an initial version of this expanded vision later this year. BlockSeer Explorer, which was the first and original software we acquired when purchasing blocks here back in 2018 is being rebuilt to be a general purpose Bitcoin Explorer with free downloadable reports with targeted availability in late calendar 2024. Subsequently, we plan to recreate the functionality of the original Explorer used by law enforcement to be able to search the Bitcoin blockchain and report transactions between wallets. We continue to see Bosonic as an element of our ecosystem, but given our custody business model, we expect to be partnering not only with Bosonic, but also with many exchanges, which will enable volume and liquidity through systemic trusts. The goal of these efforts is to build a carbon neutral ecosystem where TerraPool supplies carbon neutral blocks, which in turn are to be filled by transactions from financial institutions and ordinal content providers. Next, regarding our core strategy, which is our Bitcoin mining. During the June quarter, we had a realized hash rate of 0.95 exahash, down 2% sequentially, with a fleet efficiency of 25.6 jewels, as measured from our substation, an improvement of 11% sequentially. We mined 87 Bitcoin, down 42% sequentially, as we were impacted by the halving that occurred on April 20th, compounded by a 10% difficulty increase. As the network produced about 94 Bitcoins per exahash in the quarter, down 41% sequentially, our Bitcoin production was in line with expectations based on our realized hashrate. While we originally targeted to have our 4,550 Bitmain T21 miners installed in June, which was then pushed out to July and then August, to date we have energized about 40% of our new mining fleet producing about 0.35x a hash and have optimized our legacy fleet to run in the lowest power mode to best deal with the summer heat producing about 0.75x a hash or in total 1.1x a hash. Most of the balance of our T21 miners are racked in containers awaiting connection to our distribution line, to which we added an extension on our Christina Lake property. We still believe we can reach our goal of 1.7x a hash at an efficiency of 23 joules per terahash by the end of this quarter when we energize the balance of the T21 miners and operate our legacy fleet at a slightly higher power consumption, producing about 0.85x a hash. As we have stated in a recent press release, we have seen modest dips of hash rate on warm days. As we enter cooler weather periods, this should have a limited impact by quarter end. The cause of our T21 development delay has been the result of a fragmented supply chain composed of a plethora of suppliers and contractors who have served us well in the past but are susceptible to supply chain issues as North American electrical power is in greater demand. Going forward, we plan to A, source turnkey solutions that include pre-assembled transformer units containing all required circuit breakers needed to interface directly with our mining containers. B, for containerized mining, we are now likely to purchase off-the-shelf solutions rather than engineer them ourselves as we have done in the past. We've had great success with the Bitmain and boxes that we have deployed for housing most of our T21 fleet, and we will likely utilize similar solutions from Bitmain or other vendors going forward. C, we will also be more careful ensuring improved procurement of components related to our distribution lines, as lead times for mainly mundane components are the double-digit weeks. D, as we need to stay competitive and while the engineering of power distribution between a transmission line and individual mining rig still requires a substantial amount of expertise the capabilities of what supply chain can offer has evolved and we will be capitalizing on this evolution What is exciting about this is that we can now source custom transmission infrastructure equipment in less than six months and the distribution infrastructure in about three months, which will enable us to deploy much faster than we have historically. Of course, all of this is dependent on receiving approvals from utilities and regulators. Compressing timelines with them remains a challenge. We also stated last quarter that we would be bringing on additional staff who are highly experienced in Bitcoin mining equipment repairs. These individuals have been onboarded, and as a result, we are making good progress with performing all of our maintenance work in-house. We plan to exit our financial year with incremental hash rate improvements as a result of their work that is well underway. As we go forward, the staff will be focused on maximizing the output of our largely depreciated legacy fleet while ensuring high uptime of our new fleet. Additionally, we have put the brakes on our immersion cooling employment and are focusing on hydro equipment. We made this change as One, we see a notable maturing of both hydro infrastructure as well as mining equipment, which is now being offered with the industry's highest miner efficiency, along with a dozen or so containerized turnkey solutions in miner racking. B, the momentum for AI equipment is to utilize direct liquid cooling, or DLC as the acronym, for the highest density next-generation systems from NVIDIA and AMD. We believe Hydro or DLC becomes a harmonizing cooling technology for all next-generation high-performance computing data centers, whether they be Bitcoin mining or generative AI. We are currently in discussions with both minor vendors and container vendors and expect to make a purchase of the 12 megawatts originally targeted for immersion this fall for target installation by early calendar 2025. Assuming we purchase equipment with 16 joules per terahash efficiency, this translates to an additional 0.75 exahash of new hashrate. To support long-term expansion, DMG continues to have ongoing discussions with multiple parties about new sites for both Bitcoin mining as well as AI data center applications. On May 15th, 2023, DMG announced it entered into a non-binding agreement that will result in development of a new data center with low cost power and renewable power located in Canada in a province outside of British Columbia. While working towards a definitive agreement, DMG is actively planning the manufacturing of power distribution infrastructure, land preparation, and utility transmission interconnection. Now for a summary of our strategy. First, Core Plus. On our year-end 2023 earnings call, we highlighted how we were focused on executing our Core Plus strategy. As we have reached major milestones on systemic trust with both the first major stage of regulatory approvals, as well as software execution, we hope to have demonstrated the first of many wins on the execution front for which we are focused on turning into revenue. This is a huge change for DMG. And as we are clear as to what we want to accomplish in software and have the team two in place to execute, we're optimistic that 2024 will be a pivotal year towards realizing our core plus vision. For DMG's core mining strategy, We have elaborated at length some of our recent misses and our vision as to how we can grow at the leading edge to reach 3x hash in 2025. A key change has been that as the network hash rate continues to climb, despite the less favorable economics post happening, we know that it will become an increasingly and relentlessly capital intensive business. Accordingly, we are seeing the need to access the capital markets. Given our relative strength, we believe we are in a good position to raise capital and as such have filed a 400 million base shelf registration. We want to signal to the markets that not only do we have a plan to reach 3x a hash in the next year, but also we are here to stay as a Bitcoin miner and potentially in the future provide AI co-location and cloud services. We plan to use a disciplined approach to capital raising that avoids massive 10 or 20x dilution that we have seen from some of our peers. We plan to raise capital with very well-defined and specific uses of capital to drive revenue growth. We do not plan to raise capital to buy Bitcoin, as investors already have access to spotty Bitcoin ETFs. And as we have previously indicated, we expect our Bitcoin balance to become a smaller portion of our overall asset base over time. We have covered a lot of ground here today. And even as we are being very ambitious and our goals remain focused as to what we want to accomplish. Now I'll hand it over to Stephen to review the company's performance.