DMG Blockchain Solutions Inc.

Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the DMG Blockchain Solutions Q4 and full year 2024 update conference call. Participants of 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 Solutions is Sheldon Bennett, the company's Chief Executive Officer, and Stephen Eliscu, 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 recent press releases, particularly the cautionary statements within. The content of this call contains time-sensitive information that is accurate only as of today, December 19th, 2024. Except as required by law, DMG Blockchain Solutions disclaims 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, Chantal. 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'll provide an overview of the company's achievements in the past quarter. I will then pass the call to Stephen, 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 from those using Zoom chat. So now onto our recent highlights and achievements. Regarding Core Plus, our software strategy. As a reminder, the goal of our Core Plus strategy is to build and monetize 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. in part via Systemic Trust, our digital asset custodian subsidiary. We are proud of what we have achieved this year, as our in-house software team has executed in addition to performing the due diligence ahead of acquiring the reactor hash rate contract platform. As an update on Systemic Trust, we achieved another major milestone towards building a qualified digital asset custodian business. First, with confidence, we can say that systemic trust is in the final stages towards obtaining a certificate of registration from Alberta's Treasury Board that will enable it to provide secure custody of digital assets to third parties. Next, DMG plans to utilize this platform to store some of its Bitcoin in the near future as well. 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 proud of what the Systemic team, along with our software development team, have accomplished this year to build from scratch an institutional-ready platform that should soon be onboarding clients. TerraPool is building on all that we have accomplished with Systemic Trust. as we have rebuilt TerraPool software to utilize the same best practices to ensure the best possible client experience. In the coming year, a key focus will be on onboarding new clients and growing the TerraPool platform as a key enabler for a carbon neutral ecosystem. Helm has been our internal mind management software platform that is also being revamped to enable rules-based facility management. This month, we are releasing the first version for internal use, which is in line with our prior guidance for an initial version out this calendar year. Our goal remains in the coming year to build a powerful facility management tool for TerraPool clients to optimize operations of their fleets and work with their demand response programs. Long term, as we see Bitcoin mining and AI compute coexisting, sometimes even within the same facility, our vision is to build a tool capable of supporting both. We acquired Reactor from Navier in October. Reactor is a software platform for assuring the delivery of hash rate over the term of a hash rate contract. Reactor has been integrated into DMG software development environment and is on a roadmap to be integrated with TerraPool in the coming months. Reactor gives TerraPool clients the option to sell hash rate and be paid upfront for delivering hash rate over the term of the contract, which is a useful treasury management tool that is unique or any pool to offer. Explore, which is the original software we acquired from BlockSeer purchase back in 2018, is being rebuilt to be a general purpose blockchain Explorer, along with functionality of the original Explorer used by law enforcement. With the emphasis on developing systemic trust in TerraPool, the foundational elements of our carbon neutral ecosystem, we deferred redevelopment of Explorer from this year to next year. Explorer remains a product on our roadmap as we see it as a long-term revenue opportunity. 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 trust. We continue to work with Fosonic to help ensure its long-term success. Regarding our core infrastructure. In October, we signed a memorandum of understanding with the Malahat nation to build out 30 megawatts of generative AI compute capacity split between the parties. We are currently focused on lining up offtake agreements and execution partners ahead of executing the definitive agreement. We believe this partnership has the potential to be a blueprint for similar development with other Indigenous bands that can be replicated throughout Canada. Discussions with other bands indicate a high level of interest. In the coming year, we believe this opportunity can be transformational for DMG, as the JV with Malahat could ultimately drive a total investment in excess of a billion dollars based on the costs of electrical infrastructure and GPUs. Other similarly patterned JVs with other indigenous bands could be of similar scale. During the September quarter, we had a realized hash rate of 0.98x a hash, up 3% sequentially with a fleet efficiency of 24.6 jewels, an improvement of 4% sequentially. We mined 65 Bitcoin down 26% sequentially as we were impacted by the halving that occurred on April 19th compounded by a 3% difficulty increase. As the network produced about 68 Bitcoins per exahash in the quarter, down 26% sequentially, our Bitcoin production was in line with expectations based on a realized hash rate. On a full year basis, we mined 503 Bitcoin, down 43% from the previous year. We fully energized our fleet of 4,550 Bitmain T21 miners and are currently running at about 1.7 exahash. Note that as our hash rate has increased by over two thirds this quarter versus last quarter, we have mined more Bitcoin in the first two months of the quarter versus all of last quarter. All at a significantly higher price. We are optimistic that both revenue and margins will significantly rise in the current quarter versus last quarter. We are on target to install the first megawatt of hydro miners by calendar year end or shortly thereafter. have the foundations for six containers in place, and we expect to have all six containers installed in January. We are focused on ensuring that we have our miners infrastructure fully ready ahead of the remaining five megawatts of miners delivery, which we expect in February. So those miners should be installed within days of receiving them. At that point, our fleet hash rate should be up to 2.1 exahash. Our fleet efficiency is currently 23 joules, we are targeting 21 jewels when we have fully implemented our six megawatts of hydro miners in February. We consider this efficiency to be within the ranks of our larger peers. Beyond the six megawatts of hydro, we are looking at new sites for fleet expansion, especially as our vision is that Christina Lake facility becomes an AI facility that Bitcoin mining migrates to sites with lower cost energy. A reason for having 120 petahash of mining being hosted at a third-party facility was partly to test their Bitcoin mining running at a different part of the country, which has very attractive energy rates in a region where long-term DMG may ultimately build its own infrastructure or partner with other companies. Regarding the site that DMG announced on May 15, 2023, where it entered into a non-binding agreement that would result in development of a new data center site with access to low-cost renewable energy located in Canada in a province outside of BC, we want to provide an update. While working towards a definitive agreement, DMG has been actively planning the manufacturing of power distribution infrastructure, land preparation, and utility transmission interconnection. Given the protracted negotiations towards achieving a definitive agreement, DMG has simultaneously pursued other data center sites in both Canada as well as in the US. DMG still expects to reach a definitive agreement related to the May 15, 2023 announcement and may reach agreements with other parties in other locations. To reach our three exahash goal in the coming year, we will be looking to deploy next generation miners with efficiency ratings below 12 joules per terahash in the second half of calendar 2025. We expect at least a doubling of the capital intensity of Bitcoin mining on a per megawatt basis versus what we are paying today for our S21 plus hydro fleet, especially as we expect access to power to become more constrained as AI may crowd out Bitcoin mining. Additionally, the recent rise in the Bitcoin price is likely giving Bitcoin miner equipment manufacturers some additional pricing power. Now for a summary of our strategy. First, DMG Core Plus strategy, which is focused on our software and services. 2024 has been a transformational year for DMG as we executed on the enabling software for the two key elements of our carbon ecosystem, systemic trust and TerraTool. Accordingly, we are very encouraged that 2025 becomes the breakout year for our Core Plus strategy. We are now making a transition for development to a focus on customer acquisition and operational execution going forward. We understand that we will need not just a new mindset, but also the people in place to help ensure we can execute. We will likely be increasing the size of our development team as well as software operations to ensure we can properly service customers in both Systemic Trust and TerraPool as the platforms scale up. For DMG's core strategy, our data center infrastructure, we expect AI to become a major driver of our core strategy over the next several years. will be devoting significant resources and capital to realizing the opportunity at hand with the Malahat while simultaneously looking to make this a pan-Canadian effort among Indigenous bands. We will be leveraging our unique relationship while capitalizing on this special time in the data center industry to be part of the growth of tens of gigawatts of generative AI data centers being built throughout North America over the next few years. Bitcoin mining will remain foundational to our core strategy. Bitcoin mining is one-tenth the capital intensity of AI and can be deployed in one-third the time. We are agnostic between the two technology types about how we maximize returns, and we see a role for both technologies to be utilized in the same facility. Bitcoin mining achieves rapid time to revenue and about 18 months payback, while AI can be layered in more gradually as multi-year offtake agreements are established. Accordingly, to realize our vision, we will likely need to access capital markets again, even as we just raised $7.2 million last month. While we are looking to the September 22-25 quarter to deploy more mining capacity based on utilizing leading-edge technology, we will likely have material capital requirements ahead of that related to new site development for both Bitcoin mining and AI. And as such, we may use a combination of cash, debt and or equity to fund those investments. Now I'll hand it over to Stephen to review the company's performance.

Thank you, Sheldon. I'm Stephen Elischke, the DMG COO. Now for a few words about the company's overall position. In the September quarter, our cash plus Bitcoin balance was $36 million, a decrease of 9% sequentially and up 90% year over year. We have utilized more than half of our Bitcoin balance as collateral for our Signum Bank credit facility, which we utilize specifically for the purpose of purchasing our Bitmain T21 mining fleet and other capital purchases. Note that our 49 Bitcoin held with Prime Trust has now been moved out of our Bitcoin balance. Up until recently, our expectation was that Bitcoin held under custody would be considered depositor property. Due to the nefarious nature of the trigger of the prime trust bankruptcy, all property held at the time of the bankruptcy is now considered by the bankruptcy court as a state property. And as such, there's likely to be only a partial recovery based on the value at the time of bankruptcy. This update is detailed in our financial statements. As a side note, while DMG's motivation to create systemic trust was not the direct result of losing Bitcoin to a so-called qualified custodian that turned out to be a bad actor, but having complete control over who custodies DMG's digital assets certainly adds to our motivation to make systemic trust successful. For our mining operation, our near-term focus, beyond having grown to 1.7 exahash, is to deploy our first meaningful hydro mining capacity and reach 2.1 exahash. As we believe hydro mining and direct liquid cooled AI servers are the future of the high-performing computing industry, This deployment positions us to execute on that future. Longer term, as we look to new build outs, we expect many of our future hydro deployments to be in buildings where we would have racks of miners on skids rather than use individual containers. We may continue to deploy new air-cooled miners, but only selectively for specific situations. Now for a few words on AI. We are pleased with our progress since our last earnings call. We are taking our vision for our Christina Lake facility to become our AI data center, and we have the basis for an agreement to put that into practice. As we look into the new year, we see the opportunity to reach agreements with the Malahat Nation or other Indigenous bands that would result in us going beyond 15 megawatts of AI at Christina Lake. We're working closely with our utilities so that we can enable many tens of megawatts of power for supporting AI compute infrastructure. Now to review our financial results. In our September quarter, our revenue decreased 29% to $5.9 million, down from $8.3 million in the previous quarter, mainly due to the drop in self-mining revenue, which also decreased 30% on a 26% in the amount Bitcoin mined. On a full year-over-year basis, revenue increased 21% to $33.9 million on a 24% increase in self-mining revenue. Our hosting revenue decreased 23% sequentially to $0.2 million in our September quarter. On a full year basis, hosting revenue declined 11% to $1.2 million from the previous year. We expect hosting revenue to decline to near zero in the coming year as our existing customers retire their fleets and we utilize our capacity for self-mining and AI. This decline has been somewhat delayed with the recent rise in Bitcoin pricing. Net pool revenue is minus 2.4 million in 2024 compared to minus 1 million in 2023. As we have revamped TerraPool's software this year and need it to enable our carbon neutral ecosystem, we will be looking for ways to minimize this number in the coming year. As we have explained in our financial disclosures, this number should even out to zero when the pool is operating continuously over an extended period of time. Operating and maintenance costs decreased 1% to 4.6 million from the prior quarter, as we operated slightly more hash rate with an offsetting increase in miner efficiency. On a full year basis, our operating and maintenance costs increased 17% to 19.7 million from the previous year, as our hash rate increased 21% to 0.96x a hash, And our utility costs increased by 6%, partly offset by a 9% increase in efficiency to 26.7 joules per terahash. Our margin percentage on our revenue, less operating and maintenance costs was 21% in the September quarter, down from 44% the prior quarter. Our energy cost to mine a Bitcoin was about 46,000 US. With the increase in the price of Bitcoin in the current quarter, we expect a sizable margin rebound from the prior quarter. For the full year, our margin percentage increased to 42% in 2024 from 40% in the previous year. As a proxy for cash flow from our business, which assumes we're selling about 100% of our generated Bitcoin, our earnings before other items, excluding depreciation, amortization, and stock-based comp, was minus 1.1 million or minus 18% on a percentage basis in the September quarter versus 1.5 million and 19% margin in the prior quarter. On a full year basis, our earnings before other items, excluding depreciation and amortization and stock-based comp was 6.2 million in 2024, up 20% from the previous year. Our cash flow from operations was $1.3 million in the September quarter versus minus $1.3 million the prior quarter. On a full year basis, our cash flow from operations was $8.2 million, up 69% from the previous year. Our non-mine expenses, excluding depreciation, amortization, stock-based comp, were $2.3 million in the September quarter, up 8% from the prior quarter of $2.1 million. For the full year, non-mine expenses were $8 million, 2024, up 33% from the previous year, due largely to our investment in systemic trust. In our 2025 financial year, we would expect expenses to rise about 50% from 2024 levels as we continue to make investments in systemic trust and broaden the offering of our Bloxier platform products, including the integration of Reactor into TerraPool. Depreciation expense of 5.8 million in the September quarter increased 14% from the prior quarter, As we depreciated our new T21 mining fleet for the full quarter versus a partial quarter in the prior period. For the full year, depreciation declined 13% to $18.9 million in 2024 from the previous year. As we continue to make new investments, we would expect depreciation to increase in our 2025 financial year. Earnings before other items was minus $7.4 million in the September quarter versus minus $4 million in the prior quarter. Our net income was minus $8.4 million or minus $0.05 per share from minus $0.02 per share in the prior quarter. On a full year basis, our loss narrowed to minus $5.2 million in 2024 from minus $6.5 million the previous year. And on an EPS basis, our loss was minus $0.03 per share in 2024 versus minus $0.10 per share in the previous year. Regarding our balance sheet, our cash plus digital currency holdings decreased 9% to 36 million from the previous quarter and increased 90% from the previous year. The value of our property and equipment and long-term deposits decreased 8% to $55.8 million from the previous quarter and increased 10% from the previous year. Accordingly, our total asset base decreased 7% to $103.9 million from the previous quarter and increased by 26% from the previous year. In the September quarter, DMG sold nearly 93 Bitcoin, generating 7.7 million of cash. Thus, we sold 143% of the Bitcoin amount mined versus the prior quarter of selling 79% of the Bitcoin mined. On a full year basis, we sold 98% of the Bitcoin we mined, up from 83% the prior year, and in line with the two years before that. As a treasury policy, investors should continue to expect us to sell most or all of the Bitcoin that we mine, and that our Bitcoin holdings should decline as a percentage of our total asset base over time. We do not expect to purchase Bitcoin on the open market, as investors are free to do so independently of their investment in DMG. Regarding raising new capital, as Sheldon indicated, we're evaluating raising capital specifically for new projects to support our evolution of our Christina Lake facility to an AI data center and new sites that are focused on Bitcoin mining. And currently, we will need to raise capital for AI projects. While we may rely on government-sponsored debt sources for AI build-outs, we will continue to look to the capital markets as well. Even as our November raise was a unit offering that resulted in dilution, we believe we can earn a return in excess of our cost of capital. We have also built relationships with investment banks from which we hope will result in DMG having a greater presence among the sector's investor base via expanded research coverage in the coming calendar year. For successive raises, we'll be looking to utilize less dilutive approaches, including further utilizing our debt facility with Signum Bank. I will now hand the call back to Sheldon to summarize our prepared comments, and we will answer questions. Sheldon?

Thank you, Stephen. To reiterate our key results and outlook, first, we are positioning DMG to expand into AI in a meaningful way with a differentiated strategy based on unique, strong relationships with Indigenous bands, offtake agreements, along with deployment partners. We will continue to grow our hash rate in the near term to 2.1x a hash with a focus on hydro direct liquid cooling technology. We believe we are on the cusp of systemic trust becoming a qualified custodian with a focus in the new year on customer acquisition. We have built a revamped version of TerraPool with a focus in the new year on customer acquisition. DMG mined 65 Bitcoin in the September quarter on a hash rate of 0.98 exahash and a fleet efficiency of 26.4 joules. Sorry, 24.6 joules. We should show a significant hash rate increase in the current quarter and are positioning ourselves to grow to 3 exahash in the coming year. Cash and digital currency at quarter end was 36 million with total assets of 104 million. We generated $1.3 million of cash flow from operations this past quarter and $8.2 million this past year. On a net income basis, we had a $0.03 per share net loss in 2024, but we are already showing growth and progress on our new initiatives in the current quarter that can help us return to profitability. In summary, we are proud of the accomplishments we've made this year First, in establishing the basis for a differentiated AI strategy. Second, significantly growing our hash rate. And third, putting in place key core plus elements that should enable us to realize our vision for a carbon neutral Bitcoin ecosystem and monetizing Bitcoin transactions. We have made great strides, but we have yet to fully demonstrate the fruits of our labor. In the coming year, we hope to be able to show but our work will pay off. We appreciate your continued support, and now we'll move on to our Q&A. As with past quarterly reviews, Stephen and I normally split the questions up a little bit. I'll start with the first few questions, and then let Steve take over and join in any answers as he would like. Question number one, now that you have an MOU with the Malahat nation, why should we be confident you can convert this into a definitive agreement? A great question. First, we actually have a definitive agreement in hand with the Malahat nation, but we wanted to wait to sign it until we lined up our offtake agreements and an execution partner. So we, didn't want to sign this until we were sure we could execute. And we anticipate that in the coming months, we'll be able to line all the parts up and be able to sign the definitive agreement with the Malahat nation. Second question, sort of a continuation, what is the Malahat partnerships expected impact on revenues? Well, we expect a three to five-year payback on generative AI servers, so any investment we make should generate a commensurate amount of revenue spread over that payback period. With investments possibly being in the hundreds of millions of dollars, we sort of expect revenues should follow that accordingly. What is the timeline for to build out the two 15 megawatt sites? So that's a good question. As we've sort of disclosed, our plan is to start the first 15 megawatts in Christina Lake, utilizing our power infrastructure and other infrastructure that we have there, including our fiber that we already have in place. So we believe You know, 2025, it's possible for us to be up and operating, doing HBC AI in Christina Lake. Obviously, it takes a little while to order all of the proper equipment and get it installed and up and running. The second site, which is on Malahat territory on Vancouver Island, on their property, So it's going to take a couple of years, mainly because we need to build the power infrastructure to feed a site before we can actually build up that site and get it up and operating. So Malahat themselves are probably more of a 2026, 2027 timeframe for them to be up and running fully.

And just to add to that, you know, even for Christina Lake, the timeframe to have the tier three type resiliency that the offtake customers would require is probably going to take longer, but we hope we can get at least the pilot up in the next 12 months.

Next question. Your financial disclosures talk about rate 31 and rate 38. We had understood that DMG had firm power agreements with utility. What has changed and what do these rate schedules mean? That's a great question. I'm finding over the years, investors are getting more and more familiar with power agreements and the different types of power agreements out there. Every province in Canada, every state in the US seems to have different power systems. And so at DMG, we have a firm power agreement with FortisBC for the power that we've been using. Several years ago, we requested the utility to serve us with wholesale power for Bitcoin mining, which would be based on mid-Columbia river power or something called mid-sea rate, which is a wholesale market rate. The utility granted this request and the new RAID was made available to us through a regulatory process that took a few years. But now we have the opportunity for us to use both RS-31, so RAID Schedule 31, which is firm power, which we would allocate this to AI processes as it's uninterruptible firm power. And RS38, or rate schedule 38, which is wholesale power, which we would use this power tariff for Bitcoin mining. The RS38 are the non-firm power or the wholesale power. In general, that rate is lower for much of the year, a little bit higher in the winter months with some possibility of curtailment. And we expect that curtailment would be sort of less than 3% on an annual basis. But overall, the RS38 should be a more economically efficient rate for Bitcoin mining versus a fixed rate that we would have for fixed power on RS31. Another question, have drought conditions affected your utility costs? um so a good question uh as you know the province of british columbia is known for hydropower and drought uh has a major effect on it especially if there isn't a large snowpack um but you know historically as we've been purchasing our power from rs31 which is a fixed power rate um that regulated rate uh has very limited ability to affect um both delivery or price. Every year, both large utilities in BC, which is BC Hydro and Fortis BC, the one that we work with, need to go to the Utility Commission and present a case why they want to increase utility rates, which are examined by this BC Utility Commission, and they decide whether or not rates can go up or stay the same. So, you know, on the RS-31 rate, it's really a minimal increases as those rates are well governed. But for RS-38, the non-firm wholesale power one, with that rate, you know, the prices are more volatile. And, you know, we could be impacted, as I said, with curtailment based on things like drug conditions where there may not be enough power in the Pacific Northwest area. And we would be affected before a firm rate like RS-31 would be affected. Another question. What is your plan to bring on clients on systemic trust and how much revenue do you expect next year? It's a great question. It's really a question for Lawrence Strong, who's Systemic's CEO. Perhaps we'll have him on the call one day to go through how things are going at Systemic Trust in one of these quarters coming up. But, you know, Lawrence, you know, and his team, they have been working over the course of the last year to have clients ready to onboard. So we're optimistic that, you know, They, you know, upon receiving regulatory approval in the new year or the near future, that team will start onboarding early on in the next calendar year. And, you know, we're expecting revenue to fall that quickly. And it's hard to say exactly what that'll look like. As, you know, Lawrence has already given out his forecast. But I think when we get into sort of the next one or two quarters, we'll be able to give some more advice on what kind of revenue levels we're going to be able to project once we get some onboarding clients done over the next few months. Number six on my list of questions. What is your plan to generate revenue from TerraPool? So. The Terra Pool software and user experience have been redone and we made some specific changes so that it would feel and look and operate very similar to every other pool out there. Our fee structure, payout formula, our API and our UI were all done to allow pool clients to migrate some or all of their hash rate over to TerraPool without giving up and sort of feeling or noticing any changes and have the potential for added revenue from mining carbon neutral Bitcoin. That being said, our primary goal for TerraPool is to be an enabler to allow systemic trust clients to send Bitcoin in a carbon neutral manner. So relative to TerraPool, the much bigger revenue opportunities systemic trust where the pool is simply a mechanism to supply a steady stream of carbon neutral blocks to be filled by systemic trust transactions. Thus, you know, we would encourage investors to focus on the revenue opportunity of systemic trust with, you know, any additional revenue from a tarot pool being icing on the cake. Another question. Your new mining site announced keeps getting delayed. Is it ever going to happen? I think we had that question before. You know, unfortunately, you know, we were optimistic that we would get an agreement done over the past year. That hasn't happened. However, both us and our counterparty do see, you know, that we will get agreement done. We are still working at a few things. We've changed some things around. you know, would be remiss in saying that the spike in Bitcoin prices created different discussions on our planned agreement. However, we're working through that in a proactive way. As well, you know, we have a sense of urgency to get this done as we want to convert Christina Lake facility into mainly an AI data center. And, you know, over the next few years, we really just want to focus on AI in Christina Lake. and uh move our bitcoin mining operations to other locations and jurisdictions um so we're hoping you know to finalize the agreement uh start procurement uh so we can do early construction in the new year on this agreement and now we'd be looking at you know miners that are more in the sub 12 joules a terahash, focusing on the hydro technology. Whereas if we would have concluded this agreement a bit earlier, we probably would be looking at using air-cooled mining layers, similar to the T21s. So not the best, not the worst, but we do think that this site, along with a few others that we're looking at trying to conclude, will enable us to exceed our three X a hash goal for 2025. Steve?

Yeah, great. And, you know, we would just say that we're going to delay. Delays are never good. But in this case, we're really looking at twice the amount of hash rate that we would get from that facility that we were looking at just when we a few months ago before these delays really became protracted. so there received some other questions i'll try to step through them quickly because we're respectful of your time uh your question here your proxy for cash flow from operations was negative for the first time in memory how will you get back to historical levels and our original plan was to get to 1.7 exahash three months earlier than we did exactly to avoid this outcome as We incurred the full effect of the halvening in the September quarter. However, just given the rise in price of Bitcoin, we're at 1.7 exahash, more efficient mining fleet. We should return more historical levels in the current quarter. And more importantly, beyond a path to profitability, assuming Bitcoin pricing holds, and we continue to add hash rate as projected. And this is even ahead of systemic trust and other software initiatives fully ramping up in the coming 12 months. I have a question here just about the cost per megawatt on hydro Bitcoin versus air-cooled facilities. The reality is that the costs are not very different. A complete turnkey hydro miner costs on the order of about a hundred thousand dollars a megawatt and in terms of equipment being one million going to two million and more per megawatt it really is pretty small the rest of the costs of course the power distribution are all common whether it's an air cooler or hydro facility so and this is part of why we've made this change to utilizing hydro is the cost of buying a turnkey solution from third parties is so compelling. The most advanced silicon is available. in hydro technology that really we see now this just makes sense and there's really no cost premium on the infrastructure side. We have a question here just blatantly, what is your power costs? We encourage investors to kind of work backwards from looking at our financial statements, but kind of just look at it as we're in the five to five and a half cent range, U.S., And part of our motivation for moving out of Christina Lake to other sites is to reduce that cost more in line with what you may see with some of the other larger peers. The types of customers we're targeting with HPC slash AI are really focused around with regards to what we're doing with The Malahat Nation and other Indigenous bands really be focused on government contracts, but we also see well beyond that in terms of the types of customers who essentially want to allocate money part of their AI compute requirement to those who, such as indigenous bands, those types of groups. Here's a question on the PayPal update, which is very timely. We actually had a call with PayPal and Energy Web this week, in fact. And we are working with Energy Web so they can be potentially hoping to provide a third party verification of being carbon neutral energy sources. And PayPal would be a user of the infrastructure routing transactions through PayPal. I mean, through TerraPool. That is still on their roadmap and we hope we're able to support them as they move forward on that. Regarding our unit offering, for management and the board, we know it has negatively impacted our stock and the timing of it seems like it was done just when the stock appeared ready to break out and Of course, the question is, well, why did we do this? And just to help investors understand, we deliberated over this extensively. We knew there could be some short-term pressure on the shares, but we felt with what we're doing longer term, that the the stock would work longer term with the types of announcements we made and we did this we made this decision when bitcoin was 60 around 65k or so and uh we kind of felt we're at a limit with our signum loan given our our custody balance where We didn't want to seek to grow our debt balance anymore. And that this equity offering was, at the time we made the decision, was the best path to be able to raise money quickly. And we've deployed that money. We've utilized it. for both capital purchases as well as supporting systemic trust and internal corporate purposes. We also looked at and said with our hash rate at 1.7 exahash and other miners being valued at 100 million or more on a market cap or EV to exahash basis. We thought that and with our AI, let alone our AI announcement, that our stock would work more based on having achieved all of those goals. And at this time, it didn't happen, and it diluted more than we'd like. We did strongly consider convertible debt, as many of our peers have issued, and we're still considering that for upcoming raises. But we do want to focus on raising capital in a way that is less dilutive. Also, just key short-term catalysts for investors to focus on. I think we've signaled strongly that we believe systemic trust will be approved to hold third-party digital assets very soon. Signing agreements for new data center sites. We hope that the one from 2023 will is signed soon, but others as well, as I think we've shared our vision, how we want to transform the company where Bitcoin mining is at lower cost energy sites, AI is at Christina Lake. And the other thing is just demonstrating our first megawatt hydro mining that's imminent within We're doing the setup now. We'll be receiving the equipment within next few days and within the next couple of weeks. So at the very end of the year or shortly thereafter, having that first megawatt energized and then making more meaningful progress on our AI strategy as Sheldon has talked about. And as a final question is, how do we avoid another prime trust debacle? Well, we talked about it in our prepared statements. We're disappointed that we may only recover a fraction of what we entrusted to Prime Trust, which was operated in a way that can only be described as being managed by bad actors. So the thing with Signum Bank, to understand their custodial wallet, we can see the Bitcoin. It's not commingled in the way the prime trust wallet was there are some ways to be able to access in the case of a bankruptcy which we don't expect in the current environment but there are some better assurances but you know our policy is just to minimize what we hold at exchanges I keep Bitcoin there mainly for trades and going forward, really any Bitcoin that's not being held for a financial purpose will be held, held by systemic trust, which is fully insured. So that's, that's, uh, the, all the questions we have. And, uh, Sheldon, do you want to just make concluding statements?

Yeah, that's, um, kind of all the questions that we got in, or at least the ones that got to me, um, to answer. I don't really have any other questions or any other comments. I will say it's been a long year for us. You know, when you sort of look at the past 12 months, you know, we started sort of with a blank sheet of paper with Lawrence and You know, I've built up a team and every sleeve letters patents and, you know, we're pretty confident we'll get our fully qualified custodian done, you know, in what amounts to about a year, which is probably the fastest anybody's got a trust license in Canada. And so we're pretty impressed with that. That's been a lot of hard work for Lawrence's team, but also our software team that took on the challenge to build you know, an enterprise-grade software that can be, you know, used between ourselves and financial institutions. This is not easy stuff to do. The security around it is very complicated, so we've been very happy with how that's moved forward. As well, our software team, you know, redeveloped TerraPool, redeveloped Helm, and are on to Reactor Next and some other projects, so... they've been doing very well this year. Um, and then our core mining group, I mean, they've expanded out in over 40 megawatts of new capacity in Christina Lake this year. Uh, you know, some of it's already running and our goal is to get it all up and running with, you know, the highest, uh, efficiency miners we can. So it's been a really busy growing year for us. We have a lot to do next year and we really hope our investors will, uh, know keep uh their interest in what we're doing and hopefully they'll start to see some great return on their investment we think we're doing the right things we have the right partnerships with the malahat we want to reproduce that we looking at the right properties to continue power growth for both ai and crypto and we think we're doing the right things on the software side whether it's ourselves and systemic trust our partnerships like we have with paypal and Energy Web. You know, we can't do everything, but we're trying to pick the things that we believe will bring the most value to the company and to the shareholders. And with that, unless there's any comments from Stephen. Great.

Thank you, Sheldon.

We'll end the call now. Thank you.