Good morning and welcome to Hut 8’s Q2 2024 Financial Results Conference Call. After today’s presentation, there will be an opportunity to ask questions. Please note that this event is being recorded and a transcript will be available on Hut 8’s website. In addition to the press release issued earlier today, you can find Hut 8’s Quarterly Report on Form 10-Q on the Company’s website at www.hut8.com under the Company’s EDGAR profile at www.sec.com and under the Company’s SEDAR+ profile at www.sedarplus.ca. Unless otherwise noted, all amounts referred to during this call are denominated in U.S. dollars. Any comments made during this call may include forward-looking statements within the meaning of applicable securities laws regarding Hut 8 Corp. and its subsidiaries. The statements may reflect current expectations and as such are subject to a variety of risks and uncertainties that could cause actual results to differ materially from current expectations. These risks and uncertainties include but are not limited to factors discussed in Hut 8’s Form 10-Q for the three and six months ended June 30, 2024 and Form 10-K for the year ended December 31, 2023, as well as the Company’s other continuous disclosure documents. Except as required by applicable law, Hut 8 undertakes no obligation to publicly update or review any forward-looking statements. During the call, management may also make reference to certain non-GAAP measures that are not separately defined under GAAP, such as adjusted EBITDA. Management believes that non-GAAP measures taken in conjunction with GAAP financial measures provide useful information for both, management and investors. Reconciliations between GAAP and non-GAAP results are presented in the tables accompanying the press release which can be viewed on Hut 8’s website. I would now like to turn the call over to Asher Genoot, CEO of Hut 8.

Good morning, everyone. Thank you for joining us today as we look back at an incredibly important quarter for Hut 8. In any market, businesses must navigate the inevitable ebb and flow of macro headwinds and tailwinds. In Bitcoin mining, the network having is amongst the most powerful of these forces. While we cannot control forces like we’re having, we can't control how we respond to the challenges they create. We believe the hallmark of an enduring business is the ability to create value across market cycles. Today, our business is more resilient than ever. Our results this quarter demonstrate that we have delivered on the commitment we made six months ago, when I became CEO, to center the business on operational excellence and bottom line economics. I'll share the highlights now and Shenif will discuss our results in detail. As a reminder, the current period reflects the combined company's performance, while the comparison period reflects US Bitcoin Corp’s performance as a standalone business prior to the merger. Our revenue grew 72% year-over-year to $35.2 million for the 3 months ended June 30, 2024. Net loss attritable to Hut 8 for the quarter was $71.9 million versus a loss of $1.7 million in the prior year. And adjusted EBITDA was a loss of $57.5 million versus $14.8 million in the prior year. Both net loss and adjusted EBITDA reflect a loss on digital assets of $71.8 million in accordance with the new FASB fair value accounting rules. But these figures only tell part of the story. Despite the impact of the housing on top line production and revenue, we achieved significant gross margin expansion in our digital assets mining business from 34% to 46% year-over-year. Even with the 71% increase in network difficulty over the same period our relentless focus…

Thank you. Asher. Before we review the financial results, I wanted to remind you that US Bitcoin Corp. was deemed the accounting acquirer in the merger, and as a result, the historical figures in our income statement for Q2 2023 reflect US Bitcoin standalone performance. Results for Q2 2024 however, reflect the performance of the combined company. With respect to our balance sheet, Q2 2024 will be compared to year end 2023, both of which reflects the combined company's performance. Turning now to our results. We generated revenue of $35.2 million during the quarter versus $20.5 million in the prior year period, which represents a $14.7 million increase. The year-over-year increase was driven in part by growth in our managed services segment. Digital asset mining revenue was $13.9 million for the current period versus $15.9 million for the prior year period. Revenue decline was primarily driven by a decrease in Bitcoin mined due to having an increase in the network difficulty. Also during the second quarter, we relocated miners from the Kearney and Granbury [ph] sites to the Alpha and Salt Creek sites, and completed initiatives at Salt Creek to fortify the upstream electrical infrastructure supporting the facility. This led to temporary downtime which impacted our digital asset mining revenue in the quarter. Managed services revenue was $9 million in the current period versus $4.7 million in the prior year period, and includes $6 million in management fees, $1.6 million in cost reimbursement, and $1.4 million in the form of customer equity versus $3.1 million from fees and $1.6 million in cost reimbursement in the prior year period. The growth in managed services revenue was driven primarily by management fees related to our agreement with Ionic Digital. During the current period, we received only one month of management fees for…

Thanks a lot, Shenif. I'm thrilled to hit the ground running with the Hut 8 team next week, and look forward to meeting many of you as I embark on my new role. After nearly two decades in financial services, including 13 years in the power, utilities and renewables group at Citi, transitioning to the corporate world was not a decision I made lightly. However, the opportunity to join what I believe is the best positioned company at the center of the mega trends shaping the power and digital infrastructure sectors was one I couldn't pass up. As I got to know the Hut 8 organization, I was incredibly impressed by the team's talent, drive and passion for what they are building. Under Asher’s leadership, it is evident that every member of the team believes they are building a generational business. Having worked with hundreds of companies and management teams in my career, I can say with confidence that finding this type of environment is rare, but it jumps off the page once you see it. Building a generational business is no small feat in any industry, but building one in an industry that necessitates ingenuity, domain expertise, disciplined capital allocation and scale, is even more of a challenge. At Hut 8, I am confident that I am joining a team more than capable of rising to the occasion. From a strategic perspective, Hut 8 is defining a new market segment by harnessing large scale energy infrastructure to empower the acceleration of technological progress, particularly on the digital infrastructure front. My experience advising on transactions involving some of the largest players in power, utilities and renewables, brought me face-to-face with a tremendous market opportunity at the intersection of power and high performance computing. I was fortunate to have a seat…

[Operator Instructions] Our first question comes from John Todaro with Needham. Your line is open.

Great. Thanks for taking my question guys and congrats on all the improvements going on here. First, on the HPC business. I guess I have two questions related to HPC. But the one on the 1.1 gigs in the pipeline; I guess, just where do we stand on grid interconnect approval for all of it? And then my second question; it seems like to me that that 205 megawatt site could be all for HPC, correct me, if not. And then, just what are we kind of thinking on timeline for ground-breaking on that site, as well as what's in the pipeline through the end of calendar 2024?

Thanks, Sean. Good to hear from you. The pipeline -- all of the assets that we have in our pipeline and assets that we have today, even if they're behind the meter, are grid connected. I know there was some confusion when we announced the Texas Panhandle site that this was a behind the meter wind farm, and it didn't have great connectivity; that site is Air-Con [ph] approved, has a substation available, and can pull power as long as our data center is built and we have the connection into the substation. And so that site today, we're having conversations with customers about a HPC AI build, but we're also having discussions with them about other sites in our pipeline which maybe more interesting from them -- from a -- kind of fiber connectivity standpoint, that's a little less rural. And so, we're having active discussions in the multi 100 megawatt size in regards to AI expansion, and looking at both, our current fleet and also our expansion pipeline.

Thank you. And our next question comes from George Sutton with Craig Hallum Capital. Your line is now open.

Logan [ph], on for George. I wonder if we could just start with -- relative to that GPU-as-a-Service vertical. Has anything changed with the agreement there? I mean, the last you were talking about kind of a fixed income and then maybe a revenue share. And on top of that, is that something you guys will look to expand here in the future. Are you controlled where you at right now?

We have the same structure that we announced with them. So it's on a 5-year contract with the customer. It's a fixed AC with a rev share model in terms of sharing on the economics in their real-time on-demand marketplace. We are currently looking at financing on a go-forward basis, and so as I kind of focus our business on growth, we're looking at what is the best way to finance this; not just parent [ph] level balance sheet, but also project level financing. So, we'll share growth plans aligning and in parallel with financing updates as well.

Got it. And then I know on the press release, I think in your remarks you talked about upgrading the fleet. Any sense of -- you know, like, how much of the fleet you'll look to upgrade? And then maybe just give any ideas on the trajectory of the mining margin. I know you guys made some good progress here on the energy cost, but maybe just some thoughts going forward on that.

We're really excited by the progress we've made since I took over in February. If you look our cost of power this last quarter was $0.032 per kilowatt hour; I think that's one of the most competitive in the market today. So our power cost mining of Bitcoin was $26,232 and that was based on a fleet efficiency of 31.7 [ph]. The newest generation machines from Bitman [ph] are 12 joules per terahash for micro BT [ph], around 16 to 17 joules per terahash. So that's over a 50% reduction in efficiency from where we are today. And so with all else remaining equal, you'll see that same reduction in the cost of mining Bitcoin. So the fundamentals of what is our power cost, how is our infrastructure running; I think we continue to show the market and continue to optimize as a company, and now replacing machines with newer generation machines. And I think the most recent announcement on the 12 joules per terahash is a step function from where we were. The most kind of recent machine was around 17 to 18 joules per terahash; so 12 joules per terahash was a huge leap forward, and we're having active discussions today around a fleet upgrade as our machines kind of start going towards their end of life, and as we look at selling those and refreshing the fleet that is existing on our infrastructure. And then, net new growth for new machines for new sites that we have in our pipeline. And so, we've shared with the market that our intent is to continue to grow our power infrastructure, and that means being a leader, both in the growing an emerging AI sector in multi 100 megawatt builds, but also a leader within the Bitcoin mining sector which we've grown on our power footprint but we haven't grown on our overall exahash, and will continue to show growth there in the new near future.

[Operator Instructions] Our next question comes from Mike Colonnese with HC Wainwright. Your line is open.

Hi, good morning guys. Asher and team, congrats on all the progress. Really good to see here. Just couple for me. You mentioned the release that -- and just spoke on it about the fleet upgrades. If you could just provide a little bit more specifics than what you just mentioned, as it relates to a timing perspective? Asher roughly, how long do you think it will take for a full upgrade of your sites after signing a purchase order? And if you can just remind us of the total developed megawatt in the portfolio that is wholly owned by Hut today?

Thanks, Mike. We're in active discussions with the manufacturers today and different financing mechanisms in order to power the fleet upgrade that we think is the most economical way. If you look at hash price over the last little bit alone, I mean the last 3 months period you have hash price that has ranges in the $60 per hash per day, down to as low as $36. So right entry point, right pricing and right financing is critical to us as we look at this fleet upgrade with this new generation machine. If we look at the overall amount of megawatts that we have, we have a pretty robust pipeline today. In regards to our wholly owned megawatts, we have about a gigawatt, including the joint ventures, as you know, with King Mountain, it's a 50-50 joint venture ownership. And so we have a strong pipeline there, and then we have the natural generation facility. So today we have the four operating sites, including the expansion site plus the King Mountain joint venture that are active Bitcoin mining facilities, in addition to our pipeline.

Got it. And switching over to the HPC business. If you could just share what your utilization rate of your deployed GPUs is right now? And I think you mentioned previously that you're expecting a $20 million annual run rate revenue from the business; does that assume 100% utilization?

That does not assume a 100% utilization, that's based on the demand rates we're seeing from our partner and the average utilization that they've had across their fleets. So we'll share more of those numbers as we go into the coming quarters, and their online and operational on the financials start hitting our reporting metrics.

Got it. And if I could just squeeze one more in Asher, on the HPC side. So, you talked about the GPU-as-a-Service model which you currently have operating; as we look at future expansion opportunities, I know you talked about evaluating all different types of opportunities, whether it be co-location or somewhat similar to what you're doing now with owning the GPUs. I guess, what does that look like in terms of your go-to-market strategy? Are you leaning to one side versus another based on some of the market dynamics today?

We see it as two separate opportunities. The GPU-as-a-Service model, we have a full team that's running that business unit today. They are both, looking at expansions with customers, with the supply chain, with Nvidia, and also from a financing perspective, on a project level, equity and debt perspective. And so that's well underway; the team is building out, and they're growing. As the parent level, we're spending a lot of time working on these -- this demand pool that we see that a lot of the industry in the market is talking about which is these large scale customers with multi 100 megawatt demand for contiguous clusters [ph]. And we think a lot of our sites fit within those parameters of what they're looking for from a power availability perspective, it hits the fiber requirements that they have, and we have the ability to give them the land requirements that they need as well. And so we're in active discussion there, and that looks more like a co-location deal where we’d have a customer and a tenant lease, and we'd be providing them a data center built to suit for that customer on a long-term agreement.

Got it. I appreciate all the color and thanks for taking my questions.

Thank you. I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.