Earnings Call Transcript - MIGI Q1 2022

Operator, Operator

Greetings and welcome to Mawson Infrastructure Group, Inc. First Quarter 2022 Earnings Results Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host Nick Hughes-Jones, Chief Commercial Officer. Please go ahead, sir.

Nick Hughes-Jones, Chief Commercial Officer

Hello everybody and thank you for taking the time to hear about Mawson Infrastructure Group. My name is Nick Hughes-Jones, Chief Commercial Officer of Mawson. Joining me today is James Manning, our Chief Executive Officer and Founder, and Hetal Majithia, our Chief Financial Officer. We look forward to taking you through the investor presentation today, but first, I need to read you a short disclaimer around forward-looking statements. Please be aware today, we will be making forward-looking statements. These statements are based on current expectations and assumptions and are subject to risks that could cause actual results to differ materially from those expected. Please be sure to refer to the cautionary text regarding forward-looking statements contained in this presentation on Slide 2. Okay, Mawson at a glance. As of last Friday night's close, Mawson has a market cap of approximately $180 million, is listed on NASDAQ under the code MIGI, M-I-G-I, and has five Bitcoin mining sites across the USA and Australia. Now for those of you that aren’t aware of what an exahash is, abbreviated as EH in these slides, crudely speaking, an exahash is a measure of computing power. The more exahash you have online, the more Bitcoins you produce on a daily basis. As of the end of May 2022, we expect to have Bitcoin sales money to be operating at approximately 1.8 exahash, producing approximately 8 Bitcoin per day. Based on current network difficulty and a Bitcoin price of $30,000, this equates to around $88 million in annualized revenue. Today, we are pleased to announce a new 120 megawatt Bitcoin mining facility in Texas in collaboration with JAI Energy and Texas Pacific Land Corporation, one of the largest landowners in Texas with over 880,000 acres in their land portfolio and listed on the New York Stock Exchange under the ticker TPL. As a result of this new Texas facility, we're today upgrading our energy infrastructure capacity available for Bitcoin mining by 35%, from 350 megawatts to 470 megawatts. This is a significant strategic advantage for Mawson given the very high levels of demand for energy infrastructure in the Bitcoin mining industry today. We are also reiterating our targets of four exahash online by Q3 2022 and 5.5 exahash by early Q1 2023. This would see us producing 18 Bitcoin per day and 24.5 Bitcoin per day respectively based on current network difficulty. Mawson is also proudly a net zero carbon miner and hosting co-location provider. Something I'll touch on later in the presentation. With that I'll hand over to CEO and Founder James Manning.

James Manning, CEO

Thanks, Nick. Q1 was an exciting period for the group. Our hosting co-location business expanded materially. As we signed major hosting customers, Celsius Mining and Foundry Digital, generating new revenue streams for Mawson, which is all paid in US dollars. Our team has expanded with the Mawson family now over 50 hardworking individuals based in the USA. We continued the rapid scale-up of our self-mining operations. Turning to the Q1 results; quarter one was a solid quarter financially and operationally for our business. Mawson generated $19.4 million in revenue, up 178% compared to Q1 2021. Revenue was flat in Q1 2022 versus Q4 2021, a good result in an environment where Bitcoin price fell from a high of 69,000 in November to a low of 33,000 in January. This is a result of the substantial increase in our self-mining operations between Q4 '21 and Q1 2022, and we've seen this rapid scale-up continue into Q2. Gross profit came in at $11 million, up 138% compared to Q1 2021, and non-GAAP EBITDA came in at $4.5 million, up 160% versus Q1 2021. Some of our operational highlights in Q1 include completing the build-out of our 80 megawatt facility in Georgia and in very exciting news, we gained approval to expand this facility nearly threefold to 230 megawatts, which is capable of operating at 7.5 exahash. We expect this expansion to come online in Q3 2023. We signed our largest hosting co-location customers today, Celsius Mining for 100 megawatts and Foundry Digital for 12 megawatts, generating significant additional revenues for Mawson in addition to our Bitcoin self-mining revenue. In Q1, we upgraded our self-mining exahash targets to four exahash in Q3 2022 and 5.5 exahash in early Q1 2023. We secured a $20 million debt facility from Celsius Network and exciting news today, we've announced a new Bitcoin mining facility in Texas in collaboration with JAI Energy and Texas Pacific Land Corporation, one of the largest landowners in Texas, which is listed on the New York Stock Exchange under TPL. With that I'll hand over to our CFO, Hetal Majithia, to run through the financials in a little more detail.

Hetal Majithia, CFO

Thanks, James. Okay, turn to the balance sheet. Cash and cash equivalents in quarter one 2022 rose to $5.8 million from $5.5 million in quarter four 2021. In addition to this modest rising cash, we also paid down approximately $3.2 million of our Foundry Digital debt facility over the course of quarter one and have continued to pay this down in quarter two. We currently expect this debt facility to be paid off in quarter three 2022. Property and equipment rose to $102.5 million in quarter one, up from $76.9 million in quarter four, reflecting the ongoing expansion of our Bitcoin mining fleet and energy infrastructure deployment across our Australian and US facilities. Equipment deposits declined to $41.7 million in quarter one, down from $51.4 million in quarter four as Bitcoin mining continued to be delivered to our facilities and no major Bitcoin mining purchases were made in quarter one. Bitcoin mining hardware deliveries related to these deposits have been delivered consistently throughout quarter one and have continued on into quarter two. Our total assets grew to $166 million in quarter one, up from $145.3 million at the end of quarter four. Total liabilities rose to $62.1 million in quarter one from $30.7 million in quarter four, which was predominantly the result of a new $20 million debt facility secured with Celsius Network LLC. We expect to continue to use debt facilities and equipment finance facilities where appropriate. This is a very capital-efficient way of expanding our Bitcoin mining fleet and expanding our infrastructure in turn increasing the number of self-mined Bitcoin we produce daily, as well as increasing our ability to bring on additional hosting colocation customers. With that, I'll hand it back to CEO, James Manning.

James Manning, CEO

Thanks, Hetal. As you can see, between May 2022 and Q3 of 2022, Mawson will deliver a substantial increase in our Bitcoin self-mining operational footprint, moving from 1.8 exahash to four exahash, a 122% increase in our self-mining hash rate in just over six months. As Slide Six demonstrates, this would increase daily self-mined Bitcoin production from approximately eight Bitcoin per day at the end of May to approximately 18 Bitcoin per day by Q3 2022. It's important to note that the revenue numbers on this slide are based on current network difficulty, Bitcoin at $40,000, and the current expectations around our mining and energy infrastructure deployment. What's genuinely exciting is as we move to early Q1 2023, we expect to hit our 5.5 exahash target producing 24.5 self-mined Bitcoin per day, and generating $357 million in annualized revenue. Turning to Slide Seven, pleasingly our hosting colocation business has continued its rapid expansion. At Mawson, we have energy infrastructure capacity surplus to our own self-mining requirements. We're able to use these surplus infrastructure to generate additional revenue streams. We are paid in US dollars for providing hosting services to third-party customers. The revenue and the cash flows from this business are highly predictable and the vast majority of our customers are very large businesses. We now have 116 megawatts of hosting colocation customer agreements in place, making us one of the largest Nasdaq-listed hosting colocation providers and we expect to expand this further to 140 megawatts by the end of 2022 and then up to 220 megawatts in 2023. As of the end of May, we expect our hosting colocation business to be operating at approximately 52 megawatts, nearly halfway to our fully contracted deployment of 116 megawatts. We will continue to report our hosting revenues at the end of each quarter, enabling investors to work out just how positive this additional revenue stream is for Mawson Infrastructure Group. Turning back to our own self-mining business at Mawson, we have a very disciplined approach to infrastructure to ensure that we can deliver our expansion on time and on budget. Slide Eight shows in more granular detail our expected deployment out to Q3 2022, and then on to early 2023. Reaching these targets would make us one of the largest Bitcoin self-mining businesses on the NASDAQ. Furthermore, having focused on securing our energy infrastructure early, this has ensured that we are now among the lowest cost producers of Bitcoin, as well as one of the lowest cost deployers of infrastructure compared to our NASDAQ listed peers. Mawson's continuous focus on substantial operational expansion lies ahead of us in both Bitcoin self-mining and hosting co-location businesses. Turning to Slide Nine at Mawson, we spend considerable time and resources focusing on our energy and energy infrastructure, in an industry where energy infrastructure is in very high demand, which puts us at a strategic advantage. Central to our infrastructure-first thesis, we focus on securing long-term high-quality and low-cost energy infrastructure, evidenced by the seven- to 26-year terms we have across our global facilities, with options to buy the facilities in some locations. Pleasingly today, we have added Texas to our portfolio of Bitcoin mining facilities, providing us with not only additional megawatts in a very tight market but also further geographic diversification of our facilities. Our current available energy infrastructure capacity sits at 470 megawatts with a pipeline over 1,000 megawatts providing Mawson with one of the largest genuine energy pipelines in the industry. We have demonstrated today with deciding on our Texas facility our ability to convert pipeline into reality. It's no accident that we're at the front of the pack in energy infrastructure given the depth and experience of our board management inside of Mawson. At Mawson, we understand the importance of building a solid infrastructure platform upon which to expand our Bitcoin self-mining and hosting co-location business. Now securing our infrastructure pipeline is about more than just locking up land and energy. In Slide 10, we illustrate how we are focused on looking at ancillary infrastructure required to stand up large scale, low-cost, and highly efficient data centers in the Bitcoin mining industry. We are in a very strong position to not only deliver on our guidance, but critically, we have the underlying infrastructure in place to take us to 5.5 exahash in self-mining and 116 megawatts of hosting co-location and beyond. As of March 31, 2022, we have agreements in place for over 45,000 asset Bitcoin miners. We purchased over 250 modular data center units, which could accommodate up to 20 exahash of Bitcoin mining operations, and we purchased 160 low-side electrical transformers, which could accommodate up to 13 exahash of asset Bitcoin mining operations. As you can see, we have the infrastructure in place to scale well beyond 5.5 exahash of self-mining and 116 megawatts or 3.8 exahash of hosting colocation. With that, I'll hand back to Nick to take you through our current mining facility profile, as well as our ESG and community engagement priorities. Thanks, Nick.

Nick Hughes-Jones, Chief Commercial Officer

Thank you, James. Expanding on our established energy pipeline on Slide Nine, our current exahash capacity plus potential brownfield expansion opportunities at current sites sees us with the opportunity to be producing at approximately 21.8 exahash over time, split appropriately between self-mining and hosting colocation operations. And of course, the speed in which we expand beyond our guidance will be subject to market conditions, as always the best idea wins. Critically, Mawson is committed to being a long-term sustainable Bitcoin model. We target carbon-free and renewable energy at our sites, with our current mix at over 75% carbon-free energy. In Pennsylvania, we are using 100% nuclear energy and we source our nuclear power from Energy Harbor, which owns three local nuclear power plants in Ohio and Pennsylvania. The Beaver Valley nuclear power plant is just a mile from our Midland Pennsylvania facility. In Georgia, where we've recently been approved to expand our facility threefold to 230 megawatts, the vast bulk of our energy comes from nuclear and hydro, and importantly, there are two brand new nuclear reactors coming online in the next 12 months, Vogtle 3 and Vogtle 4, two 1100 megawatt Westinghouse pressure water reactors. This is one of the major reasons we selected this site, and we expect a lot of carbon footprint reduction and potentially lower energy prices as these new reactors come online. We are excited today to include Texas in our investor presentation, where we have secured a site that is capable of operating at up to four exahash and importantly, at this facility, we have collaborated with JAI Energy and Texas Pacific Land Corporation, one of the largest landowners in Texas with 880,000 acres across their land portfolio, providing us with substantial opportunity to expand into the state of Texas over time. Our third operational facility is located in Australia, where our energy is 100% renewable. At this site, we are co-located next to the power generation asset. This renewable energy power plant is owned by Quinbrook Infrastructure Partners, a multi-billion dollar global green energy infrastructure fund who are developing approximately 17 gigawatts of green energy assets across their global portfolio. Turning to Slide 12, our strict selection process ensures we are targeting long life, low cost, and high-quality sites. We have long-term leases on all of our sites, 26 years in Sandersville, Georgia; 15 years in Midland, Pennsylvania; 15 years in Sharon, Pennsylvania; 15 years in Texas; and 7 years in Australia. We use our own internally-designed modular data centers, enabling us to be one of the lowest cost operators in the industry and we look at all of our sites through our net zero carbon 2030 and ESG strategy lens, ensuring our energy mix is low carbon. At Mawson, ESG is a core priority for us. We have already touched briefly on our focus on carbon-free energy. In addition to this, we offset any residual carbon footprint using carbon offset credits. In 2020, we offset over 22,000 tons of carbon, supporting wind and native biodiversity projects in the process. We are now in the process of assessing and offsetting our 2021 carbon footprint. By the end of 2022, we will have planted over 100,000 new trees across the US and Australia, with 75,000 trees planted in 2022 alone. That's approximately 1.5 new trees planted every time a block is created on the Bitcoin blockchain. Mawson is also a very active member of the local communities in which we operate. We sponsor both the local school football teams in Sandersville, Georgia, and have academic scholarship programs in place in the local county. In late 2021, we sponsored Buhl Park in Midland, Pennsylvania, as well as supporting the local community college of Beaver County, the Lincoln Park Performing Arts Center, Beaver Falls Park, and the Heritage Valley Health System. Importantly, in Pennsylvania, we recently announced a partnership with Voltus, whereby Mawson has committed to deliver up to 100 megawatts back into the local electricity grid in times of need, further supporting the local communities in which we operate. In Australia, we recently became the major sponsor of the Far North Coast men's, women's, and juniors rugby union teams. Slide 14 touches on our board and management team. The Mawson family has now expanded to over 50 hardworking individuals with the vast bulk of our team residing in the United States. Our US team is led by our Chief Operating Officer, Liam Wilson, with Chief Development Officer, Craig Hibbard overseeing the development of our portfolio facilities in the United States. You've already heard today from CFO, Hetal Majithia, the other high quality components of our engine room comprise Tom Hughes, our General Counsel, and Heath Donald, our Chief Marketing Officer. Our board is chaired by Greg Martin, who was the CEO of Australia's largest energy business, AGL Energy for five years. Greg was at AGL for a total of 25 years. Michael Hughes, another of our independent non-executive directors, has extensive experience across capital markets, governance, and audit, and Yosi has substantial experience with NASDAQ listed companies. With that, I'll hand it back to James to bring the presentation home.

James Manning, CEO

Thanks, Nick. Slide 15 spells out some of the achievements we've had recently across our innovation portfolio. As we alluded to earlier, in March, we announced two large hosting co-location customers, a 100 megawatt agreement with Celsius Mining and a 12 megawatt agreement with Foundry Digital. These two deals illustrate the tightness in the industry around energy infrastructure at present and how well-placed we are to capitalize on this high demand. Secondly, following on from the listing of Cosmos Asset Management's first product in the Australian market in late '21, the Cosmos Global Miners ETF, Cosmos recently announced a partnership with Focus Investments, a multi-billion dollar asset manager who listed the world's first spot Bitcoin ETF 12 months ago. As a reminder, Cosmos Asset Management's Adam Wilson remains for however, Mawson remains Cosmos's largest shareholder. In very exciting news last week, the Cosmos Purpose Bitcoin Access ETF launched in the Australian market, making access to Bitcoin significantly easier for all Australians. For our second last slide I wanted to highlight just how aligned Mawson's board and senior management is with all our fellow shareholders. Board management currently owns approximately 24% of Mawson. So we all have a huge amount of skin in the game. This is unique amongst our NASDAQ peers and ensures we are extremely focused on shareholder returns. Lastly, for me, and before we move on to questions, in summary, why invest in Mawson Infrastructure Group? Well, over the next nine months, we expect to grow our self-mining business threefold and continue to expand our hosting co-location business. We are an infrastructure-first business with a significant amount of energy infrastructure in place and strategic advantages in the current environment. We are one of the most sustainable Bitcoin miners on the NASDAQ, with over 75% of our energy coming from sustainable sources, predominantly nuclear energy. We have strategic relationships with Quinbrook Infrastructure Partners, Purpose Investments, Celsius Mining, Canan Foundry Digital, JAI Energy, and now Texas Pacific Land Corporation. We're one of the most efficient and lowest cost operators in the industry, and we have very high insider ownership at 24%, meaning we are incredibly focused on shareholder returns. With the presentation now complete, we wanted to take this opportunity to thank all of our employees and shareholders for their ongoing support in 2022. I'll now hand the floor back for any questions.

Operator, Operator

We have our first question from the line Kevin Dede with H.C. Wainwright. Please go ahead.

Unidentified Analyst, Analyst

Hi James, it's Nick. Thank you very much for taking my questions. Thanks for hosting the call. James, apologies for this first one. I understand the target for exahash in September and five and a half sometime early next year, but I lost you. What was the hash rate at the end of the March quarter? Was that the 1.8 number or is the 1.8 number the current number?

James Manning, CEO

1.8 is our current number; that's our May number.

Unidentified Analyst, Analyst

Okay. That's May. Okay. What was March end?

James Manning, CEO

Nick? Have you got that by hand?

Nick Hughes-Jones, Chief Commercial Officer

Hey Kev. How you doing?

Unidentified Analyst, Analyst

Great. Thanks, Nick. How are you?

Nick Hughes-Jones, Chief Commercial Officer

Full speed ahead. So the end of March self-mining exahash number; sorry about that. Pardon me, average hash rate for March was 1.2 exahash. The end of month hash rate was 1.35 exahash. And then as James has alluded to, we'll be at 1.8 exahash on the self-mining at the end of May.

Unidentified Analyst, Analyst

Okay. Can we talk a little bit about the Texas location? What's the climate like? What sort of work do you have to do with ERCOT or are you behind the meter? What condition is the site in? Just some background there?

Nick Hughes-Jones, Chief Commercial Officer

Sure. I'll keep it pretty high level, Kevin, but one of the things that really attracted us to this opportunity was that the substations were in place. So it's actually a series of smaller sites all within close proximity to each other, and so no single site is greater than 30 megawatts, but not less than 20 megawatts. So it's a series of sites all within sort of 5 to 10 minutes of each other that we'll build out. The upside of that is, as you're no doubt aware in Texas, they've changed the rules about bringing large, low generation on, and we're sort of under that threshold as well with these sites and these scales. So we'll be able to turn on each site pretty quickly. Substations are in place and ready to be energized. So it's just low-side transformers and then, pragmatically, we believe we've got the modular container solution that'll work in that climate based on the work we've done.

Unidentified Analyst, Analyst

Okay, listen, I know you have first-hand experience with immersion, right? That you're thinking that's not going to be a requirement here.

James Manning, CEO

Look, we're not going to rule it out, Kevin. We might put some in and it's a great spot to do some testing on immersion or scale up one of our plants. But the economics, the economics of immersion are getting there. Historically, we've not really wanted to, but they're starting to look attractive. In the short term, we would definitely be pursuing the ERCOT at this point.

Unidentified Analyst, Analyst

Okay. The power agreement is through JAI and then to ERCOT or how does that work?

James Manning, CEO

No, we have a separate power agreement and I can't disclose the terms of the power purchase agreement or what we are doing there just yet, but Jai and I facilitated the transaction with the land owner in Texas.

Unidentified Analyst, Analyst

I see. Okay. Just looking at the network overall, the Mawson network overall, where is your average cost per power and how is that going to change as more Georgia comes online and as more Pennsylvania comes online?

James Manning, CEO

So our Pennsylvania power is partly hedged already and some of that will flow through — some of that flows through to the end customer where it's in hosting. So we're on like a cost-plus type arrangement for part of that power. Some of that's hedged, some of that is floating. So we'll see some volatility and I guess some of the hosting revenue attached to that as well, as it'll flex with the power rates. We are looking to lock in and hedge out as much of the power long term as we can, but over the last couple of months, you've obviously seen a lot of volatility in energy markets. So we're taking a cautious approach to locking anything in too quickly now because as you look further out, the prices are looking cheaper further out. So, we're just trying to weigh up what we hedge and what we don't hedge. Obviously, some of the Texas pricing is more attractive at the moment than we've got, and some of that existing Pennsylvania contract's really attractive as well.

Unidentified Analyst, Analyst

Can you give us sort of a ballpark on where the overall Mawson cost per kilowatt hour is?

James Manning, CEO

I haven't got a weighted average one at the moment, but I'm happy to come back to you separately on that, Kevin.

Unidentified Analyst, Analyst

Okay. Fair enough. Thank you, James. Now, how about the timeline on your hosting customer's deployment?

James Manning, CEO

Yeah, so as we mentioned, we're on track to have about 50 to 60 megawatts deployed in Pennsylvania at the end of the month and we're really powering all along there. So we're currently deploying about four containers per week, four to five containers a week. So between eight and 12 megawatts a week are going online in Pennsylvania at the moment. The team is working really hard to get that deployed, and I think we're pretty comfortable with that deployment rate at the moment. So we've got the ability to flex that up a little bit more, but I think we'll get up to about six containers a week, and that's 12 to 15 megawatts a week, but we can deploy at that rate.

Unidentified Analyst, Analyst

Okay. So all the hosting will be at your two Pennsylvania sites?

James Manning, CEO

Yes, at this stage.

Unidentified Analyst, Analyst

Okay. Then just to touch on the increase in facility size in Sandersville. Sure. Having been there, with Liam's direction, I understand you're going to clear forest, I think, if I understand it correctly, and I'm just, I guess you mentioned that you expect deployment there to begin sort of the tail end of next year. Is that, did I hear that all correctly?

James Manning, CEO

Yeah, we'll be looking to start building that facility; the expansion of that facility next year, starting probably Q1.

Unidentified Analyst, Analyst

Okay. Can we talk a little bit about your philosophy on holding and spending and capital sources and what you think you're going to need to build that and Texas out?

James Manning, CEO

Sure. So we currently, I think we're one of the lowest-cost infrastructure players in the space at the moment. And I think that's probably been one of our key advantages in deploying what we've done to date. So, we're going to continue to be focused on cost and getting a very efficient, low-cost operation and continue to build that out. As far as capital requirements for building out additional sites, we've made it very public and we are very clear that we're looking to do a mix of both for our hosting clients and self-mining. The self-mining we are looking to fund organically through cash flow, as well as short-term facilities. We've typically done a 12-month facility on equipment and amortized those over 12 months. Where we buy asset miners and so forth, that's the way we approach this, and we would cash flow the infrastructure as we went. Where we're looking at taking on larger hosting customers like we did with Celsius, given the tightness in the hosting market at the moment, we'd be looking at those hosting customers or to other debt providers to lock in some facilities around that infrastructure build-out for that customer. So we can make a very clear economic case about not only bringing on that infrastructure, but the return on that customer over the period and if that's the best use of our capital.

Nick Hughes-Jones, Chief Commercial Officer

And Kevin, as you're aware, we're also selling Bitcoin daily, which generates cash flow for us.

Unidentified Analyst, Analyst

We are. Right. Yeah. Thank you for reminding me. I appreciate that, Nick. Okay. Let me hop back in the queue. Thank you for entertaining my questions.

Operator, Operator

We've got a bunch of questions that have come through on email. I might read those out if you're happy with that. Yes, sir. Please go ahead.

Nick Hughes-Jones, Chief Commercial Officer

Okay. So Matt asked what have Bitcoin mining hardware prices done recently with the market sell-off? I might take that one James and Hetal. So, mining hardware prices, happily for us, have come right back. So, if you're looking at a what's miner, M30 and 30S, that was $80 or $90 a terahash at the beginning of the year. We're seeing prices around the sort of $50, $60 a terahash mark. So hardware prices tend to have a fairly high correlation with the Bitcoin price. So when the market's sold off, it made hardware much more attractive for us.

James Manning, CEO

Sure. So far we haven't seen any impact on deliveries. All our freight and everything's been working fairly well. We always assumed there was going to be a delay in some extended shipping times, and we always modeled that in. We are seeing freight — air freight is difficult, and it's hard to get things up in the air at the moment out of China. The last month's been particularly difficult, but we haven't seen any material slippages and definitely no slippages relative to our current deployment projections.

Nick Hughes-Jones, Chief Commercial Officer

I think the other important point there is we've only got a couple more shipments left of mining hardware coming out of China, and then we'll be looking at spot orders here in the US, and hardware prices have come right back. That's the gear that's landed in the US, so it's obviously a much better outcome because you don't have any of the supply chain issues you're seeing globally at the moment. Okay, next question. Where do you see the global hash rate going over the next 12 months?

James Manning, CEO

So I think we sort of expected or guesstimated to be around 300 exahash by the end of this year. That's looking a little bit less likely at the moment because you've seen, obviously it's at the margin harder to mine Bitcoin in Russia. You would imagine likewise Ukraine, likewise Kazakhstan. I think given energy prices in Europe, it's probably harder or less profitable to mine Bitcoin in Europe. And then you've seen from a bunch of other US-based miners that they have a lot of Bitcoin miners sitting in boxes at present. So it's very difficult to get energy and energy infrastructure online in the US. I think that global hash rate has probably got some downside to it versus our sort of expectations of a couple of quarters ago, which is obviously great for installed miners that are adding hash rapidly like we are.

Nick Hughes-Jones, Chief Commercial Officer

Next question. Why do you sell Bitcoin instead of HODL?

James Manning, CEO

I think we sort of touched on that just around generating cash flow to fund our operations and our CapEx.

Unidentified Analyst, Analyst

Last one here is what will your split on self-mining hosting be going forward, given you now have such a large energy and infrastructure pipeline? James, do you want to take that last one?

James Manning, CEO

Sure. I think we've always sort of said that we'd explore up to a 50-50 hosting and self-mining mix. As our portfolio expands, we'll consider that mix at the moment. We're prioritizing obviously the highest margin and the best use cases for us, which is self-mining. However, we're conscious we'd like to continue to partner and build out with the right partners that are in the hosting model. While I don't want to put a firm percentage on it, we are really looking at the infrastructure and the counterpart on a case-by-case basis, especially given the recent volatility in the market. We really want to make sure we've got really strong hosting customers where we do take hosting customers on, and it makes sense from an infrastructure deployment perspective that that's the best use of capital for the business.

Nick Hughes-Jones, Chief Commercial Officer

Okay. Operator, that's all the questions we have. I might pass it back onto you to wrap up.

James Manning, CEO

Great. Well, I'd just like to say on behalf of the entire Mawson team to all our shareholders and anyone else that is on the call, whether it's employees or the board, if you're on the call, it's been a great start to 2022. We've got a lot to deliver and we're really focused on delivering that this year. We hope you are all along for the ride, and we're looking forward to delivering on what we promised moving forward for the latter half of the year. Thank you.

Operator, Operator

Thank you very much, sir. Ladies and gentlemen, this concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.