HIVE Digital Technologies Ltd. Q4 FY2025 Earnings Call

Hello, everyone. Welcome to today's webcast on HIVE Digital Technologies financial results for the quarter and year ended March 31, 2025. My name is Nathan Fast, Director of Marketing and Branding at HIVE, and I'll be your moderator for today's call. Before we get started, on Slide 2, I would like to briefly note the disclosures for today's presentation. Except for statements of historical fact, this presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as expects, believes and similar expressions identify these statements. Actual results could differ materially, and we disclaim any obligation to update them, except as required by law. For a full discussion of risk factors, please refer to our most recent SEC filings at www.sec.gov. In addition to discussing results that are calculated in accordance with GAAP, we will also reference certain non-GAAP financial measures, including adjusted EBITDA, adjusted net income and free cash flow. Management uses these metrics to evaluate operating performance and believes they provide investors with additional insight, and they are presented for supplemental purposes only and should not be considered in isolation from GAAP results. Reconciliations to the nearest GAAP measures are included in the appendix to this presentation and in the press release and Form 8-K furnished to the SEC. On the next slide, I'm pleased to introduce today's presenters: Frank Holmes, Executive Chairman; Aydin Kilic, President and CEO; and Darcy Daubaras, Chief Financial Officer. I would now like to hand the presentation over to Mr. Frank Holmes for a macro recap of the quarter. Frank?

Thank you, Nathan. Let's start with a macro overview, highlighting this transformative year, which is the most remarkable in HIVE's history. When HIVE first went public, it was the inaugural crypto mining company, and it's impressive to see how well the team is collaborating. I want to explain why this year is so transformative for HIVE. The next visual is crucial for investors; there's a saying in the Bitcoin community about buying the dip and holding on. As you can observe, HIVE's daily volatility exceeds that of Bitcoin, while MicroStrategy's volatility is even higher than Bitcoin's. This is significant because many attempt to trade like Bitcoin, but the ideal strategy might be to buy when it drops by 5%, contrary to common perception, especially within the Bitcoin community where this idea is frequently discussed online. I’ve mentioned that this is a transformative year, which requires strong leadership. HIVE has strengthened its senior leadership team, with Craig Tavares, who has extensive experience in Canada, playing a vital role in scaling our business as President and Chief Operating Officer. Over the past six months, our high-performance computing business using NVIDIA chips has seen its run rate double, and we expect it to double again. Recently, we announced a significant acquisition in Toronto, Canada's financial hub, which boasts excellent infrastructure and intellectual resources. Bringing on a key person from the University of Toronto for AI is a testament to what HIVE is accomplishing. We are also expanding in Paraguay, acquiring Bitfarms assets and other resources. Gabriel Lamas, an electrical engineer with substantial experience in high-voltage electricity, has joined the team and is leading our efforts in Paraguay. His expertise has already resulted in remarkable growth, surprising many who didn’t anticipate this rapid scaling. I’m excited to share this video showcasing our new assets that helped us surpass 11 exahash, a significant increase from less than 4 exahash a year ago. We are committed investors in Paraguay, and numerous positive advancements are occurring there. Another visual shows Aydin Kilic, our CEO, alongside Gabriel Lamas, who is instrumental to our operations. Another key player is Carlos, positioned between Aydin and Gabriel. We are enthusiastic about the direction of the business. As we methodically scale our hash rate, we're organizing to create beautiful campuses. We’ve also contributed to the local community, providing air conditioning to nearby schools and enhancing safety by lighting up downtown Valenzuela with 100 megawatts, which has been well-received by the mayor. HIVE's future hash rate growth is projected to double by Thanksgiving, from 11 exahash to 25, which we expect will lead to substantial margin expansion and a significant revenue increase, especially if Bitcoin reaches $100,000, potentially generating over $400 million on a run rate. Historical trends suggest that our margins will increase significantly. It's worthwhile to note Bitcoin's fluctuations; a year ago, it was $65,000, and now it's projected at $100,000, compared to $25,000 two years back. Our HPC business continues to expand rapidly. I'm currently at MIT in Boston with 100 CEOs from 50 countries for an AI Bootcamp discussing innovative business models. The growth we witnessed since OpenShot launched in November 2022 has been astonishing, growing to 1 million users and quickly climbing to 100 million. Now, it has a run rate of about 500 million users, with many on the $20 a month plan. OpenAI, similarly, has achieved a $10 billion annual run rate, forecasting a monthly revenue of $1 billion by December 2025. HIVE is positioned well for this substantial growth. This is indeed a transformative year for HIVE, as we're aiming for a fourfold increase in revenue to capture 3% of the Bitcoin network. We are expanding our HPC AI business through the acquisition of a 7.2-megawatt data center in Toronto, planning to upgrade it from its previous Bitcoin mining focus. Additionally, we’ve announced further purchases of clusters from NVIDIA. This transformative year has also seen us relocate our head office to Texas and transition from IFRS to U.S. GAAP accounting, which facilitates easier comparisons with other U.S. Bitcoin miners. Looking at our growth, we target reaching 25 exahash by November. The average valuation of our peers approximates $100 million per exahash, yielding a potential upside for HIVE of 7x, leading analysts to predict our stock price in the range of $7 to $10. As for our fiscal year ending March 31, Darcy and Aydin will provide more details in the upcoming quarter. However, I want to reiterate the significant transformation in our accounting practices. Last year, under GAAP, we reported around $115 million in revenue, with $10 million coming from high-performance computing using NVIDIA chips. That segment has now expanded to over $20 million, showing remarkable growth under Craig Tavares’ leadership. Our adjusted EBITDA stands at approximately $56 million, with a gross operating margin around $25 million. A notable non-cash item from changing accounting standards is depreciation, which remains high at $64 million. In contrast, stock-based compensation is relatively minimal, reported at $11 million. Additionally, quarterly unrealized losses and gains from revalued digital assets will arise from the mark-to-market approach, including a $5 million non-cash charge for currency fluctuations that have impacted us over the past three months. The changes in tariffs and shifts in the U.S. dollar have considerable effects that need to be reported. Nearby the well-known waterfall in the Western Hemisphere, the largest dam, a collaboration between Paraguay and Brazil, exemplifies how HIVE leverages green energy there. Enthusiasm for crypto education in Paraguay is growing, with conferences being organized. The President, involved with the Young Presidents' Organization, is hosting an event for 150 global CEOs to discuss investment prospects in Paraguay. Notably, Paraguay shares close ties with America; their President attended Columbia University and has worked with the World Bank, which enhances his understanding of global financial institutions. His effective leadership has improved the country’s currency ratings and financial stability. Our Bitcoin mining efforts are generating U.S. dollar income, which is critical since the local utility and energy companies are state-owned with stable fiscal policies. In Paris, I expressed that HIVE’s mission goes beyond chasing quarterly results; we are focused on building a long-term digital infrastructure and promoting decentralized freedom. Our aim in mining Bitcoin is not driven by current prices but rather by the upcoming paradigmatic shifts. Now, I'll hand over the presentation to our CEO, Aydin Kilic. Thank you.

Thank you, Frank, for that introduction. Let's summarize the year-to-date, along with some recent milestones. It's been a fantastic year for HIVE, highlighted by $56 million of adjusted EBITDA and a market cap of $350 million. We also hold over $60 million in Bitcoin, with a treasury of 610 Bitcoin and total revenue of $115 million. HIVE represents an appealing investment, particularly with robust growth drivers this year. Our revenue includes $105 million from Bitcoin mining and $10 million from HPC AI, and we achieved $20 million in annual recurring revenue in May. This growth will persist as we implement our HPC strategy, and our gross operating margin stands at $25 million. We navigated the halving successfully, making this a strong year for us. Our fiscal year begins on March 31, which means all of this reflects post-halving conditions. We currently hold 53% net cash and Bitcoin per share, trading at $1.75 today. We’ve achieved a 22% return on invested capital over the last 12 months, showcasing our adept handling of post-halving market conditions, which have been challenging. As the industry prepares for expansion, we anticipate an exceptional year for HIVE. So, how do we achieve these results? We focus on return on invested capital when deploying our capital and ensure stable growth during both down and up cycles. We’ve mined over 1,400 Bitcoin this fiscal year, reaching 11.5 exahash in June and consistently mining 5.5 Bitcoin per day since then, producing approximately $600,000 in daily revenue. This breaks down to $550,000 from Bitcoin and over $50,000 from HPC, leading to an annualized revenue of $200 million. Once we reach 25 exahash, we expect to represent around 3% of the global Bitcoin mining network. Our comprehensive HPC strategy involves constructing and running Tier 3 data centers alongside our GPU cloud, focusing on high-value contracts. We have over 5,000 GPUs operational in our GPU cloud and recently achieved the $20 million annual recurring revenue milestone. Next, let’s look at our Bitcoin mining setup: 440 megawatts of green energy across Sweden, Canada, and Paraguay. Our 5.5 Bitcoin daily production since hitting 11.5 exahash accounts for over 1% of the network today. We are on track to reach 25 exahash by this fall, aiming to achieve the multiple that some peers have received. For five consecutive weeks, we increased our hash rate from 6 to 11 exahash last month, which is unprecedented growth. We have also made a significant purchase with Bitmain at $14 per terahash for the S21+ Hydro miners, with additional air-cooled units coming online soon. Our target for sub-1-year ROI is based on a $55 hash price at a $0.05 cost, positioning us well for profitability, even being able to remain profitable at a $21 hash price. We have strategically allocated capital, maintaining a low general and administrative cost per Bitcoin mined, which is backed by our outstanding uptime. The following slide shows our Paraguay site, featuring 200 megawatts of capacity. The bottom right contains a substation image, while the top shows 10 air-cooled buildings that are set up for 100 megawatts of hydro miners. The first 100 megawatts are already operational, allowing us to hit 11.5 exahash ahead of schedule. The second portion of the hydro setup will also come online this summer. I was recently in Paraguay to monitor our progress, which was exciting; our first containers are currently being installed. The hydro mining containers, which will have both dry chillers and hydro configurations, are on-site, and we expect that hash rate to be operational next month. We also have an additional 300 megawatts in Valenzuela, where civil works are completed, and we are fully funded to achieve 25 exahash. All the ASICs needed to reach 18 exahash are financed, and we have weekly shipments arriving throughout the summer. I've highlighted that we are completely funded for this growth trajectory. I take pride in our team's execution on infrastructure. Now, let's discuss our allocation of 440 megawatts between Canada, Sweden, and Paraguay, particularly showcasing our Tier 3 footprint. Our GPU cloud operates in Stockholm and Montreal, with the 7.2-megawatt data center in Toronto being acquired. This facility includes a 5.5-megawatt IT load, based on a 1.3 power usage effectiveness ratio. This new addition will effectively triple our HPC footprint, and we have a binding purchase agreement to close on this quickly. We plan to upgrade the Toronto facility for liquid cooling to support next-generation GPU compute. As an NVIDIA NCP partner, we are excited about expanding our HPC operations, aiming to grow from $20 million to $100 million. More updates will follow later in the presentation. Our Bitcoin mining business has ramped access successfully, achieving 11.5 exahash in the first phase of air cooling. Currently, our global fleet efficiency stands at 20 joules per terahash. We expect ongoing improvements as we integrate hydro-powered S21+ miners from Bitmain, anticipating a drop to 18.4 joules per terahash by the end of summer and aiming for 17.5 joules per terahash efficiency this fall. This is a pivotal time for HIVE shareholders. I liken this situation to a hockey stick curve beginning to ramp up—our success was four years in the making. We have scoured the globe for affordable hydro energy, successfully establishing our operations in Paraguay and actively engaging with the local community. We are electrifying rural schools in Valenzuela, having completed the process for six of them; I have also met with the Chief Technology Officer of ANDE, Paraguay's national power provider, and I will be attending a YPO event hosted by the country’s President in September, enhancing our geopolitical connections. In terms of efficiency improvements, reaching 25 exahash would mean processing 12.5 Bitcoin daily at a global network hash rate of 900 exahash, against a backdrop of $126 trillion in network difficulty. At current Bitcoin prices, this results in daily revenues of $1.3 million, translating into over $400 million in annual revenue. The projected gross mining margin approaches over $250 million, given that the production cost per Bitcoin is around $42,000. Should Bitcoin reach projected highs of $150,000 later this year, we could see daily revenues near $2 million and almost $700 million in annualized revenue, with a gross mining margin nearing $500 million. We are fully funded for this expansion, targeting 25 exahash by fall, with 18 being operational this summer. With our current market cap of $350 million and $600 Bitcoin on our balance sheet, we also have plans to buy back 1,300 Bitcoin at $87,000. As our market cap, enterprise value, and free cash flow increase, we will lower our capital costs. We aim to utilize free cash flow to repurchase Bitcoin or leverage proceeds from our ATM efficiently. Our goal is to increase our holdings to over 2,000 Bitcoin by year-end, supported by reduced capital costs. HIVE is poised for significant growth in the sector this year. While some companies have achieved substantial growth rates of 50 exahash, they have since plateaued. In contrast, we have recorded a remarkable 2.2 times growth, starting the year with an impressive 4 times growth rate. Currently, we showcase the best growth profile in the entire industry. Notably, HIVE is trading at the most favorable multiple within the sector, executing around $10 an exahash based on our enterprise value. Comparatively, our peers are trading at multiples of $30, $40, or even over $50 per exahash. We have shifted our primary executive office to San Antonio, pursuing U.S. domicile with aspirations of achieving a $500 million market cap and eventually a billion-dollar valuation. Many buy-side funds adhere to market cap or liquidity criteria, and our stock proves very liquid, with over 10 million shares traded daily over a three-month average, peaking near 20 million shares on some days. I foresee 2025 being HIVE’s year as we transition to 25 exahash. Currently, we trade at an appealing multiple compared to our peers, with a market cap under $350 million and holding $65 million in Bitcoin, while also generating $20 million in annualized revenue from our HPC operations. Discipline in capital allocation is crucial for us. We focus on sourcing ASICs at the lowest costs and take advantage of spot buying for immediate delivery. Our sector-leading uptime and innovated ASIC life cycle management maximize free cash flow while maintaining the lowest G&A costs, resulting in best-in-class return on invested capital. Our annualized return on invested capital over the last year stands at a remarkable 22%, contrasting sharply with our competitors, many of which hover around 12%. We are committed to operating discipline, focusing on ROI in capital deployment. If we invest $100 million in ASICs, we aim for returns significantly exceeding that amount, or else we may prefer acquiring Bitcoin directly. Our model targets under a one-year ROI; for instance, Bitmain ASICs purchased at a $55 hash price yield an 11-month ROI. Operating these devices for three years allows for substantial free cash flow in years two and three, illustrating our operational model at HIVE. We strive to enhance shareholder value by leveraging free cash flow to grow without relying on dilutive financing, serving as a hedge against increased dilution in capital markets. Unlike many firms that buy machines right before their end of life to reflect high margins, we focus on true cash flow visibility. Our figures showcase this stark contrast: maximizing ROI on ASICs significantly benefits our financial results. We lead the sector by a significant margin. Our general and administrative expenses per Bitcoin mined are notably low relative to revenue. Low costs do not equate to compromised performance; we have the highest uptime for Bitcoin mined per exahash across the sector, as verified by independent analyses, including those from Anthony Power’s power mining evaluation. We've also announced our intention regarding the 7.2-megawatt data center in Toronto, which will feature 5.5 megawatts of liquid-cooled compute. We aim to begin the conversion process soon and expect closure on this facility very shortly. We are excited about the breakthroughs this will enable. Additionally, we continue to operate over 5,000 NVIDIA GPUs, having achieved the $20 million annual recurring revenue milestone, with a target of reaching $100 million ARR soon. If we populate the Toronto facility with H200s, we project an additional contribution of approximately $80 million to our revenue. This is an exhilarating moment for HIVE shareholders. Buzz, wholly owned by HIVE, intends to focus on high-performance computing by running Tier 3 data centers alongside our GPU cloud. Our growth pathway includes scaling our 4,200 NVIDIA A-Series GPUs and 344 H100s. We've made excellent progress toward achieving our $20 million ARR goal and are diligently working to reach $100 million ARR by 2026. Now, I'll turn it over to Darcy Daubaras, our long-standing CFO in the crypto mining sector.

Thank you, Aydin. Good morning, everyone, and thank you for joining us today. This reporting period marks a significant milestone for our company, transitioning our financial reporting framework from IFRS to U.S. GAAP. This change aligns with our strategic objectives, enhances comparability with U.S.-listed peers, and supports our growth ambitions in U.S. capital markets. As this is our first earnings release under U.S. GAAP, I want to emphasize that while the core fundamentals of our business remain unchanged, certain financial metrics and disclosures may look different due to accounting presentation differences. We remain committed to transparency and will continue to provide clear, consistent reporting as we move forward. As this is the first time reporting under U.S. GAAP for HIVE, I want to highlight three key U.S. GAAP adjustments seen in these newly presented statements compared to prior years, namely functional currency, digital assets, and leases. Regarding functional currency, HIVE has changed its functional currency from Canadian dollars to U.S. dollars for the parent company. This was primarily driven by a shift in financing activities to U.S. capital markets. This change aligns with U.S. GAAP and affects several areas, including classifications of warrants and convertible debt. The second adjustment relates to digital assets. Under U.S. GAAP, HIVE now records digital assets at fair value, recognizing gains and losses directly in profit or loss. This contrasts with IFRS, where only losses were recorded in profit or loss, while gains flowed through other comprehensive income unless reversed. This shift greatly improves market comparability between ourselves and peers. The third adjustment relates to leases; while they remain on the balance sheet under both standards, U.S. GAAP requires different income statement treatments, such as rent expenses for operating leases versus amortization and interest for financing leases. This is similar to IFRS’s treatment for finance leases. Fiscal 2025 has proven to be a transformational year for HIVE, having executed on a strategic plan to scale massively from 4.7 exahash at the end of March 31, 2024, to 6 exahash at the end of this year. We're currently at 11 exahash and aim for 15 by mid-2025 and 25 exahash by the end of the year. We will continue leveraging our green energy hydroelectricity with our expansion into Paraguay while growing Bitcoin production through upgrades and purchases of cutting-edge ASIC machines throughout the year alongside our exahash growth. We've also modernized our structure with our U.S. GAAP headquarters, U.S. GAAP reporting, and improved governance. Our high-performance computing diversification through Buzz’s HPC growth into sovereign AI and liquid-cooled GPU clusters marks an important high-margin digital infrastructure vertical, aligning with national and enterprise demand for secure, scalable compute. Collectively, these milestones signify our transformation from a modest digital mining firm to a globally scaled green-first Bitcoin infrastructure and high-performance computing leader. Let's walk through the results. We are providing certain non-GAAP measures in our presentation today. The company believes these measures, while not substituting performance measures prepared in accordance with U.S. GAAP, improves investors' ability to evaluate our underlying performance. These measures lack any standardized definitions under U.S. GAAP and may not be comparable to other issuers. Further details can be located in our management discussion and analysis for the three and twelve months ended March 31, 2025. As shown, HIVE ended the March 31 year with 165.6 million common shares, 3.3 million options, 7.1 million RSUs, and 3.2 million warrants outstanding. On to the next slide. For the fiscal year ending March 31, 2025, HIVE recorded $115.3 million in revenue and a $56.2 million profit measured in adjusted EBITDA, driven by a production of 1,414 Bitcoin equivalent. Moving on to the next slide, we take pride in maintaining a healthy balance sheet, as always. Our cash position was $23.4 million as of March 31, 2025, in addition to $181.1 million in digital currencies, primarily Bitcoin. This is down slightly from the prior period due to strategically using Bitcoin to fuel accelerated operation expansion in Paraguay. There was also $15.3 million in amounts receivable, an increase from the previous period. The total market value of our strategic investments remains strong at $24.1 million. We maintain a robust net cash position and healthy working capital to support operations and growth objectives, with a current ratio of 3.7, calculated as current assets divided by current liabilities. Let's shift our focus to our gross operating margin on a year-over-year basis, comparing this year’s annual results with last year. Our gross operating margin has decreased, in absolute terms, to $25.1 million for the most recent year from $37.5 million in the previous year's results. A significant factor to consider is the impact of the halving event that took place in Bitcoin in April 2024. This event reduced rewards earned by miners in the current year to half compared to the prior year. The gross mining margin is influenced by additional external factors such as the high mining difficulty currently experienced and a reduced amount of digital currency rewards received, now half of what it was a year ago, as well as market prices of digital currencies at the time of mining, which were higher than during the previous period. In this recently completed year, we reported a net loss of $0.02 per share compared to a net profit of $0.29 per share for the year ending March 31, 2024. Looking at our gross operating margin on a quarter-over-quarter basis, the Q4 results for the March 31, 2025, period compared to last year's numbers indicate a decrease to $8.8 million from $15.6 million in Q4 results from the prior year. The same key factor regarding the halving event impacted these results as well. In the recently completed quarter ending March 31, 2025, we are reporting a net loss of $0.34 per share compared to a net profit of $0.55 per share reported for the same Q4 period last year. Now let's take a look at our revenue year-over-year. We generated total revenue in fiscal 2025 of $115 million, compared to $114.5 million in the previous year. The strong and stable revenue compared to the fiscal 2024 year was aided by significantly higher average Bitcoin prices compared to last year. This is notwithstanding the reduction in Bitcoin mined resulting from the halving event in April 2024, coupled with substantial contributions from HIVE's performance computing revenue, which increased by close to 300% compared to last year. We have also succeeded in overcoming industry pressures from the continuing rise in Bitcoin difficulty hash rates experienced throughout the past year. As mentioned previously, our gross mining margin has decreased, in absolute terms, to $25.1 million or 22% in the most recent year, down from $37.5 million or 33% in the previous year. Next slide, let’s look at our quarter-over-quarter revenue: We generated total revenue in Q4 fiscal 2025 of $31.2 million versus $36.9 million from the previous year's fourth quarter. Revenue declined, which can primarily be attributed to higher average Bitcoin prices, now more than double compared to the quarter last year. However, this increase is offset by rises in Bitcoin difficulty hash rates and the impact of the halving event on current results. Our gross mining margin decreased to $8.8 million or 28% in the most recent quarter compared to $15.6 million or 42% in the previous year. Moving on to the next slide, we generated revenue of $31.2 million in this quarter, compared to $29.2 million in the previous quarter. The slight increase in revenue versus the prior quarter was driven by increases in Bitcoin pricing, leading to higher revenue from digital currency mining and enhanced outcomes from high-performance computing.

Are there any questions, guys?

Yes. It's Bill Papanastasiou from KBW. Can you hear me?

Yes. I got you loud and clear.

Congrats on the sequential margin expansion and strong execution at Paraguay. I was just hoping to get some more color on the recent data center acquisition. It seems like a nice bolt-on addition to the portfolio. Any chance you have a timeline for liquid cooling installation and when the site will ultimately come online?

Yes. So that site, 7.2 megawatts, would yield about 5.5 megawatts of compute, assuming 1.3 PUE, and something like a 9- to 12-month retrofit with liquid cooling to bring that compute online. It will effectively triple our HPC compute footprint. So that's the outlook for it; very exciting.

Awesome. I apologize if I missed this; I can't see the slide deck on my end. Was there any discussion regarding the type of hardware you are considering? I recall there may have been some mention of NVIDIA Blackwell in the past. Just curious how you weigh deploying latest versus next-generation equipment.

Yes, exactly. That’s a great question. It depends on what's available on the market at that point. Today, you can order B200, while there are talks of B300 being available in Q1 2026. It will be an economic analysis since the newest models typically fetch a premium, such as B200 being offered at over $5 an hour right now. The decision leans on whether we can get our hands on the latest model GPUs available. So we haven’t specified that as a function of training capacity—once we approach locking in the PO, we'll provide more specifics on the exact model GPUs we intend to operate.

You're making progress on Bitcoin mining gains, buying back ASH before the end of November, and now scaling to a $100 million annualized run rate on AI and HPC. Is there a particular revenue mix the team is aiming for? How could that differ going forward as you execute on both businesses and scale?

That's a good question. I wouldn't term it a revenue mix. We're putting Buzz forward as a pure-play HPC company, expecting 100% HPC AI revenue and HIVE to focus on Bitcoin mining data centers globally. We're aiming to unlock shareholder value within that structure. If we do achieve targets of $100 million on Buzz and roughly $400-plus million on HIVE, even conservatively, you'd still have an 80/20 mix based on those projections.

I appreciate all the color. Congrats on all the progress.

It's been an awesome year so far. I look forward to ongoing momentum.

Thanks for the questions, Bill. Our next question comes from Mike Colonnese from H.C. Wainwright. Mike?

Congrats on all the progress in Paraguay and the recent hash rate ramp; great to see. Following up on Bill's question regarding the 7.2-megawatt Tier 3 data center in Toronto, can you share the acquisition cost and any related costs for the full retrofit?

We haven’t publicly commented yet on that. We'll provide the details shortly, so stay tuned.

Got it. Fair enough. Regarding monetizing the 5.5 megawatts of critical IT load when fully operational, how should we consider customer demand? Are you pursuing more on-demand deals or contracted revenue streams? Trying to grasp the projected $80 million revenue stream once it's fully operational.

We currently have 5,000 GPUs, about 5,100 total, of which 4,300 stem from A-Series, 344 H100s, and 504 H200s—most being rented. Around 80% utilization involves some GPUs placed on long-term contracts. With our sovereign strategy growing, we're looking to embrace enterprises in Canada and work with the government and researchers to secure longer-term contracts. There's a considerable AI grant momentum in Canada right now. As we engage with those, we’re cycling through strong demand, corroborating how we crossed the $20 million threshold. Once we factor in 3,000 B300 clusters fitting the additional 5.5 megawatts IT load, we're confident about the ramp's integration, given that we are already leasing many GPUs.

That's helpful. Lastly, could you remind us of the cutoff point for repurchasing Bitcoin with Bitmain?

The deadline is by year-end, extending slightly beyond that. We haven't specified the vendor involved with the pledge, though.

This is Tom on for Brett. I just wanted to touch on the regulatory situation in Paraguay. I know as of June of last year, they established a tariff against crypto mining companies. Has this impacted you, and how do power costs at your Paraguay sites compare to elsewhere?

Things are in hold until 2027; we're actively evaluating the landscape and working closely with ANDE, the national power company. I met with their CTO two weeks ago, and I'm returning in September for a YPO event with the President, who is also a YPO member. Engaging with the government and utility companies presents a valuable educational experience. Although the June tariff citation remains in the landscape, the power pricing is still attractive compared to jurisdictions assessed. We anticipate that in the current quarter, when reported in roughly six weeks, we'll reveal how the gross mining margins from Paraguay appear as we deployed 5 exahash at the period-end in June.

That's helpful. Just another question about CapEx throughout fiscal 2026. As you think about ramping up to 25 exahash and potential expansion within the HIVE cloud business, how should we expect CapEx cadence throughout '26? How much will be allocated to the cloud vs. ramping to 25 exahash by Thanksgiving?

The 25 exahash target is fully funded. We possess 610 Bitcoin on the balance sheet, which is roughly a little over $60 million. We have effectively paid for ASICs arriving weekly that cover going up to 18 exahash. By the fall, we will make final deposits for equipment necessary to reach 25 exahash. Thus, all payouts occur relatively soon. Regarding the GPU business, we haven’t publicly shared the acquisition cost yet, however, we have ensured it is competitive, which is why we're excited about this acquisition of the Toronto data center. Generally, as a construction project unfolds, costs may be pre-purchased and spread out over a nine-month timeline.

Next, we'll take a question from Fedor from B. Riley. Fedor, the floor is yours.

Yes. Frank and the team. Congratulations on the progress you're making on both HPC and Bitcoin mining. I wanted to delve deeper into the Toronto HPC data center. Could you share your scaling roadmap for that facility and the growth expectations you foresee here? How do you think about financing that, specifically regarding preferred funding sources, whether equity or debt?

Yes. The HPC can be financed in several ways. For example, as you noted, there's an option for debt financing, which we've not utilized, but some have procured leasing arrangements with Dell's financial services allowing leasing of GPUs. Roughly speaking, GPUs are currently priced at about $30 million per megawatt for HPC; therefore, there are various methods companies adopt to finance their HPC capabilities. Regarding data center construction financing, we haven't disclosed the full acquisition budget yet, but we are optimistic about cost-effectiveness, which draws us to this acquisition. As for the capacity, we expect to handle a 1.3 PUE, alongside other specifics addressed earlier. We will share more detail on the scaling yield once the workload is operational.

Can you describe your customer profile? Are you primarily serving on-demand customers, or do you have a mix of large enterprise clients? What typical duration do you see for HPC agreements? Are most arrangements short-term/flexible, or are you locking in longer-term contracts for larger-scale commitments?

Yes. The customer mix varies. We aim to pursue long-term contracts primarily—this isn't solely with aggregators but rather engaging larger enterprises and research institutes via government strategies to retain sovereignty over data. Presently, a former Googler is training a model on a 6-month contract using our GPUs; we are looking to increasingly target longer-term commitments, particularly with established entities doing novel work in AI. It's crucial to ensure that users have a positive experience with the GPUs. Having a conducive working relationship with users is paramount for successful implementation. NVIDIA stresses the need for an enhanced user experience, which is what we focus on at HIVE.

Thank you, Aydin. Time for just a few more questions. Dylan from ROTH, if you would kindly unmute yourself and proceed.

Just to start on the Canadian data center, would there be any reason that those megawatts would come online in tiers, or do you expect to energize all 7.2/5.5 critical IT load at once?

The rollout largely hinges on the retrofit process, which I noted could stretch roughly across a timeline of 9 months. Significantly, the data center is operational as it stands today. However, bringing it to a liquid-cooled capacity involves deeper retrofitting.

Got it. Just as a follow-up, where do you stand with some of your existing sites? Are you still considering retrofitting any of those to HPC AI, or are they going to remain focused on Bitcoin mining for now?

Yes, our site in Sweden is a prime candidate for HPC conversion, particularly as it was built as a GPU data center. It has an excellent level of finish, so I'm optimistic about that further conversion, with updates to follow.

Thanks, Dylan. Our next question comes from Mike from Northland.

If you could provide us with details on the demand for that 5.5 megawatts. Is it almost fully spoken for already, or is sourcing demand still a concern?

We recently announced the data center, so we will provide updates as it transitions to the market. That means we currently manage about 5,100 GPUs of which 4,300 come from A-Series, 344 H100s, and 504 H200s—with approximately 80% of that utilized. We've actively maintained rental agreements with various aggregators and users, leading to strong renting dynamics across sectors. We've monitored demand and programmed it well.

Thank you, Aydin. This concludes our Q&A session and our Q4 and full year 2025 earnings call. Thank you, everyone, for joining us. We look forward to speaking to you again soon.