Hut 8 Corp. Q3 FY2025 Earnings Call

Thank you for being here. I would like to welcome everyone to the Hut 8 Third Quarter 2025 Earnings Conference Call. I will now hand the call over to Sue Ennis, Head of Investor Relations. Please go ahead.

Good morning, and welcome to Hut 8's Third Quarter 2025 Financial Results Conference Call. Joining us today are our CEO, Asher Genoot; and our CFO, Sean Glennan. Following the presentation, we will open the line for questions. This event is being recorded, and a transcript will be made available on our website. In addition to the press release issued earlier today, our full quarterly report on Form 10-Q is available at hut8.com, on our EDGAR profile at sec.gov and on our SEDAR+ profile at sedarplus.ca. Unless otherwise indicated, all figures discussed today are in U.S. dollars. Certain statements made during this call may constitute forward-looking statements within the meaning of applicable securities laws. These statements reflect current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. Certain key risks are detailed in our Form 10-K for the year ended December 31, 2024, and our other continuous disclosure documents. Except as required by law, we assume no obligation to update or revise any forward-looking statements. During the call, management may reference non-GAAP measures such as adjusted EBITDA. We believe these metrics alongside GAAP results provide valuable insight into our performance. Reconciliations of GAAP and non-GAAP results are included in the tables accompanying today's press release available on our website. With that, I'll turn the call over to our CEO, Asher Genoot.

Thank you, Sue, and good morning, everyone. Earlier this year, we introduced our 2025 strategy. At its foundation is our development flywheel, a framework designed to compound returns through four integrated stages of platform development: origination, investment, monetization, and optimization. This model defines how we scale across our power, digital infrastructure, and compute layers under a unified power-first architecture. The third quarter marked a clear inflection point in the velocity of that flywheel. That acceleration is evident not only in our financial results but also in the step change extension of our near-term growth runway. Together, these outcomes reflect the strength of a diversified platform operating as a single integrated engine. Let's begin with our results. I'll share the highlights now before turning it over to Sean for a detailed review later in the call. In the third quarter of 2025, we delivered revenue of $83.5 million, up 91% year-over-year. This increase was driven primarily by the expansion of Bitcoin mining revenue through American Bitcoin, the purpose-built Bitcoin accumulation vehicle we launched earlier this year. American Bitcoin has scaled rapidly since its debut on the NASDAQ, contributing to significant top-line growth in our Compute segment. Because American Bitcoin is a consolidated subsidiary, its revenue is reported entirely within our Compute segment. Meanwhile, the infrastructure and services it consumes from Hut 8 are treated as intercompany transactions and eliminated in consolidation despite representing real and recurring economic activity. In effect, what appears in compute today reflects only the surface layer of a robust commercial engine fueled by our power and digital infrastructure businesses. Importantly, our results reflect not only top-line growth but also early evidence of commercial and financial synergies across the platform. Net income was $50.6 million versus $0.9 million in the prior year period, and adjusted EBITDA was $109 million versus $5.6 million in the prior year period. These metrics reflect a $76.6 million gain on digital assets versus a $1.6 million loss on digital assets during the prior year period, both recorded in accordance with FASB's fair value accounting guidance. Beyond strong headline performance, the third quarter demonstrates the structural advantage we have unlocked by carving out the majority of our legacy Bitcoin mining business into a stand-alone entity. That separation has clarified our mandate and streamlined our capital allocation framework, enabling us to focus on scaling lower cost of capital businesses such as colocation. During the third quarter, that clarity drove tangible momentum at the foundation of our development flywheel for our power layer. From the outset, we recognized that large load technologies like Bitcoin mining and AI computing are, at their core, functions of how effectively energy can be harnessed, deployed, and monetized. That insight shaped how we built Hut 8. We engineered the business around power expertise and designed it to transcend any single application. Today, surging computational demand has transformed energy from a background input into a defining constraint to growth. For us, that constraint represents an advantage. Hut 8 was built from day one with a power-first, innovation-driven strategy. By integrating power, digital infrastructure, and compute assets at scale, we aim to address energy demand from the world's most transformative technologies for decades to come. Early last year, shortly after I became CEO, we began translating our Power First strategy into our external reporting. We introduced new performance metrics such as energy capacity under management and energy capacity under exclusivity, which reflect the utility-grade depth and rigor with which our power native team operated and scaled the business. At the time, our focus on energy was contrarian in a sector still oriented around exahash and other end application metrics. Since then, the exponential rise of AI and the broad adoption of energy-based performance metrics have validated our founding conviction that energy is not merely an input but a structural source of value creation and competitive advantage. This shift underscores a fundamental distinction in the role of power within our business. For many, power is a reporting overlay on a legacy model or a reactive pivot to capture new value. For us, it has always been the foundational driver of our growth, the lens through which we scale, deploy capital, and allocate resources. The development flywheel we introduced earlier this year codifies that foundation. It defines how we originate, invest in, monetize, and optimize critical infrastructure assets across four interconnected stages. By aligning these stages under a single power-first framework, we can systematically convert development opportunities into tangible value with increasing speed and capital efficiency. As the benefits of this framework have compounded across our organization, our flywheel has entered a new phase of scale and execution. In the third quarter, that momentum drove the launch of our largest expansion initiative to date. Spanning four U.S. locations with a combined 1,530 megawatts of utility capacity, this initiative has the potential to more than double the scale of our platform, diversify our presence across strategic energy markets, and position us to meet growing demand across energy-intensive applications. It underscores both the depth of our development pipeline and the scalability of our platform. In conjunction with the launch of this initiative and building on our early sector leadership in power-first growth and performance metrics, we refined our reporting framework to more precisely capture the maturity and velocity of our development flywheel. This refinement is formalized in a new stage of our development pipeline: energy capacity under development, which is positioned between energy capacity under exclusivity and energy capacity under management. Capacity under development bridges origination and monetization, providing greater visibility into late-stage projects that have advanced beyond exclusivity. It applies to sites where critical development work is underway, including the execution of land and power agreements, site design and infrastructure build-out, and engagement with prospective customers. Capacity advances from exclusivity to development, ultimately converting to energy capacity under management upon monetization. In the near term, our focus is on commercializing the four sites in our expansion portfolio, representing 1,530 megawatts of energy capacity under development. The sites range in scale from 50 megawatts to 1 gigawatt of utility capacity, each selected for near-term power access and the potential to support commercialization across a range of advanced technologies. Guided by our first principles approach to digital infrastructure, we continue to advance design and commercialization initiatives with prospective customers. Where appropriate, we will seek to incorporate next-generation architecture that enables rapid, capital-efficient deployment and the flexibility to support a range of customer requirements. Across our expansion portfolio and broader development pipeline, we continue to execute against a long-held ambition to build a platform that evolves alongside energy-intensive technologies for decades to come. From the world-shaping innovations of today to the nascent ideas of tomorrow and the breakthroughs yet to be achieved. Today, the conversation is rightly dominated by AI. The scale and intensity of AI compute demand is unlike anything the power sector has seen. But we believe this is only the first chapter of a much longer story. We believe the same power infrastructure that underpins AI and high-performance computing today will, over time, form the backbone for a broader class of next-generation technologies. While it is still early, we're beginning to see directional interest from adjacent sectors that recognize that large-scale power infrastructure will be foundational to what comes next. Our platform is designed for that future, and we are building it for now. As always, we will remain disciplined in how we structure and underwrite new opportunities, deploying capital only where we see a clear path to long-term value creation. We will not chase trends, and we'll continue to prioritize durable returns over short-term gain as we strive to build an enduring generational business at the intersection of energy and technology. With that, I'll turn it over to Sean.

Thanks, Asher. Before I review our third quarter 2025 results by segment, I want to briefly clarify our reporting structure, particularly as it relates to American Bitcoin. Because American Bitcoin is a consolidated subsidiary, revenue from its Bitcoin mining operations is reported within our Compute segment. However, revenue earned by Hut 8 through our managed services and ASIC colocation agreements with American Bitcoin within our Power and Digital Infrastructure segments, respectively, is eliminated in consolidation, as is revenue from our shared services agreement with American Bitcoin. With that context, let's turn to our results. We begin with Power, which consists of power generation and managed services. Segment revenue declined year-over-year from $26.2 million to $8.4 million, reflecting the full impact of the wind down of our managed services agreement with Ionic Digital in late 2024. The resulting $17.8 million reduction in managed services revenue was partially offset by a $1.9 million increase in power generation revenue, driven by elevated demand across our portfolio of four natural gas-fired power plants in Ontario. While these results capture the termination of our MSA with Ionic, they do not reflect the full earnings power of our Power segment. During the quarter, we expanded our managed services agreement with American Bitcoin to 325 megawatts of contracted capacity, the largest in our history. This milestone supports the broader structural shift we have executed this year from merchant exposure to long-term contracted revenue. At quarter end, more than 85% of our energy capacity under management is commercialized under executed agreements with terms of one year or longer, positioning our Power segment for greater earnings visibility and recurring returns. Segment cost of revenue rose from $5 million to $6.5 million, reflecting a $3.6 million increase in power generation cost of revenue due to higher output during the period. This was partially offset by a $2.1 million decrease in managed services cost of revenue following the termination of our MSA with Ionic. We turn next to digital infrastructure, which consists of ASIC colocation and CPU colocation. Segment revenue increased 31% year-over-year to $5.1 million, driven primarily by the ramp-up of our ASIC colocation activity at our Vegas site, which was initially energized in June 2025. Revenue generation commenced under an ASIC colocation agreement with BITMAIN, supporting nearly 15 exahash of capacity delivered by the next-generation ASIC machines we co-developed with the manufacturer. In August and September, American Bitcoin exercised its option to purchase those machines. As a result, our colocation agreement with BITMAIN concluded in September. We subsequently transitioned to managed services and ASIC colocation agreements with American Bitcoin and continue to operate the fleet under these agreements. Because American Bitcoin is a consolidated subsidiary, revenue from these agreements is eliminated in consolidation and therefore not reflected in reported segment results for our Power and Digital Infrastructure segments, respectively. Operationally, Vega remains active. Financially, revenue is now recognized as intercompany rather than third party. Segment cost of revenue rose modestly year-over-year to $3.8 million. This $0.1 million increase was mainly driven by higher electricity and connectivity costs across our five traditional data centers in Canada. Finally, we turn to compute, which consists of Bitcoin mining, data center cloud, and GPU as a Service. Compute segment revenue increased more than fivefold year-over-year from $13.7 million to $70 million. Top-line growth was driven primarily by the expansion of Bitcoin mining revenue from American Bitcoin. During the quarter, American Bitcoin deployed approximately 14.9 exahash of additional installed mining capacity at Vega, increasing Hut 8's total hash rate from approximately 12 exahash to approximately 26.8 exahash. Of that total, approximately 25 exahash was attributable to American Bitcoin at quarter end. Supported by a higher average price of Bitcoin during the period, this expansion delivered $54.3 million in incremental Bitcoin mining revenue. The segment also benefited from a $2.6 million increase in GPU as-a-Service revenue from Highrise AI, our wholly-owned subsidiary. Gains from Bitcoin mining and GPU as a Service operations were partially offset by a $0.5 million decline in data center cloud revenue driven by customer churn. Segment cost of revenue increased from $8.9 million to $22 million year-over-year, consistent with the significant expansion of operations and top-line growth we achieved across the segment during the quarter. Revenue growth significantly outpaced cost increases, resulting in substantial operating leverage. Segment gross profit grew tenfold from $4.8 million to $48 million year-over-year, and gross margin expanded by 33.5 percentage points to 68.6%. Taken together, our third quarter performance reflects the strength of our integrated platform model and the accelerating momentum of our development flywheel. As we look ahead to the remainder of the year, our focus turns to execution across both our recently launched 1,530-megawatt expansion initiative and our broader 8,650-megawatt development pipeline at quarter end. To deliver at utility scale, we must operate from a position of both strength and flexibility and always with an eye toward the future. That has been a guiding principle of our capital strategy since I stepped into the CFO role just over a year ago. And over the past 12 months, we've executed on that strategy to build a financial foundation purpose-built for balanced risk-adjusted growth. The foundation of this strategy is our fortress balance sheet. Today, three key pillars support that foundation: an actively managed strategic Bitcoin reserve, disciplined access to capital markets, and a focus on responsible leverage. The first pillar is our strategic Bitcoin reserve. At quarter end, we held 13,696 Bitcoin in reserve with a market value of approximately $1.6 billion, of which 10,278 Bitcoin were held by Hut 8 and 3,418 Bitcoin were held by American Bitcoin. Since February 2024, when Asher became CEO, we have benefited from nearly $1 billion in incremental value and liquidity from these holdings. That includes $689 million in contributions from Bitcoin price appreciation, $265 million in new Bitcoin-backed credit facilities with Coinbase and Two Prime at a blended cost of capital of 8.2%, and approximately $32 million in premiums realized through covered call option strategies. These results validate our conviction that Bitcoin, when actively and responsibly managed, becomes a productive reserve asset that enhances liquidity, provides optionality, and reduces reliance on equity. The second pillar is disciplined access to capital markets. During the quarter, we significantly reinforced this pillar with the addition of a $200 million revolving credit facility with Two Prime and the launch of a new $1 billion at-the-market equity program. Simultaneously with the launch of our new ATM program, we closed our previous ATM with 40% of its capacity unutilized. Shares issued under the prior program were sold on average at a 50% premium to the average trading price during the period, underscoring a disciplined approach focused on minimizing excess dilution. The third and final pillar is responsible leverage. There’s a joke among financing bankers that goes something along the lines of this: just because I’ll give you leverage doesn’t mean you should take it. Leverage is often easy to add but expensive and painful to unwind. We, as a management team, understand these realities, and they inform our decision-making on a daily basis as stewards of shareholder capital. When paired with a fortress balance sheet, responsible leverage fuels operating growth and provides strategic flexibility. As we continue to execute on our business plan, we will aim to make capital decisions in a manner designed to minimize enterprise risk and support long-term growth. In closing, the third quarter marked a clear inflection point in both our 2025 strategy and the velocity of our development flywheel. We believe this reflects a business with structural advantage, proven commercial velocity, and a long runway for continued growth and value creation at the intersection of energy and technology. Backed by a fortress balance sheet, disciplined capital framework, and diversified platform spanning power, digital infrastructure, and compute, we are executing from a position of strength as we build what we believe will become a category-defining business for the next era of energy-intensive innovation.

Your first question comes from the line of Patrick Moley with Piper Sandler.

I have a two-part question. Can you provide an update on how discussions have evolved with potential AI and HPC clients since the last earnings call? Additionally, I've noticed a significant difference in how the market is assessing your power pipeline compared to some competitors, with a considerable discount applied to the 1.5 gigawatts currently in development. What are your thoughts on the reasons behind this disconnect, and do you believe it is justified?

Great to hear from you. I'll start on the second and go into the first. I think the second one is simple. People want to see us execute and prove out the ability to convert the power pipeline, and then we'll get more value for it, which I think is fair. And so for the investors that are waiting to see execution, I think they'll see value contributed as that execution leads that. That's to your second question. On to the first, it's no surprise, the market is very hot over the last couple of months, a ton of demand. The conversations we're having have progressed even faster. When we think about a deal, and I know a lot of folks are on this call around this question, it might be worth going into detail here. When we think about a deal, we think about it holistically. Who is the customer? What are the commitments we're making to that customer? How are we going to finance that agreement? Where is our supply chain going to come from? And how are we going to build that site? All coupled together with the local relationships that we have with the communities and the state to create a project that is set up for success and that could actually execute. If we look at the timelines in which customers want these data centers delivered, they're faster than any historical data center timelines from a greenfield build to delivery to the customer. And so it's really important in our opinion to have these specific pillars as a part of the deal concrete and solidified as you deliver and commit to these obligations on these long-term contracts that we hope to continue to grow and scale with customers as we build credibility and delivery execution with them in the overall market.

Your next question comes from the line of George Sutton with Craig-Hallum.

Asher, you made an interesting comment that you felt AI is only the first chapter of the story. There are other chapters to come and you're positioning yourself for that. Can you be a little bit more specific about what you're referring to there?

Yes. When we started the business and when I say started the business, U.S. Bitcoin Corp., which then merged into Hut 8, the thesis was that as technologies evolve, their consumption of power will increase. We started with Bitcoin mining because we felt it was an under-computered sector that allowed us to arbitrage electrons and energy and capture load to help build that new generation. The thought when we started the business was always we would be more than just a Bitcoin mining company. At the time, the foresight was not to AI and data centers, but we looked at green hydrogen, we looked at carbon capture, a lot of other technologies, industrial batteries; a lot of those, the economics did not actually pencil out as we go deeper. And obviously, AI and where it stands today, we think is an incredible opportunity due to the changing tide in the scale of these sites that allow you to be a leading platform within the world and competing today as a newcomer rather than an existing incumbent. The technology is changing, so you can innovate right now at the forefront of the sector as well. And so what I believe we did in the Bitcoin mining sector is we're a leader in that industry today. We did not want to pivot out of that technology and just focus on the next new shiny object. We want to layer that into our platform. That was one critical portion of what we did this quarter with American Bitcoin. I think many thought it was not possible. If you look at the financials of American Bitcoin in this first quarter, they did $64 million in revenue at about $28 million in cost at a 56% margin. That's a great first quarter in this public debut as a public company when the company was only started in Q2 of this year. As we think about our ability to scale and grow within that sector, which we first started, we believe we're a leading provider and leading operator within that industry, and we look to do the same in the data center market. Looking forward into the future, there's additional demand that we see from a power perspective from advanced manufacturing, from large-scale campuses that drive robotics, and other energy-intensive use cases as well. It's interesting because some of the sites that we have in our pipeline, folks have reached out because locally, people know that we have access to that land or that power, and have had other use cases reach out as well. I think right now, we stay hyper-focused on being a leader within the data center industry platform. Once we feel we have a very strong foothold in that market and are a leader, the platform of Hut 8 will be more than just a data center platform. It's already more than just a Bitcoin mining data center platform, and that's the vision for the company. Until then, we stay relentlessly focused on developing and competing within this sector and becoming a market leader before being distracted and looking to expand anything else.

Your next question comes from the line of Darren Aftahi with ROTH Capital Markets.

This is Dylan on for Darren. I guess on the 1.5 gigawatts, where do you stand in terms of progress securing some of the longer lead time items that might help with some of the build time visibility in terms of whichever of the four sites you're sort of working on consistently or one or the other?

Great question. All four of these sites, we have land control and the utility agreements as well. For these projects, we are in sequence right now based on customer demand. For all of these projects, power is actually available for development. So to your point on long lead time items and execution regarding who our partners will be in delivering site execution as well, we feel comfortable in our ability to deliver at a time that the market expects today. We have continued to increase our reserve of long lead time items like high to medium voltage breakers at the substation. There are many of our projects in which we design that we're actually using similar equipment across sites even if the transmission level voltage is at a certain scale; we drop down to 34.5. By doing that and adding that into our design, we're able to procure equipment that is valuable and can move around from site without taking that risk on supply chain on a single site. We continue to do that and continue to scale in that reserve that we have as well.

Your next question comes from the line of Brian Dobson with Clear Street.

So the business has evolved tremendously over the past year, and we're about to enter '26. What key themes do you expect to emerge next year? And what do you believe Hut will look like when we're discussing the company at this time next year?

The market demand has only increased since we started this journey, especially as of recently. I think next year is a year of execution. Next year is a year that companies need to deliver on the promises they made to customers in the market, and that's extremely important in order to maintain that credibility and build into it. Right now, there's an opportunity if you have power and land, and demand is there because there's such a shortage of power that exists. But that demand will only come back to you if you execute on the promises that you make today and you deliver on those promises. I see next year as a year of execution for data center providers, for actual AI companies that have raised the capital and need to deploy and show the growth rates of those businesses as well. For Hut 8, we will be along our journey of executing on those data center platforms that we announced to the market and deliver. We need to show progress and continued updates on where we are, both on the sites we have announced and are developing and constructing, in addition to new sites and new projects. For us, as we provide more transparency into our pipeline, we hope to have people understand where our projects are within our pipeline and what the probability of outcome is that they become successful, enabling them to apply different weights on each megawatt within each stage of our business. What’s really important is the transparency and execution to the market when we announce deals, so they are able to better understand our business and its evolution past just the initial sites or two.

Your next question comes from the line of Stephen Glagola with Jones.

For the 300 megawatts of gross capacity at Riverbend, what is your expected ready for service date for a hypothetical colo lease there? Additionally, could you share any updated milestones or timelines regarding the plans to scale the site to 1 gigawatt?

Expectation is end of 2026. The IT capacity we're looking at, at 300 megawatts utility, is roughly 216 to 224 megawatts in IT capacity. We sent some photos on my X account regarding the delivery of the Switchyard. The utility has been doing a phenomenal job in the progress that they've made at the Switchyard. We've already started moving forward on a lot of civil work for the last few months. The substation is being built right now as well, and you'll start seeing more active construction as well. But delivery is expected for end of 2026, and that’s where we think there's a lot of value in that site. The beauty of finding this project was the high density of transmission line capacity that flows through the campus and its proximity to generation nearby, allowing for the physical capacity to deliver power to the system. We've been in deep discussions with the utility on the scale of that campus. We spent a lot of work in Q2 with one of our customers who had an interest in wanting to look at that campus being larger than just 300 megawatts. We believe that the ability to do that exists, and we have had deep discussions with the utility. We'll be sharing more updates post-announcement of the first deal.

Your next question comes from the line of Joseph Vafi with Canaccord.

I thought maybe we could drill down a little bit on the Bitcoin holdings here. Clearly, it is a differentiator versus some of your peers. It feels like some of the GPU as a Service demand is really rising. Just wondering how you're looking at that as you work on your power pipeline. Clearly, there's value there, but it might be a little longer term to realize, while the GPU as a Service could be a little shorter term, leveraging power that you already have and your balance sheet. Just wondering how you're thinking about that in kind of the pecking order of efforts and developments right now.

The GPU business is actually the first business we looked at before data centers. This was pre-our merger with Hut 8. We looked at deploying our first cluster of GPUs. At that time, the market and scale were much smaller. Unfortunately, it took about a year in 2023 to get through the merger. We launched Highrise during that period, but as you mentioned, the demand for compute is extremely high today and combining compute with power creates even more value. The investment risk profiles for GPUs and ASICs are similar. If you're unhedged, you take compute price risk; if you're hedged, you're taking counterparty risk on what the value of that contract is. That’s why, structurally, we built Hut 8 to be the energy infrastructure platform to invest into longer depreciating assets. We spun out American Bitcoin to continue investing in ASICs, and then we incubated Highrise as a separate company with a separate balance sheet to invest in GPUs as well. There are definitely conversations in which Highrise has been involved in Hut 8's discussions regarding our power infrastructure, whether it’s just a colocation deal or colocation compute in some regards. As we look at the scale of projects, we remain sensitive to Highrise's ability to bring on capital, the scale of our entry, and how we view dilution and equity versus debt on raising for GPUs. This remains part of our discussions and strategic growth if opportunities arise, but we are hydropowered focused on ensuring long-term lease agreements that anchor the cash flows of Hut 8.

Your next question comes from the line of John Todaro with Needham.

On the 1.5 gigawatts, could you frame a bit more on what would be earmarked for HPC AI and then getting at one of the earlier questions, more details on maybe some of those other use cases like advanced manufacturing or something else that you might look at for the other capacity?

We'll go into detail on each site shortly after we share some of the recent efforts we have across data centers. One of the sites is a gigawatt site in Texas, near Corpus Christi. We have 700 megawatts becoming available in Q4 of next year and another 300 megawatts following in the 24 months after that. Initially, we saw this site as an opportunity for Bitcoin mining or advanced manufacturing, given its proximity to the coast. To our surprise, we have had recent demand for that site, not just from AI labs or new cloud services, but from hyperscalers as well and have been exploring test fits. That said, I'm not saying customers will land at these sites, but the demand for power is extremely high right now. So we're focusing on commercializing, executing, and announcing the sites that are high on the list in data center markets. Some of the other properties, where we are developing the opportunity from the ground up, have very low-cost bases due to the development work. Right now, all our sites are being looked at across the board for new players, even sites we historically wouldn’t have considered for data centers. Another example is Vega, which we built to show the market what a low-density, high-density data center could look like. We have it behind the meter at a local co-op territory. Customers are looking at that, too, and are okay with some of those constraints; it’s a really interesting world we live in.

Your next question comes from the line of Chris Brendler with Rosenblatt.

I wanted to follow up on the competitive environment for power. Where is the competitive pressure? Where does that pressure show up in your pipeline as it moves between diligence, exclusivity, and development? How is Hut 8 positioned to win in this environment? I’d love to get a high-level view of Hut 8's strengths in sourcing, finding, and closing on power sources.

When we think about power development, there are three types of ways to consume power: front of the meter, behind the meter, and then net new generation build, where you actually build your own generation. Front of the meter is about finding the right location in the transmission line that others aren't looking at. Louisiana is a perfect example. We looked at places that other people weren't considering and bet on our perspective on where the market was heading. This is becoming more competitive as more entrants come in, and the value of power is realized from the local landowner and farmer to the developer and larger platforms. Behind the meter is interesting because we have pioneered a focus on these assets. Our total behind-the-meter power in our portfolio today is about 0.5 gigawatt across multiple sites. We believe this unique positioning will create ongoing value because it allows us to partner with generators and pull power to co-locate a data center. Lastly, there’s generation where there will be a continued theme of bringing your own generation. Although we planned not to maintain ownership of our power plants, our experience over the last 1.5 years has increased our understanding of running generation. We have been able to amend agreements to co-locate data centers, and we can bring that experience to the table, whether partnering or doing it ourselves. We do recognize that front of the meter is getting more competitive. The other critical element is timing on deals. There's a wave of excitement in the market right now, and we are cautious about the economic structure of what we offer. Some sites we are considering are overpriced, and we will need to be thoughtful about the long-term risks before locking in those prices. Your patience is appreciated as we navigate these opportunities. There’s a long way to go, and we view growth opportunities pragmatically. I know many on this call are anxious to discuss when the deals will be announced. We have numerous sites we are evaluating. However, we want to ensure value is truly built before bringing these to market. As such, we will be disciplined in pursuing only those opportunities that are in the best long-term interests of both Hut 8 and our shareholders, and we’re committed to maintaining transparency in our process.

Your next question comes from the line of Matthew Galinko with Maxim Group LLC.

Can you touch on the role that your Bitcoin reserve plays in accessing project financing and financing for site builds?

Happy to do so. The example with Two Prime is a great illustration of that in addition to Coinbase. When we think about our balance sheet, I would like Sean to share his perspective as well because his views have evolved. Through the strategic use of Bitcoin, we're able to generate yield through covered calls. This allows to fund our business while maintaining low capital costs through Bitcoin-backed loans. The structured access to the value of Bitcoin on our balance sheet is highly valuable. As we consider the long-term strategy of holding Bitcoin at Hut 8 versus American Bitcoin, these opportunities will allow us to mature that balance sheet further. Sean, do you want to add more context?

Yes, thanks, Asher. We talked about the contributions from price appreciation, Bitcoin-backed facilities, and premium realization through covered calls. Direct access to capital is crucial; there's also a read-through to our balance sheet. For very large counterparties, our creditworthiness is critical. When they look at our balance sheet, it checks a lot of boxes, which eases the conversation significantly as we enter new business lines with larger financial numbers.

Your next question comes from the line of Nick Giles with B. Riley.

Can you give us a little more color around how project financing discussions have progressed or any changes since your last update? Given some of the other deals we've seen across the space, has your approach to structure evolved?

Yes. Project financing remains extremely healthy. We've witnessed significant recent deals demonstrating that capital supports data center growth. The market remains bifurcated between investment-grade and non-investment-grade off-takers. We have the means to secure financing creatively and explore any structures that create shareholder value. A useful strategy is non-recourse project financing, insulating the parent company from debt issues at the subsidiary level. We will continue to evaluate such approaches. Overall, I am confident in our long-term project financing options.

Your next question comes from the line of Benjamin Sommers with BTIG.

I just wanted to ask about the site in Illinois. I’m curious about the demand profile for the site given it's a bit smaller than some of the sites in Texas.

We initially developed that site because most of our other sites weren't in Tier 1 markets, and we wanted a campus that could act as a tuck-in. Demand has shown it to be just that, a complement for people with nearby sites and even AI labs and enterprises. It adds strategic value for Highrise and GPUs as well, but right now, we’re prioritizing supply chain and focusing on larger campuses given current demand. While the Illinois site is smaller, it remains significant for strategic reasons beyond just its size. We're exploring additional opportunities there.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.