Hello, and welcome to the Intchains Group Limited Second Quarter 2025 Earnings Conference Call. Now I will turn the call over to Alex Zhang of the Equity Group. Please go ahead, Alex.

Thank you, operator. Good evening to everyone. Welcome to Intchains Second Quarter 2025 Earnings Conference Call. Please be advised that the discussions on today's call will include forward-looking statements. These statements involve known and unknown risks and uncertainties and are based on the company's current expectations and projections regarding future events that may impact its financial condition, operating results and strategic direction. Although the company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the company cautions investors that actual results may differ materially from the anticipated results. Investors should review other factors that may affect its future results and the company's registration statements and other filings with the SEC. The company undertakes no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances or changes in its expectations, except as required by law. Please note that in today's call, we will discuss certain non-GAAP financial measures. Please also refer to the reconciliation of non-GAAP measures to the comparable GAAP measures in the earnings press release. The presentation and webcast replay of this conference call will be available on the Intchains website at www.ir.intchains.com. It is my pleasure to introduce Intchains CFO, Mr. Charles Yan, who will provide an overview of second quarter and first half 2025 financial results, recent operational achievements and then discuss the company's long-term growth strategies before opening the floor for questions. Charles, please go ahead.

Thank you, Alex, and welcome, everyone. For those new to Intchains and our story, I would like to provide an overview of our three main business lines: altcoin mining machines, ETH accumulation, and Web3 application development. Our core business, altcoin mining machine under the Goldshell brand is our primary revenue contributor. We designed altcoin mining machines incorporating in-house developed asset chips, which are used to mine a number of popular alternative cryptocurrencies, including Litecoin, Dogecoin, Aleo, and more. Since the first quarter of 2024, we have implemented a strategic self-funded dollar cost averaging ETH accumulation strategy, as part of our value creation strategy to generate return on our capital. We also have our Web3 application development business and have launched a one-stop blockchain payment solution, Goldshell Pay, and our crypto wallet product, Goldshell Wallet. Moving on to our financial results during the second quarter and first half of 2025 period. Revenue for Q2 2025 was RMB 43.2 million or $6 million, impacted by lower sales from mining machines compared to Q2 2024. The decline in Aleo price during Q2, combined with newly imposed short-term tariffs that delayed the export of our machines, negatively impacted mining machine sales and resulted in lower revenue. We would like to note that quarterly fluctuations in mining machine sales are a common industry-wide phenomenon and are often driven by a combination of external market conditions including volatility in cryptocurrency price, changes in mining difficulty, seasonal demand shifts, and evolving regulatory environments. These factors can influence customers' purchasing behavior and investment cycles, especially in the altcoin segment. As such, short-term sales variability in our business should be viewed within a broader context of long-term growth trends and product innovation. Cost of revenue was RMB 32.9 million or $4.6 million for Q2 2025, a decrease of 20% from Q2 2024, primarily due to lower revenues recorded during the period. We also recorded an impairment charge related to excess mining machine inventory during the period. Total operating expenses were RMB 26.4 million or $3.7 million for Q2 2025, 10.2% lower compared to Q2 2024. As a result, we recorded a loss from operations of RMB 16.2 million or $2.3 million for Q2 2025, compared to the income from operations of $8 million for Q2 2024. Interest income decreased to RMB 3.1 million or $0.4 million for Q2 2025 from Q2 2024, mainly due to cash used in acquired ETH-based cryptocurrencies. For the second quarter, we recorded a gain in fair value of cryptocurrencies of RMB 42.8 million or $6 million, primarily a result of increased holdings of ETH-based cryptocurrency units by 1,793 units since Q1 2025, while ETH price increased by around 34% during the period. As a result, net income from Q2 2025 was RMB 38.3 million or $5.3 million, which was affected by lower revenues and offset by gains on the fair value of cryptocurrency as we increased ETH holding and saw a 34% increase in ETH price during the period. Moving on to first-half 2025 metrics. Revenues were RMB 175.6 million or USD 24.5 million, primarily supported by sales of our Aleo series mining machines during the first half. Net income for the first half of 2025 was RMB 4.3 million or $0.6 million, primarily impacted by lower gross profit and losses on the fair value of cryptocurrency as ETH price dropped by about 28% during the 6-month period. Our balance sheet remains strong. As of June 30, 2025, our cash position, which consisted of cash and cash equivalents, deposits, government securities listed in long-term investment, and short-term investments was $71.6 million. Also, as of June 30, 2025, we had current assets of $94.5 million, total assets of $148 million, and total liability of just $4.6 million. I would like to provide some color on our current and long-term growth strategies before opening the floor for questions. We currently compete in the cryptocurrency segment through the development, launch, and ongoing enhancements of our Goldshell mining machines. In line with this strategic focus, we have invested $5.8 million in R&D so far this year. At the beginning of this year, we launched new products and several upgrades to our existing portfolio of mining machines that together represented the primary source of our total revenues. Key highlights include the release of six major Aleo mining series following the debut of the first AE Box in February. Our Goldshell Byte dual-mining machine, launched in Q1 2025, gained strong traction among the miner customers. As previously mentioned, at the beginning of 2024, we adopted an ETH dollar-cost averaging accumulation strategy and started to build our strategic reserve. As of June 30, 2025, Intchains has total holdings of ETH units of 8,816 units, representing a 25.5% increase from the end of the first quarter. According to recent publicly available information, including a report published by Standard Chartered in July 2025, the company was identified as one of the top ETH treasury holders among public companies globally. Notably, the price of ETH has risen 34% since the end of the first quarter of 2025. Looking ahead, our growth strategy rests on the same two core pillars. First is the launch of our new products and the continuous upgrade efficiency of mining machines and exploration of innovative new projects. Second is optimizing our ETH accumulation and yield generation strategies. On one hand, we remain firmly committed to long-term R&D investments, making every effort to stay ahead in the dynamic cryptocurrency market. Leveraging our experienced R&D team and past investments, we have been able to quickly identify, assess, and act on opportunities in the development of altcoin mining machines, achieving 100% profitability across all such projects to date. As we continue to explore new altcoin projects, we are also planning new upgrades to mining efficiency for our existing mining products, such as the Dogecoin series to expand our market share. On the other hand, we have taken several steps to increase our strategic ETH reserve and expand our long-term digital asset positioning and yield-generating strategy. As part of these efforts, we recently announced cooperation with FalconX, which focused on two key aspects. First, we are optimizing our ETH acquisitions through customized derivative-based trading strategies, such as funded put selling, which may enable Intchains to accumulate ETH at a favorable price while also potentially generating premium income. Second, we are enhancing ETH yield by combining lending activities with derivative-based yield generation, aiming to deliver superior returns compared to traditional passive ETH accumulation and staking methods. Our goal is to achieve an increased annualized yield on our ETH holdings, which could potentially be as high as 10%. 2025 has been a transitional year for us as we make strategic moves to ensure we are well positioned for long-term sustainable growth. While we expect revenue for the second half of the year to be impacted by softer sales driven by altcoin price volatility, we see the value of investing in the future and have accelerated R&D investments to strengthen our technology leadership in the altcoin mining machine market, allowing us to advance new altcoin projects under development towards commercialization. At the same time, the expansion of our ETH reserve and new ETH yield-generating initiatives paved the way for improved overall profitability. We expect these strategic moves to reinforce our business pillars and translate into tangible growth in 2026. We believe that the ability to pivot quickly and innovate across the evolving crypto mining ecosystem is critical to long-term success, particularly in a market defined by rapid technological change and regulatory shifts. We remain focused on executing our long-term vision and delivering sustained value through technology leadership and our strong commitment to innovation to unlock long-term value and reinforce our leadership in the evolving blockchain ecosystem. By aligning our development roadmap with the needs of both enterprise and crypto-native users, we aim to be a driving force in shaping the future. With that, operator, let's open it up for questions.

And our first question comes from Matthew Galinko with Maxim Group.

I wanted to maybe focus on the ETH accumulation strategy. Do you have any, I guess, concrete objectives on how aggressively you intend to accumulate ETH? Is there any thought to becoming more like the traditional Bitcoin strategies where they issue and use financial instruments to acquire more? Or are you intending to continue to sort of do it organically from cash flows that you could generate off the core business?

Okay. Thank you for your question, Matt. Currently, the company primarily uses our own funds to conduct a dollar cost averaging strategy to do the ETH purchases. This approach, we think, is a risk-controlled, prudent, and consistent with our long-term strategy. In the future, we may consider moderate financing for ETH accumulation depending on market conditions and opportunities. But overall strategy will remain unchanged. The dollar cost averaging approach will continue to be the core of our ETH treasury operation. We think that, on the one hand, our profits from our mining machine business can directly support the ETH strategy. Compared to short-term gains, our approach is more resilient across market cycles and avoids forced ETH sales or ETH disposal triggered by short-term price drops. Thank you.

And if I could ask one follow-up question. I think you mentioned targeting up to a 10% yield on your Ethereum treasury. Can you talk about how much of your holdings you would consider putting towards a staking or trading strategy? Is it half or more? Just how much do you intend to put towards yield activity?

Yes. Let me think about this question, how to answer your question. Currently, we cooperate with FalconX. The key point of this cooperation is to lower purchase price cost through certain trading strategies and to optimize returns through lending. In the future, we will also explore partnerships with some decentralized exchange to expand other staking opportunities. Overall, we will make decisions based on market conditions and yield efficiency. But we will not put all our ETH in one place, but we will put over 80% of our ETH to generate income, but maybe not put in one place. Yes, this is our long-term strategy. Thank you.

And our next question comes from Mark Palmer with The Benchmark Company.

Yes. Just the company's prepared remarks made reference to a pipeline of multiple altcoin projects that are moving toward commercialization. We saw the rollout of the new mining machines recently as well as the Goldshell Byte initiative. What can you tell us about what that pipeline of altcoin projects looks like? And what your thinking is with regard to their potential contribution especially in 2026?

Yes. Thank you. The Aleo mining has achieved strong revenue growth in the first half of this year. In the second half, we will launch new altcoin mining products, while our new state-of-the-art Dogecoin miner is expected to complete testing in 2025 and enter mass production in the first half of 2026. We will continue to invest in R&D to maintain product competitiveness. So for the second half of 2025, first is our Aleo miners and second is our Dogecoin miners. We will also have new coin miners launching in 2025. In 2026, there's Dogecoin miners. Thank you.

And our next question comes from Kevin Dede with H.C. Wainwright.

I'm just curious strategically, how you're thinking about the artificial intelligence market given excellence in semiconductor design. I'm just wondering where that might fall in your strategic thinking.

Yes. Currently, we don't have any plans to expand business in that area. Yes. Thank you for your question. But we will internally discuss further.

And your next question comes from the line of again with Matthew Galinko with Maxim Group.

I'm curious about if you could give us some thoughts about how to model R&D spending through the rest of 2025. Should we see that pick up in the back half of the year as you try to bring new products to market? Or do you think first quarter was maybe the high point of the year? Just some thoughts around that.

I believe our R&D expenses in the first half were significant because we will be introducing new products in the second half. However, we expect that the second quarter spending will not exceed the first half. There may be one tape-out, but the process node will not be very intensive. Thus, I anticipate that total R&D expenses will remain lower than in the first half.

There are no further questions at this time. I will now hand it over to Charles Yan for closing remarks. Charles?

Yes. Thanks again for all of you for joining us. We are always open to dialogue with investors. Please feel free to reach out to us or to our Investor Relations firm for any additional questions. We look forward to speaking with you again on our next quarterly call. Thank you.

That concludes today's conference call. You may now disconnect.