Good day, ladies and gentlemen. Welcome to Marathon Digital Holdings First Quarter 2022 Earnings Webcast and Conference Call. I would now like to turn the call over to your host, Charlie Schumacher, Vice President of Corporate Communications. Please go ahead. Thank you, Karen. Hello, everyone and welcome to Marathon Digital Holdings inaugural earnings call. Today, we will be reviewing our results for the first quarter ended March 31, 2022. We will begin with some prepared remarks from our Chairman and CEO, Fred Thiel and our CFO, Hugh Gallagher. After their prepared remarks, we will be taking questions from our covering analysts. Before we start, a few reminders. I would like to remind you all that this call – management that in this call management’s prepared remarks contain forward-looking statements, which are subject to risks and uncertainties and management may make additional forward-looking statements during the question-and-answer session. These forward-looking statements are subject to risks and uncertainties and actual results may differ materially. When used in this call, the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project, and similar expressions as they relate to Marathon Digital Holdings are as such a forward-looking statement. Please refer to our earnings release for a full recitation of our forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainties, which may cause actual results to differ from those anticipated by Marathon at this time. In addition, other risks are more fully described in Marathon’s public filings with the U.S. Securities and Exchange Commission, which can be reviewed at www.sec.gov. Finally, please note that on today’s call, management will refer to certain non-GAAP financial measures in which Marathon excludes certain expenses from its GAAP financial results. Please refer to our company’s periodic reports on Form 10-K and 10-Q for a full reconciliation of its non-GAAP performance measures to the most comparable GAAP financial measures. Once again, this call in its entirety is being webcast on our Investor Relations website. A replay of this webcast will also be available on our website shortly. And with that covered, I am going to turn it over to Fred to kick things off. Fred?

Good afternoon, everybody. Thank you all for taking the time to join us today for our first earnings call. Marathon is a mission-driven company. Our purpose is to secure and support the development of the world’s monetary network, which is the Bitcoin ecosystem. Today, we are supporting the adoption, security and evolution of Bitcoin by building one of the largest, most agile, and most sustainably operated Bitcoin mining operations in the world. Miners like Marathon are essential base layer infrastructure that enables Bitcoin to be distributed trustlessly and securely. We perform a service to the network, and for performing that service we have the opportunity to earn Bitcoin. We operate in a nascent industry that has the potential to dematerialize traditional finance in the same way the internet dematerialized communications. We believe the opportunity for innovation and value creation is immense. We believe 2022 will be transformational for Marathon as we are in the process of deploying nearly 200,000 miners growing to represent potentially 7% of the total Bitcoin mining network and transitioning our operations to be 100% carbon neutral. To kick things off, we started the year with our most productive quarter to-date in terms of Bitcoin produced. Some highlights from Q1. In Q1, we increased our Bitcoin production 556% year-over-year and 15% sequentially and produced a record 1,259 Bitcoin in the quarter. In dollars, this translates to $51.7 million in revenue for Q1, which is a 465% increase from Q1 of last year. The improvements in our Bitcoin production were tempered by the fact that the global hash rate increased by approximately 17% during the first quarter of this year. Holding the global hash rate and difficulty rates constant from the end of Q4, we would have produced approximately 1,282 Bitcoin in the first quarter. As of March 31, we held 9,374 Bitcoin, and as you can tell from our monthly production reports, that number continues to grow as we hold all the Bitcoin produced, solidifying our position as one of the largest holders of Bitcoin among publicly traded companies. Some strategic and operational highlights. In Q1, we made substantial progress, strengthening Marathon’s competitive advantages to expand our position as the leading Bitcoin miner in North America. A year ago, when I transitioned from the Board of Directors to become CEO, we had 12,000 miners operating. Our hash rate was 1.3x hash, and Marathon consisted of 4 full-time employees. Today, we have approximately 37,000 miners installed. Our hash rate is more than 3x higher, and we have 15 full-time employees, most of whom are in senior level positions that extend across technology, operations, strategy and finance. Our philosophy is to maximize intellectual capital in-house, test everything and then outsource the muscle of our operations. This industry is evolving quickly, and we want to be agile and informed so that we can effectively adapt to changing circumstances and capitalize on new opportunities as they present themselves in hardware, firmware immersion, Layer 2 protocols like lightning and elsewhere. In regards to deployment, and perhaps most importantly in Q1, we began deploying with our hosting partner, Compute North at their new facilities in Texas. We increased our hash rate to 15% from the prior quarter, which drove our record BTC production. But the timeline has admittedly shifted from the original targets we set for ourselves. Deploying and effectively operating miners, which drives our hash rate and our Bitcoin production, is our primary focus at Marathon today. However, before discussing our deployment and outlook for the rest of 2022 in detail, I’m going to turn it over to our new CFO, Hugh Gallagher to discuss our financial results. Hugh?

Thanks, Fred, and welcome again to everyone for joining us on our initial earnings call today. My focus will be to comment on some of the highlights of the quarter and to provide additional color on our financial performance before I turn it back to Fred to discuss operations and the outlook for the business in a bit more detail. Given the dynamic growth and business activity over time, I am going to provide color on our results for the current quarter compared to both last year’s quarter period ended March 31, 2021, which is also outlined in the earnings release and the last calendar quarter, which we sometimes refer to as the sequential quarter, Q4 of 2021. That information is not in the release, but we think it’s an important data point. Revenues for the quarter were $51.7 million, an increase of $42.6 million from the prior year quarter. A significant increase in mining activity during the quarter accounted for $50.9 million of this increase in revenue. That increase was partially offset by the impact of lower average Bitcoin prices versus the prior year period, which had the effect of reducing revenue by about $8.3 million. Revenues compared to Q4 decreased by $8.6 million despite the 15% increase in mining activity that Fred discussed earlier, as the positive impact of that higher mining activity, which was about $8.8 million in revenue is more than offset by a decline in average Bitcoin prices, which reduced revenue by about $17.4 million. It’s also worth noting that there were two fewer days in Q1, and that, as we said earlier had a slightly negative impact on production results and therefore revenue. Our cost of revenues during the quarter were $26.4 million, which was an increase of $24 million from the prior year period and $12.4 million from Q4. The increase in cost of revenue was largely due to the increase in mining activities versus the prior period with higher depreciation and amortization expense as the primary drivers of this cost increase. I also wanted to mention that we have updated our non-GAAP disclosures this quarter as a means of providing additional information to investors. Specifically, we have added adjusted EBITDA as a non-GAAP metric in addition to adjusted net income. Just a few quick reminders on these non-GAAP metrics. They are intended to be used in conjunction with our GAAP financial statements and our quarterly SEC reports. It’s really important to note that our definition of these non-GAAP measures may vary significantly from similar terms that may be used by other companies, including our competitors. So, please refer to our earnings release and our SEC reports for more detailed information on the reconciliations and the definitions of the non-GAAP measures. Turning to this adjusted EBITDA, adjusted EBITDA for the quarter was $39.4 million. This was an increase of $33.3 million from the prior year period. This was primarily related, as I said earlier, to the significant increase in Bitcoin mining year-over-year, which increased net margin, excluding depreciation and amortization. Again, we are talking about EBITDA by $35.8 million. As we mentioned earlier, we also had a 15% increase in production versus Q4, but in spite of this, adjusted EBITDA declined $10.3 million, primarily due to the lower average price of Bitcoin mined during the quarter. Turning briefly to the balance sheet, cash and cash equivalents were $118.5 million at the end of March, a decrease of $150 million from December. The primary drivers of this decrease were the significant increase in mining activities, including deposits for Bitcoin mining servers of $192.4 million; to a lesser extent, purchases of property, plant and equipment, $6.5 million; and deposits for co-hosting of $6.3 million. We also invested $10.5 million in equity investees during the period. These uses of cash are financed with a combination of cash on hand and proceeds from the issuance of common stock of $85.6 million, and net cash used by our operating activities was $19.7 million during the quarter. At March 31, we held 4,579 self-mined Bitcoin, with a book value of $155.6 million. We also held Bitcoin in an investment fund with a book value of $218.2 million, that investment fund is carried at fair value. The market value of all of our Bitcoin holdings at March 31 was $427.7 million. We expect to increase our Bitcoin holdings over time, primarily through mining activities though we may purchase or sell Bitcoin in future periods as needed for treasury management or general corporate purposes. Finally, we had zero borrowings outstanding under our revolving credit line at March 31. But we have since drawn about $70 million on that line to fund additional deposits related to some orders of Bitcoin mining servers. And with that as my update, I will turn it back over to Fred for his update. Fred?

Thanks, Hugh. Our primary focus for 2022 is the deployment of our miners. This year is all about execution. At Marathon, we are constantly pushing boundaries to propel our business and our industry forward. But as Q1 and subsequent events have demonstrated, not every industry operates at the same pace as we do. There is no playbook for building Bitcoin mining operations behind the meter at our scale nor with our strategy, and innovation is not a linear process. No one has deployed 23 exahash behind the meter with renewable power companies before. It takes immense effort to drive progress, especially in an entirely new industry, as anything new is inherently met with some level of friction. Building one of the largest and most sustainable Bitcoin mining operations in the world is no exception. In our case, the friction has manifested primarily in the form of regulation and permitting, which we made great progress overcoming during Q1, in which we continue to proactively address. As we have discussed in our prior monthly production reports, our deployments were delayed by approximately 45 days during the first quarter. These temporary delays have nothing to do with procuring equipment or operational competency. Last year, we provided Compute North with a bridge loan so that we could preorder the infrastructure containers, transformers, etc. for us. Historically, the miners they have operated for us have performed at nearly 100% uptime for over two years. Rather, the friction relates to breaking the mold and deploying our miners behind the meter at power facilities operated by some of the largest renewable energy companies in the United States. This strategy provides many benefits to our business and to the local community and grid, but its implementation comes with the unique challenges that we are progressing through. The challenge with renewable power, particularly wind and solar, is that it is intermittent, and our objective is for our miners to operate as close as possible to 100% uptime. To ensure our miners perform when their renewable power sources dip, a grid connection needed to be established into our new facilities feeding over 200 megawatts of power from the grid back into a power station, which was a new process for the grid operators. No one had done it before. Therefore, there was a learning curve and it took longer than originally anticipated for the various parties involved to coordinate and complete the permitting and approval process. Since then, we have encountered some additional hurdles related to our energy partners’ need for third-party consents before energizing our installed miners, which we expect to be resolved in the coming weeks. We do not anticipate this impacting future deployments. Regardless, we are in the process of strengthening our relationships with our power providers to ensure that we have more influence over the timeline going forward. While the power provider was working through this process, construction of Compute North’s facilities continued unimpeded. On schedule, approximately 4,200 miners were installed in containers in April. These miners are currently ready to be energized, and thousands more are being installed as construction progresses. It’s our expectation that our hash rate, which is available for anyone to see online, should start to reflect this progress later this month. Encouragingly, in March, the grid operators in Texas granted permission for all 280 megawatts of the first major facility to be energized. When you consider that Texas may begin slowing down the rate of deployments for all miners in the state to monitor Bitcoin mining’s impact on the grid, the fact that we have 280 megawatts pre-approved to energize places us in a uniquely advantageous position relative to our competitors. Additionally, once we have finished working through some of these initial hurdles with the regulators and power providers, we will have a model we can use for all sites going forward, which should make future deployments much more efficient. We are committed to working through the process and expediting as much as we can to achieve our targeted 23.3 exahash by early next year. We recognize that we do not control all the variable types of deployments, most notably the regulatory process and the pace at which large regulated entities prefer to operate. Currently, the pace of deployment is predominantly determined by the power providers and the pace of construction. As a result, we believe we may be through our backlog of miners and fully back on track with deployments before the end of this year. Given the progress we have made at the start of this year, breaking the mold on deploying behind the meter and the unique advantages we maintain from our asset-light model, we are cautiously optimistic that we are still on pace to hit 23.3 exahash early next year. There is no denying that the macro environment has become turbulent. The broader market and Bitcoin are all down year-to-date as investors work to navigate market volatility, inflation, changing interest rates and the impact of the war in Ukraine. The Bitcoin mining industry has felt these effects as well. We have seen some large miners start selling their Bitcoin or sign deals for equipment financing with double-digit interest rates, indicating that they are becoming capital constrained. Pricing on mining machines has also started to come down, indicating that miners may not be able to grow at the rate at which some analysts have predicted. The cost of natural gas is increasing, which may be problematic for miners who buy exclusively from the grid and are subject to fluctuations in power pricing. Given that Bitcoin mining is a zero-sum game, the miners who are most agile and well-equipped to adapt to changing circumstances will ultimately benefit in the long run, and that’s exactly how we positioned Marathon. For Marathon, we aren’t immune to the macro environment, but our asset-light model does make us fairly well insulated. Due to our size and scale, we have several options available to us to efficiently finance our growth, and we sit on a large war chest of Bitcoin as well. We have fixed pricing for power and industry low Bitcoin production costs. We aren’t under pressure to finance the construction of data centers or maintain customers since we aren’t in the hosting business. We have a lean team of industry experts who are focused on efficiently scaling Marathon and opening doors for new expansion opportunities in the future. I am very proud of what the team at Marathon has accomplished so far. We are incredibly excited for what 2022 has in store for our business. We very much appreciate all your support as we continue to set the pace for innovation in our industry and establish Marathon as one of the leading Bitcoin miners in the world. With that, we will open the call for questions.

Thank you. We will take our first question from Lucas Pipes with B. Riley Securities. Sir, the floor is yours.

Thank you so much and thank you very much for this format. Fred, I really appreciate the outlook and maintaining, I think you mentioned maybe cautiously optimistic or maybe that’s more of the spirit, growth target of 23.3% early next year, how should we think about kind of the cadence of minor deployment between here and there? Thank you very much for your perspective.

Sure. You should see significant ramp start as we begin deploying now and energizing. Again, as I mentioned on the call in my prepared remarks, we – construction is not slowing down. So, construction and installation of miners and containers is continuing at pace regardless of what’s happening with the power provider being able to flip the switch. So, that’s continuing. So what you are going to start seeing is a pretty significant ramp as we get to the end of this quarter and then through Q3 you will see an even more significant ramp through Q3 and in Q4, you start seeing it tapering down as we fully catch up to all the backlog of miners that we have. It’s really we are back in a mode waiting for Bitmain to deliver the orders, which are predominantly S19 XPs towards the end of the year and into early next year. So, hopefully that provides you some more color, but we are very bullish on kind of catching up to our original targets here towards the end of Q3 and then being fully on track from then on.

That’s helpful. Thank you, Fred. And in terms of the number of megawatts that are completed from a construction perspective, so I understand 280 megawatts are approved from the grid to be energized. What’s the amount of power capacity that’s been completed from an infrastructure perspective?

I don’t have that exact number, so I don’t want to quote something that’s going to be incorrect. I don’t think in megawatts so much as in actual miners, in the thousands of miners, so – and containers that are ready on the ground, but our container deployment, if you would, is going fully on schedule. So, we don’t foresee any issues with that.

Got it. Got it. Thank you. And then one last one for me, then I will turn it over. So we try to model capital outlays diligently. It’s not always easy when considering minor deposits that you have made to Bitmain. Can you guide us to kind of what do you still need to pay cash USD for Bitmain deliveries this year would really appreciate that guidance? Thank you.

Sure. I will hand that one to Hugh.

Sure. So for the remainder of the year, when I look at our investment needs, we are looking at including not just orders that have been made, but orders that we are planning. We are looking at around $0.5 billion of investment needs for the remainder of the year.

Got it. So, could you break that down? Thank you very much for that. Could you break that down between things that are already booked versus what might still be contemplated in the future?

I don’t think I can.

Okay, alright. Well, thank you very much and best of luck.

Thank you.

We will take our next question from Jon Petersen with Jefferies. Please go ahead.

Great. Thanks. So, you have Compute North lined up for the stuff that’s coming online through midyear? I mean, can you remind us, is Compute North also your hosting provider for that next 10 megawatts that gets you to 23.3 by early 2022 or are you guys still in negotiations with various hosting providers?

So, we haven’t disclosed that yet, but we will over the course of this quarter. But Compute North will have definitely a piece of it. They are our primary partner. And then we are going to have some diversification in the mix.

Okay. And then if we think about the cost of hosting, I mean, I know you guys kind of addressed the cost of power and how that moved for those that are connected to the grid. Just curious if you know how much of that you think is impacting your business and if your hosting costs might increase on that – those next contracts you sign?

Sure, yes. So, all the existing contracts are at fixed price that we have already disclosed. Future contracts, we are seeing energy prices with the resulting power price that’s coming up a bit. We think there are some things we can continue to do to mitigate some of that. But I would estimate that depending on where the energy markets are over the next few months you may see an increase in the energy cost. You are not going to see a doubling or anything like that, but you will see some increase in the energy cost.

Okay, alright. That’s fair. And then just a couple of high level questions on the industry, so any thoughts – any updated thoughts on immersion cooling as that seems to be coming somewhat more mainstream? Have you guys spent more time looking at that? Is that something we could see you do on future deployments?

Sure. Great question. I couldn’t have teed it up better. So, we are very actively looking at immersion. We have spent pretty significant time and resources in evaluating a number of different solutions, not to go into any deep technical descriptions, but there are a variety of different ways of doing immersion. There is single phase, dual phase and then you can do individual tanks per miner, you can do totally new tank designs, where you essentially deconstruct miners and build higher density. You are going to see some new miners come to market, new mining hardware companies come to market with solutions that are designed specifically for immersion based on non-Bitmain chips. So, you could infer Intel or one of the 3 or 4 other new vendors coming to market later this year, early next year. But I think our focus is to deploy as much as we can where it makes sense with immersion. There are a number of benefits with that. Immersion extends the life of a miner because you are not operating with air cooling, where you have wide temperature cycles and where you get a lot of dirt in the miner. Some early tests have shown that the reliability for a miner is greater when it’s in immersion. That’s one reason to do it. The other reason to do it is you have the ability to potentially overclock the miner. In some cases, we are seeing significant improvements where you could get up to a 40% boost in miner performance. So, obviously, there is a linear increase in power consumption as well. It’s not free that boost. What it does is, if you pay, let’s just say a round number $10,000 for a miner, if you can get a 40% boost out of it, well, that saves you $4,000 of extra capital for buying additional miners to give you that boost. You also have the capital cost for the immersion tanks. What we are seeing is it can range from the kind of low say sub $1,000 per miner for immersion, up to a couple of thousand to almost $3,000 per miner immersion, depending on the tank vendor of the solution and how it works. Lastly, you have capacity constraints. Most immersion vendors can’t deliver 10,000 tanks a year. It’s in the hundreds per month most probably for most vendors. What I think you are going to see is a gradual kind of use of immersion, starting really next year. As we go through the year, you will see a greater and greater percentage of miners deployed with immersion. As we get into 2024, that continues to develop, but there are this combination of supply constraints. Obviously, it’s more expensive. You want to make sure that your operating model supports that additional expense. You have to have a way to be able to overclock the miners as well if that’s what you’re going to do. Hopefully that answers your question.

Yes, that’s really great. And just one last question and you kind of mentioned more chip manufacturers, so Intel has – everybody is talking about Intel coming into the industry. I guess, if we fast forward a year or two from now, I mean, how do you think that we are going to be talking about the cost per terahash for these ASICs? Will it become more disconnected from the price of Bitcoin in kind of a more realistic, and I guess, more favorable number for somebody like Marathon?

Yes. At the end of the day, the price of Bitcoin does end up driving it because it drives demand. So if the price of Bitcoin, let’s just say it’s in the $40,000 to $50,000 range at the end of this year, then I think you are going to see continued in the macroeconomic environment remaining kind of as is. What you are going to find is miners may be capital constrained and not able to grow as quickly as they expected. You are going to see a glut of equipment like in prior cycles. The buyer is going to have pricing power. If Bitcoin goes to $100k, and everybody is like grow, grow, grow, then demand will outstrip supply and pricing will be based on the market. In a normal environment, two new factors impact price: today only Bitmain arguably has 65% of the market. I think you are going to see that number come down to about 50% and then potentially lower as these new vendors scale. Intel is still early in the game; they are only partnering with four OEMs at the first stage, but there are new people coming to market with some really exciting designs that are both more energy efficient and designed specifically for immersion and high density, which will lower the CapEx cost of an immersion tank. What you are going to see is the industry going through that same transition. The large industrial miners like us will likely over time move from shoeboxes to industrially designed application-specific immersion systems that give us high density, maximum performance and the ability to control every aspect of the operation of the miner through our own software systems. Looking at how companies like Marathon will add value in the future and differentiate themselves from other miners who just want to be datacenter operators effectively, we are going to focus very much on the technology of mining and how we can add more and more value to that as a way to make our mining operations more efficient and more productive.

Alright. Sounds good. Well, thank you so much. I appreciate your time.

Yes.

We will take our next question from Kevin Dede with H.C. Wainwright. Sir, the floor is yours.

Thank you, Fred, Hugh. I appreciate you holding the call. Fred, you didn’t really address the move from Hardin. So, I wouldn’t – I appreciate if you could just spend a little time on whether or not that’s going to – how that folds into your deployment plan?

Sure. So, the move from Hardin will be done as a phased move because we don’t want to take down more operating capacity than absolutely required as we transitioned. You can figure 7 to 10 days door-to-door for moving miners. You will see in Q3 kind of takes – kind of 7% to 8% of the capacity of Hardin down, 10 days later that capacity will pop up at a new site. We will phase that across Q3, so that we are hopefully never going to see more than a 10% decrease in Hardin’s capacity at any one time. Those units are already calculated in our deployments for the fall.

Okay. Does your planning there? Does that match with your expectations for your power partners to deliver and your infrastructure to be in place?

Yes.

Do you foresee any issues with transportation?

No, I think we have worked out a very good plan on how to do this essentially. The miners are taken out of the existing containers. They are cleaned. They are essentially quarantined. Is there any – are there any repairs that need to be done to any service that’s required in the miner and then they are put in boxes and loaded into large semis? You can figure its one container full of miners fills a semi. You can kind of figure each day you will have roughly two trucks coming and going from the facility and traveling away, and then the miners are installed. The ability to install miners if they can install about a thousand miners a day, so that fits perfectly with that kind of two trucks a day model. We don’t foresee an issue there.

You mentioned an emphasis in technology and I know that’s something you have stressed over the past year. I mean, you offer great insight on immersion. Could you talk a little bit to software optimization? I don’t necessarily know that’s well understood across the industry and how are you working with your – the managers of your pool and other vendors to generate the greatest return you are getting on your hash?

As you know, we operate our own pool, so we are not dealing with a third-party. You could expect to see a number of levers you can pull at the technology in mining. You can do things at the chip level. If you are big enough in scale, you can drive certain aspects of that. There are things you can do in the firmware of the miner itself regarding how it allocates and operates the – optimize the use of the ASICs, especially in an immersion system, there are some unique things you need to be thinking about with those ASICs. You have in the controller board for the miner, again, some opportunities to get some small incremental benefits. At the pool level, some opportunities to get some incremental benefits too. You have, let’s just call them architectural and algorithmic advantages you can eventually create. These are in very small percent numbers of efficiency gains and performance gains, but it does add up in the long run. An important factor is the ability to go down and control directly at an ASIC level the performance of the miner that can give you a couple of percentage points of benefit as well. The whole key is maximizing productivity out of a miner across its life such that it’s producing the maximum amount of Bitcoin based on what’s going on. Not just that the data center, in the individual miner at the individual ASIC level, but also more globally, how it interacts with the overall global network. So let’s kind of think of it as a whole technology stack.

Are you at a point where you have many of these adjustments implemented and then you are running, Marathon is running at Hardin, I guess, offer enough time to make some of these improvements?

We have a lot of things that are work in progress. Operating the Hardin facility taught us a lot of lessons, least of which was we don’t want to own our own facility. But it has taught us a lot of lessons about how one can potentially get some benefits. We are doing a lot of testing. We will implement things as we feel confident that it makes sense to implement them. That’s going to be pretty proprietary information, so we are not going to share too many details about the what and the how. We are just going to let the numbers speak for themselves.

Yes, fair enough. I would expect that. Aside from some of the immersion working you are doing and the obviously the software work, what other aspects of technology improvement are you considering or testing?

One is operational efficiency and productivity of the miners. There are some interesting things, potentially a little bit beyond the base layer, as we look at layer two, where we are seeing what we can do to help provide better infrastructure for some layer two implementations. We will share more about that later on this year as those plants move into execution mode. You are also going to see some new ways of leveraging the work that proof of work does relative to validating transactions, such that we can leverage all the existing investments we are making and operating costs we are incurring in ways that can drive some additional revenues by leveraging some of the space in blocks to provide an immutable record for non-Bitcoin blockchain. I can’t really share too much more about that because there is some development going on there and we don’t want to spill the beans on that quite yet. But let’s just say that there are ways that the Bitcoin blockchain can actually help other blockchains become more immutable and provide better validations. Obviously, that’s something that miners can charge for to be another revenue source.

I see. The infrastructure in place now has your facility behind the meter, but also attached to the grid. I am wondering if the green sources of power are directly attached to your facility and what stage of construction they might be in?

All of the renewable power is in place already, it’s been operating for a while. That’s not new. That power generation equipment has been operating. It takes years to build those sites. That’s all operating fully functional. The challenge, as I said earlier in my comments, was a power plant generates electricity and pushes it to the grid. It does not take electricity off the grid. All this infrastructure, the transformers, etc., are all designed for power moving from the generator to the grid. If you are going to do it the opposite way, you need to put in place infrastructure. That’s all in place. ERCOT has already approved the load. Typically, you have heard this term of a load study. They have approved 200 megawatts of load to the facility. That’s not an issue. The problem, the last little gating problem we have right now is consent, third-party consent. As soon as that’s done, we can go live. We are continuing to Compute North build out the site. They are continuing to deploy containers. They are continuing to stuff miners and containers. Every day that goes by more miners are built and put into containers. When we flip the switch, they all come online. One thing I will say is, the renewable energy operators are getting additional benefit from having us behind the meter. We have talked a lot about Bitcoin miners being like a capacitor buffer to the grid being able to be a customer for the renewable energy operator to absorb the excess energy that they can’t sell to the grid. The other thing that we can do as a miner is enable a renewable energy generator, who let’s just take wind, for example. If they are a wind generator and they have the right type of leases with the land under their wind turbines, they can deploy solar as well. They don’t have to get additional capacity permits from the grid because they are not going to push that extra energy out to the grid since solar and wind operate at different times of day, especially in Texas. We are not providing an incentive for the renewable operator to double down and add solar in addition to wind at the same facilities, significantly increasing their total capacity, but their capacity on an hour of the day basis remains the same, if that makes sense. But the benefit to us is that it means we don’t have to take even less energy off the grid.

Absolutely. I hadn’t expected to hear that, Fred. So, thanks for sharing. Appreciate it. And thanks for entertaining all my questions.

Yes. Absolutely. Appreciate it, Kevin.

We will take our next question from Chase White with Compass Point. You may proceed.

Thanks, guys. So, how do you guys think about financing your build out going forward in terms of both capital needs and also sources? I mean is there going to be a focus on kind of non-dilutive sources of capital, like debt and/or potentially selling bitcoin, or is at the market offering that you guys had out there going to be kind of the main source? I am just trying to get an understanding of the needs and where it’s going to come from going forward. Thanks.

Sure. I will let Hugh answer that question.

Sure. I think what you have to do is look at the long-term financing plan, what’s the right capital structure for the business. When you really look at that, it’s a combination of debt and equity over the long haul. I don’t want to get into timing of when we are going to issue debt, when we are going to issue equity, whether we are going to do leasing or not. But we are looking at all of that at this point. I said, we may buy or sell Bitcoin for general corporate purposes, but I will say we don’t really have an intention to do that in the near-term. We are looking at financing things like term loans, revolvers, equipment financing, and the shelf all are part of the mix. We have to focus on getting to a long-term balance of what’s an appropriate long-term capital structure. The way you get to that is, you pull different levers at different times. I don’t think we want to quote – we want to go into details of how we are going to finance in the very near-term, mid-term, or long term, other than to say all of those things are part of our plan.

Sure. It makes sense. And I mean just on the debt/equipment financing side. I mean, is it getting easier out there? Are you finding that there is more competition and therefore, capital costs can start coming down for those who can obtain it, or how does the debt and debt related market look?

Yes. Well, I am well, one month in, so it’s pretty hard for me to draw conclusions from it. But it was getting easy. I would say without question. I think Bitcoin is getting more readily acceptable. There has clearly been a pullback in the whole – before today, the whole industry and the whole stock market. But I think it’s becoming a little bit more – there are more sources coming, approaching us now. The folks that we are working with are open for business and willing to continue to work with us. I feel like the environment is constructive. It’s hard for me to draw a hard and fast conclusion as to whether it’s better than a year ago or worse than a year ago because I am just too new in the chair.

Fair enough. And following that up, I mean is there any, I mean how does the landscape for hosting providers look right now? Do you see that impacting your ability to grow beyond sort of the 23.3 exahash that you guys have contracted in the future? And following on to that, I mean is there any concern that maybe to the extent you go for geographic diversification that regulatory delays, like you saw in Texas might start popping up in other states that maybe currently don’t have a regime like that?

I think let me answer the question in two parts. One is if anything we are seeing more and more opportunities for hosting every day. You could say, well, that’s just part of the trend. I think there are enough people who have now understood kind of the nature of this business who either have access to flare gas, renewable energy, hydro, geothermal, solar, etc. Now we are looking at, hey, we have got 10 megawatts, 20 megawatts, 30 megawatts, we would love to have you guys come in and run miners in our facilities. We are not at all against having a lot of hosting partners. We obviously prefer having a handful of larger hosting partners, it’s fewer next to choke, if you would, fewer operations to be babysitting because we are very active in the oversight of our miners and how they are operated. There is definite benefit to having a broad dispersion. There is much easier access to smaller chunks of hosting than there are big chunks. It’s pretty hard to find 300 megawatts of power at a time. Our strategy now is broadening out and looking at a lot of site diversity, a lot of geographic diversity to avoid over establishing in Texas. In the prepared remarks, I mentioned that the environment in Texas while it’s very open to mining, there comes a point where enough is enough, and the load on the grid just becomes too much. We don’t want to be in a position where we have all our eggs in one basket. Some of our colleagues in the industry have everything in Texas and everything in ERCOT. ERCOT may decide depending on what happens to go one way or another and do things differently. We just don’t want to have that risk of having all our eggs in a single basket. You are going to see us having more geographic diversity over time. You will likely start seeing some international deployment over time as well.

Got it. Thanks guys.

Our next question, we will turn to Zach Sippel with D.A. Davidson.

Hey, guys. Thanks for taking my question. It looks like cost per coin came down a bit from last quarter, is that a function of improved operations at Hardin? If you could remind us what we should expect for cost per coin as you transition to Texas?

I will let Hugh address the difference; if we look at our cost per coin, I think our cost in Q1 was up a little bit over Q2. Go ahead, Hugh.

Yes. What I typically do is look at the face of the financials, I looked at the cost of revenue, and I backed out DNA; that’s kind of how I sort of worked my way through this. When I do that compared to the fourth quarter, you do have a slight increase in cost per Bitcoin mined.

And that makes sense because the global hash rate increased and so therefore, the amount of energy required to mine Bitcoin should in theory have increased.

That’s right. Yes, makes total sense. And then maybe some additional color on the April issues and if that was sort of related to the Hardin facility and if you expect those to subside in May?

Yes. We have had this ongoing issue with the Hardin facility. Unlike our Compute North facility in Texas, there is no grid connection at Hardin. If the power plant goes down, we can’t pull power off the grid. The power plant in Hardin though, it’s quite new, it was built in 2007, just look at our past production reports and you can see there have been consistent issues. In the case of a coal-fired plant, there are mechanical issues, such as you are ingesting coal, it gets ground up, turned into a slurry that then gets combusted, generating heat and boiling water, generating steam, electricity is generated, lots of mechanical parts. Sometimes it can be rocks in the coal that mess up a grinder or it could be a turbine issue. With supply chain issues out there today, when something breaks, you don’t necessarily always have spare parts available, and you have to wait for them to come in. The Hardin facility in April was really limping essentially. It was operating at about 60% of capacity. Hopefully those issues are behind us but I don’t think we have believed they were behind us a number of times in the past, and it just keeps cropping up. Uptime is very important to us. We are eager to do this transition away from Hardin and into an environment where we can have much higher performance and uptime.

Yes, that’s super helpful. Thanks. And then my last question is sort of pertaining to that transition. Can you give any color on how many rigs you may expect to be up in Texas this month and then throughout the year? I am sorry if I missed that.

Yes, I mean, we are not giving specific numbers for this month, but if you were to look at Q2, I think you are going to see essentially another 3 exahash come online and then a significant increase over that in Q3 and then Q4 you start seeing the increases or decrease because they are now driven by receipt of miners. You are going to see a – think of it as a snake where you have got kind of the tail in the mouth. The middle of the snake is the fattest while Q3 is by far our absolute fattest deployment quarter.

Thanks. That’s super helpful. Congrats, guys.

Yes.

At this point, there are no further questions. I’m going to turn the call back over to Charlie Schumacher for closing remarks.

Thank you all for your time today. If you have questions that were not answered during today’s call, please feel free to contact our Investor Relations team at iratmarathondh.com. Thank you and enjoy the rest of the day.

This does conclude today’s teleconference. We thank you again for your participation. You may disconnect your lines at this time and have a great day.