Digi Power X Inc. (DGXX) Earnings Call Transcript & Summary

Hello, and thank you for joining us for the IAccess Alpha Virtual Best Ideas Winter Investment Conference 2025. IAccess Alpha host virtual investor conferences featuring company source from investors with a track record of generating alpha. Today, you will hear presentations from 15 selected companies. IAccess Alpha holds 4 virtual investor conferences annually, 1 per quarter. The next event will be the IAccess Alpha Virtual Best Ideas Spring Investment Conference 2026 scheduled for March 10 through 11, 2026. We'd also like to take a moment to thank the many investors who have pitched in with ideas or helped source companies. These conferences would not be as valuable or high quality without your ongoing support. Now let's begin with our first presenting company, Digi Power X Inc. [Operator Instructions]. I'd now like to turn the floor over to today's host, Edward Karr, Capital Markets Advisor at Digi Power X. Edward, the floor is yours.

Great. Thank you very much for that warm introduction, and thank you for inviting us with Digi Power X to your IAccess Alpha Virtual Winter Conference. We're really excited to be here. And thank you very much for everyone who's attending right now and listening to the presentation. So I'm going to run you through our presentation and our slide that you see up here that we have, this December 2025 corporate overview. As you can see down below, Digi Power X're traded both on the NASDAQ the symbols DGXX there and up in Canada on the TSX with the symbol DGX. I will certainly be making some forward-looking statements during my presentation. In fact, our whole business is basically a forward-looking statement these days because we're in a transitional pivot period in our evolution. So just kindly draw your attention to that slide. So what do we do with Digi Power X? At a glance, we are what we're calling ourselves an energy infrastructure company. And we've got a very robust portfolio of assets. We own our own power plant in Upstate New York. In addition, we have several other facilities that have a lot of infrastructure. And we are in the process right now of transitioning a lot of our infrastructure from historic Tier 1 operations into Tier 3 high-performance computing data centers, mainly for artificial intelligence workloads. We have announced in the last year a partnership with Super Micro. So we have designed a brand-new modular solution. You can see a picture of it on this slide called our ARMS 200. It's an acronym stands for AI-ready modular solutions. And these are patented pods that are powering our HPC AI infrastructure. They have liquid-cooled super micro racks inside and the latest and greatest NVIDIA Blackwell 200, 300 GPUs. So really, really interesting product line for us. And we're also building out a new proprietary wing arm business we're calling NeoCloudz. That is our GPU as a Service going to offer on-demand chips and infrastructure for AI workloads directly from our Tier 3 infrastructure. If you look at that stock chart on the right there of this slide, you can see we did present at this conference last year. Our valuation is up significantly since that time period. Obviously, everyone is probably aware of what's been happening in the AI industry. We did have a little -- we're in a little bit of a pullback now that the whole AI industry is in, but very, very confident of what we've gotten going forward. Stock information, if you look at that box, I did mention we trade both in Canada and on the NASDAQ, decent daily volume. We're looking at liquidity average of about 3.8 million shares. Two analysts currently cover the company. If you do want to see any of their reports, just reach out to me. I'd be happy to send them to you. Our recent stock price was around, let's say, $4 a share. This was the end of November, November 30. We had 67 million shares just over outstanding. That gives us a market capitalization of Digi Power X currently about $275 million, maybe a little less, see where the stock trades today. Fully diluted shares, 72 million. So we have a very few warrants and some employee stock options that are out there. Look at that cash and cash equivalents number as of November 30, $97 million. So the company has nice liquidity in the bank. We're in very, very good financial shape, maybe the best in the history of the company. That $97 million is about USD 90 million in cash that we put in money market funds and T-bills. The $7 million is a combination of Bitcoin and Ethereum. We are still mining Bitcoin. So we generate Bitcoin each month in a couple of our facilities. Zero long-term debt currently. So very attractive for a company like ours. As part of our story as we build out our infrastructure, we might consider taking on some debt financing in the future. But currently, we have no long-term debt. Insider ownership, 10.8%. That is predominantly our founder, Chairman and CEO. His name is Michel Amar. Michel founded the company. Michel is a significant shareholder. I believe he has over USD 8 million of his own money in the company. So significant capital, significant commitment and investment. He's never sold a share and really is committed to the upside of the company. So when we look at the company and our core business strategy, we are currently pivoting right now from a historic Tier 1 infrastructure company mining Bitcoin to a Tier 3 HPC AI company. And this is really exciting. We've got a lot of infrastructure and a bunch of assets to convert. As I mentioned, we do own our own power plant in Upstate New York. Our first facility that we are working on and transitioning is in Alabama, and I'll talk more about that. And we have a lot of potential in the future. So what we want to do is provide our Tier 3 data center clients with scalable modular solutions. And our ARMS modular pods are perfect for that. These can be deployed very, very quickly as little as 1 megawatt. We can scale up from there. So we don't need as much CapEx as traditional hyperscalers when building out these Tier 3 data centers. And then our NeoCloudz division, that's going to provide other tenants with access to the next generation of GPU compute as a service. And finally, we're going to leverage that existing our know-how, both in construction, engineering to transition infrastructure into Tier 3 data centers. We're doing it right now. We're proving that we can do it. And as we do that, we'll have a big runway ahead of us that I'm going to talk more about. So when we look at this business strategy that we're in, artificial intelligence, Tier 3 data centers, I'd tell you, not a day goes by, don't forget that, not even an hour goes by. When I don't look at Bloomberg, the Wall Street Journal, CNBC, and I see a headline about artificial intelligence, Tier 3 data centers, the demand is insatiable right now. This industry is growing by leaps and bounds. And the simple fact of the matter that I think everyone is starting to realize is we just do not have enough infrastructure. There's not enough power. There's not enough data centers. The demand is absolutely incredible. The industry is growing by leaps and bounds, and we are positioned right in the center of this industry. So very, very exciting time for us as we convert a couple of our operations to Tier 3 data centers. Looking at the operational footprint of the company. So you see these 3 properties in blue. Those are currently energized facilities, and we have a what I'll call a brownfields in development project on the right. So starting on the left, Columbiana, Alabama. This was a former Bitcoin mining operation. We have 70 megawatts of capacity and approved load study from the utility there. Alabama is a great state. I'd call it regulatory light, very, very friendly. And we have now converted this facility from a historic Bitcoin mining operation into a Tier 3 data center. So our ARMS 200 pods, these are being deployed literally as we speak right now. These are all coming online at the end of this year into early next year. And this facility, as we build it out, we believe we're going to have both colocation long-term tenants, and we'll be able to use some of our infrastructure for our NeoCloudz GPU as a Service. So this is going to scale up. Again, 70 megawatts of capacity. We think we'll be about 20 megawatts of clients officially booked by midyear, up to 40 megawatts by the end of next year. Our center column, North Tonawanda, Upstate New York, this is our power plant. So we own our own power plant. It's rated for 123 megawatts, fantastic facility. I'll talk more about it on the next slide, but we are already starting the engineering, the feasibility studies to transition this facility as well to a Tier 3 data center hub. Very, very exciting, very valuable asset for us. Buffalo, New York, we have 19 megawatts in a former industrial site. Nice thing about that is the power is hydro, so clean, green hydropower comes right off Niagara Falls. It's very inexpensive. We think as we convert that facility, it is currently mining Bitcoin, but as we convert that infrastructure into a Tier 3, that could be an ideal location for our NeoCloudz facility going forward. Then on the right, this North Carolina development site. This is very unique and very valuable for us because we have in North Carolina, an approved 200-megawatt load study. And the infrastructure that we have is substantial. Our property in North Carolina is located literally next door to the local utility, which is Duke. We are at a Duke Switchyard. So extensive infrastructure is there. We've got substations. There are transformers. Indeed, right next door to us is a brand-new Google Tier 3 data center. I believe it's a 200-megawatt data center. Google spent about $1.2 billion building that out, again, because of the infrastructure, and we are located right next door to it. So I would say this is a very, very valuable piece of property. We can develop this in the future. Certainly, 200 megawatts is a lot of capacity. That could be hyperscaler type of tenant in the future. Or who knows, maybe Google would come knock on our door one day and want to buy this to expand themselves, could potentially be worth even more than our current market cap, who knows, but keep an eye on that. So looking a little more at the facilities. Look, our power plant in just outside of Buffalo is a quite valuable asset for us. If you wanted to come on a site visit and we'd encourage anyone who wants to look more into the company, please do come. You fly into Buffalo, New York, we could pick you up at the airport with an SUV, 10, 15 minutes later, you could be taking a left up our driveway and into our power plant. You can see in the background in this photograph. So the power plant is currently rated for 123 megawatts. This is a nat gas co-gen, and it's a real interesting asset because we get revenue in 3 different ways through our power plant. Number one, it's a BTMG, which means behind-the-meter generation. So we -- with this power plant, we actually get annual capacity payments from the New York ISO. That's the New York Independent System Operator. So they pay Digi Power X just to be on standby with our power plant. Why? Well, in case the New York grid up here in Buffalo gets very stressed, they might need us. We have direct utility grid connection. They might need us to generate electricity and sell it back into the grid. And you think, okay, well, when does that happen? happens kind of 2 times a year in New York. This time of year, right now, like winter, you can get a big Canadian Arctic high-pressure system, comes over Buffalo. It goes to negative 20, tough for Sunday football, but everyone turns up the heat and there's a lot of stress on the electricity grid because everyone is turning up their heat very cold. In those sort of circumstances, the grid could call on us. We sell power back into the grid. The nice thing is, if you see, because there's a nat gas turbine, our cost of electricity, our production cost, up $0.04 a kilowatt, quite competitive. When we're selling electricity back to the grid and the grid gets stressed, a lot of times those spot electricity prices can spike. We might be selling electricity at $0.10, $0.11, $0.15 a kilowatt. So it makes nice money for us. The third way we make money is when everything is running normal, and the grid is not stressed, we use the power to actually mine Bitcoin. And if you see in that photo, so we've got containers literally on our front lawn. Those are colocation. We are mining Bitcoin right there. You see the transformers next to them. So tremendous infrastructure. And that infrastructure is very, very valuable. Again, 123 megawatts. Our plan now is to convert this facility into a Tier 3 HPC AI data center hub. And we have that direct grid connection. So we've got 24/7 power. We've got 24/7 backup power. We think that this will be a fantastic location to start bringing in our arms pods, build this out modularly. And if we can build all the way up to 123 megawatts of Tier 3 HPC AI, it's going to create a tremendous amount of value for us. So moving on, talking a little bit more. We have announced a strategic collaboration with NANO Nuclear. I think everyone knows as we look at this artificial intelligence, Tier 3 data center industry, it needs tremendous amounts of power. Where is that power going to come from? I'll tell you, it's not going to come from solar. It's not going to come from wind. They're too intermittent. There's just not enough. The demand is insatiable for these data centers. I don't think that the political scene is going to really allow new coal mines or coal power plants to come back online. Certainly, natural gas, like our power plant is going to play a very, very big role. But ultimately, the United States and other countries want to transition into clean, green nuclear. Nuclear is zero emission. Some of these companies like NANO Nuclear are working on state-of-the-art small modular reactor technology. So these are very small reactors. They could deploy a, for instance, 100-megawatt reactor to our North Tonawanda power plant. It'd be a fantastic location. We are currently undergoing a feasibility study right now. Now this is not going to happen tomorrow or even 2026 as technology is still pretty theoretical and it's going to take some time to be deployed. But we are already laying the groundwork from feasibility study. We'll move into engineering. This will take a fair amount of permitting, et cetera. But this is where we'd like to transition to in the future for our energy needs. So look, if you wanted to take advantage of this artificial intelligence industry and go out and build your own Tier 3 data center, you're an aspiring entrepreneur like our founder, Michel Amar, how would you do it? Well, first, you would have to find the land. So that land certainly takes time. Right now, any attractive land, I tell you, is being hoovered up by all the big Mag 7 and hyperscalers and technology companies. So that land has to have some attributes to it. You want to be close to infrastructure, your utility, a switchyard, you want to be pretty close to a metropolitan area. You don't want to be on a flood plane. You don't want to be in an earthquake zone. You don't want to be in tornado alley because these Tier 3 data centers are expensive. You need security, you need access to fiber. So that all takes time. Then you need to get regulatory approvals. That varies state by state. If you're in a, what I'd say, regulatory-friendly state like Alabama, Wyoming, Texas can go quick. If you're in California or Massachusetts, that takes a lot longer. So varies state by state. And then once you get the regulatory approval and your load study, then you need to get the actual infrastructure, the energy infrastructure. So you pick up the phone and okay, we've got a nice piece of land like our property in North Carolina. Now we need transformers, and I'm going to call Siemens and place an order. Siemens will gladly take my order and sell me a transformer, but they won't deliver it for at least 24 months because the supply chain right now in this industry is as dry as the Sahara Desert. You just can't get transformers. They don't exist. Maybe if you're lucky, you overpay, you get some news ones, but so much demand. So you need all this infrastructure. And then ultimately, you have to find a customer. And that can vary because customers have different requirements, depends what it's going to be. If you look at that box on the right, we've already done all of this, and that's the excitement behind the Digi Power X story. So we've got 70 megawatts load study approved in Alabama. We've got all of the infrastructure in place, direct grid connection, transformers, gensets, everything, cable. We've got that load study complete, and we are deploying right now our ARMS 200. These are certified Tier 3 units. These are being deployed and exciting time for us in Alabama. So our 2 business lines here in Digi Power X, I've been talking a lot about our ARMS 200 pods. So these, again, about a year ago, our Founder, Chairman and CEO, Michel Amar, had the vision to reach out to Super Micro. And he's got a very, very strong relationship with Super Micro. He had this idea in his head, "Hey, let's collaborate and let's design a modular Tier 3 system. " So these are scalable. Inside, they're liquid cooled. That means we get better efficiency, modular design, the racks are made and manufactured by Super Micro. And in those racks are the latest and greatest NVIDIA Blackwell B200,B300 chips. So this is really cool because being modular, we can deploy these with less CapEx and we can generate revenues quicker and we can expand. So we can deploy our ARMS pods, would say, as little as 1 megawatt and scale up as we get tenants, as we get revenues and cash flow. Now this product, very, very successful, great design. So we went out and we actually patented it. We have a provisional patent filed. We think this ARMS can actually become its own independent business line. Not only are we going to deploy these to Alabama, to Upstate New York to North Carolina. But let's say, other companies decide, wow, this is great. We'd love to convert our infrastructure, our former Bitcoin mining operations into Tier 3. We could sell them our ARMS pods and make even more revenue. So really, really exciting. We're already working on the next design to scale these ups to ARMS 300 and 400. So that's going to become really interesting. Those will be targeted larger clients like sort of hyperscaler tenants. On the right, NeoCloudz. NeoCloudz, that is our GPU as a Service division. So you're going to be able to literally rent chips directly rent infrastructure from our NeoCloudz division. You'll be able to log in off the net, go to a cloud portal and rent time on the chips. This is really cool because, okay, the Mag 7 and hyperscalers, they can afford to go build a $1 billion data center. But what about the small guy? What about the small college or the small university that needs some AI computing power? What about the small biotechnology company? What about the doctors and dentists office that would like to use some AI for marketing and customer outreach and things like that? Well, they could come to us on our NeoCloudz platform. We'll have an API for all of the access and they can rent the top-of-the-line NVIDIA chips for their HPC calculations. So moving on, we are currently in the process of completing our Alabama facility pivot. As we did this, we formed a new subsidiary in February this year called U.S. Data centers. Really exciting. It's a wholly owned subsidiary of Digi Power. We've got our own website. The reason we did that is we wanted to kind of separate the Tier 3 data centers from our historic Bitcoin mining. A lot of investors really want Tier 3 data center focus. So U.S. data centers has retrofitted Alabama, the 70 megawatts there. It's deploying the arms, modular units. You can see them in this rendition here. They come in mill bands, modular shipping containers inside of the ARMS. So it's very, very scalable plug-and-play kind of like LEGO bricks, if you will, for Tier 3 data centers. And that allows us to really scale up quickly. Again, in Alabama, we have 70 megawatts. The reason we're doing this is the valuations on the Tier 3 data centers are significantly higher than Tier 1 historic Bitcoin mining operations. Look, if you look down the bottom here, we're anticipating having 20 megawatts of tenants by mid-2026 and 40 megawatts in Alabama by the end of '26, could go higher because we have 70 megawatts of power. But even on 40 megawatts, the current valuations in the market, about 12.5x enterprise value to EBITDA, that asset alone by the end or even mid-2026 could be worth up to $500 million of market cap. Now again, our market cap today is only about [ $275 ] million. We have a little over -- approximately $100 million in cash. That does not include the Upstate New York wholly owned power plant, the North Carolina site. So you start to see how these pieces can really, really add up and unlock a tremendous amount of shareholder value. Looking at our Tier 3 build-out, so the ARMS Pod, one thing we're very excited about is back in August, the end of August, we did an independent audit on it from EPI. This is the gold standard in the industry. And we got the results of that at the end of August that our ARMS 200 are Tier 3 rated, they're certified. They meet the highest global standards for resilience, reliability and compliance and data center design. So very, very excited about that. We have the provisional patent filed. And as I mentioned, we're already moving on to the ARMS 300 and ARMS 400 designs. So -- when we look at how this all plays out and where we could go, currently today, we've got about 212 megawatts energized. Of course, not all of that is yet Tier 3, but that is our immediate low-hanging fruit when you look at those sort of megawatts. Moving in the future, with our North Carolina site, the additional 200 megawatts to bring that on, we've got capacity and infrastructure of about 412 megawatts that we do plan on turning everything into Tier 3 here in the next years. Why are we doing this? Well, the reason we're doing this is because of these valuation differentials in the industry. The digital asset miners, the legacy Bitcoin mining companies, which we were, we're trading around 5.6x enterprise value to EBITDA. If you look at that comp average and over on the right, the HPC, high-performance computing companies, wow, they're trading at almost 22x. Huge valuation differentials. And why is that? Well, once you build out the infrastructure, the tenants tend to be long term, the revenues are very attractive. They're very sticky. Those leases tend to be 5, 10 years plus renewable with really, really high-quality clients. So you get these nice valuation re-rates. And that's where we believe we are heading. As soon as we announce our first tenant in Alabama, which could be any day, I think you're going to see a significant potential re-rating and valuation on the company. And why would that be? Well, if you look on this slide, just kind of what we could be looking at for potential as we transition our portfolio into Tier 3 HPC AI data centers, we think the end of next year, the end of '26, 70 megawatts could potentially be Tier 3. If you're looking at $12.5 million, as I shown on the last slide, that could imply a potential value for the company of $875 million. If we could convert all of our 412 existing megawatts, then it becomes very, very substantial. Now with a huge caveat that everyone knows, that's going to take a lot of CapEx. We are certainly hoping that Alabama for us becomes the success, the proof of concept, people see it. And then the debt markets open up, we could get a lot of debt on very, very favorable terms to build out our CapEx and infrastructure and move towards this 412 megawatts of Tier 3. And Michel Amar, I'll tell you everyone, he is always looking for the next acquisition as well. In addition to Michel, we've got a great team, a deep bench. Alec Amar is his son with a technical background. We did just announce Jag coming on as our CTO. He's got experience in Silicon Valley with some of the big boys like Oracle, Equens, VeriSign, et cetera. Our team up at our power plant in North New York, some of those guys have been there 30 years. They're used to dealing with federal government regulators, consultants, engineering, construction, build-out, overseeing all the contractors. We've got a great advisory board. We've got a fantastic Board of Directors and a team to execute. So in the interest of time, I am going to wrap up here. I really do appreciate the chance to present to everyone. I think I have maybe a minute left. So I'm going to look at the questions. I apologize to everyone [indiscernible] so many questions, I'm not going to be able to answer them all. I'm just going to pick the very first one that I'm seeing here.

Can you talk -- this is the question, I'll read it. Can you talk about Digi Power X's business model for Tier 3 colo and Neocloudz? Yes. Thank you for the question, by the way. Thank you very much for that. Look, we think in the future, colocation at our Alabama, Northern New York sort of facilities is probably going to come in around $150 per kilowatt per month. Now that is a forward-looking statement, but just to give you an idea on maybe some of the projections. NeoCloudz will be very different because I mentioned, these will be smaller organizations and companies, maybe even educational that will be renting our chips directly by the hour. A lot of our competitors out there are in the $15 to $20 range per hour per chip. So on our ARMS cluster, 1 megawatt cluster is approximately 500 chips. So if you look at that, maybe 500 chips at let's say, low end $15 an hour. Well, if we rent it up the whole month, 24 hours in a day, 30 days in a month, you can do the math, and you can see what these can generate. That is a very, very attractive amount of monthly revenues per megawatt. So that's kind of the economics on it and how we plan to split that out. We don't -- unfortunately, my time is running out. Please feel free to reach out to me directly. We're going to put this presentation up on our website. We did just come up with a new website, very exciting time for us. We'll be presenting at a lot more conferences in the future, trying to get this word out and really, really appreciate the IAccess Alpha conference team for having us here this morning.

Thank you very much. That concludes Digi Power X's presentation. You may now disconnect. Please consult the conference agenda for the next presenting company.