HIVE Digital Technologies Ltd. (HIVE) Earnings Call Transcript & Summary

Hello, and welcome to today's webcast covering HIVE Digital Technologies Financial Results for Fiscal Q1 2027. My name is Nathan Fast, Director of Marketing and Branding at HIVE, and I'll be your moderator for today's call. Before we get started on Slide 2, I'd like to briefly note the disclosures for today's presentation. Except for statements of historical fact, this presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as expects, believes and similar expressions identify these statements. Actual results could differ materially, and we disclaim any obligation to update them, except as required by law. For a full discussion of risk factors, please refer to our most recent SEC filings at sec.gov. In addition to discussing results that are calculated in accordance with GAAP, we will also reference certain non-GAAP financial measures, including adjusted EBITDA, adjusted net income and free cash flow. Management uses these metrics to evaluate operating performance and believes they provide investors with additional insight and their presented for supplemental purposes only and should not be considered in isolation from GAAP results. Reconciliations to the nearest GAAP measures are included in the appendix to this presentation and in the press release and Form 8-K furnished to the SEC. On the next slide, I'm pleased to introduce today's presenters. Frank Holmes, Executive Chairman; Aydin Kilic, President and CEO; and Darcy Daubaras, Chief Financial Officer. I'd now like to hand the presentation over to Mr. Frank Holmes from a macro recap of the quarter. Frank?

Thank you. And so let's go to a quick macro capital that's been affecting stock markets and high stock price and valuations over this past recent quarter. Next, please. So before we jump into those granular details, it's always important to understand the DNA volatility in every asset class has its own DNA of volatility. And this is the highlight that for specialty, we find so any people like to trade HIVE. [indiscernible] it is a nonevent over 1 day to go up or down 6% and over 10 days, 23%. You can see that's a little more than core we've -- it's substantially more than what Bitcoin is and 4x more what NVIDIA is when we look over 6 trading days. So it is just a factor of these macro forces pulling with these announcements from what Bitcoin is doing on a daily basis to the announcements of our AI build-out. So when we have a strong Bitcoin day and good AI sentiment, the stock has these big surges vice versa, a negative day in the world of AI and Bitcoin down and you get these downdrafts. These appear to be the factors driving a lot of the sentiment. The leadership team has been up here before, Aydin, CEO, the best operator in I'll walk you through why in the data center business, and Craig [ Daubaras ], our superstar sovereign bigger, I mean, incredible builder of data centers build out our vision in Canada, in particular, which is the losses track that we have and the government is committed to it with having a minister for AI. Darcy Daubaras, our CFO; Gabriel [ Igea ] in Europe; and Gabriel [ Lamas ], who's in Paraguay; [indiscernible] [ Thormbod ] is also in Europe. HIVE operates over nine timezones and five languages, and we're able to manage that complexity and still be one of the most efficient Bitcoin miners and our HPC data centers that we have functioning today in downtown Montreal, Stockholm in Manitoba and British Columbia. Our efficiency is always ranked by third party as the top of the stock. Hive has always used green energy. Canada Sweden Paraguay. Low the electricity cost, low temperature, fast Internet connection. And what we've been doing is to accelerate the AI build-out as early dark fiber, dark fiber in British Columbia -- sorry, dark fiber in Brunswick in Canada and dark fiber is next to be laid in Paraguay. But we've been able to demonstrate on this ability to export convert electrons and exports to, they call compute power, 5,000 miles away. So that's pretty impressive. And so we're pretty excited about what the opportunities down the road is from Paraguay. I want to thank all the shareholders, you can see Invesco, Citadel Advisors, Millennium management, 2 Sigma investments, Charles Schwab -- Charles Schwab is probably the biggest in the retail component from registered investment advisers and the retail public. So thank you all for or listening to the call for being shareholders. For the quarter ended June 30, you can see that HIVE performed its 50-day moving average. They had a big sell off along with the whole industry in July. And it was one of the biggest outpouring in the month of July by hedge funds. And a lot has to do, which I'll mention later on about the carry trade in Japan and the significance of the sort of domino effect a contagion, Japan on their money back because rates are going up, and it impacted first the Korean stock market, which was one of the best performers last year, up about 100%. It had a huge correction as in particular, technology and AI-related stock sold off out of South Korea. And we saw that domino effect impact in America and we saw a lot of AI anything related also being deleveraged. And I think that, that sort of worse is behind us. And the sentiment factors, they swing back and forth what investors have to realize is as carry trade Japan is quite significant in my years as a money manager of seeing the swings back and forth globally of what it's done. And so it appears that the worst is behind us now out of the Japanese economy. We're happy to see that the high outperformed Bitcoin at the end of June when you look over that time period this year. And I think a big part is much of our AI strategy and announcing the growth in the revenue from $1 million a month to $3 million a month and now expanding that it will be going to $5 million to $6 million to $10 million a month with these contracts that we're building. And we have machines that are increasing this year-to-date substantially over the year, the daily cash flow coming from our GPU chips, in particular, the suite of NVIDIA chips we have. I mentioned earlier that Japan carried trade online is a macro risk. I think the worst is behind us, but any rising rates in Japan will have a big impact. We've seen the administration come into support Japan's currency that even though rates were rising. And then it appears to be sort of an aftermath of COVID that after 3 decades, inflation started showing up in Japan, and rates start rising. They went for 3 decades of basically at majority time issuing 0 cost of capital or 10 basis points, funds would borrow in Korea, in U.S., Canada, England, and get U.S. rates from 4% up to dividend paying stocks and then speculative stocks. That was starting to unwind as a pan started seeing the rates rise and they want their money back. This is a real important phenomenon for investors just to be able to follow the Japan carry trade because it could impact you, you don't realize why the stocks are up or down during the day, there's no news, and it could be an unwind or reloading around the world. Well, it's been exciting to respect that last year, we substantially increased our hashing power in Paraguay, in particular, taking overall complex from 6 exahash to 25. That gives us economies of scale. And that gave us the ability to deal with the drop in Bitcoin pricing and the difficulty rising. And those are two real significant headwinds, especially in February of this year, we hit, and we've been able to make money every month, even though and I can share with you, have we not strapped on that additional power, we would be -- very difficult to be operating a Bitcoin operation today. But we are -- we have this key scalability at 2% and then redeploying our Bitcoin into expanding our AI Gigafactory vision. So Aydin is going to give you, and Darcy, our CFO; and Aydin Kilic, our CEO, is going to give you more granularity on these numbers. But underneath the hood, underneath all these noncash charges, such as the depreciation that we have to take for our chips and this particular the noncash charges out of Sweden, which we'll have more discussion on as we go on this ongoing battle with the Swedish tax agency, which changed the rules from when we initially went there. The interpretation the laws haven't changed. It is their interpretation because they're very anti-crypto industry. And even though we tried to explain that we're exporters of electrons, we take hydroelectricity, run them through an ASIC chip, and we export that hashing power compute power to foundry, which was a pool in the U.S., which is SOC1 and 2 compliant, and they pay us a Bitcoin and Bermuda. It's an export industry. And what's really exciting is that Paraguay Central Bank gets that, and it's important now for them in calculating what the GDP is and the contribution to their of how we use a chip and AI business is very similar, and that is you take the electrons, you run for the hydroelectricity of hydro, they go through your GPU chips, and you can transmit that GPU power the compute power to New York City. And we've demonstrated that in a test 5,000 miles. Now you cannot send electricity on transmission lines 5,000 miles, but you can convert them into compute power and seal fiber optics cables along the bottom ocean 5,000 miles, and someone can create models at New York at Columbia University, which is basically validated that exercise. So when you look at a Bitcoin mining industry or you're looking at an AI Gigafactory, what investors have to realize is that you don't have an ATM, you don't have a Bitcoin machine that spits Bitcoin. No, you really export out to a pool of Bitcoin mining or to an end user wants your compute power, and you can transmit that. So this is phenomenal because you can take all this abundance of electricity in Paraguay and you could turn around in export by converting those electrons into compute power, and they can be used all over the world. So it's very exciting where we are doing on that, but it doesn't stop still this ongoing saga in battling with Sweden. And we believe that based on land and our expert witnesses, we will go through this process, and we believe that Justice will prevail. But what's important for you is to recognize underneath the hood is that the revenue quarter grew 10%, net operating income grew by 86% because at the beginning of this year, February was a very big challenging month. So the year-over-year, it goes to show the significance of the scaling. I mentioned at the very beginning, taking revenue as year-over-year grew by 73%, even though Bitcoin fell by 40% and operating net income grew by 50%. So we're really thrilled of our positioning of having 2% of that global network and continuing to build out that dual engine, in particular, this year, is our HPC high-performance compute strategy to build AI Gigafactories. And Craig [ Daubaras ] will give you more granularity as we go on, but who's really going to really carry that ball for you today, it's going to be Aydin Kilic. The team is very, very proud of closing another $130 million of exchangeable notes, 0 cost of capital for interest payments. That money is not earmarked for Sweden. That money is earmarked for the fastest path to cash flow and revenue, in particular, in our partnership with [ Bell ] Canada. The countries that win the AI race will just produce the smartest engineers that build the infrastructure to support them. And data centers are becoming an essential to economic growth as railroads were a century ago. Quote I've been saying as speeches. And one of the things that in our Gigafactory and being the biggest in Canada, I think what's really interesting is that is not taught in school in Canada to the degree, but I grew up there as a child, and Toronto was very proud of their medical breakthroughs and research it inspired me and part of my journey of education was to going into medical school before I pivoted to go into business economics because I was just so in love with what was taking place in Toronto and Waterloo and the University of Western Ontario, the founding school is called [ Huron ] University, I said on the board of. I was always thrilled to know in 1921, insulin was discovered in Toronto. [ Pablon ] was developed in Toronto. The pacemaker eras pioneered. Polyol vaccine in scaling it was at 1955 when I was born, was done in Toronto. The first successful double lung transplant, is fibrosis gene. I can go on, but it has rich with intellectual capital with two major schools, the University of Toronto and Waterloo University, which is like Canada's IT. There are many other schools all around like the [ Schooling ] School is famous for business in Toronto. But there's many scientific research laboratories in that area. And Toronto is the financial capital of the country. Ottawa is like Washington, D.C. is the political capital of the federal government, but the universities are really in that greater Toronto area. So we've been on a campaign to try to educate investors in Canada as well as in the U.S. both the University Health Network, SiC Kids Hospital. One of my friends is a doctor here, pediatrician -- and his in terms of was in Toronto at SiC Kids, the Princess Margaret Cancer Center, the Vector Institute, where the Noble prize went 2 years ago, Jeffrey Henning was at the University of Toronto. It's the use of artificial intelligence to approve cancer diagnosis, drug discovery, medical imaging, it's very, very big. But what they do not have are these big Gigafactories, AI Gigafactories, and that is where HIVE's buzz is buzzing with activity to build up. So other things just to understand, appreciate Toronto more outside of the Maple Leafs or the Raptors Basketball and the Blue Jays baseball. The telephone innovation was not too far from the city of Toronto, the Electron microscope in 1938, [ anti-GGC41], Deep Learning 2006, Ethereum next place was discovered by a student out of Waterloo University. What's also important in this visual is to show you the triangle of concentration of Internet nodes and in particular for AI and transferring of data, the big concentration is from the Toronto region up to Boston and down to Virginia. This is a visual to show you where like Ontario is Finger Lakes, as you see is New York and the University of Toronto and the buzz, Gigafactories right in between Waterloo University and University of Toronto, the University of Toronto is much closer to where Toronto is than this map. But it gives you an idea that this is an important intellectual capital. Just like I've mentioned before, that you look at bio research, 50% of bioresearch is done in Boston, San Diego. If you look at Other types of gaming, there's clusters of software coders that show up. And when you look at cybersecurity, the biggest clusters is right here in San Antonio, Texas, with the UT university, which has the biggest school, cybersecurity school in the country with 10,000 students. So [ Vatelic Butren ], the criterion went to Waterloo as like called the MIT of Toronto because of the software number of geniuses that come out of that school. So this is to give you an idea from a macro point of view, which has happened this year as semiconductors have had a big run and they've started coming off of the correction, as you can see here in July. And a lot of this had to do with the contagion from Japan to Korea to North America to Europe. And it looks like the worst is behind us now. What's important when I look at and I hear all it's a bubble, it's already -- it's the worst ever. It's a bubble, bubble, bubble. And all these people are coming up with PhDs and [ bubblelogy ]. I share with you that it's far from that. And the amount of these collateral minerals, you need lithium batteries, not just for cars, but you need them for all these data centers. And you can see the drive for lithium and graphite and nickel and zinc and copper. Copper is make an all-time high because gigawatt of electricity, converting that to an AI factory like Belen, Texas, is going to consume 50,000 tonnes, not copper tonnes of copper. And most think of pounds of copper now 50,000 tonnes, and that's 2,000 pounds per tonne. That's a significant amount. And when we look around the world, it means that the supply is limited and it continues to have big demand globally. That's another sort of demand that I see that's going to continue with building out of AI centers. And there's lots of political headwinds as election years, it becomes on the agenda. But it's not going to stop this build-out. This is just looking at spending for you and you've seen this in other visuals, but it's just Important to recognize the peripheral equipment for computers. Those stocks have been on Ontario, and it's not just here in America. It's a global phenomenon. Anyone's involved in the building construction of these data centers. I was thrilled. I mentioned early Bitcoin, in particular, was the bank -- Central Bank of Paraguay recognize that Tier 1 data centers, our big contribution to the GDP because it's a way for the country to export besides food and beef, they're able to export electrons and they export them with compute power. And that's a significant contributing income to the country for its size. So I'm very pleased that the Central Bank has had this ability to really grasp the significance of this being an export industry. And hopefully, other countries will all of a sudden recognize that like Sweden and Canada, Norway and Iceland that it's an important component of converting hydroelectricity or any other type of electricity with GPU chips to be able to export that compute power. So it's a [ visual free to gross ] you cannot transmit electricity from Paraguay to New York, but you can send AI compute power. And those GPU chips is what we do, and we've shown it, we've demonstrated. And that is a big breakthrough. We think this is very significant, what we've been able to demonstrate. And after we lay all the dark fiber necessary in Paraguay, like we're doing in New Brunswick on the Board of Maine, I think that the ability to move those molecules electrons and the compute power will even accelerate. That's the team, 300 megawatts building out in Paraguay and expanding another 100 megawatts. So this will give you more granularity of other things we're looking at. We are looking in Texas, Paraguay substation being built boat in the land that we end up purchasing in a separate entity as we repurpose the land and power in Sweden and then the Gigafactory that's taking place in Canada, in particular, in New Brunswick, and then this joint venture with Bell Canada, rapidly expanding in British Columbia. So we are coast to coast and the biggest technically hyperscaler in Canada. That's the building beautiful data center that we bought in Northern Sweden with the land and the long-term power contracts. And we have a very strong footprint in the community. There's the HIVE hockey arena and which we sponsored 12 kids learning how to play hockey. This is a draft to visual for what we expect to see over the next couple of years in Toronto for the AI Gigafactory. This is really quite phenomenal that -- Aydin will give you more granularity, but the relationships that Craig has been able to build and accelerate with other key groups and entities. So I think it's really important to see that a couple of years ago, it was predominantly the relationship that we had with NVIDIA and Aydin myself, had and purchased a lot of NVIDIA chips, but what we've seen with Craig taking that ball and running with it has really accelerated these other relationships and the trust to be in these other countries that have sovereign data centers. So this is just to give you an idea, we're traveling all over the world all the time meeting with captains of industries like Michael Dell several times, President Pena, [ Jensen Hang ]. So we are meeting with very important people that have visions and President Pena has an incredible vision for the country. You can see Gabriel [ Lamas ] or on President Pena shoulder. Well, it's the big vision is to make that the biggest destiny center for Gigafactories in Latin America. So it's great to be with young executives, like Santiago Pena, the President of Paraguay that has us phenomenal vision. And we hope to be fast tracking that process and growing with this country. While here as I turn it over to Aydin. And as Aydin flowing touched on pass to Craig [ Daubaras ], which I just mentioned, Aydin Kilic is our electrical engineer. He's our CEO, who was resin our President and Chief Operating Officer and saw the building and construction of New Brunswick and help dramatically build out Paraguay for HIVE. And I think it's important to listen to give you the story. And also have been very much involved in Wall Street and raising capital for this growth we have for our Gigafactories. There you go, Aydin.

Thank you, Frank, for the excellent strategic overview. Now let's get into an executive summary of the quarter to date, our recent accomplishments and some citing things in the pipeline. Starting here, financial highlights for the quarter, period end June 30. And $79 million of revenue, $24 million of gross operating margin and $15.2 million of earnings from operations, which is revenue less cost of goods sold, less corporate G&A. We do have a $143 million net loss, which is really driven by two noncash items. This is depreciation of about $54 million and this roughly $85 million provision for tax liability in Sweden. This is actually a long-standing issue that we've previously disclosed over the last 2 years going back as far as 2023 related to the Bitcoin mining business in Sweden and VAT tax treatments for basic imports in the Bitcoin mining business. So we are appealing it. We are contesting it. We do not plan to pay, and that is why it is a noncash charge on the financials. There's further disclosure in our earnings press release, but I really want to focus on the operations of the business. We did make $15 million this quarter on a noncash basis or if you interpret it through adjusted EBITDA, $13.4 million. And of course, the depreciation -- look, we have a very aggressive 2-year depreciation cycle for those ASICs, that means over 8 quarters, ASICs will get depreciated to 0. Well, guess what, we imported about $0.25 billion of Bitcoin mining equipment, the containers and DC to Paraguay last year. So that depreciation is still hitting us quarter-over-quarter, and we have 4 year depreciation for the GPUs. And of course, as we have GPUs from the past to bring online more, that's really where that noncash number comes from. Quarter-over-quarter and year-over-year. I'm very pleased it was a strong quarter growth, 10% in revenue quarter-over-quarter, 74% growth year-over-year driven by the expansion in Paraguay. And moreover, if you look at the earnings from operations, again, that figure $15.2 million, that's up 86% quarter-over-quarter. Again, last quarter, Jan, Feb, March, we saw the downturn in February, mine economics were the lowest they've been. We navigated that still with the business generating $8 million on a cash basis this quarter, April, May, June, number, almost doubled to $15.2 million. And year-over-year, that number is up about 50%. So again, having a lean and mean corporate G&A. We've made a lot of strategic higher scale the HPC business. But we really want to focus, does the business fundamentally on a cash basis, make money. So what is your revenue? What are your direct operating costs for your COGS and of course, your corporate G&A. And you can find this nicely summarized on the Page 20 of the MD&A, but here it is graphically represented. This is a breakdown of the Bitcoin mining versus HPC revenue. Currently, our HPC revenues represented by the GPU Cloud revenue, $7.1 million for the quarter represents about 10% of the total revenue this quarter and $72 million as Bitcoin mining about 90%. But I want to point a couple of things out. So the last 4 quarters, the previous 4 quarters, we were doing roughly $5 million a quarter. We're at that $20 million ARR figure. Well, in May, that B200 cluster went online in Bell Canada's Winnipeg facility. And that got us to $7 million of actual revenue for the quarter. So you're seeing that growth and that number is going to continue to grow, and we're going to explore why. But just looking at the quarterly analysis, Bitcoin mining revenue grew 7% quarter-over-quarter 7% year-over-year, again, having Paraguay, fully at scale. And of course, as I imagined, HPC is growing. So if you look at that $7 million realized for the quarter of HPC revenue, that's about $28 million ARR, if you annualize. So let's go to the next slide. Well, that means at Q2, we exited the quarter at $28 million ARR. We're actually doing $35 million ARR today because we're about 97,000 daily HPC revenue. But here's the big news, everybody. We have hit a massive milestone. I'm so excited to share our team's done a tremendous job and we are at $180 million of contracted revenue because we just announced a new 5-year deal, which adds 70 million ARR to our HPC business unit. And this is brand new. We just announced it this morning. This is in addition to the [ Cohere ] deal, which we announced a few months ago. So you now have $180 million of combined active and contracted revenue, we're very excited. This is a 5-year contract that we just announced. These are GB300s, 2,000 G300 is going to go to the Bell Merit facility. These will be delivered and deployed in Q4. It is a 5-year contract for a $350 million total contract value, therefore $70 million ARR. Super excited. We funded the acquisition of these GPUs using proceeds from our June convert where we did the $130 million convert at 0% coupon. Lenovo is our partner for the OEM on these GPUs and this gets us to that sweet $180 million number. And by the way, we're still targeting $200 million ARR for the GPU cloud business with Q4, we still have more GPUs to bring online in the pipeline, but we're at critical mass ladies and gentlemen. So very exciting. And of course, this will go into the Bell Merit facility, which will be closed liquid-cooled ultralow PUD. I was actually just there that last week on a site to where the call is looking phenomenal. That Merit facility will help both the [ Cohere ] cluster of G200s in this new GB300 cluster. And this is with an investment-grade global technology giant that we signed this deal with. So that's fantastic. And they're actually putting a 10% down deposit of total contract value of about $35 million. So that's very exciting. If you zoom out and look at the total contract value now of the cluster deals we sign, we are up $600 million of GPU cloud TCV signed this year. this year. The buzz team has done a tremendous job, Craig [ Daubaras ], Mark [ Volk ], Mario [ Sergi ]. They've all been doing a phenomenal job, Gabriel, the be really the whole executive team. Of course, Darcy, everybody has been working around the clock to make this a reality. And of course, it all really started with Frank's Vision when we ordered those in GPUs back in 2021 to pivot from Ethereum mining to HPC cloud. So to see here today that we've got $600 million in total contract value signed really this year. And we're -- our market cap is about $800 million. So see how attractive we are. And so I think that the stock should be due to rerate with this fantastic news. And these are long-term contracts. We told the Street when we were doing our converts to fund this growth that we were going to focus on long-term 3- to 5-year contracts, which is exactly what we've done. The [ Cohere ] contract 325 million TCV and this new G300 contract with the tech giant investment grade is a 5-year deal. So very exciting stuff. And of course, that is a snapshot, a picture they are one of our actual clusters. So this is a snapshot of the two convert deals we did this quarter in April and in June. Collectively almost $0.25 billion 0 coupon debt 5-year bonds. We did purchase a capped call for each to minimize dilution. So the cap call conversion premium $4.92 for the April bond and then $8.53 for the June bond. Those capped calls very attractive as you minimize dilution and, of course, having that 0 coupon interest. So we are delivering on our promises. The proceeds from these notes were to go towards the acquisition of these GPUs, which by the way, the GPUs we still finance, so we put a healthy down payment down and try to minimize our cost of capital all the way around and then have financing for the rest and targeting about 20% to 30% down per GPU cluster and the balance you finance. So this is just an overview for all the analysts and uses out there if you want the granular details of the three deals we have now. So three deals in Bell AI fabric data centers in the Winnipeg facility, and of course, the Merit facility, those are going to get delivered and deployed in Q4 of this year, the G200 cluster for [indiscernible] and the GB300 we just announced. So we talked about that landmark $180 million of contracted revenue. Here's the breakdown. Again, this is a really handy slide if you want to pause on this slide for all the analysts and enthusiasts out there shows you that we have the approximately 5,500 GPUs online today doing 35 million ARR and then the two large clusters coming online in Q4, which brings us to 9,800 GPUs contracted or active bringing us to 180 million ARR target. And again, by the way, our year-end. We're still targeting $200 million. By Q4, we still got some more bullets in the chamber, so to speak. But for the most part, we've done a trendous job. It's August, and we're already at $180 million of that $200 million target that we have. So very proud of the team -- it's been a tremendous quarter, and I think it's going to be an amazing year. Let's go to the next slide. We also announced an LOI for our [ Odense ]. This is an HPC colo lease. This is for $45 million ARR we announced it in June, 25 megawatts of IT load. So I'm going to pause here and let this sink in. We are at $180 million of active and contracted revenue today with our GPU cloud business. If you add this $45 million ARR HPC colo deal, which we will announce the total deal size, how many years, et cetera, when we announced it at which we hope to announce before the end of September, then it puts us at $225 million ARR contracted HPC revenue with cloud and colo. And I think that's really exciting because our target was $200 million for the end of the year. So we're blowing past that target ahead of schedule once this deal is announced formally. But I just want to put that into context. So really exciting stuff. Nothing is slowing down. We just announced this a $350 million 5-year GPU cloud deal of GB300s, and we've already got another bullet in the chamber. So really exciting. Let's hop on the next slide because I want to underscore the value proposition, the value proposition if you look at having a diversified some of the parts valuation, we've still got the Bitcoin mining think about the $750,000 a day of revenue, $275 million ARR today. We've got the $180 million signed contracted revenue, including $35 million of active and then, of course, once we bring online that Boden HPC colo deal, what you can look at here is if you look at the multiples that our peers are rating at so on the cloud, looking at the core [indiscernible] high ends of the world. It's about a 5.5x based on 2-year forward revenue. multiple. And if you look at the HPC colo, your [ Wolf ], your [ Ciphers ], your [ Huts ]. It's about almost 11x multiple. So if you apply those multiples to -- and with some of the parts. And then you sort of have the normal valuation based on where our peers are, such as [ Marin ] Clean spark that still have large cash rate online. The composite sounds a $2 billion enterprise value. And again, we're hoping to announce this potent HPC colo lease before the end of September. So I think that there's a lot of real exciting near-term value growth. In fact, I think with the announcement again of this GB300 deal, we're due to rerate as we've massively grown our ARR to the $180 million contracted number. But this is the case for a $2 billion enterprise value in your term based on where our peers are trading. So recap, I know it's a lot going on. We huddle every day over nine timezones where we operate in three continents, Europe and North America and South America. And we've got $35 million ARR active. Today, again, that really hold in $180 million contracted GPU cloud revenue, ARR and then that lease, which was announced in June for Boden. And again, we also announced the Gigafactory in May. I was technically in this Q2. So just giving you a quarterly recap. It was a very dynamic quarter and also very excited. Here's a bit of a double-click on this Boden data center LOI. So it's 32 megawatts of utility load, which would be 25 megawatts of IT load. We have a FIT test complete. We have a Tier 3 data center builders to actually do some Tier 4 as well. It's very prevalent in the Swedish market. They've been at it for 9 months. This isn't something that just -- we just picked up last week guy. So -- we just announced LOI. So that's why it's new news. But this is a legacy site. We've been operating here since 2018. This is the GPU super site where HIVE was mining with 130,000 GPUs Ethereum. In the Ethereum mining hay day, almost 6% of the network at its peak. And what the catalyst is the catalyst was that we got approval from the Boden municipality to buy this building because this was long-term lease with the municipality. They actually own the building. And we just got approval to buy it. And that was the catalyst that suddenly made it an HPC co-location conversion candidate. And so that was the big news in June. And here it is by the numbers, what it works out to. And that coal rate, by the way, is about $150 a kilowatt a month. So very strong, very comparable to some primary U.S. markets that we've seen our peers sign data center deals for colo throughout the U.S. So very exciting. Now once we announce a definitive deal, we'll have the total contract value, we'll have the length the lease. But right now, on an indicative basis, you know that's $45 million ARR at HPC colo, and it's with an investment-grade Swedish offtaker as well as a telco company. So we've talked about the Gigafactory, the crown jewel of our Canadian assets. We announced this in May. And of course, this slide was in our last quarterly update. But here it is, again, just as a frame of reference, I expect a lot of news as we advance this site. It's very exciting. We expect to energize the site end of 27.5 compute come on early '28. Our dual-engine strategy. We are at approximately $850,000 to date. And that comes from $750,000 a day of mining. Bitcoin, got 24 exahash operational. It's actually 25.3 installed. We just optimized with firmware and down clots and machines. Again, we are in bear market economics. So how do you maximize your profit, so that's running off about $275 million ARR. And then on, of course, buzz with the HPC is about 97,000 [indiscernible] days. You add that up, it's about 850,000 a day of total revenue. And if you look at our COGS and SG&A, the total cash cost to run the company globally, Again, I always like to go to Page 20 and 21 in the MD&A. We've got a nice chart. It's my favorite page in the MD&A, which is a long and it's a great document for all the analysts and duties out there. If you add our total operating cost of about $63 million for the quarter or up about 690,000 a day. And that's just a good number I'd like to have at the tip of my fingers because if we're doing $850,000 of daily revenue, on a cash basis and our global operating costs, everything. On the conference is paying for data centers, electricity, you name it, salaries, everything. It's about $690,000 a day. I mean we're printing. We're doing about over $150,000 day of profit. So that just gives you a sense of the health of the business. And again, you have all these noncash charges and accounting treatments, et cetera. I'm an engineer, I just want to know as a businessman, fundamentally, are we making money on a cash basis? Yes, great. let's look forward. So once we get to that $180 million contract and those go live in Q4. Once those go live in Q4, it's really easy math, $180 million of GPU cloud business, about $500,000 a day. So what does that mean Well, I mean, hash rates can vary, but let's just assume line economics are similar in the next 3 to 4 months, which is not far away. We're in CapEx right now. That would be 750 graded on Bitcoin mining and $500,000 a day on HPC, which includes our GPU Cloud revenue. So that's about 40% of global revenue is what the HPC business is going to constitute with Bitcoin being 60%. So again, this quarter, it's 10% AI and 90% Bitcoin mining within the next few months, that's going to be 40% on the AI and 60% on Bitcoin mining. So really exciting outlook on the dual engine strategy. Zooming out global power footprint, we have 86 megawatts globally. That includes 440 megawatts active of Tier 1 site. And of course, the additional 420 megawatts, which is 100 megawatts in [indiscernible] that we're building out, a substation, of course, the Gigafactory in the Greater Toronto area. So what you can see on this slide to try to make it easy for the viewers is the sites that we've highlighted in green are sites that we own the last states that are candidates for conversion to Tier 3. And if you tally that number up, it's about 440-megawatt pipeline between Canada and Sweden for our conversion to Tier 3, which is very exciting. And by the way, there's -- on top of that, [indiscernible] as well. So it's very exciting. And I think that if you look at the value proposition and what that looks like on a revenue basis on our 2-year vision, let's go to the next slide. So on the left, GPU Cloud on the right HPC colo. So again, we are at $180 million contracted today. We went over that earlier in the presentation. We still have some room in Quebec put another 500 B300s in, that will add 20 million ARR. So our end of year target is actually $200 million ARR on the GPU cloud business, and we're so close to that, given that we're at $180 million contracted now. And then on the right-hand side, if you look at the portfolio of sites, the Toronto site or both of our Boden and such, of course, New Brunswick and the Gigafactory. On an HBC colo basis, 325 megawatts of critical IT load, would generate at prevailing lease rates, 150 megawatts -- $150 a kilowatt in Boden, $130 in New Brunswick and so forth, the Gigafactory and lives about $160 a kilowatt. If you do the math, what that works out to the competence on $500 million of HPC colo revenue with these sites being developed over the next 2 years. So on a total basis, between AI cloud and HPC colo, $700 million ARR, and that's very exciting. Now by the way, Anyone on the slides on the right, HPC colo, we could stand up GPUs as well. We have that optionality, if we did that, those sites on the right would be able to accommodate over 120,000 GPUs. That's very exciting. Of course, big Boden is already been earmarked for HPC coal, but just to give you a flavor, the other sites, new brands with GTA Gigafactory in the Toronto airport side, we still have the optionality if you want to send it more cloud. But to keep it simple right now, we've done the research, we've had talks with parties that are interested in colo any of these sites. That number on prevailing market rates $500 million target ARR plus, of course, the $200 million for GPU Cloud. $700 million is the number to take you from this slide. That's the vision plus, of course, the Bitcoin mining revenue. Now we're Bitcoin mining over the next 2 years. Of course, it depends on hash price. But if it's where it's at today, that puts us collectively almost $1 billion in combined revenues. So very exciting. As we continue to grow, we want to see the stock rerate search for the lowest cost of capital. Convertible, we've seen high-yield bonds being used to finance the construction of data centers. A lot of our peers have done that. We are exploring that as well. Of course, the convertible bond market, if we did two of those deals this year has worked out very well for us and of course, leveraging vendor finance for the GPUs as GPUs are emerging as an asset class. So we've got a very methodical and forward-looking strategic cost of capital. plan to realize this growth. Let's go to the next slide. On a sum of the parts, $5.2 billion is the implied enterprise value. If you look at having $200 million of GPU cloud revenue, $500 million of HPC colo revenue and again, you apply those industry multiples. This is actually a base case. We're not even using our peer multiples. We're discounting it that we're going 3.5x on cloud and 8x on colo and then, of course, you have the Bitcoin mining business, puts a $5.2 billion base case. And you could see here how you get to that number during the sum of the parts. If you actually go to where our peers are trading and you use the same multiples, the midrange case at USD 7 billion market cap as we scale towards those revenue targets we presented. So that's very exciting. And on the upside case, depending on peers trade at higher multiples as high as $8 billion. But really, to be conservative, we say the base case is $5 billion. And again, these are sites we own. This is power that land and power that's here or sites that are operational, that are conversion candidates to Tier 3. And of course, degrowth in our GPU cloud business. A summary of the land and power we are advancing on that. We've talked about everything except Paraguay. So we have completed the civil work. We've talked about that all summer. We just had two 80 MVA transformers installed. And by the way, in June, we announced the proof-of-concept between New York and [indiscernible]. So that is the cherry on top. I would say Stay tuned for updates there. But just a little bit of eye candy for everybody. Let's go to the next slide. Here is one of those 80 MVA transformers that were just delivered and dropped on the site last week. So again, we were doing the civil work. This is heavy civil infrastructure guys. We're trenching. There's large concrete pads that go deep underground, et cetera. Of course, you've got cables and so forth. This is a 200-megawatt substation in [indiscernible] that is going to have an additional 130 megawatts of utility load from these two 80 MBA substations, which will allow for 100 megawatts of IT load. This is just at [indiscernible] in the backyard of the [indiscernible] hydro dam, it's a 1.2 gigawatt substation regionally that we feed off of, which directly feeds off the [indiscernible] dam, which is a 14 gigawatt down. So just letting you know a lot of things happening and progressing in the background. Again, we are data center builders and developers and operators. So we do everything from substation construction, maintaining substations and of course, building the data centers and operating them. So steady progress on all fronts around the world. Just a little bit of context, so [indiscernible] is very close to Sao Paulo. Why Sao Paulo, well Sao Paulo is where the hyperscalers in Latin America are mostly service. There's a center park in Sao Paulo. NVIDIA's Latin American headquarters in Sao Paulo. So Sao Paulo is kind of the hub for Latin America. But most of the data centers there like 1, 5 or 10 megawatts. So this will be, we believe, based on our market research, the largest AI factory in [indiscernible] with 100 megawatts of critical IT load, Design development is underway as well. We've -- we're completing a basis of design so stay tuned for updates there. There's a little bit of a geographic snapshot of how far we -- how close we are to the region that is currently serving all of Latin America. And again, with that proof of concept we did earlier this year, and we're in talks with different groups. There is a lot of international interest in Latin America as the market emerges. Let's go to the next slide. Looking at the last 12 months, here, you've got the revenue and here you have earnings from operations. So $330 million of revenue in the last 12 months. I would say that is very impressive, almost $1 million a day we've done. And again, that's navigating the downturn in calendar Q1 of this year, it was for the entire market. It was tough, but we persevere, we optimize. And on a cash basis, we still made money every quarter. So again, the earnings from operations is revenue minus cost of goods sold on its corporate SG&A. So we have done $80 million of earnings from operations in the last 12 months, which I think is very impressive. And again, we've seen bull markets and bear markets in the last 12 months. And by the way, we're showing 5 quarters here. I realize that it's just a you can do the year-over-year comp as well. But if you look at the last 12 months, that's what those sums are. But let's actually zoom out and look at how the industry has done. So I think what's overlooked. [indiscernible] is so hyper focused on the next year or 2, that's great. We've got a 2-year target of $700 million ARR with $180 million contracted revenue now in GPU Cloud. So that's great. That is great. And I think it's about getting the story in front of peers. By the way, we should be Russell 2000 qualified by the end of this year. We, of course, file in U.S. GAAP. Now principal executive offices in San Antonio, we're very much aware of the -- it's important to have a strong presence in the U.S. capital markets. Let's look at the actual revenue. We've done amongst this peer group here in these you've got $2 billion and $10 billion companies represented here. We've done more revenue than all of our peer group, $331 million in the last 12 months. Some of our peers have done half of that which is interesting. In some cases, the farms or revenue is actually trending down. We get it. People are focusing on HPC conversion and colo. And we are, too, but I think it's important to point to a track record. We stood up 300 megawatts in 6 months in Paraguay. We've got 900 GPUs now contracted 5,500 active. So we're not only pointing to the growth, but we are actually doing it today. And so I think it's very noteworthy to point out a strong track record. Accomplishment is a good indicator of future success, at least in our opinion, at high [indiscernible]. We get it. It's all about megawatts, powered land. So if you look at what we've got secured in our pipeline. When you compare that to our peers, we had a very healthy 86 megawatts. And so of course, you've got the hot to the world with 2 gigawatts, but outside of them, our pipeline is in line. So I think it's really just framing this in context for the Street, I think, has an incredibly attractive value proposition now. We've got some really smart money in our cap table, and we look forward to growth and our team is working hard around the clock to value for our shareholders. This is just a quick rip sheet for you as Bitcoin price fluctuates $60,000, $70,000, $80,000. This is just what the mining margins after electrical costs using an indicative $0.05 OpEx. You could see how appears versus Bitcoin price, et cetera. So right now, we're sort of in the 36% range, getting where Bitcoin is 36% to 40% margin on that $750,000 daily revenue that we're at right now. So just a handy reference slide. And I'm going to turn it over to Mr. Darcy Daubaras, the longest-standing CFO in the industry since 2018. Darcy, thank you so much in the team working tirelessly. It was a super solid quarter. Over to you.

Thank you, Aydin. I'll take the next few minutes to walk through Hive's financial results for the first quarter of fiscal 2027. This was a strong quarter from an operating perspective. We delivered significant year-over-year revenue growth, improved our gross operating margin in dollar terms, return to positive adjusted EBITDA and substantially strengthened our liquidity position. At the same time, our reported GAAP net loss was significantly impacted by several noncash items, most notably a provision associated with the ongoing Swedish tax matter, which I'll discuss in more detail. Before getting into the financial results, I'll briefly highlight our capital structure. At June 30, 2026, and I've had approximately 271 million common shares outstanding, together with approximately 3 million warrants, 2.6 million options and 16.7 million restricted share units. Our shares continue to trade on the Toronto Stock Exchange and NASDAQ under the simple HIVE as well as on the Colombian Stock Exchange under HIVE Co. Turning to our first quarter financial highlights. There are settle numbers I want to emphasize. I've generated $79.1 million of revenue compared with $45.6 million in the same quarter last year. Bitcoin mining remained our largest contributor, generating $72.1 million of revenue, while our HPC and AI business contributed approximately $7 million. Importantly, our gross operating margin increased to $24.2 million compared with $15.8 million in the prior year quarter. We also generated positive adjusted EBITDA of $13.4 million. Our reported EBITDA was negative $86.3 million and our GAAP net loss was $142.9 million. However, there is an important distinction between the operating performance of the business and the reported GAAP loss this quarter. The net loss included an $84.7 million noncash provision related to regulatory liabilities associated with our ongoing Swedish VAT dispute. It also included $53.7 million of depreciation and $7.1 million of share-based compensation and the impact of fair value adjustments. So while those items are appropriately reflected in our U.S. GAAP financial statements, they are important to consider when evaluating the underlying performance operationally of the business. We ended the quarter holding 190 Bitcoin in treasury. Stepping back from the individual line items, three numbers really summarize the quarter for me. First, revenue of $79.1 million demonstrates the increased scale of HIVE's operations. Second, adjusted EBITDA of $13.4 million returned to positive territory after negative adjusted EBITDA in the fourth quarter. And third, we produced approximately 1,004 Bitcoin equivalent during the quarter. Take together, these metrics demonstrate the operating leverage we're beginning to see from the investments we've made in our global infrastructure. We continue to balance growth in our core Bitcoin mining operations with the development of our higher-value HPC and AI infrastructure business, that operating performance is supported by a substantially stronger liquidity position. We finished June with $208 million of cash compared with approximately $23 million at March 31. In addition, we held approximately $11.2 million of digital currencies, $10.9 million of investments and $18.9 million of receivables and prepaid. Total current assets were approximately $280 million compared with current liabilities of approximately $143 million. The increase in cash primarily reflects the financing activity completed during the quarter, including our exchangeable senior note offerings and proceeds from our ATM program. These financings have provided HIVE with significant liquidity as we continue investing in our Bitcoin mining infrastructure and increasingly focusing on our HPC and AI growth initiatives. Our objective remains to maintain financial flexibility while deploying capital into opportunities that we believe can generate attractive long-term returns for shareholders. Turning from the balance sheet back to operations. Gross operating margin showed meaningful year-over-year improvement. We generated $24.2 million during the quarter compared with $15.8 million in Q1 of last year. That's an increase of approximately 53% year-over-year. This is particularly noteworthy given the substantial increase in the scale of our operations during the past year. Our basic loss per share was $0.54 compared with earnings per share of $0.19 in the comparable quarter. Again, the current quarter loss per share reflects the significant noncash charges recorded during the quarter, particularly the Swedish regulatory provision and depreciation associated with our expanded infrastructure base. The year-over-year comparison really demonstrates the increased scale of the business. Revenue increased from $45.6 million to $79.1 million, representing growth of approximately 73%. At the same time, gross operating margin increased from $15.8 million to $24.2 million, an increase of approximately 53%. As a percentage of revenue, gross operating margin was 31% compared with 35% in the prior year period. So while the percentage margin mode or at the somewhat, the absolute dollars of gross operating margin increased significantly as we expanded the scale of the business. This is an important measure for us because it demonstrates our ability to generate positive operating contribution substantially larger revenue base. Sequentially, the trend is also encouraging. Revenue increased from $71.8 million in the fourth quarter to $79.1 million in Q1, an increase of approximately 10%. More importantly, gross operating margin increased from $17.5 million to $24.2 million or approximately 38% quarter-over-quarter. Gross operating margin as a percentage of revenue improved from 24% to 31%. So sequentially, we saw improvement in revenue, operating margin dollars and the margin percentage. That combination is a positive indicator of the underlying operating performance of the business as we entered fiscal 2027. From an earnings perspective, it's important to [indiscernible] English between our underlying operating results and the impact of several nonsignificant -- sorry, several significant noncash items. Adjusted EBITDA was $13.4 million compared with $44.6 million in the same quarter last year. The year-over-year decline reflects a number of factors, including the changing economics of Bitcoin mining and the increased operating cost base associated with our expanded global infrastructure. Our reported U.S. GAAP results moved from net income of $35 million in the prior year quarter to a net loss of $142.9 million this quarter. Again, the most important point when interpreting that result is the magnitude of the noncash items. The quarter included the $84.7 million regulatory provision associated with the Swedish VAT matter together with $53.7 million of depreciation as well as share-based compensation and fair value adjustments. The Swedish provision reflects our accounting assessment following the adverse court of appeal adjustments. We continue to pursue the available legal avenues in Sweden. Accordingly, we believe adjusted EBITDA provides investors with an additional perspective on the underlying operating performance of the business alongside our U.S. GAAP results. And finally, looking at earnings sequentially provides another useful perspective on the quarter. Adjusted EBITDA improved significantly. We moved from negative $9 million of adjusted EBITDA in Q4 to positive $13.4 million in Q1, an improvement of more than $22 million. That improvement is consistent with the stronger revenue and gross operating margin performance we discussed on the previous slides. Our U.S. GAAP net loss increased from $76.3 million in Q4 to $142.9 million this quarter. But again, the comparison is heavily affected by the $84.6 million noncash Swedish regulatory provision recorded in Q1. For that reason, we believe it's important to look at both the U.S. GAAP results and the operating metrics when assessing the quarter. Overall, we entered fiscal 2027 with a larger revenue base, improving sequential operating margins positive adjusted EBITDA and a substantially strengthened liquidity position. That financial position provides us with flexibility as we continue executing on both sides of HIVE strategy. Operating our existing Bitcoin mining business efficiently while investing in the growth of our HPC and AI infrastructure platform. With that, I'll turn the presentation back over to Nathan.

Thank you, Darcy. That concludes the presentation portion of today's call. We will now begin the question-and-answer portion of our call. [Operator Instructions] our first question comes from the line of Joe Vafi from Canaccord.

Great progress in the business, especially this new cloud deal with the investment-grade tenant. Maybe we could double-click on that. I know it's a 5-year deal. Could we get some perhaps initial thoughts on if you've run some IRRs on the GPU investment, what kind of return potentially you're getting there and maybe some additional thoughts on CapEx here to fund the build out? I know you've got a deposit, I know you've done some of your convert deals, just kind of what the rest of the financing stack might look here might look like here? And then I have a quick follow-up.

This is Aydin Kilic. Good to see you last week at the conference in Boston. So having that 5-year term locked in, we put in the press release, CapEx is about $185 million for the GPU cluster, of course, with the [ InfiniBand ] and so forth, really just to have NVIDIA reference architecture designed for the 2016 GPUs. And so if you kind of do the math indicatively model, of course, it will be delivered and deployed in Q4. So we're expecting EBITDA to land in the 75% to 80% range. And so if you do the math, you're paying off the GPUs completely in about 3 years and the balance of that 2-year term is free cash flow. So you effectively bake in a 1.6x return roughly speaking on the GPUs. And then you own them out right after the term. And now we've also financed the GPU, so we're putting a portion down about 20% down of the cost of the GPUs. And so we can provide subsequent market updates with the financing terms, but really the inaugural release was to let -- the Street know that we've now hit that $180 million ARR target well on our way to the $200 million target end of the year and to show the Street that we were delivering and deploying the promises from our converts in April and June to use that capital as down payments to lock in these GPUs. The financing actually doesn't kick in towards when the GPUs ship and so as we get closer to the deployment dates, et cetera, but POs are secured for the GPUs and that means they go into production, which is so critical, and that's really what locks in. So having the capital from our converts, the $245 million collectively that we raised allows us to have those GPUs POs accepted, hardware going into production. And then, of course, you've got a shipping date, which is important and critical for the offtake for the clients. So they have assurance that the infrastructure. And by the way, the data center is ready. It was actually just the Bell Merit facility 2 weeks ago doing a diligence visit with one of the lenders. And I'm going again tomorrow for another trip. So Things are really moving forward. And yes, I hope that covers your questions.

It sounds like it's well on its way. And then down in Paraguay. I know there's a lot of things going on. The substations are going in for that additional build. The benchmark testing has been done. What should we be looking for down there as kind of the next step in the evolution of that power portfolio?

I would say the next thing to look forward to just updates as we work through the basis of design. If I'm actually planning to go to Paraguay at the end of September. We've got a trip to New York plant, the third week of September, and then I'll actually stop in Sao Paulo, I plan to visit NVIDIA down there and then go straight to [ Asuncion ] and do a site tour. So we're engaged with a design-build firm. that's built a lot of data centers in the region. That's where we're working through a basis of design. So I think as we work through that process, we'll be providing updates, just the same way that we put a photo of the substation being deployed last week. So we'll keep the Street updated progress as we work towards that substation we expect to be energized towards the end of this calendar year in parallel, of course, working through that basis of design. And that's how I'm going to say for now. I think really -- we'd like to let people know as a multinational company. We have progress in different jurisdictions and a lot of the growth like the revenue growth is happening in Canada this year with the deployment of these GPU clusters. And of course, we'll work on the conversion of the Toronto airport site, the New Brunswick site as well. I was actually just in New Brunswick last week after Boston, I included New Brunswick to Fredericton, to meet provincial government [ NB ] Power as well to talk about our vision there to make the New Brunswick Seaton Grand fall is the largest AI token factory in the Maritimes, which I think will be of national significance. So -- and of course, that complements the Gigafactory in Ontario and the Greater Toronto area. So I would say stay tuned for updates coming out of Canada as we advance the conversion of those data centers. And then, of course, big Boden site. I would say that's actually further along because we had that LOI signed with an offtaker as well. And so the next step there is really to watch out for the definitive agreement to be announced, and then that plays into the growth of our ARR targets as well, which was highlighted in my section. So I would say keep your eyes peeled for updates on big Boden, Canada, and then Paraguay is -- was just the icing on top, and we'll update the market, but focus on Sweden and Canada for now.

We'll keep the Q&A moving next to Chris Brendler from Rosenblatt.

Nice to see the progress and tough market for Bitcoin, but you guys are executing pretty well. My first question is on the high [indiscernible] compute business, given all the progress there. I was hoping you could just give us a little color on what you are targeting for gross margin in the Q, it looks like it was like 44% this past quarter. I know as these contracts ramp up, I think it'll become less impacted by the service fees and potentially go a lot higher than 44%. Any thoughts on the target gross margin for the HPC business after signing these contracts?

Yes. That's an insightful question, Chris. So our fleet right now is comprised still of -- we've got about $20 million of our $35 million of revenue coming from [ Opera ] series GPUs, a combined total of 844 H200 and H100. And then the balance is about 4,200 A Series cards. So the A Series cards are legacy. They've been running on cloud since 2023, which is a testament to their fortitude. But as older generation cards, those rent out for $0.40 GPU hour. Now keep in mind, 40 only uses 400 watts. It's still doing almost $1 a kilowatt hour, but still, of course, as we bring on CB200, CB300s, these are more profit than per watt. And also, of course, with scale you get economies of scale. So those two factors, newer generation GPUs coming online at scale. Both are indicative drivers for that margin to go up in. Again, as we've built the business, of course, you need to have the foundation in place to scale. So some of that cost base is somewhat fixed and of course, as the scale grows on a relative basis, that fixed cost diminishes. So hence, you can expect margins to improve substantially.

Okay. Great. That's good color. My second follow-up question is for open jump over your Frank or [indiscernible] the Bitcoin mining business actually doing pretty well, like you've gained has share. The gross margins there also improved sequentially despite a pretty tough environment for Bitcoin. We've seen as price stabilize network cash rate has also come down from the peaks. Just wondering how you feel like the big core mining at this point? And any updated sort of like big picture thoughts on Bitcoin have been long-term believer myself and just sort of waiting for the next cycle. Is that kind of what you think are thinking about it as well? Or are we in a new paradigm Bitcoin? I'd love to be your thoughts.

Yes. So we see hash price sort of stabilize around the $31 per pet hash per day level. We saw Lowe's as low as $27, which was not long lived, but they -- for a week or 2, and we see difficulty adjust. So it seems that the floor, the prevailing floor of this bar mark is just above $30 hash price. So what does that mean? Well, in our case, in Paraguay, we've got I think last time I checked, about 19.5 exahash because we've optimized with firmware and we've had earlier in this year, we had some [ S21XP ] orders go down and replace some of the buzz minus. So we're actually at 19.5 exahash in Paraguay. That's new generation gear that on a blended average is below 15 joules of terahash. So we've got a large amount of new generation hash rate. Of course, Paraguay has got a very attractive power cost, too. So that just forms part of that cash flow engine and a dual-engine strategy. So I think that it's anyone's guess, of course, with Clarity Act. If that gets pushed through in September, that could be a catalyst. But I think the Street is really looking for a catalyst for what's going to be the next breakout for Bitcoin price. But 100% of our growth is in HPC and AI. So again, we have new generation here in Paraguay that's performing phenomenally well. very, very close to 100% uptime. The hydro infrastructure we deployed has worked very well for the climate there. We've made some modifications to it. So yes, it's there. It's performing doing exactly what we expected, and it's showing off cash flow as we focus on growing the rest of the business. So I think that -- we'll see. Bitcoin always tends to come around. Is it going to stick with a cyclical 4-year cycle? Will the Clarity Act cause a big breakout? We'll see.

For our next analyst question, we'll pass the to Mike Grondahl from Northland.