Release Date: August 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue more than doubled from the prior year, showing significant growth.
- Gross margins expanded by over 1,000 basis points, indicating improved profitability.
- The HPC segment generated $12.5 million of revenue at 63% gross margins during the second quarter.
- The company has a pristine balance sheet with zero debt, providing flexibility for future investments.
- Bit Digital Inc (BTBT, Financial) announced a binding term sheet with Boosteroid, potentially worth more than $700 million over five years.
Negative Points
- Adjusted EBITDA and EPS were negatively impacted by an unrealized loss on digital assets.
- Bitcoin production decreased by 23% year-over-year due to increased network difficulty and reduced block rewards.
- The company experienced a slight decrease in active hash rate due to curtailments in Iceland and high electricity prices.
- Current economics make it difficult to justify new investments in mining rigs, impacting future growth in this segment.
- There is uncertainty regarding the deployment of new GPUs for their anchor customer, which could delay revenue recognition until 2025.
Q & A Highlights
Q: Can you provide more details on the $700 million potential Boosteroid contract and its scaling?
A: We expect to provide greater detail on the growth cadence over time. The initial allotment is a starting quantity, and upon successful deployment, we expect to start fulfilling incremental deployments. Our baseline for 2025 is to get to around 30% of total deployments, with Boosteroid's growth trajectory and our own capital allocation plans being key variables.
Q: How do you plan to reach your $100 million run rate by year-end 2024 without the contribution from customer one?
A: Beyond the contribution from Boosteroid, we have several clients close to closing. Our new hires will help accelerate the closing process. We are confident we can hit the $100 million mark by year-end, even if the expansion with our current anchor customer is pushed to 2025.
Q: What is the status of your new head of sales?
A: The new head of sales has already started.
Q: Are you considering acquiring a data center?
A: We are evaluating opportunities that could complement our existing business well. Owning our own site, especially on the HPC side, would allow us to offer different services like co-location and on-demand compute.
Q: How are you planning to finance future growth, considering the recent use of the ATM?
A: We are cautious with the use of the ATM and are also talking to credit facility providers to determine the best terms for us. We continue to evaluate term sheets on debt financing and have not been forced to accept less than optimal terms.
Q: What are your plans for the bitcoin mining machines that have been taken offline?
A: If certain models are not economically viable, they go into a warehouse or are sold. We remain opportunistic with our bitcoin mining investments.
Q: How are you lining up facilities to meet the obligations of the Boosteroid deal?
A: We have sourced data centers close to metropolitan areas, which is more akin to the inference side than training. This follows the cloud gaming industry's need for low latency.
Q: Can you explain the difference between a binding term sheet and an MSA?
A: The binding term sheet includes high-level software economics, while the MSA covers more legal details. The term sheet is binding, and we are working on completing the MSA very soon.
Q: How do the margins on the Boosteroid contract compare to your anchor HPC contract?
A: The margins on the Boosteroid contract are still good but not as high as the margins on the H100. If our anchor client decides to go with the Blackwell B200, the margins will be even better despite a potential delay.
Q: Is there a strategic shift towards HPC from bitcoin mining?
A: We have multiple levers, including bitcoin mining, ethereum staking, and HPC. We are in a fortunate position to allocate capital creatively and have been ahead of trends. The HPC side allows for better cash flow modeling and aligns with our strategic goals.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
