Good day, ladies and gentlemen. Welcome to the Marathon Digital Holdings second quarter 2022 earnings webcast and conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Charlie Schumacher, Vice President of Corporate Communications. Sir, please go ahead. Thank you, Vikram. Hello, everyone, and welcome to Marathon Digital Holdings second quarter 2022 earnings call. Joining me on today's call are our Chairman and CEO, Fred Thiel, and our CFO, Hugh Gallagher. Before we get started, I'd like to remind everyone that our prepared remarks may contain forward-looking statements which are subject to risks and uncertainties, and that we may make additional forward-looking statements during the question-and-answer session. These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially. When used in this call, the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project, and similar expressions as they relate to Marathon Digital Holdings, Inc., are as such a forward-looking statement. Please refer to our earnings release for a full recitation of our forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainties which may cause actual results to differ from those anticipated by Marathon at this time. In addition, other risks are more fully described in Marathon's public filings with the U.S. Securities and Exchange Commission, which can be reviewed at www.sec.gov. Finally, please note that on today's call, we will refer to certain non-GAAP financial measures in which Marathon excludes certain expenses from its GAAP financial results. Please refer to our company's periodic reports on Form 10-K and 10-Q for a full reconciliation of its non-GAAP financial measures. We'll begin today's call with prepared remarks from Fred and Hugh. After their comments, we will be going through some of our more popular questions from our investors before transferring to live Q&A with our covering analysts. With that covered, I'm going to turn it over to Fred to kick things off. Fred? Thank you, Charlie, and thank you all for joining us today for our earnings call. The second quarter of 2022 proved to be a challenging time for our industry, the broader market, and for Marathon. As we'll discuss today, we believe our recent progress proves that Marathon is well-positioned relative to its peers to grow as a leader in securing and supporting the Bitcoin ecosystem. During the quarter, Bitcoin's price declined approximately 56%. At the same time, energy prices increased, in part due to Russia's invasion of Ukraine. The combination of both factors has compressed margins and reduced profits for many in our industry. Miners who were running old equipment or overpaying for electricity have been forced to stop mining. As a result, the global hash rate has grown far slower than many analysts were projecting at the start of this year, and we have even seen the difficulty rate adjust downwards multiple times since the end of May. At Marathon, we tend to be fairly well insulated from the macro environment relative to our peers. Since we run a lean operation, we are asset light, and we do not have large capital expenditures for data centers or power assets. However, as our financial results demonstrate, we are far from immune to the impact as we are directly tied to a new but maturing asset. In the second quarter, in addition to the challenging macro environment, we also had to work through several obstacles unique to Marathon that depressed production and negatively impacted our results this past quarter. As we've discussed in our monthly production reports, our Bitcoin production was substantially reduced during the second quarter due to downtime and maintenance issues at the power generating station in Hardin, Montana, coupled with an elongated regulatory process that delayed the energization of our installed miners in Texas. For most of the quarter, the power generating facility in Montana struggled to produce an adequate amount of electricity to supply our miners with power. In June, it seemed that Murphy's Law came into effect when a severe storm passed through the region, damaging the power plant and taking offline all 30,000 of our miners in the area, which represented approximately 75% of our active fleet at the time. The downtime from an inconsistent supply of electricity and the storm caused our miners to produce approximately 45% less Bitcoin during the quarter than they theoretically could have if they had been running at 90% uptime, which is more in line with our long-term target. Outside of Montana, the energization of our miners in Texas was repeatedly and frustratingly postponed by the power provider until the tax-exempt status of the wind farm where 68,000 of our miners are being installed could be confirmed. While confirmation was pending, we applied pressure where we could to expedite the process, and we continued to have miners installed in preparation of receiving the green light to energize. By the end of Q2, we had approximately 30,000 miners or 3.9 exahash installed across these new facilities. As of August 1st, that number increased to approximately 49,000 miners or 4.7 exahash. Fortunately, these delays are finally behind us. Just last week, miners at the wind farm in West Texas started to be energized. However, before discussing the immense progress we've made subsequent to the quarter's end to energize our installed miners, procure hosting for the remainder of our fleet, and bolster our financial position, I'm going to turn the call over to Hugh to discuss our second quarter financial results in detail. Hugh? Thanks, Fred. My focus today will be to comment on our operating results for the second quarter and to provide some color on more significant recent financing activities, including our withdrawal from the investment fund in June and the new credit facilities we put in place at the end of July. First, operating results. We recorded a net loss of $191.6 million during the quarter, compared with a net loss of $108.9 million in the prior year period. This is an $82.7 million increase in loss, and I'm going to walk through the components of this increase in our loss, starting with revenues and margin. As mentioned, as Fred mentioned, and as we mentioned in our release, we faced some real operational challenges this quarter, and we generated revenues of $24.9 million for the three months ended June 30th, 2022, compared with $29.3 million during the three months ended June 30th, 2021. This $4.4 million decrease in revenue was driven by lower revenue per Bitcoin mined of $6.8 million, and this resulted from the lower market prices for Bitcoin in the current year period when compared to the prior year period, partially offset by an 8% increase in Bitcoin production activity during the quarter, which had the effect of increasing revenues by about $2.4 million. Cost of revenues, energy, hosting, and other during the three months ended June 30th, 2022 amounted to $16.7 million, compared with $4.1 million in the prior year period. This $12.6 million increase was driven by accelerated cost recognition associated with our early exit from Hardin of about $10.3 million and to a lesser extent, higher cost per Bitcoin mined. Total margin, which we define as revenues less cost of revenue for energy, hosting and other, totaled $8.2 million, compared to $25.2 million in the prior year period. This is a $17 million decrease, driven primarily by the accelerated costs at Hardin that I mentioned earlier and the lower revenue per Bitcoin mined. We also recorded a $21.8 million increase in depreciation expense during the current quarter. This is included in the caption called cost of revenues, depreciation and amortization. About $18 million of this $21.8 million was related to the acceleration of depreciation into the second quarter as a result of our decision to exit Hardin. The remaining increase in D&A was just the impact of having a larger fleet year-over-year. That sort of covers depreciation and our margin, but the largest single driver of the steeper loss in the quarter was the significant decline in the carrying value of our digital currencies, driven by the lower Bitcoin prices during the quarter. We recorded a combined impairment expense/fair value decline of $207.3 million during the current period quarter, compared with $125.8 million in the prior-year period. That's $81.5 million of an unfavorable earnings variance quarter-over-quarter. We also saw increased costs related to income tax expense of about $10 million, operating expenses of around $6 million, and interest expense associated with our convertible notes of about $3.7 million. Partially offsetting these unfavorable variances was a gain on the sale of equipment of $58.2 million. In December of 2021, we entered into a contract in which we agreed to sell certain equipment in conjunction with the development of commercial activities at the King Mountain facility. During the three months ended June, we sent two shipments of equipment for cash proceeds of approximately $87 million and realized a gain, a total gain of $58 million. Finally, adjusted EBITDA, as we define it, was a loss of $147.2 million, compared with a loss of $105.2 million in last year's quarter. This $42.1 million decline in adjusted EBITDA primarily resulted from the decline in carrying value of our digital assets, which I spoke about earlier, both impairments and changes in fair market value, and lower total margin, partially offset by the gain on the sale of equipment. Now I'll turn briefly to a few of the more recent updates on the third quarter. These are things that we see coming up in the next quarter. In July, we sold the final shipment of equipment related to King Mountain. We received proceeds of $44 million and expect to record another gain of $29 million on this sale. We can also now say that we finished the accelerated cost recognition associated with the Hardin exit. During the month of July, we recorded $7 million of accelerated cost in cost of revenues, energy, hosting and other, and an additional $13 million in depreciation costs. We are now in the process of moving and/or selling the Hardin miners, and we'll report on the outcome of these efforts in our monthly production reports as appropriate once we have more definitive plans for these assets. Turning briefly to our Bitcoin holdings, at June 30th, we held around 10,055 Bitcoin, of which 2,820 were being utilized as collateral. The fair market value of the remaining 7,235 unrestricted Bitcoin was approximately $143.1 million. We also had unrestricted cash on hand of about $86.5 million. As to our Bitcoin holdings, we expect to continue to add to our holdings over time through mining activities. As our mining activities increase, we may sell a portion of the Bitcoin produced in future periods to fund monthly operations for treasury management purposes or for general corporate purposes. As previously reported, on June 13th, we withdrew 4,769 Bitcoin from our investment fund and transferred into direct company ownership. As a result, we no longer will receive mark-to-market accounting for the Bitcoin formerly held in the investment fund, and the 4,769 Bitcoin are now classified on our balance sheet as digital currency. Also during the quarter, we terminated the loan of Bitcoin of around 600 Bitcoin. These were treasury management actions that we wanted to consolidate our Bitcoin holdings in support of the anticipated Silvergate financing, which we placed on July 28th. Speaking of that financing, we entered into an additional $100 million term loan, and we refinanced our $100 million revolving credit facility. The term loan includes a $50 million draw at closing, which we've executed, as it carries an interest rate of 7.25%, and there's a $50 million delayed draw that we have up to 270 days to choose to draw that facility. Both the term loan and the revolving credit facility are secured by Bitcoin and both mature in August 2024. Turning to the cash flow statements, our total cash position, including cash equivalents, and restricted cash, was right around $90 million, a year-to-date decrease of about $179 million. The primary drivers of this were expenditures of $394 million in advances to vendors related to Bitcoin server orders and to a lesser extent, $14 million related to capital expenditures and $14 million related to equity investments. These uses of cash were partially offset by proceeds from asset sales of $79 million, proceeds from the issuance of common stock of $161 million, and proceeds from borrowings under our revolving credit facility of $35 million. That $35 million that was outstanding at the end of June has since been repaid. Looking forward for the remainder of the fiscal year, we see cash needs for investment, including shipping costs related to previously ordered miners that will be shipped, to be substantially lower than what we've incurred to date. We're estimating this to be in the range of $150 million-$175 million. That completes my comments. I'll now turn it back to Fred. Thank you. The second quarter tested our resilience and our resourcefulness. As a result, as recent events have demonstrated, we not only weathered the difficult times, but we capitalized on opportunities to improve our operational and financial position subsequent to the quarter's end. The end of July, we received the much-anticipated news that the exemption the power company had been waiting on had been confirmed and that miners could start to be energized at the wind farm in Texas. Just last week, the energy provider started feeding power to the data center and energizing our miners. Of the 68,000 miners that will eventually come online at this facility, approximately 40,000 are already installed and are now being energized. As of this morning, we had brought approximately 9,700 miners online, which added 0.9 exahash to our hash rate. Energizing this much capacity is a complex process that will occur in stages. According to the latest schedules, the facility should be constructed and energized by the end of the third quarter this year. At that time, we should have approximately 68,000 miners online at this facility working to secure Bitcoin's ledger, process transactions, and produce new Bitcoin for Marathon and our investors. In addition to energizing miners in Texas, we also recently eliminated the uncertainty surrounding our future hosting capacity by securing new hosting arrangements to achieve our prior hash rate targets. When vetting potential new hosting arrangements, in addition to the quality of the operator, we prioritize speed of deployment, cost of electricity and hosting, geographic diversity, and the source of power. With this in mind, we signed a major new agreement with Applied Blockchain, securing approximately 200 MW worth of hosting capacity, 90 MW of which is in Texas, while the other 100 MW are at a wind farm in North Dakota. As a part of this arrangement, we have the ability to add an additional 70 MW of capacity, bringing the total amount of hosting across all of Applied Blockchain's facilities to 270 MW if we choose to exercise the option. Additionally, we opted to expand our agreement with Compute North to include an additional 42 MW of hosting capacity at their facility in Granbury, Texas, and we're also expanding with several smaller providers in the U.S. In total, we secured enough hosting capacity to support our prior target of 23.3 exahash. Based on construction schedules, it's our understanding from speaking with our hosting providers that we will have enough miners installed to reach that target by the middle of 2023. In addition to substantial operating progress we made to energize previously installed miners and procure hosting arrangements for others, we have taken measures to enhance Marathon's financial position going into the second half of 2022. As listed in our contracts, which were published in December of last year, the S19 XPs we purchased from Bitmain benefit from price protection. For the July and August shipments, we received a price adjustment on our first shipments of S19 XPs that were relatively in line with current market conditions. It is our current belief that we will receive similar adjustments if market conditions persist through the end of the year. These price adjustments materially reduced our potential capital expenditures for 2022. As Hugh mentioned, rather than relocate all the miners that we installed in Hardin, Montana, we have opted to sell a portion of them. This decision begs the question: How are we still on track to achieve our target of 23.3 exahash? At Marathon, we're always looking to reduce our costs and boost performance, especially in current market conditions when Bitcoin's price has declined and energy rates have increased, compressing margins for Bitcoin miners. As part of the strategy and in anticipation of the potentially industry-wide margin compression, we opted to purchase an additional 30,000 S19 XPs from Bitmain in April of this year. We're currently in the process of using these new miners to upgrade our fleet by replacing some of our S19Js and S19 Pros with XPs. We are still on target to achieve our prior goal of 23.3 exahash. With the upgrades, approximately 66% of the 23.3 exahash will be coming from XPs. The S19 XP is 30% more energy efficient than the prior generation, and by converting to these machines, we are decreasing our electricity costs on a per terahash basis. As a result, once fully installed, we believe Marathon's fleet will not only be one of the largest, but among the most energy-efficient mining fleets on a per terahash basis. One other update worth mentioning relates to our hosting arrangement with Compute North. Our original agreements with them included a fixed price for energy and hosting, as well as a small profit share on a portion of our overall fleet. Given the current market dynamics, we opted to renegotiate these contracts to maximize the potential profitability. We have eliminated the joint venture and profit share. Under our new agreements, we will continue to pay a fixed rate for hosting, and we will have an extremely attractive fixed price on the wind energy at the facility in West Texas. The remaining grid energy we use has pass-through pricing, which gives us the opportunity to benefit from hedging and participating in curtailment programs. Because we now have the benefit of being able to control when our miners will be curtailed, we can now benefit from selling energy back to the grid when it makes economic sense to do so. As some of our peers in the industry have recently demonstrated, there are times when it can be more profitable to sell electricity back to the grid than it is to mine Bitcoin. Under our new arrangements, we now have the ability to participate in this potential upside. In summary, the second quarter was challenging for the industry and for Marathon in particular. Bitcoin mining is a nascent industry, and as I mentioned in our last call, there is no playbook. However, given our progress, we're confident that we remain on track to grow our position as a leader in this space. Miners are coming online in Texas. We have hosting arrangements secured to achieve our target of 23.3 exahash by mid-next year. Our mining fleet is state-of-the-art, consisting predominantly of the most efficient Bitcoin miners available on the market. We have a war chest of Bitcoin, and our liquidity position and balance sheet continue to improve. Overall, we have entered the second half of the year with added confidence that we remain on track to grow our position as a leader in supporting and securing the Bitcoin ecosystem. With that, I'll turn it back to Charlie so we can begin taking questions. Charlie? Thanks, Fred. At this time, we're going to commence the Q&A section of today's call. We'll start by answering some of the questions submitted by investors on our new Q&A platform. In total, we received about 100 questions, which looks fantastic. We won't have time to tackle all of them today, but we do wanna cover some of the most upvoted questions, and also let you all know how much we appreciate the interest in Marathon and the opportunity to have more of a dialogue with our investor base. To start, the first question comes from Bill G, who asks, "Can you please give us an update on the rigs and when they will be plugged into full capacity? We got approval from FERC, and they were curious about the energization timeline. I think we've actually covered this a little bit in the prepared remarks and in today's earnings release. Just curious, Fred or Hugh, any color that either of you want to provide on the process of receiving approval and starting to energize?" Once the FERC approval was received, the power provider could proceed with beginning to energize the site, which took a certain number of days. They can't turn on 280 MW at one time. They turn it on in essentially kind of 20 MW chunks. While we have 49,000 miners installed at the site, those will be energized 20 MW at a time, and we expect to be fully energized with the 68,000 miners installed on site by the end of September. Excellent. Our next question comes from Tamir G, who asks, "What are Marathon's plans for any severe downturns that may occur within the crypto market in the coming years?" I guess any comments around kind of, resiliency of the model or how we're prepared to kind of survive crypto winter? You know, I can touch on part of this, and maybe Hugh will have a comment on the other side of this. Essentially, because of the way we're structuring these power agreements, you know, we do have the ability to curtail our mining operations if mining becomes unprofitable. This is different than other miners who may have PPAs where they're obliged to take the energy. We believe that we have strength in this strategy, and it will help us going forward. As it relates to the other side of this and how Bitcoin pricing may affect us, Hugh, I'll let you comment on that. Again, I think, Fred, the whole point with this is optionality, right? You want to build flexibility and optionality into your processes. As we said, the financing we completed goes a long way in helping us achieve that goal. The other thing I think we need to look at is, as we mentioned, as we produce more Bitcoin, considering using a portion of that production every month to cover your costs, where regardless of where Bitcoin's going up or down, you're matching the cost of Bitcoin with your cost of production within the same month. That's something we're certainly looking at. I would say there, in addition to what you mentioned, which is probably the first order issue, the second one is building in financial flexibility so you can continue to absorb fluctuations that will come in the market. Thanks, Hugh. This is probably a good segue actually into our next question, which comes from Noah P, who asks, "How does Marathon compare or stand out from other miners in the market?" Any other additional comments besides what you two just touched on related to Marathon's differentiators or kind of what makes us unique? I think, you know, as we've stated many times in our public, disclosures, earnings calls and presentations, our strategy is different than many of our, colleagues in the industry, where we operate with an asset-light model, working with third parties who do hosting and provide energy for us as opposed to being vertically integrated. We think that has certainly given us a lot of flexibility, especially with the delays that we incurred in, energizing miners. Had we been having to make huge CapEx expenditures and investments in infrastructure, I think, it would have been a very different financial situation for the company. Our strategy provides us with a great amount of flexibility. I think as you can see, you know, we've weathered the storm quite well. This next one's a little more esoteric, if you will. Fred, maybe I'll toss this over to you. Ivan V was wondering about the Ethereum's move to proof of stake. Do you think there may be any sort of impact on Marathon, or our earnings as a result of that shift? Yeah, I'm not gonna directly comment on whether it'll impact our earnings. I think just generally in the marketplace, you know, Ethereum and the Ether platform is really a platform for developing this decentralized applications and smart contracts, where Bitcoin is really all around Bitcoin as cryptocurrency and as a network that really is ideally designed for tracking ownership of assets. I think the two of them will continue to operate very independently of each other. I think there's still going to be, you know, different versions of Ethereum. You have Ethereum Classic, you have the current version of Ethereum, and there's people in the news commenting about doing yet another fork of Ethereum. I think Bitcoin won't be really impacted by that much. Thanks, Fred. Next question comes from Mark B, who asks, "Is there a future potential of a dividend paid in Bitcoin?" This is something that I think, you know, as a management team, we've discussed. It's not in the current plans. It may be an option in the future or not, we don't know. I think time will tell. Great. Thanks. Next question, maybe Hugh, this might be a good one for you. "Is Marathon considering adding additional shares, hence, you know, potentially increasing dilution? Hugh, maybe can you touch on sort of the capital allocation strategy a bit and some of the different levers that we have available?" Sure. We have an ATM, an at-the-market facility that's active that we're using. I mentioned earlier, that was a source of about $161 million in the first six months of this year. We will continue. That's an option that's available to us. Given the growth mode that we're in, we will probably continue to lean on, although less needs coming up in the next six months than in the first six months. We also try to make sure that we always keep in mind that whatever we're doing in the short term fits a long-term debt equity split, debt equity capital structure. That's why we felt comfortable adding a little bit of debt capacity this quarter because of how much we've been able to raise on the equity side. You can lever that with a little bit of debt. Don't wanna go overboard in that. Always finance keeping your long-term view of where the company needs to be and keeping optionality and flexibility available to yourself. The short answer to your question is yes, we will continue to tap the equity markets as needed for growth. I think the good message that we put out there is we clearly want to get to the point where we're not tapping the capital markets to pay for monthly operating expenses, which is where we've been to this point. Great. Thank you. I think we'll do one more question before we kind of switch gears here a little bit. Last question. David J asks, "Is Marathon Digital planning on branching out at any point and mining other cryptocurrencies besides Bitcoin?" Fred, maybe you wanna touch on that one a little. At this point, you know, Bitcoin is our primary focus and only focus. We may do experimentation just to learn and understand how some different cryptocurrencies operate, but Bitcoin is our focus. Great. In the interest of time, I think we'll wrap up this section of the Q&A. Again, we really appreciate the questions and the interest and, wish we had more time to answer all of them. For now, I'm gonna turn the call back over to our operator to open the line to questions from our covering analysts. Vikram, the mic is yours. Thank you very much, sir. We're now going to open the call to questions from Marathon's covering analyst. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. We request you to restrict to one question and one follow-up. We have a first question for the line of Jonathan Peterson with Jefferies. Please go ahead. Oh, great. Thank you. Congrats on all the progress over the last, you know, few weeks. Maybe my first question, you know, I guess if we think about the second half deployments and some of the delays that you had in the first half of the year, I mean, I guess talk us through your confidence level that we're not gonna run into energization delays or anything like that with the next level of deployments. Sure. The initial site we're deploying in the second half of the year with Applied Blockchain already has capacity running at it, so that site is, you know. The expansion that we're doing there is really more of a construction issue than anything else, so we don't foresee any energization issues there. The second site, based on their historical operating experience, we feel fairly confident that that'll happen on time. You know, the good thing is today, with the energization of King Mountain and the additional capacity that we've tied up with other hosting providers, all of the inventory of miners that we have will be fully absorbed here very shortly. If you look at the second half of this year, it's predominantly the XPs that are yet to be delivered that will be deployed there. If anything, we believe it's really more deliveries will be the gating item than construction or energization. Okay, got it. Then on the delivery, you know, you mentioned the July and August deliveries were discounted from the original purchase price. Not sure if you're able to quantify that for us. I think if I remember right, you guys paid $79 a terahash. I think the market rate, I would imagine, is less than, you know, down by more than 1/3 from that, and your final payment is 1/3. I'm just curious if the market terahash rate is less than, you know, 33% lower than what you paid, you know, are there ways to renegotiate that contract, maybe increase the amount of miners that you're buying? Or just how should we think about that? You know, I think you should think about it as, you know, we will be deploying 23.3 exahash and we're benefiting from essentially a decrease in the amount of CapEx we're gonna have to pay to get those miners deployed. I think your estimates on kind of market pricing are most probably definitely in the ballpark. You can obviously see those numbers in the secondary market. You're starting to see the XP prices come down in the secondary market already pretty aggressively. I think that's about all we're gonna comment on that for obvious reasons. Okay. All right. Thank you. Thank you. We have next question from the line of Chris Brendler with D.A. Davidson. Please go ahead. Hey, thanks. Good afternoon, and congratulations on the progress. Not sure this is for Fred or for Hugh, but I'd love to hear on the. You know, it's really impressive that you were able to go through this quarter without selling material amounts of Bitcoin like a lot of your peers did. Can you just maybe give a little more detail on the sources of cash in the quarter, looking specifically at the Compute North loan and how much of that has been repaid back, as well as any, it sounded like you had less payments on some of these orders than you expected. Can you quantify that at all? Thanks. Hugh? Sure. Chris, there's been no activity on the Compute North loan. That's still outstanding. That was not a source. The two largest single sources of funds were the $87 million proceeds from the sale of the miners. We pulled on the revolver, and we also, despite that it was not a tremendous quarter from a standpoint of stock price, we did keep tapping our ATM periodically during the period as well. They were our three main sources of funds. Of course, the biggest use of funds was clearly continued payments for miners. Important point is that a lot of the impact on miner pricing adjustments came in July and very end of June and into July. That did not have a significant impact on the current quarter. It is more of an impact as you're looking forward for the remainder of the year. As we said, if you look at where we are, in the first six months, I think our number is around $390 million of advances for miners. Over the next six months, our forecast is around $150 million-$175 million. Great. Thank you so much for that, Hugh. My follow-up question, and I do have a lot more, but I'll get back in queue. The new facility and the new hosting arrangement with APLD, and I think you've got a couple other hosting deals that you've signed to complete the 23.3. Can you talk at all about the pricing? I was always so impressed by the Compute North transaction back in December at $0.042 per kWh was really attractive pricing, and it's especially in today's environment. You know, can you give me just any indication on how much higher, just given what's happened to energy prices, your new contracts are? Thanks. Yeah. While we haven't sort of announced the exact price, it is a fixed price contract. I think if you look at the fact that we'll be deploying XPs there, and with that energy efficiency, we'll still be relatively in the same ballpark as, you know, prior fixed-price agreements that we had with Compute North. The XP efficiency offsets the increase in power, so your cost per coin is relatively stable? Yeah. That's a great way to look at it. Thanks, Fred. Congrats. Thanks. Thank you. We have next question from the line of Chase White with Compass Point. Please go ahead. Thanks. Good evening, guys. Just curious, what portion of the power purchase agreements have the ability at this point to participate in curtailment programs? I mean, you mentioned that, you know, a certain portion you're able to actually do that and sell power back to the market. I'm just curious, what amount of power is kind of subject to that? In relation to the King Mountain site, which is a wind farm, the wind energy that we have, it has a fixed price, very attractive fixed price. For example, if you look at the forward market in ERCOT, this week, it's, I think $400 a MW or something like that. We are significantly below that, and so that gives us a very big opportunity to sell the wind energy back. The grid energy, we only take it when we need it and wanna mine with it, so that's not energy that we sell back. The wind energy, we have 100% benefit from, if we sell it to the grid. Gotcha. That's helpful. Then, I mean, is it safe to say, just as a follow-up to the prior question that the kind of blended average electricity costs go up, but the efficiency comes down, but everything should stay effectively the same? I mean, are you kind of implying, I guess, here that the power price is, you know, fixed at something like 30% higher given the efficiency of the XPs? Yeah. I think a good way to look at it is, you know, operating with XPs, you know, our costs stay in line with where they've been estimated before. Gotcha. Thanks, guys. Thank you. We have next question from the line of Lucas Pipes with B. Riley Securities. Please go ahead. Thank you so much, operator, and good afternoon, everyone. I wanted to follow up on this last question. In May of last year, I think you disclosed the cost per MW h, $0.045 roughly, per kWh. How should we think about that cost component on the Compute North side of the agreement today? I assume that's the rate that was changed. Right. In the original agreement, we had no benefit of curtailment. It was a fixed price PPA. We had to take the energy whether we liked it or not, unless ERCOT was curtailing the site, and we didn't get the benefit of selling the energy back. What we've done now instead is we've negotiated a very good price, you know, considerably lower than the prior price for the wind energy piece with full rights to sell that back to the grid, and optimize the profit picture from that. On the grid side of the energy, we have a full pass-through on the energy, so we have the ability to hedge, do whatever we want with that energy, and so we'll optimize there as well. We've just decided that if you look at the current energy markets, the short-term picture, meaning 2022, 2023, is going to be very volatile for grid energy prices because of energy prices. We didn't wanna be locked in to a five-year term at a fixed price based on the current market conditions. We wanted instead to have the optionality to be able to, you know, hedge ourselves, buy futures, and turn on and off energy as needed and desired to optimize for profitability. That's why we focus on restructuring the agreement. It gives us a lot more optionality. That's helpful. On 280 MW or so, you're locked in at a fixed rate. That rate is presumably somewhat higher than it was before. On the remainder of the grid, you're currently floating. The wind energy is considerably lower than the rate we had before. Lower. Got it. Okay. That's very helpful. By a significant factor. Then obviously, that generates a very interesting opportunity for. You know, so an example, if you use the old price, $0.045/kWh or $45/MW, if current ERCOT pricing is $400/MW, then we could sell energy. We're paying $45/MW for $400/MW. That profit we receive, the benefit of that. You know, that's really why we structured the agreement that way. That profit can offset. Very, very helpful. Yeah. That profit can offset any, you know, spot market issues with grid pricing as well as, you know, help fund futures and other things like that for hedging. I appreciate the color. Thank you, and best of luck. Yep. Thanks. Thank you. We have next question from the line of Stephen Glagola with Cowen. Please go ahead. Yeah. Thanks for the question. Fred, can you just discuss the construction timelines on the 270 MW of Applied's infrastructure under your new hosting arrangements? You know, where do they stand today? What's constructed in North Dakota and Texas, and what still needs to be done? Thank you, and I have a follow-up. The Texas site's an existing site where this is just expansion of that site. You know, I'm not gonna give you specific how many miners per month will be turned on there. It's essentially really the gating item is our deliveries from Bitmain versus the construction. If you think about our deliveries, we're basically receiving about 15,000 miners per month, give or take a few thousand, each month, which we'll start seeing a receipt of here later this month. That's really the gating item as we go through deployments of the Applied Blockchain sites. At the North Dakota site, you know, you'll start seeing the first miners going in there right around the December timeframe, most probably. That will continue deploying through May of next year. Okay, thank you. I think the press release highlighted 2,800 Bitcoin utilized as collateral for borrowings roughly. Is there any risk of triggered forced sales or liquidation here in the contract with Silvergate, and what prices of Bitcoin would that be potentially? Well, the amount we have outstanding, that's since been repaid. You know, the issue that you're talking about is, if you look at where we are today, we probably have 3,000 some odd Bitcoin outstanding as collateral. And that's of our 10,000. We're not overly concerned about that. I think once you get down to Bitcoin prices of around $12,000, things get pretty rough. Right now, we're watching it closely, and we feel like we've kind of picked the right time to do that financing. Remember, the issue you also have is, you can also choose, if you wish, to sell Bitcoin if you have to and pay off the loan. Since you're over-collateralized all the time, you can also do that. I'm not particularly worried about that, but it is something we have to keep an eye on and we do keep an eye on to make sure that we're not getting out over our skis. The most important thing for me is production ramping, right? Our view is there's a level of Bitcoin holdings that we wanna utilize for borrowings. As our Bitcoin holdings increase and as our production ramps up, that becomes less and less of a concern because the amount that could be drawn on your borrowings becomes less and less a percentage of your overall Bitcoin holdings. That's why it's so important that we got that delayed drawdown feature in the term loan. It gives us an opportunity to grow into that debt as well. All right, t hat's helpful. Thank you, appreciate it. Sure. Thank you. We have next question from the line of Greg Lewis with BTIG. Please go ahead. Yeah. Hey, thank you, and good afternoon, good morning, everybody. I guess I wanted to follow up on the shutting down of Hardin. You know, I guess you announced that you're either gonna be moving rigs or selling those rigs off. Could you talk a little bit about the drivers of those decisions, what types of rigs are there, and as we think about that, what the market is for potentially selling, and if we were to move rigs, how much it would cost to reposition those rigs, and as you look at your existing footprint, where those rigs could even go? Sure. Let me start by saying, you know, the 23.3 exahash, that number does not include any miners from Hardin being installed anywhere else. You know, we have no need to use those miners. They happen to be older S19s. They've been in use for 18-24 months. We believe that, you know, what we need to do as much as possible is deploy the latest state-of-the-art machines, meaning XPs, because of the energy efficiency. We think that that's gonna benefit us in the long run, especially in the next 18 months of the market where energy prices are gonna be very high, most probably, generally around the marketplace. You know, the miners that are at Hardin, if you go back into our filings, you could calculate that, you know, our cost to acquire those miners were somewhere in the low 20s per terahash. You know, essentially, if you look at the current market for used machines, it's around that ballpark. Essentially those machines could be sold, you know, in their current condition, at a small loss or near breakeven kind of number. The cost to move them, you know, if we were to relocate them somewhere, it would be, you know, around $1 million- $1.5 million, if we were to do that. You know, I think we're very focused on deploying the latest machines that we are getting in and really just exiting, I mean, kind of a clean break out of Hardin, so we can move on. Super helpful. I did want to talk a little bit about the wind facility. I mean, clearly there's gonna be opportunities, as you mentioned, Fred, about selling power into the grid. You know, I guess what I would say, realizing that we have to look at each of these locations a little differently, is there any way that we should think about utilization of the exahash at that facility, just given those opportunities, i.e. you know, in the summer when its demand for power pricing tends to be most attractive to sell, versus, say, most of the other parts of the year when it's, I guess, pricing's more stable. Any kind of color you think as we build out our models, how should we be thinking about the utilization of that exahash? I don't know if you wanna on a quarterly or even annual basis. Any, you guys, any kind of color there? It's a great question. We've been working with the power provider there and the operator of the wind farm. It is a very complex calculus to figure out the actual capacity because it's very dependent on seasonality and when the wind blows, not just what the energy markets are doing. It varies the amount of hours of the day that the wind generates vary during the course of the year. A lot of seasonality. The wind farm operator has some very sophisticated models on this. They've obviously been operating this site for, I think it's nearly 20 years at this point. They have a lot of experience, and we're relying on their models to really look at this. Generally, the calculus is this. If it's more profitable to mine than selling the energy, we'll mine. If it's more profitable to sell the energy, then we'll sell the energy. From a cash flow perspective, if you would, to the company, whether it's Bitcoin or whether it's fiat currency, you know, we're optimizing to maximize that profitability. You know, this is gonna be a process where it's gonna take us most probably a few quarters to understand the real seasonality and the real impact of this. The goal is to really just optimize for profitability. Okay. I did wanna follow up, because, you know, I guess sometimes power prices are negative. Now that's typically probably 'cause wind's blowing in the middle of the night. I guess maybe the question is: In the event that power pricing is super attractive across the grid, or is there an ability for you to draw power to power at those rigs when the wind is not available, i.e. you know, can we draw from the grid or not? Yeah. Absolutely. I mean, the wind doesn't blow 24/7, right? The goal is to optimize the 95% uptime, or sell energy back to the grid. You know, by no means are we only using wind energy. You know, we learned our lessons at Hardin that we want redundant energy. Again, you know, and part of the difference in our model to some of our competitors who sit and only have grid energy is by having the wind energy, there's a lot of wind energy that's stranded at the wind farm that can't go into the grid because ERCOT's not buying it. Yeah. We get the benefit of that, hence the extremely low pricing on that energy, but we also have the benefit of being able to draw off their grid when that's cheaper. The good thing is that, you know, we have, you know, the same incentives as the power operator does to operate this site for maximum profitability. We're very aligned in how we're looking at the energy strategy. I think one of the unique things here, you know, as we've talked about, gosh, at this point for over a year, is by partnering directly with the power company and really operating a mining business kind of where your incentives are fully aligned with your energy provider, it creates a very unique situation that people operating directly on the grid don't have the ability to do. I think, you know, again, our model here is gonna be proven to be, you know, somewhat better than some of our colleagues in the industry. Okay. Great to hear, Fred. Hey, thank you all for the time. Have a great rest of the day. Thanks. Thank you. We have next question from the line of Kevin Dede with H.C. Wainwright. Please go ahead. Hey, Fred. Thanks for fitting me in. Appreciate it. No, no questions on MaraPool or your optimization. Is there any way you can talk about that, your ongoing strategy and weaving that back into your operation and what sort of efficiency gains we could see? I've got a follow-up for you. I'll just say stay tuned on that and you'll hear things in the not too distant future on that. Fair enough. Given multiple sites in Texas, Fred, how far have you gone with your immersion experimentation? When could we expect to see Marathon's implementation? Yeah, great question. We have evaluated a number of different vendors of immersion technologies. We have kind of honed in on two that we like very much. I think as you know, you may be well aware, a lot of the immersion vendors don't have the scale to deploy at our scale quite yet. For these current deployments, these are all air-based, both King Mountain and the Applied Blockchain sites. The Applied Blockchain sites in the Dakotas have the benefit of a very different climatology, where for a portion of the year, we may even be able to operate the S19 XPs at that site and overclock them even in air. That's a benefit there. I think as you look at future deployments, you know, that we haven't announced yet, whether that's gonna be in later 2023 or in 2024, I think you'll see immersion make up a portion of those. Again, immersion is still a relatively new technology. A lot of the Gen 1 technologies that have been deployed either require copious amounts of water. You know, again, we are very ESG-focused, and we have our goal of being carbon neutral at the end of this year. We love to deploy behind, you know, renewable energy sources, and we don't really wanna be in a position where we're having to suck water out of a lake to cool our miners. As we look at immersion technologies, we're looking at solutions that are more closed loop in nature. Those are systems that are kind of still in their early stages, but we believe longer term will provide much better operational stability, and allow us to leverage different types of deployment, not just utility scale deployments, but also microgrid deployments. Well, thanks for diving in on that, Fred. Pardon the pun. No worries. I appreciate you entertaining my questions. Thanks, Kevin. Thank you. We have next question from the line of Gustavo Gala with Truist. Please go ahead. Hi, Fred. Thank you for taking my questions. This one's a bit of a follow-up/clarification. For that incremental 254 MW that you've been able to book, has the connection to the grid been approved by the respective operators? I'm particularly asking for the 110 MW out of North Dakota with Applied. The grid operator, they have been approved. I'm not 100% sure as to whether the full load study's been completed, but I do know it's approved. Gotcha. That's helpful. Just looking at the space with all the dislocation that's been going on, can you talk a little bit about the opportunity for consolidation, be it in the sense of picking up a peer or even some of the orders that peers might not be able to pay for, and things of that nature? Thanks. Yeah. Great question. I think, you know, the challenge is, acquiring another mining company, the problem is, you know, what is the cost of the infrastructure, CapEx required, condition of the current miners they have, you know, hash rate. As we've looked at it, we have yet to find an opportunity where we can acquire a miner and have an ongoing operating cost and CapEx model that beats just going out and buying state-of-the-art XPs and deploying them kind of behind the meter at wind farms, solar sites and, you know, partnering with energy companies. We think that sort of de novo model still beats the acquisition model. You know, part of the challenge is if you have a miner who's been operating for two years, their rigs are old S19, so you have no idea how they've been treated. You know, the hosting agreements may only have a year, two years, maybe three years left on them, and then you're back to square one. We think there's just, you know, opportunity for a lot of hair on some of those deals, potentially. That doesn't mean that there won't be some fire sales here as, you know, some miners struggle with, you know, their energy pricing and, you know, Bitcoin production. You know, clearly global hash rate's gonna continue to grow, just based on our deployments and what some of our peers are deploying. We still think the de novo model is a better model. You know, we'll see. There may be a fire sale that just is too good to say no to. Our preference is to grow through de novos. Thank you. Appreciate all the color. Thank you. Ladies and gentlemen, we have reached the end of the question- and- answer session, and I'd like to turn the call back over to Charlie Schumacher for closing remarks. Over to you, sir. Thank you all for your time today. If you have questions that were not answered during today's call, please feel free to contact our investor relations team at ir@marathondh.com. Thank you, and enjoy the rest of the day. Thank you very much. Ladies and gentlemen, this concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.