Welcome to Marathon Digital Holdings third quarter 2022 earnings webcast and conference call. I would now like to turn the call over to your host, Charlie Schumacher, Vice President of Corporate Communications. Please go ahead. Thank you, Diego. Hello, everyone, and welcome to Marathon Digital Holdings third 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 performance measures to the most comparable 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 the more popular questions from our investors before transferring to a 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 Q3 2022 earnings call. The third quarter was a transition and rebuilding period at Marathon. With the facility in Hardin, Montana offline and energization of miners in Texas delayed, we entered the third quarter with only 6,000 miners operational, producing approximately 0.7 exahashes per second. Unsurprisingly, the operational transition that occurred during the third quarter caused our financial results to dip both quarter-over-quarter and year-over-year. However, as our consistently improving Bitcoin production substantiate, our confidence in our ability to rebuild our hash rate while maintaining a healthy balance sheet was well-founded. Today, we believe Marathon has a strong foundation on which we can continue to efficiently grow towards our goal of 23 exahashes per second by mid-2023 and expand our position as a leader in securing and supporting the Bitcoin ecosystem. Since the end of the second quarter, we have sequentially improved our Bitcoin production from 72 Bitcoin in July to 184 in August, then 360 in September, and then to a record 615 in October. October was the most productive month in our company's history, during which our production was almost equivalent to the entire third quarter's. We now hold approximately 11,300 Bitcoins, making Marathon the second-largest holder of Bitcoin among publicly traded companies worldwide, according to various third-party sites tracking this data. The consistent improvement in our Bitcoin production is the direct result of increasing our hash rate by bringing more Bitcoin servers online and improving those servers' uptime. During the third quarter, we transitioned out of the data center in Montana, where our servers were drawing their electricity from a coal plant that had consistently incurred maintenance issues that negatively impacted our uptime. This scheduled move was part of our broader strategy to become both more operationally effective and more environmentally sustainable. By transitioning away from the Hardin facility, our renewable energy mix has increased, our uptime has improved, and our fleet has become more efficient on a joules per terahash basis. While we were in the process of exiting Hardin, new facilities, most notably the data center in McCamey, Texas, that is co-located behind the meter at a large wind farm called King Mountain, began coming online. The energization of this new site during the third quarter enabled us to increase our hash rate from approximately 0.7 exahashes per second on July 1 to approximately 3.8 exahashes per second on September 30, as over 30,000 miners were brought online during the quarter. Since the quarter's end, we have increased our hash rate an additional 84% to approximately 7 exahashes or 10 times greater from where we entered Q3, with approximately 69,000 of our Bitcoin miners operating as of November one. Not only have we been able to execute in line with our recent expectations, but we've been growing consistently at a time when many in our industry have been struggling. However, before discussing the current state of the industry and why do we believe it creates uniquely beneficial opportunities for Marathon, I'm going to turn the call over to Hugh to discuss our financial results for the third quarter. Hugh. Thanks, Fred. This was a particularly eventful quarter as we energized our miners in King Mountain and completed the exit from the Hardin, Montana site, a significant strategic pivot for the company. We also announced additional hosting capacity with Applied Digital, and we added new term loan and revolving credit facilities. In September, we learned of the Compute North bankruptcy, a process which is still ongoing as we speak and which we'll comment on a little bit later. Let me first turn to the numbers. We recorded a net loss of $75.4 million during the quarter compared with a net loss of $22.2 million in the prior year period. This $53.2 million increase in our loss... This is a $53.2 million increase in our net loss, and I'm going to walk you through the components of it now. As mentioned in our earnings release, production was very low in July as we made the decision to exit Hardin, and we were just starting to energize King Mountain. This combination of factors, coupled with lower Bitcoin prices, resulted in a $39 million decline in revenues when compared to the prior year. Decreased production accounted for $26.3 million of this variance, and lower Bitcoin prices accounted for $12.7 million of the revenue variance. Cost of revenues increased a total of $29.8 million. This was primarily related to the impact of $20.8 million in accelerated cost recognition related to the early exit from Hardin. This impacted both cost of revenues, energy hosting and other by about $5.7 million, and cost of revenues, depreciation and amortization by about $15.1 million during the quarter. Fortunately, the recognition of these costs are now behind us. Turning to the value of our digital currencies, we experienced a $5.9 million impairment in the carrying value of digital currencies during the quarter, compared with an impairment of $6.7 million in the prior year period. However, in last year's quarter, we also experienced an increase in the fair value of digital assets we held in our investment fund of $42.1 million. You'll recall that we eliminated the investment fund during the second quarter of this year, and we now hold all of our Bitcoin as intangible assets subject to impairment. Overall, the negative period-over-period impact was $41.3 million. I mentioned earlier that it was an eventful quarter, and next I'm gonna just touch on two of the more larger and more unusual items that we recorded during the quarter. In October, we finalized our previously disclosed legal settlement of $25 million. The expense to establish this reserve for the settlement was recorded during the quarter. We also previously disclosed our exposure to Compute North, consisting of investments in preferred stock, loans, and operating deposits, that this number was approximately $81 million. During the quarter, we performed an assessment of where we stood with Compute North, and we recorded an impairment of $39 million related to the preferred stock, the loan, and certain deposits. This bankruptcy process is ongoing, and we will not be able to comment on the process further other than mentioning these financial impacts. We also saw a $3.8 million increase in interest expense during the period, primarily related to the convertible notes issued late in 2021. Now, partially offsetting these unfavorable variances were the following items. We recorded gains on sales of assets of $31.9 million during the quarter. These gains included the previously disclosed sale of equipment related to the King Mountain development and additional asset sales related to our exit from Hardin. We sold approximately 22,000 miners at Hardin for proceeds of around $46.5 million, and we recorded a gain of around $4 million related to this transaction. Operating expenses decreased significantly. This was primarily due to a drop in non-cash compensation expenses, partially offset by higher costs related to increased business activities from the growth of the company. We also recorded an income tax benefit of $5.8 million in the current year period versus a $0.1 million benefit in the prior year period. Adjusted EBITDA was a loss of $8.7 million compared with adjusted EBITDA of $78.8 million in the prior year. This decline in adjusted EBITDA primarily resulted from lower total margin. Again, this is EBITDA, so we're excluding depreciation and amortization of $46.9 million. The $41.3 million impact to the carrying value of digital assets, the legal reserve, and the increase in cash operating expenses of about $6.3 million. All of these negative variances were partially offset by the gain on sale of assets I mentioned previously. Turning now briefly to our Bitcoin holdings and liquidity. Unrestricted cash was $55.3 million at the end of September and $52.1 million at the end of October. Total Bitcoin holdings were 10,670 or a market value of $207.3 million at September 13th, and 11,285 or $231.3 million at October thirty-one. Unrestricted Bitcoin holdings were 6,842, that's about $133 million at September thirtieth, and 3,464, that's about $71 million at October 31st. During the month of October, we borrowed $50 million under our revolving credit line, which is why our unrestricted Bitcoin went down, and we intend to repay this by making the final draw on our term loan facility in November. We don't expect significant additional collateral requirements related to this transaction. We expect to increase our Bitcoin holdings over time, primarily through our mining activities. As our mining activities increase, we will likely sell a portion of Bitcoin produced in future periods to fund monthly operations for treasury management purposes or for general corporate purposes. We also expect to fund our operations through prudent use of our ATM facility. Looking forward for the remainder of the year, we see modest cash needs for investment, including shipping costs related to previously ordered miners. With that summary, I'll turn it back to Fred for the rest of the call. Fred? Thank you. There's no doubt that the macro environment presents challenges for Bitcoin miners. Bitcoin's price has been relatively flat for the past four months. Power prices have increased, and the global hash rate has climbed to over 260 exahashes per second. These forces have depressed margins across the industry, and so far, hosting providers seem to have felt the largest impact. While these variables present challenges for some, they also present opportunities for others, including Marathon. We believe there's no better time to be scaling our Bitcoin production and to be commencing the installations of our previously purchased S19 XPs, which are the most energy-efficient machines available and approximately 30% more energy efficient than the prior generation S19j Pros predominantly being installed today by many of our competitors. Today, it is unprofitable to mine with S9s and S17s unless your energy pricing is below $0.03 and $0.065 per kWh, respectively. Even with S19j Pros, the break-even cost to mine is approximately $0.085 per kWh, given the current global hash rate. For these reasons, we believe one of Marathon's unique strategic advantages is that over 60% of our hash rate is expected to be generated by S19 XPs by the time we achieve our primary target of 23 exahashes per second in mid-2023. Given the large mix of XPs in our mining fleet, we believe the efficiency across our fleet will measure approximately 24.2 joules per terahash once fully operational. To put this in context, it's been estimated that global Bitcoin mining fleets are currently operating at an average of 45.9 joules per terahash. Said another way, by mid-next year, we expect Marathon's mining operations will be consuming 47% less energy than the Bitcoin network is today on a per terahash basis. Why does this matter? It means we're positioned to keep the lights on when others cannot. Since Bitcoin mining is a zero-sum game in which the difficulty of mining is dynamic, being able to survive the winter while others are out in the cold provides us with excellent downside protection, and it also provides us with more leverage should Bitcoin begin to turn in a positive direction. Installing and energizing our miners and achieving 23 exahashes per second remains our primary goal for the upcoming quarters. Based on conversations we've had with Applied Digital and our other hosting provider, we believe we are still on pace to achieve this target near the middle of 2023, as previously stated. The most recent construction and deployment schedules indicate that miners should start to be energized at Applied Digital's facility in Texas during the fourth quarter of this year, while our deployments at their facility in North Dakota should mostly occur during the second quarter of next year. King Mountain is now nearly fully operational, and depending on the outcome of the ongoing Compute North bankruptcy, second-phase energization of Wakulla may occur in Q4, with final energization potentially in Q1. These timelines are always subject to change, and we continue to provide the updates on this progress in press releases, quarterly filings, and elsewhere. With production scaling and our hash rates becoming more consistent, the obvious question to ask is what's next? In Marathon, we don't speak in detail about our growth plans until we have contracts in place. However, today I do want to share part of our philosophy to give you all a sense of how we see the company evolving over the coming quarters. To drive value, we believe it's imperative to become effective and then more efficient over time, to maximize optionality and to be proactive rather than reactive. As part of that strategy, we're constantly evaluating new technologies and searching for new hosting arrangements. This past year, we significantly reduced our reliance on fossil fuels as we broke the mold on deploying behind the meter at renewable energy sites. While the majority of our hash rate will be located near sustainable power sites by this time next year, Marathon is always striving to set the pace to make Bitcoin mining more energy efficient and environmentally sustainable. While we believe there are several innovative opportunities in North America to increase our geographic diversity, decrease our power costs, and drive further towards carbon neutrality, we are also investigating international markets which are becoming increasingly more interesting, especially as we look to deploy immersion technology. Bear markets are a great time to build if you can do so, and we believe Marathon remains well-positioned for growth. We look forward to building on our current momentum through the end of the year and beyond to become the largest self-mining Bitcoin miner and to improve 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 Q&A platform. The first question comes from Yu Di, who asks, "If Bitcoin continues sideways between $18,000-$21,000 for the next 6- 12 months, is Marathon currently in a financial position to weather the storm and come out on top if the value of Bitcoin begins to increase in the future?" Fred, would you like to take that one? Sure. As you can see from the earnings release in our prior production reports, our cost to produce Bitcoin remains very competitive in the marketplace. We think, as we've been saying, we expect Bitcoin to trade in this kind of $18,000-$22,000 range for some time, and we think we're very well positioned to weather that storm and come out the other side very attractively as Bitcoin goes up in price. You know, to date, we haven't yet sold any of our Bitcoin. You know, we will hold that Bitcoin unless we deem it's necessary to cover operating expenses or other expenses. At the same time, as we were gonna continue to look at, you know, Bitcoin's price behavior. Today was a unique day in the market. This news with this little battle between CZ and Sam Bankman-Fried has obviously caused some turmoil on the price of Bitcoin, but we think that, you know, Bitcoin will likely come back within the range that we've spoken about, and that's a range we feel very comfortable with. Great. Hanish H. and Mohammed M. were both curious about some of the potential risks to the business. I guess the questions essentially were, does Marathon currently face any threat of bankruptcy or other major risks associated with it? What are the company's plans to avoid those risks? Well, there are lots of, you know, risks that we can't control. Price of Bitcoin, global hash rate, things like that. We think that barring those things, we're very well positioned to weather through this winter and come out the other side, and definitely harvest as the environment improves. Our next question is from Hop N. Fred, this is probably one for you as well. What is the future of Marathon in 2023? Sort of a follow-up question to that from Bassam S. is, will Marathon consider diversifying its business beyond Bitcoin mining in the foreseeable future? 2023 is gonna be an important year. I mean, today we're operating at a little over 7 exahashes per second, and by mid-2023, we'll be at 23 exahashes. That's pretty substantial growth in a very short period of time. If you look at the balance of the year, and if you remember the comments I just recently made probably earlier on this call, we're beginning to look at international opportunities and other opportunities which we believe will provide us with very attractive energy pricing, very consistent energy sources, very well-capitalized hosting partners and energy partners as we continue to evolve kind of our strategy around renewables and, you know, driving that renewable mix as high as 100%. Our next question is from Jacob B., who asks, "Is Marathon considering an acquisition of another mining operation or data center?" Fred, maybe you can talk about your ideas around potential consolidation that may occur within the mining space. Yeah. One of the big challenges, and I've said this at many conferences, and my kind of stock answer to this question, in this industry, when times get tough, the cost to replace assets goes down as well. In traditional industries, you know, if you're gonna build a factory, whether the industry is doing well or not, that cost differential is marginal. In our industry, when the price of Bitcoin drops, the price of Bitcoin miners drops. You have the technology cycles, and we've just gone through a technology upgrade cycle. If we were to go acquire another miner, they likely will have machines that are S19J Pros or older, and they may have hosting agreements that don't necessarily fit our mix. Which is why we prefer to buy those latest state-of-the-art miners, deploy them, so we have an energy consumption advantage or an efficiency advantage, if you would, in the industry. Really drive the types of hosting agreements that fit our model ideally. With that, you know, as I've said to many people, you know, I don't foresee us going and consolidating the industry necessarily. That being said, there may be unique opportunities and, you know, we'll obviously be open to looking at things. Our next question comes from Brian D., who asks, "What is your energy diversification strategy to avoid overexposure to any one provider like a Compute North and/or avoid another Hardin incident? Is there any consideration of hosting some of your own miners? If by hosting some of our own miners, it means owning hosting infrastructure sites ourselves and contracting for power directly. Our model currently is asset light, where we don't like to invest in the infrastructure. That being said, there are potentially new solutions for energy that would cause Marathon to potentially invest in developing those further, which could drive our energy costs down substantially in the future. I think one of the most important thing for miners to have control over is not their infrastructure, but it's their power price. If you can control your cost of power and drive that down, then you'll have better competitive position than any other miner. At this point, in the interest of time, I think we'll wrap up this section of Q&A. Again, we really appreciate the questions and interest from all the investors who added to the Q&A platform. I'm now gonna turn the call back to Diego, our operator, to open the line for questions from our covering analysts. Diego, the mic is yours. Thank you. We're now going to open the call to questions from Marathon's covering analysts. If you would 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 would 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 keys. Our first question comes from Jonathan Petersen with Jefferies. Please go ahead. Oh, great. Thanks. Good afternoon, guys. Maybe to pick up on a comment actually you just made, Fred, on the importance of controlling your power. I wonder if you could just give us some more details on the hosting agreements you have with Applied Digital and this next wave with Compute North. Like, how are those power agreements structured, and are they structured in a way that, you know, I guess maybe a continued low price of Bitcoin or rising network hash rate coupled with rising energy costs kind of protects you guys from these hosting providers having future issues such as what Compute North is having right now with their bankruptcy? The Applied Digital hosting agreements are at fixed price, so rising cost of energy doesn't impact our hosting costs in those circumstances. In the case of the King Mountain site, as we've talked about before, we have a PPA on the wind side that is extremely attractive energy price that also gives us the ability to sell that energy to the grid, whenever ERCOT needs it, and we get 100% of that upside. For the balance of the energy there, we're buying from the market and, you know, following traditional principles of dealing with energy cost risk mitigation. If you look at the future, what's important is, you know, being really at the point of power generation as opposed to being on the grid at all. I, you know, I don't really wanna kind of open the kimono too much on this 'cause it's a strategy we haven't talked publicly about a lot. Suffice it to say that we believe that Bitcoin miners in the future will be very intertwined with the energy industry and more directly in energy generation than before. This is kind of an extension of the thoughts that we've had regarding, you know, partnering directly with the power industry. In those circumstances, hosting is really just an outsourced service you procure from somebody. As long as you control your input costs, the rest is really just question of deciding what do you wanna own, what don't you wanna own. Right. Okay. Maybe a question for Hugh. You guys use some of your Bitcoin as collateral, I guess, on your line of credit, and you said you were taking out a term loan. I mean, I guess the bigger question is why, you know, in this, you know, with these debt costs today and in these uncertain markets, like why take out an additional term loan and more debt, and why not just pay down Bitcoin and use that to fund your business? It's just a treasury management decision that we've made, keeping our flexibility for the price appreciation of Bitcoin. There's really nothing more to it than that. The term loan we put in place last quarter, and it's a $100 million term loan for 2 years. We, you know, consider that part of our sort of longer-term capital structure evaluation. We try to balance kind of the short-term needs and the ultimate long-term needs of the company when we come up with those decisions, and that's where we ended up. Okay. All right. That's it for me. Thank you. Our next question comes from Chase White with Compass Point Research & Trading. Please state your question. Thank you. Could you just give us a bit more color on kind of the regulatory issues with ERCOT at the Wolf Hollow site? Any idea when those could be resolved, and what options do you have if there's continued to be delays? Our understanding is that ERCOT is going to give a decision on energization imminently. Don't believe it will be a negative, but the number of miners we have installed there, in the scope of our overall miner fleet is quite small. Obviously in today's marketplace, there are a lot of opportunities to plug holes, you know, 5,000 miners here, 10,000 miners there, very cost-effectively. There are a lot of people whose miners have been shut off and can't run. They have PPAs to cover, and so we're seeing ample opportunities to essentially cover that mix if we need to, and we don't believe at all it's gonna impact our delivery of our 23 exahash. Great. That's helpful. Thank you. Then, you know, how much in prepayments do you guys have left for the year? I might have missed that, but for the year-end just in total on the main orders that you have for the 23 exahash. We said that it very modest. When I look at our investments. You know, when you look at what we've spent so far this year, and I look at where we are, where we're going, you know, we spent about $200 million in the first quarter, $207 million in the second quarter, around $96 million in the third. The fourth quarter is going to be pretty light. It'll probably be $20 million or $30 million. Great. Thanks, guys. Thank you. Our next question comes from Stephen Glagola with Cowen. Please state your question. Hey. Thanks for the question. Just first, Fred, can you just clarify for me, did you say that the PPA with Applied is a fixed PPA? Yes. Okay. I'm just curious, in light of that comment, we saw, like, from a document on July of this year, excuse me, some verbiage around, you know, the ability for Applied to pass through, you know, some higher power costs up to, you know, a certain threshold. You know, I just was curious, is that document just to disregard it or, anything you can say around there? You know, let me go back and look at the document, the fully executed MSA, before I respond to that. Okay. I appreciate that. My other question was regards to guidance for, you know, you reiterated the 23.3, but I know you don't really explicitly give near-term guidance, but I did notice, you know, you're now expecting to reach 9 exahash by the end of the year, and that was a downward revision from your October 19 presentation of 11.5 exahash, which was a downward revision from prior to that at 13.4. Could you maybe just talk through what's driving the lower near-term guidance on hash rate for the company? Sure. It's driven by a couple of things. One is, you know, when you contract for the hosting and when they actually have it ready and live to go, there can sometimes be 30 or 60-day lags in that. What you're seeing is us being a little bit more prudent regarding the full energization of the first Applied Digital site in Texas and how that slips over into the new year. But again, you know, we're not changing our end number for midyear at all. All right. Appreciate the question. Thank you. Our next question comes from Lucas Pipes with B. Riley Securities. Please go ahead. Thank you very much, operator, and good afternoon, everyone. My first question is on it. It's a modeling question. In terms of modeling uptime in Q4 and then also in 2023, when you hit the 9 exahash threshold, when you then hit the 23.3 exahash threshold, what's a good range to model for equipment miner uptime? That's my first question. Thank you very much. With Wolf Hollow, we have a very short period of experience so far. We're seeing very good uptime, though, at that site, actually exceptional uptime. It's a little too early to tell, most probably, on that. We've not had a lot of curtailment there at all, in comparison to, you know, other sites in Texas that we've been monitoring. I think you're gonna see that remaining quite high. You know, let us get back to you with a better number on that. The other Applied Digital sites we expect to have very good uptime too as well, especially the North Dakota site, just because the climatology is much better there, and there's an opportunity for us to overclock miners at that site during the right times of the year. Again, for the Texas sites, you are gonna have to look at some seasonality because of temperature, and we're still very early on in that. You know, we're more than happy to work with you on kind of coming up with a model and a way to look at that. I appreciate the color. Thank you. Second question is more strategic. Obviously, there's a ton of distress in the space. Miner prices are way down on a $ per terahash basis. Fred, how are you looking at the opportunity set here? Is this a time to raise more capital, be more aggressive, or would you say, look, you have 23.3 as a target for the middle of next year, let's kind of stick to that? I'm just kind of trying to get a sense for your strategic priorities given the distress in the industry. Thank you very much for your perspective. Sure. As stated in the call, our primary priority remains getting the 23.3 exahash deployed and operational. Beyond that, as you look at the back half of next year, we're obviously continuing to evaluate opportunities for expansion, and I think over the next couple of months, you'll see us talk more broadly about that. Obviously, you know, this is a time period where you can acquire miners at very low cost, and then, you know, there's more and more hosting opportunities becoming available each day. We're also thinking more about the long term. Really, it's not a question of just growth for growth's sake, but how do we grow strategically so that we're getting better and better leverage on energy costs, and we're getting better and better uptime and availability as we transition to things like immersion and operating in locations where we get very good, you know, opportunities for energy arbitrage. Thank you. Thank you, Fred. I'll squeeze in one last one if I may. What is the current mix between XPs and JPROs? And if you wanna pick the 9 exahash figure for the end of the year, that's fine too. Just trying to get a sense of what the current breakdown is between XPs and JPROs. Secondly, how are the XPs performing versus the S19 JPROs? Are there any notable performance differences other than, of course, the specified performance metrics just in terms of uptime and things like that? Thank you for your perspective. Yeah. Today, I would say that the King Mountain site is all S19j Pros. That's the bulk of our capacity today. We have a couple of other smaller sites running S19j Pros as well, and the first XPs really go into production at Wolf Hollow. And then Applied Digital is 100% XPs. You'll see a little bit of XPs coming online in Q4, but really it's in the first six months of next year that you'll see the bulk of those XPs come online. The mix, when fully deployed, 66% of our hash rate will come from XPs. It might actually be 65 point something%, but generally speaking, about two-thirds of our hash rate will be XPs by mid next year. If you look at it from a performance perspective, anecdotally, what I would say is the XP is a better quality machine than the S19j Pro. It has a cooler operating range. If you're looking at the difference between the input air temperature and the output air temperature, we're seeing definite advantages on the XPs. That means you can run them potentially in slightly warmer climates without them having to shut down. It also speaks very positively about the opportunities for overclocking them. To date, we're very happy and pleased with you know what we're seeing out of the XPs that we've been operating in our labs and as we begin to deploy them. Thank you, Fred. I appreciate the color, and to you and the team, best of luck. Thank you. Our next question comes from Greg Lewis with BTIG. Please go ahead. Hi, everyone. This is Todd on for Greg. Thanks for taking the question. Most of mine have been answered, but I just wanted to follow up on the immersion comments, Fred. Could you maybe provide a little bit more color on how you're viewing immersion today, you know, realizing that the XPs are gonna be rolled out, and then you allude to the 60% of the fleet, I think by the middle of next year. Just trying to get a sense as to, you know, where immersion's really gonna come into play, and as we start to get a real meaningful incremental benefit. Just any other color on that front would be appreciated. Thank you. Sure. You know, immersion is ideal for use in places like Texas, anywhere where there's a warm climate because it provides for a more stable operating environment for the miners, so you're not having to shut down the miner due to temperature issues. You know, if you have to curtail for power issues, you have to curtail regardless. We believe that immersion allows the miner to operate in a narrower temperature range, which then extends potentially its life and decreases the amount of times you have to touch a miner. Your total cost of ownership with immersion, in theory, should be less. I say in theory, because with air-cooled miners, you're having to really clean the miners and touch them at least kind of once a month. With liquid immersion, that need for cleaning kind of disappears. It comes then down to, you know, failure rates of components and things like that. Again, if the operating temperatures aren't as extreme because you're keeping them immersed in fluid, then in theory, there should be less of that. We believe that the advantages in immersion, excluding the ability to overclock, are longer lifespan on the miner and lower cost of ownership to maintain and manage them. In regards to the overclock, you know, there are certain vendors who have published results of overclocking S19j Pros as much as 60%-70%. To date with XPs, you know, there are still some firmware hurdles, but those have been solved for the most part, I think. We'll see kind of what the test results are in overclocking with the XPs. We believe that there's very good opportunities just based on how they perform in air, that they will be able to perform exceptionally well in immersion. Okay, great. That's all I have. I'll turn it back to the queue. Thank you. Thank you. Our next question comes from Brian Dobson with Chardan Capital. Please state your question. Oh, hi. Good evening. You mentioned global geographies becoming more appealing for mining. Could you elaborate on which geographies you're seeing becoming more appealing, and is Africa an area that you see as an area of opportunity? I'll answer it in this way. You have certain geographies where you have very good energy infrastructure, you have no risk of regime shift, you have a good legal system, but you may have energy asymmetry due to seasonality, where you need a lot of energy in one season to provide cooling or heating, and in the opposite end of the calendar, you don't need as much energy. There's a lot of idle energy sitting there. Those locations are very interesting. You have areas like Latin America, where you have ample hydroelectricity that is for the most part not utilized perfectly, and so that makes it available to Bitcoin mining. You have parts of the Middle East, where you have this temperature asymmetry and seasonality, and you have some opportunities potentially in Asia. Africa, unfortunately today, outside of North Africa, the Middle East, you have too much issues around regime risk. While you have, for example, in Kenya, very ample geothermal opportunities, you know, I think Kenya has published data about up to 17 GW of geothermal energy being available to be developed. You have issues with regime risk, getting infrastructure in place and other things. You know, at this point, as we're looking around the world, it's really predominantly kind of Latin America, Middle East, parts of Asia. Yeah, thanks. That's interesting. Turning to global difficulty, I guess, where do you see it now and what are your thoughts on next year, given the price of Bitcoin? Well, you know, the beauty of the Bitcoin network is that it's constantly looking for stasis, right? When the price of Bitcoin drops, people have to unplug miners because they can't operate profitably. You know, as we said on the call, the cost to operate an S19j Pro, if your energy cost, energy and hosting costs, if you put those two together, is north of $0.085, you're getting to a point where, you're most probably not operating profitably. If you look at the most recent price drop of Bitcoin now down to kind of $18,000 range. You know, there's some miners who are definitely about to become or are marginal operators, which is why we believe it's so important to really push hard to use S19 XPs because of the energy efficiency there. Thank you very much. Our next question comes from Kevin Dede with H.C. Wainwright. Please state your question. Hey, Hugh. Yeah, you mentioned $20 million-$30 million perhaps, right, payment in the fourth quarter. Is that the last payment that you have to make on the XP batch? That's our forecast for the fourth quarter of this year, and there's not much after that, no. You know, that's an all-in number, Kevin. That's payments, that's shipping, that's everything. Okay. Can you give us, you know, a balance sheet perspective on the, you know, the two debt levers? Where were they at the end of September, and what do you expect them to be at the end of the year? What are you talking about? Our level of debt? Well, yeah. You said. Yeah, you're offsetting the revolver with a term loan. I just wanted to make sure I understood that. Refinance. We've got $50 million in the term loan. Right now we borrowed $50 million in the revolver. We're gonna borrow $50 million on the term loan and pay off the revolver. All that we're gonna have is $100 million of debt outstanding. That all happens before the end of the year? That'll happen in November. Okay. This month. Okay. Right. My whole point to that was the collateral's already outstanding for the revolver, so there's no additional collateral needed to turn that revolver into a term loan. Right. What was the total amount of Bitcoin as collateral? Then what's your interest rate payment associated with that? The term loan is the Wall Street Journal Prime plus 1.75, so it's a floating rate. The Bitcoin that we used to collateralize, I think it's around $3,800. It's probably around 7,600 for the whole $100 million. Okay. Okay. All right. Yeah. That's kinda what tripped me up. I appreciate the detail. Thank you for- Yeah. Providing it. No, no. No problem at all. Thank you. Our next question comes from Gus Galá with Truist Securities. Please state your question. Hey, guys. Thank you for taking my question. I just wanted to understand. I mean, what's the biggest, like, roadblock, potential roadblocks to this 23 exahash, midyear 2023 outlook. I mean, as Stephen pointed out earlier, we've pushed. Now it's gonna be 14 exahash, let's call it, in six months. What is, maybe, help me size of that 14 exahash. What's gonna be like, you know, maybe plugged in but not energized at the beginning of the year? Just help me with the cadence there a little bit. You've got the Applied Digital site in Texas, which we'll be deploying now in Q4. Part of that will be potentially energized this side of the year and with the balance really in January, potentially. You know, could it energize all this side of new year? Possibly, but we prefer not to put that out there. We're just taking a very prudent approach on that. Relative to the North Dakota site, there's been very good construction progress to date, so right now we're feeling very good with the deploying that site completely in Q2, and energizing that site. It's really construction and potentially final approval from the electrical regulator in each location. We don't think there'll be any issues with the Texas site, because we're so close in on that. There are already miners being put on shelves there, so that's moving ahead. North Dakota site construction is moving ahead very nicely. We don't foresee any delays there currently, so. Got it. Thank you very much. As we think about, I just wanna see how you think about running. If Bitcoin remains sideways, let's say, the very bearish case, like, through midway 2024, how do we think about running the business into halving, with depressed, like, prices? Well, as long as we can mine profitably, we'll continue to mine profitably. Right? It's. There aren't a lot of reasons to operate your miners if you're losing money with every Bitcoin you're mining. So it's just something we have to keep a very watchful eye on. Right now, our margins are still quite nice, so we don't believe there's a lot of risk. We think price, you know, our margins would support Bitcoin dropping below this current range and still allowing us to operate. Question is really more, as we get closer to the halving, you know, how Bitcoin is gonna perform. You know, nobody can project that. Nobody would know that. I think that, you know, if Bitcoin were at a price in the teens, when we come to a halving, I think, you know, that would have big implications for the whole industry. Got it. Thank you very much. Thank you. At this point, there are no further questions. I'm going to turn the call back to Charlie Schumacher for closing remarks. Thank you all for your time today. If you have any questions that were not answered during today's call, please feel free to contact our investor relations team at ir@mara.com. Thank you, and enjoy the rest of the day. Thank you. This concludes today's conference. All parties may disconnect. Have a great day.