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Core Scientific(CORZ) - 2024 Q2 - Earnings Call Transcript
CORZCore Scientific(CORZ)2024-08-09 03:54
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Financial Data and Key Metrics Changes - Total revenue for Q2 2024 was 141million,with141 million, with 111 million from digital asset self-mining, 25millionfromdigitalassethostedmining,and25 million from digital asset hosted mining, and 5.5 million from HPC hosting [16][17] - Gross profit increased by 5% to 39million,whileoperatingincomedeclinedby3139 million, while operating income declined by 31% to 7 million [16] - Net loss for Q2 2024 was 804.9million,significantlyhigherthanthe804.9 million, significantly higher than the 9.3 million loss in the same period last year, primarily due to non-cash mark-to-market adjustments [27] - Adjusted EBITDA was 46million,reflectinga246 million, reflecting a 2% year-over-year increase [17][29] Business Line Data and Key Metrics Changes - Digital asset self-mining revenue increased by 14% year-over-year, driven by a 134% increase in bitcoin prices and a 28% increase in self-mining hash rate [18] - HPC hosting revenue of 5.5 million exceeded costs by 0.6million,resultinginaGAAPgrossmarginof110.6 million, resulting in a GAAP gross margin of 11% [20] - The self-mined to hosted mining mix was 79% to 21% as of June 30, 2024 [30] Market Data and Key Metrics Changes - Power costs decreased to 0.0402 per kilowatt hour from 0.0425intheprioryear[25]−Thecompanyanticipatesaveragepowercostsin2024tobebetween0.0425 in the prior year [25] - The company anticipates average power costs in 2024 to be between 0.042 and 0.044perkilowatthour[29]CompanyStrategyandDevelopmentDirection−ThecompanyistransitioningtoHPChostingwhilemaintainingitspositionasaleadingbitcoinminingcompany,withafocusonoperationalefficiencyandcostmanagement[14][42]−CoreScientificaimstoexpanditshostingbusinessanddiversifyitsclientbase,targetingbothbrownfieldandgreenfieldopportunities[47][66]−Thecompanyplanstoacquire10,000to15,000additionalbitcoinminersin2024toenhanceitsself−miningfleet[35]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinthecompany′sabilitytoexecuteitsstrategyandachievesignificantrevenuefromHPChostingcontracts,projecting0.044 per kilowatt hour [29] Company Strategy and Development Direction - The company is transitioning to HPC hosting while maintaining its position as a leading bitcoin mining company, with a focus on operational efficiency and cost management [14][42] - Core Scientific aims to expand its hosting business and diversify its client base, targeting both brownfield and greenfield opportunities [47][66] - The company plans to acquire 10,000 to 15,000 additional bitcoin miners in 2024 to enhance its self-mining fleet [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute its strategy and achieve significant revenue from HPC hosting contracts, projecting 6.7 billion in total revenue over 12 years [38][44] - The company is focused on improving its capital structure and reducing debt, with a significant reduction in secured convertible notes [34][68] - Management highlighted the importance of site selection and relationships with local utilities as key factors for future growth [92][94] Other Important Information - The company completed 72 megawatts of infrastructure at its Denton, Texas site, bringing total operational infrastructure to approximately 830 megawatts [11] - Stock price appreciation allowed for the conversion of $260 million in secured convertible notes, significantly reducing debt [12][33] Q&A Session Summary Question: Insights on funding for new HPC or bitcoin mining sites - Management indicated that contracts with CoreWeave open up various funding opportunities and that they are targeting less expensive sites for expansion [58][59] Question: Competitive dynamics in the HPC site selection market - Management noted competition from major players like Equinix and Digital Realty but emphasized their focus on brownfield opportunities [66] Question: Thoughts on leverage and balance sheet changes - Management stated that they are comfortable with their current capital structure but are evaluating opportunities to strengthen it as they grow [68][70] Question: Status of remaining 112 megawatts of data center capacity - Management confirmed ongoing discussions with CoreWeave and emphasized the importance of client diversification [72][74] Question: Impact of delays in black well shipments on delivery timelines - Management is closely monitoring the situation and is focused on executing facility deliveries alongside GPU shipments [76] Question: Supply and demand imbalances for energy - Management described the current market as tight, requiring expertise in site selection and negotiations [78][80] Question: International expansion plans - Management confirmed they are considering international opportunities but are currently focused on domestic negotiations [102][104]