Good morning and welcome to Hut 8's Full-Full-Year 2024 Financial Results Conference Call. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded and a transcript will be available on Hut 8's website. In addition to the press release issued earlier today, you can find Hut 8's annual report on Form 10-K on the company's website at www.hut8.com, under the company's EDGAR profile at www.sec.com, and under the company's SEDAR+ profile at www.sedarplus.ca. Unless otherwise noted, all numbers referred to during this call are denominated in U.S. Dollars. Comments made during this call may include forward-looking statements within the meaning of applicable securities laws regarding Hut 8 Corp and its subsidiaries. The statements may reflect current expectations and, as such, are subject to a variety of risk and uncertainties that could cause actual results to differ materially from current expectations. These risks and uncertainties include, but are not limited to factors discussed in Hut 8's Form 10-K for the 12 months and to December 31, 2024, as well as the company's other continuous disclosures documents. Except this required by applicable law, Hut 8 undertakes the obligation to update or review any forward-looking statements. During the call, management may also make references to certain non-GAAP measures that are not separately defined under GAAP, such as adjusted EBITDA. Management believes that non-GAAP measures taken in conjunction with GAAP financial measures provide useful information for both management and investors. Reconciliation between GAAP and non-GAAP results are presented in the tables accompanying the press release, which can be viewed on Hut 8's website. I would now like to turn the call over to Asher Genoot, CEO of Hut 8.

Good morning everyone, and thank you for joining us today. Just over a year ago, when I stepped into the role of CEO, I made a commitment to our Board, our shareholders, and our team to set Hut 8 on a new trajectory. Today, I'll discuss how we delivered on that commitment in 2024 through a comprehensive transformation that we believe has positioned our business for profitable growth and long-term value creation. A transformation of the scale does not happen overnight, nor does it happen without deliberate design. Executing on our commitment required a clear vision, rigorous planning, and the conviction to make tough, but necessary decisions. Guided by these principles, we focused relentlessly on execution and built the foundation for what we intend to grow into an enduring generational business at the intersection of energy and technology. Before I discuss the key objectives that drove this transformation and the impact it has had on our business, I want to take a step back to something more fundamental, an idea about who we are and what we are building. Next slide, please. At the heart of everything we do is a simple conviction. We believe the value of energy will continue to rise as the technology is fueling both daily life and world-changing innovation place ever greater demands on a constrained electrical grid. Over the past year, this dynamic has accelerated as AI catalyzed a surge in demand for power in the digital infrastructure sector. Our ambition is to build a platform that can meet this demand at scale across energy-intensive technologies for decades to come. But conviction alone is not enough. If the past year has reinforced anything, it is that execution is the bridge between conviction and reality. And execution requires people, a team with the discipline and…

Thanks, Asher, and good morning, everyone. It's a privilege to be here today as we reflect on a year of transformation and growth. As outlined by Asher, we've refined our reporting structure to provide a clearer, more comprehensive view of how each layer of our platform contributes to growth, profitability, and value creation in the context of our overall business. This structure more accurately reflects how we think about cost of capital, capital allocation, and risk management, as well as how we scale our business with the goal of maximizing long-term shareholder value. Let's take a closer look at this new reporting structure before turning to our results. Next slide, please. Going forward, we will report under three core segments or layers as we like to call them internally. Power, digital infrastructure and compute, each corresponding to a component of our integrated energy infrastructure platform. A fourth segment, other, will capture revenue from activities that fall outside the framework of our core platform. Aligning our financial reporting with how we manage the business operationally will deliver four key benefits. First, it will enhance financial transparency by offering more granular insights into revenue composition, cost structures, and profitability dynamics at each layer of our platform. Second, it will establish a link between our power-first model and the outcomes driven by it, enabling investors to better understand platform synergies across power, digital infrastructure, and compute. Third, it will support more effective benchmarking by structuring our disclosures in a way that allows investors to assess our performance relative to other market participants across the value chain. And fourth, it will enhance our capital allocation framework by aligning our disclosures with how we deploy capital across the business lines addressed by our platform. With that said, let's turn to our results for the full-year…

Thanks, Sean. Before outlining our roadmap for 2025 and the early progress we've made against our strategic priorities, I want to take a step back and put everything into context. In 2024, we fundamentally transformed the legacy Hut 8 business, optimizing operations, fortifying our capital strategy, and developing a high velocity utility scale power origination pipeline. To enhance transparency and investor insight, we also realign our financial disclosures to more accurately reflect our business model and long-term strategy. Now that this transformation is complete, we can channel the foundation and the momentum we've created into a new phase of growth and expansion. It's an incredibly exciting time for our business, and I'm eager to share how we're thinking about what lies ahead. Next slide, please. It all begins here with our development flywheel, a framework designed to compound returns and drive long-term value creation as we scale. In 2025, our goal is to accelerate this flywheel by advancing four drivers of value creation, origination, investment, monetization, and optimization. Each of these drivers plays a distinct yet interdependent role in our power-first strategy. First I'll outline the function of each driver and its role in our 2025 roadmap. Then I'll illustrate this model in action by discussing River Bend, a large-scale campus in Louisiana that we recently acquired. The first driver of our development flywheel is origination. A scale diversified pipeline is essential to the expansion of our power layer and enables us to capture demand in high growth segments like AI data centers, where power access is the gating factor for infrastructure development. Last year, we built a high-velocity utility-scale origination pipeline spanning 12,000 megawatts under diligence, enabling us to take a disciplined strategic approach to site selection and portfolio construction. In 2025, we will continue to prioritize near-term access…

Thank you. [Operator Instructions] Our first question comes from Mike Colonnese with H.C. Wainwright. Your line is open.

Hi, good morning, guys. Congrats on all the progress you made in 2024 with the business and the plans here for 2025. I was wondering if we could start, if you could provide more detail around your capital allocation priorities for 2025. You obviously have this large development pipeline and now River Bend and exciting new site for you. So it'd be great to get a better sense as to how you plan to deploy capital either to develop Bitcoin mining infrastructure or HPC AI data centers? And also how you're thinking about acquiring additional Bitcoin in the open market following the purchase you made back at the end of last year?

Thanks, Mike, really appreciate that. As we look at the layers of our business and we think about power, digital infrastructure, and compute, we'll continue to invest into the power layer, because we believe that's the foundation that drives value across the rest of the business. And so you'll see right now with our fleet upgrade coming in this quarter, that will bring our fleet efficiency on the Bitcoin mining side of the business from 32 joules per terahash to around 20.5 joules per terahash with about 10.3 exahash online. And then with the fleet upgrade and the potential main option there's a path towards 25 exahash as well, bringing efficiency down to 16 joules per terahash. When we look on the other side of the business, which is data center development and HPC development, we're extremely excited by the potential of what's possible and the scale. When we look at these large project sites, every 100 megawatts is about $1 billion of development and capacity development. With the right investment grade counterparties, we can pull about 70% to 80% project level financing on the construction loan and we've seen in the spread between SOFR plus 200 bps or up to SOFR plus 450 bps for non-IG counterparties. And so we’ll use different mechanisms of project level financing, subsidiary financing, in addition to parent level financing to drive growth across all layers of the infrastructure stack and continue to accelerate growth with the foundation being on power development.

Appreciate the color there, Asher. And if you could just provide some more detail on how conversations with prospective AI customers have evolved since last quarter. Just curious to see what inning they are in their due diligence process as it relates to evaluating Hut’s power assets and if the Coatue relationship is really helping to accelerate those conversations.

Thanks, Mike. I've kind of taken this approach from the very beginning when we started this which is Hut 8 will be a lot more thoughtful about what we share to the market and really share updates as they become definitive. As we continue to commercialize both River Bend and other opportunities in our commercialization pipeline, we'll continue to work hard. You guys have our commitment that myself and Sean spent a majority of our time on this segment of the basins, because we've already built such a great flywheel on the low redundancy Bitcoin computes out of the business. So we continue to have active deep conversations with different counterparties and we'll share more with the market as they become definitive.

Great. Thank you for taking the questions.

[Operator Instructions] Our next question comes from Patrick Moley with Piper Sandler. Your line is open.

Yes, good morning. Thanks for taking the question. So, you saw a pretty significant step up in the amount of power under exclusivity, as well as the development pipeline. Can you talk about where the incremental opportunities are coming from? And how we should think about your ability to convert, or like what pace you expect to convert some of the development pipeline into power under exclusivity? And then just lastly, as we sit here today, how much of your power under exclusivity could be used for AI HPC data centers? Thanks.

Thanks, Patrick. So today, as we look at kind of end of Q4 2024, 12.3 gigawatts of total pipeline capacity, of which 2.8 gigawatts are under exclusivity. The River Bend project was an example of a project that was under exclusivity for quite some time under a one-way kind of purchase and sale agreement, which we executed and now own the property. We're looking at projects across the ecosystem in the U.S. from Kansas City, West Virginia, Michigan, Florida, Ohio, Indiana, and so we continue to focus the pipeline on sites that are focused on AI data center development, some in Tier 1 markets, or others that have dual purposes as well. But there are some sites that are purely just for the HPC AI side of the business and others that have this dual purpose. We are less interested in developing sites that only have kind of one purpose, and so we've been very thoughtful in building and adjusting our development pipeline over the last 12 months to address the demand both that we see that exist today, but also as we see the energy landscape evolve over the years to come.

Okay. And then Just as a follow-up, on the River Bend site, any idea of like what the potential CapEx per megawatt would look like there? I understand maybe depending on the deal terms, maybe the tenant would cover a portion of that, but just broadly what would you expect that CapEx per megawatt to be really help with our models? Thanks.

I think that's right. The kind of rough range is around $10 million a megawatt that will adjust a bit based on kind of the tenants demands and as you know some of these structures are on a triple net yield on cost model and others are on a more gross modified lease. So any adjustments to that CapEx depending on the tenants needs will obviously have an impact on that lease rate.

All right, great. That's it for me, thanks.

[Operator Instructions] Our next question comes from Bill Papanastasiou with KBW. Your line is open.

Good morning and thanks for taking my questions. Asher, can you shed some light on the managed services business following the Ionic digital contract termination? What does the landscape look like today and do you see more growth opportunities in the market or you know should we expect growth coming mainly from self-mining and hosting?

Thanks, Bill. Yes, so on kind of the Ionic partnership and relationship there, we obviously reserve our rights there, but are focused on kind of the highest and best use of time right now in terms of where we see the biggest growth towards our business and the biggest catalyst for that growth. As we look at the managed services business we actually have a team and we just brought on a new person as well to that team to continue looking and growing. I think the profile of customer there is really financial investors looking to get exposure and we become that counterparty. So for example, our managed services business that we had with Generate Capital when they took over the Compute North assets, that was a great relationship. In addition to our managed services at the King Mountain JV with Nextera, great relationship. Both of these counterparties have kind of a common theme where they're financial investors into this asset class unless they have an ambition of being operators within this asset class. And so we'll look at other areas of growth for managed services, but within the largest driver of shareholder creation in the company is obviously continuing to build power and digital infrastructure capacity and be able to find co-located customers specifically on the AI business and also co-locating on the digital asset side of the business as well. Managed services is a great business line to offset some of our SG&A and it's a high margin kind of service based business, but the largest value drivers of stockholder value to our company, we believe, will be through the other pillars.

Appreciate that color. And then just shifting to the AI HPC strategy, it seems like the market is constantly evolving at this point here on the AI HPC side. Criteria is becoming more specific, whether it be training versus inference, location, energization timelines. Can you speak to the level of competition in sourcing new sites and how that may or may not be impacting Hut’s strategy here with the development pipeline. Thank you.

Thanks, Phil. I think the unique differentiator of Hut 8 is our ability to develop this pipeline and the ability to develop energy assets better and faster than many. When we looked at this opportunity from day one, it was never about we have one, two, or three sites that we want to convert to AI and that's kind of our business and we're kind of that's it. It was really about all right, there's this big demand for energy. We've always been able to capture that demand and scale to it and let's cater our development pipeline in order to meet these demands from these different industries. I would say over the course of the last year, we've learned a lot. We built a lot of really deep, meaningful relationships. And I actually had a conversation with a large data center operator recently, and we got connected through another counterparty. And they said, I've been hearing Hut 8's name all around. I'm like, look, we're just trying to catch up. Like, well, you're catching up pretty quickly. I hear about you guys all over and all good things. And so, look, we're very, very fortunate that we've been accepted well, we've built good and deep and meaningful relationships. And we understand power. We understand power both in regulated, unregulated markets. We understand power on a front of meter basis, on a behind the meter basis. And we understand power generation as well. When people are talking about [island] (ph) facilities, we owned four power generation facilities today that we've operated for well over a year now. And so I think as we think about what the market demand is, I think we've done a good job of adjusting and catering our development pipeline in order to cater towards that…

Thanks for that, color, Asher, and congrats again on the attractive River Bend acquisition.

[Operator Instructions] Our next question comes from John Todaro with Needham. Your line is open.

Great, thanks for taking my question. Congrats on the progress and all the plans for the rest of ‘25 and beyond. I guess as it relates to the development pipeline and then maybe specifically at River Bend, do you ultimately think there's going to be a couple customers at that site or do you think it would be one? And then, I know Mike kind of asked on this, I don't know if we fully got to it, but has there just been any slowdown in conversation regarding some of the Microsoft news, which we have our own thoughts on, but just wondering if any change in those customer conversations. And then I have one more follow-up.

Sure, happy to answer. Good to see you again, John. On the customer side, right now, most of the customers we're speaking to want large-scale campuses and large-scale campuses that have a path towards a gigawatt, especially in new markets that they would go into. And so we have multiple customers that we're speaking to around different commercialization opportunities. And so we are having deep and engaging conversations with multiple customers. However, the customers we're speaking to also are looking at large-scale campuses. I do believe, however, long-term, not today, but enterprise will continue to grow and you'll start seeing kind of multi-tenant campuses as that market continues to grow. But I think today we're seeing ample demand from a large campus site. And then in terms of demand, I mean, we haven't seen a slowdown from pre kind of DeepSeek News and pre Microsoft News at PTC, which is one of the largest kind of like data center gatherings in January to post DeepSeek News, post kind of Microsoft News. We've seen, if not the same more increased heightened of demand and velocity of those conversations. So we continue to see investments on this infrastructure stack and on this investment class and continue to dive deep into the discussion that we've had.

Great, that's super helpful. And then just my follow-up, you mentioned earlier you want to be very thoughtful about what you share with the market. You know, some of your peers have announced these, and I'm just wondering if it's like an LOI considered something big enough that you would share that to the market or if that's something where I get on that side you would almost wait for a finalized lease to be shared. Just any kind of commentary on the distinction?

Yes, John, we've decided not to share LOIs as definitive, because at the end of the day, LOIs lay out the foundation of what the deal is. The definitive documents actually lock people up in those commitments. And we think the reason we have decided not to share LOIs is because one, I think it actually hurts the negotiating leverage you have with counterparties when they know that the market is expecting you to close and if you don't, you're going to hurt them. So they have more leverage in that conversation. We want to be very thoughtful around the agreements at this quantum of dollars and scale and risk. And so our perspective is definitive means a definitive document, not a letter of intent.

Got it. Understood. Thank you, and congrats on everything so far, Asher.

Thanks so much, appreciate the support.

[Operator Instructions]

And we'll run a little bit over to be able to answer all the questions as well.

Our next question comes from Stephen Glagola with Jones Trading. Your line is open.

Hey Asher and Sean, thanks for the question. On the River Bend site, I just had a follow-up there. The application noted Hut would lease the facility to a hyperscale tenant, and I just wanted to see if you can confirm if you're still focused on a hyperscaler tenant there or another or other customer types as well?

So the way I think you can think about kind of our customer profile is folks that can actually commit to campuses of this scale and folks that were able to finance as well that have the credit worthiness to finance. So obviously, hyperscale is a large category within that set. I think the Louisiana permitting news, we had ideally not liked it to be picked up like it got picked up and so we've tried to continue to be restrained and thoughtful in our approach even though the kind of that news got picked up, but look any projects of this scale I think you need a really credit worthy counterparty in order to be able to finance this thoughtfully and to drive the types of returns that these data centers have the potential of driving.

Thanks and then can you just maybe update us too on where you stand with the natural gas assets as it relates to sort of strategic alternatives?

Definitely. We've kind of shared last year that we'll look at kind of the best and highest use cases of those assets as we progress. Look, we've had a lot of learning, especially as these islanded kind of concepts become more and more mainstream as people think about data centers and how do you build these kind of multi gigawatt campuses. And so it's been a great learning ground for us to understand power generation and how we think about that from an island campus. But these assets specifically, why don't I pass the phone over to Sean and he can give a little bit more updates.

Yes, thanks, Asher. And Stephen, thanks for the question. Good to see you today. As Asher said, these assets, I think, gave the team a lot of familiarity with owning and operating power plants. And I think that, that's beneficial to the future as we think about island generation. As it stands with the plants and where we are with them today, there's a few near-term catalysts and we're going to see how those play out. But I think generally speaking, we’re on the same -- we continue to evaluate our options from a strategic perspective there. So, you know, stay tuned on news for those as the year progresses.

All right. Great. Thank you.

[Operator Instructions] Our next question comes from Joseph Vafi with Canaccord Genuity. Your line is open.

Hey guys, good morning and my congrats also on the progress so far here. Maybe we kind of start at high level looking at your acquisition and development pipeline. You know, is there a gating factor here on further site acquisition in 2025 or kind of you know a rough model is that a gating factor is a capital is it suitability of sites that makes sense, you know, operational bandwidth to be able to move simultaneous projects forward. Just how you're looking at the opportunity if indeed we're kind of right now in a market where some of these scarce assets get acquired and they get scarcer over time? And now a quick follow-up.

Thanks for the question, Joe. Yes, look, all the variables you just talked about, we talk about pretty often. I think it goes without saying we move at a pretty high velocity across multiple pillars. And even when we had our board meetings, they were always surprised by how much we're working on, how much we're doing. Look, we have real constraints as we think about growth, right? And I think for us, it's less about what are the right opportunities, more so what are the right opportunities that we're going to prioritize. The right opportunities that we're going to prioritize capital deployment, the right opportunities that we're going to prioritize bandwidth and team, and the right opportunities that we're going to prioritize that help build the foundation for the future we're trying to create. And so I think we feel very fortunate and grateful that this last year, from when I spoke to you all to where we are today, I think the business is completely different. The types of partners that we're working on are different and the opportunities that are at our fingertips are radically different as well. And so for us, it's continuing to build on that, continuing to scale, but also being prudent capital allocators and being very, very thoughtful about how we grow and making sure that it's in a creative manner and that we're prioritizing the highest and best uses of capital deployed for long-term shareholder creation. And so I think Joe's a struggle I always face, because there's so many things that we can work on in choosing the right ones that can drive the most value. And that was, I think to an earlier question about managed services, Ionic, like, yes, can we go drive some value there? Can we go and try to get a termination fee we believe we're owed? Yes, is that the highest and best use of our time that drives the most value for our shareholders today? Probably not. We've expanded across all areas of the business. Our legal team continues to grow, just the amount of velocity of contracts that we do. In contracts we go every time I speak to Victor, our Chief Legal Officer, he talks about, do we need more people? We're doing so many things. And so look, I think we continue to prioritize and we'll continue to show the market growth in this new year. Last year was about restructure, this year is about growth.

Great. And then just switching gears over to Vega, Bitmain agreement, just we could double click there a little bit on, you know, maybe potential timeline to hashing and then, you know, kind of what you're looking for kind of at a high level if you were going to go ahead and exercise that purchase option on that agreement as it stands now. Thanks a lot.

Thanks, Joe. Our target continues to be Q2 of this year. We're really proud and excited about the progress that we've had. We share some of those in our socials. And then from an execution standpoint, the beauty about this agreement is we have a great hosting co-location agreement when we start energizing the site, and we have six months to make that decision. So let's hope that Bitcoin continues to run, and that becomes a really easy decision. But ultimately, I don't think we need to make a decision now. And we can make it in real time as we have that option period to our advantage.

Great, thanks, Asher.

[Operator Instructions] Our next question comes from Brett Knoblauch with Cantor Fitzgerald. Your line is open.

Hi, guys. Thanks for taking my question and congrats on the results. Maybe just to start off with Vega, I believe you guys probably said at a minimum it would be $135 million of annualized revenue and it seems like it kind of lowered that to $125 million. So I guess any reason why the reduction there?

Hey, Brad. Thanks for that. I think as we look at the uptime, I think ultimately we're looking at what the energy rates are and we're thinking about kind of on a curtailment adjusted basis. And so we see that the kind of underlying natural gas prices in ERCOT have adjusted a little bit and if we need to adjust for that curtailment. So that's the biggest driver there. Maybe $135 million again, if we see kind of energy rates kind of adjust, but it's really adjusting for potential curtailment that we see, which obviously would impact topline.

Perfect. Thank you. And then regarding River Bend, can you maybe just touch a bit on what you guys need to do to get that site ready in order to sign a contract from an infrastructure standpoint? Is it building a substation? Have you started building that substation? How much capital do you think you need to put into that site before you could potentially find a lease?

We've already started kind of moving dirt on that ground preparing for the switch yard that Entergy Louisiana is building for us getting the substation ready to make sure, kind of, the value of the project and near-term energization continues to do so. If we think about that to the overall development cost of a data center, obviously that's kind of single-digit percentage points. And so I think we'll continue to develop in areas that we believe add value to the opportunity, but not take massive capital risk before we've kind of shared with the market what the customer is. And look, some structures that we've kind of been discussing and seen as well and I think we'll be able to sell the market after the fact on these things, but you don't need definitive to necessarily start breaking ground. Some customers are willing to have some advanced payments to make sure you keep timelines. And so I think, look, all that will come to fruition as we kind of share with the market once we have more definitive updates.

Awesome. Thank you, guys. I really appreciate it.

[Operator Instructions] Our next question comes from George Sutton with Craig-Hallam Capital Group. Your line is open.

Hey, good morning, guys. This is [Logan] (ph) on for George. Congrats on all the progress here this morning. Maybe just one on the Vega site. As we think about that potentially being upgraded down the road for an AI use case. Do you see any difference in the potential end user for an upgraded Vega site, as compared to River Bend, keeping in mind that that is you know ostensibly a hyperscale kind of customer? Like would you see Vega being maybe more suited for enterprise customers or do you see any difference there?

Yes, so the biggest differences we think about kind of River Bend, our intention plan is a full kind of Tier 3 data center with all the redundancy that you would imagine a Tier 3 data center. Vega, we don't have that redundancy that we built in. Actually a couple of future iterations of this design will include the optionality to be able to add it in. Right now from a spacing perspective, We just didn't add in the ability to kind of add in the generators and backup and phase in this kind of V1 of our design. I think honestly as I look into the future, let's use ASICs, the compute layer in mining, as the analogy. Old miners that were less efficient in those ASICs were sent to places like South America and Africa where there is a cheaper cost of power because using the U.S. infrastructure that's more expensive to build wasn't the best and highest use case of that infrastructure. So I think when we think about these projects and when we think about Vega, it's great for a counterparty that wants speed towards generalization and ultimately I think long-term it's great for a counterparty that will start caring about how much a data center costs relative to their lease rate, because there will be -- I mean the Blackwell said it will not be the newest and greatest hardware and there will need to be a place that they go to where they're a lot more sensitive on lease rates and energy costs where today that's not the case. And so I think as we're thinking about this ecosystem, we're not just thinking about how do we secure an opportunity today, show the market that we can secure a data center contract and build, but long-term like where's our competitive edge, where's our competitive moat, and how do we also build the foundations of that today as well.

Got it. That's helpful. That's all for me, I'll hop back in the queue.

Thank you. I'm not showing any further questions at this time. So this also does conclude today's presentation. You may now disconnect and have a wonderful day.