Good day, ladies and gentlemen and welcome to Marathon Digital Holdings First Quarter Earnings Webcast and Conference Call. I would now like to turn the call over to your host, Chris Brendler, Vice President of Investor Relations. Please go ahead.

Thank you, Sherry. Good morning and welcome to Marathon Digital Holdings first quarter 2023 earnings call. Thank you for joining us for our call today. With me on the call 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 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 materially 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. And with that on the way, I'm going to turn the call over to Fred to kick things off. Fred?

Thank you, Chris. We started 2023 with two primary goals for the year. The first is to energize our previously purchased mining rigs to reach our target of 23 exahashes by the middle of year and the second is to optimize our performance to become more effective and more efficient. As our monthly production demonstrate, we've been making notable progress executing on both of those initiatives. After weathering at tumultuous 2022, that tested the resilience of our entire industry, we started 2023 with our most productive quarter to-date. During Q1, we increased our operational hash rate 64% from seven exahashes on January 1 to 11.5 exahashes on March 31. By growing our hash rate faster than the rest of the network and by improving our uptime, we also increased our Bitcoin production. We produced a record 2,195 Bitcoin during the first three months of this year, which is up 41% increase from the prior quarter. April's production report which we published on May 2 shows that these positive trends have continued into Q2 as well. Thanks to the hard work of our team and our hosting partners, Marathon’s operational hash rate is now over 14 exahashes, double where we started the year and 61% of the way to our 23 exahash target. Additionally, our installed hash rate, which we define as our operational hash rate plus the hash rate that has been installed, but not yet energized, is approximately 18 exahashes, nearly 80 of the way to our goal. Given our recent progress, we believe we are still on track to achieve 23 exahashes of capacity near the middle of this year. As a reminder, the miners have all been paid for, so the primary gating item at this point are the ongoing construction of the facilities, the pace of…

Oh, thanks, Brad. And thanks for the kind remarks, I appreciate it. It’s been a pleasure to work here at Marathon, and I'm proud of what the team has accomplished during my time here. And I really do wish everyone at Marathon the best going forward. But now let's focus on the results for the quarter, and I'll take you through them briefly. Improving Bitcoin prices, increased production and the commencement of our previously mentioned plan to start selling Bitcoin as a means of generating cash were the main drivers of our operating results for the first quarter. Revenues for the quarter were $51.1 million slightly below prior year revenues of $51.7 million, as a 74% increase in Bitcoin production year-over-year was more than offset by lower average Bitcoin prices, compared to last year's quarter. We recorded a net loss of $7.2 million or $0.05 per share in the quarter, compared with a net loss of $12.9 million or $0.12 per share in the prior year quarter. The $5.6 million favorable variance in net loss year-over-year was driven by three main factors. First, we realized the gains on sales of the digital asset associated with our sales program that was $17.6 million. Second impairment of digital assets improved by $11.5 million year-over-year as Bitcoin prices were generally increasing during this quarter. And third, you'll remember last year we had an investment fund with Bitcoin in it and it had a $5.3 million unrealized loss last year, we have no such fund this year, so we benefited from the absence of that loss. Partially offsetting these favorable variances was a reduction in total margin of $25.3 million and to a lesser extent the impact of modest income tax expense in the current quarter versus a large benefit in the prior year,…

Thanks, Hugh, and thanks again for all your hard work. To ensure we maintain our leading position in the Bitcoin Mining industry, we need to constantly push the pace of innovation. It's easy to view Bitcoin Mining as commoditized. All miners convert electricity into economic value in the form of Bitcoin. The commodity we all produce may be fungible, but the techniques we implement to produce that commodity, the technologies we develop and deploy make all the difference. At Marathon, we have always believed in staying ahead of the technology curve, because it allows us to optimize our performance and further differentiate Marathon from our competitors. We have continuously invested in the latest most energy efficient mining rigs and we're the only publicly traded miner that runs its own mining pool. Now we're further leaning into this strategy to develop new proprietary mining techniques and own more of the process. Vertical integration is a popular term in our industry and when most people in the industry use that term, they're really referencing power in data centers. We take a different approach. Marathon is the only Bitcoin miner that is vertically integrating the Bitcoin Mining technology stack, we're the only miner that either directly controls or influences each aspect of the Bitcoin Mining tech stack, all the way from the mining pool down to the ASIC. This includes our mining software, firmware, hardware and infrastructure. Bitcoin Mining is a game of speed and efficiency and we believe technological innovation is essential to maintaining an edge in both. Let me give you some examples of our key competitive advantages. We operate our own mining pool MaraPool, which reduces latency and allows us to orchestrate how and when miners working to solve a block. Our team has built custom controller boards, which gives…

Thanks, Fred. At this time, we're going to commence the Q&A section of today's call. We'll start with -- by answering some of the questions submitted by investors on our Q&A platform. Our first question comes from Brandon. B. What is the minimum bitcoin price that would allow you to sustain for profitability based on current operating costs, would it be Fred?

So, the breakeven price if you would of Bitcoin Mining is very dependent on global hash rate and current energy prices and obviously the price of Bitcoin. So it really is a very complex kind of question. But essentially, we're constantly optimizing our operations to make sure that we're operating with the right mix of hash rate dependent on the energy cost and the price of Bitcoin. So I think as you kind of look at Bitcoin pricing, you can kind of look in the rearview mirror at where our average cost to mine at Bitcoin was in Q1. And as you roll forward, an expectation would be essentially to look at growth in the global hash rate and what projections for energy pricing are going forward, which for the summer months we may see obviously some seasonality in energy pricing in certain markets, due to just weather driving more demand for energy or less. But our expectation is that obviously more hashrate will continue to come online and so that kind of breakeven point will continue to edge up sort of month-by-month.

Great, okay. Our next question comes from Jacob. B. Yes, are we still on course to achieve our 23 exahash per second target by June or July? And what obstacles may get in the way of that goal? Also, what is the cause of our hash rate run over the last week. We've hit block numbers, we've never seen. What's the catalyst? [Multiple Speakers]

Yes. Thank you. So we're still on course to hit our 23 exahashes we reiterated kind of throughout this call by the middle of this year. What obstacles can get in the way of that goal. At this point, it's really down to some final construction that's going on, which we don't foresee currently, any challenges with. And then just regulatory approval of one site in Texas where we have machines installed currently and we're just waiting for energization. Those are kind of the only two things that we see as any potential risk there. Obviously, all the machines have been purchased, virtually all of them have been delivered. And what can be installed, has been installed and the rest are just waiting for buildings to be completed. So we're feeling very confident about that. If you think about the hash rate run over the last week, many of you are familiar with the luck factor that exists within Bitcoin Mining and over time in theory, your luck should kind of even out. I'd love to say that it's because our technology stack is performing better-than-expected, but I'm not going to make that comment quite yet until we have more historical data to kind of go from. But we've been very pleased with the results needless to say. And certainly, based on kind of what everybody can see in the Min Pool by looking at how MaraPool is performing. We're definitely performing north of expectations from just pure hash rate and average BTC produced per exahash numbers that many of the analysts put out there.

Great, okay. Our next question comes from Chaitre. A. Are you planning on selling any Bitcoin soon? If not, do you have enough capital for the operations for the next four years?

I can take that. We sell Bitcoin to cover operating expenses as we've done all this year. Essentially will cover energy costs operating expenses. And then any Bitcoin that's left after that, we save put on the balance sheet and huddle. So every month we've been increasing our holdings to some degree or another. Other than potentially in January when we sold more Bitcoin than we produced. But as you look at our capital requirements, going forward, we've essentially fully funded the 23 exahash growth target for this year. We've funded the vast majority of the Abu Dhabi project as well. So barring additional expansion in the back half of this year and early next year. We're pretty well set from CapEx spend perspective at this point. I'm not going to kind of comment on the next four years, because that's a whole cycle in this industry and we'll have to see how things go.

Yes. Sounds good, okay. Let's go to Bra. M. Yes, countries like the U.S. and Sweden are implementing or attempting to implement large tax penalties on Bitcoin miners. What are you doing to avoid fight or position the company against these proposed and pass discriminatory taxes?

Well, we have no operations in Sweden, so we're not very active in that area. And to be fair in Sweden, what they did was essentially remove tax abatement that they had and essentially removed the discount. And so those energy rates went back to what they had been previously. And that affected the broad data center space completely, it wasn't just something targeting Bitcoin miners. In the U.S. very different story, the Biden administration's proposal of an excise tax on energy used by Bitcoin Mining is another example of this industry being specifically targeted in an unfair way. If you were to think about different ways to save on energy wastage. The vast majority of energy used in this country is used for heating and cooling of homes. And I think the government should think more seriously about if you're going to restrict an industry, then restrict instead the wasting of energy across all industries. If you want to reduce carbon emissions in this country, Bitcoin miners are the biggest users of renewable energy of any industry and consume less than a percent of the energy generated globally. And you should focus instead if I were the administration on fossil fuel industry, which when it comes to our electrical energy generation coal is still 19% of our energy generation focused there as opposed to targeting the Bitcoin Mining industries. This is clearly just a veiled attempt at trying to push Bitcoin Mining offshore, which is something we believe potentially could threaten U.S. National Security and we think it's very important for the U.S. to maintain a strong position in securing the Bitcoin network by allowing Bitcoin Mining to operate within the U.S. along fair economical terms.

Okay. [Indiscernible] ask can you briefly expand on Marathon Digital Holdings mission for its investors regarding growing valuation and dividends?

I'm not going to comment on dividends. Companies that pay dividends typically are just mature industries where there's typically not a lot of growth happening and it's really just about optimization. In the Bitcoin Mining industry, we are driven to continue to grow our capacity, because of the increase in the difficulty rate and the -- having a Bitcoin that happens every four years. And so we're very focused on continuing to grow. We've done a huge amount of growth this year, we've already doubled our capacity from where we were at the beginning of the year and we're going to increase it further nearly 50% by the time we hit our 23 exahash target around the middle of this year. And so we'll continue to grow in the future. We've not made any public pronouncements as to how much. But I think you could infer that minimally we would want to maintain our share of the global hash rate. Going forward to maintain our share of the Bitcoin that are awarded each day.

Okay. Well, in the interest of time, I think we'll have to wrap up this part of the Q&A. Thanks to our investors. We really appreciate your interest and your questions. I'll now turn the call back over to our operator to open the line to questions from our covering analysts. Sherry, back to you.

Thank you. [Operator Instructions] Our first question is from Joe Flynn with Compass Point Research and Trading. Please proceed.

Hey, guys. Thanks for the question. We're curious what drove the lower uptime in April compared to the March? And if you could comment on maybe the incremental fee benefit you've been getting from [ordinals] (ph) and just overall network activity, looks pretty strong this quarter and it looks like it started picking up as early as March? Thanks.

Sure. So what drove April's production results are a combination of some curtailment in Texas, due to heat, as well as one less day of mining, 30-days versus 31-days in the month. And the increase in the global -- in the difficulty rate, because of the increase in the global hash rate, primarily. As you look at the impact of ordinals, obviously we've seen blocked rewards go up considerably. Where typically the average block reward we've previously been seeing is somewhere in the, kind of, 0.2 to 0.5 Bitcoin per block. There were some blocks that were won by various pools at over 6.25 Bitcoin per block meaning that the transaction fees were greater than the block reward fees provided by the Bitcoin network. I think this is likely going to be a kind of an initial frenzy as people use, kind of, BRC-20 tokens and are leveraging ordinals. And I think over time, what we'll find is the competition for getting blocks processed and transactions processed that have driven up the fees will abate a little bit and we'll see more normalized transaction fees. Still above historical, kind of, trends in the most recent periods, but not at the levels of 6 BTC per block. I think the -- there'll be some technologies that will likely come to market, which will enable people to achieve the same outcome on the Bitcoin network as BRC-20 and Ordinals have enabled, but without causing as competitive erase around the transaction fees. And I'm strong believer in innovation in this space and I think we'll continue to see development of applications and business and use cases on top of the Bitcoin blockchain accelerate, we've seen -- if you look at the data around the creation of wallets on the Bitcoin network, it's at a record level, back near or above the levels of 2017. And so obviously there's a huge demand to build things on the Bitcoin blockchain. Development team's focus on the Bitcoin blockchain have expanded considerably. And we're obviously very interested in fermenting as much development on this network as possible, because we believe a strong Bitcoin network is the best thing for not just the industry, but this country as well.

Thanks. That's helpful. And then just one more question on, kind of, if you could expand in your capital allocation plans going forward. As you mentioned, most of the CapEx is paid for at the JV and all the miners are purchased. So just more specifically on that point, have you considered using the cash in Bitcoin on hand to buy back the convert here, like at a significant discount?

Yes, I'm not going to comment on the convert, but we're obviously very focused on managing the company's assets as effectively and efficiently as possible. And we'll continue to evaluate growth opportunities and obviously balance sheet opportunities as we move forward. And we'll announce plans kind of as they happen.

Alright. Thanks.

Our next question is from Lucas Pipes with B. Riley Securities. Please proceed.

Thank you very much, operator. Good morning, everyone. Thanks for taking my question. Fred, I wanted to circle back to the earlier question regarding production cost and maybe take a slightly different angle. Could you comment on the average power cost in Q1? In terms of kind of 10s per kilowatt hour and what would be your outlook for power cost once you fully ramped up to the 23.3 exahash? Thank you.

Sure. The difficulty, Lucas, as you're aware, is in some cases, we pay for energy and hosting separately. But in most of our third-party hosting, it's actually baked together. So I can only really talk about combined posting an energy cost as opposed to just energy broken out. But I think you can look at, kind of, the numbers there and see that our energy costs are -- and hosting costs all combined are somewhere in the, kind of, $0.06 to $0.07 range most probably doing a calculus back of the envelope. I think that would be a fair place to put it. But again, that's hosting plus energy cost. The only place where we currently break it out is really our King Mountain site is the only place where we could break it out separately.

Very helpful. Thank you. And then that $0.06 to $0.07 would supply to the fully ramp 23.3?

Yes.

Very helpful. Thank you for that. And then I know you've got a few questions already in regards to investments over the course of this year. Again, I want to take a slightly different angle looking at Q1 cash flow statement. I kind of see three buckets, advances to vendors, purchase of PP&E or P&E rather. And then also investments in the joint venture. And I just wondered if you could maybe elaborate on each of those buckets exactly, kind of, what use, for example, in the joint ventures, is that in Abu Dhabi or is that related to Kings Mountain et cetera. So would appreciate the color on those investments and then also kind of at the end of the year where would you expect these various buckets to stand based on your current budget? Thank you very much.

I mean, the way we look at it -- yes. Thank you, Hugh.

I'll just jump in. Lucas, I think the way I would look at it is as Fred mentioned, the 23 exahash is paid for, so we don't have any real significant CapEx related to hitting that. That doesn't mean where we won't continue to look to grow the business going forward. I think the one that you could probably most easily comment on and get clarity on is the investment in the joint venture, that is all related to the Abu Dhabi JV, it's $43 million so far. We said earlier in the initial announcement that we expected the entire JV to be around $406 million, 20% is our share, so 20% of that is in the $80 million range, a little bit over $80 million. So we're kind of halfway through that. And I think that's probably the best way to kind of walk you through it. As you can see when you compare our cash flow this quarter to last year's quarter as we've already said significantly lower, because most of the advances to vendors most of what happened in the first quarter was receipt of equipment and not necessarily purchases of any new equipment. Any purchases of PP&E that you see there are probably just some maybe some containers here and there for immersion and things like that, nothing really significant.

That is very helpful. Thank you for all the color and I'll turn it over. Best of luck.

Thanks.

Our next question is from Tyler DiMatteo with BTIG. Please proceed.

Good morning, everyone. Thanks for taking the questions. So Fred, I wanted to follow-up on your comments on the vertical integration with the mining tech stack. Can you provide a little more color there and how you're thinking about integrating some of those technologies into the business the uptime of rigs from emerging, for example, I know it's a pretty big thing that you talk about. Any other color there that you could, kind of, speak to that you're looking towards through this year maybe in the next?

Sure. So I think a great way to look at this is and again, don't translate these numbers literally. But if you look at the mobile telephone industry and you look at Apple versus any other vendor, Apple with less than 20% share of the mobile industry generates over 80% of the gross margins in the industry, because of their vertically integrated tech stack. They have the hardware device. In the hardware device, they have chips. They have the operating system on the device, they operate to cloud services and get a fee on kind of transactions if you would that are done through their cloud services. If you correlate that to our tech stack, what is the equivalent of, kind of, cloud services for us is our pool. The pool is the orchestration layer that essentially instructs miners what to do. In a traditional third-party pool, the challenge is that they have to be able to properly task and control miners with a huge amount of variation in them. They may have old S9s old S17s by Bitmain, they may have micro BT machines, they may have all sorts of machines of different generations, different efficiencies, different latencies, different capacities connecting to their pool and they have to manage those, kind of, equally, which means typically third-party pools are optimizing to the lowest common denominator. That creates inefficiency if you're a large scale miner, who has the most advanced equipment in the industry. And as we've said repeatedly, 66% of our pass rate will be coming from S19-XPs, which are the most energy efficient miners and amongst the most powerful miners in the industry today. So being member of a pool that's optimized to a lower common denominator of S9s and S17s doesn't make sense. And while it's not…

Okay, great. Thank you. I really appreciate that. And then I want to follow-up. You made some comments on the immersion applied digital and now you're working towards the JV. But you allude to some of those other opportunities presumably, you may have mentioned a little bit of those, but can you just provide some more color on those as well if there's anything that you didn't just touch upon, please?

Yes. So as it relates to immersion, there's this concept in the technology industry about you're either a pioneer and you're the company that, kind of, is the first one into an industry and -- or technology. And then there's a concept called fast followers. And if you look throughout history in the technology industry and I've spent 40-years in this industry. Clearly, pioneers get arrows in their back and the fast followers are the ones who win and the typical example people use is Google isn't the first search engine, Facebook, wasn't the first social media site, et cetera. So it's typically a fast follower can build upon the learnings of the pioneers and do something much better. And so we like many companies and again the analog to kind of Apple. Apple is typically not the first one into a -- with an innovation in a sector. They typically wait, see how things develop and come out with a much better optimized version and that was our approach to immersion. We looked at a lot of the Gen 1 versions of immersion and how people had done those. And we realized there were some shortcomings in those systems and we had a couple of design criteria that we wanted to have. One was simplicity and cost efficiency, it had to be as low cost as possible from a CapEx perspective to deploy it. It had to have the highest degree of reliability and uptime and be able to be controlled and maintained remotely. So that you didn't have to have large team of people on the ground. And as could be -- as we were able to prove in the Abu Dhabi, pilot. There are very few places where Bitcoin Mining goes on where the operation can be…

Okay. Great. Thank you. Really appreciate that, Fred. I'll turn it back to the queue.

Our next question is from Kevin Dede with H.C. Wainwright. Please proceed.

Good morning, gents. Thanks for taking the questions. Fred, can we go back to the curtailment announcement or comment that you made with regard to the March -- sorry, yes, March operation.

April? April. April. Right.

Could you add maybe a little more color to that. At what point do you get to decide or do you rely on your hosting partners to decide? What's sort of the threshold? How do you look at weather patterns? And I don't know, just maybe just give us some insight on your thinking around curtailment and how you're going to manage it?

Yes. So kind of think of it this way. Unlike some of our competitors who operate single sites have all of their hash rate coming from one site and are subject to the foibles of the grid and our power generation sources that they have at the one site. We have our operations now distributed across many, many sites. And so each site handles curtailment slightly differently from an operational perspective. For example, at King Mountain in Texas, what's unique is we have a direct PPA for the wind energy there, which drives some decisions as to whether we're going to sell that energy or consume it ourselves. Based on where the current price of Bitcoin is, global hash rate and energy prices in the grid market. And then that's kind of also limited by the systems that our third-party partners in this case U.S. BTC have deployed on the ground. We've been doing number of upgrades with them to how curtailment is being handled and I think what you'll see is with the enhancements -- the technology enhancements that are being put in place the systems are becoming more intelligent in our ability to really optimize when we shut down and how we shutdown. We'll start seeing some benefits here as we go into the summer months, where typically in Texas you have higher heat and therefore you have issues around heat generated curtailment, which is not a grid issue that's an operations issue, but it's still important because it is a curtailment of operations if you would. And so some of the things our custom firmware allows us to do is optimize both under clocking and over clocking at miners as a way to deal with heat. With the APLD sites, for example, again, it's kind of site specific, how we deal with curtailment though, because the North Dakota location of those sites is very different than West Texas, where King Mountain is, different weather patterns, different seasonality different issues, great operators, et cetera. So our diversified strategy allows us to have a very diverse exposure to curtailment. And as we continue to explore and deploy more immersion, we'll have less curtailment due to heat. In places where we use the emerging technology and as we continue to build out our operations capabilities around managing in an automated fashion. Energy pricing curtailment, you'll see some advancements in efficiency there. And I think obviously as we get involved in opportunities where we're actually controlling the power purchases, you will be able to take advantage of some of the tools that exist for buying blocks and hedging and things like that as well, which will further optimize operations there. So think of it as we're just starting on this journey of optimizing curtailment, but they'll see continual benefits throughout this year.

Can we carry that discussion over to the Abu Dhabi installation, Fred, please? I know you said 250 megawatts and seven exahashes. Is that seven nameplate? Can you talk about overclocking, underclocking there. Maybe you can offer some insight on the performance you saw in your pilot with overclocking? And then how should we assume that power comes online? Do you think it's all in by the end of this year or maybe give us a little more insight? I know you said that you'd have something going this year. I just wasn't -- I guess, I just missed the details. Apologies.

Sure. So in reverse order, the site will be fully operational by the end of this year, all 250 megawatts. And like any of our deployments, you'll see it come on gradually. Starting in the not too distant future here and then accelerating as more equipment has, kind of, landed on the ground and installed. So we'd obviously specifically if you want to think about curtailment there in the summer months, you'll see some curtailment due to not heat, but rather energy demand. As I think I've mentioned previously, you have this energy use of symmetry that exists there where they need 4 gigawatts of power generation in the summer for all the air conditioning that they run amongst other things. And in the winter, that's only about 1 gigawatt. And so in the wintertime, there's plenty of excess energy and in the summertime, there are periods of the day where there may be curtailment. So we may see some seasonality in the numbers and likely we'll see in the summer months, some curtailment. And then in the winter period obviously, there won't be any curtailment. So there'll be seasonality in those numbers. All of the hash rate when we talk about it is nameplate. And we specifically don't comment on over clocking because two things: one, it's very easy to assume, oh, if you can overclock your miner by 10%, 20%, 30%, 40%, 50% then we'll just take that into your numbers. And overclocking is dependent on a lot of things, site specific, cooling technology specific, et cetera, et cetera. And it just gets too complicated to try to talk about hash rate net of, kind of, over or under clocking. So we believe that by talking just nameplate hash rate, there's going to be periods of the time in certain sites where we underclock miners as a way to keep them operating during summer months when otherwise they would be curtailed for heat purposes as opposed to energy purposes. And there will be times of the year at certain sites where we will overclock. What I can tell you is that the pilot in Abu Dhabi exceeded our expectations on the amount of overclock we were able to achieve. I'm not going to name a specific number, I'm going to be like the U.S. Navy and just not talk about how fast our ships are or how deep our submarines go. But I think what you will see as we announced numbers in the forward quarters, including results from those sites I would expect to see our operational efficiency as a percentage of our nameplate hash rate get closer to 100% at times when we can overclock and otherwise be it kind of what our normal rate is, which is in the kind of 90-ish percentile.

How should we think about the joint ventures power costs?

So I think you should think of it as it's essentially fixed contractual price that starts in the kind of low-single-digit range and goes up marginally over the life of the contract. So there's no risk on the pricing there at all. It's fixed with, kind of, an annual little increase each year. And again, because that's a joint venture operation, depending on how we end up consolidating that. We may just show it as a profit number based on our 20% share without, kind of, a lot of detail around the specific Bitcoin mine there et cetera. But that's something those are details we're still working out.

Okay. You mentioned the -- actually I apologize, I’m not sure if you mentioned the length of the contract, but can you talk to that, can you talk to who has hands on assets at the conclusion of the contract?

So we haven't commented on that aspect of it, it’s a multi-year agreement. And like any JV, there are provisions in the contracts that allow for liquidation of the joint venture either at expiration or extension of it. And then there's an unwinding process that would happen there. So it’s -- but it is a multi-year agreement, not atypical to the typical duration of the hosting agreements that we have.

Our final question is from Brian Dobson with Chardan Capital Markets. Please proceed.

Hi, thanks and good morning. Just another quick follow-up on the joint venture, which is very exciting. So I guess ultimately as a management, how did you choose that partner? And also which geographies were you considering? And really what made you decide that Abu Dhabi was the right place?

Great question. So when you look at any opportunity, you're looking at kind of the risk reward aspects of it. And so as an international opportunity, you obviously have risk relative to the locust, the country you're going to operate in there, regime risk, taxation, et cetera. And UAE had a number of very attractive opportunity or aspects to it. One is stability, excess power, they just recently brought on a new 5 gigawatt nuclear power plant in addition to all of the existing power infrastructure they had. And so they had excess power generation capacity, but they also had a need for Bitcoin mining. This asymmetry in the energy that exists there creates a problem or challenge for them, which is two-fold. One is you are only monetizing your energy generation in the winter months to a much lower degree than you are in the summer months. And so that capital equipment if you would for energy generation in theory is not revenue generating in the months when you're not consuming the power that's needed there. And so the government and the owners and investors in the power generation assets were very interested and to find a way that would allow them to better get a return on investment in their power generating assets, which includes the transmission line distribution of energy in the country in a way to achieve a couple of things. One is how do we obviously generate revenues that we're not generating today as a way to increase the ROI on the investment they made in the energy generation and distribution. The other thing is the government provides subsidies for electricity to their people, which is a great thing. And the ability to monetize the energy generation through Bitcoin Mining is a way to allow…

Yes, excellent. Thank you. I think that, that's really in line with what a lot of investors are talking about as far as, you know, subsidizing the base loan on -- a base load on that clean energy projects. Do you see opportunities elsewhere in the world? And what other geographies might you consider?

Yes, a great question. So we are very focused on diversifying risk. And by the same token, no pun intended, that we diversified out of Texas into North Dakota and other parts of the U.S. Now diversifying internationally. We're looking at things like optimizing for different climates in different hemispheres. And so for example, if you're in the southern hemisphere and you're operating there with seasonality there, heat, for example, if we were to do air cooled in the southern hemisphere, the hottest period for the southern hemisphere is when it's coldest in the northern hemisphere. And so you could essentially offset some of the seasonality in production by splitting operations between North and South hemispheres. So there are some opportunities in Latin America, which we think are potentially promising. We're not going to name locations at this point, but let's just say that there's some very interesting opportunities for renewable energy in Latin America. We're also looking at further growth in the Gulf region not just in UAE, but countries around there, who have similar needs and similar systems and allows us to kind of leverage our good reputation from the Zero Two project in the region. There's some potential interesting energy source is in Africa that are renewable, geothermal energy for example being one that look quite promising. You won't see us necessarily doing any expansion in Europe. You may see some expansion in Asia. There's certain opportunities in parts of Asia where there's attractive hydro energy also. So I think if you kind of look at the combination of our technology stack that we've built kind of going back to what I said about being able to operate smaller sites, hands off kind of remotely allows us to take advantage of opportunities for smaller size sites that maybe are more geographically dispersed. It kind of opens up more opportunities than would normally be open to a large scale miner like ourselves. And then you also have the opportunity as we've spoken about before where we believe the ability to generate energy by consuming methane gas from landfills for example is a very interesting opportunity, because you're taking something that is 80 times more damaging than carbon dioxide and essentially eliminating it. Converting it to energy using that energy for Bitcoin production. And in that way, we would be fully energy self-sustaining at those sites and not need potentially grid energy at all for that. And so generate our own energy, consume our own energy, while at the same time having a significant potential impact on the climate. So those are kind of how we look at opportunities here going forward.

Excellent. Thank you very much for that color.

Thank you. There are no further questions at this point. I'm going to turn the call back over to Chris Brendler for closing remarks.

Thanks, Sherry, and thanks everyone for your time today. If you have any additional questions that were not answered today during today's call. Please feel free to contact our Investor Relations team at ir@mara.com. Thank you and enjoy the rest of your day.

Thank you. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.