Bill Papanastasiou: Yeah. Good afternoon, everyone, and thanks for taking my questions. I want to lead with a question on the term loan. Obviously, management has taken very significant strides of paying down the debt. And I’m curious to hear what the appetite at this point is to refinance, just given the more favorable outlook and the guidance that management has provided to get to 28.3 exahash?
Patrick Fleury: Yeah. Hey, Bill, it’s Patrick. Thanks for the question. Good question. So, look, I think given where economics are right now, the biggest asset of this company is the cash flow generating ability, and we’re generating a lot of cash. I mean, we’re mining 12 to 13 Bitcoin a day right now. And our cost is, call it, $25,000, $26,000. So, you can do the math, but it’s $500,000 to $600,000 a day kind of depending on exactly where Bitcoin price is because it’s been pretty volatile here. So, as Paul said in his remarks just now, I mean we are kind of head down focused on maximizing cash flow and taking the debt down and ultimately taking it out completely. So, as we move forward in time, yeah, could we pursue something on a refinancing front?
Yes, maybe. But I think if we can keep harvesting cash flow and Bitcoin stays here, I think we’ll pay off the debt naturally by the sort of end of third quarter, fourth quarter. So that’s, I think, more of our focus, Bill, is not necessarily refinancing, it’s eliminating.
Bill Papanastasiou: Great. I appreciate that response. And then for my second, final question, as reported in the preliminary earnings, the company had just under $50 million of cash on hand at the end of February. Can you provide some color in terms of what — whether there’s any outstanding payments due on equipment — recent equipment purchases or the build-out of Building number 4? Just trying to get some color on that. Thanks.
Patrick Fleury: Yeah, good question, Bill. So, I think the way we think about it — so to answer, I’m going to answer the three different parts of that question. So, I think about just what I would call true excess liquidity on the balance sheet of about $20 million. So that’s kind of what we’re holding to kind of navigate through the halving and make sure that the company has an adequate liquidity to address any volatility over the next couple of months. So that’s number one. Number two part of that question, we do not have any contracts currently, any liabilities for miners, for example, and then that sort of folds into the third question. So, Building 4 at Lake Mariner, which is scheduled to be completed in June, that is substantially funded from an infrastructure perspective.
We have not announced a minor purchase for that yet. Hence, my sort of answer to your previous question of, we don’t have any liabilities currently, but we have not announced how we’re going to populate that miner — sorry, that building with miners. Does that all make sense?
Bill Papanastasiou: Yeah, thanks. Sorry, I should have been more specific. I did mean for the infrastructure part instead of the mining part. So that helps to clear everything up. That’s all the questions from me. Thank you.
Patrick Fleury: Thanks, Bill.
Operator: Our next question comes from the line of Josh Siegler with Cantor Fitzgerald. Please proceed with your question.
Josh Siegler: Yeah, hi, team. Thanks for taking my question today. Really appreciate all the transparency you provided around a bunch of KPIs here. My first question is really around financing for infrastructure. I’m curious if you can dive a little bit deeper into the financing options that would exist for infrastructure committed to HPC compared to infrastructure committed for Bitcoin mining.
Patrick Fleury: Yeah. Hey, Josh, this is Patrick. Thanks for the question. So, look, I’m not going to answer that in great detail, but I will, at some point, further down the road this year. But I think the short answer to that question is on the HPC AI, and again, I’m going to go back to the barbell approach, because I think that’s really important to think about. But the financing is abundant and available for any type of large cap customer, right? Because that’s a 5-, 10-, 15-, 20-year type contract. And so that build cost for us, so if you think about 300 megawatts, it’s anywhere — and these are wide ranges, because this moves around, so bear with me, but anywhere from kind of $3 million a megawatt to $7 million. So those are big numbers.
I know if you multiply that by $300 million, that’s like $1 billion to $2 billion, right? And so, what I would say, though, is if you have an underlying contract, long-term contract with an A-rated counterparty, you can finance 70% to 90% of that cost. Now that’s one part of the barbell. The other part of the barbell, which is the smaller, more capital intensive. So, I’ll give you an example, like if we were to go out and build the infrastructure and buy all the GPUs for our 2-megawatt pilot, that would be probably around $20 million to $25 million per megawatt right? Because we’re doing everything. We’re buying the — we’re building the infrastructure and then we’re owning and building the GPUs. And so, those contracts tend to be more like, like I said, sort of roughly two-year type contracts, and the payback on that is, generally speaking, over two years.
But the counterparties there, just again, because they’re smaller companies, are putting up kind of like 25% of the contract value day one. And so, those, as you can imagine, are harder to finance. That being said, we are looking at doing, say, like 10 megawatts of those types of deals and then doing it with the same sort of financial counterparty that would finance the sort of other side of the barbell of like an A-rated company, because when you put a bunch of — it’s like [CMBS] (ph), right, when you put a bunch of companies together, you’re decreasing the risk. So, there is that possibility. It’s just more complicated. So, as you can see, like both sides just take time. And I know you all cover other folks in the space and I think others have reported kind of the same.
