SportsQuest, Inc. Q1 FY2022 earnings call

• Helios Facility: Energized in May 2022, using immersion cooling. Has a 125,000 sq ft facility with 800 MW interconnection agreement. Installing machines from Bitmain, expecting completion by end of October 2022, and will deploy Intel Blockscale ASIC chips in H2 2022. - Financing: Secured $71M debt from NYDIG, signed machine swap with Core Scientific to replace S19s with S19J PROs. - Argo Labs: Allocated 10% of digital assets, focusing on web3 sectors like gamefi, NFTs, DeFi, generating revenue via yield. - ESG: Continues to be 100% carbon-neutral, emphasizing sustainability.

The company generated revenue of $19.5 million in Q1 2022, a 9% increase from Q1 2021. Adjusted EBITDA was $19.1 million, net income $2.1 million. They mined 470 Bitcoin, a 21% increase y-o-y. Mining margin for Q1 was 76%, with direct cost per Bitcoin mined at just under $10,000. Revenue contribution is primarily from mining operations.

• Target to increase hash rate to 2.2 Exahash by end of Q2 2022, aiming for ~5.5 Exahash by end of 2022 and over 20 Exahash by 2024. - Needs ~$125M additional capital for Phase 1, expecting to finance with debt and selling a portion of monthly Bitcoin production.

• Delays in machine delivery from Minerva affected hash rate in Q1 2022. - Volatility in Bitcoin price impacts margins. - ERCOT adjustments in Texas grid connections, but Argo confident in 800 MW interconnection in Texas.

Q: Can you help us understand your margin expectations for the remainder of the year and to what extent the launch of the Helios facility will offset network margin pressures?

A: Margins will be good but not necessarily offset network margin pressures as Bitcoin price and mining difficulty are uncertain. Helios' lower power costs and immersion facility help but not definitive offset.

Q: How much debt are we willing to take on?

A: We take a prudent approach, considering debt against forward-looking EBITDA. Debt is matched to asset lifespan, with machine debt over 2 years and infrastructure debt over 4 years.

Q: Congrats on energizing Helios, have you begun using immersion there yet?

A: Helios is entirely in immersion facility. We are ramping up operations, not yet over clocking at scale but monitoring systems.

Q: Can you explain the procedure for receiving the mining rigs to converting them to emerge-cooled setups?

A: Machines are received, un-boxed, prepped by removing fans, then dunked into fluid by the 'dunk team', with systems broken into 4 MW pods.

Q: What is the criteria for Argo Labs involvement in crypto projects?

A: Criteria include token utility, team track record, tokenomics, blockchain quality, and community engagement.

Q: Why was the second NYDIG loan done at a significantly higher rate?

A: The second loan is against Bitcoin mining machines, which have one use and higher risk, compared to infrastructure assets with lower risk.