Core Scientific, Inc./tx Q4 FY2023 earnings call

• Core Scientific is one of the largest bitcoin miners in North America, having mined more bitcoin than any other listed company in 2021, 2022, and 2023.
• Generated $502 million in revenue in 2023, owned 724 megawatts of infrastructure translating to 23.2 exahash as of December 31st and 25.2 exahash as of February 29th.
• Diversified hosting customer base into high performance computing with a contract with CoreWeave.
• Underwent restructuring in 2023, emerging with a stronger balance sheet, instilled rigor in capital allocation, rationalized hosting business, paid off DIP financing, and completed an equity rights offering.
• Prepared for the halving by deploying new miners, improving fleet energy efficiency, optimizing fleet based on energy efficiency and power rates, implementing power hedging strategy, and conducting scenario planning.

In 2023, Core Scientific operated two segments: self-mining and hosting. The self-mining to hosting mix was 76% to 24%. The 2023 self-mining gross margin was 25% and hosting gross margin was 22%, compared to 1% and 2% in 2022. Revenue for the year was $502.4 million, with cost of revenue decreasing by 40% to $378.9 million. Adjusted EBITDA in 2023 was $170 million, up from negative $10.7 million in 2022.

• Plan to complete 72 megawatts of partially built infrastructure at Denton, Texas data center by end of 2024, resulting in self-mining hash rate of 21.8 exahash.
• Expect operating cash flow to fund operations, growth, debt service, and capex associated with organic growth plan in 2024.
• Model a statutory effective tax rate of approximately 23% for 2024, with over $300 million in net operating loss carried forward.

• Industry volatility and upcoming halving could impact hash prices and operational results.
• Power price fluctuations and risks associated with regulated and unregulated power markets.
• Dependence on key customers and potential challenges in diversifying the hosting customer base.

Q: Looking into the first quarter with stronger bitcoin prices and hash price, what's the balance between investing in growth, holding cash for a rainy day into the halving and paying cash interest or pick interest?

A: Priority number one is executing on the business plan for growth, then paying down debt. Top priority is executing the business plan to provide a pathway to de-leveraging.

Q: On power prices, existing power agreements and hedging strategy?

A: Power prices in 2023 averaged $4.04. Have a split of regulated and unregulated markets. In Texas, implemented a hedging strategy on 50 megawatts of power, focusing on short-dated fixed price PPAs to capitalize on market opportunities.

Q: Color on CoreWeave contract, operating margin profile, and interest in HPC business?

A: Excited about CoreWeave contract, which is a natural hedge. Operating margin profile is positive, and seeing opportunities in HPC as there's low availability of high megawatt power sites, with CoreScientific having unique advantage to convert facilities quickly. Revenue from the contract expected to show up on income statement in next few months.

Q: Timing of exahash additions, fleet upgrade, and CapEx budget?

A: Pulling forward S21 miner deliveries to earlier part of Q2 2024. Plan to spend approximately $20 million to complete 72 megawatts of infrastructure in Texas in 2024. CapEx budget for miners in 2024 not yet announced, but payments for ordered miners in 2024 already made.