Core Scientific, Inc. Tranche 2 Warrants Q2 FY2024 earnings call

Management Statement and Operational Highlights

• Announced a contract with CoreWeave to lease a 16-megawatt HPC data center in Austin, delivered over 30 days ahead of schedule and started generating revenue in Q2.
• Signed HPC hosting contracts with CoreWeave for a total of 382 megawatts, with aggregate potential revenue of $6.7 billion over 12 years starting 2025-2026.
• Completed 72 megawatts of partially built infrastructure in Denton, Texas, bringing total operational infrastructure to ~830 megawatts.
• Began build-out of a 100-megawatt facility in Pecos, Texas.
• Stock price appreciation led to mandatory conversion of secured convertible notes, eliminating $260 million in debt.
• Signed an agreement with Block to procure 15 exahash of their new 3-nanometer ASIC chip to refresh/expand self-mining fleet.
• Preparing sites for HPC hosting, migrating miners from HPC-designated sites to bitcoin mining sites.

Segment Performance

• Digital Asset Self-Mining: Generated $111 million in revenue with a gross profit of $30.7 million. This segment contributed approximately 78.7% to total revenue (111 / 141).
• Digital Asset Hosting: Generated $25 million in revenue with a 30% gross margin.
• HPC Hosting: Earned $5.5 million in revenue with an 11% gross margin. The Austin data center's margin is expected to improve over time, initially lower due to accelerated lease expenses but anticipated to reach 35%-40% excluding power pass-through by mid-2025.

Guidance

• Expect 21.8 exahash self-mining hash rate in 2024.
• Anticipate ~800 megawatts of total operational infrastructure, noting variability due to HPC conversion and bitcoin mining power upsides.
• Expect 16 megawatts of revenue-generating HPC hosting infrastructure.
• Anticipate average bitcoin mining fleet power price of $0.042 to $0.044 per kilowatt hour in 2024.

Risks

• Potential supply chain delays affecting HPC infrastructure delivery.
• Intense market competition in data center and mining sectors.
• Uncertainties in power pricing and availability affecting profitability.
• Risks associated with the conversion process of sites for HPC hosting, including delays in modification and construction.

Question and Answer Q: Greg Lewis with BTIG asked about funding for site and source new locations for HPC or bitcoin mining and leveraging 12-year contracts with CoreWeave.

A: Adam Sullivan responded on capital structure, funding from operational cash flow, balance sheet, and accessing capital markets.

Q: Lucas Pipes with B. Riley Securities asked about competitive dynamics in HPC site selection and leverage ratio.

A: Adam Sullivan discussed competition with data center companies, focus on brownfield and greenfield sites, and balance sheet objectives.

Q: Joe Flynn with Compass Point Research asked about remaining HPC site options and client diversification.

A: Adam Sullivan talked about finalized designs for remaining capacity and client diversification through site selection.

Q: Brett Knoblauch with Cantor Fitzgerald asked about power pricing and location focus for HPC.

A: Adam Sullivan discussed power price confidence based on regulated and deregulated markets, and focus on low-latency sites.

Q: Joseph Vafi with Canaccord Genuity asked about learnings from Austin HPC facility and attractiveness of Block's 3-nanometer chips.

A: Adam Sullivan shared learnings from Austin and explained the advantages of Block's chips for future mining infrastructure.

Q: Darren Aftahi with Roth Capital Partners asked about site selection sources and international expansion.

A: Adam Sullivan discussed subscale data centers, relationships with utilities and local governments, and international expansion considerations.

Q: Rosemarie Sison with Odeon Capital asked about infrastructure support for expansion and international locations.

A: Adam Sullivan talked about team expertise, bench strength, and international market exploration.

Q: Kevin Dede with H.C. Wainwright asked about HPC location details and power requirements.

A: Adam Sullivan discussed competitive advantage, working with utilities, and power requirements for HPC expansions.

Q: Jack Chan with Imperial Capital asked about deal structures for future HPC customers.

A: Adam Sullivan explained varying deal structures based on client credit risk and contract terms.

Q: Lucas Pipes with B. Riley Securities asked about ASDC locations on Slide 15.

A: Adam Sullivan clarified that ASDCs are on a facility level, not necessarily across different sites.