Digi Power X Inc. Q3 FY2024 earnings call

Industry Context

• Digital infrastructure is entering a pivotal era driven by AI, requiring scalable computing power. Digihost is reimagining data center lifecycle from energy sourcing to infrastructure design.

Quarterly Highlights

• Revenue grew 104% YOY to $31.4 million for 9 months ended September 30, 2024. EBITDA for 9 months was $5.5 million positive, 3.5x increase YOY. Adjusted EBITDA was positive for the quarter, totaling $3 million for the year.

Strategic Partnerships

• Partnerships with U.S. Bitcoin miners allow use of top-end equipment for cost efficiency, leading to profitable mining JVs with lower CapEx.

Capacity Expansion

• Consolidated opening capacity is ~100 MW of developed and available power and 3 EH/s mining hash rate. Flagship North Tonawanda power plant had maintenance in Q3, expected back to full operation in Q4 2024. Plans to expand capacity: Columbiana, AL plant from 22 MW to 55 MW; NY plant from 60 MW to 120 MW pending NY regulators.

Future Focus

• Colocation services revenue exceeds digital mining and expected to continue. Moving towards Tier 3 infrastructure development and traditional datacenter collection as demand scales.

Colocation service segment: Produced revenue of $10.7 million for the 9 months ended September 30, 2024, compared to $0 in the same period in 2023. Digital mining business: Revenue declined from $13.5 million to $10.3 million year-over-year, driven by reduced Bitcoin mining and focus on colocation. Energy Sales segment: Produced revenue of $10.3 million for the 9 months ended September 30, 2024, compared to $1.7 million in the same period in 2023. Colocation services have more revenue than digital mining and this trend is expected to continue.

Next 12 Months

• Expect significant expansion of total megawatt capacity. Columbiana, AL plant expanded from 22 MW to 55 MW; awaiting NY regulators' decision in Q1 2025 to expand NY plant from 60 MW to 120 MW.

Long-Term Goal

• Aim to achieve 6-7 years goal by end of 2025/Q1 2026. Focus on expanding power portfolio and maximizing energy resource use. Expect high-performance computing to be primary driver of value for power assets.

Maintenance Impact

• Q3 results were lower due to a major maintenance program on the North Tonawanda power plant, which affected production.

Regulatory Uncertainty

• Pending approval from NY regulators for expanding capacity at the NY plant could impact expansion plans.

Market Volatility

• Fluctuations in Bitcoin mining difficulty and market conditions could affect revenue from digital mining.

Q: Could you run through the detail of the lower Q3 results due to maintenance?

A: Every three years, a major maintenance program is done on the turbines and to repair defects. Q3 results were lower because of this maintenance, with 2/3 of Q3 affected, and expected to be back to full capacity by early December.

Q: How much of the September quarter was down and when would it be up?

A: 2/3 of Q3 was down, and full capacity resumed in December.

Q: Split of mining capacity at North Tonawanda plant?

A: Normally, the power plant represents 55% of total capacity, but currently running partially from utility due to maintenance and pending NY regulator approval.

Q: Categorization of revenue and EH contribution to colocation?

A: Revenue split is via JV with split profit formula, with energy revenues increasing independently of Bitcoin mining, currently 25% energy revenue contribution.

Q: Alabama facility capacity and HPC plans?

A: Alabama has 22 MW developed, running ~14 MW. Plan to develop 20 MW Tier 3 HPC in increments of 5 MW, with first 5 MW by end of 2025/early 2026.

Q: North Carolina site plans?

A: Own North Carolina site with 200 MW allocation, plan to develop via debt financing or JV with HPC operators, starting with Alabama Tier 3 as stepping stone.