LM FUNDING AMERICA, INC. Q1 FY2026 earnings call

• Operational Scaling and Performance Improvements • After completing site integrations in 2025, Q1 2026 was the first full quarter the vertically integrated mining platform operated at scale • Total Bitcoin production reached 26.1 BTC in Q1 2026, a 19% sequential increase from 22 BTC in Q4 2025, with a record monthly high of 9.6 BTC produced in March 2026 • Energized hash rate grew to approximately 790 petahash at the end of Q1 2026, the highest level in company history, up from 750 petahash at the end of 2025 • Key operational improvements were achieved across all metrics: Bitcoin production, energized hash rate, fleet efficiency, and uptime

• Hardware and Site Updates • In January 2026, the company energized a second BC40 Elite immersion cooled unit in Oklahoma, adding 35 petahash of capacity via 160 Bitmain S21 immersion miners • Winter Storm Fern in January provided an opportunity for grid demand response: the company proactively curtailed mining operations and redirected power to the grid, earning $305,000 in curtailment revenue (equivalent to ~4 BTC) over three days • In late February 2026, 300 Bitmain S19 XP miners were deployed in Oklahoma to replace older hardware, with higher-efficiency units reallocated to the Mississippi site

• Industry Dynamics and Competitive Position • ASIC efficiency gains have slowed materially in recent generations: early generational leaps delivered 30-55% efficiency improvements, while the last two air-cooled generations only delivered 18-23% gains • This slowdown is driven by structural constraints: leading semiconductor foundries are reallocating most advanced manufacturing capacity to AI chip production, extending ASIC lead times and compressing efficiency improvements for Bitcoin mining hardware • As a result, the company's deployed fleet of S19 XP, S21, and S21 immersion miners retains its competitive network position much longer than prior generational hardware would have, a dynamic management expects to persist

• Balance Sheet and Valuation • As of March 31, 2026, the company held 338.2 BTC in treasury, valued at approximately $23.1 million; Bitcoin prices recovered after quarter end, bringing the 334 BTC held as of April 30 to a $25.3 million valuation, and $27.3 million as of mid-May 2026 • 174 BTC are held as collateral for the Galaxy Digital loan; total assets were $41.8 million and total liabilities were $22.7 million as of March 31, 2026, essentially flat from year-end 2025 • The company's common equity trades at a substantial discount to the fair value of its Bitcoin treasury alone; closing this valuation gap is a primary management focus • The Galaxy Digital loan maturity was extended to June 26, 2026, providing capital structure flexibility to evaluate settlement options as market conditions evolve

• Strategic Positioning • LM Funding America remains a focused Bitcoin mining and treasury company, targeting low-cost power that is not currently suitable for HPC/AI compute but may become viable in the future • Many large public Bitcoin miners are reallocating existing mining capacity to AI hosting: the Bitcoin network hash rate has declined 27% from its October 2025 peak, with five downward difficulty adjustments year-to-date, as public miners sold 32,000 BTC in Q1 2026 to fund AI GPU capital expenditures • Every megawatt of mining capacity converted to AI reduces network difficulty for remaining Bitcoin miners, creating structural tailwinds for small-focused operators like LM Funding

LM Funding America operates as a single focused segment of Bitcoin mining and digital asset treasury. Total Q1 2026 revenue was approximately $2.1 million, representing a 11% year-over-year decline from Q1 2025's $2.4 million, and a sequential decline from Q4 2025's $2.4 million. 100% of operating revenue comes from Bitcoin mining and related energy activities. Mining revenue was partially offset by $368,000 in curtailment and energy sales that reduced cost of revenues. The company reported a net loss of $10.1 million and a core EBITDA loss of $8.4 million in Q1 2026, compared to a Q1 2025 net loss of $5.4 million and core EBITDA loss of $2.8 million. The vast majority of the Q1 2026 net loss ($7 million) came from a non-cash negative fair market value adjustment on Bitcoin holdings, driven by a decline in Bitcoin price from $87,500 at the end of 2025 to $68,300 on March 31, 2026. Mining margin for Q1 2026 was 24.1%, down slightly from 25% in Q4 2025.

• Management did not issue formal numeric revenue or production guidance for 2026, but outlined clear operational and strategic priorities for the remainder of the year • Continue incremental fleet upgrades to partially offset seasonal efficiency headwinds from warmer second quarter temperatures and maintain the company's competitive position • Core 2026 priorities are unchanged: grow Bitcoin production, improve fleet efficiency, increase Bitcoin per share, and evaluate accretive acquisitions of 5 to 20 megawatt mining sites with the same value discipline used for the Mississippi acquisition • Management expects the structural industry dynamics of large miners exiting Bitcoin mining for AI to persist, creating favorable conditions for small-scale low-cost operators

• Bitcoin price volatility creates significant non-cash fair value adjustment impacts on reported net income, and can pressure operating cash flow for mining operations
• Warmer seasonal temperatures create headwinds for mining efficiency and Q2 production output
• Siting small-scale mining projects faces multiple barriers: many prospective sites fail due to inadequate existing electrical infrastructure, local environmental/noise regulation issues, and proximity to residential or community areas that limit operational scaling
• The company's market valuation remains disconnected from the underlying fair value of its Bitcoin treasury and operating assets, which could impact access to capital for future growth
• Semiconductor foundry capacity constraints for Bitcoin ASIC production limit the availability of new high-efficiency mining hardware

Q: Given the observed slowdown in ASIC efficiency gains across recent generations, how does this change your strategy for adding hash rate, acquiring new sites, and optimizing your fleet? Will you pursue new ASICs or consider older generation hardware?

A: All deployment decisions are driven first by electricity cost and targeted payback period. Management prioritizes any machine that can pay for itself the fastest at a given site's electricity price, which currently favors the used and prior-generation hardware market due to more favorable per-TerraHash economics and payback timelines. The choice between air-cooled and immersion setups also depends on site-specific cost conditions.

Q: For the 5 to 20 megawatt site acquisition pipeline you are evaluating, have you seen changes to pricing, seller expectations, or deal flow over the past quarter? Is there more activity today than in prior quarters?

A: The pipeline of prospective sites is robust, but many deals fall apart during due diligence after discovering inadequate electrical transmission or transformer capacity, or local permitting/community issues related to noise and heat near residential or public areas. While it is a buyer's market for these smaller sites (as many sellers are exiting Bitcoin to pursue AI/HPC), there are very few buyers in this microcap acquisition space, leading to lower deal velocity than management initially expected.