Hello, everyone, and welcome to today's webcast reviewing HIVE Digital Technologies financial results for the quarter ended September 30, 2023. .

On Slide #2, I would like to briefly note disclosures. Except for statements of historical fact, this presentation contains forward-looking information within the meaning of the applicable Canadian and U.S. securities regulations. These forward-looking statements are based on expectations, estimates and assumptions as of the date of this presentation. .

On the next slide, I'm pleased to introduce today's presenters. Frank Holmes, Executive Chairman; Aydin Kilic, President and CEO; and Darcy Daubaras, Chief Financial Officer. .

I would now like to hand the presentation over to Mr. Frank Holmes for a macro recap of the quarter.

Frank?.

Thank you, Holly, and thank you all shareholders and media people that are listening to this webcast. We're very happy how we've been navigate. It's going to be an incredible roller coaster year, and let's see if we can -- but the bottom is behind us and the future looks much better. .

So I always like to start off my presentations with this beautiful little roller coaster of Bitcoin prices.

And there's a reason for that, and I'm going to show you in a second, but most important is to understand the DNA of volatility of an asset class because each one has its own unique volatility and high daily volatility is 6x the S&P 500 and 6x gold prices. That means 70% of the time, it's the non-event that go up or down 6%..

Bitcoin is a plus or minus 2% on a daily basis. So that's really sort of the volatility on a daily basis has slowed down. But over 10 days, it is quite large. So you can see that we are still 3x the volatility over a 10-day 2-week period, Bitcoin to HIVE.

And I think part of that component of that additional volatility has to deal with, we used to mine Ethereum, that's gone, and now we have this unique AI strategy which we're going to talk about you in a second.

But before you invest, it's really important to appreciate and respect the standard deviation, HIVE as a company versus the underlying Bitcoin. .

Now what happens with Bitcoin drives the price action. And it doesn't really matter if you have good news or bad news on that day, it is the Bitcoin direction, and it appears to be a quant basket by the Citadels and other quants that trade these stocks as a basket around Bitcoin prices.

It used to be by the day, then by the hour, and I think it's recalibrating actually by the minute..

But what you're seeing here is that we have a 97% correlation to Bitcoin. And you can see some of the other companies have a lower correlation pattern. And also, you can see that HIVE has a strong correlation to some of the other crypto mining stocks like to RIOT, it's 99% of the time; to HUT8 it's 95%; to Bitfarms it's 94%. .

And even though we have better uptime than RIOT, that correlation as a basket move, we move in tandem, we moved together. I think it's really important for investors to understand, real monster here is the price of Bitcoin action. .

So what is this importance of Bitcoin? Bitcoin is a decentralized asset. It's portable wealth. It fits into the alternative asset class just like gold, silver and arc, which show up as an alternative asset class. Private equity shows up as an alternative asset class. So from that point of view, it's in good hands.

And it's a matter of how much do you have. In the world of gold, the rate down of the world, managing the largest hedge fund in the world, has always a wedding in gold and has had nothing but positive state, as I say, about Bitcoin is like Mozart's Symphony, Jupiter Symphony. .

I think it's really important to appreciate that the crypto ecosystem, even with the meltdown in the past 12 months, we have attended many conferences in America, in Europe and they're packed. I was told today in Lisbon that there's one in Lisbon, Portugal, and it's in a football stadium, 100,000 people for a web summit.

And you're going to think this never would happen with gold stocks. So it never happened with -- even a technology conference with NVIDIA is showing up, you're not going to get 100,000 people spending EUR 700 to attend. It's just unquestionably not going to happen. But the crypto ecosystem is robust around the world. .

And what's important here is to recognize these nodes that are like close to 13,000, it goes up to 14,000 are decentralized, and they're validating the network, and it's a global phenomena.

And that's one reason why even with all the negative news that's taken place by the Bank of International settlements, which is biased towards the central banks and regulatory regimes around the world is not appreciating that this new demographics of voters that are going to be coming in are relating to Bitcoin as an alternative asset class and they have these huge conferences.

So I think that something big is happening and to recognize that there's centralized and there's decentralized, Bitcoin like gold is a decentralized asset class. .

Well, one of the other really interesting parts is just recently came out by something in the HIVE sponsors is education, and we sponsor a Bitcoin Magazine and having their research and they come with these beautiful graphics.

And what this graphic here is really profound and showing you that even with the crisis in the past year and the immense volatility, the number of addresses holding more than $1,000 worth of bitcoin hit an all-time high. So this recent change of tone coming up with an ETF, which is still yet to really happen, created all of a sudden more interest.

And I think it's just important to recognize the uniqueness of Bitcoin, cap the 21 million coins, over 19 million been mined, less than 10% are to be mined. .

And as less and less supply is coming out and the adoption is rising, Metcalfe's law would suggest that $100,000, $200,000, $600,000. You can hear many of these speakers like Kathy Wood say $600,000, other people saying millions of dollars. It's really based on this Metcalfe's law and looking at other adoption processes.

So I think it is very, very positive and constructive. .

But what we do have is we have more and more people coming into mine bitcoin.

And Bitcoin right now, and there's an opportunity to -- if you have the fastest computers and you have most efficient computers and you have cheap electricity, you go out and you mine, but there's only 900 coins a day that you can mine and HIVE has basically been around 1% of that network.

And that network is attracting still more and more miners predominantly coming from Bitmain who is now probably the biggest miner themselves if they were public for what they do with their own machines before they sell them off to other new miners. But I think it's really important for investors to understand this risk and opportunity. .

As the difficulty rises, the margins are going to fall.

And what does that mean? If there's a fixed amount of 900 coins a day, means that more and more people are coming in to compete, to be able to get a piece of those 900 coins, that means there's going to be less, there's going to be less to share, and you're going to just have a difficulty on them, on your margins. .

Now when crypto mining companies shut down because there's no profits, then the difficulty falls, that means there's less miners, that means margins are rising.

And we've seen this happen, and this will be -- have a big occurrence when we go through the having at the end of April, where the embedded model in the Bitcoin is that every 4 years, the half amount of rewards are offered. .

So we're going to go from 900 coins a day to 450, and you're going to have all these machines competing.

So basically, the revenue is going to half and you're going to either have more machines to be able to cover your costs or you're going to have to have people fall off the grid, basically no pun intended for difficulty money, but this concept is so important to understand the inverse relationship.

And in capital markets, there's many inverse relationships, like the price of oil falling is very bullish, for airlines profit margins rising. Rising oil prices hurts profit margins of the airlines industry. So you have this strong inverse relationship. .

If you have rising government bond yields, well, that hurts dividend paying stocks unless they're going to increase their dividend paying. So it's -- I think it's an important concept of capital markets to be able to identify this is an opportunity as a risk.

Right now, for the past year, it has been a big risk and Aydin is going to -- our CEO, is going to go into more granular information and detail in showing you how we've tried to stay ahead of this and maintaining the world [indiscernible] of the network. .

HIVE is a green energy focus in Canada, Iceland and Sweden, very important. Now we've been innovators, first to go public in September 2017. First of all, basically create its own ASIC mining rig with Intel, first to buy data centers, first to be green energy focused, first to balance the grid.

We know that the biggest in Texas, most of the profits the past year from balancing the grid. And we're first to have an AI strategy because of our expertise because we were mining Ethereum. And when you're mining Ethereum, you need expertise in using GPU chips. .

I have an incredible team. Aydin Kilic as our President and CEO, Electrical Engineer; also Darcy Daubaras is the longest-standing CFO in the crypto ecosystem.

Guys, whether 2 bear markets are having acquisitions and a growth profile and the disappearance of Ethereum going from proof of work to proof of stake, and which was for us was always a very, very attractive, higher margin business to whether those storms gives you lots of resiliency. And then we have Johanna Thornblad, who's the President of Sweden.

Sweden has been an important part for us for many reasons. And so it's great to have someone from Sweden that's managing that country for us. And then we have Gabriel Ibghy, who is the General Counsel, who speaks many languages like Johanna. And if he's not in Europe living, he's in Montreal. And so I had this incredible dynamic team. .

We also have an office in Bermuda for managing a lot of our financial reporting and getting stuff done from time zone difference between Sweden, Iceland and then dealing with in Canada, but that we're always on top of our daily production. .

So HIVE has outperformed Bitcoin, gold price and S&P year-to-date, as you can see, 114%. Bitcoin was up 62%. S&P was up 12%, Gold is up 1%. So the big push for gold as an asset class that continues to see that with central banks acquiring more and more. But gold still is related to interest rates in the U.S.

for that 40% demand as was that inverse relationship to the yields in the U.S. .

Bitcoin has got a complete different ecosystem, but it is recognized as digital gold. It is another form of a portable asset, and it's much more portable than gold is, but you can't wear like gold jewelry.

So you see there are strengths and weaknesses and have always been an advocate as a well-known gold fund manager that Bitcoin is one of those beautiful things as an alternative asset class and a diversified portfolio. .

HIVE has options of $3.4 million, RSUs of $1.9 million, and it has some warrants outstanding, but still is relatively a very tight float. HIVE has strong strategy of the local community. Boden is 100 miles south of the Arctic Circle in Sweden. We basically sponsored the HIVE arena helps the community.

We have 12 kids teams learning and practicing and proving it being hockey players. There are 3 Stanley Cup champions, NHL Pros from this little community. They retired back in this community. So hockey is a very big a part of the ecosystem of Boden. And in the middle, you can see one of the photos is Darcy, a lovely guy that likes to play hockey.

And I don't think he's been playing recently, but that uniform looks like he's already put on the blades. .

But what's really important here is our community involvement with the Boden business center for education and at the same time for kids, they're not doing silly things on the streets. They're out there earning this great sport hockey. .

I was very proud of -- when you take a look at the shareholder dilution, we've had the smallest amount of dilution that is issuing shares, either for a bought deal or ATM. Some of the other companies have grown in their overall Bitcoin production, and a lot of that's come at the expense of issuing shares. We try to manage our balance sheet.

It's a delicate process. Do we sell from our holder position? When do we sell? When do we do the ATM? And we have not gone down the path of creditor lenders, which has gotten many of these other companies to big trouble in the past 18 months. We have avoided that path.

So when you look at this, like it's one of the most attractive parts of the shareholder dilution. .

And then HIVE has the lowest G&A per bitcoin mine. It's -- we pay attractive, we have bonuses, but we have a different business model. Our model is to be much more like a royalty company rather than being Newmont or Baric as a gold mining company. I'd rather be Newmont, which has a royalty on their assets in Nevada. And that's what we've done.

So we have strategic partners and relationships in other countries, and that has helped us be able to stay lean and be able to weather these downdrafts the volatility and maintain the payment, attractive compensation for the executive team. And so I'm very proud of that as a money manager, this part is very important. .

But it appears that, that is not really key to when you leave the space of CFA, Chief Investment -- money managers, portfolio managers, what appears to attract the most interest is how big is your total position and what is your growth? We've had a different discipline.

That's one reason why we love mining Ethereum, because it allowed us to have the highest gross margins and to be able to grow our business model with the least amount of shareholder dilution. .

So let's talk about macro stuff. It's really important that you recognize that the imbalance of government policies is what may historically made gold very attractive. It's also -- it makes Bitcoin very attractive. And it's a binary model like the Internet or 0s and 1s.

When you look at a macroeconomic model of any country's currency, you can see that there'll be likes and disappointments between their monetary policy and their fiscal policy. So once again, there's binary. .

Monetary is binary also. It's what do they do with interest rates, that is real interest rates above the inflationary rate and money supply, how much money they they're printing? And when it comes to fiscal policies, tax regulations. And rising taxes and regulations is a real drag on the economy and spending. Where they're spending their money.

Is it long-term infrastructure that will create sustainable jobs? Or is it just basically welfare payments or [ boondoggle ] project? So it's important to see that in this century, we have witnessed this concept of modern monetary theory where just print more money as a solution to the problem. .

And that is like gold outperform the S&P 2:1 and -- in this century, but Bitcoin comes along little about half of the century. If you recall, it was in 2008, the paper was submitted in 2009, Bitcoin is into the ecosystem and has far outperformed everything.

And I think one of the things has caught the imagination has been the limited supply that capped at 21 million coins. And as more people appreciate this digital portable wealth and you have to make a brick of gold, you need electricity and if you want to make a Bitcoin, you don't need electricity.

So both of them require this financial capital spend on energy to be able to make an asset. One is tangible, that is gold; and one is intangible, that is Bitcoin. .

And what I'm seeing around the world is that the greater the imbalance between monetary and fiscal policy, the greater has been the price movement of Bitcoin in that country's currency. And at the same time, I can say with gold. But in particular, Bitcoin has captured the imagination of especially demographics. .

As you can see these 2 old guys out there are baby boomers like myself and they've not adopted to like the millennials and Generation X, Y and Zs of the world, have adopted to digital money from the gaming industry. So we do have a huge transfer of wealth, wealth is going to go from baby boomers to millennials.

There's a much greater propensity to use digital wealth. So I think that bodes very well for asset classes like Bitcoin. .

So positive corporate margins through the bear market.

As you can see, last year of September 2022, we started Ethereum mining and that was a big benefit to even though Bitcoin has started to get sloppy because not a quarter, we had the problems with Celsius and other hedge funds imploding, but still nothing compared to Sam Bankman who fried the crypto industry. .

And the FTX implosion that took place last year in this quarter, really impacted the margins. And you can see that it took about 6 months for it to slowly get a bottom. Then we had a bounce between March and June and then it start to roll over during the summer this year. .

Bitcoin was down. But with the recent news of the EPF and the SEC losing cases in the federal court system to Ripple and to Gray Scale has created a different tone. And most important, I really think is Larry Fink has done a 180 from trash talking, like he's a hip pop singer about Bitcoin, and now he's serenading about the greatness of Bitcoin.

And whenever there's fear in the global economic world or geopolitics and war, there's a move to U.S. treasuries, there's a move to gold, and now another same story, another alternative asset has become Bitcoin. And so now he's pushing for the Bitcoin ETF.

And I think that all our brands between the regulatory regime and reaching out to BlackHawk with $10 trillion beast is very positive and constructive in that adoption. .

I have seen this before. I have seen this with gold, a great concern on retail investors buying gold and bullion or even gold stocks. And when the GLD came out, tremendous amount of adoption took place, and money went into the GLD. And you saw that as sort of a changed attitude towards gold as an asset class was the adoption.

I think when the ETF space comes out for Bitcoin, we'll get that same type of a change and -- which is positive and constructive in that overall adoption. .

We're very proud of going looking last year, and we'll see it this year we'll be able to give you the numbers. But if you take out and strip out our depreciation, because the cycle is so competitive with ASIC chips every 2 years, new chips.

And whenever you get a Bitcoin downturn, the auditors push to do a mark-to-market write-down of your equipment also. So if you backed up this depreciation, and we have an accelerated 2-year depreciation, not 4-year, it does impact your overall -- your reported earnings.

But if you strip that out and you just look at corporate margins from running your business and your SG&A, I'm very proud of this visual, and I think you showed too. And HIVE continues to show the highest corporate margins. .

The only frustration when you -- is that people are more focused on, what, exahash are you promising going to the future and how much total do you have in your balance sheet. We have a much more investment strategy of how we're looking at margins and cash flow. And we really focus our strategies to cash flow return on invested capital.

But this is an important and part of that is how we manage our cost structure. And I think it has shown in previous visuals that very proud of these numbers. .

Well, the future looks great, and we're integrating the future of computing with the future of climate to promote sustainability and environmental consciousness. And I think that our HPC strategy fits into that. I did help fund the company called the Gold Spot to go public. It was the first AI company.

It was the first and I learned a lot about the AI business, in particular, the hub of Montreal being a hub for the intellectual capital of so many PhDs and machine learning and AI. And it was using AI to help the geologists look for gold and drop the high-risk capital of exploration down by using AI.

And so it's always kept me -- this is before COVID, and it's always kept me fascinating this path. .

So we started down this path through 3 years ago, a concept of spending money to build an HPC strategy. And then 18 months ago, we purchased a lot of NVIDIA chips. And we were unlike our peers, there were single purpose. Our peers were single purpose only to mine Ethereum.

We wanted to have something that allowed us to pivot after mining Ethereum, we could go into the HPC. And that's what we did, and we spent close to $70 million buying NVIDIA chips.

And the proof-of-work to proof-of-stake, jump that Ethereum did, and I think it was a big mistake for many reasons, but let's not talk about that, but more important is what is our vision for HPC and AI. .

So we've slowly started building out. It's been a big learning. We've got a beta site that started earlier this year in the first quarter. It threw off cash flow of $0.25 million. And what's interesting is that there's many things that we've learned in this journey. And part of it was the servers and the CPUs and the basket you have to put them in.

So having super micro servers, you can put 10 of these chips into them, and then you want to get special types of cable and you get paid more for different cable. And so it's interesting, if you look at for simplicity, let's say today, you're making $0.15 mining in Bitcoin an hour. So all our machines, ASIC machines, they are generating about $0.15.

Our HPC, as we're slowly building, it is more like $1.50. .

So it has a much higher gross margin. And so now we've been able to take that from $0.25 million a quarter, which is a run rate of $1 million a year. We're now at $0.25 million a month. And so it's a matter of getting all this equipment, putting it together and assembling it.

We're in Downtown Sweden, the Stockholm and we're Downtown Montreal, and we're looking at other assets to expand and acquire. And so our goal is by year-end, hopefully, this beta site can all be ready in the new year that we can get up to a $0.25 million a week, and we see the potential to be $0.25 million a day a year from now. .

But there's things there's risk there on what they'll pay for your various chips and as new chips come online. But we had seen several companies make announcements they're getting in the business. And I really think that it's just more about promoting their story that really don't understand how complex it is to provide an HPC strategy.

The first thing is when you're mining Bitcoin and you're balancing the grid that means that you're not 100% of the time or 99% uptime that you're mining, but you get paid for and you compensate for not being up 99% by the utility company. Well, when you're into HPC, you have to be up 99.9% of the time. You can't be balancing the grid. .

So you have to look at these other dynamics and the cost per megawatt to build in Texas, our facility is about $500,000 per megawatt. When it comes to HPC, it's $10 million to $12 million per megawatt. So you have a much bigger CapEx spend, much more sophistication.

And I'm just very blessed, and luck that we learned with mining Ethereum, and we have some of the sort of unique learning experience. And I'd like to always tell investors, it's like driving a Porsche Cayenne or Ferrari versus driving a Ford 150 pickup truck. ASIC is a Ford 150 pickup truck. A Ferrari is NVIDIA chips.

So it's recognizing the mechanics, the technicians, all the stuff are much greater in that space. .

I'm going to turn it over now to, who's going to give you much more granularity, and that is our Chief Financial Officer, Darcy. .

Thank you, Frank. As usual, at this point to the presentation, I will be taking you through a snapshot of the period, looking at the most recently completed quarter and some financial indicators.

First of all, I'd like to remind our listeners that our earnings are comprised of our operational earnings or call it cash flow usually, plus our investment earnings, which includes realized and unrealized earnings, which often includes non-cash charges. .

Mark-to-market accounting is a practice that involves adjusting the value of an asset to reflect its value is determined by current market value conditions. The market value is determined based on what a company would get for the asset if it was sold at that point in time.

Mark-to-market losses or paper losses generated through an accounting entry rather than the actual sale of the security. The swings in digital assets impact paper profits and losses each quarter. So our Bitcoin digital assets do generate unrealized gains and losses each quarter.

It is important that investors understand the differences in operating earnings or losses in addition to mark-to-market paper gains and losses each quarter. .

Moving on to Slide 25. As we can see, the second part of this equation is the non-cash charges. A non-cash charge is a write-down or accounting expense that does not involve cash payment, such as depreciation, amortization, depletion, stock-based compensation and asset impairments.

These are common non-cash charges that reduce earnings, but not cash flows. .

If we move on to Slide 26. You take a look seeing that during this most recently completed quarter of September 30, 2023, we recorded $22.8 million of revenue and experienced a $1.5 million loss in adjusted EBITDA. It was driven by production of 801 Bitcoin equivalent mined tokens. .

As you can see on Slide 27, we continue to be proud having a healthy balance sheet. Our cash position stood at $4.5 million at September 30, 2023, along with an additional $46.9 million in digital currencies, comprised almost entirely of Bitcoin. We also had $10 million in amounts receivable and prepaids.

Amounts receivable maintain mostly of sales tax receivables. The market value of our strategic investments is shown there also, and we remain having a strong net cash position and healthy working capital to fund our operations and growth objectives. .

Our Bitcoin holdings at September 30, 2023, was 1,738 Bitcoin. This was down slightly from the June 30, 2023 month-end period of 1,957 Bitcoin.

We have been strategically selling some of our Bitcoin over this quarter to continue to invest in higher efficiency ASIC machines to get prepared for the having in the first half of 2024, which is expected in April and also some investments we are making in our high-performance equipments. .

Moving on to Slide 28 and switching gears. Taking a look at our gross operating margin on a year-over-year basis comparing the second quarter of this year compared to the second quarter last year.

Our gross operating margin, which equates to our total revenues, minus direct operating and maintenance cost, decreased in absolute dollars to $4.6 million or 20% gross operating margin in the most recent quarter compared to $15.9 million or a 34% gross operating margin in the comparative year quarter. .

Gross mining margin is also partially dependent on various external network factors, including the high mining difficulty we continue to experience, the amount of digital currency rewards miners received and the market price of the digital currencies at the time of mining, which were on average higher than the prior comparative period. .

In addition, the company is no longer mining Ethereum since the merge on September 14, 2022, which has contributed to the decrease in gross revenue from digital currency mining.

In this most recent quarter, as you can see, we are reporting a net loss of $0.29 per share compared to the net loss experienced last year of $0.41 per share in that September 30, 2022, period. .

Moving to Slide 29. Taking a look at year-over-year revenue, we generated a total revenue in the second quarter of fiscal 2024 recently completed of $22.8 million versus $29.6 million in the previous year's second quarter. This decrease in revenues versus the same quarter in fiscal 2023 can be attributable to 2 main headlines.

There is the ever-increasing Bitcoin difficulty hash rates over the past year that continues to be an experience in this ecosystem; and two, to a significant extent, the Ethereum merge that happened on September 15, 2022. As this current quarter and operations moving quarter does not include any Ethereum revenues, that is reflected in our results.

This double punch contributed strongly to the significant drop in revenues that we experienced. .

As mentioned previously, our gross mining margin, which equates to our revenues, minus direct operating and maintenance costs, decreased in absolute dollars to $4.6 million in the most recent quarter compared to $15.9 million in the prior year comparative. .

Now taking a look on the next slide of our quarter-over-quarter fiscal Q2. We generated revenue in the second quarter of fiscal 2024 of $22.8 million compared to $23.6 million in the previous Q1 quarter ended June 30, 2023.

The decrease in revenues versus the previous quarter was impacted by an average stagnant price a Bitcoin comparing the 2 quarters and 33% less Bitcoin mined in this current quarter. Our gross mining margin decreased in absolute dollars to $4.6 million in the most recent quarter compared to $8 million in the prior year comparative.

The decrease in gross mining margin versus the prior quarter was impacted for the same reasons as stated above for revenues. .

Moving to Slide 31. Our adjusted EBITDA decreased in the second quarter of fiscal 2024 to negative $1.5 million versus a positive adjusted EBITDA experienced of $5.3 million in the prior quarter. I will highlight again that adjusted EBITDA is a non-IFRS figure.

In the second quarter of fiscal 2024, we experienced a loss of $24.5 million compared to a loss of $16.3 million in the prior quarter. .

I'd like to thank you, our loyal shareholders and stakeholders. And at this time, I'd like to turn the presentation over to our CEO and President, Aydin Kilic.

Aydin?.

Thank you, Darcy, for that excellent summary of our fiscal quarterly performance. I'm going to give a strategic outlook for the year ahead, talk about our production to date and recap our growth over the last year. It's been a phenomenal year for HIVE. .

Next slide, let's jump into it. So we are back to producing over 9 bitcoin per day as of mid-November 2023. Now 9 bitcoin a day is a very significant production figure. And this chart explains why. The entire Bitcoin blockchain has a block reward of 900 Bitcoin per day. And so 1% of that means you would be earning 9 Bitcoin per day.

So we are earning upwards of 1% of the entire Bitcoin blockchain rewards. Now in addition to this, there are transaction fees, which fluctuate anywhere from usually 1% to 2%. And recently, we saw a rally at 9% to 10%. And that will vary with market demand, and that's gravy on top for the miners. But your core blocker award is 900 bitcoin a day. .

However, next slide, please. You do not earn 9 Bitcoin a day if you have 1% of the network as time goes on. And what I mean is there is a quantum called Bitcoin network difficulty. And this is just a refresher for all the enthusiasts out there.

And if you're a new market entrant or a new high shareholder, and you want to learn, we'll just give you a quick primer, as difficulty rises, you earn less Bitcoin. .

For example, a difficulty was to double and your operating capacity, which we call hash rate, wasn't the same, you'd earn half the Bitcoin. So if difficulty goes up by 30%, you earn 30% less Bitcoin. Similarly, if difficulty falls, your production would go up by the same amount. But that's just a key principle.

And right now, difficulty is about $63 trillion, an integer number. .

Next slide. This is what difficulty has looked like over the last year though. It has almost doubled from about $32 trillion to, as I said, about $63 trillion today, double in the last year. So what that means is if we sat on our laurels and did not expand, we would be producing half the amount of bitcoin today than we did a year ago.

However, we're actually producing more Bitcoin today than we were a year ago. .

In early November 2022, HIVE was doing a little over 8 Bitcoin in a day, and now we're over 9 Bitcoin a day. So that is scaling with intention. This is what I talk about we expand the business to maximize our profit. We want sound due to economics. We're not just about scaling for the sake of scale. Yes, we are growing.

We've grown 100% in the last year if you consider the difficulty growth has been 100% because we're still producing over 9 Bitcoin on a day. .

Next slide, please. This is what our production looks like overlay. So if you think about it in the 30-day month, 9 Bitcoin you do, would be about 270 Bitcoin, you could see that we've done almost 9 Bitcoin a day for the last year, say for a few aberrations. We've mined 3,220 Bitcoins in the last 12 months.

And again, you see that growing difficulty over the last year, and you see how our production has remained steady despite increasing difficulty. Again, we've grown. .

Next slide. This is what that Bitcoin production now looks like on a quarterly basis. The previous slide was on a monthly basis. So 801 Bitcoin this last quarter. .

Next slide, please. And here it is represented on a fiscal basis. As you know the price of Bitcoin as that changes, it will affect our revenue, the revenues at Bitcoin times the price of Bitcoin during that period. And of course, we saw a drop in the period end December 2022 because of the FDX bankruptcy.

And that caused our revenue to go down because even though our production was still strong, our revenue went down substantially because Bitcoin went down to about $16,500 during that period. And moreover, as your top line goes down, you still have your operating costs and it affects your margin. And the green bar here is the gross mining margin.

We still had a positive gross mining margin, even in the most bearish aspect of the bear market in the last year. .

And in fact, that had been on the uptrend. You see a period end March, we were up to $4 million of gross mining margin. It doubled in period end June the $8 million gross mining margin.

Now our gross mining margin, even though our revenue was strong, $22.8 million this quarter compared to $23.6 million the last quarter, revenues effectively held steady, even though again, difficulty has gone up, our hash rate has also grown. So we've gotten that production up. However, our gross mining margin has come down to $4.6 million.

Why? Well you all know that it's little Swedish way. And I'm going to talk about this for a second because there's a lot of speculation. There's a lot of conjecture here uncertainty and doubt. .

And I see this because people were reading about energy taxes in Sweden policy shifts. And they thought that spell dooming gain for HIVE. And I remember reading an article for a crypto -- popular crypto news outlet.

And they said, "Oh, this new energy tax, it's a massive increase over what it used to be." I think they said it was a 1,000% increase of tax or so, some real headline grabbing number that didn't make sense. And all what -- here's what really happened.

And it was a rebate that affected the entire data center industry, not just Bitcoin miners, and the government pulled back that rebate. Now it's very frustrating for data center operators, don't get me wrong. But we navigated it, right? We navigate things we don't control, we still have to find workarounds and solutions. .

So what that means is effective July 1, the energy tax in Sweden, which by the way, worked out to about $0.27 a kilowatt hour, okay, for all your industry analysts out there. And for everybody else that just wants the account dollars and cents, it worked out to about USD 1.9 million.

That was USD 1.9 million of additional cost, which was this energy tax that in this current quarter period end September because that went into effect July, okay? So $1.9 million and it's unfortunate. And we do think that Sweden is still a great place to operate.

Why? As you know what, we also earned $1.4 million of income from our grid balancing program, and that's unique to Sweden as well. .

So as any jurisdiction will have its challenges, it's all about how do we, as an executive management team navigate these things. And so I'm glad to say that we still had a healthy positive gross mining margin this last quarter, $4.6 million. And if you look at our corporate margin, if you subtract our G&A, off of the gross mining margin.

We still had a $1.1 million corporate margin this quarter, which I know Frank covered in his section. So we've grown the business. We've managed the state with a positive gross operating margin, even a positive corporate margin during this bear market, wrestling with all sorts of curveballs and emerging successfully with a strong balance sheet. .

Next slide. Now this, again, just shows the operating margin on it on. So you could just see how we sustained positive gross mining margins. And again, the Ethereum merged last September, that was another event where people were talking about doom and gloom fear uncertainty and doubt and we successfully navigated through that.

We've since pivoted our GPUs to work on HPC computing, which I'm going to talk about a little bit later. And all of these headwinds about tax and policy in Sweden, we navigated.

And by the way, we just found out that we'll be eligible for VAT rebates for our Bitcoin mining business in Sweden, which was another major issue earlier this year that again, the media seem to report on with a lot of speculation. .

And of course, as a company with expertise in the jurisdiction, we have great tax advisers, great professionals, we know how to engage and deal with these issues as they come up. So very happy to see that we've managed to pull through this quarter. .

Next slide, please. So to recap our current production, we're doing about 9.2 Bitcoin per day with which 4.3x hash. In addition to that, we're doing $250,000 a month right now from our GPUs that are doing high performance computing. Keep in mind, we were doing $250,000 a quarter in the last quarter.

So we've effectively tripled, tripled our revenue on our AI income with our GPUs, $250,000 a month. So I'm very excited about that. .

And in terms of the outlook for the core Bitcoin mining business, so we did $4.7 million gross mining margin, 21%. And that last quarter, the average hash price was $68 a petahash per day. Well, guess what? The hash price in the last week has been between $75 to $80. Part of that has been because of higher transaction fees.

But things are on the uptrend, so it's looking to be a strong quarter for period end December. So we're excited. And we've got some updates, too, in this presentation on how we're preparing for the halving. .

Next slide. As mentioned, we've grown substantially in the last year. We've grown our hashrate by 80% in the last year, and that is a function of our commitment to being strategic about how we expand. We don't say we're going to be at 20x a hash and dilute our shareholders or sell all our Bitcoin.

We've managed to keep a good model and also scale our production by 80% in the last year. And our target for next year is 6 exahash as we navigate through the halving. So that's another 40% of growth. .

Next slide, please. So let's talk about the halving. The halving in 2020 is highlighted here with this yellow circle. You're looking at a chart of hash price, which tells you the dollars per terahash per day you earn operating on the Bitcoin mining network.

It doesn't matter if you're in Paraguay or Montreal or wherever, this is network-wide $1 per terahash per day or you can express this as $1 per petahash per day as well. So at the last halving event, we saw hash price -- if you look at that orange line, it shows the floor. Back in 2020, it was about $0.06 a terahash per day or $16 a petahash per day. .

And if you look more recently to October, November, December of 2022, hash price actually got worse. And you could see how it dips below the orange line. So what that means is more recently, we've seen worse hash price than after last halving it. And why? Well, because more efficient machines are now online that have lower breakeven prices.

So it means a network can sustain a lower global average hash price because each individual operator are operating machines with more efficiency, and those machines have different electrical breakeven prices based on their efficiency.

I'm actually going to present some data, which would be very helpful for all the analysts and enthusiasts out there as they try to map and predict what might happen to the network. .

And you can never really predict the future perfectly, but you could study the past. You can look at empirical data and understand trends. And so here, we see that there's been a local minima in the last year of about $0.05 a terahash per day hash price.

It's never gone below that because that's -- there'd be too much strain on the network to be uneconomical, and miners would power up and difficulty would drop. And that's what causes the hash price to sustain at that level. .

Next slide, please. This is a closeup because we saw some pretty bearish mining conditions in the last month or 2. And it was on par but not quite as bad as last November, December. And so this is quite granular.

But again, for all the analysts and enthusiasts, we have very sophisticated research and analytics at HIVE that we used to make, in our opinion, the best decisions for shareholders as we scale the business.

And we study the network very diligently to understand how can we best deploy capital to make the best returns on invested capital for our shareholders. .

So again, you -- really zooming here, what you're seeing is we hit low -- more about like $0.051, $0.052 last November, December. And we didn't really get below $0.055 this September, October. You can see this floor has been supported by the network.

And the funny thing is, though, you would actually expect the floor to be even lower this September, October because there's been more efficient machines come online. But nevertheless, the network has exhibited this floor value. So we're cognizant into that. .

Next slide. Let's see what that means, depending on the type of machines that you're operating. As I mentioned, the hash prices for the entire Bitcoin network. Now we could look at what it means for an individual operator depending on the type of machines they have. So for example, right now, hash price is back to about $68 a petahash a day.

So that is shown here on this particular slide. So Bitcoin with $34,000. I know Bitcoin has been around $36,000, $37,000, but -- and it changes in this model, we can update in a second. So here's a snapshot, difficulty at about $62 trillion. .

And so with these mining economics at a $68 hash price, what that means is if you have a Bitmain S19 XP, you're going to be doing $130 a megawatt hour. If you have a Bitmain S19J Pro, you'd be doing $95 a megawatt hour.

And if you have a Canaan 1246 or really any other machine that has an efficiency of 38 joule a terahash, you're going to be doing $75 a megawatt hour, okay? And those are 3 very common machine types. And so we're highlighting those 3.

And then you zoom out and you say, okay, well, most crypto miners have power costs that are about $0.04 to $0.05 a kilowatt hour or $40 to $50 a megawatt hour in the U.S. .

Now look, in Sweden, we hedge our power at $0.035. We get really cheap power in New Brunswick, as low as $0.02 sometime. And that's all fine and well, and that's part of our competitive edge.

But look, we're doing a macro analysis for the entire network so we can study the pattern of the network and understand where we have performance arbitrage, how can we outperform? But broadly, on average, a lot of large-scale miners have power in the $0.04 to $0.05 range, okay? So what that means is let's just use a nominal $45 a megawatt hour operating costs.

So then you would say, well, how much are you going to be earning from a J pro?.

Well, in this case, if you're earning $95 a megawatt hour of revenue, your operating costs are $45 a megawatt hour. That means you're earning $50 megawatt hour. So margins are still pretty decent. And the same applies at Canaan. You're going to be earning $30 a megawatt hour of profit, okay? That's to date. .

Next slide. This is what it might look like after the halving event. It's halving -- after the halving, our hash price settles around $36 a petahash per day. And this is an estimate. This is a potential scenario.

All of a sudden, you have the same table on the right, where by a S19J pro would only be doing $0.05 a kilowatt hour revenue or $50 a megawatt hour of revenue. And I think that's where the breakeven is going to be. I think that J pro is going to be doing about $50 a megawatt hour revenue post halving.

And if you're running older gear like 32 joules per terahash machines, you can run it profitably if you've got really, really cheap power. But in this scenario, you can see the row where it says 30 joules efficiency. Your revenue per megawatt hour is only going to be $40 a megawatt hour.

So if your power cost -- even if your power costs are at $0.035 and you've got other nominal cost, staff, et cetera, maybe you can be breakeven with 30 joules per terahash machine. So our strategy is to upgrade 30 joules per terahash machines to machines that are 22 or 23 joules a terahash, but more on that later. .

Next slide. Okay. Well, in the last 12 months, we have quietly -- although we've press released it, we only buy machines when we see the best possible deals out there. I'm talking about buying machines at $11 a terahash. I'm talking about buying machines last December that are effectively 100% ROI in 11 months.

I'm talking about buying machines for immediate delivery that we wire the money out today, and we have those machines plugged in a few weeks, right? We don't go doing big giant headlines that, hey, we just ordered 100,000 machines and they're going to arrive next year. And we just put down a $20 million deposit.

No, because it breaks your cost of capital model. .

What happens is you might have to dilute because you're taking a huge chunk out all at once, and you might have issues completing all those purchases if the bear market sustains and you still have those purchase commitments. And again, they're not immediate delivery.

These are deliveries spread out over a year, but you're putting deposits months and months in advance. So anyways, we've done 29,000 new ASICs in the last 12 months -- sorry, new generation ASICs, we procured 29,000. And notably, we recently just purchased 4,000 Bitmain S19K pro.

And I really like that model because it's got amazing mining economics with 23 joules a terahash of efficiency, and we bought them for a very attractive dollar per terahash price. And in the last 6 months alone, we've purchased 8,900 S19Ks and XPs combined.

And again, that is part of our strategy to prepare for the halving to replace 30 joules per terahash ASICs with 22 joules per terahash ASICs and ultimately bring our fleet-wide average below 30 joules a terahash. .

Next slide. Now in buying those 29,000 ASICs, and we've made some investments in our AI, that's why we've only had 5% dilution on our cap table in the last year. Again, as a public company, first and foremost, where we want to drive value for shareholders, we had very little dilution. And we sold some Bitcoin strategically for making these expansions. .

Next slide. So the AI. AI is the fun stuff everybody loves to talk to me about when I go to the conferences and I love to give updates because it's very exciting. I was just on the line with one of our AI partners.

They are a company we work with, where we do B2B sales of our GPU computing power, and they're working with a lot of end users that are the vanguard of AI research development. So our NVIDIA A40s are very popular we found out for fine-tuning 13 billion model -- large language models.

And in fact, there's a new large language model of 34 billion parameters called the Yi, Y-I, 34B EYI 34B that is going toe-to-toe with GPT-4. And again, GPT-4 is about 1.8 trillion parameters. This model called Yi only has 34 billion parameters, and it runs on 48-gigabyte GPUs, which is NVIDIA A40. .

So our GPUs are being used for some very, very cool large language model operations and even fine-tuning. And in addition to that, our 24-gigabyte card A5000s are very popular for generative art. Stable Diffusion 1.5 has a bit grown very popular because there's been a lot of fine-tuning on that model.

And Stable Diffusion XL as well has been very popular. And even the A4000 that we have, the 16-gigabyte cards, they're really popular to run Whisper. And Whisper is an incredibly important large language model that's used for audio transcription. One of you may be using AI bots to record meetings, which transcribes the audio into a text and summary.

The back engine for that is Whisper in most applications, and that runs really well on our 16-gigabyte card. So there's some really cool stuff happening with our NVIDIA GPUs. .

Next slide, please. Again, as a reminder, our energy is green energy focused, hydro and geothermal. And this is not a projection. This is not pie in the sky. This is happening now. This is a photo of our data center in Boden, that's [ me ] and Johanna. We've been running GPUs for the past 6 years.

Our site in Boden is one of the largest Ethereum mines in the world. And some of those GPUs are still mining altcoins and we earn Bitcoin, which is about 130 petahash still. But we're converting them, if you follow our press releases, to do AI computing, right? And that's where we're in partnership with Supermicro. .

And next slide, please. We just had our Supermicros with our NVIDIA GPUs populated in a Tier 3 data center in Stockholm, and we have another Tier 3 data center in Montreal that are live this week. .

Next slide, please. And it's very exciting because to date, we're doing $250,000 a month in revenue from our GPUs doing HPC and AI compute. And again, that's triple because you noticed our financials, we booked $250,000 a quarter. While we're doing over $8,000 a day right now, which is $250,000 a month, so we tripled that.

And with our Tier 3 infrastructure going live in Stockholm and Montreal this week with an advanced enterprise-grade network, we are on the precipice of hitting our year-end target, which we hope to be doing well in excess of $250,000 a week by the time we get to end of this calendar year, end of December. So it's a very exciting time for us.

So we hope to get to that third step by the end of this year. And of course, what is the projection and what is blue sky? Is it $250,000 a day? And that's potential for next year 2024 if we converted all of our NVIDIA GPUs. .

So our target for the end of this year would be $250,000 a week, upwards of that would be about 13% of our GPUs. If we had all 100% of our GPUs doing AI compute, it would be about $250,000 a day.

And we're finding about a 6- to 9-month ROI right now as we upgrade our servers, our Supermicro servers, which we run the GPUs in, in order to unleash all their computing power to start doing high-performance computing. When the GPUs are in the existing servers, which are the retail-grade service from the Ethereum mining days, they mine altcoins.

And so we're slowly flipping them over to HPC and AI. It's a very exciting time in the HIVE multiverse. .

Next slide. Follow our Twitter. Updates are posted there. And of course, our YouTube. Speeches, conferences and other cool stuff and other media is there along with this presentation. Have a great day, everybody. Stay tuned..