Core scientific stock up 200% this year And it it seems to be this larger Trend That a lot of the Bitcoin miners who Have Diversified into Ai and HPC clients Are just outperforming the Pure Play Bitcoin miners talk to me about this Change in strategy for the company yeah So it's something that we've been Setting up as a company dating back to Our our founding back in 2017 so our Facilities were developed to be multi- Or multi-use for not only just Bitcoin Mining but also for the transition that We're doing right now to high Performance Computing and so trend is Much broader for the entire industry so You've seen a number of Bitcoin mining Companies and now in similar type uh Strategy ships for the business and it's Really about the next three years in Terms of where the opportunity set truly Lies to capture a large portion of the Data center Market because we're in the Largest Trend in data center history so Every Big Data Center company that Exists carved out a niche just so Happens at the niche that Bitcoin miners Are carving out now are in the largest Niche that has ever been found in the Data center industry And in terms of the clients that you're Working with we've spoken about the $6.7 Billion doll deal that you have with cor Weave a company that's backed by Nvidia
Where else are you seeing appetite in Terms of this new AI HPC customer that You're serving yeah it's not just cor That's building out large models so you Think about Microsoft open AI Amazon Google all of these companies are doing Significant amounts of investments into This GPU Cloud so it's AI is really Fueling the new Cloud business which is The GPU cloud and is this where your Company is going I mean you said that it Was always a part like a fixture of a Larger business plan when you launched In 2017 but a lot of people thought of Core in the same breath as as being a Bitcoin minor and it seems like you're Really uh straying away from that so is It more about becoming aih HPC Exclusively since that's appears to be Working yeah we're a digital Infrastructure company at heart so the 800 megawatts that we've been operating It's allowed us to be the largest Bitcoin mining company for the last 3 Years and now it's allowing us to make This TR transition into the high Performance Computing market so it's a Natural transition for the business and Our team is really just a data center Company at heart so that's really where Our skill set lie so attacking this new Vertical is very easy for us to handle So you guys were the largest Bitcoin Minor through bankruptcy as well we were
Yeah okay and so I would like to point Out like you're somewhat new to the Company when did when did you start I Started April of 2023 okay so you've Been really helping the company navigate Its way out of bankruptcy what what our Next steps what do the next few months Look like this year in terms of your Strategy for core yeah so we've outlined Our Catalyst through the remain this Year which is really about identifying And acquiring new sites and then Diversifying our client base so given This is a new business model for the Company you know we signed our first Deal about just under 100 days ago and It's now it's about finding a more Diversified larger client base so that We can continue to grow and to become One of the largest data center companies In North America which AI clients are You going after some of the largest ones Out there any that you can share today Not today now one thing that I I want to Understand because I I've spent so much Time talking to bitcoin Miners and and One of the value propositions that they Uh you know that they offer is that yes We're using grid power but we're able to Help stabilize a grid because if you Have too many Renewables that you're on Boarding and you you don't have Consistent demand for that we can kind Of toggle that toggle down that demand
Uh when more people need power you know Shift it back up overnight when there's Just less uh you know need for for Households to consume electricity but What as you move into serving these AI HPC clients I would imagine that you Can't have that kind of flexible demand Uh buying so like how has that changed Your thought process around uh the value Ad that you you bring to a a grid in a Given state that you operate in whether It's Texas or elsewhere yeah so our Initial locations were all in places That had lowcost abundant power so it Wasn't just the renewable aspect to it As well so we were hyper focused on Finding locations and geographies that Were really underserved communities Because that is a place where they used To have significant industrial and Manufa facturing but all that business Has left the United States and so Locating at those locations uh provided Us a significant opportunity to grab a Large amount of megawatts and the Bitcoin mining side we're still pursuing Some Acquisitions on on the Bitcoin Mining side which mainly targets Locations where there's a significant Amount of Renewables a significant Amount of volatility on the grid and That's something that Bitcoin miners Have been able to solve in local Communities where they can help
Stabilize power prices and also allow New renewable projects to come online Well across AI across Bitcoin there is This Universal need for more electricity That's something that you've been Talking with the former president now GOP uh you know Presidential nominee Donald Trump about um to my Understanding you I mean you were in Closed door meetings with him in Nashville and in marago and it seems Like one part of his uh presidential Platform that he's been you know very Strong on is the need for greater uh in Terms of his energy policy build out Infrastructure generate more electricity At home to support the AI Um boom that's happening here to make This the destination for a lot of the Companies that are building out Infrastructure to support this growing Industry how do you feel about um a a Potential you know president Donald Trump coming into office and what that Might mean for the work that you're Doing at core yeah so he's been very uh Forward about his thoughts on energy Dominance and further energy generation Development which is obviously important Not only to our industry but industrial Manufacturing broadly speaking and it's It was great to hear last night in the Debate uh Harris also said she wanted America to be a leader in artificial
Intelligence and so both parties right Now have kind of centered around being a Forefront leader in artificial Intelligence which is going to require a Forward thinking process on energy Policy and so that's something that we Think is you know very bullish overall For the industry and it's going to be Great Tailwinds if either Administration Comes in right now and provides a a Significant uh Tailwind to our uh to the Energy policy in the United States some People within the crypto industry in Particular are concerned about uh vice President kamla Harris potentially Taking over if she were to win there is This the worry appears to be that like SEC chair gendler would remain in place And that a lot of the the policies that We've seen under President Joe Biden Would persist that perhaps uh you know We wouldn't get the kinds of rules uh we Meaning like what the industry is saying Wouldn't get the kinds of rules that Would uh better police the space in the US are you at all do you share that Sentiment have you been having Conversations behind theen with people About what a a Harris Administration Might look like for the crypto industry In particular yeah we haven't heard too Much out of the the Harris party yet in Terms of what actually their their Policies are going to be I think we have
A a good Tailwind here though from uh Some of the policies that they've or Some of the broad speaking points that She's had around crypto especially Crypto for Harris you know there's been A number of different groups that have Come out in terms of supporting Cala uh And so our hope is that there's enough Voices that are close to her that are Feeding her the correct information About Bitcoin and crypto more broadly That there's not going to be a Significant political risk to Bitcoin in The near term but I think over the long Term we'll be just fine no matter who Who comes into office okay so in terms Of the Bitcoin mining side of your Business uh the industry more broadly Hit an all-time high Network hash rate Uh it also be last month it was the Least profitable that it's been uh or we Saw the profitability of mining uh Plummet from the month before it seems That September is trending in that same Direction uh at the same time you have The block reward go down uh during the Having in in April so it's just so many Different things are happening right now And I help help me help me parse through Because I I think that part of why I'm Having trouble uh digesting all this is Because in a sense it's a good thing for The network cash rate to be an all-time High it would seem that like it's you've
Got a robust Network that's protected by A lot of people many uh you know Different players coming online in order To secure the network so isn't that a Good thing network security is at an All-time high is correct but what we've Seen post a having which where we Expected a significant amount of hash Rate to come offline we haven't really Seen that occur and we've actually seen More hashr come online ever since so you Actually saw a number of public Companies have negative gross margins on Their Bitcoin mining business in Q2 and Q3 is you know shaping up to be a much More challenging quarter than Q2 and so I I would expect to see more challenged Business models more companies begin to Sell themselves to larger entities we're Looking to aggregate uh more companies And just gather more hash rate because Hash rate growth has been completely Outpacing the expectations of the Broader industry and so the large public Companies who want to maintain a certain Percentage of the overall Network need To make Acquisitions to acquire all that Hash rate to bring in in house much more Quickly and we're seeing the kind of m&a Action yeah uh cor wees tried to buy you A couple of times it seems like um how Are you thinking about uh deal activity For core scientific are you looking at People to buy are you interested in
Being bought what what are next steps For you guys on that front yeah right Now we're mainly focused on looking at Acquisitions in the data center space And so that's where our focus is we want To continue to grow that part of the Revenue mix of the business and we Obviously have one of the largest Footprint build outs over the next two Years even when you compare us to some Of the largest data center companies out There and so finding the right types of Acquisitions for us is incredibly Important and we think that really fits Well in the data center industry right Now uh last question are you concerned About the Bitcoin mining business like That's that's one part of what you do But as you said it seems like the Company's really been diversifying into Other areas like focusing on HPC and AI Clients for the the Pure Play Bitcoin Miners the people who you said aren't Coming offline if anything they're Doubling down like joining the network Um since the having even though it's Less lucrative to do so is this a d i Mean is it a dying industry is it is it Something where you're just going to Keep seeing m&a and it come down to a Handful of players or what happens next First I think the Acquisitions in this Industry and the mergers that are Occurring healthy for the industry I
Think we had 27 public Bitcoin mining Companies just in North America alone so There's going to be consolidation Especially as the network continues to Grow outside of the United States it's Actually Distributing very well in terms Of a lot more smaller sites a lot more Smaller companies but Bitcoin mining is Always about one thing which is time and Market can you survive during the down Cycles to survive for those three to Four months every single year where Economics are completely outpaced due to Bitcoin price outpacing Network cash Rate growth and right now we might be in A bit of a down cycle but that just Means you have to figure out a way to Survive until we get back to an Up Cycle Because there's 9 months a year where We're essentially flat on margins 3 Months to four months a year where Things are very very challenged and Three to four months a year where things Are very strong and so it's all about Plane to get to that next point in the Market cycle which I think a number of Bitcoin miner mining companies are Trying to set up now and just really Quick on that last point you were making Typically we see the price run up come After the having it was different this Year and I mean a lot of people believe That that just had to do with the tens Of billions of dollars that were flowing
Into the spot Bitcoin ETFs that just Launched in January but we're not really Seeing the price balance after the Having yeah yeah we haven't seen much I Mean the expectation would be if you Look at the previous happs we should be Around $250,000 bitcoin price about 12 Months post having but doesn't look like We're training them right now do you Think we will I hope I hope so
