Hut 8 - CEO Asher Genoot - Q2 Earnings, AI Demand & Deals!

Hey guys, welcome back to the channel McNally Money, the official home of power analysis, a big interview in store for you today with none other than the CEO of Hut 8, Ashur Junu, joining us on the podcast, "Hot Off the Heels of Q2 Earnings." We've got a lot to talk about before we get into it. Take a second, smash the like button, guys. Big help to myself in the channel. If you're not already subscribed, McNally Money, feel free to join and let us know in the comments section below what your thoughts are on Hut 8 and if you're currently holding shares. With that being said, let's get into today's interview. All right guys, away we go, Ashur Junu, "Hot Off the Heels of Earnings" back on the podcast. We've got a quick one on our hands here today. Ashur, welcome to the podcast. Thanks for making the time. First question for you, highlights from Q2 Earnings. Q2 Earnings, we signed another data center release and so now we're three leases in, almost $27 billion in contract to revenue and almost a giga lot of IT contract to capacity. So very happy with Q2. We also did our second financing on our second building and we're obviously working on our third one now, about $7.5 billion raised within a couple of months. All project level, no parent recourse debt. Awesome. Now we're going to cover obviously these three big deals with a little bit more colour later but just wanted to do a couple of quick questions. News apps come out this week, obviously the moratorium from the governor of Texas. Just show of you on that and does that impact anything, maybe not the moment but is it impact anything that you're planning down the line and also Logan County in terms of how you're able to light educate, help the locals that understand what you're all about and that you're bringing things to the community. I mean we've recorded the podcast, we've met all the companies, we know how social responsible you guys are but so it gives a flavour from those two particulars before we get into the big contracts. So specifically on our beacon point site, we were actually one of the few that submitted voluntarily the PUC survey that they had a couple of weeks ago and a lot of the governor Abbott's questions that he raised are very similar questions that we responded to the PUC on grid reliability, water usage, environmental concerns, noise, traffic, emergency and kind of other community protection. So overall like a lot of those things, we actually already provided to the PUC and so I think we're prepared to provide whatever the governor is looking for. So from a beacon point perspective, we've run through the process, everything that's been happening in today and today is just another process. The way I think about it is there's so much fear in the US in general around data centers and there needs to be things to be able to put these false fears at bay. And so I think what Governor Abbott is doing makes a ton of sets, it's actually great because then the residents have comfort of okay this is not going to take all my water usage. This is not going to screw up my electricity bill pricing. This is not going to go and contaminate the soils, right? And so I think doing these things like I don't think Governor Abbott is saying we don't want data centers to taxes. I think he's saying the opposite. I think he's saying we want to get ahead of people being so scared of data centers coming. We're actually can get ahead of all of these things to be our fearful of and check the box and have a checklist to make sure none of them exist. So we need that because otherwise like we'll bring up Logan County. I think a lot of the work we're doing is trying to correct all the false information and narratives that are out there. And sometimes it's hard, right? Because we're coming in and they're saying well you're biased because you want to go build this. Can we trust you? Is this real? Is this not? And I think by putting process in, then people get comfort over okay, you now verified you have a closed-loop water system and you're not using water to cool down your chips, right? You have now verified you're actually paying for the transmission upgrades and the energy supply. So you're not going to increase our energy bill. So I think those things are good because it takes a lot of the noise and the fun out of the ecosystem. Just so I mean that's great to hear and we'd expect nothing less from the company and the fact that I did see the the the acknowledgement that you were one of the first companies to respond to the to the gunners work on a previous request and so that will only for me sounds like you know having that more regulation in Texas anyway will only better the companies that are going to deliver you know the proper facilities for this amazing technology that we're seeing at the moment. And we would prefer that you don't have like a couple bad actor developers going create a bunch of fear in the system. We'd rather have this kind of process where all these things are built with the right way from the get go and we're able to continue to scale this critical infrastructure in the United States. Yeah. In terms of those deals that riverbend and beacon point, I mean you've blown the market apart in terms of you know creating that the size of those deals and the numbers are phenomenally being very transparent on on the levels of the number there and you sort of set in benchmarks. Can you give us a bit more color as to as this this lake to steal this addition there to the site there looks like you just mimic this the first deal in terms of delivering the expansion. So if we think about the three deals we've announced all three things are in the same construct same least rate same escalation same years literally same structure. We have different tenants so it shows the structure is repeatable across multiple tenants not just one and we had one tenant double down which shows that people like it and their will have to continue to expand. And so overall I feel like we're building a program that scale will and that's repeatable like the second deal was easier than the first a third deal was easier than the second and so we're really building that platform not just from a commercial perspective not just from a financing perspective but also from an operations and execution perspective as well and so like in my mind we're just getting this engine turned on and we're just starting to get going and starting to scale and we a lot of my earnings was talking about like we're building a platform and we're showing the repeat ability of the platform in these first couple of deals. Hey now one thing we've noticed in these recent deals asher we put a visual on yesterday's podcast the rates we're seeing on a permegoat basis both on colo and csp continue to creep up can you talk to us a bit about overall macro demand sentiment there's been obviously some fud in the headlines recently part of it is at nimbi or pushback to data centers but from the actual numbers we're seeing everything moving up into the right. Demand is massive if you have capacity the end users are there that's why you're we're seeing a lot more developers actually come to us with their sites and trying to have us to kind of M&A and buy their project they trust us to go and execute on those projects and they're even saying like hey we trust you to execute like we'll get paid on the back end because we have confidence that you'll be able to execute on actually commercializing this opportunity and so demand is there I think for us the last thing we did probably we could have gotten a little higher release rate or even a little bit more tenure I think we're also like happy with the numbers right and so if the structure is the same like we're good with our return profiles and I like the thing I always say internally is like pigs get fat and hogs is slaughtered like you don't want to be greedy like you got to do good deals where everyone feels great because long term this is a relationship business of trust and just because we have something that people need if we try to take advantage of that and try to charge more that doesn't create the right confidence and relationship building I think like there might be changes in terms of lease rate or or tenure if we're changing the structure a little bit right and we say hey we're doing this a little bit differently we need a little bit more on the lease rate or vice versa or like some of the things we've been thinking about is like hey do we have a little of the lease rate we add on we actually support some like community initiatives and so like there's other things we can play around with but I I really do believe that these long term kind of 15 and could set up to 30 year agreements like you want to make sure that they're fair deals and that people feel good because that also adds to the repeatability of the process now you've signed on the affraction of the sort of total pipeline at the moment moon forward will we see sort of like more co-location type deals or do you ever envisage the company even considering looking at the sort of like the CSP model light maybe two or three of your peers out there coming from the mining space and moving into that direction we've seen rates of those hourly rates for those GPUs rising significantly but you've got your probably ear close to the ground what are you seeing yourself so we have a business called high-rise audit and that business we've incubated now and it have been running for about two years and a big reason that we started that business originally was to build great infrastructure we actually want to know what the chips need to run the infrastructure because otherwise you're just being told what the tenants want and so you don't know what to want versus what the need right and so like understanding that full integration and that stack to design the most optimized data centers was kind of the initial perspective look today and the reason we separated those companies is a different investment to invest in chips as it is investing in infrastructure one is a faster depreciating asset is a different return hole literally we're trying to reach trying to get paid back in call three years or so versus data centers you have a lower return hole but you have more residual value on that asset because a transform is a transformer switch here is a switch here right there there's less of a decay there and so from that perspective like there's a lot of excitement around compute today there's a lot of interesting deals that we're we're looking at for sure. And so, I'm excited by high rise. Hey, I know you're back to back today, Ash, or we don't want to interrupt your schedule. I'll give you an opportunity to close out here if there's anything we've missed on. I think overall, as we think about how to do it as a company. And if I'm someone looking at how to do it and saying, what is this business? What we've focused on is expanding our platform of connecting power to technology. When we built the original business that supported Bitcoin, we believed in this idea of this decentralized finance network. When we went into the AI sector, we didn't say, hey, we're pivoting to AI now. We're done. We still have 700 megawatt's of capacity that run the Bitcoin business. Every site that we've announced is a completely new site that we originated, built, commercialized from the ground up. And so we are not a crypto to AI convert. We've expanded this platform. It is another technology that we're supporting. And I think there will be other technologies in the future we support as well. But we need to get the AI data center platform to be as mature as our Bitcoin mining platform. That business today, I spent very little time on. We could scale hundreds, if not gigawatts, the capacity of the team that we have today. We operate at some of the highest up times in the world of the top in the world in that sector. Like, we want to be one of the best in the world at the AI data center development sector. And so we're building and we're maturing that platform. And that's why in order to do that, we needed to be able to go from zero, which is originated brand new site all the way to commercialize, develop, build, and operate. And so we're going through that journey but creating that repeatable process, continue to scale. So we're very excited at, we're at with Hyundai today. I think we were patient and laying that foundation. And in a very short period of time, we've been able to grow on that foundation relatively quickly. And we expect to continue to grow. - Hey Anthony, I'll pass it to you for any closing thoughts here at Great Update Azure. Huge support from the sidelines here. I know you've captured the attention or retail. Anthony, you can close it out for us. - No, a great update. And your last comments there, I was gonna suggest, have you got any sites on Vega becoming a data center or your business or you're happy with attendance at the moment? - Oh yeah. Always have interest over the weeks for it. - Hey, there you go. - Thanks so much, Ashur. Always a great time having you on the podcast. We look forward to more deals. You know where to find us. Guys, if you have any additional questions, leave them below and we'll see you back here tomorrow. (upbeat music)