DMG Blockchain Solutions (Ticker: DMGI), a blockchain and cryptocurrency technology company, discussed its third-quarter achievements and forward-looking strategies in a recent earnings call. The company announced its subsidiary, Systemic Trust, received approval from the Alberta Treasury Board to provide secure digital asset custody and aims for SOC 2 certification soon.
DMG plans to store its bitcoin in Systemic Trust's cold storage and revamp its Terra Pool (NASDAQ:POOL) software with a new user interface. DMG's collaboration with PayPal (NASDAQ:PYPL) and its software updates, including Blockseer Explore, were also highlighted. The company reported a hashrate of 0.95 exahash, with a goal of 1.7 exahash by quarter's end. DMG's cash plus bitcoin balance was $39.6 million, down 9% sequentially, and they sold 69 bitcoins during the quarter.
The company filed a $400 million base shelf registration to fund its expansion and expressed its intention to raise capital for revenue growth, not for buying bitcoin. DMG also shared plans to become an AI data center and to incentivize miners to join Terra Pool.
Key Takeaways
- Systemic Trust, a subsidiary of DMG, is approved to provide digital asset custody.
- DMG targets SOC 2 certification and plans to use Systemic Trust's cold storage for its bitcoins.
- Terra Pool software is being revamped with a fresh UI and SOC 2 Type 2 compliance expected.
- Collaboration with PayPal and software updates, including Blockseer Explore, are underway.
- DMG aims for a hashrate of 1.7 exahash by the end of the current quarter.
- The company's cash plus bitcoin balance is $39.6 million after selling 69 bitcoins.
- A $400 million base shelf registration has been filed to support growth plans.
- Plans to expand into AI data centers and incentivize Terra Pool miners are discussed.
Company Outlook
- DMG is working to achieve a hashrate of 3 exahash by 2025.
- The company is focusing on executing its software vision, with optimism for 2024 as a pivotal year.
- There are ongoing discussions about new mining and AI data center sites.
Bearish Highlights
- There was a decrease in revenue due to a drop in self-mining revenue.
- The company is facing delays in announcing new mining sites due to negotiation and due diligence processes.
Bullish Highlights
- DMG is revamping its mining fleet, with a 40% installation of new equipment and an 11% fleet efficiency improvement.
- The company is considering deploying more efficient hydro miners to improve margins.
- A bitcoin pricing rally could benefit the sector and DMG's operations.
Misses
- The cash plus bitcoin balance decreased by 9% sequentially to $39.6 million.
- Revenue declined due to a fall in self-mining revenue, despite efforts to improve efficiency.
Q&A Highlights
- DMG is focusing on growing blockchain and digital asset custody adoption in Canada with Systemic Trust.
- There is optimism about Bosonic's operations and plans for collaboration.
- Strategies to reverse margin decline include increasing hashrate, evaluating efficient miners, reducing energy costs, and generating revenue from Core+ initiatives.
- The company is open to both acquisitions and being acquired within the bitcoin mining industry.
- DMG is working to recover 49 bitcoins held with Prime Trust, affected by bankruptcy issues.
InvestingPro Insights
DMG Blockchain Solutions (DMGGF) has been navigating a challenging financial landscape, as reflected in its latest metrics and market performance. According to InvestingPro data, DMGGF has a market capitalization of $63.24 million, indicating a relatively small size within the technology sector. The company's Price to Earnings (P/E) ratio stands at a lofty 250, which suggests that the stock is trading at a significant premium relative to its earnings. This is further underscored by an adjusted P/E ratio of 63.86 for the last twelve months as of Q3 2024, and a PEG ratio of 2.23, indicating that the price may be high relative to the company's earnings growth.
Despite these challenges, DMGGF has shown some promising financial signs. The company's revenue growth was 17.11% over the last twelve months as of Q3 2024, with a gross profit margin of 44.33%. This growth is a positive signal for potential investors, reflecting the company's ability to increase sales and maintain a robust gross profit margin.
InvestingPro Tips highlight both the risks and opportunities presented by DMGGF. The company is quickly burning through cash and is trading at a high earnings multiple, which could be a concern for investors looking for immediate profitability. However, it's also important to note that DMGGF has been profitable over the last twelve months and has shown a strong return over the last five years. Additionally, analysts do not anticipate the company will be profitable this year, which is an important consideration for those evaluating the stock's near-term prospects.
For readers interested in a deeper analysis, InvestingPro offers additional tips and insights. Currently, there are 10 more InvestingPro Tips available for DMGGF, which can be accessed through the InvestingPro platform at https://www.investing.com/pro/DMGGF. These tips can provide a more comprehensive understanding of the company's financial health and market position, aiding investors in making informed decisions.
Full transcript - Dmg Blockchain Solutions Inc (DMGGF) Q3 2024:
Operator: Thank you for standing by. Good afternoon, and welcome to the DMG Blockchain Solutions Q3 2024 Update Conference Call. Participants on this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. A webcast replay of the call will be available on the company's website. Joining us today from DMG Blockchain Solutions is Sheldon Bennett, the company's Chief Executive Officer, and Steven Eliscu, Chief Operating Officer. During this call, management will be making forward-looking statements, including statements that address DMG Blockchain Solutions' expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in DMG Blockchain Solutions' most recently filed periodic reports and the company's press releases, particularly the cautionary statements within. The content of this call contains time-sensitive information that is accurate only as of today, August 27, 2024. Except as required by law, [DMG Solutions] (ph) disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to Sheldon and Steven. Sheldon?
Sheldon Bennett: Thank you, Louie, and good afternoon, and thanks to everyone who has joined the call today. My name is Sheldon Bennett, and I am the CEO and Founder of DMG Blockchain Solutions. With a similar format as recent quarters, first, I will provide an overview of the company's achievements in the past quarter. I will then pass the call to Steven, who will review the company's performance. We will end the call with our Q&A session based on questions submitted to us prior to the call, as well as those from using the Zoom (NASDAQ:ZM) Chat function. So, now to highlight our recent achievements. First, regarding our Core+ strategy, which is DMG's software strategy. As an update on Systemic Trust, we achieved a major milestone towards building a qualified digital asset custodian. On August 6, 2024, we received approval from the Alberta Treasury Board for the incorporation of Systemic Trust, a wholly owned subsidiary of DMG. Systemic Trust is now working with the Alberta Treasury Board to obtain a certificate of registration that will enable them to provide secure custody of digital assets to third parties. Our target remains to achieve this goal by the end of this calendar year. Although we are dependent on the regulatory body's ability to approve our application, we also expect to receive SOC 2 certification next month. DMG plans to utilize this platform to store some of its bitcoin in Systemic Trust cold storage wallets while waiting for final regulatory approval. Systemic Trust is a centerpiece of DMG's Core+ strategy and gives us the vehicle by which institutions can hold and transact carbon-neutral bitcoin. We are encouraged by the Systemic Trust team's pace combined with our own software team's pace, who have delivered from scratch this year an institutionally-ready platform that is now going through the regulatory review process. Next on Terra Pool. For Terra Pool, we have utilized the best practices of our software team, which they developed for Systemic Trust to revamp out our Terra Pool software, supporting both a fresh new UI and highly-scalable enterprise-grade back-end that should be SOC 2 Type 2 compliance soon. Like other major pools, it pays out utilizing FPPS, which is Full Pay-Per-Share, with competitive fees. A key benefit of Terra Pool is that miners on our pool will be able to mine carbon-neutral bitcoin, which we believe may sell at a premium. We also believe there are many additional revenue opportunities for Terra Pool members, exemplified by our collaboration with PayPal, where an additional bounty on top of the standard transaction fees that can only be unlocked by carbon-neutral pools can be split among pool members. Regarding our relationship with PayPal, as the original collaboration was a proof of concept, we are continuing to work together to help them deploy a successor version of this proof of concept for institutional applications. As well, Helm has been our internal line management software platform that is also being revamped to enable rules-based facility management. While this concept isn't new, what DMG will bring to Terra Pool members is highly-scalable mine management software that is built on a modern tech stack, supporting even the largest mine operations. We expect an initial version of this expanded vision later this year. Blockseer Explore, which was the first and original software we acquired when purchasing Blockseer back in 2018, is being rebuilt to be a general purpose bitcoin explorer with free downloadable reports with targeted availability in late calendar 2024. Subsequently, we plan to recreate the functionality of the original explorer used by law enforcement to be able to search the bitcoin blockchain and report transactions between wallets. We continue to see Bosonic as an element of our ecosystem. But given our custody business model, we expect to be partnering not only with Bosonic, but also with many exchanges, which will enable volume and liquidity through Systemic Trust. The goal of these efforts is to build a carbon-neutral ecosystem where Terra Pool supplies carbon-neutral blocks, which in turn are to be filled by transactions from financial institutions and ordinal content providers. Next, regarding our Core strategy, which is our bitcoin mining. During the June quarter, we had a realized hashrate of 0.95 exahash, down 2% sequentially, with a fleet efficiency of 25.6 joules, as measured from our substation, an improvement of 11% sequentially. We mined 87 bitcoin, down 42% sequentially as we were impacted by the halving that occurred on April 20th, compounded by a 10% difficulty increase. As the network produced about 94 bitcoins per exahash in the quarter, down 41% sequentially, our bitcoin production was in line with expectations based on our realized hashrate. While we originally targeted to have our 4,550 Bitmain T21 miners installed in June, which was then pushed out to July and then August, to date, we have energized about 40% of our new mining fleet producing about 0.35 exahash and have optimized our legacy fleet to run in the lowest power mode to best deal with the summer heat, producing about 0.75 exahash, or in total 1.1 exahash. Most of the balance of our T21 miners are wrapped in containers awaiting connection to our distribution line, to which we added an extension on our Christina Lake property. We still believe we can reach our goal of 1.7 exahash at an efficiency of 23 joules per terahash by the end of this quarter when we energize the balance of the T21 miners and operate our legacy fleet at a slightly higher power consumption, producing about 0.85 exahash. As we have stated in a recent press release, we have seen modest dips of hashrate on warm days. As we enter cooler weather periods, this should have a limited impact by quarter-end. The cause of our T21 development delay has been the result of a fragmented supply chain, composed of a plethora of suppliers, contractors who have served us well in the past but are susceptible to supply chain issues as North American electrical power is in greater demand. Going forward, we plan to: A, source turnkey solutions that include preassembled transformer units containing all required circuit breakers needed to interface directly with our mining containers. B, for containerized mining, we are now likely to purchase off-the-shelf solutions rather than engineer them ourselves as we have done in the past. We've had great success with the Bitmain Antboxes that we have deployed for housing most of our T21 fleet, and we will likely utilize similar solutions from Bitmain or other vendors going forward. C, we will also be more careful ensuring improved procurement of components related to our distribution lines as lead times for our mainly mundane components are the double-digit weeks. D, as we need to stay competitive, and while the engineering of power distribution between a transmission line and individual mining rig still requires a substantial amount of expertise, the capabilities of what supply chain can offer has evolved, and we will be capitalizing on this evolution. What is exciting about this is that we can now source custom transmission infrastructure equipment in less than six months and the distribution of infrastructure in about three months, which will enable us to deploy much faster than we have historically. Of course, all of this is dependent on receiving approvals from utilities and regulators. [Compressing] (ph) timelines with them remains a challenge. We also stated last quarter that we would be bringing on additional staff who are highly experienced in bitcoin mining equipment repairs. These individuals have been onboarded, and as a result, we are making good progress with performing all of our maintenance work in-house. We plan to exit our financial year with incremental hashrate improvements as a result of their work that is well underway. As we go forward, the staff will be focused on maximizing output of our largely depreciated legacy fleet while ensuring high uptime of our new fleet. Additionally, we have put the brakes on our immersion cooling deployment and are focusing on hydro equipment. We made this change as: one, we see a notable maturing of both hydro infrastructure as well as mining equipment, which is now being offered with the industry's highest miner efficiency along with a dozen or so containerized turnkey solutions in miner racking; b, the momentum for AI equipment is to utilize direct liquid cooling, or DLC as the acronym, for the highest density next-generation systems from NVIDIA (NASDAQ:NVDA) and AMD (NASDAQ:AMD). We believe hydro or DLC becomes a harmonizing cooling technology for all next-generation high-performance computing data centers, whether they be bitcoin mining or generative AI. We are currently in discussions with both miner vendors and container vendors and expect to make a purchase of the 12 megawatts originally targeted for immersion this fall for a target installation by early calendar 2025. Assuming we purchase equipment with 16 joules per terahash efficiency, this translates to an additional 0.75 exahash of new hashrate. To support long-term expansion, DMG continues to have ongoing discussions with multiple parties about new sites for both bitcoin mining as well as AI data center applications. On May 15, 2023, DMG announced it entered into a non-binding agreement that will result in development of a new data center with low-cost power and renewable power located in Canada in a province outside of British Columbia. While working towards a definitive agreement, DMG is actively planning the manufacturing of power distribution infrastructure, land preparation, and utility transmission interconnection. Now, for a summary of our strategy. First, Core+. On our year-end 2023 earnings call, we highlighted how we were focused on executing our Core+ strategy. As we have reached major milestones on Systemic Trust with both the first major stage of regulatory approvals as well as software execution, we hope in to -- we hope to have demonstrated the first of many wins on the execution front for which we are focused on turning into revenue. This is a huge change for DMG. And as we are clear as to what we want to accomplish in software and have the team to -- in place to execute, we're optimistic that 2024 will be a pivotal year towards realizing our Core+ vision. For DMG's Core mining strategy, we have elaborated at length some of our recent misses and our vision as to how we can grow at the leading edge to reach 3 exahash in 2025. A key change has been that as the network hashrate continues to climb, despite the less favorable economics post halvening, we know that it will become an increasingly and [relentlessly] (ph) capital-intensive business. Accordingly, we are seeing the need to access the capital markets. Given our relative strength, we believe we are in a good position to raise capital and, as such, have filed a $400 million base shelf registration. We want to signal to the markets that not only do we have a plan to reach 3 exahash in the next year, but also we are here to stay as a bitcoin miner and potentially, in the future, provide AI colocation and cloud services. We plan to use a disciplined approach to capital raising that avoids massive 10x or 20x dilution that we have seen from some of our peers. We plan to raise capital with very well defined and specific uses of capital to drive revenue growth. We do not plan to raise capital to buy bitcoin as investors already have access to Spot Bitcoin ETFs. And as we have previously indicated, we expect our bitcoin balance to become a smaller portion of our overall asset base over time. We have covered a lot of ground here today, and even as we are being very ambitious in our goals, we remain focused as to what we want to accomplish. Now, I'll hand it over to Steven to review the company's performance.
Steven Eliscu: Thank you, Sheldon. I'm Steven Eliscu, DMG's COO. Now, a few words about the company's overall position. In the June quarter, our cash plus bitcoin balance was $39.6 million, a decrease of 9% sequentially and up 76% year-over-year. We have utilized about half of our bitcoin balance as collateral for our Sygnum Bank credit facility, which we utilize specifically for the purchase -- purpose of purchasing our Bitmain T21 mining fleet. For our mining operation, our near-term focus has been deploying our fleet expansion. It is important for investors to understand that even as our execution on this deployment has missed our target, we have evolved our approach to working with the supply chain in a way that should speed up future deployments. While revenue expansion is important, it must be done at a cost level that can result in a solid return on investment. To manage mining costs, we are focused on driving fleet efficiency from its recent level of 28.4 joules a terahash to 23 soon and then down to the range of 20 or below next year. As newer generation mining equipment later in calendar 2025 is expected to have efficiencies of under 10 joules of terahash, we want to incrementally add to our fleet while retiring older miners so that on a blended basis, our overall efficiency remains competitive, especially as we know that network hashrate is going to continue to rise. Now, for a few words on AI. We know that Tier 3 data centers, which are required for most AI applications, demand the level of uptime that requires a substantially more robust power distribution infrastructure than bitcoin mining. We are currently investigating what it would take to enable our Christina Lake facility to support becoming an AI data center. We believe the transmission infrastructure feeding our Christina Lake substation is supportive of the uptime required for our Tier 3 data center. As we own our own substation, we understand what upgrades we will need to do to implement redundancy and believe we can make these upgrades in under a year at a reasonable cost. Finally, we have access to multiple 40-gig fiber lines that can provide us network redundancy. As we progress in this investigation, we will keep you up to date. Now, to review our financial results. In our June quarter, our revenue decreased 17% to $8.3 million, down from $10 million in the prior quarter due mainly to the drop in self-mining revenue, which decreased 11%. The 25% higher realized bitcoin price was more than offset by the 42% drop in bitcoin production due to the halvening. On a year-over-year basis, revenue increased 11% from $7.5 million on a 5% increase in self-mining revenue. Our hosting revenue increased 5% sequentially to $0.3 million in our June quarter. We expect hosting revenue to decline to near zero over the next several quarters as our existing customers retire their fleets, and we utilize our mining -- our capacity for self-mining. Net pool revenue was minus $55,000 in the June quarter as we utilized Terra Pool for a short period of time to have a chance of solving for Block 840,000, which ultimately netted the winter nearly US$5 million in fees and auction value of the Epic Satoshi. Operating and maintenance costs decreased 11% to $4.7 million from the prior quarter. This metric mirrors the 11% increase in fleet efficiency to 25.6 joules at terahash as our hashrate only declined slightly. Our margin percentage on our revenue less operating and maintenance costs was 44% in the June quarter, down from 47% the prior quarter. And our energy cost to mine a bitcoin was about US$35,000. As a proxy for cash flow from our business, which assumes we're selling about 100% of our generated bitcoin, earnings before other items, excluding depreciation and amortization, and stock-based comp was $1.5 million or 19% on a percentage basis in the June quarter, down from $2.4 million and 24% in the prior quarter. Our cash flow from operations was minus $1.3 million in the June quarter versus $4.5 million in the prior quarter. Non-mining expenses, excluding depreciation, amortization and stock-based comp were $2.1 million in the June quarter, down 11% from the prior quarter of $2.3 million. As previously guided, expenses will be somewhat more elevated in the current year as we're making more substantial investments in our Core+ strategy. The main driver of increased Core+ expenses is the build-out of Systemic Trust. We're also incurring interest on our Sygnum Bank loan, which is reflected in the interest and bank charges category. Regarding guidance, excluding interest, we continue to expect non-mining expenses to be in the range of $1.5 million to $2 million per quarter. Last quarter was in the middle of that guidance. Depreciation expense of $5 million in the June quarter increased 32% from the prior quarter as we began to depreciate the new T21 mining fleet. Our earnings before other items was minus $4 million in the June quarter versus minus $1.8 million in the prior quarter. Our net income was minus $3.8 million or $0.02 loss per share versus breakeven in the prior quarter. Regarding our balance sheet, our cash plus digital currency holdings decreased 9% sequentially to $39.6 million as the value of our bitcoin held at respective quarter-ends decreased 11%. The value of our property and equipment and long-term deposits decreased slightly to $60.8 million from $61.3 million the prior quarter. Note that even as we began depreciating last quarter the new T21 fleet purchased for US$12.1 million, we spent the cash on the fleet in the prior quarter and hence, the small sequential change. Accordingly, our total asset base decreased 6% to $111.4 million from $118.4 million the prior quarter. In the June quarter, DMG sold nearly 69 bitcoin, generating $6.4 million of cash. Thus, we sold 79% of the bitcoin amount mined versus the prior quarter of selling 92%. As a treasury policy, investors should continue to expect us to sell most or all of the bitcoin we mine. Regarding raising new capital, we are actively exploring several options. As we are focused on our 12-megawatt hydro deployment and infrastructure deployment for our new site this calendar year, we expect fundraising developments in the near term. I will now hand the call back to Sheldon to summarize our prepared comments, and we will answer questions. Sheldon?
Sheldon Bennett: Thank you, Steven. To reiterate our key results and outlook, in summary, we are positioning the company for hashrate growth with a focus on hydro direct liquid cooling technology, but our spending is also being directed to establish and grow our Core+ business. We have achieved a significant milestone towards Systemic Trust becoming a qualified custodian, and we are focused near term on our carbon-neutral pool, Terra Pool. We are committed to our Core+ strategy and are building a software that will enable us to execute the strategy. DMG mined 87 bitcoin in the June quarter on a hashrate of 0.95 exahash and a fleet efficiency of 25.6 joules per terahash. We are positioning ourselves to grow to 3 exahash in 2025. Cash and digital currency at quarter-end was $39.6 million, with total assets of $111 million. As a proxy for cash flow from our business, earnings before other items, excluding depreciation and amortization and stock-based comp, was $1.5 million or 19%. On a net income basis, we swung from breakeven to a $0.02 per share loss, but we have in place growth initiatives that can return us to profitability. As we have provided a lot of detail on this call, I want to continue to maintain transparency as we believe in the strategy and the ecosystem we are building. We said at the beginning of this calendar year that we would fix our software execution, and since then, we have demonstrated results. From our mining deployments, we have been open that we have had execution issues, and we're putting in place supply chain -- a supply chain strategy to enable us to improve going forward. We appreciate your continued support. So now, on to our Q&A session. We received many questions throughout the last few days. As we normally do, Steve and I split the questions up a little bit, depending on what they're about. We have a dozen or so questions. So, I'll get right into it.
A - Sheldon Bennett: First question, what kind of timeframe is realistic if you got all of the power approvals to begin generating AI related revenue? So, this is a great question. There's a lot of discussion about AI in the industry and crypto miners getting involved in AI. Realistically, it's sort of a two to three year process. Obviously, DMG, we would look at partners that are in the AI space to help us deploy infrastructure and connect the infrastructure with users of AI resources. Given that we're just at the beginning of this, we would first look at making upgrades to our transmission infrastructure at Christina Lake. As Steven mentioned earlier, we've already looked into some of this infrastructure, some of the timelines for that infrastructure upgrade, as well as the fiber side of what is needed in a data center and how long and the cost to bring in multiple high-band fiber connections. Christina Lake is a great location from a power and buyer point of view, and has lots of property, and that's owning our own substation. And with the work we've done with Fortis (NYSE:FTS) on improving the stability of the transmission line over the last few years, becomes a great candidate for what would be a large-scale AI operation in the province of BC. Hopefully, that answers that question. The next question we received isn't really directly about DMG, but it's about Systemic Trust. A Swiss-based crypto custody company, Taurus, I think that's how you say it, recently made a big move into the US with its agreement to provide services to State Street (NYSE:STT). How will Systemic Trust compete with much larger international providers? That's a great question. There's some really good companies out of Switzerland and other parts of Europe, as well as great companies in the US that we will be competing with. But, just to kind of be clear, the business vision for Systemic Trust is to really focus in on growing adoption of blockchain technology, including tokenization of financial and real world assets. All of this requires digital asset custody. So, we do see this as a market that's in the early stages of growth even though there's already some large players there. We think there'll be a lot of additional players entering this market as well. Our research has shown the potential market in Canada alone at about $5 trillion. And so, to start with, Systemic Trust is going to focus on Canada first. Our goal is to be the second qualified custodian after Tetra, and to build our relationships in Canada first before we would look at the US or other parts of the world. I assume that this State Street is a US bank. I assume that this is more about US operations, which aren't currently the focus of Systemic Trust. Hopefully, that answers the question. Onto another question. How are you going to incentivize other miners to join Terra Pool? Well, that's a great question. The greatest ascent of we've ever seen in the world of bitcoin mining pools was Foundry, who gave the pool away for free for a while, and they've subsequently stopped that. But I think the first thing that we would be doing in Terra Pool is to ensure that the pool fees are competitive. And what I mean by that is, most pools are on 2.5%. We'll be looking at having a much more competitive pool fee than 2.5%. Additionally, we believe that miners that have at least a portion of their hashrate generated using carbon-neutral energy will want to benefit from being on an ecosystem where, a, they'll be recognized as a carbon-free player, but p -- b, they have the potential to make more money selling carbon-neutral bitcoin at a premium. Obviously, we need to demonstrate that there is a benefit for and a market for carbon-free bitcoin, but we believe that's out there, and we've been doing quite a bit of work towards that. Additionally, for Terra Pool customers, they will have access to Systemic Trust, which will be a value-add for managing their bitcoins, which other pools can't do. They can't provide, as far as we know, a third-party legally mandated, qualified custodian with insurance and other protections on their crypto. As well, Helm will be part of our pool, which will give our pool users access to an integrated mine management software to help them not -- control their miners, not just see them. Normally, at pool, you can just see what the miners are doing, where the mine management software like Helm, you can actually monitor -- not monitor, but you can actually implement changes and get a lot more feedback on information of how the mine is running and what we'd like to do to optimize it. Another one here. What is causing the delays with new mining site announcement? Can you commit to any timeframe for an announcement? We are encouraged that we can finalize an agreement in the coming weeks, and I've said this before, but as winter is coming in Canada, we want to get as much accomplished with respect to a new site or sites where we have land prep and transmission interconnections that need to be done before Canada freezes up. The announcement that we've been working on, we've brought into some delays in negotiating the agreement mainly because it's a long-term agreement with various renewal clauses that are taking a longer-than-anticipated legal process to finalize between the two parties. And, of course, lawyers love long processes. As well, the due diligence on the sites was longer than we thought. And that due diligence isn't just physically seeing the site. A lot of that due diligence is costing and estimating out the build out, that cost, and the ROI on that build out versus other things that we could be doing with our mining in other ways that we could be expanding our hashrate out at potentially given sites. So that takes a little while to do, or at least to do it in a way that we're fairly confident that our investment decision for our shareholders will yield the kind of ROI that we're looking for as a company. Hopefully, that answers that question. There's many more to go, so I'll keep moving through them. Can you clarify the company's prior investment in Brane, which was acquired by Wellfield, but the investment value is recorded as nil? Did DMG receive anything from the sale? All right. Let me pull this one apart a little bit for people. We recorded the Brane investment as nil due to a few issues. First, Brane is not a public company. And as such, IFRS rules make it really difficult to substantiate the value of Brane versus a public stock. And so, if we held a public stock, we would just look at that stock price at the end of a quarter, how many shares we have, and that would be the value that we put on our balance sheet. Brane is private. You could try and get valuators to do it. You have some work with your auditor and all these different things you need to go through. Normally, when you first buy a private -- stock of a private company, the auditors are happy with the price because it gives a market price at the time, but as time goes by, unless there's other sales -- shares of sales -- sales of shares happening or other financial things happening, they can look at to see the value of Brane. It's really hard to put a price going forward. So, we took the decision to move it down to nil. Obviously, we can bring a little bit back up if there's value that we obtain in the future. Some people may want to say, well, Wellfield is public, so why isn't it easy to value now that a public company bought -- yes, bought Brane? But Wellfield didn't buy Brane. They bought assets of Brane, and Brane itself still exists. So, we own shares in Brane, not in Wellfield. And so, that's one of the reasons why we can't just say, well, Wellfield is at the stock price, and they own Brane now, and that means that our share value is this, and we put that on our balance sheet. So, what this comes down to is, right now, the future of Brane is a little uncertain. We believe that Brane will be wound down. And what that means is the cash that it has in the company, plus the cash it got from selling its assets into -- or out to Wellfield will then be dispersed out at a winddown to the shareholders of Brane, us as DMG being one of them. And we believe when this happens, and this usually takes a few years to happen, DMG will get its value returned to it through its value of shares held and the amount of cash that can be dispersed from Brane. So that's sort of what's going on with Brane and Wellfield. So, just pull those two apart. Wellfield doesn't really own Brane so much as it owns the assets of Brane. Brane itself as the company is still around, not doing much, but as far as we can tell, it's winding itself down, and it will return what it can to shareholders. Next question. Can you provide an update on DMG's investment in Bosonic, and why are they recorded as nil as well? Okay. So, similar to Brane, Bosonic is a private company. And so, sort of what I said about private company, it's a little bit different to put them on your balance sheet. At least, initially, you can put them on, but it gets hard to substantiate that value unless there's multiple transactions going on in a private company that auditors can look at and say, yes, we can clearly see a value. But Brane is a little bit different than Brane -- or sorry, Bosonic is a little bit different than Brane, because Bosonic is operating. It hasn't sold off its operations to somebody else. It's operating. It's generating cash right now as far as we know from our calls with management there. And we're optimistic that Bosonic will continue to grow its operations. And hopefully, in the coming year, 2025, our Systemic Trust will be added as a new partner as well. We're hoping that Bosonic will, I guess, develop and implement, a carbon-neutral Bitcoin trading platform. So, just we've had some discussions about this with Bosonic's management team. Systemic has talked to Bosonic in detail about becoming a qualified custodian with them and liquidity services for that. So, we see Bosonic still as a good investment. We see that they're -- as far as we say -- we know, they're generating cash and operating. So, they're a little bit of a different beast than Brane, which made a strategic decision to sell itself to Wellfield. But like I say, with Bosonic, we think that, that is a good investment, and we are upbeat on the future of us in that investment and DMG and Systemic working with Bosonic in the future. So, I've done about half the questions. I don't know, Steve, would you like to take over the next half?
Steven Eliscu: Certainly, Sheldon. And we'll try to move through these a little more quickly. So -- but these questions are a little bit more diverse than what we had in the first section. The first question just pertains to margins and the recent trends of margins declining and how we plan to reverse the trend. Well, first is bringing up the T21 fleet. That will be a market difference, and we, obviously, will see the bulk of that starting next quarter, but we hope to be able to give you some insight on our next earnings call in terms of the -- how that increase in hashrate has proceeded. And along with that, we've indicated we're evaluating new hydro miners that are even more efficient than the T21 fleet. This will add to our margins. And the other aspect of that to things we can control are our fleet efficiency and our energy costs, and we're working towards, as Sheldon described, completing our first step to reducing our energy costs, and we hope this is the first of a number of steps in that direction. But longer term, as we think strategically about Systemic Trust and other Core+ initiatives, as that revenue, which most of it should fall to the bottom to the operating margin line, that we really see that as a longer-term lift to margins. And so, it's just this overlay of in our Core strategy, more efficient miners, lower energy costs, and our Core+ strategy having a high degree of fall-through. And, of course, the bitcoin pricing really jumps up here in the short term like some of the bitcoin bulls are forecasting for December quarter rally, that would be much more of an immediate lift and catalyst for the whole sector. The next question, you said you won't dilute 10x or 20 x. Well, how much would you be willing to dilute? And the answer to that is really it depends on how much we're able to increase our share price as a result of our execution. So, our view is we will deploy capital in tranches with very specific uses. And as we've talked about from the infrastructure side, how to compress the lead times and the supply chain and really work with the supply chain in ways to allow us to make purchases and deploy that capital quickly to start getting a return in a short period of time. And that execution should drive up our share price, which ultimately would result in less dilution than otherwise. And so, this is really our focus. And, just along with this is if we can successfully execute on these successive steps, we are in a better position to uplist. We know that that is a point that people have asked us many times in the past. And so that is clearly something we would be looking at doing, but only when the timing is right. We do believe TSX offers us liquidity, but we know that there's a much larger base of investors with an uplist. So, did get a note from panic shareholder to ask, are we about to get diluted? We are doing our best to essentially minimize dilution, but we can't necessarily indicate anything on the timing of that, but we have been very public for several quarters now that equity is under consideration in terms of form of capital raising. When do we expect Core+ products to start producing meaningful revenue? I think one of the things we try to do in this call is really talk about our two primary initiatives. We have a number of products we talk about in Core+, but the initiatives -- the centerpiece initiatives are really around Terra Pool and Systemic Trust. And we've talked about both of those being -- in the coming quarter is our target to have those really, the revamped Terra Pool and the qualified custodian status for Systemic Trust. And that really could -- has the potential to lead to a ramp up that could be meaningful in calendar 2025, but it really depends on our success of customer acquisition. Next question is an interesting one. Do you expect DMG more likely to be acquired by a bitcoin mining company or to be an acquirer? And what I would say is, in actuality, it could be both over a period of time. We do have opportunities we're looking at that are on the table of various sizes. The focus is lowering our cost of energy, giving opportunity for expansion, and also looking at sites that could be AI data centers longer term. And we really see that if our strategy really takes hold and we have this portfolio of bitcoin mining, potential AI as well as the software and services, we could become an attractive target, but our focus is to remain an independent entity. Next question is just short-term catalyst for investors. Really, about -- what we see is reaching our 1.7 exahash target and really having capital deployed to be able to show and have expansion. And so, we want to get momentum with regards to our expansion. And so, we certainly, at the end, are focused on increasing our share price. That's why we're very sensitive to the question about dilution, because, ultimately, anything we do has to be accretive. And then, the final question here is just about recovering the 49 bitcoin held with Prime Trust or in the -- held in -- with the bankruptcy trustee. One of the things we've learned in the bankruptcy process and kind of what we're seeing with FTX is because bad things happen inside of Prime Trust leading up to its bankruptcy, we're kind of the mercy of the court to really sort out some of the nefarious activity that may have occurred to really ensure that the creditors overall receive as much as possible. And even though, the Bitcoin we had was depositor property, and it should be straightforward to have it returned, nothing is going to happen until these other issues are sorted out. We hope in the fall, we do get more clarity. And with that, that concludes our Q&A. I'll hand it back to you, Sheldon.
Sheldon Bennett: Thanks, Steven. Just a few other comments here. One, we just want to remind our listeners that DMG is planning to participate in the Gateway Investor Conference on September 4th and 5th in San Francisco, and our presentation will be on 5th at noon Pacific time. As well, DMG will be participating in the H.C. Wainwright Annual Global Investment Conference in New York on September 9th through 11th. We will be presenting September 10th at 8:30 EST. And the last one, DMG will be participating in the ArcStone-Kingswood Growth Summit, September 26th at Toronto, in which we will be on a crypto panel. I think unless Steven has any other comments, I think we were done. And I thank everyone for attending, and our call is now over.
Steven Eliscu: All right. Thank you.
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