CEO Joel Block on BMTV_

I think the thing that gives you the most flexibility is your power agreement and the access to power and maybe the ability to get the power to your property, your land or parcel. When you look on the actual physical site itself, the infrastructure is quite different. The components needed to run the tier two and tier three data centers that are running AI and HPC compute are very different than those that are running Bitcoin mining. Everything down to the cooling and the way you keep the computer from overheating and the advanced technologies that you'll use on the AI HPC computing. And that's why I don't think you're going to see this toggle on and off or switch back. I think companies like ourselves that are committed to putting the CapEx dollars into the infrastructure and the AI HPC are moving in that direction and are likely going to do that when they have their tenants secured.

So as it comes back to DarkHorse and what we're doing, all of our footprint today is in an area where we've had very constructive and welcomed conversations around data centers. We're currently already operating data centers in these communities. They're just currently under the Bitcoin mining variety and we're actively working through the transformation to them to be used for AI and HPC computing.

And I think our core fundamental principle is that power and land is a scarce asset. And that is something that we always look to accumulate and then figure out the best use for that power. And that's kind of how we've always viewed the legacy Bitcoin mining business that we've been operating for a number of years. It was very profitable and the margins were high and it made a lot of sense to kind of use excess power to mine Bitcoin. And in the current environment, we see significant demand for AI and computing. So we don't see that slowing down anytime soon.

Not all data centers are the same and they're not all created equal. There's different sizes, there are different shapes, and we firmly believe that data centers should be built in conjunction with the towns and with the communities and be built in the right areas. There's already a lot of zoning in place in a lot of communities where there's light industrial zones or commercial areas, and that's primarily where these data centers should be built. I think the other thing is if you look at kind of the states and kind of the political changes that have taken place, I think it's appropriate for states and cities to take kind of a measured approach and really understand what they're approving and what they're bringing into their community and also onto their electrical grid. And if that means kind of a little bit of a pause so that there's some structure in place, that makes sense.

It's incumbent on us as leaders in this industry to really explain to communities what the benefits are that bringing a data center to that community would happen. And I think obviously there's detractors and there's a lot of negatives and misinformation that has been out there, but it's more than just explaining away the negatives or misinformation. It's really important for our industry to take a lead and explain the positive benefit that we can bring to a community. And it can come in a couple of forms. It can come in job creation. It can come in kind of skilled trade and labor. And then the other big form that I think is probably misunderstood and doesn't get spoken enough about is in monetary compensation. There's significant tax benefits and tax kind of payments that will go into these local communities to help them in kind of emergency services and their school system and a lot of other areas to help boost economic activity in this area.

I think the other thing that people need to think about as they're looking at new data center builds is there needs to be this positive benefit to the community. So beyond the tax base, are there upgrades to the electrical infrastructure or other areas of critical resources that you can bring to that community? And I think those are all discussions that should be happening. And I think the communities are not just emboldened, but they should be asking those tough questions. What is this going to do to us? What is the impact and how can we benefit from this?

Curtailment was always a feature that we all talked about. We said that when times are tough and people that need power and electricity, the Bitcoin miners will curtail. And that allows people to keep their homes heated in the winter. It allows hospitals to stay open. And so I think, as you think through kind of a good community citizen and kind of corporate responsibility, the ability to kind of build curtailment and flexible load into the model is going to be increasingly important. I do think that there's different types of compute needs though that you're going to have to be balanced.

You will have some peaks at times and there'll be some strain on the grid where you'll get up to a maximum utility for a very, very small portion of the year. And so I think from our standpoint, that's where you do have to participate and you should be participating in potentially curtailment in these pieces. And that's why at DarkHorse, we believe in a world where there's a distributed computing use case, right? And so there's multiple states or multiple cities or multiple options. So you're not creating a specific grid strain in one area, but you've got different options where you can kind of run your compute and be a bit more flexible from a load standpoint.