Core Scientific, Inc./tx Q2 FY2022 earnings call

• Core Scientific operates over 200,000 bitcoin mining servers in 8 data centers across 5 states, expecting to operate ~300,000 servers by year-end with over half for self-mining. - Total revenue grew 118% to $164 million, driven by self-mining; hosting revenue up 110%, equipment sales down 90%. - Cost of revenue increased due to more servers, power, depreciation, etc. Non-cash items included digital asset impairment, goodwill impairment, fair value adjustment to convertible notes, and stock-based compensation. - Discontinued blockchain technologies development business, reduced headcount by 10%, renegotiated vendor contracts. - Hosting business restructured for profitability, expecting it to be cash generative and profitable by 2023 with 20%-30% EBITDA margin. - Introduced 'cash to mine' metric to assess marginal cash cost to mine a bitcoin.

Total revenue increased by 118% to $164 million from $75.3 million, driven primarily by self-mining revenue. Total hosting revenue increased by 110% to $38.9 million, while equipment sales decreased by 90% to $30.5 million. Cost of revenue rose to $151.3 million, driven by increases in self-mining and hosted servers, power consumption, depreciation, and personnel/facilities costs. The total number of bitcoins produced in the second quarter was 3,365 compared to 180 in Q2 2021. The average price of bitcoin was $32,500, a 30% decrease from Q2 2021. The cash to mine a bitcoin for the first half of 2022 was approximately $10,200, consisting of power costs of ~$8,500 and data center operating costs of ~$1,700.

• Expect to operate approximately 300,000 servers by year-end, with over 170,000 for self-mining and ~125,000 for hosting. - Aim for an operating cash rate of between 30-32 exahashs and 1 gigawatt of power by end of 2022. - Expect to produce or self-mine approximately 2000 bitcoins a month by end of 2022. - On track to generate ~$700 million in revenue and ~$300 million in EBITDA assuming constant bitcoin price and modest global hash rate growth.

• Economic, competitive, governmental, and technological factors outside control that may affect business strategy. - Power price fluctuations, including seasonal and regional impacts (e.g., extreme heat in south affecting pricing). - Grid curtailment issues in Texas and variability in power pricing in Georgia. - Uncertain outlook for the digital asset mining industry affecting market conditions.

Q: Lucas Pipes at B. Riley asked about power price outlook and hosting backlog.

A: Mike Levitt said full year power price assumption is $0.05-$0.055, with prices expected to come down in fall/winter; on hosting, demand exceeds capacity with strong pipeline but focus on profitable hosting.

Q: Chris Brendler at D.A. Davidson asked about power costs in Georgia and Texas, and immersion technology.

A: Mike Levitt said Georgia has exposure to natural gas pricing variability; Texas CLR program in development but not effective soon; immersion testing ongoing with expectation of significant portion of self-mining fleet in immersion within 12 months.

Q: Stephen Glagola at Cowen asked about OpEx exclusion of non-cash items and RSU vesting.

A: Denise Sterling said OpEx reduction excludes non-cash items; Mike Levitt explained RSU vesting was due to technical drafting issue to correct time vesting requirement.

Q: Kevin Dede at H.C. Wainwright asked about site selection attributes and immersion data.

A: Mike Levitt discussed site selection attributes like power predictability and scalability; immersion data too early to comment on performance improvements.