$IREN Weekly Space @9PM ET

Hosted by @Frans Bakker · 2025-12-14 · Tags: IREN

TLDR

The group acknowledged severe near-term price weakness, macro uncertainty, options risk, and doubts about the Microsoft deal’s five-year economics, but remained strongly optimistic about IREN’s long-term fundamentals. Speakers argued that Microsoft’s strategic validation, scarce grid-connected power, Canadian expansion potential, Sweetwater, diversified hyperscaler relationships, and AI-cloud growth could drive major value in 2026 and beyond.

Speakers

Notable quotes

Transcript

Frans Bakker: Hey guys, welcome to the Sunday night iron themed space. I have for now only my co-host Bitcoin Butcher here. Let's give him a welcome. Hey, how are you doing, man?

₿itcoin ₿utcher: Hey friends, welcome back from Australia. Hope you had safe travels.

Frans Bakker: Yeah, I did. It's not a very good experience, this flight, but it's the only direct flight from where I live. So they got this kind of like a, they call it business class, but it's like a premium economy where your chair can recline like 30% and you got to be grateful for that. It's like, yeah, pathetic, but whatever. It's Jetstar, you know. It's like an 8 1/2 hour flight still, but I managed to get out of the country before the **** went down. I heard the terrible news from yesterday, or maybe for the US listeners, it was today where there was a shooting at Bondi Beach. I was actually there on Friday night, so it kind of, you know, shocked me more than it would otherwise. But we heard from a couple of people that actually live on Bondi or were even present that it was a really shocking experience. Like, compared to a zombie apocalypse where thousands of people are running from the beach. You know, we talk about stocks and, there are good and bad things about seeing the price go up and down. But at the end of the day, there is something more important than, you know, gains or losses. It's, you know, actual human lives, you know, so this, terrible tragedy. don't want to get into it too much, but just want to, I'm grateful that the people that at least I know and met in Sydney were not harmed. So I just wish everyone to, the most sympathy and support I can. And yeah. So yeah, it was a very interesting week. I could talk about this first, but I think maybe I'll just leave the whole Sydney part for a bit further on in the space. Curious, Butcher, how you've been experiencing the last week. I went into last week, as in I thought we would like stabilize in the mid-40s. And then the last day of the week, it just was a terrible sell off still and we but we still managed to hold $40. I had a a pretty significant bet on $40 with my put play and I was able to, you know, realize some profits amidst the big sell off. But how have you experienced the last week? Did you did you manage to structure your portfolio in a way that you could stomach this or did you have to take some unexpected losses or how was it for you?

₿itcoin ₿utcher: I'm still working through that, to be honest with you. What I did do was I had sold some non-core positions for tax loss harvesting to raise capital and sold covered calls against my whole cipher holdings. I just think there's more catalyst for Iron versus Cipher going into next year. So I did that early enough in the week where I didn't, and then the other piece that I was telling people on Friday before our space got cut off is I did swap some shares for call options for March. And I think that's what I'm working through right now is trying to figure out if that gives us enough time between earnings and potential deals. So after going through the April lows, nothing really shakes me anymore. But I'd be lying if I didn't tell you that, yeah, it's not a time of certainty by any stretch. I would say for the next-- two, three months, it's hard to say. I know fundamentally we are where we need to be, but what that means with respect to the macro, we're all trying to figure out. But on the flip side of it, then I'm reading sentiment today, and everyone, whether it's our specific chats or just posts, everyone's saying the worst is coming, which in my past experience, It could get worse the next few days, but I think we're closer to the end than the beginning of this personally. So that's just where I'm at right now.

Frans Bakker: I am experiencing the same sentiments. It's very, you know, odd as a fundamental, you know, retail analyst, as I would call myself, that the entire conversation on in our Twitter groups and on X in general is, you know, it's only about price action, it seems, and charts and expectations about where we will be next week and next month. And it's almost as if, you know, the fundamentals don't matter anymore. And to a degree, I, you know, I sort of have to admit that that's true. There are some consideration, some some people that think $40 is fair value for iron where we are at now after the Microsoft deal, even though we were above 60 or $70 before the Microsoft deal. So that, you know, could make you, you know, conclude that maybe we ran up too quick and maybe a lot of, you know, the deal was already priced in. And on top of that, people expected a better deal. I can't really disagree with some of the points that are being made about, for example, the economics of the Microsoft deal. If you look at it from a five-year project basis, I did talk to IR about this as well, and they also kind of like agree that, if you look at it that way, it's, it doesn't look too good. But that's because, it is so much more than just a five-year project. And I think that there is a big, disconnect between the market and the company in terms of looking out to the future. And I just think that what we're going through now, at least the part that is fundamentally based and why we're going down is because it's just a short-term vision, like a lot of the significant shareholders of Iron that have been buying in the beginning, first half of this year are well in profits, you know, people with an average below $20. if they see like this is a story that's going to take a bit longer to play out and we're at the end of the year, I can totally understand people are selling or trimming or anything like that. So I think that outside of the whole, seasonal thing and the liquidity and, the non-fundamental reason why we're going down, like general market sentiments, bearish narratives around AI and tech, I think that there is just a rotation of shareholders, shareholder base going on. I think the swap of the convertible notes was a, you know, they kind of said it's like reshaping the shareholder base. I don't know, in fact, if that's really true, because I think those placements were done to bondholders that were going to the same people that are buying the new comfortable notes. So I don't know if there's really a new entity coming in unless I got that entirely wrong. But I think that's what I got out of the talks with IR as well. So it was the same bondholders that are the same ones that are taking the new comfortable notes. So I guess I'm a little bit out of my depth talking about the convertible notes on a technical perspective. But from what I heard from other people that are very well versed into the convertible notes that Iron did, like people in Sydney that were like part of very early raises, it was also, it was not just Iron buying out the old convertible note holders. because it was only beneficial for iron. So it was like more of a win-win situation. So the way it was explained to me is that it had to do with gamma exposure or the old note holders wanted to buy more gamma. So basically those old notes didn't provide that anymore. So the new notes will give them that exposure. I guess this is the new version, I guess how I understood it. I'm still trying to like grasp it entirely. Maybe you can help me out here, Butcher, but what I'm trying to say is, as I understand it, this could actually increase volatility on stocks. So Yeah, I'm not entirely sure if that's such a good thing for us common shareholders, but I think it's it could have like also the flip side is that it would make them also want to push the price up. So I guess something about something I hope that I explain it a little bit like that, but there's probably someone else who can do this better. But so Yeah, right now we're in a pretty weird situation where at the beginning of the year, if you would ask me a $40 iron, you know, I signed for that immediately. I think my opium roadmap actually included prices like $35 and $40 by the end of the year. And people said, made fun of me. when we surpassed those targets, they said I was too bearish. Now it's starting to look like my Hopium roadmap was actually kind of correct. So, you know, at the same time, when we were above $60, there were a lot of people that were interested in iron all of a sudden, right? Like you could like see these institutions that were like, okay, we adding iron to our pipeline and a lot of big accounts on X started to talk about Iron and, Amit and some others started all of a sudden to mention it. And then Beth Kindick came in and traded Iron, I think, like in a couple of days. But at that same time, I was kind of worried that, people were questioning the valuation and hasn't it run up too much? And now we're actually below or around $40 again. And now is the time for those people to reconsider, right? So I think that there is still appetite to buy the stock. I mean, we could obviously see that in the dump of the last weeks. Every time we were going down towards $40, it was like basically immediately swooped up by multiple accounts, I guess. I don't think it was just one party buying all that. But what I'm trying to say is, I don't know if $40 is an actual floor, but there is certainly appetite for the stock around these valuation levels. And this is why I think that this whole sentiment and price action in these last, I guess you could say, six weeks is also, making us reshape the investor base. So, I guess what I'm trying to say is it's not all bad what's happening right now. There will probably be some people, you know, leaving their iron behind or a part of it because they made their money, you know, fast money just can take a 2X or a 3X and it's enough. We're at the end of the year. So profit taking is quite common. So I don't know. I mean, it's very hard for me to draw a real conclusion of what's happening right now. But what I can say is that I'm not selling a single share. The only reason I sell a little bit at $65 was because my broker basically forced me to liquidate something because they hate iron. So I'm still working on finding a solution for that. But as it's looking now, I'm still exercising calls. So I'm still adding. And I hope we're going to get through this week, this OPEX week. There are supposed to be some tailwinds as well, but I think it would be pretty impressive if we would end the year above $40 right now. I mean, last week I said I'd be very happy with a $50 close right now, you know, so you can see these negative sentiments even have some impact on me. And that is actually kind of, you know, surprising because I I mean, it is what it is. I will still be very grateful for a $40 iron. So, next year will be very different. That's what I am thinking. So, Butcher, how are your, let's talk about something positive. So the price action this week and last week, we can't predict it. But let's look at Q1. What are your expectations for the coming quarter?

₿itcoin ₿utcher: Yeah. So my concerns earlier, Franz-- and we'll try to channel this to a more positive direction-- but in trying to catch a falling knife here, I positioned myself for March calls, which it circles back to just how the macro's acting. And just to kind of tie up the last point we were talking about, we have the strong close on Thursday. We end up in 42 or 43 with a hammer candle just to have it reverse on Friday. So I think that works both ways, though, where right now this isn't really-- that could have had to do with Friday expiration. now everyone's negative going into this week. So I'm just kind of-- I think everyone with calls manage your risk accordingly. But if you hold shares, I think you're just better off. If you have money, then you have a long-time preference. I can't think of a more long-term risk-adjusted time where I would want to own iron. And this is coming from someone who I first purchased in, I believe, October or November of '24, around $7 or $8 after the run-up in the summer, and then having it come back down and having been a previous Bitcoin HODLer, miner, holder, and then kind of having my come to Jesus moment, finding iron, and then going pretty heavy. watching it draw down in April, buying it as low as $5.30 on my honeymoon on a boat with no seller reception. So it's kind of not quite the same gauntlet as Dolce, Comma, or Franz, but long enough to have a little street crowd with this crowd. And I can say to you with certainty that April is way more scary than this. This is more just frustrating right now, to be honest. And I don't think in five weeks that all of these hedge funds and investment funds figured out that AI is capitally intensive and that this is going to require potential share dilution and whatnot. So personally, my base case on all this is that It's the end of the year. People are rotating. There's a lot of people who had a ******** performance-wise who call themselves professionals, who got outperformed by retailers like us. And if they can swoop in and pick up shares right now at a discount, whether it's in Q4, early Q1, while they're peddling all this uncertainty, they stand to benefit from it. So my only concern earlier was related to having March calls, which I got to figure out if I want to roll those or what I want to do. But more importantly, though, Franz, you were asking me for positive catalysts. We're still in a power shortage. I haven't had a chance to read. Dolce had forwarded a piece about the grid connection requests in ERCOT and how it's over, I believe, 200 gigawatts, yet there's only 80 currently. So over three times the actual request. So the idea being there's all this power being requested. If they can't fulfill it, then that actually makes me feel more bullish about the power that we do have. And reasonably, how much power can come online. And there's also going to be behind-the-meter options that come into the market. But I still think there's a stigma with those providers. And if you ask the hyperscaler, would you rather have grid-connected power behind the meter, they're probably going to choose grid-connected. And the fact is Sweetwater is about to be energized in April, I believe. You can correct me if I'm wrong, Franz. and we still have all of Childress, 450 megawatts available. And that doesn't even include what we got going on in Canada. So I'm looking personally to survive the price action these next few weeks if you have options or margin. But otherwise, Q1, I think sentiment's going to flip and you're going to see certainly not to make this political, but we are in election year. And typically, the party in power has an incentive to loosen up things financially going into midterms. And I expect to see a more liquid environment, which should impact Bitcoin, which would make the remaining mining a little more profitable, assuming they haven't leased it out yet. So between mining potentially as a catalyst, 450 megawatts if they transition, and Childress, and then you got Sweetwater, and then you still have Canada, which I anecdotally have heard that the rates and the quality of customers that Iron is attracting now to the Canadian cloud operations is improving after being validated as a world-class service provider and strategic partner to Microsoft. So 1.8 gigs, we've only leased out 300 with Childress so far, and then you got 180. So I think the stat was 16% of the portfolio with much of it coming into play in 2026. I think the only challenge we have is I think people who aren't familiar with Iron just assume that we're pumping the stock and that it's too good to be true. And there is still a burden on Iron through its financial statements for that to you know, transition. And I think it'll be really telling in February at earnings. And I'd like to see a little more progress, especially in Canada, to show that the CapEx requirements for Canada, with the exception of minor retrofitting, were minimal and that the rates were better than that they received with Microsoft. So I hope that gives you a little enough to work with, Franz.

Frans Bakker: Yeah, thanks for setting me up. I just had to get that out of the way first, the realization that me as a fundamental analyst, I'm a fundamental investor, I'm a people investor first. So I just have to acknowledge that there are forces in play that, you know, basically nullify everything I say when it comes to the stock price. So now we have that out of the way. I will attempt to go on a good news, bullish, fundamental, informational spree. So I've been to Sydney for about four days. I've been meeting with, you know, incredibly different, you know, incredible group of people. And let me just call it like that. Most of them, you know, backed Dan and Will from 2018, 2019, a long time ago. And these people have just given me a certain perspective on the company, which really strengthens my conviction. But at the same time, I've also met with, you know, with IR and, you know, I just, I have a pretty good picture of what's going to happen. So let me just start with the first topic that I want to talk about is Iron and Canada. I think there's a pretty big misconception in the market about how Iran is going to utilize Canada and British Columbia in particular. So the thing here to understand is that Iran has a lot more rights to power than they have disclosed. I think I will give you a ballpark of 750 megawatts to a gigawatt of power that they probably have connection agreements for that they are not able to utilize because the Canadian government holds them down. So this is a much bigger political thing than we have any clue about. So this is not just a utility thing. This is a political thing. You have to realize that to be able to monetize electricity in Canada, you need to have backing from the government, local governments, regional governments, and federal government at the end of the day. And what we've seen is that Iron is not able to expand their power for the first reason is that there was a moratorium on Bitcoin mining that came into play for some reason at the exact moment that Iron was able to by some power sites from Brian Fair. So you can start to see the picture here that as soon as there is a very well monetized and capable company that is swooping up old pulp mill sites to convert them to Bitcoin mining site, all of a sudden there's a moratorium. And okay, so Iron's got 160 megawatt, but this has been, you know, pretty small compared to the power that they actually got the rights to. And so going forward, we are now in 2024 and there are new use cases coming to light, such as the GPU as a service, the AI cloud topic. And obviously Iron is considering now to monetize the size they have for this new use case where there's no moratorium. And all of a sudden there is this AI throttling where companies will need to bid for power and there's only allocation of 100 or 200 megawatts every year. And you see how this again is, I won't say that this is specifically designed only to contain iron or to hold them down, but it is absolutely, you know, I think this is mostly directed at them. So without all the political pressure and, you know, the lack of will to cooperate with iron, I think iron would have more than 750 megawatt in Canada in their development pipeline. And I think in their disclosed development pipeline. Let me restate that. So now I just now I'm going to flip this positive. So I just shared a post in in a nest. It's a LinkedIn post. It doesn't show anything else but but the link. But this is a post from the leader. Yeah, I would call him a leader because it's a communist. But I mean, the prime minister of Canada, I guess. where Microsoft is going to invest $19 billion in Canada for AI. And this may not look very relevant, but at the same time, Iron is a new partner of Microsoft. So I guess you're starting to see where I'm going here, where I'm getting at. So my expectation is that now Iron is a BFF with Microsoft. And I will elaborate on that later because none of you guys know how good Iron is with Microsoft right now. And I have a pretty good idea. So I think what's going to happen is that Microsoft is going to be the enabler for Iron in Canada to get government approval to energize more sites. And I think that's going to circumvent the throttling of the AI megawatts. I'm not saying that this is directly, I'm not saying like Microsoft said like, oh yeah, you know what, Iron will help you out, we'll invest 19 billion in Canada. But I think that they could, you know, I think it's very likely that they could benefit from this going forward. And you know, you got to remember that Iron is 100% renewable, right? So even, you know, even though these socialist governments like to keep commercial governments small, they still like to play the ESG card. So I think that these two things together could help Iran monetize more megawatts than they've currently disclosed. So this is purely based on my own research in the last week where I talked to people that explained that in the early days, and we're talking like 2020, Iran always knew that they needed the government to be able to roll out their portfolio in Canada. And I think if you've got the Prime Minister quoting Microsoft's investment on LinkedIn, you know, you can say that they're probably getting closer to actual megawatts in this regard. So We also know that Iron has talked about the AI grant or whatever it was. I think there was a package that was still under Trudeau where they mentioned $2 billion or something for AI infrastructure. I'm not sure if, you know, I don't know if they still in the, you know, trying to get any of that, but I think that there is a positive thing developing here. And I think that Iron and Microsoft going forward could be something in Canada as well. In fact, I can inform you that there are hyperscalers interested in Canadian sites, particularly Kennel Flats as a 30 megawatt single cluster is something that is talked about. And, you know, I wouldn't be surprised if Iron would sign a deal with a hyperscaler in BC. And I'm not saying it's going to be Microsoft, but I think this is a step in the right direction. And to elaborate on that, I think that people should know how good the cooperation is between Microsoft and Iron. In fact, Iron is part of a work group with Microsoft and a bunch of very high-profile external consultants to be on the frontier of AI data center development. And this is something directly coming from the Microsoft deal. So this was not just an investment in Horizon data centers. The intangible value from this deal is there are a lot more things going on here. And one of them is this sort of work group. This is actually a kind of secret thing. So I was not, I don't know who those external consultants are, but supposedly they are high profile in a way that if you hear their name and you're, you know, a bit knowledgeable in the industry, you know who they are. So I think that this is, if you add these things together, so you see Microsoft is investing money in Canada, gets approval from the government. And Iron is in their AI data center development work group with external consultants, possibly from Canada and or the US. I think that people should really stop looking at a five year deal as a project on its own. You know, this is just one example. of a benefit that you get from being a partner with Microsoft that no one has a clue about, right? Everyone here is thinking like, you know, oh, it's the economics are bad, NPV is negative, the free cash flow is negative. But if you're getting like a shortcut to being cooperating with, you know, one of the biggest hyperscales in the world, and all of a sudden you are able to monetize megawatts in Canada, how is that not extremely bullish and accretive to shareholders, right? I mean, I think that people don't understand what door or what kind of door open for iron with this deal. I mean, first of all, people are discounting the fact that this was the first GPU as a service deal between a Bitcoin miner, you know, and a hyperscaler directly. So I think It just starts with underestimating. People look at the top line, they do a very simple calculation, and then they say, yeah, this deal is bad. And I think that is, borderline stupid. But okay, I'm just going to give you the mic Bitcoin butcher because I can rant on for hours. I got a lot more bullish things to talk about, but go ahead.

₿itcoin ₿utcher: I was enjoying the communist rant, but I wanted to add a statistic, the market cap of Microsoft currently is 3 1/2 trillion dollars. The GDP of Canada is, according to Gemini, between 2.2 and 2.4 trillion. So you have a company that, you know, has a market cap that is bigger than the whole economic output in Canada. And it just echoes your point, Franz, where it's good to have friends with money and in high places. It's like having the friend with the boat. Microsoft just has more firepower and more influence to sit down and get a phone call with Carney and tell him we have the ability to create jobs here and help take care of your economy and create a tax base. And I think whether it's fair or not, a company with $3 trillion market cap is probably going to get that phone call and meeting with Carney before Dan or Mike would. But it does also show the-- it makes me appreciate Texas more because when Mike was Mike Alford was in Texas just to have Governor Abbott simply say to him, whatever you need, we gotcha. It is crazy to me that some of these political structures, they forget how they are supported. But yeah, hopefully what you're alluding to, Franz, I mean, the fact that he's trumpeting that announcement and not hiding from it, it feels like a positive development and we had, I don't know if it was the head of whether you can confirm this, but I thought it was echoed by Microsoft that Iron has the ability to develop quicker than they would. So they're probably going to lean on Iron to execute that plan because they can't do it alone. And if there's an material economic incentive to them, which there is with their backlog to get all this capacity online in a... cooler environment where they can more efficiently and they don't necessarily, they'll have lower PUEs, which means that they can run more critical IT and use power more effectively. Canada sounds like a great opportunity and Brian Fry has echoed that in the past and it looks like that's coming to fruition. So that's very promising.

Frans Bakker: Yeah. I just think that you should look at it from this perspective that, like you said, Microsoft says Iron can develop or build faster or deliver faster. I don't know what the exact phrasing was, but it doesn't really matter. What matters is that just imagine that you're Microsoft and you're looking for a gigawatt of power in Canada, and then you've got Iron who says, yeah, well, we have it, but we're just not allowed to monetize it. And then you get Microsoft saying, well, let's see if we can make a win-win situation out of this. We need the power, you got it, but you don't have the permission, we can get it. I mean, this is speculative, but this looks like this is a very likely possibility. I mean, I just know that the initial pipeline, the undisclosed pipeline initially was mostly Canada, So just imagine you're iron, you're sitting on a 750 megawatts that you just can't monetize because you're being held back by regulations that are put in place specifically for you. So I think that is a big frustration. And I think that taking a hit on a one five year deal in NPV is not good, you know, just to be able to get through this door. get access to, you know, the C-suite of Microsoft, being able to monetize your old development pipeline that has been, you know, signed with connection agreements potentially already for years. But you're just, you know, you're just getting into that. You're running into regulatory bottlenecks. And I think that this angle is entirely dismissed by the market. I mean, I won't say dismissed, maybe I should say it's just people are unaware of this. And I think that this is a very interesting thing to look at in the coming one, two years. I don't know how quickly this is going to be materialized, but I think this is very bullish. And at the same time, let me just give you another very positive thing. What's also unknown by most people is that because Iron has the Microsoft mark of approval now, and they are a partner of Microsoft, they are actually able to raise their GPU hour prices in Canada. And So this is a direct result from having the Microsoft mark. You can actually, Iron can increase their pricing of their current fleet of GPUs. And I'm not sure if that means that contracts that they already have are able to, you know, I don't think they can increase the pricing on those, but I think that they still haven't like contracted half of those 23,000 GPUs. I'm not entirely sure what we know and what's been done so far, but this is another very positive result of being a Microsoft partner. So are we supposed to ignore the fact that Iron will increase their revenue in Canada as a direct result of the Microsoft deal? Should we tell Jim Chanos to add this in his models, right? These are all things that people dismiss, even, you know, or just fail to acknowledge that this is a real thing. So this is just another example of something that I found out in the last week that I just wanted to share with you guys because it's just super bullish. The margins in Canada are already very, very good. Just imagine you can just increase your revenue You can increase your prices because you have a Microsoft label now. I mean, that's going straight to the bottom line, right? That's just a profit. So I think we can't look at Microsoft as a five-year deal. It is something much bigger. And this is just one example. Do you still have your hand up, Butcher, or?

₿itcoin ₿utcher: No, I think it's just axe glitching. But before you transition, I think it would be interesting to hear from Mike Reese. I saw that he was from Toronto and he might have a good vantage point from Canada and an opinion. So Mike, how are you this evening?

Mike Reese: Hey, I'm good, guys. And thanks for holding the spaces. I really have been learning A lot. And yeah, you're speaking about Canada and being Canadian here felt like I wanted to put my hand up. Yeah, so like, you know, first and foremost, I just want to put it out there and not get too political. Canada's not communist. Like, we pay taxes just like states in the United States pay taxes. Probably just pay more than you guys do. But I don't feel like I live in a communist state. I'll just throw that out there. You know, we love our people down south in the United States. I know people that have fought and died along other Americans in war. And you know, hockey's a major culture up here in Canada. And in hockey culture, like, you know, you live and you die with your teammates, you speak well about them too. I'll just throw that out there, get that out of the way. With regards to business and the government, like, I do think it's a no-brainer for the Canadian government to try to pave waves to encourage investment in our country. So what you're talking about with Ireland obviously is a no-brainer. But what I will say is, you know, backtrack to earlier on in the year when the powers that be were saying, oh, you know, Canada would be a great 51st state. You know, that kind of really, really changed things for us. in that we learned, hey, we might need to like figure stuff out ourselves and start, you know, paving our own ways and monetizing our own things and having our own pipelines and being thinking less of having and working with our partners down south because of those types of comments and some of the decisions that have been made. So I hope that our prime minister would do what he can with the power that he has to, you know, make things more accessible and encourage investment in our country. Because I truly believe as a taxpayer and a voter, like we need more outside investment in our country. That being said, I think we're also being challenged of trying to figure stuff out on our own because we don't know what the future holds because of things that have been said and other policies down south that are coming to life now, right? So Um, that was just kind of like where I wanted to be. And again, I don't want to be super confrontational. Like this is just like a space. I'm just sharing my opinion. I'm patriotic for my country and I love you guys down south. But, uh, yeah, you know, we're, we're not communists. I'm, I'm, I'm happily Canadian down here living well. Uh, I look at my paycheck and yeah, I'm not too fond of how much tax I pay, but, um, You know, it is what it is right now. Maybe that'll change one day.

Frans Bakker: Yeah, no, no, I'm going first. So just a few things. I'm not American. Obviously, you can hear that. And I didn't say that your country is communist. I said that your government resembles communism. Maybe I didn't use the word resembles, but you know, obviously it is another communist country, so you can't really technically have communism there. This is just a way that we talk about governments that want to limit investments and thriving companies. And no matter which way you turn this, Canada is not as open or welcome to business as, for example, some states in the US are like Texas. And that's just, I mean, it's maybe you don't like the word communism, but there is just only, it's very binary for me, you know, either you, Either you're like open for business or you're not. So I just use words like that to put you in that bucket. So that's just how I do on my spaces. I know technically this is not the most cooperative word to use, but I'm not a supporter of saying that Canada should be a 50-year state as well, by the way. I've never endorsed anything like that. What I'm just trying to say is It's very evident to me that Iran is being held down by local or federal government regulations that have been put in place for reasons that are overprotective and, you know, maybe other powers that I don't know about. And I just hope that this I just wanted to spin this positively. I think that with this Microsoft investment, maybe this could open a door that they could get a chance to monetize their power and The same thing. Iron is not a US company either. So if Canada needs more foreign AI, sorry, sovereign AI and more sovereign AI infrastructure, you know, Iron would be a great company to work with, especially if you see how well they are operating in their local communities. They're creating jobs and they're having community grants. They're loved by the villages that they operate in. And it just feels like the political agenda is something that doesn't favor business. And so, yeah, I am pretty strong in my wording with regards to that. And just don't think that I am trying to, you know, create any gap between Canada and the US because, you know, I'm an iron investor. I love both countries. I think it would be great if Ireland could expand their portfolio in both countries. But it's quite obvious that the way Canada is currently treating their power, that's very far from capitalism. And I just think that's very unfortunate. So, yeah, that's why I'm using words like this. Keshe, go ahead.

Keshe: Yeah, thanks, guys. A quick mic check just to make sure. Either I don't have much of a delay or any technical issues. Can you guys hear me OK?

Frans Bakker: Perfect.

Keshe: OK, awesome. So real quickly, I'm from Toronto myself and know the Canadian landscape a bit, having worked on both sides of the border really and on both coast as well. So for a period of time there I worked in in in British Columbia where Iron's assets are located. And so, you know, I've sort of been witnessed firsthand, not just on the as a recipient of the pros and cons of that regulatory and political framework, but also literally trying to work through it with, you know, various investor assets that, you know, my employers are like at the time. So a couple observations. One, it's very cool. know that there's a significant megawatt base in BC for iron to tap into. Also hearing loud and clear that it's actually in BC. So a couple of thoughts here. First at the sort of macro stage, political stage across Canada. The challenge with Canada is that it's not communist by any stretch of the imagination. But it is highly protectionist for whatever reason. Having done much of my education in Canada and trying to have a career here in Canada, I'm a very, very proud Canadian. So let's just get that out of the way. But there are major shortcomings in how business is done here. And it has to do, I think, with a lack of scale and having to work when we talk about it. lack of scale and a really large land mass to cover with infrastructure assets because of real challenge. So in BC, for example, we've got all this transmission infrastructure that's run by the likes of Fortis BC, but you're trying to deal with servicing sparsely populated regions of the country. And so there are challenges in the grid, but there are challenges in every grid in North America. It doesn't take away from the fact that there was many sectors that are actually highly protectionist. Anecdotally, I could tell you that when I was going through my university years in Canada, I was actually aspiring to be an accountant at that time in the early 2000s. And I found myself highly challenged to actually get an accounting a CA, charter account designation here in Canada, whereas in that same two to three-year timeframe from graduating and completing the required courses, I was actually able to get a US CPA much, much faster, which is what actually led me on to Wall Street in the 2000s. So all this to say, even after having gone and acquired a designation for the largest market in the world, the US, and then worked for a highly reputable name at the time. Trying to go back and get that Canadian designation was so difficult despite all that experience. I used to wonder whether it was me in particular that was being targeted for some reason. But when I spoke to more and more people, I understood that every profession, every sector is highly protective to them. for whatever reason that I've yet to unearth that notion now. But it's true of professions. It is true of jurisdictions. And BC, for better or for worse, is actually one of the worst to do business, in my opinion. And I welcome other perspectives on this. And I say this primarily not to refute anything from what you've done, but rather really to temper some of that expectation. because each of the provinces in Canada operate individually, just like you have in the US federal and the state level government, like Texas thinks of itself actually a separate country to its own. And in many ways, they've set up their economy to be very, very business friendly. But other states in the US have not, much the same way, BC hasn't, for whatever reason. And so the political environment Mike, as you point out, has actually shifted fundamentally from those conversations around a 51st state and so on and so forth. I've had one-on-one discussions with people very, very close to the current US administration, and I mean very close, and I've raised this particular point. And it was very quickly met with laughter because I could see And I had an inkling of this. I think most Canadians do, but they don't really know because it's hard to tell until you have these micro conversations. And I could tell very quickly, and it was made clear to me that it was meant to be a bit of a joke. It actually started off as a joke in the Trump administration. Unfortunately, for better or for worse, it took on a lot of its own. And here we are. It's actually part of the Canadian narrative now on how to shift away from US dependence. And so I apologize for making this a bit of a political background history sort of discussion, but the idea here is really to shed some light on what's happening here in Canada and what's likely to happen with those assets. There isn't a grassroots movement underway. A lot of people actually, I can tell you firsthand, there are huge investors, high net worth investors in Ireland right now. that are also very, very, very close to the Mark Carney government, as well as Mark Carney himself. So the ability to shift that narrative is very much there. The question is, is the political will there? And that is the biggest question mark today. I think everything you see in the public realm with regards to how the Canadian economy, through the Carney government is actually being repurposed to be less US-centric and more globally oriented. That narrative, once it takes a hold across Canada, province by province, it will certainly come to BC. But if I had to guess, and this is, call it an education, but a guess nonetheless, is that BC may be one of the last to actually pick up that because frankly, BC has tremendous resources. In fact, most of the provinces do, but it also has some tremendous pristine real estate quality of living that is unmatched anywhere in the world. When I first moved to BC in 2012, I thought I had literally landed in heaven when I got off the plane to go to my job interview and I could. The only thing I think of was, I hope to God I get that job because I would be living in heaven on earth. And I arrived. It was all that and more. But at the same time, I realized it came with a lot of protectionism to try to maintain that bubble as sustainable as you could. And I think that these permeate through Population there in the political route there, but I'll hand the mic back, but I just want to share. For for what it's.

Frans Bakker: Right. Thanks, Kash, but you got some connection problems. So you're turning into a robot for me. I did. I did get the most of that, by the way. I think I understood 95% of what you said. So just saying that if you have the ability to improve your connection, maybe by moving or something. I don't know. Maybe that could help?

Keshe: Yeah, those are the challenges of trying to jump space sitting here in Punta Cana for my vacation. So apologies events, but I'm having a great time out here, I guess.

Frans Bakker: That's great to hear. And thanks a lot for your contribution and your you know, it's certainly valuable to consider. But my first point of rebuttal is, you know, when you land in BC, you probably land in a city. And the problem is the poverty in the small towns that are stripped from their old, you know, professions and businesses leaving the area. And those are the communities that need new jobs, you know, and the repurposing of wood mills, pulp mills or whatever by AI data center infrastructure that is creating jobs. And so there is no even if it's if the if the region is protectionistic, you know, there is a genuine benefit for the local communities to embrace a bit more business because it just makes a lot of sense in every way. So I think if Iron is really sitting on certain assets that they can't monetize, maybe, you know, improving that relationship by partnering with Microsoft could certainly, you know, fast track some of that. That's my hope. But I realized there are factors that would still delay some of that. So, you know, let's just say it's just probably a net positive. Mike, go ahead.

Mike Reese: Yeah, I wanted to reiterate, I think cash articulated very well, you know, kind of what's always been an issue with our government, it's protectionist, things take way too long. But I will say again from the ground floor here, a lot of voters voted for the the party or whether whatever party you voted for, I can assure you that nine out of 10 voters wanted that to change, especially now. They wanted the government to, as Kat said, break down the border. So, you know, each province isn't operating independently. That was a huge campaign rhetoric on both sides. And, you know, we're, we're hoping, I'm cautiously optimistic that that'll slowly happen. But like any government, it doesn't happen overnight, right? So, I, and I'm with you too, friends. Like it's in even the small towns, it's in everybody's best interest to, encourage outside investment, take in that money, create jobs and whatnot. It's just, you know, historically, it's always taken so long in Canada. It's been it's a frustrating part of our government. It comes up every election time. And I think, you know, it felt a bit different in the latest election where there was definitely a sense of urgency to break down the red tape and, you know, get things done, encourage that outside investment, branch into new businesses, capitalize on this AI boom. So I'm going to be cautiously optimistic as a Canadian and as a shareholder in Iron.

Frans Bakker: Thank you, Mike. Yeah. And I will say I'm also more optimistic than I was a couple of months ago when it comes to new Canadian megawatts. I think Microsoft is that Microsoft is definitely the partner to have in this regard. So I think we just got to be patient and see how this plays out. But unless anyone wants to talk more about Canada, I think I want to shift it back to the broader group and market. So something else that I talked about in Sydney was the diversification of the portfolio in terms of customer base. So I believe Iron is going to have, Iron's focus is, in my opinion, going to be a diversified hyperscaler portfolio. And this is probably going to mean that outside of Microsoft, Iron will try to strike deals with one or two, probably at least two different hyperscalers. And given the due diligence that I did and the research that I've done so far, I have a very, I have a very strong expectation that it's going to be Google most likely to be the next or the one after. Let's just say Within the coming two different partners that Iron will work with, I think Google is certainly going to be one of them. So I think that is something very interesting because it shows that Iron is still very agnostic when it comes to chips. I think we are being, you know, thrown out with the bath water when it comes to the AI cloud providers that only work with NVIDIA. Yes, we so far we have mostly bought Nvidia GPUs, but I think that's the market forgets that Iron has always been a vendor and GPU agnostic and they will continue to be. So maybe in particularly now with Nvidia, you know, remaining somewhat of a worry when it comes to the value chain and the margins. that are mostly going to Nvidia. So I think this is a very bullish thing. I think to know as a shareholder that the company is focusing on a diversified hyperscaler portfolio in the coming period of time with Sweetwater coming up and Horizon 5 to 10 coming to the table. Plus now knowing that Canada is interested by hyperscalers, I think this could mean that maybe in a year from now, we're sitting in this space and talking about how Iron has a deal with Google, maybe with Meta or with AWS or both. I'm not sure if it will be all of them, but this is, I think, to know that the company is putting this in their focus is something very valuable. So I wanted to share that too. Bitcoin Butcher, go ahead.

₿itcoin ₿utcher: Yeah, Franz, no one's necessarily going to have an answer, but the question I would have as a Cipher shareholder and iron shareholder, I think what you're saying is consistent with what Dan's been speaking to, the optionality in the past two, three, or if not five years. And as a contrast, Cipher does have Cipher, or excuse me, Google as its largest shareholder, one of the top three, as well as TerraWolf. And I can't help but ask out loud, as a Cipher shareholder or from Wolf, now that they have those equity interests from Google, does that restrict them in any way? And how much influence Google can potentially have on their decision-making? Whereas it's more to reiterate, while the top line numbers didn't excite everyone with Microsoft, the fact that we could secure that relationship, iron that is, for a top tier hyperscaler and not give up equity, allows them to seek those other partnerships. And I think that gives the company more leverage into the future. And You won't see it until they execute that next deal, but that's just my gut feeling.

Frans Bakker: Yeah, I don't exactly know how to respond to that, but what I will say is that for Iron internally, I think cloud is still the focus. So I know that Cypher is strictly... colocation and Wolf as well. So, you know, I haven't really been paying attention to what that means for their optionality. I mean, it certainly means that they are capping their upsides in revenue and in optionality when it comes to striking new deals after a five year period. So I don't know if it also means they have to, you know, stay away from certain other companies or, if it limits them. But I would say probably not. But I mean, I don't know exactly how that should play out. I mean, the other thing is that what I do know from these co-location deals is that, you know, I think it's Mike Alfred has been talking about this a couple of times, but it's actually true that if, for example, a fluid stack default that Google would be able to get control of the data centers or a part of the data centers. I don't know exactly, but it's that is something that as an iron, they would never sign to that. So I don't think there will ever be a situation where Iron would work with Google through a subsidiary or a third party like FluidStack and sign away their data centers in case of a default. So that that would also give you an idea of how likely it is that Iron would go with a pure traditional co-location deal. So I I'm also pretty certain that Iron is not going to do co-location as a first deal in Sweetwater. But I do want to reiterate that the site is massive, so there is room for a lot of things. So that could mean, you know, various kind of active business activities, including co-location, maybe Bitcoin mining and maybe other things such as battery storage or solar. I don't know how likely, but I would expect a first deal for Sweetwater to be AI clouds, you know, like GPU as a service. Nick, go ahead.

Nick: Yeah, I just wanted to circle back kind of to where you guys started, right, which was price action. But I'll preface that with saying, you know, I think sentiment's pretty bad. And earlier when you guys spoke about price action, you know, we had another hit piece, right, the whole Oracle thing that came out this week. And You saw capitulation candles and all of the AI minor names, not just in Oracle. And it turns out the whole thing is completely false, right? And this was after they had the whole manipulation. We talked last week about Kramer. And then before that, it was Michael Burry, and they were misstating the size of his short. And it's hit piece after hit piece. And so they don't manipulate the price for no reason. We also talked about the diversification of the shareholder base in IRN vis-a-vis the convertible notes, but then also the 13 Fs that have been dropping. And you can see that institutions are using this opportunity to accumulate. And so perhaps for some of the late comers, I know all of us have been around here probably many years now, or at least a couple of years. But for the late comers that were trapped in offsize options positions or even bought shares late, they're substantially offsides. But I mean, man, in the last 12 months, how far have we come? And we've got the largest monetizable power asset for AI HPC compute that I know of, like in the world ready for 2026 here, right? And so There's tremendous, tremendous tailwinds coming with these deals, but the short-term price action obviously does not reflect that. And I personally don't use options unless it's for hedging strategies if I'm going to collar or if I'm going to put on a short-term trade position. I know you guys run your portfolios a little bit differently. You know, I'm just sitting a lot of shares and just be very patient. You know, I think this is all compounded with a lot of other things that are going on right now with the macro picture. You know, you've got these cross-border carry trades and liquidity flows through Japan, through the United States, through the Federal Reserve interest rate, through the rehypothecation of all these funds. In addition to one thing that kind of popped up on my radar this week also was the STRC strategy bond. And obviously, I'm sure that you guys have seen the relentless amount of FUD that has happened towards Bitcoin, towards strategy. I mean, obviously, you know, the original stock is at a 70% drawdown now. And, you know, this bond, this STRC that they've issued, this dividend, whatever you want to call it, this new instrument that they've issued, kind of puts a monkey wrench in a lot of things, right, for for a lot of other places where that capital can go. And I think that JP Morgan and a few other people have really worked to suppress the price of a lot of these assets and pull down strategy and pull down Bitcoin. Correspondingly, it's pulling down the sentiment of Iran. It's pulling down the sentiment. It's at least partially dragging on some of the original mining and AI HPC names. And then the last point that that I'll make on that is that you also have this new favorable regime in the United States, right? Which we saw Trump issue the executive order this week on favoring AI and cutting regulation on a state basis. But in addition to that, they're also extremely pro-crypto, pro-Bitcoin. And one of the things that I think was a a thorn in the side of the current administration was the offshore price manipulation, market making, and liquidity flows that were and still are, I would argue, kind of a criminal enterprise, criminal organization manipulating the price of Bitcoin. And I think that it just seems precarious, right? All of the FUD, all of the bad news, you know, CZ gets let out of jail, They're flooding MicroStrategy. Meanwhile, sailors at JP Morgan's headquarters. There's just a lot of weird stuff going on, and it feels like a lot of manipulation. It feels like it's spilling over, but it doesn't feel like organic price action. It doesn't feel or look based upon my 20 years of operating in markets doesn't feel like general macro tide winds are changing. That's all I wanted to say. we've got an amazing 2026 coming up with IREN. There's so many things that are positive that you guys have been talking about that we have to focus on and so much more revenue to be created, so much more profitability to be had. And it's all going to come. But you might have to sit here for another couple of years. And if you're an investor in IREN and you can do that, then you're probably going to do really, really well. So that's my piece that I want to say, Frans, and thanks for everything. Saw a couple of great posts from you this week and let me know if you have any follow up.

Frans Bakker: Yeah, so that was a lot to, yeah, I will try to react. So I think the price action has been partially manipulative, if you could call it like that. I think that's obviously that 15% drawdown on the day that they announced that offering was already manipulated. In part, there was also the broader market was selling off. So I think we were like in excess of seven or 8% of what the other hybrid miners were going down. So I I could, I think it was obvious that this was related to they wanted to have a certain closing price for the stock to be able to get the best terms on their swap. So outside of that, yeah, I mean, you're right. Sweetwater is the only 1.4 gigawatt grid connected site that's coming online in 2026 as far as I know. don't even know if there is anything close to a gigawatt of grid connected power anywhere else at all. So this obviously puts them in a very sweet spot when it comes to negotiations. It's kind of like a double edged sword, though. It's also, you know, you also get the big pressure from you got to monetize it. So I think that this is something they have been working on. And that's also why I think we will see a deal for Sweetwater well before energization. I'm personally leaning to a first quarter of 2026 deal, but I'm not entirely sure if that is going to be just for Sweetwater 1 or if it's going to be for part of Canada or for the remainder of Childress. But it would make sense if the first deal would be Sweetwater, because you're now looking at a site that is prepped for energization in a few months from now, and to be able to go forward with the layout of the site, they are going to have to allocate land to data centers. And that's where you start to get the question of what is going to be a use case and who's going to use it. So I think it is to be expected that Iron will get a client for the first couple of hundred megawatts for Sweetwater one in the coming months. I think the sentiment I got when I was there is probably within 6 to 8 weeks from now, we would get something interesting. But that kind of brings you close to earnings. So I would say that there is probably something very interesting we are going to hear leading up to earnings or at earnings. And with regards to that, I think this could also be an earlier deployment of the 23,000 GPUs. I think people are still focusing too much of the old guidances of Horizon One will be energized by the end of the year and the $225 million of AI, ARR by the end of December. I think we should try to like focus more on the latest guidance, which is chips, chips for Horizon One will be shipped in March and the end of March will be half a billion dollars of AI revenue, ARR in Canada. So I think that they will beat that one. I think maybe we won't get a confirmation on the end of this year guidance, previous guidance, but I think they will probably beat the next guidance. So, you know, do with that information what you want. I can't say that this is going to be received well or it's going to be disappointing, but I think it's bullish because at the end of the day, you are front running your your latest guidance. So maybe, you know, on average that it beats the expectations. So that's something I think is interesting to consider. Just trying to structure my thoughts real quick. What else did I want to talk about? Because I was showered with information in those days where I have been meeting with various groups of people that know a lot more than me. There's a lot of Iron shareholders that have been in the stock for more than four years that just know a little bit more about the company than I do. just gives you a different perspective. So in let me just say that I think the general sentiment was very bullish. I think all the people that I've met in Sydney are not talking about the drawdown. They're just ecstatic about what's coming. And from my from what I got from the people that were there that worked for Iron, like, you know, there was a couple of the upper management people attending a lunch. They are very confident and very, enthusiastic and bullish. So I didn't get any like negative sentiments at all. I know that it is obviously something you can't really put a number on that or draw conclusions on, but it still gave me a very uplifting vibe. I think the general ideas that Iron is going to deliver on time or beat it. They're going to sign multiple deals in 2026 with different hyperscalers. We will have a diversified portfolio. They're going to energize Sweetwater in time. They're going to monetize it. It's going to probably be AI cloud for the first couple of 100 megawatts. And I think when it comes to the financing, I think they have this, you know, let's just say it's done in my opinion. I think that the remaining money they need for the Microsoft deal is probably going to be met with tranches of GPU debt financing as the year progresses. I think that could probably mean that they are able to declare fully funded for Microsoft at the next earnings. Maybe they are technically like already sort of fully funded if you consider this, but I think we will get some update on that. And people maybe forget that we already fully funded for Sweetwater's substations. So that means that for when it comes to Sweetwater, you're basically fully funded until the, you know, for the first half of 2026. Anyway, so Yeah. And someone has his microphone on. Anyone who wants to say something? Maybe reply to me?

Speaker 6: France, do you hear me?

Frans Bakker: Yeah, I can hear you.

Speaker 6: Oh, yeah. Thanks for me. I just wanted to give my two cents in regards to the price action and the convertible notes. So I've been I've been following Iron for a long time, and I first considering buying when it was like at 14 or so. And but I didn't do it because I was buying some other stuff and went heavy on Vidia when in April. And then, you know, I was focused on on some other stocks. But finally I FOMOed a little bit. And so I started buying like at 50 and bought some and 60. And then when when when it go lower briefly, you know, before the like when it got to 41 and $0.12, wow, I said, wow, this is a great opportunity. And what I have been feeling all this time is that the a little of an interest on the price going to that $41.12 because they would have paid more to buy the old converts if the stock was higher. And so the number of shares they would have used for the dilution would have been bigger. So for them, it was kind of interesting. The price was so low. And also there's a lot of big buyers because they just sold $39 million, 39 million shares, which means that a lot of the big players know about this in the following months were buying a huge amount of shares. And so this is a pretty good floor for the of the stock. It could go lower, but if this big you know, institutional investors are in at 41. To me, that means that, you know, they were considering that $41, the stock was at a discount or as they wouldn't have bought. And so the other thing I wanted to say is that the reason the company wanted to retire this old company is because probably by January, February, the old combers would have been able to execute their calls and have shares. And I don't think the company wanted that. They didn't want them to buy those, to get those shares. And they wanted the new direct offer to be the guys that they wanted as shareholders, which are probably these big institutional investors. So my point here is that the stock could go lower, but I think that 41 is a pretty solid number to consider going forward because big investors like maybe were buying at this level considering this was a bargain. Thanks for having me. Thanks.

Frans Bakker: Yeah, no worries. Thanks for your thoughts. I mean, I lost my train of thoughts when you were talking. I was trying to read up on something I wanted to talk about. I was so stuck in that whole talk about Sweetwater and everything that I'm expecting to happen in the coming months that I lost the connection with the whole convertible notes offering. But from what I, from what I heard from IR is that this move was mostly done to restructure the balance sheet when it comes to the debt and equity, you know, the split between the debt and equity. So, I think what what what's going to happen moving forward is that they need to, you know, manage this in order to issue new debt. So I think without buying back these, you know, swapping out those old notes, they weren't able to issue the new convertible notes that they did to 2.3 billion, I think it was. So this was a necessary in order to maintain this mix. And well, I also asked them, so in hindsight, if you would have known that the deal would be received this way, would you not have issued more at the 60 plus price? And well, generally what he said to, you know, if they had a crystal ball, they would have maybe done that. But you have to understand as well that when the company disclosed the Microsoft deal, the market just had the worst day in weeks. And that was something you can't time, right? So I mean, I think some people have talked about this on Twitter as well. You can have all the best fundamental intentions, but if the market just has a a ****** day, you know, you can still go down even though there's no reason for that. So I remembered the day that the deal came out and I think we were like the only stock that was not read on my entire watch list of like 100 something companies, you know, so Yeah, if you have a crystal ball, you could probably time it a little better, but we should still appreciate the $1 billion we had with the 42 and a half percent premium and zero coupon. So, you know, let's not forget what we have. And I think that is something that we will see more in the coming year. that people seem to forget what we have and only focus on what we don't have. And I think we will be reminded of what we own. Let me just say it very high level like that. There are a lot of things that are currently not talked about or are unknown, right? Where are we now with the GPU installations? Are we on track for the ARR by the end of this year? Are we on track for the half a billion dollars in Canada by the end of Q1. All these things we don't know anymore because there are no monthly updates anymore. So we got to just take it from what we hear, what we see, our own analysis, but I think things are looking very good. One other thing I just wanted to talk about is because we're now at one and a half hours, we've done a lot of Canadian politics, but I wanted to talk about Horizon. So I think what's interesting to know is that Horizon is specifically built for Rubens. So the design and everything around the layout, the rack density was originally going to be 200 kilowatt racks, which is as Iron perceives is compatible with the Vera Rubens. So that means that when they had to switch back to GB300s for Microsoft, the variable rack density came into play. And I think that this is something that makes the utilization rate of the data centers be below 100% technically. So I think that's also why we are seeing a lower amount of GPUs per megawatt in Horizon because Iron has made one thing clear to me is that they are not oversubscribing megawatts when it comes to this Microsoft deal. And part of the reason is that they have a lot of power, so they don't need to, you know, budget their megawatts in this way. But another reason is obviously this is their first deal with a hyperscaler and they have SLAs to, you know, to comply to. And you don't want to get into a situation where you run at a maximum peak usage and you're, you know, you might jeopardize that. So I think that this is important to remember that delivering on these deals is extremely important. especially with your first deal. So, you know, and as I said before, there are many other things that will flow out of this deal that we are currently unaware about. But just important to remember that Iron is looking beyond this cycle, this first five years, and that is You know, if you hold this talk for the long run, this is still important to remember that at the end of the five years, as Dan Roberts has said as well yesterday, you own the data center that is basically paid off by Microsoft. So I think it's a little bit misunderstood or discounted that Iron has future proofed their data center design in a way that it is It's ready for Vera Rubin. If Iron would have Microsoft come to them and say, yeah, look, you guys are killing it with the GB300, but we want Rubin, so can you do that? And Iron can say, yeah, sure. You know, so the data center is already ready for that. And when it comes to Rubin Ultra, there's also something that I didn't know, but basically it means The 600 kilowatt rack density that's stated for Vera Rubin is not just one rack. So basically it's two racks next to each other. So that would mean a single rack would be 300 megawatts, sorry, kilowatts. If I said megawatts in the last few sentences, I meant kilowatts. So going from 200 to 300 kilowatts is not going to be an impossible challenge, basically. this is the gist that I got from my talk with, you know, the people at Iron, that this is not something they can't overcome within Horizon One. So I think that future-proofing them for multiple future chips is something very valuable coming out of this data center design and, you know, this deal. Kash, go ahead.

Keshe: Yeah, Frans, I got a couple of questions for you. One is, What did you learn around the SLAs, if anything in particular? And two, did Iron ever bring up power management, managing the cost of power, assuming it's not a pass through in their contracts?

Frans Bakker: They didn't learn anything about SLAs. I just, what I did learn is that it's just, top of mind, right? This is the most, the most important thing. I mean, the clauses in these contracts are, you know, very punishing. And for Iron, there's a lot at stake, right? In your first deal with a triple-A credit rated hyperscaler, if you deliver on your first deal and you're killing it, not only do you get paid off data centers at the end of the run, but you get five years of working with Microsoft on your resume, right? So this is basically all I know from the SLAs. And the other thing is that they just pressed it to me that they don't oversubscribe their megawatts. So I guess you can draw your own conclusions from that when it comes to how important the the deliverances of this deal. So the SLAs will probably be very important. That's all basically I know. So it's not a lot, sorry. And I have no idea about the power prices. Obviously, they have a fixed GPU hour price. That is something I do know, by the way. I think that everyone should stop focusing on price per megawatt, but should solely focus on GPU hour prices. So infrastructure as a service deals are centered around GPU hours and not around megawatts. So when a company doesn't disclose their amount of GPUs or the GPU hour prices, you can't just compare them through the megawatt or the price per megawatt because there are very different metrics when it comes to how you utilize your megawatts for certain deals. Like I just said, oversubscribing megawatts. So if a company doesn't disclose the amount of GPUs or they disclose a very high amount compared to others, there are probably reasons for that. What's important to know is that these contracts are based on a GPU hour price. So I guess that means if the power is not passed through because it's not co-location, that means that it's baked into the price. So knowing that Iron has the lowest cent per kilowatt compared to other GPU as a service providers, for example, I don't know the price Nibius is paying to Data One for their, I think it's a natural gas turbine source power, right? Most likely, that is a lot higher outside of the fact that they pay co-location fees. So this is something--.

Keshe: This is why with public structure, you aren't passing through the power costs. And so to the extent that you've got a fixed price, you need to manage that risk on the cost of power. And what we've seen is obviously a rising cost environment for that power. So I'm curious, that's why I posed the question, but I appreciate that background, Franz. Thanks for that.

Frans Bakker: Yeah, no, I mean, that's correct. I don't know how they're going to manage that. All I know is that, you know, how have they, how they've been doing it for now is they've been curtailing and I guess the infrastructure they're building for Horizon is going to be supportive of curtailment. Maybe this is the way they will manage their power cost is by making a data center that is able to operate within the intervals of the power prices. I don't know. I mean, this is just conclusion I would draw based on what I know and what I don't know. So, I mean, that would make sense, right? I mean, if you see what kind of generators they're putting outside of these buildings, these are massive. So I think what I know is that Horizon will be able to run for an X amount of hours outside of the grid, you know, if there would be like a blackout or something or a failure of a transmission line So I guess if that is responsive enough to be able to operate within the ERCOT price window intervals, maybe that's a way to manage the power, if you understand what I'm saying.

Keshe: Yeah, but doesn't that work counter to the three nines, five nines sort of uptime requirements that are typical of these SLAs?

Frans Bakker: I guess if you have enough generators, backup generators, then you can maintain your four or five nines, right? I mean, I'm just trying to understand what you're, why would they fail to deliver if they internally switch between a battery a generator or the grid. I mean, it's still temporary power supply. If you can avoid like a peak in ERCOT pricing in like 15 minutes running on your generator, then you are not folding on your SLA, right?

Keshe: Yeah, no, look, I don't have a specific angle in mind per se, just trying to understand the construct a bit better. The backup generators, yeah, I mean, that's certainly one way to do it. Your 4CP events could last a few hours and so that's what I've seen at my facilities. So 4CP events in Narcot last longer than 15, 20 minutes or however you think about it, it's not short term, it could actually be a fair bit longer and yeah, certainly backup. generation could be a way to address it. But yes, these facilities, I mean, particularly with the Microsoft, you would have, you know, high uptime requirements, three nines, five nines, somewhere in there. And if I don't think their strategy is going to be to curtail without backup, right? I mean, these facilities do come up with backup power generation, but if your standard operating procedure is to curtail and rely on your backup. I just haven't seen that in the past. But then again, you know, this is all sort of, you know, a brave new world, so to speak, because I'm thinking more of the enterprise polo facility as opposed to, you know, we're talking about hyperscale here, so completely different. So appreciate the insight.

Frans Bakker: It's not as much as insight. It's more like I'm trying to, like, try and, it's more of brainstorming because I also don't know. But what I do know is that Iron is paying a significant amount of money per megawatt to be able to get the tier 3 stamp, right? So this is going to be actual tier 3 and not a tier 3 like. And I don't know if this says it's four nines, but I think Iron's confident they can deliver five, though maybe they were not paid for five nines, but if they are internally confident they can deliver five nines, I think that by deduction, you can conclude that they have backup storage or whatever in place to be able to deliver that. And I think that that can be considered independent of the grid, as in hours of power for their SLA with Microsoft. So I'm not saying that this inadvertently means that they are going to curtail, but 4CP events are a real thing. So I mean, that could really harm their margins, right? Which are already very thin. So if the company doesn't speak about this or to the degree what kind of backup they are really installing, I know that Jim Liu has been concluding that there must be BESS on site for the 15 to 16 million dollars a megawatt for Horizon 1 to 4. I don't know if it's going to be proper BESS, but you know probably more about that than I do. So if you have battery storage on site in that capacity, can you curtail or is that still something that doesn't work with curtailment? I mean, you would tell me.

Keshe: Yeah. So on battery side, you can have, you know, quick start capabilities, usually in a two hour or four hour runtime batteries. It's a significant cost to bear for the facilities, but ultimately you're getting paid for it. So that's completely fine. Typically, you'd find diesel recips that allow for a very quick start and therefore mitigating your, you know, your SLA requirements to run four nines, five nines, whatever the case may be. So, you know, Bess, I've seen recips as a lower cost solution to the exact same problem. So I haven't seen anything, certainly in your imaging work, France, or in the press for that matter, about what that backup generation actually looks like. Meaning I haven't seen it be best specifically, but I have to assume that it's there. The other piece I found interesting was typically when you operate in the golden spread territory, and I'm not 100% sure whether they're in the golden spread territory or not, but I think they are. I've checked the maps several times. I think they are. There's a load for CP voluntary load shed requirement, which is getting a little bit technical here, but the idea being that you have to shut down, but then if you post enough collateral, you can stay operational. So that's the other piece. As you shift away from mining use case to AI HPC, that's probably another element. and tackled to get Microsoft there. So that's kind of that's comforting that they aren't being forced to go offline to address 4CP. That's that's very likely the case that they don't have to. So it's really a question of how do they address being able to stay online or certainly continue servicing their SLA requirements even during 4CP, which can be expensive, but post post URI it's actually. less of an expensive endeavor. One of the interesting things is in the ERCOT grid, the proliferation of BESS across the system has actually brought down the price spikes that come hand in hand with 4CP events. You do have 4CPs, of course, but the price volatility has been far more muted thanks to BESS elsewhere in the grid. Again, my vote is in favor of ERCOT being one of the best grids in the entire country. So Iron is really well positioned in that regard relative to data centers in other states.

Frans Bakker: Yeah, I agree. And for what it's worth, I don't know if Childress is in gold spread territory. I think Sweetwater is certainly. I think that's That substation that's next to the utility substation is owned by Golden Spread Cooperative. Wet Sole Substation, I think it's called. That's that smaller, I think it's 138 kilovolts. The So, I know, I don't know. I mean, I can only assume that they have factored this in, because, like you said, that's the way that they got Microsoft to, sign with them for children. So, I think everything that we're trying to figure out, they already thought of this two years ago. I mean, that is basically all the same conclusion I arrive at every time. So especially, you know, after meeting the team in Childress, that was something that did the onsite medium voltage circuit is so impressive. I mean, the way they set up this network of their primary substations all connected to each other, you know, they are able to squeeze out a lot more and critical megawatts, so to say, from the bulk substation than any other would, any other company would. So, and then you're operating in a grid that's more favorable with the BESS being brought online, stabilizing price spikes across the whole territory. I think things are looking out and then knowing that Iron has mentioned BESS in their Sweetwater One tax abatement. is also something to remember that this, there are things happening without us knowing it, but I think we shouldn't have to worry about a lot of those things. They got it figured out for us already. But yeah, that's the thing with markets, you know, you're trying to like predict the price, you're trying to predict what's the company going to do, how is the market going to react. But There is a big delay usually between the fundamentals and the price. The same thing as there is a delay in what we know and what we don't know because, you know, they won't, a lot of things they don't want to tell us. Then there's a lot of things they don't have to tell us. And then there is the window until the next earnings. So, you know, this is just what we do. But generally speaking, I am. extremely confident that Sweetwater 1 is going to be an absolute monster of a flagship site for Iron. It's going to be, you know, very impressive. One little thing that I'd like to say when it comes to Sweetwater, I am actually kind of thinking that there may be more power there than 1.4 gigawatt. And the reason why is that Iron only disclosed AEP for Childress after they got the expansion of 150 megawatt. And currently Iron has not disclosed who is their utility for Sweetwater One. So that could, you know, by very basic deduction, that could mean that they are expecting more power. And if I look at the build out of the utility substation there, it really looks like they are going to make it a lot bigger than it initially was. So, maybe there is going to be more power than 1.4 gigawatt there. And why did they buy that extra piece of land a couple of weeks ago, right? You're starting to get to, maybe the whole gist of this space is iron is probably improving their stance with the Canadian government through Microsoft, possibly getting to a situation where they can monetize more of their development pipeline in Canada on the back of that. Maybe, or probably able to get more power in Sweetwater at some point. And, you know, starting to see this picture where maybe things are not all that bad. maybe iron is really on top of things and with more power coming and the demand increasing and the power crunch intensifying. I think we are sitting on a gold mine and the market's not seeing it right now. It's not acknowledging it or just doesn't want to. And I'm glad that we have the right people in these spaces to keep the market informed about what's actually happening. So with that said, I have nothing else to talk about. I could probably think of a few things more to say from my Sydney visit, but maybe I'll leave that for another time. If any of the speakers want to add something, feel free to raise your hand. We're nearing two hours now. So if not, then probably going to conclude the space here. I want to give a shout out to Mike Alfred, who's in the crowd. It was great meeting you in Sydney. And we had a nice couple of beers in Wednesday afternoon in the sun. That was a great, great moment to be there. And yeah, I see you're one to speak Mao Bao, but I think we can leave it to next time. So thanks everyone for joining and see you next week. And let's hope OPEX won't murder us. So see you next week, guys. Bye-bye.