Trascrizione completa di IREN's $363M GPU Raise, Plus, Morgan Stanley's Bullish TeraWulf Price Target, and SK Hynix's Earnings

of the kid. Jensen's saying, "Congrats. Happy for you. Nice," et cetera. 15 00:02:33.660 --> 00:02:42.000 So, um, you know, if you're, if you... The financing was circular. [laughs] Let's just look at the chips, baby. So we are gonna roll on. 16 00:02:42.040 --> 00:02:48.440 We're gonna talk about the Eiron story at the top, but before that, a word from our sponsor, Soluna. 17 00:02:48.440 --> 00:03:06.980 [Relaxing music] Soluna Holdings, NASDAQ listed ticker SLNH, develops data centers co-located with wind and solar plants, turning surplus renewable energy into computing power for AI and other intensive applications. 18 00:03:07.540 --> 00:03:17.620 We are proud to partner with Soluna Holdings here at Block Space, and if you would like to learn more, please visit solunacomputing.com. That's solunacomputing.com. 19 00:03:23.220 --> 00:03:34.020 Eiron closed $363 million of refinancing of deployed GPUs with Wing Spire, according to a press release this morning, Wednesday. The financing is securing principal... 20 00:03:34.220 --> 00:03:40.920 i- is secured principally by GPU servers and network gear, which is already deployed and generating revenue. 21 00:03:41.660 --> 00:03:54.640 Eiron share price closed at 27.44 on Tuesday, down 27.35% year to date, after a tremendous 2025, where it gained 284% in the year. 22 00:03:55.620 --> 00:04:02.280 This might look like a small deal, and in terms of financing it is, but it's also notable for a few reasons. First, why it's small. 23 00:04:02.800 --> 00:04:15.340 The company is guided to project CapEx of $25 to $30 billion for building out its dream of a complete verticalized AI Neocloud. $300 million doesn't do a lot there. 24 00:04:16.600 --> 00:04:24.060 It's also notable because Elon Musk recently said that the financing market for Neoclouds is basically gone. 25 00:04:24.480 --> 00:04:34.060 Quote, "As of Sunday, as of the past few weeks, debt markets have almost entirely shut off access to money for any company that doesn't have substantial revenue-independent AI data centers. 26 00:04:34.660 --> 00:04:45.540 SpaceX closed 40 billion of debt from GPUs, but we're investment grade F Starlink and launch revenue. That means the 200 plus Neoclouds are going to see guppy level death and consolidation. 27 00:04:46.080 --> 00:05:00.240 Some will make it through, but not many." End quote. Charlie, gotta ask the question, is Elon wrong? Is he manipulating markets again? Is Elon ever wrong, or is he ever right? I mean, it's a little bit of both. 28 00:05:00.320 --> 00:05:14.080 I'm gonna say both, and look, Elon talks his own book. We know this. He makes projections which shock you, and occasionally he delivers on those. Um, he said there's 200 plus Neoclouds. 29 00:05:14.100 --> 00:05:25.400 Now, I could probably personally name, like, 30. There's probably more, there's definitely more than that. Um, but we do know there's just gonna be a lot of disappointed investors, a lot of disappointed clients. 30 00:05:25.440 --> 00:05:38.040 There's gonna be a lot of GPUs collecting dust once deliveries start coming in Q1 of 2027. But my question is, like, does Eiron specifically, are they stuck holding the bag? 31 00:05:38.460 --> 00:05:46.560 Um, I would say they're much higher on the totem pole than some of these other companies that I, I couldn't name, less, less maybe even haven't even heard of. 32 00:05:46.640 --> 00:05:54.780 So, like, they're in a much better position here, and so I'm trying to fend off the Eiron haters, 'cause I see them furiously typing in the comments right now as I speak. 33 00:05:56.560 --> 00:06:01.900 Yeah, I mean, they, we had a few of those, so we've certainly taken some heat from some Eiron fans over the last few weeks covering some of the news. 34 00:06:03.292 --> 00:06:12.072 The gist of it is, like, the stock has not done super well this year compared to last year. And so we, we've seen a lot of investors get a little spooked by that CapEx number I said earlier. 35 00:06:12.612 --> 00:06:17.972 I think what you're seeing right now, though, is the maturity of the debt stack for a company like Iren. 36 00:06:18.452 --> 00:06:24.972 So if we look at the broader picture, especially from the, the latest earnings call, they forecasted, again, that $25 to $30 billion in CapEx. 37 00:06:25.352 --> 00:06:30.612 They have about $14 billion on hand in cash as of la- the last earnings call in August. 38 00:06:31.032 --> 00:06:37.372 And then they also have the ability to debt finance their builds once they are finished, or use debt from their builds, I should say. 39 00:06:37.812 --> 00:06:46.572 So, you know, they have the Sweetwater sites or the Childress sites, and this looks like maybe the, the Prince George site, I think, is, is probably what they're referring to here in this notice. 40 00:06:47.292 --> 00:06:59.292 They're basically going to, like, reverse mortgage that, in a sense, and be able to get cash back from it, and then use that to continue to build out their vision of this verticalized AI neo cloud. 41 00:06:59.692 --> 00:07:07.892 To Elon's point, it does help a lot when you have Starlink revenue, launch revenue, or, you know, anything else. Maybe if they merge one day with Tesla, they'll have Tesla revenue. 42 00:07:08.291 --> 00:07:21.972 And then you're able to get better, uh, investment-grade, uh, benefits from having more revenue than just, like, what you're reinvesting in, which at the end of the day for Iren is energy, land, and GPUs. Yeah. 43 00:07:22.092 --> 00:07:32.452 Here's the tweet from Elon. I mean, this went giga viral. It was in response, obviously, to Chamath, so obviously two of the heavy hitters, two of the talking heads for the AI movement. 44 00:07:33.112 --> 00:07:47.232 Um, Iren chart, Will, look at this. Down on the day. It looks like it started the morning at, what, like, 28, down to 27. So market initially not a fan of this, which I don't really understand why. 45 00:07:47.352 -->

00:07:59.392 Maybe that- that's animal spirits. Um, I'm curious- Well, I mean, I would, I would just zoom out. Like, this is a drop in the bucket, uh, what they need for CapEx spending. So if they came out with a much larger deal... 46 00:07:59.612 --> 00:08:01.472 Look at the, the Cipher note, right? 47 00:08:01.532 --> 00:08:10.112 Their convertible note a few weeks ago, $850 million, and that really spooked the market, 'cause there was some rationale for needing that convertible note, but it was also at a bad time. 48 00:08:11.032 --> 00:08:19.292 I think, like, a smaller financing plan like this, it's fairly vanilla at the end of the day. Like, they already have those GPUs on hand. They're humming along. 49 00:08:19.372 --> 00:08:28.112 I think it's, like, pooled together, or it's Together AI, uh, and some other companies that they're, uh, using already, have those leased out. So they're already making money on this. 50 00:08:28.152 --> 00:08:39.072 They're just, you know, using that money to go get credit and make more money. A few comments. I see Fairfax says, "Ah, but can they triple net lease?" Uh, unsure if they triple net on all these. 51 00:08:39.292 --> 00:08:48.172 Uh, a lot of the times that happens during the initial tenant agreement. And for, uh, Iren here, they're not always gonna go that decision to be kind of like a landlord. 52 00:08:48.392 --> 00:09:00.272 They're going to own everything, all the infrastructure pay for itself, and then get some sort of deal like they did with Microsoft, right? Where, like, Microsoft is coming in and using the GPUs that Iren builds. 53 00:09:00.572 --> 00:09:08.312 It's different than, say, like, a CleanSpark build, where CleanSpark's just like the tenant, owns the power and the land, but they don't own the GPUs. And, and there could be, like, a few differences there. 54 00:09:08.392 --> 00:09:20.952 But I think, uh, and they, Fairfax adds up similar to Ionic. I think that's probably fair. I haven't looked into Ionic since this summer. But I think in general, Charlie, going back to it, we have a Fed decision today. 55 00:09:21.552 --> 00:09:30.952 This wasn't a huge notice from Iren. Year to date, it's, it's down. They got a little bit of, uh, execution before we see any more growth in the stock, I think, for the moment. 56 00:09:31.132 --> 00:09:42.872 But not, not to say it's bearish, just, like, there's more to come. Yeah, I mean, any, any few pennies you can scrounge up, maybe you call 363 million pennies these days in the scale of things. 57 00:09:43.452 --> 00:09:59.992 You know, whatever cash you can have on hand to front these deals and put towards projects, the better. So cash is king, and investment grade is, uh, the usurper. So, um, we are gonna keep on rolling. 58 00:10:00.072 --> 00:10:08.172 Next story we have on the dock is Morgan Stanley. Very bullish on TeraWulf, another one of our favorite portfolio companies. How high do you think their, their projection is? 59 00:10:08.212

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Get started at luxor.tech/commander. 63 00:11:06.452 --> 00:11:15.872 Morgan Stanley reiterated an overweight rating on five AI data center stocks, including Hut8, TeraWulf, Riot, Galaxy Digital, and Cipher Digital. 64 00:11:16.532 --> 00:11:26.992 Of the five, Morgan Stanley gave TeraWulf the most bullish boost, with the price target 413% over its current market price at $12.67. 65 00:11:27.732 --> 00:11:36.972 The bank argues that months of underperformance reflect misconceptions about the PowerShell providers, and it's keeping an attractive view on the entire industry. 66 00:11:37.612 --> 00:11:52.792 Its bull and bear case is set at $104 and $17 for the stock. Other targets include $43 for Galaxy, 15-- oops, excuse me, $35 for Riot, and Cipher at 15 bucks. 67 00:11:53.072 --> 00:12:06.652 All those numbers significantly higher than their current trading average. The bank's core claim is that these operators are landlords, not neo clouds. They sign 15 to 20 year leases instead of two to three years. 68 00:12:07.012 --> 00:12:15.672 They build shells at nine to $14 per watt versus 30 to 50 per watt, and they took no risk on chips or GPU allocation. 69 00:12:16.560 --> 00:12:28.200 Morgan Stanley values, values expected TeraWolf contracts at 9% equity discount rate and a 7% terminal cap rate, which says, which is above what most real estate investors expect. 70 00:12:29.020 --> 00:12:38.540 Charlie, these bullish price targets look a little bit better after the Anthropic IPO filing paperwork, which showed a deep cash balance and profitable compute segments. 71 00:12:39.060 --> 00:12:51.100 What's your take on these new price targets from Morgan Stanley, given the Anthropic IPO? Well, I can't say a whole lot about what I think a 4X would look like, but I'll point out this. 72 00:12:51.220 --> 00:13:04.520 I mean, uh, Morgan Stanley is, uh, down over fif- I'm sorry, TeraWolf is down over 50% from their all-time highs this past summer at, what, like 28 bucks, 29 bucks? They're down at 12, so that's 73 00:13:05.780 --> 00:13:07.540 more than 50% retracement. 74 00:13:07.840 --> 00:13:26.820 So technically, Morgan Stanley at 441%, uh, would actually only be a two, a slightly over 2X from TeraWolf's all-time highs, which are down maybe not because the fundamentals of TeraWolf have changed, but because the data center sector has just taken a bunch of beatings over the past few months. 75 00:13:27.580 --> 00:13:37.000 Um, I do wanna mention that there have been a number of other bank notes and investment notes predicting the price that we've covered over the past few months. 76 00:13:37.740 --> 00:13:48.100 October 7th, Wells Fargo, TeraWolf had a $30 price target, which would be h- you know, roughly 100% upside from there. Actually, 120% upside. 77 00:13:48.760 --> 00:14:04.580 Morgan Stanley, as of, I believe, August, had TeraWolf at a $62 price target, which by the way, would only be, would be a, uh, would be a, uh, 500% increase from where we are today. 78 00:14:05.520 --> 00:14:19.120 And then also Needham, John Todaro, friend of the show here, I've got... We reported on this, again, in August. Um, they kept their TeraWolf target at 33 bucks, um, which again, is slightly over their all-time high. 79 00:14:19.240 --> 00:14:21.580 So the thing is, like, everybody's bullish TeraWolf. 80 00:14:21.640 --> 00:14:35.160 It's really just a matter of, like, uh, is it, is it how many, how, how much multiple increases from here, which is a flat from the start of the year, or is it, are we just benchmarking to the previous all-time high of, like, 28 bucks? 81 00:14:35.500 --> 00:14:42.380 The long story short is everybody's bullish TeraWolf. It, you know, how bullish are you is the question. A few thoughts here. 82 00:14:42.440 --> 00:14:52.800 So one, disclosure, I do hold TeraWolf in my personal portfolio, and I'm a, a long-term holder at it. I enjoy what the team is building over there, and I do think that the PowerShell model makes a lot of sense. 83 00:14:53.360 --> 00:15:05.100 And there are, uh, th- there is a big divergence in the market that I think a lot of people don't know about when they're first looking at these stocks, that Neocloud, "Hey, we're going to not only own the power and the land, but we're also gonna buy the chips. 84 00:15:05.160 --> 00:15:11.720 We're gonna build the orchestration layer for GPUs. We're gonna go sign contracts with AI labs, or we're gonna sell our compute into a generalized market." 85 00:15:12.240 --> 00:15:19.400 And then there's the PowerShell model, where it's like, "Hey, we're pretty happy with just owning the power and the land. We will be the landlord. You can be the tenant. 86 00:15:19.600 --> 00:15:27.160 You get certain rights to come use our facilities." They typically sign 15 to 20-year deals, uh, and, and that's pretty stable. 87 00:15:27.200 --> 00:15:36.760 You can kinda, like, look at the, the net expectation for that over 15 to 20 years, and it's almost like the people who move in as tenants own the space for 15 to 20 years. 88 00:15:37.240 --> 00:15:45.400 Uh, but not quite, because there's that profitable layer in between that companies like Wolf

are able to sit in. And so I'm a huge fan of that. 89 00:15:45.720 --> 00:15:57.720 Now, on the other hand, I do think that there are some dangers here, and I'm just gonna pull up this chart, if you can help me do that. But there's, there's the other layer, which is the funding risk for these sites. 90 00:15:57.800 --> 00:16:08.160 This is Cipher Digital, which I mentioned earlier in the show. They put out that convertible note, bad time in the market. They needed a little more money because co- cost overruns, expensive and hot to build. 91 00:16:08.440 --> 00:16:17.160 It's not expensive building in Texas, but it's hot to build in Texas. They need a little more cash, uh, and the market kinda puked on it, and they've been trying to recover for a while. 92 00:16:17.220 --> 00:16:21.800 You can see that market seems to try to be getting going again, and it, it's struggling. 93 00:16:21.900 --> 00:16:31.620 But, uh, you can look at over, once these ads drop off, look at the, the year-to-date levels and things like that, and it, it's kinda struggling. I think so is TradingView at the moment. 94 00:16:32.120 --> 00:16:43.740 But it's, uh, yeah, pretty brutal in a, in a percentage term. Like, we're not necessarily getting where we want to with, with Cipher at the moment, uh, because of those cost overruns. 95 00:16:44.180 --> 00:16:53.460 So moving away from that segment and, and getting away from it, I want to pull up this video from Paul Prager. He's the CEO over at TeraWolf, and I think he does a good job explaining this. 96 00:16:53.520 --> 00:17:02.420 We love a good Paul Prager video. Was this, is this the CNBC one? He had a great- Yeah... he had some great content. I linked it in the show notes, so we should be able to pull that up in a second. Uh-huh. 97 00:17:02.440 --> 00:17:12.460 But I'll let you grab that, and in, in between I'll just kinda mention that the way that TeraWolf is thinking long-term at the moment is, "Let's go find more sites." 98 00:17:12.560 --> 00:17:19.000 And I expect them to have more lease announcements going into next year, and maybe even to earnings. Like, that, that's what these guys do. 99 00:17:19.040 --> 00:17:24.380 They're almost like real estate investors, where they go and find plots of power land and build that out. 100 00:17:24.800 --> 00:17:33.900 Uh, and it's excellent for investors because there's a little bit of risk diversification there versus the GPU market, where it's like, "Hey, we gotta go find debt. 101 00:17:33.960 --> 00:17:44.960 We gotta go find, uh, installation teams, orchestration. We have to go find customers." The two to three-year contracts, there's a lot of problems with that versus, like, "Hey, we need a plot of land, we need energy. 102 00:17:45.140 --> 00:17:49.140 Let's go." Let's watch this from Paul Prager, the CEO over at TeraWolf. 103 00:17:49.180 --> 00:18:02.480 Between companies like CoreWeave, Neoclouds, versus companies like ours, we're a co-location company, which means we own the land, we own the energy, we build the building, and we operate the data center. 104 00:18:02.980 --> 00:18:16.200 So we have long-term predictable cashflow, and we get quality energy from an investment-grade credit like Utility, Kentucky Power, AP, and we sell it to a high-quality credit. 105 00:18:16.420 --> 00:18:30.376 In this case, our customer, Elite Mariner effectively as Anthropic in the announced deal Hawesville Anthropic. But what the investors also need to understand is that we have an investment-grade backstop. 106 00:18:30.496 --> 00:18:41.076 In Lake Mariner, it's from Google. In, in Kentucky, in Hawesville, we have an investment-grade backstop commitment, so we can raise the capital at very competitive rates. 107 00:18:41.556 --> 00:18:52.316 I think the other thing that the investors need to understand is we're not all the same. You have to focus on execution. You must focus on execution. 108 00:18:53.056 --> 00:19:02.616 We have guided the markets that we're building at our facilities at 8 to 10 per megawatt, 8 to 10 million a megawatt. We are squarely right in that range. 109 00:19:02.796 --> 00:19:18.936 We haven't changed our story, and we're delivering Data Hall 4 at the, at, at the, the fourth quarter, and CB5 in the first quarter of next year. So we're on schedule. We are on track to deliver within a timely fashion. 110 00:19:19.396 --> 00:19:33.096 We are delivering at the cost that we told the customer we would deliver at, and we have the capital. He's right. I mean, it's like, think about how long and persistent this narrative has been, that they've been on time, 111 00:19:34.336 --> 00:19:44.396 at the budget they targeted, and they have investment-grade counterparties. Like, it's almost like they saw the playbook happening, uh, a year before it came to fruition. 112 00:19:44.556 --> 00:19:51.536 So shout out to TeraWolf for- Yeah, we're just, we're just bull, bull posting here for TeraWolf. Yeah, but, but the stock's down 60% [laughs] on the year, so, you know. 113 00:19:51.556 --> 00:20:03.556 [laughs] Yeah, I mean, like, a lot of these got spooked, and there was a ton of compression in the, in the markets since July, uh, because it's like, oh, this tenant thesis. You do need to have multiple tenants. 114 00:20:03.656 --> 00:20:15.716 Remember, I remember a year ago we were thinking about this with who's going to sign next, who's gonna get the next deal, and then it became not the next deal, but how many different types of counterparties are you gonna have this deal? 115 00:20:15.776 --> 00:20:25.236 Is it gonna be hyperscalers? Is it gonna be different AI labs? And then it became, okay, execution, we'd see the revenue start flowing in. And then it became, oh, are you keeping your costs down? 116 00:20:25.656 --> 00:20:34.816 Uh, oh, then it became, can you keep your debt levels within the boundaries? The game's always changing. Only a few teams are gonna be able to execute. Right now I like Wolfe. 117

00:20:35.216 --> 00:20:43.696 Morgan Stanley also makes note of a few other companies, so I think we can leave the, the levels there. As always, check out the website, uh, Blockspace.media for more content. 118 00:20:44.416 --> 00:20:55.196 Yeah, we publish a lot on TeraWolf, and, uh, if new price targets from the banks and investment banks that we cover drop, we'll turn them around quickly. You'll hear it on our channels first, Blockspace.media. 119 00:20:55.876 --> 00:21:06.316 We're gonna talk about the memory trade. Is it so back? Um, it is not clear, but SK Hynix up big this morning. We'll talk about that after a word from our sponsor, Ligos. 120 00:21:06.316 --> 00:21:23.216 [static party music] Hedge funds are getting liquidated. Is your Bitcoin safe? It's not just Bitcoin price drying up. Big whales, hedge funds, and lending desks are going under after the notorious 121 00:21:24.116 --> 00:21:36.016 crypto winter. Counterparty risk is rampant, so it's more important than ever to understand who actually controls your Bitcoin. Don't be the next FTX or Celsius victim. 122 00:21:36.516 --> 00:21:41.936 If you're working with another loan provider, do yourself a favor before it's too late and check out Ligos Finance. 123 00:21:42.356 --> 00:21:53.276 Ligos Finance is Blockspace's preferred non-custodial Bitcoin lender, which uses native Bitcoin smart contracts to protect your Bitcoin stack. With Ligos, you always know where your Bitcoin is. 124 00:21:53.896 --> 00:22:05.436 Hold your keys, no wrapping, no bridging, no rebuy, re-hypothecation, and get competitive rates as low as 10% APR. Go to Ligos.finance to learn more. 125 00:22:05.436 --> 00:22:18.756 [clears throat] Is the memory trade back? SK Hynix just reported an eye-watering profits and is up 12% today. 126 00:22:19.636 --> 00:22:35.456 Here's what's going on and why investors may be piling back into the memory trade. So last summer, memory stocks like Samsung and SK Hynix soared upwards, and then there was a bloodbath as the memory trade collapsed. 127 00:22:35.936 --> 00:22:45.256 Across the major memory and storage makers, roughly a trillion dollars in market value was erased in a single week just earlier this month. 128 00:22:46.436 --> 00:22:55.796 SK Hynix, the industry leader in high bandwidth memory, HBM for short, fell nearly 60% from its peak in June. 129 00:22:57.056 --> 00:23:05.956 However, last night, SK Hynix reported third quarter results, and the numbers tell a very, very different story than the doom and gloom you've been seeing. 130 00:23:06.756 --> 00:23:23.816 Revenue for SK Hynix topped 100 trillion won for the first time in the company's history, which is more, sit down, than it earned all of last year. Operating profit came in nearly $60 billion at an 80% operating margin. 131 00:23:24.076 --> 00:23:32.216 That's the sixth consecutive record quarter for the company, and it beat consensus by about 10%. 132 00:23:33.016 --> 00:23:45.736 I will go deeper into the

numbers behind SK Hynix, but first, throw it to Will, who, granted, Will is not a memory trader here. But Will, these profit numbers are about as good as it can possibly get. 133 00:23:46.776 --> 00:23:58.236 Why do you think investors were so ready to bail on this trade just a few weeks ago? I mean, I remember this summer and the, and the craziness that we saw with this stock. 134 00:23:58.616 --> 00:24:03.476 Uh, South Korean markets were big on it, and there was a lot of margin calls. 135 00:24:03.596 --> 00:24:13.296 There was some stat about the sizable percentage of the South Korean population had been margin called over the summer, and I, I think this IPO had a lot of reasons to do with it. 136 00:24:14.276 --> 00:24:24.896 Look, the, the, it, entire game is predicated on having all of the stack. Memory is part of that stack. So if you're an AI bull, then you can't just say, "Hey, I'm gonna sit out on part of this." 137 00:24:25.016 --> 00:24:33.336 And parts of that stack have more of a bottleneck than others, right? So we talk about power land on this show because that's a lot of the counterparties we're used to working with. 138 00:24:33.376 --> 00:24:42.856 We just talked about Morgan Stanley and, like, their bullish price targets on the PowerShell providers Think about the hardware layer. There's all this hardware that needs to be talked about. 139 00:24:42.915 --> 00:24:53.576 We met up with Dylan Patel at Yotta just a few weeks ago, and we asked him, "What's the biggest bottleneck people aren't thinking about?" And he said, "Drill bits for PCB boards." 140 00:24:53.936 --> 00:25:00.636 PCB boards- I had to, I had to, I had to Google that. I was like, "What?" And then I got... Quickly I was like, "Oh, it's the little drill tips. They go in and they- Yeah... 141 00:25:00.676 --> 00:25:09.476 drill the actual, like, electronics boards that sit, that the stuff sits on. So yeah. Just- I mean, that's a niche trade right there... just think about that. Yeah, just think about that. Like, the... 142 00:25:09.976 --> 00:25:21.136 There is a need on every single layer of this stack, and that's when people talk about this AI bubble as being something scary. I think you can take that 143 00:25:22.116 --> 00:25:29.896 kind of inside a little bit, because a bubble like this does touch everything in the market. And I think as, like, humans, we have a hard time thinking about exponentials. 144 00:25:30.436 --> 00:25:33.716 This is one of those cases with the memory stock. So there's an exponential. 145 00:25:33.756 --> 00:25:43.956 There is a need for this equipment on every part of the globe, and you're going to see the few companies that can provide this at scale have huge markups on all their numbers. 146 00:25:44.436 --> 00:25:57.516 Uh, last thing I'll say, I throw it back to you, just what a reversal versus a few weeks ago. And this is so classic, right? But you think it's all over, all of our stocks are down 50, 60% year to date. 147 00:25:57.556 --> 00:26:07.436 Like, we're off way from the highs. Like, is situational awareness gonna make it? Things are only getting worse. And then there's, like, a little bit of good news, and then, like, a little more good news comes out. 148 00:26:07.476 --> 00:26:18.036 And then all of a sudden, like, Meta's doing a huge raise because, like, they're so bullish on the whole thing, and, like, Claude and Anthropic are having huge usage growth despite everyone saying it's on. 149 00:26:18.416 --> 00:26:28.196 And then you see stuff like this, like, oh, the memory trade is back. So never, never doom pill, never dark pill, never red pill. Like, s- stay- Yeah... with the trade is what I kinda think after seeing this. 150 00:26:28.916 --> 00:26:38.576 Look, look, if the memory trade is so back, we... You need to refer back to this show that you heard it here first. And if it's not so back and we keep going down, just forget we ever even covered this story. 151 00:26:38.616 --> 00:26:48.256 But let me, like, pull up the actual numbers, 'cause the fundamentals are very impressive. I think people just got way too reactive about the stocks. We'll s- so here's the numbers from the quarterly earnings. 152 00:26:48.535 --> 00:27:05.516 One, revenue was up nearly 80 billion US dollars. That is a company record, and it's up 32% from last quarter, and more than 400% from this quarter last year. Operating profit was about $63 billion. 153 00:27:06.096 --> 00:27:16.396 So [laughs] of that 80 billion revenue, 63 billion was operating profit, which is sevenfold increase year over year. This is the sixth straight record quarter, as I said. 154 00:27:16.616 --> 00:27:28.116 And then that one quarter, this one past quarter, brought in more revenue than all of last year. And this is happening everywhere you, you look. Micron just posted an operating margin above 80%. 155 00:27:28.816 --> 00:27:42.136 And then Samsung, I got the chart here, it's up great this week. Up 9, 10%. Samsung is also rebounding this week. And the interesting thing is, like, like, why did memory just become all of a sudden the trade? 156 00:27:42.676 --> 00:27:59.636 It's historically been the commodity with the low margin layer of the chip business. It's been the story. [upbeat music] Riddled with drama. Morgan Stanley thinks Terawulf is going to more than quadruple. 157 00:28:00.496 --> 00:28:08.136 It's the most bullish call for the stock that we've seen from any investment bank this year, and we are going to dive into the numbers here on this show. 158 00:28:09.036 --> 00:28:19.676 Also, on the episode today, we have Airen refinancing $363 million worth of GPUs. Can Airen survive Elon Musk's Neocloud extinction event? 159 00:28:20.596 --> 00:28:34.056 And for our final story, the memory trade may be back as SK Hynix posts record profits. And when I say record profits, I mean they just joined Nvidia as one of the most profitable companies in tech. 160 00:28:34.096 --> 00:28:44.996 You're

listening to Block Space Live, hosted by Charlie Spears and my co-host William Foxley, who's subbing for Colin, who is on a R&D expedition across the Atlantic. 161 00:28:45.756 --> 00:28:57.716 Block Space goes live every weekday at 1:00 PM Eastern. We are Compute's daily live show. If you want more Block Space Media content, go to our website, blockspace.media, newsletter, articles, et cetera. 162 00:28:57.776 --> 00:29:12.276 And we kick off every episode with a tweet. Will, what's this tweet say? Really quick, I think we picked the wrong tweet, 'cause I'm realizing now that the Fed decision goes live in 10 minutes. 163 00:29:12.296 --> 00:29:20.096 So [laughs] maybe- Oh my God, do we wanna do it? Like, well, do we wanna talk about the Fed decision? [laughs] I mean, that's... I guess everything kinda comes back to the Fed at the end of the day. 164 00:29:20.136 --> 00:29:28.516 But we got a few people in the chat talking about that. Yeah, yeah. Now it's like, Fed decision's about to happen, so it's funny. Maybe, uh, we'll keep an eye on that and give an update once it, once it happens. 165 00:29:28.916 --> 00:29:37.736 Uh, no, this is, uh, a, a tweet from the Information, "OpenAI plans to use Google's TPUs." We were chatting about this before the stream. 166 00:29:38.036 --> 00:29:44.976 I think a lot of people would be like, "Oh, oh my, like, OpenAI, they're cheating on Nvidia. They're... You can't do that." [laughs] Yeah. But come on. 167 00:29:44.996 --> 00:29:55.036 Like, all this hardware is gonna be commoditized, uh, even the information sector itself, intelligence layer, looks like it's gonna be commoditized with distillation. So can you really be that upset? 168 00:29:55.136 --> 00:30:03.476 I, I don't even see this as much of a headline. Uh, I just think it's more to come. E- even Elon is cheating on Nvidia. They're gonna make their own chips. Yeah. 169 00:30:03.536 --> 00:30:13.556 I mean, if he can, he's, he's gonna build the largest, uh, the largest building mankind's ever built. Well, okay, I mean, Jensen does have to be feeling a little bit like this tweet from Neg- Negligible Capital. 170 00:30:14.036 --> 00:30:27.736 "Jensen invests billions into OpenAI. OpenAI then starts making Jalapeno, invests in Cerebras, and buys Google TPUs." It's the meme of the kid. Jensen's saying, "Congrats. Happy for you. Nice," et cetera. 171 00:30:27.796 --> 00:30:36.156 So, um, you know, if you're, if you... The financing was circular. [laughs] Let's just look at the chips, baby. So we are gonna roll on. 172 00:30:36.176 --> 00:30:42.536 We're gonna talk about the Airen story at the top, but before that, a word from our sponsor, Soluna. 173 00:30:47.792 --> 00:31:01.132 Soluna Holdings, NASDAQ-listed ticker SLNH, develops data centers co-located with wind and solar plants, turning surplus renewable energy into computing power for AI and other intensive applications. 174 00:31:01.692 --> 00:31:11.652 We are proud to partner with Soluna Holdings here at Blockspace, and if you would like to learn more, please visit solunacomputing.com. That's solunacomputing.com. 175 00:31:17.352 --> 00:31:26.092 Eron closed $363 million of refinancing of deployed GPUs with Wing Spire, according to a press release this morning, Wednesday. 176 00:31:26.612 --> 00:31:35.072 The financing is securing principle, is secured principally by GPU servers and network gear, which is already deployed and generating revenue. 177 00:31:35.812 --> 00:31:48.792 Eron's share price closed at 27.44 on Tuesday, down 27.35% year to date, after a tremendous 2025, where it gained 284% in the year. 178 00:31:49.772 --> 00:31:56.432 This might look like a small deal, and in terms of financing it is, but it's also notable for a few reasons. First, why it's small. 179 00:31:56.952 --> 00:32:06.612 The company is guided to project CapEx of $25 to $30 billion for building out its dream of a complete verticalized AI neo cloud. 180 00:32:07.412 --> 00:32:18.792 In August, Eron said during its earnings call that they needed at least $25 to $30 billion to, to see that, uh, come to life, and $300 million doesn't do a lot there. 181 00:32:20.052 --> 00:32:27.512 It's also notable because Elon Musk recently said that the financing market for neo clouds is basically gone. 182 00:32:27.932 --> 00:32:37.512 Quote, "As of Sunday, as of the past few weeks, debt markets have almost entirely shut off access to money for any company that doesn't have substantial revenue independent of AI data centers. 183 00:32:38.112 --> 00:32:50.632 SpaceX closed 40 billion of debt from GPUs, but we're investment grade, have Starlink and launch revenue." That means that 200 plus neo clouds are going to- Story. Riddled with drama. 184 00:32:53.792 --> 00:33:06.992 Morgan Stanley thinks Terawulf is going to more than quadruple. It's the most bullish call for the stock that we've seen from any investment bank this year, and we are going to dive into the numbers here on this show. 185 00:33:07.892 --> 00:33:18.532 Also on the episode today, we have Eron refinancing $363 million worth of GPUs. Can Eron survive Elon Musk's neo cloud extinction event? 186 00:33:19.452 --> 00:33:32.912 And for our final story, the memory trade may be back as SK Hynix post record profits. And when I say record profits, I mean they just joined Nvidia as one of the most profitable companies in tech. 187 00:33:32.952 --> 00:33:47.492 You're listening to Blockspace Live, hosted by Charlie Spears and my co-host William Foxley, who's subbing for Colin, who is on a R&D expedition across the Atlantic. Blockspace goes live every weekday at 1:00 PM Eastern. 188 00:33:47.672 --> 00:34:03.712 We are Compute's daily live show. If you want more Blockspace media content, go to our website, blockspace.media, newsletter, articles, et cetera. And we kick off every episode with a tweet. Will, what's this tweet say? 189 00:34:05.692 --> 00:34:11.692 Really quick, I think we picked the wrong tweet, 'cause I'm

realizing now that the Fed decision goes live in 10 minutes, so [laughs] Oh my God. 190 00:34:11.712 --> 00:34:18.932 Do we wanna do it, like, pull up-- Do we wanna just talk about the Fed decision? [laughs] I mean, that's, I guess everything kinda comes back to the Fed at the end of the day. 191 00:34:18.992 --> 00:34:27.372 But we got a few people in the chat talking about that. Yeah, yeah. Now it's like, Fed decision's about to happen, so it's funny. Maybe, uh, we'll keep an eye on that, give an update once it, once it happens. 192 00:34:27.772 --> 00:34:36.592 Uh, no, this is, uh, a, a tweet from the information. OpenAI plans to use Google's TPUs. We were chatting about this before the stream. 193 00:34:36.892 --> 00:34:46.092 I think a lot of people would be like, "Oh, oh my, like, OpenAI, they're cheating on Nvidia. They're, you can't do that." Yeah. But come on, like, all this hardware is gonna be commoditized. 194 00:34:46.312 --> 00:34:56.392 Uh, even the information sector itself, intelligence layer, looks like it's gonna be commoditized with distillation. So can you really be that upset? I, I don't even see this as much of a headline. 195 00:34:56.692 --> 00:35:07.032 Uh, I just think it's more to come. E- even Elon is cheating on Nvidia. They're gonna make their own chips. Yeah. I mean, if he can, he's, he's gonna build the largest, uh, the largest building mankind's ever built. 196 00:35:07.451 --> 00:35:15.192 Well, okay, I mean, Jensen does have to be feeling a little bit like this tweet from Neg- Negligible Capital. Jensen invests billions into OpenAI. 197 00:35:15.412 --> 00:35:26.792 OpenAI then starts making Jalapeno, invests in Cerebras, and buys Google TPUs. It's the meme of the kid. Jensen saying, "Congrats. Happy for you. Nice," et cetera. So, 198 00:35:27.692 --> 00:35:35.012 um, you know, if you're, if you have the financing with Circular [laughs] let's just look at the chips, baby. So we are gonna roll on. 199 00:35:35.032 --> 00:35:41.432 We're gonna talk about the Eron story at the top, but before that, a word from our sponsor, Soluna. 200 00:35:46.652 --> 00:35:59.972 Soluna Holdings, NASDAQ-listed ticker SLNH, develops data centers co-located with wind and solar plants, turning surplus renewable energy into computing power for AI and other intensive applications. 201 00:36:00.532 --> 00:36:10.512 We are proud to partner with Soluna Holdings here at Blockspace, and if you would like to learn more, please visit solunacomputing.com. That's solunacomputing.com. 202 00:36:16.212 --> 00:36:24.952 Eron closed $363 million of refinancing of deployed GPUs with Wing Spire, according to a press release this morning, Wednesday. 203 00:36:25.452 --> 00:36:33.932 The financing is securing principle, i- is secured principally by GPU servers and network gear, which is already deployed and generating revenue. 204 00:36:34.652 --> 00:36:47.632 Eron's share price closed at 27.44 on Tuesday, down 27.35% year to date, after a tremendous

2025, where it gained 284% in the year 205 00:36:48.604 --> 00:36:55.284 This might look like a small deal, and in terms of financing it is, but it's also notable for a few reasons. First, why it's small. 206 00:36:55.804 --> 00:37:05.404 The company is guided to project CapEx of $25 to $30 billion for building out its dream of a complete verticalized AI Neo cloud. 207 00:37:06.264 --> 00:37:17.644 In August, Iren said during its earnings call that they needed at least $25 to $30 billion to, to see that, uh, come to life, and $300 million doesn't do a lot there. 208 00:37:18.904 --> 00:37:26.364 It's also notable because Elon Musk recently said that the financing market for Neo clouds is basically gone. 209 00:37:26.784 --> 00:37:36.364 Quote, as of Sunday, "As of the past few weeks, debt markets have almost entirely shut off access to money for any company that doesn't have substantial revenue-independent AI data centers. 210 00:37:36.964 --> 00:37:47.844 SpaceX closed 40 billion of debt from GPUs, but we're investment grade at Starlink and launch revenue. That means that 200 plus Neo clouds are going to see guppy level debt and consolidation. 211 00:37:48.404 --> 00:38:02.564 Some will make it through, but not many." End quote. Charlie, gotta ask the question, is Elon wrong? Is he manipulating markets again? Is Elon ever wrong, or is he ever right? I mean, it's a little bit of both. 212 00:38:02.644 --> 00:38:16.384 I'm gonna say both and. Look, Elon talks his own book. We know this. He makes projections which shock you, and occasionally he delivers on those. Um, he said there's 200 plus Neo clouds. 213 00:38:16.424 --> 00:38:27.704 Now, I could probably personally name, like, 30. There's probably more-- There's definitely more than that. Um, but we do know there's just gonna be a lot of disappointed investors, a lot of disappointed clients. 214 00:38:27.764 --> 00:38:40.344 There's gonna be a lot of GPUs collecting dust once deliveries start coming in Q1 of 2027. But my question is, like, does Iren specifically, are they stuck holding the bag? 215 00:38:40.784 --> 00:38:48.864 Um, I would say they're much higher on the totem pole than some of these other companies that I, I couldn't name, less, less maybe even haven't even heard of. 216 00:38:48.944 --> 00:38:58.963 So, like, they're in a much better position here, and so I'm trying to fend off the Iren haters 'cause I see them furiously typing in the comments right now as I speak. Yeah. 217 00:38:59.004 --> 00:39:04.264 I mean, they-- we got a few of those, and we've certainly taken some heat from some Iren fans over the last few weeks covering some of the news. 218 00:39:05.604 --> 00:39:14.384 The gist of it is, like, the stock has not done super well this year compared to last year, and so we, we've seen a lot of investors get a little spooked by that CapEx number I said earlier. 219 00:39:14.924 --> 00:39:20.284 I think what you're seeing right now, though, is the maturity of the debt stack for a company like Iren. 220 00:39:20.764 --> 00:39:27.284 So if we look at the broader picture, especially from the, the latest earnings call, they forecasted again that $25 to $30 billion in CapEx. 221 00:39:27.664 --> 00:39:39.684 They have about $14 billion on hand in cash as of la-the last earnings call in August. And then they also have the ability to debt finance their builds once they are finished or use debt from their builds, I should say. 222 00:39:40.124 --> 00:39:48.884 So, you know, they have the Sweetwater sites or the Childress sites, and this looks like maybe the, the Prince George site, I think is, is probably what they're referring to here in this notice. 223 00:39:49.604 --> 00:40:01.604 They're basically going to, like, reverse mortgage that in a sense and be able to get cash back from it and then use that to continue to build out their vision of this verticalized AI Neo cloud. 224 00:40:01.984 --> 00:40:10.204 To Elon's point, it does help a lot when you have Starlink revenue, launch revenue, or, you know, anything else. Maybe if they merge one day with Tesla, they'll have Tesla revenue. 225 00:40:10.604 --> 00:40:24.284 And then you're able to get better, uh, investment grade, uh, benefits from having more revenue than just, like, what you're reinvesting in, which at the end of the day for Iren is energy, land, and GPUs. Yeah. 226 00:40:24.404 --> 00:40:34.764 Here's the tweet from Elon. I mean, this went giga viral. It was in response obviously to Chamath, so obviously two of the heavy hitters, two of the talking heads for the AI movement. 227 00:40:35.424 --> 00:40:49.544 Um, Iren chart will look at this down on the day. It looks like it started the morning at, what? Like, 28 down to 27. So market initially not a fan of this, which I don't really understand why. 228 00:40:49.664 --> 00:41:01.704 Maybe the-that's animal spirits. Um, I'm curious. Well, I mean, I would, I would just zoom out. Like, this is a drop in the bucket, uh, what they need for CapEx spending. So if they came out with a much larger deal... 229 00:41:01.924 --> 00:41:03.784 Look at the, the Cipher note, right? 230 00:41:03.844 --> 00:41:12.424 Their convertible note a few weeks ago, 850 million, and that really spooked the market 'cause there was some rationale for needing that convertible note, but it was also at a bad time. 231 00:41:13.344 --> 00:41:21.604 I think, like, a smaller financing plan like this, it's fairly vanilla at the end of the day. Like, they already have those GPUs on hand. They're humming along. 232 00:41:21.684 --> 00:41:30.424 I think it's, like, pooled together, or it's together AI, uh, and some other companies that they're, uh, using already have those leased out. So they're already making money on this. 233 00:41:30.444 --> 00:41:41.384 They're just, you know, using that money to go get credit and make more money. A few comments. I see Fairfax says, "Ugh, but can they triple net lease?" Uh, unsure if they triple net on

all these. 234 00:41:41.604 --> 00:41:50.484 Uh, a lot of the times that happens during the initial tenant agreement. And for, uh, Iren here, they're not always gonna go that decision to be kind of like a landlord. 235 00:41:50.704 --> 00:42:02.584 They're going to own everything, all the infrastructure pay for itself, and then get some sort of deal like they did with Microsoft, right? Where, like, Microsoft is coming in and using the GPUs that Iren builds. 236 00:42:02.884 --> 00:42:10.624 It's different than, say, like, a CleanSpark build where CleanSpark's just, like, the tenant, owns the power and the land, but they don't own the GPUs. And there could be, like, a few differences there. 237 00:42:10.704 --> 00:42:23.244 But I think, uh, and the Fairfax adds up similar to Ionic. I think that's probably fair. I haven't looked into Ionic since this summer. But I think in general, Charlie, going back to it, we have a Fed decision today. 238 00:42:23.864 --> 00:42:34.904 This wasn't a huge notice from Iren. Year to date, it's, it's down. They got a little bit of, uh, execution before we see any more growth in the stock, I think, for the moment. But not, not to say it's fair. 239 00:42:34.944 --> 00:42:45.124 It's just, like, there's more to come. Yeah. I mean, any, any few pennies you can scrounge up, maybe you call 363 million pennies these days in the scale of things. 240 00:42:45.764 --> 00:43:02.296 You know, whatever cash you can have on hand to front these deals and put towards projects, the better. So cash is king, and investment grade Is, uh, the usurper. So, um, we are gonna keep on rolling. 241 00:43:02.396 --> 00:43:10.476 Next story we have on the dock is Morgan Stanley. Very bullish on Terawatt, another one of our favorite portfolio companies. How high do you think their, their projection is? 242 00:43:10.536 --> 00:43:28.196 You'll have to wait till the story after a word from our sponsor, Luxur. [static sound] This episode is brought to you by Luxur's Commander, Bitcoin miner management software built for enterprise operations. 243 00:43:28.876 --> 00:43:42.316 Commander gives you real-time fleet monitoring, bulk remote commands across your fleet, and Intelligent Miner, which is an automated profitability engine that runs every five minutes, adjusting power settings to a live hash rate and energy markets. 244 00:43:43.276 --> 00:43:54.596 Ercot back tests show over 10% more profitability versus binary mining. Commander Pro is 100 bucks per megawatt, or 25 basis point full fee adder, 245 00:43:55.636 --> 00:44:04.616 which is roughly half the price of competitors, and comes with a 60-day free trial. Get started at luxur.tech/commander. 246 00:44:08.756 --> 00:44:18.196 Morgan Stanley reiterated an overweight rating on five AI data center stocks, including Hut8, Terawatt, Riot, Galaxy Digital, and Cipher Digital. 247 00:44:18.856 --> 00:44:28.836 Of the five, Morgan Stanley gave Terawatt the most bullish boost, with the price target 413% over its current market price at $12.67. 248 00:44:30.056 --> 00:44:39.196 The bank argues that months of underperformance reflect misconceptions about the PowerShell providers, and it's keeping an attractive view on the entire industry. 249 00:44:39.916 --> 00:44:55.096 Its bull and bear case is set at $104 and $17 for the stock. Other targets include $43 for Galaxy, 15-- oops, excuse me, $35 for Riot, and Cipher at 151 bucks. 250 00:44:55.376 --> 00:45:09.016 All those numbers significantly higher than their current trading average. The bank's core claim is that these operators are landlords, not Neo clouds. They sign 15 to 20-year leases instead of two to three years. 251 00:45:09.316 --> 00:45:18.016 They build shells at nine to $14 per watt versus 30 to 50 per watt, and they took no risk on chips or GPU allocation. 252 00:45:18.876 --> 00:45:30.516 Morgan Stanley values, values expected Terawatt contracts at 9% equity discount rate and a 7% terminal cap rate, which says-- which is above what most real estate investors expect. 253 00:45:31.316 --> 00:45:40.836 Charlie, these bullish price targets look a little bit better after the Anthropic IPO filing paperwork, which showed a deep cash balance and profitable compute segments. 254 00:45:41.356 --> 00:45:53.416 What's your take on these new price targets from Morgan Stanley, given the Anthropic IPO? Well, I can't say a whole lot about what I think a four X would look like, but I'll point out this. 255 00:45:53.536 --> 00:46:06.836 I mean, uh, Morgan Stanley is, uh, down over fif- I'm sorry, Terawatt was down over 50% from their all-time highs this past summer at, what, like, 28 bucks, 29 bucks. They're down at 12, so that's 256 00:46:08.076 --> 00:46:09.836 more than 50% retracement. 257 00:46:10.136 --> 00:46:29.116 So technically, Morgan Stanley at four to 41%, uh, would actually only be a two-- a slightly over two X from Terawatt's all-time highs, which are down maybe not because the fundamentals of Terawatt have changed, but because the data center sector has just taken a bunch of beatings over the past few months. 258 00:46:29.896 --> 00:46:39.316 Um, I do wanna mention that there have been a number of other bank notes and investment notes predicting the price that we've covered over the past few months. 259 00:46:40.056 --> 00:46:50.416 October 7th, Wells Fargo, Terawatt had a $30 price target, which would be, you know, roughly 100% upside from there. Actually, 120% upside. 260 00:46:51.056 --> 00:47:06.976 Morgan Stanley, as of, I believe, August, had Terawatt at a $62 price target, which by the way, would only be-- would be a, uh, would be a, uh, 500% increase from where we are today. 261 00:47:07.836 --> 00:47:21.436 And then also Needham, John Todaro, friend of the show here, I've got-- we reported on this again in August. Um, they kept their Terawatt target at 33 bucks, um, which again, is slightly over their all-time high. 262 00:47:21.536 --> 00:47:23.916 So the thing is,

like, everybody's bullish Terawatt. 263 00:47:23.956 --> 00:47:37.456 It's really just a matter of, like, uh, is it, is it how many-- how, how much multiple increases from here, which is a flat from the start of the year, or is it, are we just benchmarking to the previous all-time high of, like, 28 bucks? 264 00:47:37.836 --> 00:47:44.696 Long story short is everybody's bullish Terawatt. It-- you know, how bullish are you, is the question. A few thoughts here. 265 00:47:44.756 --> 00:47:55.076 So one, disclosure, I do hold Terawatt in my personal portfolio, and I'm a, a long-term holder of it. I enjoy what the team is building over there, and I do think that the PowerShell model makes a lot of sense. 266 00:47:55.656 --> 00:48:07.396 And there are, uh, th-there is a big divergence in the market that I think a lot of people don't know about when they're first looking at these stocks, that Neocloud, "Hey, we're going to not only own the power and the land, but we're also gonna buy the chips. 267 00:48:07.476 --> 00:48:14.036 We're gonna build the orchestration layer for GPUs. We're gonna go sign contracts with AI labs, or we're gonna sell our compute into a generalized market." 268 00:48:14.556 --> 00:48:21.696 And then there's the PowerShell model, where it's like, "Hey, we're pretty happy with just owning the power and the land. We will be the landlord, you can be the tenant. 269 00:48:21.916 --> 00:48:29.476 You get certain rights to come use our facilities." They typically sign 15 to 20-year deals, uh, and, and that's pretty stable. 270 00:48:29.516 --> 00:48:46.476 You can kinda, like, look at the, the net expectation for that over 15 to 20 years, and it's almost like the people who move in as tenants own the space for 15 to 20 years, uh, but not quite, because there's that profitable layer in between that companies like Wolf are able to sit in. 271 00:48:46.516 --> 00:48:57.196 And so I'm a huge fan of that. Now, on the other hand, I do think that there are some dangers here, and I'm just gonna pull up this chart, if you can help me do that. But there's, there's the other layer, which is- 272 00:48:58.312 --> 00:49:05.752 The funding risk for these sites. This is Cipher Digital, which I mentioned earlier in the show. They put out that convertible note, bad time in the market. 273 00:49:05.852 --> 00:49:13.252 They needed a little more money because co- cost overruns, expensive and hot to build. It's not expensive to build in Texas, but it's hot to build in Texas. 274 00:49:13.732 --> 00:49:24.112 They need a little more cash, uh, and the market kind of puked on it, and they've been trying to recover for a while. You can see that market seems to try to be getting going again, and it, it's struggling. 275 00:49:24.212 --> 00:49:33.932 But, uh, you can look at over, once these ads drop off, look at the, the year-to-date levels and things like that, and it, it's kind of struggling. I think so is TradingView at the moment. 276 00:49:34.432 --> 00:49:46.052 But it's, uh, yeah, pretty brutal in a, in a percentage term. Like, we're not necessarily getting where we want to with, with Cipher at the moment, uh, because of those cost overruns. 277 00:49:46.492 --> 00:49:55.772 So moving away from that segment and, and getting away from it, I want to pull up this video from Paul Prager. He's the CEO over at TeraWulf, and I think he does a good job explaining this. 278 00:49:55.832 --> 00:50:04.912 We love a good Paul Prager video. Was this... Is this the CNBC one? He had a great- Yeah... he had some great content. I linked it in the show notes, so we should be able to pull that up in a second. Uh-huh. 279 00:50:05.212 --> 00:50:12.572 But I'll let you grab that, and in, in between, I'll just kind of mention that the way that TeraWulf is thinking long-term at the moment is, 280 00:50:13.512 --> 00:50:21.312 let's go find more sites, and I expect them to have more lease announcements going into next year, and maybe even to earnings. Like, that- that's what these guys do. 281 00:50:21.352 --> 00:50:26.692 They're almost like real estate investors, where they go and find plots of power land and build that out. 282 00:50:27.112 --> 00:50:36.212 Uh, and it's excellent for investors because there's a little bit of risk diversification there versus the GPU market, where it's like, "Hey, we gotta go find debt. 283 00:50:36.272 --> 00:50:41.392 We gotta go find, uh, installation teams, orchestration. We have to go find customers." 284 00:50:41.512 --> 00:50:51.212 The two to three-year contracts, there's a lot of problems with that versus, like, hey, we need a plot of land, we need energy, let's go. Let's watch this from Paul Prager, he's the CEO over at TeraWulf. 285 00:50:51.212 --> 00:51:04.852 Let's take a look. Companies like CoreWeave, Neoclouds, versus companies like ours, we're a co-location company, which means we own the land, we own the energy, we build the building, and we operate the data center. 286 00:51:05.292 --> 00:51:18.512 So we have long-term predictable cashflow, and we get quality energy from an investment-grade credit like utility, Kentucky Power, AEP, and we sell it to a high-quality credit. 287 00:51:18.732 --> 00:51:32.752 In this case, our customer in Lake Mariner effectively is Anthropic. In the announced deal Hawesville, Anthropic. But what the investors also need to understand is that we have an investment-grade backstop. 288 00:51:32.812 --> 00:51:43.452 In Lake Mariner, it's from Google. In, in Kentucky and Hawesville, we have an investment-grade backstop commitment. So we can raise the capital at very competitive rates. 289 00:51:43.872 --> 00:51:54.692 I think the other thing that the investors need to understand is we're not all the same. You have to focus on execution. You must focus on execution. 290 00:51:55.352 --> 00:52:04.932 We have guided the markets that we're building at our facilities at 8 to 10 per megawatt, 8 to 10 million a megawatt. We are squarely

right in that range. 291 00:52:05.112 --> 00:52:14.892 We haven't changed our story, and we're delivering Data Hall 4 at the, at the, the fourth quarter, and CB5 in the first quarter of next year. 292 00:52:15.272 --> 00:52:29.472 So we're on schedule, we are on track to deliver within a timely fashion, we are delivering at the cost that we told the customer we would deliver at, and we have the capital. He's right. 293 00:52:29.532 --> 00:52:40.252 I mean, it's like, think about how long and persistent this narrative has been, that they've been on time, at the budget they targeted, and they have investment-grade counterparties. 294 00:52:40.312 --> 00:52:50.912 Like, it's almost like they saw the playbook happening, uh, a year before it came to fruition. So shout out to TeraWulf. Yeah, we're just, we're just bull- bull posting here for TeraWulf. 295 00:52:50.972 --> 00:52:53.852 Yeah, but, but the stock's down 60% [laughs] on the year, so you know. 296 00:52:53.852 --> 00:53:05.872 [laughs] Yeah, I mean, like, a lot of these got spooked, and there was a ton of compression in the, in the markets since July, uh, because it's like, oh, this tenant thesis, you do need to have multiple tenants. 297 00:53:05.952 --> 00:53:18.011 Remember, I remember a year ago we were thinking about this with who's going to sign next, who's gonna get the next deal, and then it became not the next deal, but how many different types of counterparties are you gonna have in this deal? 298 00:53:18.092 --> 00:53:27.552 Is it gonna be hyperscalers? Is it gonna be different AI labs? And then it became, okay, execution, we'd see the revenue start flowing in. And then it became, oh, are you keeping your costs down? 299 00:53:27.972 --> 00:53:37.052 Uh, oh, then it became, can you keep your debt levels within the boundaries? The game's always changing. Only a few teams are gonna be able to execute. Right now I like Wulf. 300 00:53:37.532 --> 00:53:46.012 Morgan Stanley also makes note of a few other companies, so I think we can leave the, the levels there. As always, check out the website, uh, blockspace.media for more content. 301 00:53:46.712 --> 00:53:57.512 Yeah, we publish a lot on TeraWulf, and, uh, if new price targets from the banks and investment banks that we cover drop, we'll turn them around quickly. You'll hear it on our channels first, blockspace.media. 302 00:53:58.192 --> 00:54:08.632 We're gonna talk about the memory trade. Is it so back? Um, it is not clear, but SK Hynix up big this morning. 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With Ligos, you always know where your Bitcoin is. 307 00:54:56.212 --> 00:55:07.748 Hold your keys, no wrapping, no bridging, no rebuy, uh, rehypothecation, and get competitive rates as low as 10%. APR. Go to lygos.finance to learn more. 308 00:55:07.748 --> 00:55:21.068 [clears throat] Is the memory trade back? SK Hynix just reported an eye-watering profits and is up 12% today. 309 00:55:21.948 --> 00:55:37.768 Here's what's going on and why investors may be piling back into the memory trade. So last summer, memory stocks like Samsung and SK Hynix soared upwards, and then there was a bloodbath as the memory trade collapsed. 310 00:55:38.248 --> 00:55:47.508 Across the major memory and storage makers, roughly a trillion dollars in market value was erased in a single week just earlier this month. 311 00:55:48.748 --> 00:55:58.108 SK Hynix, the industry leader in high bandwidth memory, HBM for short, fell nearly 60% from its peak in June. 312 00:55:59.368 --> 00:56:08.267 However, last night, SK Hynix reported third quarter results, and the numbers tell a very, very different story than the doom and gloom you've been seeing. 313 00:56:09.068 --> 00:56:26.108 Revenue for SK Hynix topped 100 trillion won for the first time in the company's history, which is more, sit down, than it earned all of last year. Operating profit came in nearly $60 billion at an 80% operating margin. 314 00:56:26.388 --> 00:56:34.528 That's the sixth consecutive record quarter for the company, and it beat consensus by about 10%. 315 00:56:35.328 --> 00:56:48.048 I will go deeper into the numbers behind SK Hynix, but first, throw it to Will, who, granted, Will is not a memory trader here. But Will, these profit numbers are about as good as it can possibly get. 316 00:56:49.088 --> 00:57:00.548 Why do you think investors were so ready to bail on this trade just a few weeks ago? I mean, I remember the summer and the, and the craziness that we saw with this stock. 317 00:57:00.928 --> 00:57:05.788 Uh, South Korean markets were big on it, and there was a lot of margin calls. 318 00:57:05.908 --> 00:57:15.588 There was some stat about the sizable percentage of the South Korean population had been margin called over the summer, and I, I think this IPO had a lot of reasons to do with it. 319 00:57:16.588 --> 00:57:27.228 Look, the, the, uh, the entire game is predicated on having all of the stack. Memory is part of that stack. So if you're an AI bull, then you can't just say, "Hey, I'm gonna sit out on part of this." 320 00:57:27.328 --> 00:57:35.648 And parts of that stack have more of a bottleneck than others, right? So we talk about power

land on this show because that's a lot of the counterparties we're used to working with. 321 00:57:35.688 --> 00:57:45.148 We just talked about Morgan Stanley and, like, their bullish price targets on the PowerShell providers. Think about the hardware layer. There's all this hardware that needs to be talked about. 322 00:57:45.228 --> 00:57:55.388 We met up with Dylan Patel at Yotta just a few weeks ago, and we asked him, "What's the biggest bottleneck people aren't thinking about?" And he said, "Drill bits for PCB boards." 323 00:57:55.388 --> 00:58:06.108 PCB boards- I had to, I had to, I had to Google that. I was like, "What?" And then I, I quickly was like, "Oh, it's the little drill tips. They go in and they drill- Yeah... actual, like, electronics boards that sit... 324 00:58:06.148 --> 00:58:11.788 that the stuff sits on. So yeah. Just- I mean, that's a niche trade right there... just think about that. Yeah, just think about that. Like, the... 325 00:58:12.288 --> 00:58:23.448 There is a need on every single layer of this stack, and that's when people talk about this AI bubble as being something scary. I think you can take that 326 00:58:24.428 --> 00:58:32.208 kind of inside a little bit because a bubble like this does touch everything in the market. And I think as, like, humans, we have a hard time thinking about exponentials. 327 00:58:32.748 --> 00:58:36.028 This is one of those cases with the memory stocks. There is an exponential. 328 00:58:36.068 --> 00:58:46.268 There is a need for this equipment on every part of the globe, and you're going to see the few companies that can provide this at scale have huge markups on all their numbers. 329 00:58:46.748 --> 00:58:59.828 Uh, last thing I'll say, I throw it back to you. Just what a reversal versus a few weeks ago, and this is so classic, right? But you think it's all over. All of our stocks are down 50, 60% year to date. 330 00:58:59.868 --> 00:59:09.748 Like, we're off way from the highs. Like, is situational awareness gonna make it? Things are only getting worse. And then there's, like, a little bit of good news, and then, like, a little more good news comes out. 331 00:59:09.788 --> 00:59:20.348 And then all of a sudden, like, Meta's doing a huge raise because, like, they're so bullish on the footprint. And, like, Claude and Anthropic are having huge, huge growth despite everyone saying it's on. 332 00:59:20.728 --> 00:59:30.508 And then you see stuff like this, like, oh, the memory trade is back. So never, never doom pill, never dark pill, never red pill. Like, s- Yeah... stay with the trade is what I kinda think after seeing this. 333 00:59:31.228 --> 00:59:40.888 Look, look, if the memory trade is so back, we... you need to refer back to this show that you heard it here first. And if it's not so back and we keep going down, just forget we ever even covered this story. 334 00:59:40.928 --> 00:59:44.868 But let me, like, pull up the actual numbers 'cause the fundamentals are very impressive. 335 00:59:44.968 --> 01:00:41.508 I think people just got way too reactive about the stocks [clears throat] 336 01:00:41.548 --> 01:00:50.728 Like, why did memory just become all of a sudden the trade? It's historically been the commodity with the low margin layer of the chip business. It's been not flashy. 337 01:00:51.008 --> 01:01:00.948 It's been a consistent part of the Korean economy particularly. And right now, it's, like, the most profitable business in tech alongside Nvidia. SK Hynix's $63 billion 338 01:01:01.948 --> 01:01:11.728 in operating profit is within about a billion dollars of Nvidia's last quarter. So it's kinda crazy to see these two companies have roughly the same, uh, operating profit. 339 01:01:12.320 --> 01:01:27.720 Only Samsung and NVIDIA earn more operating profit among these global tech companies. [lips smack] What is driving this? Well, it's the high-bandwidth memory, specifically HBM4, high-bandwidth memory version four, 340 01:01:29.040 --> 01:01:34.920 which is the newest high-bandwidth memory, and that's the mem- the memory that goes on all of the AI chips. 341 01:01:35.560 --> 01:01:46.100 Um, it started full mass production, and it's, uh, happening at SK Hynix's new fab, which is called M15X, which is fully online by the year-end. 342 01:01:46.680 --> 01:01:58.520 And then you also have a new type of RAM, DDR5, but it's specifically for servers. So it's server DDR5, specifically data center memory. Sales are up 40% from last quarter. So back to Will. 343 01:01:59.860 --> 01:02:09.320 Will, you're not a memory investor. You're a data center guy. But I'm still gonna put you in the hot seat. Put your investor hat on. The stock was down 60%. You've seen bubbles. 344 01:02:09.380 --> 01:02:21.000 We've been in crypto [chuckles] for, like, nearly a decade. Um, the company just posted some of the best numbers it's ever posted, at the highest in its category in manufacturing and tech. 345 01:02:21.860 --> 01:02:31.060 Is this the moment to get back into memory? Or people stopped out- Oh, wow. Yeah. What do you, what do you d- You can just, like, sense the vibes in the timeline. What do you think? 346 01:02:32.220 --> 01:02:41.820 I mean, good earnings, get in there, right? Like, especially if the expectation going forward is just more and continuous growth. That's all I can really say about it. I'm not a memory trader. 347 01:02:41.880 --> 01:02:50.120 I don't, I don't touch it too much. But if you're beating consensus by 10%, and that's how all these hedge funds kinda do things now. It's not really like, "Oh," like, "what was your revenue? 348 01:02:50.180 --> 01:02:56.400 What was your profitability on that?" Like, it's all consensus. Like, are, are you beating? Are you under? Were you under? How are you over? And, 349 01:02:57.320 --> 01:03:08.580 and if it's over that much, for one, I think a lot of these buy-side, sell-side firms need to get better information. Uh, and, and two, probably a good place to look at. I don't think that we're gonna see a slowdown 350 01:03:09.480 --> 01:03:13.820 in these sort of applications, desire for these applications, cost for these. 351 01:03:14.360 --> 01:03:24.960 It would be interesting if there was, like, some sort of metric you could kinda look at, like the cost to purchase new GPUs and how that plays into, uh, the demand for memory, things like that. 352 01:03:25.060 --> 01:03:30.200 But I guess it would all be pretty, like, backwards-looking, maybe not that helpful. Uh, but yeah, I... 353 01:03:30.240 --> 01:03:42.300 my brain is kinda thinking around this now that it's popping again, like how can we think about actual deployments, purchase price for these things, and then tie it back into bottlenecks like memory. Yeah. 354 01:03:42.400 --> 01:03:52.700 You don't hear people talking about the bottleneck trade right now, but I bet you they start doing it. Like, I got this tweet pulled up, um, this went viral today in light of the SK Hynix news. And again, it's sarcasm. 355 01:03:53.140 --> 01:04:00.940 So he says, "Oh, no. Bad news for the memory bulls. SK Hynix only made $62 billion of profit in one quarter. 356 01:04:01.380 --> 01:04:13.580 For perspective, that's about seven years' worth of Tesla profits, or about 15 years of Palantir's current yearly profits, or six years of AMD's current yearly profits, all in one quarter, not one year. 357 01:04:13.960 --> 01:04:23.140 But it doesn't really matter, 'cause memory, it's cyclical, and cyclical money is like Monopoly money. And all these really smart people on X taught me that cyclical money doesn't really count." 358 01:04:23.720 --> 01:04:37.940 So it, the tweet goes on and on, but, like, it does underscore that when you compare [chuckles] how much profit SK Hynix just made compared to all the other cool companies worth way more than it, it does boggle the mind. 359 01:04:38.500 --> 01:04:53.280 So is the memory trade back? Let us know in the comments. Let us know what you think. We will respond. Thank you for listening to Block Space Live, co-hosted by Charlie Spears and William Foxley. 360 01:04:53.740 --> 01:05:06.220 My co- my former co-host, Colin Harper, is somewhere in the middle of the Atlantic Ocean, I hope, doing some R&D on, uh, prevailing trade winds. If you like the show, leave us a comment. 361 01:05:06.420 --> 01:05:16.760 We do this every single weekday at 1:00 PM Eastern. However, there is a slight change of the schedule. Given that Colin is out, we may be doing this Monday, Wednesday, Friday. 362 01:05:17.300 --> 01:05:30.399 Still, make sure to hit that like and subscribe, turn the notification bell on so you get the push notification on your device when we're live, 1:00 PM Eastern. This is Compute's daily live show. Thank you for watching. 363 01:05:31.120 --> 01:05:48.600 I'm Charlie. I'm Will. We'll see you tomorrow. [upbeat music]