Binance Hack Shockwave: Hyperscale Earnings, BTBT, WYFI, HOST, IREN, CORZ & SLNH News!

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Hey guys, welcome or welcome back to the channel McNally Money, the official home of power analysis.
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A big episode in store for you today as we're covering last night's Binance Bitcoin hack.
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In addition to that, hyperscale earnings, talking CapEx and free cash flow and top AI infrastructure news.
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A lot to get through before we do.
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Take a second, hit the like button, guys.
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Big help to myself and the channel.
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Anthony absolutely loves it.
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If you're not already subscribed, McNally Money, feel free to join.
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And let us know in the comment section below what you make of today's news from Binance and the Hyperscalers.
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With that being said, let's get into today's podcast.
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All right, guys, away we go.
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As you can see on location down in Phoenix, Arizona, and just in time, Anthony, for a big podcast here.
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We've had a major situation overnight at Binance.
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We're gonna be talking about that.
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We've got hyperscaler earnings, gonna be talking CapEx and some big headlines in the AI infrastructure space.
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Uh we'll kick off with Bitcoin, Anthony.
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Now in the$77,000 range.
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We'll get into the reasons here in a second, but what do you make of this mess this morning?
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Yeah, it's it's um it's a it's a bit of a mess, and it's not something that's totally unusual.
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It's we've seen it happen um a few times now in the past few years.
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There's been an attack on on the exchanges, and um yeah, it's not gone too well, and we'll cover it in a second.
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You know, look at the Bitcoin price there, 24 hour, you can see the pullback.
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I mean, we've been talking about this range of 80 to 85,000.
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I'm afraid that's been sort of like pushed to one side.
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The only thing I'll say though is, you know, we're talking um in terms of the size of the of the theft there, you know, 6.3 billion of cryptocurrencies um you know removed by by hackers, and the Bitcoin price has dropped around about 3%.
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Now, if you'd have gone back a few years ago and that amount of money had been hacked, you'd have seen a 20 to 25, maybe even higher percentage drop in the Bitcoin price.
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So, you know, yes, it's an issue, but still still undetermined as to whether, you know, what's the cause of this, but um I'm assuming um, you know, there'll be retrospective action in terms of securing even further the network because this is an issue, you know.
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Uh, how many people out there have got crypto?
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And I suppose, Bryce, from your perspective, you know, does this actually move into the wider perspectives of outside of crypto into the financial arena?
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Is anything safe out there?
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Well, and that's what we were talking about, Anthony.
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You think about these crypto exchanges, Binance, one of the original uh most well-known, well-recognized exchanges, the best engineers working there, and they're still finding ways to hack into these systems or exchanges.
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Where does it stop?
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With banks, with uh brokerage accounts, all kinds of data uh now susceptible to AI, AI hacking.
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Now, in the terms of Binance here, Anthony, nothing confirmed yet, but it does look like a hack.
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They're saying potentially North Korea.
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We've seen action from this group and region before.
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Can you walk us through what we know so far?
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Yeah, things we know for certain, it's approximately 6.3 billion.
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It took 20 minutes.
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It's the largest crypto theft ever.
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It took place about 4 p.m.
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Eastern time uh Thursday from Binance wallets across at least 10 blockchains, including Ethereum, Bitcoin, Tron, and Solano, with most of it taken, as I said, 20 minutes um via uh TRM labs.
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Now, 2.8 billion was frozen, so about 44% of the total, but almost all stable coins, roughly 3.3 billion, mostly Bitcoin, Ethereum, and XRP, which can't be frozen.
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You're right to mention, you know, is North Korea suspected?
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We're not sure yet, but um, certainly all eyes are pointing towards TRM labs and chain analysis link uh the attack to Trader Traitor, the group that the FBI blamed for last year's 1.5 billion uh Bybit hack.
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While Elliptic says North Korea is likely responsible but hasn't tied it to the group as of yet.
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Now Binance and law enforcement haven't named any suspects, and Binance says it will cover all the losses, although that does raise a point there.
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I mean, they are going to use their balance sheet to cover these losses, and um, you know, that's a big amount to find, and shareholders in Binance might feel a bit underwhelmed that um you know that effectively it could erode some of their um valuation in that company and that therefore their position in that company.
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So this is a challenge.
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Um so nobody's going to um uh maybe except the shareholders, nobody's going to you know effectively lose because it will be covered, um, but it does raise that uh raise that issue about you know security.
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Uh you know, we've been talking on the channel for years and years about you know blockchain being you know secure.
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And now, you know, is it um you know the case of your passwords?
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This wasn't even requiring to use passwords, this was done a dip a totally different way.
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This has basically tricked the blockchain in terms of the way it's been set up, and by the time it's been highlighted, they've actually managed to move uh a lot of the uh a lot of the coins um onto other blockchains and then sort of like utilize that uh to to make their getaway.
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I expect now that there'll be a big push now to get uh further security to really um uh you know to really bolster this because this will not send out a great message for new potential um people coming into the space.
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There'll be uncertainty with these headlines, it's not small amounts, 6.3 billion is a significant large amount.
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The timing is significant as well, only 20 minutes to do this.
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I mean, it took the Hatton Garden robbers about three days to remove all the gold from London uh back in the 60s, it took, and that was about 40 million pounds worth.
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Um 6.3 billion 20 minutes uh takes some takes some imagination, and it and it was imagination, but um overall, nobody's hurt, the money's going to be replaced.
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Uh Binance will take the hit on the balance sheets, as we said there.
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But I expect now that some big, big security measures will be coming in um to sort of like try to and actually if it's been caused by AI, then use AI to start bringing in some better security measures as well.
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Use it in a positive way to prevent this in the future.
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That's maybe a good way of looking at this.
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Um, if they can use it for removal, let's move it to use it to shore up the up the defence systems, um, because it certainly needs it.
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We don't need these stories here.
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Bitcoin was in a nice position at that time between that 80,000-85,000.
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Um, it's pulled up a little bit since it dropped to 77,000.
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Let's see how it plays out the rest of the day.
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We'll pick it up on Monday when uh Asia come on, and hopefully we we can get some recovery towards that 80,000 again, but not a great news story for Bitcoin or crypto today.
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No, and a couple interesting tweets here, Anthony.
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Michael Saylor, again, to your point, saying Binance has committed to its own balance sheet to making customers whole.
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Uh, you can see Binance put out an announcement there, and then an interesting one from Elon Musk.
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We know he likes to stir the pot a bit.
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Uh, timing, I guess, could be better.
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He does, and um, you know, he's put out a little smiley emoji there, but uh ZZ has has responded to that one um uh quickly and said, look, you know, we got a lot of respect for you, but not the greatest time to troll.
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Please stop.
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And by the way, uh we invested$500 million in your Twitter takeover, and that's now worth a billion dollars in SpaceX.
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Would appreciate if you show a little support, thanks.
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And you can see the uh the feelings there as CZ.
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He was in um Hong Kong when I was there for the Bitcoin Asia conference to a packed audience, and he gave the best part of an hour's presentation.
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Um, really talking uh Bitcoin and really from a from a really down to earth level as well.
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Um, so extremely good presentation.
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I was part I was there with my with my wife listening to that one there.
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One of the better presentations I saw in in Hong Kong, apart from the two that I did, actually, they were very good as well.
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But um, yeah, he was there to do that.
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And he's doing he's saying that I think he's saying the right thing here, really.
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We don't need to look on the downside.
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We want to come up with uh Elon should come up with a way of you know all his um knowledge and technology, come up with a preventing this type of thing.
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Because bear in mind, uh Tesla have one of the largest, they're one of the largest holders of Bitcoin.
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They surely don't want to lose um their I think 11,000, 12,000 Bitcoin on the balance sheet.
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That's a significant amount of Bitcoin, one of the largest holders from a public company.
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So uh not the greatest time to tweak a smiley emoji.
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No, it's not.
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And uh we obviously know this causes a lot of questions now.
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What's the best way to store Bitcoin?
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Is iBit the best way to go?
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Should you go into one of the proxies like Strategy or Stretch?
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Uh, or do you take your chances with the exchange?
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I don't know, Anthony.
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It's it's getting harder and harder to find a safe place to store this stuff.
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Uh, in terms of the stocks, though, they're definitely taking a hit here.
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We've got the Bitcoin focused ones, ABTC, the Riots, the Maras with the HODLs getting hit on the Bitcoin side.
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We're also seeing a sell-off market wide here.
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So SP, uh, hyperscaler neo cloud, and of course the AI infrastructure stocks.
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This is following yesterday, which was also a pretty bad day.
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Yeah, not a great day for stocks today.
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A sea of red against uh the stocks there.
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Wolf having the best day in there, down nearly 3.5%.
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And actually, that stock has recovered somewhat.
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It was down at 11.52 in earlier trading.
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Now it's at 12.31, so it's gained 50 cents, and it's still down 3.4%.
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So um a little bit of recovery there.
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But you look at the 52-week range, pretty much everything towards its low.
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Um, I'm looking at my portfolio, it's at a year's low as we speak now.
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So that no, again, all the signs are the same.
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No big volumes today in terms of uh stocks, so really, probably on this news um that's spreading across the market there, even though most of these companies are doing very little in terms of mining anymore.
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Uh quite a few of them still hold Bitcoin in their treasury positions.
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Uh, some of them are still mining significantly, like the likes of BitDear, like uh Mara, uh, but don't seem to be impacted too much.
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ABTC, which is a pure play, um, they don't have any strategies to do anything other than either buy Bitcoin or produce Bitcoin, and they're down you know, uh over 9% as we speak there.
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Um, and so you know it's a it's a it's a it's a red day.
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Moving to the heat map, we can see you know that sea of red there.
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The five-day change is um predominantly green, there's a one percent increase in the five-day change, but we've had some three or four days of of reasonable um updates, and so um, you know, we've seen that sort of you know, the the greens coming through there, but one one day can just turn that around.
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Then you look at the one month change down 35%, that four-month change.
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We talk about that four-month period there, down 52% on average, and then the year to date and one year change, 17 and 13% down there.
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So, pretty much the sea of red, uh, with the exception of the of the five-day change where it's um there's a there's a few green shoots there, but uh, we need the daily rate to really recover um to sort of help all those periods.
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So, you know, maybe next week brings us some more positivity as earnings start to come out in real force next week.
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Got quite a few earnings coming out from companies we talk about on a regular basis.
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Core Scientific, uh, Keel have got their results next week, Riot got their results next week, so some big names out there.
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Hive, I think the week after.
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So maybe some of those results, maybe some announcements with those results.
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I know we've seen before a lot of companies like to hold a little bit back for earnings, and we're hoping that um maybe Ben, maybe Jason have got something under their um under their wings there, ready to sort of like to give the market something to hope, hope, because we need a bit of hopium at the moment.
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Um, it's took a bit of a bashing over these last four months, pretty much if you think back since the last earnings period.
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So um it'd be nice to get some some positivity back into these stocks before the end of the year.
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Yeah, it certainly will be.
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Uh now, something that could act as a catalyst here, Anthony, hyperscaler earnings.
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So we've got a couple to go through here.
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We're gonna start with Alphabet or Google.
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Specifically, we're talking CapEx here and free cash flow.
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We're seeing some big changes from the biggest companies in the world.
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I'll let you start off with Alphabet.
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Uh, obviously, Google, a big player in the AI space.
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Well, they've been a big player in this space for a long time.
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I mean, people have been using Google for many, many years, and they just dominated the space in terms of search engine.
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It's the number one search engine out there that everyone's used.
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However, now that we've got um various AI um applications coming to market, like ChatGPT, like Claude, like News, and many, many, many others, they're actually doing exactly what Google does, and some of them are actually doing it better.
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So, Google at the moment are in that sort of quandary.
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They've got Google One, which was gold standard, and now they're thinking about you know, what do we do to bring on Google Two?
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And in terms of their investment, uh, you know, they're looking to invest significant amounts, and this is causing a problem for the market in terms of in terms of cash flow.
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Um, if we look at the revenue though for Google Cloud, um, you know, that's doubled um to 30.7 billion, and it as it's as it's now hit, and listen to this, a half a trillion dollar run rate.
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So we took about, you know, yesterday, I think we talked about iron and 4 billion run rate by the end of the year, and Google are at half a trillion, and we're just at the starting point, really, for this particular area.
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This is how much these companies can grow uh quickly.
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Now, the cloud revenue growth, um, you know, it's 103% up uh with operating income of$11.1 billion versus$3.6 billion just a year ago, and that's been helped by enterprise AI infrastructure and sales of its TPU chip systems.
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The total revenue itself for the company was$127.6 billion for the quarter.
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That's the uh 13th straight quarter of double digit growth.
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So some some really positive parts of this um uh with operating income up 30% and a 31.8% operating margin.
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These are numbers that are fantastic, you know, positive operating growth, operating margin.
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Uh search growth um also up 12% to 63.4 billion.
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So even um, you know, Google as a search engine there is still bringing in more revenue than it's ever done before, with query growth the highest in five years, according to their CEO, Sundar Pichat Pikay.
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Um 1 billion users are using the Gemini app, which um which the CEO calls the fastest growing product in Google's history, uh, with model APIs processing nearly 32 billion tokens a minute, which is more than four times just a year ago.
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So this is you know, uh, you know, you go through their their earnings to start with, it's it's just tick, tick, tick, tick, tick, tick, tick.
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Net proceeds from senior notes and stock issued at its ATM value, there totaled about$42 uh billion dollars to help um uh you know uh grow the capital expenditure.
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Now, here's an area that um that um didn't do as well.
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The earnings per share, um, because obviously they've issued more shares now that that's dropped to$2.12.
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So still still very positive.
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$2.12 every share.
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But a year ago it was$2.87.
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And one of the main reasons for this is you know, effectively there's been an$8.2 billion expense from the income statement relating to the uh reduction in value of um shares held in other companies, effectively.
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So Google being the size it is, remember we talked about the stake in TerraWolf, we talked about the stake in Cypher, they've got a massive stake in SpaceX, plus a number of other companies.
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What's happening to the tech market over the last four months?
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Hello, we've just talked about that.
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You know, some of these stocks are down 30, 40, 50 percent.
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So if you look at the uh, you know, the the impact to Google's uh valuation, that goes straight to the income statement.
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Any reduction in assets, just like we highlighted with um, you know, when companies increase you know that through their Bitcoin value, they get that as a positive.
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This is the exact opposite.
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If the sh if the value of assets, including shares, including Bitcoin, drop, then they report that lower value, and that it goes straight to the income statement, so it's it's there as a as a loss.
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So that uh 8 billion impacted their EPS, but everything else was phenomenal.
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The only other one negative factor, which I don't I'm not sure it's negative, is the fact that they're spending a lot of money on CapEx.
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Well, you know, hey ho, you want to grow these companies to be something you know bigger than everybody else, you've got to spend you've got to spend capital to grow, you know, you want to be through that hurdle first.
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And we've just highlighted Meta's uh numbers.
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I mean, their CapEx expenditure for this quarter alone was 34 million.
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Then you look at um what Google have spent, and it's 51 billion, and that's like 50% more than Neta.
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Um, and that's jumped to 114%, which has basically put their free cash flow in negative.
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So if you've got like 42 billion in operating income and you've spent 51.4 billion in Capex, hello, one versus the other, you've got a$9 billion net uh negative net cash flow, which the market highlights, and so that's an issue, but not really is it an issue because when companies grow, how are you gonna grow?
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They're not gonna, you know, these these facilities don't come along and don't cost anything.
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And you look at um, you know, the cost of these facilities at 12 to 14 million, the GPUs, anything from 30 to 35 million per megawatt.
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So you're gonna spend a lot of money to get there.
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Uh so I don't think it's as as as as big a deal, but the market obviously you know has has took a downside.
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That share price um after closing on on Thursday was uh or after on Wednesday, sorry, was down 12% after these results came out.
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So that just shows you that's one of the biggest one-day drops Google's had there, but not insurmountable.
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Now, if you look at the full year CapEx guidance for 2026, it's going to be between 195 and 205 billion.
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I mean, we were talking six months ago, these companies were going to spend about$100 billion each.
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Now they're literally doubling those estimates there.
00:19:47.039 --> 00:19:59.279
And if they've spent$132 billion for the through the first three quarters of the year, that's another$63 billion to$75 billion to spend in the last quarter of the year alone.
00:19:59.359 --> 00:20:13.359
And it doesn't stop there because they've already provided the guidance for 2027, and yeah, you've guessed it right, it's going to be another 50% increase in CapEx to$300 billion just for Google alone.
00:20:13.599 --> 00:20:18.640
And um, that's versus Meta where they're guiding up to$145.
00:20:18.720 --> 00:20:21.599
So again, double the amount that Meta are doing there.
00:20:21.759 --> 00:20:34.559
I think Google really are looking to sort of bring something out that will sort of like just be a game-changing application in the market, just like uh Google search engine was when that came out all those years ago.
00:20:34.799 --> 00:20:45.440
Now they have uh raised uh that 41 billion uh to help towards this, and I've already explained 28.7 through the senior notes and 12.4 through ATM stock.
00:20:45.759 --> 00:20:53.839
Uh now if you think about the future ahead now, bear in mind they're spending 200 billion this year, 300 billion next year, whatever they spent 100 billion last year.
00:20:54.079 --> 00:20:59.359
A lot of this cost is around GPUs and obviously a lot about infrastructure as well.
00:20:59.519 --> 00:21:05.279
There's gonna be some big depreciation costs coming through over the next five years for the for these costs going out there.
00:21:05.359 --> 00:21:09.519
So you're gonna see that start to flow through the income statement.
00:21:09.599 --> 00:21:20.400
And so, you know, uh it's going to take a few years before these revenues start really showing, and the net income from these revenues, bear in mind, you'll have depreciation.
00:21:20.480 --> 00:21:27.039
So depreciation being the cost to deliver this um revenue, you know, the cost of the GPUs, the cost of the site.
00:21:27.119 --> 00:21:30.880
Um, infrastructure would probably be depreciated over a longer period, maybe 20 years.
00:21:30.960 --> 00:21:37.039
But GPUs, I would think at the longest period five, might even be even less than that price.
00:21:37.119 --> 00:21:41.119
So overall, I think the the news is positive.
00:21:41.200 --> 00:21:43.519
They're spending the money, they've got the money.
00:21:43.680 --> 00:21:47.440
Um, they haven't had to go out and borrow hundreds of billions of dollars.
00:21:47.519 --> 00:21:56.720
They've been very savvy in using cash flow from income, cash uh from using their ATM and getting a smaller amount that just under 30 billion senior notes.
00:21:56.880 --> 00:21:59.759
There, um, this sounds to be very manageable for.
00:22:00.240 --> 00:22:04.799
Google, but the market obviously reacting negatively towards it.
00:22:05.039 --> 00:22:09.440
Yeah, it seems we can't catch a break now, regardless of what headlines come out.
00:22:09.519 --> 00:22:12.000
But we see that as an investment in the future.
00:22:12.160 --> 00:22:17.839
Obviously, short-term pain with free cash flow, but that long-term gain in terms of AI revenues.
00:22:18.000 --> 00:22:20.160
Now, the next one we have up, Microsoft.
00:22:20.240 --> 00:22:22.799
This is Q1 2027 for them.
00:22:22.880 --> 00:22:29.759
You can see again big growth on the Azure AI platform, but also some big CapEx investment.
00:22:30.079 --> 00:22:35.279
Yeah, the market actually liked uh Microsoft numbers a lot better than they did Google's numbers.
00:22:35.359 --> 00:22:40.160
Um, they had 92.3 billion revenue, as that you quite rightly say.
00:22:40.319 --> 00:22:51.119
The Azure uh growth there of 48%, and their backlog hitting another massive number here,$677 billion.
00:22:51.839 --> 00:23:00.240
Now the revenue itself is up 19% with operating income of 45.9 billion, which is up 21%.
00:23:01.039 --> 00:23:03.839
Earnings per share$4.89.
00:23:04.319 --> 00:23:14.559
Um, and that's excluding the OpenAI investment effects, which is up 18%, 19% in constant, I don't want to mention that, which is up 18%.
00:23:15.359 --> 00:23:21.039
Uh, and it's versus$4.92 on a gap basis, which is up 32%.
00:23:21.759 --> 00:23:38.400
Now looking at just the Azure revenue growth there, that's up 48%, with uh within Microsoft Cloud Revenue of$63.9 billion, up 30% again, and the remaining um commercial performance obligation up 73%.
00:23:38.720 --> 00:23:46.079
A measure of the contracted revenue, still to be recognised, is that$677 billion I just quoted.
00:23:46.319 --> 00:23:59.599
Now, agents and infra revenue up 25%, while devices and consumer fell 3% to 15.5 billion on a 22% on a 22% drop in Windows, OEM, and devices.
00:23:59.680 --> 00:24:03.200
Uh, so you know, 76.8 billion total there.
00:24:03.359 --> 00:24:13.680
They've managed to return 10.2 billion to shareholders through dividends and share repurchases, so extremely positive uh there as well, Bryce.
00:24:14.000 --> 00:24:18.000
Yeah, really nice to see that money flowing back to investors' pockets.
00:24:18.160 --> 00:24:20.799
Now, Amazon is the third one to round us out here.
00:24:20.960 --> 00:24:29.119
We've got an interesting uh 12-month trailing free cash flow chart here, and a similar story to what you said with Google, Anthony.
00:24:29.279 --> 00:24:34.079
Significant investment, but starting to hit the company uh in a meaningful way.
00:24:34.400 --> 00:24:36.720
Yeah, so uh good numbers out from Amazon.
00:24:36.799 --> 00:24:47.279
They posted their highest operating margin ever at 13.9% as their AWS operating income jumps 56%.
00:24:48.799 --> 00:25:00.000
In terms of operating income, um, that was 28.1 billion, up from 17.4 billion just a year ago, uh, with that near 14% margin, the highest ever.
00:25:00.160 --> 00:25:06.079
The Web Service operating income is up from$11.4 billion to$17.8 billion.
00:25:06.160 --> 00:25:23.279
So these numbers, in terms of you know, this this uh new technology that all these companies are taking on doing extremely well, and they're up on sales uh up 39% to 46 billion and 184 billion annualized run rate already.
00:25:23.440 --> 00:25:32.960
So, you know, these numbers are really dwarfing some of the ones we talk about on a daily basis from some of the neo clouds or or or even some of the smaller companies.
00:25:33.119 --> 00:25:56.559
If you look at the 12-month uh free cash flow position, it's negative 42.4 billion versus a positive 14.8 billion just a year ago after a 94.8 billion increase in net property and equipment in net property and equipment purchases, which Amazon say really reflects their AI investment.
00:25:56.799 --> 00:25:59.759
So again, uh another sizable now, you know.
00:25:59.839 --> 00:26:12.799
Now that we've got the four companies out there, we can sort of like really highlight Meta at 34 billion, uh, you've got Microsoft at 39 billion, you've got Google at 51 billion.
00:26:12.880 --> 00:26:22.480
This is in the quarter capital expenditure, and topping everybody, you've got AWS at 77 billion dollars.
00:26:22.799 --> 00:26:25.119
Um, these are mouthwatering amounts.
00:26:25.200 --> 00:26:36.319
This is just for a quarter, so um, you know, the expectation is these numbers for all these companies will significantly um increase as we move into 2027.
00:26:36.640 --> 00:26:40.079
Um, and this is not getting this is not slowing down at all.
00:26:40.240 --> 00:26:48.960
Um, I don't think, you know, uh we can go back to you know when the internet was around and people were sort of like you know, uh saying it's not going to last forever.
00:26:49.039 --> 00:27:00.480
Um, this is definitely here to stay, and you can see these companies want to be uh first past the post, and the only way you can do that is to grow um extensively, and and they look like they are doing.
00:27:00.559 --> 00:27:03.680
We're looking at growth in the companies we talk about on a daily basis.
00:27:03.839 --> 00:27:12.799
Um, I'm afraid they just can't keep up with the sort of numbers here, but maybe five or six years' time, some of the companies we do talk about can start to produce some of these numbers.
00:27:12.960 --> 00:27:17.680
It hasn't taken these companies that long to do that, but uh you can see the race is on.
00:27:17.759 --> 00:27:29.119
This is why these are called hyperscalers, because the sheer size is massively different from what um what uh worries some of the COs that we talk to on the podcast on a regular basis.
00:27:29.200 --> 00:27:31.839
These are dwarfing numbers here.
00:27:32.079 --> 00:27:34.960
Um, but um, you know, all for a good position.
00:27:35.200 --> 00:27:36.799
Think about what they're spending there.
00:27:37.039 --> 00:27:48.880
How much of that$200 billion that's been invested by these four companies in the quarter will flow at some point into the companies that we talk about because our companies have got the power.
00:27:49.119 --> 00:27:55.839
They've also uh proved that they can build uh data centers, and so they look very attractive.
00:27:56.000 --> 00:28:04.640
Some of them have already got um deals with the likes of Google, with the likes of Microsoft, with the likes of AWS, and with the likes of Meta.
00:28:05.039 --> 00:28:20.720
And so, you know, there's a number of companies out there that are still to get uh sizable contracts with the amount of available power now, and so hopefully we'll see the scramble now to get these companies uh their contracts signed.
00:28:20.799 --> 00:28:30.799
Because believe you me, when you're spending$200 billion a quarter, this is going to be a trillion dollars for 2027 between these four companies alone.
00:28:31.039 --> 00:28:40.960
They'll need to purchase uh these sites, and the companies that we talk about have the sites, have the power, and are ripe and ready to take on these contracts.
00:28:41.200 --> 00:28:45.359
Yeah, you wouldn't guess it from the share price, but we still think they're in a pretty good spot.
00:28:45.440 --> 00:28:49.200
Uh, final earnings update for us today: strategy.
00:28:49.359 --> 00:28:52.400
Uh, posting some pretty eye-watering numbers as well.
00:28:52.799 --> 00:29:07.440
Yes, and I don't really want to focus too much on strategy, really, because strategy are effectively a software company, and I can tell you now that the software revenue for the quarter was an eye-watering$125 million.
00:29:08.240 --> 00:29:16.480
Um, I say eye-watering because when you look at the operating income for the same quarter, the net income is$19.1 billion.
00:29:16.960 --> 00:29:20.400
I know a few of you out there be saying, Anthony, you just mentioned the revenues.
00:29:20.640 --> 00:29:22.240
Where do you get the net income from?
00:29:22.400 --> 00:29:26.000
Well, I can tell you straight away where the net incomes come from.
00:29:26.240 --> 00:29:36.559
Under the uh FESB rules for accounting, you're allowed to um account for your cryptocurrency as it rises and therefore show a true and fair value.
00:29:36.720 --> 00:29:50.480
And as we spoke about, between quarter two and quarter three, um, the last quarterly reporting, the Bitcoin price rose between$24,000 and$25,000 in a quarter.
00:29:50.799 --> 00:30:18.240
And so the amount of Bitcoin held by strategy somewhere in the region of about$848,000, and the majority of that was held back in the end of Q2 because um, through their stretch preferred uh share, they've not been able to sell as many shares with the price of that stock below$100, and we've highlighted that I think something like 14-15 weeks now.
00:30:18.400 --> 00:30:26.319
Now bear in mind, you go back to the end of the uh the quarter two, that's probably about 16 weeks ago from where we are today.
00:30:26.480 --> 00:30:36.079
So if you look at the previous three periods, uh you can see uh for the end of uh March, it was a 12.6 billion loss.
00:30:36.240 --> 00:30:45.039
The end of June was a 12.8 billion loss, and that's sort of you think where the Bitcoin price was at the start of the year, we are pretty much where we were at the start of the year.
00:30:45.119 --> 00:31:07.359
So we've recovered those sort of like two net losses over the past two um quarterly announcements in this one announcement this month because Bitcoin price at the end of QQ um three four strategy was the the same as the previous the same as amount as probably the previous two periods added together, and that's how you see that recovery there.
00:31:07.440 --> 00:31:11.920
So, not showing a sort of like a true reflection of what's happening in the company.
00:31:12.079 --> 00:31:16.480
This is all about assets and valuation of assets and how that impacts.
00:31:16.559 --> 00:31:27.119
And as we highlighted with Google, with some of their assets, which majority stocks, you can see how these can impact favorably or negatively uh within a quarter.
00:31:27.680 --> 00:31:30.160
Yeah, it can really move one direction or another.
00:31:30.240 --> 00:31:36.160
Now, on the earnings topic, Anthony, two more from our uh regular AI infrastructure players here.
00:31:36.319 --> 00:31:42.160
Bit digital coming out with their Q3, gonna be Thursday, November 12th, pre-market.
00:31:42.400 --> 00:31:50.160
Then we've got sister company white fiber wifi out pre-market as well on November 10th to talk about their earnings.
00:31:50.319 --> 00:31:53.519
And on the Wi-Fi topic, actually a nice little shout out.
00:31:53.680 --> 00:31:55.920
We've been talking about the launch of Continuum.
00:31:56.000 --> 00:31:58.799
This came to market uh late in September.
00:31:59.039 --> 00:32:06.799
Looks like they've actually got another example up and running now, 83 kilometers apart uh in the Atlanta region, Anthony.
00:32:06.960 --> 00:32:13.839
Again, showing the possibility of connecting these smaller uh satellite data centers to a larger network.
00:32:14.000 --> 00:32:20.160
They're stating upwards of 32,000 GPUs can be supported on this technology.
00:32:20.559 --> 00:32:36.000
Yeah, they're showing that the distance between Wi-Fi's QTS ATL1 Atlanta site and the QTS SUW1 Suwani site is 83 kilometers and it's connected by 12 dark fiber strands leased from Zio.
00:32:36.559 --> 00:32:46.160
Now the aggregate bandwidth from 170 channels of 800G optics uh with measured round trip latency of 0.9 milliseconds.
00:32:46.319 --> 00:32:51.200
Uh don't worry too much about all the tech here, is 136 terabits per second.
00:32:51.680 --> 00:33:02.559
Um 256 NVIDIA H200 graphic processing units at each site running as one logistical cluster, so jobs can span sites without being rewritten.
00:33:02.720 --> 00:33:06.799
So a total of about 512 GPUs across both sites there.
00:33:06.960 --> 00:33:34.960
And the number of GPU endpoints the network fabric is designed to support around 62 times today's cluster, though Wi-Fi says that design capacity is not deployed or tested, so probably a total of 32,000 GPU endpoints, and as we've talked about before, uh Continuum became commercially available with plans to add more sites to the Meshore Hub and Bespoke Layout um from the September 23rd.
00:33:35.519 --> 00:33:36.960
Yeah, and kind of a nice segue.
00:33:37.039 --> 00:33:38.480
We're gonna move into host digital.
00:33:38.720 --> 00:33:44.400
They've actually got smaller sites like this and potentially could benefit from continuum technology.
00:33:44.559 --> 00:33:48.640
We've got Sean Matthews, the former CEO of Cantor.
00:33:48.799 --> 00:33:50.799
He's actually the chairman of Host.
00:33:50.880 --> 00:33:52.160
He was on Bloomberg.
00:33:52.240 --> 00:33:53.519
We mentioned this earlier in the week.
00:33:53.680 --> 00:33:55.839
We're able to grab a couple of clips, Anthony.
00:33:55.920 --> 00:33:57.200
Two caught my attention.
00:33:57.359 --> 00:34:00.000
I'll play you the first one here, and then we can go through the second.
00:34:00.640 --> 00:34:02.799
Trying to get infrastructure built online.
00:34:03.359 --> 00:34:06.240
What what is the local community's attitude to it?
00:34:06.400 --> 00:34:09.440
Has it actually stopped you from making any progress?
00:34:09.840 --> 00:34:16.800
No, actually, if you work with a community and don't try to put in massive projects that are out there.
00:34:16.960 --> 00:34:23.760
We're we're in the beginning looking between 20 and 100 megawatts, which are you know reasonable-sized projects.
00:34:23.920 --> 00:34:28.639
They work, there's real estate already in place, we there's power in place.
00:34:28.880 --> 00:34:31.679
So we're not changing the environment in any way.
00:34:31.840 --> 00:34:35.039
We're just using what's there and taking advantage of it.
00:34:35.119 --> 00:34:41.679
And that's we're able to do that because we have a great team in place that allows us to find sites and has the ability to put these deals together.
00:34:41.840 --> 00:34:43.599
So that's the key component here.
00:34:43.920 --> 00:34:47.360
And it's great to see that uh that pickup from Sean there.
00:34:47.519 --> 00:35:26.559
We've been covering exactly the same points all the way through there with a number of of the companies that we talk about regularly, and one that springs to mind is Keel in terms of engagement with local communities, explaining, educating, showing them exactly what's going to occur, showing the impact of these machines, and um also the benefits that are attributable to the local uh domestic um, you know, uh community in terms of you know what will come through in terms of tax revenues, what will come through in terms of support, uh, what sponsorships will be available for numerous things.
00:35:26.800 --> 00:35:36.639
They are companies that take community involvement extremely seriously, and it's great to see that host also following through in that same strategy.
00:35:37.360 --> 00:35:41.440
Yeah, social responsibility, a big theme on the channel here recently.
00:35:41.679 --> 00:35:48.239
Now, the second clip we've got, this one very relevant today, Anthony, talking about capital becoming more discerning.
00:35:48.320 --> 00:35:50.800
So there was a lot of money flowing into this space.
00:35:50.960 --> 00:35:57.840
Now they're being a lot more selective in terms of where the financing's coming from, the interest rates, uh, the backstop.
00:35:58.079 --> 00:36:00.960
So this is another awesome clip from the interview.
00:36:01.519 --> 00:36:05.760
Financing risk, particularly the debt load in what's happening in aggregate.
00:36:06.320 --> 00:36:09.039
We're concerned, you're concerned about that.
00:36:09.440 --> 00:36:12.400
Well, I got white hair early on because I was always concerned.
00:36:12.559 --> 00:36:20.960
I mean, when we look at kind of how credit works, you know, credit is readily available and then it becomes discerning over time, right?
00:36:21.119 --> 00:36:24.000
And at this point in time, credit is becoming discerning.
00:36:24.239 --> 00:36:27.440
That's not a crazy statement, it's reality.
00:36:27.679 --> 00:36:37.039
And, you know, from our perspective, we think it's healthy because credit, when it's just readily abundant and available, eventually that causes bubbles.
00:36:37.199 --> 00:36:42.320
We think that the actual the market is is actually looking at it more logically now.
00:36:42.480 --> 00:36:48.320
And it means that you're having a little bit of a pause, you know, from the perspective of, oh, let's just do any deal.
00:36:48.400 --> 00:36:54.880
To now let's look at actual counterparties, let's look at cash flows, and let's look at we're getting our cash back, right?
00:36:54.960 --> 00:36:58.000
Because what what a credit, what do credit investors care about?
00:36:58.159 --> 00:37:00.719
They care about getting their money back with a return, right?
00:37:00.800 --> 00:37:02.000
And that's all they care about.
00:37:02.159 --> 00:37:08.880
So I think it's just changed the dynamic in some ways, um, but all healthy and all in a logical cycle.
00:37:09.199 --> 00:37:13.599
I like Sean's point on here that you know it's not going to be ready available.
00:37:13.679 --> 00:37:15.440
There'll be some checks and balances.
00:37:15.599 --> 00:37:20.559
You don't want to issue out um loans to every uh company that comes along.
00:37:20.639 --> 00:37:24.159
There are some good actors out there, but equally there's some bad actors out there.
00:37:24.320 --> 00:37:39.039
We've seen this already in terms of permitting now, has taken a change in terms of there's got to be a number of um uh standards that each of these companies have to adhere to uh before they'll be issued permits for power.
00:37:39.199 --> 00:37:48.239
I think the same will be certainly in terms of issuing um uh the available debt uh for these companies to raise capital.
00:37:48.400 --> 00:37:57.039
And so I'm in I'm in favor of this because this will certainly um select the ones that can and ones that can't deliver uh very, very quickly.
00:37:57.280 --> 00:37:59.360
And Sean, equally good to raise that point.
00:38:00.400 --> 00:38:01.280
Yeah, agreed.
00:38:01.360 --> 00:38:10.079
Now the next story, Core Scientific, again, a good segue talking about community involvement and about executing, bringing these data centers online.
00:38:10.239 --> 00:38:16.960
They actually reached out to some of the first responders in the local community and had them on a walkthrough of the facility.
00:38:17.440 --> 00:38:23.679
Yeah, and we we've been through uh quite a number of facilities last year, and I've been to a couple of other ones in previous periods as well.
00:38:23.840 --> 00:38:28.079
This one looks pretty much um, you know, high high class here.
00:38:28.159 --> 00:38:30.239
You can see it looks extremely clean there.
00:38:30.320 --> 00:38:41.679
There's no site of any ear defenders there, I'm not quite sure it's a Bitcoin mining site there, but great to see the involvement uh bringing these people in there just to highlight uh what they're doing.
00:38:41.760 --> 00:38:49.119
I'm I'm more than certain that these organizations are involved in all the safety aspects of these companies before they do go live.
00:38:49.280 --> 00:38:58.000
There's a lot of commissioning in place, and you'll have to have a lot of certification before you can do any any energization for any long-term periods.
00:38:58.079 --> 00:39:15.840
But um, again, it's bringing in a community, uh bringing in these first responders, and then word of mouth will filter out to the communities uh from these people as well to highlight that it's you know it's what the opportunities these data centers bring and not all the negativity all the time.
00:39:16.480 --> 00:39:18.800
Yeah, education awareness critical there.
00:39:18.880 --> 00:39:29.760
And actually, Saluna mentioned to us on an interview they had the fire department out to their data center seeing if they have the equipment, the technology to handle some sort of a fire at these types of facilities.
00:39:29.920 --> 00:39:36.320
Keep in mind these are rural fire departments that in many cases have never seen a data center in their jurisdiction.
00:39:36.480 --> 00:39:40.719
Uh, speaking of Soluna, another big pickup from Microsoft here, Anthony.
00:39:40.880 --> 00:39:44.079
We've seen a lot of synergy between Microsoft and Saluna.
00:39:44.239 --> 00:39:50.159
So I don't know if this is foreshadowing or not, uh, but adding a big position VP of planning.
00:39:50.480 --> 00:39:54.880
Yeah, so uh Mikhail Stark is uh welcome to the team there.
00:39:55.039 --> 00:40:08.800
Um as the VP of planning, she'll uh be supporting the data center development team as well as advancing their AI pipeline and scale the mission to make renewable energy a global superpower.
00:40:09.039 --> 00:40:27.039
And if you look at um her resume, she's spent the last 11 years, nearly 12 years, at a certain Microsoft holding director positions in data center schedule management, development, construction scheduling, and data center construction special project.
00:40:27.199 --> 00:40:32.559
So brings with her a lot of experience in all the right areas for the company.
00:40:32.800 --> 00:40:39.760
We've seen this now more than happening with every company we talk about in getting those, bolstering those teams there.
00:40:39.840 --> 00:40:55.679
This is not um Bitcoin mining, this is uh this is high performance compute AI, this is a total different strategy, and you want to make sure you've got the expertise throughout the company to help you deliver this, and this is what we're seeing happening now from every company.
00:40:55.760 --> 00:41:12.239
Uh, we're highlighting you know new appointments at the senior level pretty much on an every other day basis, and so this will continue as these companies grow out, and it's just interesting that they're managing to find key people from my uh you know, some of the hyperscalers.
00:41:12.320 --> 00:41:13.199
This is not the first.
00:41:13.280 --> 00:41:23.119
We've seen a number of big appointments across the board from the likes of Microsoft, Google, uh, Meta, um, AWS, etc.
00:41:23.360 --> 00:41:23.679
etc.
00:41:24.079 --> 00:41:28.079
So um great for Saluna, bolstering that team there.
00:41:28.320 --> 00:41:35.119
Um, and we've had the pleasure of going to their site in Silverton, uh, seeing Dorothy One and Two firsthand.
00:41:35.199 --> 00:41:37.679
Dorothy 3 is going to be built at that site there.
00:41:37.840 --> 00:41:39.760
That's going to be one of their flagship sites.
00:41:39.840 --> 00:41:44.639
They've got a 50 megawatt uh LOI signed with Applied Digital.
00:41:44.960 --> 00:41:52.320
Um Soluna putting in the the power and the land into that uh into that joint venture.
00:41:52.480 --> 00:41:57.679
And what um Applied Digital do, they'll match the capital there, and it's a pretty much 50-50.
00:41:57.760 --> 00:42:08.880
I think it's 51% uh applied and 49% Saluna, so pretty much 50-50 all the way through on this deal, and it sort of like really highlights uh the real potential.
00:42:09.039 --> 00:42:19.840
I mean, you look at the size of these companies, and they're a million miles away from each other in terms of market capitalization, but it looks like it's a good fit, and everyone's looking to get power.
00:42:20.000 --> 00:42:27.360
And if it means going down the joint venture route, look at Mara, they've gone down a joint venture route with one of the biggest data center builders, Starwood.
00:42:27.519 --> 00:42:30.159
Uh, we're still waiting for that deal, Fred.
00:42:30.239 --> 00:42:41.599
So um, hopefully, we'll get something um announced in the near future, maybe around earnings to highlight something's happening there because we could really do with a pickup in the uh in the share price there.
00:42:41.840 --> 00:42:50.000
But uh it's great, as I say, great to see a lot of new um incoming talent to these companies and the right the right calibre of talent too.
00:42:50.320 --> 00:42:52.639
No kidding, yeah, some big appointments there.
00:42:52.880 --> 00:42:54.559
Final story here, iron.
00:42:54.960 --> 00:43:00.000
Just looking at the live trading, Anthony, down nearly 10%, 2365.
00:43:00.400 --> 00:43:03.679
So a new 52-week low today for Iron.
00:43:04.000 --> 00:43:06.639
Uh, they came out with a tweet from GTC Berlin.
00:43:06.719 --> 00:43:09.119
We talked a lot about the full stack integration.
00:43:09.280 --> 00:43:12.719
This was a big concern from semi-analysis with Iron.
00:43:12.960 --> 00:43:15.360
Are you gonna be able to integrate the software layer?
00:43:15.519 --> 00:43:25.760
Uh, they actually took the opportunity to present this live at NVIDIA GTC Berlin and had a full audience there for uh the full stack observation.
00:43:25.920 --> 00:43:28.000
So interesting development at Iron.
00:43:28.079 --> 00:43:36.239
Again, we're hopeful we get some meaty updates from earnings, but share price-wise, Anthony, we are struggling across the board today.
00:43:36.559 --> 00:43:47.280
Yeah, there's a there's an even bigger downturn since we started the podcast with many of the stocks now in double-digit um red positions, and uh not a great end to the week.
00:43:47.440 --> 00:43:51.760
Um, some tricky stories to go through today, some positive stories to go through as well.
00:43:51.840 --> 00:44:09.280
I mean, the expenditure of those uh four hyperscalers, that$200 billion just in a quarter, um, some of that money is going to flow into some of these companies that we talk about because you know they're out there looking for the for the power, uh looking to place their GPUs.
00:44:09.360 --> 00:44:11.039
And guess what's uh available out there?
00:44:11.199 --> 00:44:16.480
Many of the sites that we talk about on a regular basis are still waiting for contracts to be signed.
00:44:16.639 --> 00:44:18.800
Think of that big site, Corsi Carna.
00:44:18.880 --> 00:44:32.800
There's a number of sites in Pennsylvania, uh MARA have got a couple of sites, Clean Spark have got a couple of sites in in Texas as well, plenty of sites out there, plenty of contracts to be signed, plenty of investment in capital expenditure.
00:44:32.960 --> 00:44:39.119
Um, I think we you know we will get through this rocky period, and the future will certainly look a lot brighter a few years down the line.
00:44:39.199 --> 00:44:44.000
We want to see these revenues come through, their income statements that will highlight the positivity.
00:44:44.079 --> 00:44:48.079
I think the unknown at the moment is, you know, we're talking about everything like that.
00:44:48.239 --> 00:44:51.519
Nothing's happening from a from a from an earnings perspective.
00:44:51.599 --> 00:45:07.360
Some of these companies will have really uh limited earnings because they're not bringing any revenues in, and they're obviously spending hundreds of millions of dollars, in some cases, billions of dollars, to build out these sites before a penny of revenue comes through the door.
00:45:07.519 --> 00:45:20.960
So that's the challenge, but we can see fundamentally that these contracts stack up, and hopefully, um, you know, the opportunity now is to look at some of these stocks and see where you know there's some big value.
00:45:21.119 --> 00:45:27.679
Just highlighted that iron now down to its 52 week low, as are many of the other stocks we talk about daily.
00:45:28.159 --> 00:45:30.079
Yeah, really testing the patience here.
00:45:30.159 --> 00:45:34.400
But if you want to get the big returns, you have to wither the big downturns, Anthony.
00:45:34.480 --> 00:45:36.480
We'll see you guys back here on Monday.
00:45:36.559 --> 00:45:39.840
Uh, make sure you check out the Eric Jackson video that went out yesterday.
00:45:40.000 --> 00:45:43.039
Some very interesting price targets there in relation to HUT.
00:45:43.199 --> 00:45:47.360
Uh, let us know your thoughts on today's market, and we'll see you here next week.