Publicly listed Bitcoin miner turned AI company to cover. That will be our lead story.
Ionic Digital went public yesterday through a direct listing, not an IPO, so we're going to be heading off the show with a quick rundown of their financial position and their AI HPC contract with Enscale.
Following that, we have Ryan Lane, the co-CEO of Impery Digital, on to talk about why they pivoted away from a Bitcoin treasury strategy to make strategic investments in AI infrastructure.
Following Ryan, we have Ben Puladian of BE- BEP Research on to talk about Bloom Energy tokens and the memory trade.
And then we will cap off today's live stream with a quick newsflash segment, where we will cover Galaxy Digital's pricing for its senior secured note and some investment bank notes from Needham Research on Core Scientific following the AMD deal we covered yesterday, and Applied Digital.
That's right. Blockspace goes live every single weekday at 1:00 p.m. Eastern.
We are compute's daily live show, featuring quick hits on AI, data centers, emerging technology and markets, which by the way, markets are a little bit down today. Thank you, Korea. We'll get into that in a little bit.
If you like what you hear on the live stream, it turns into a podcast anywhere podcasts are found, and if you like the podcast and the live stream and want more Blockspace content, all of our stuff is on our website, blockspace.media.
Once again, that is blockspace.media. This show is brought to you by CleanSpark, NASDAQ listed ticker CLSK. More on CleanSpark later on in the show. Colin, stonks are down again because of Korea.
I was looking, I think we tweeted earlier on the main account, Blockspace account, that Iron was headed toward the lowest prices in, like, a year or so. Um, dang. Things are- It's a bloodbath Yeah, it's a blood... Yeah.
That's not stopping the deal flow, nor is it stopping a direct listing from Ionic that we actually covered on the show a week or two ago.
And I'm gonna go ahead and get the latest note that we have from Blockspace up here.
This is specifically about an activist investor, Sacom, had taking a 6.9% stake in Ionic Digital as the miner pivots from Bitcoin mining to AI and HPC infrastructure.
But we're not gonna be covering the strategic investment exactly. Just a quick note on it. I wanted to use this opportunity, Charlie, to just give a quick briefing on Ionic Digital.
So again, the direct listing hit yesterday. And Ionic Digital, for those who remember, was formed in 2024 out of the Celsius bankruptcy specifically to manage the Celsius mining assets.
They have since, as many of the Bitcoin miners in our orbit have, basically all of them at this point, pivoted into a digital infrastructure and AI and HPC leasing company.
They have five facilities in Texas, three of which are owned and two of which are leased.
And the big focus for Ionic Digital as they go public is this Ward County site, a 234-megawatt site that is currently leased to Enscale under 126-month triple net lease.
They received the first payment for this site in November 2025, an advanced payment of $45.6 million, and they have monthly fixed leases starting in August 2026.
The total contracted revenue under the current lease stands at $1.95 billion.
The annual fixed rent is for 234 megawatts and is equals $182.5 million per year for revenue after an 18-month ramp-up, with a 3% annual escalator after year five.
In a February 2026 amendment, Enscale contractually is obligated to take an additional 89 megawatts at the same per megawatt rate when available, roughly, uh, second half of 2027, according to Ionic Digital's estimates.
That would push the annual run rate for this deal up to 250.5 million, for a total contracted revenue of 2.6 million.
Enscale has also granted Microsoft an additional option for power at Ward County starting in the second half of 2027.
For its longer term ambitions, Ionic Digital expects to expand Ward County to 700 megawatts of total capacity. It's working through the details with ERCOT currently.
And the CapEx for this would be $40 million for the 234 and 89-megawatt build, and then $64 million for the full 700-megawatt build-out, funded from cash and BTC treasury sales.
So the Ward County site is the jewel of their portfolio. They also have four sites in Midland, Texas. East Stiles, 30 megawatts.
Garden City at 12, Rebel at 50 megawatts, and another in Stiles at 20 megawatts for 112 combined. Their total power portfolio sits at 346 megawatts.
And their mining fleet right now is, has been pared down from roughly 120,000 to 28,100 that will remain actively deployed at Midland.
They are going to scrap 73,400 for, uh, you know, sell them or scrap them, and then they're going to have around 19,000 kept for spare parts. Charlie, any Ionic Digital- Not many, not many takes.
Yet another miner wisely pivoting to AI HPC. Many such cases.
I think my only other comment is, I didn't realize they were in Midland, which if you're in oil and gas, that's the suit-and-tie-wearing, uh, city for the, uh, Permian Basin oil and gas play, versus Odessa, Texas, which is the steel toes and jeans...
uh, service, service guy, uh, uh, it's part of the, the, the Twin Cities, if you will. It's kinda like how Minnesota's got Twin Cities. Texas has them too.
And at some point, the AI HPC guys flying in will outnumber the oilmen. But we- we're gonna wrap up with that. We have our guest, Ryan Lane, sitting in the wings.
We'll bring him up here, and we'll talk about, again, what else? Pivoting from Bitcoin to AI. Before we bring up Ryan, though, a word from our sponsor, CleanSpark. [gentle music] We are CleanSpark,
America's Bitcoin miner, a publicly traded company with the largest operating hash rate. Powered entirely by self-operated infrastructure across four states.
This is our proof of work, and we are setting the standard for what's next. Learn more about the intersection of energy and Bitcoin at CleanSpark.com. All right, Charlie, let's get Ryan up here.
Learn a little more about Emporee Digital. All right. Ryan- Ryan Lane... Lane. Welcome to the show, sir. Charlie, Colin, uh, thank you for having me. Absolutely, man. Really appreciate you taking the time.
Obviously, this fits into our beat really well. Everyone is pivoting to AI and infrastructure in some way. We used to cover mostly Bitcoin. Now we are knee-deep- We're, we're just in AI pod now... in data center topics.
Yeah. Yeah. [laughs] And so y'all's company really fits, I think, the zeitgeist of the current market.
And s- uh, as, as a good place to start, can you give us some background on Emporee Digital, and also why y'all made the decision to sell roughly half of the treasury raise, like 87 mil, for this push into AI infrastructure with your strategic investments?
Yeah, sure. There's a lot of overlap here, too, 'cause we're actually working with, uh, Anthony McKiernan, who was, uh, the guy who negotiated the NScale and, uh, Ionic Digital, uh, triple net lease. So he's Cardinal...
He's the CEO of Cardinal Data Power, which we can talk about later. But, uh, so we, we basically hit the buzz saw as soon as we did our, uh, our DAT. We raised about, uh, 500 million, or exactly 500 million.
We, we bought Bitcoin. Uh, our average price was, like, 117, uh, thousand on the Bitcoin.
And then as soon as we launched the DAT, uh, we announced it about a month later, uh, they started to get weak, uh, and we started trading below NAV, uh, like a lot of the DATs out there, if you've seen, whether it was Bitcoin or, or other cryptos.
And so the thesis on the trade kinda busted, uh, pretty quickly. And so then we had to figure out pretty quickly what we were gonna do, what the best use of that balance sheet was.
And we always knew that we would have to figure out something to do with the balance sheet, because the best way to aggregate Bitcoin is through cash flow. And so we started really out of the gate.
I mean, we're hedge fund guys, been running a hedge fund for almost 20 years. Uh, actually some of our seed money was out of, uh, Tulsa. So yeah. Yeah. Yeah, maybe we could talk about that.
We can, we can talk about that. Yeah. Yeah. Uh, very dear to my heart. Uh, so we had, we started looking at different businesses. We, we couldn't...
We had to figure out things that would be accreted to, uh, our NAV, right? We couldn't dilute shareholders.
And with the Bitcoin trade and the DAT trade, it was, you know, selling stock, uh, above NAV and, and aggregating Bitcoin. Uh, but if that's not available, how do you, how do you do that?
So we started leveraging up a little bit, selling some Bitcoin, buying our stock back, still adding Bitcoin per share, but in the meantime, looking for opportunities. And we looked at a lot of stuff.
Um, we had a ton of deal flow coming through our shop, uh, trying to figure out exactly what the best place to spend money was. And we looked at Bitcoin mining, uh, too.
Uh, I mean, the miners are what we determined effectively short power. And we said, "We don't wanna be short power in this environment. That's a disaster. So how do you get long power?"
Uh, and so that's the quest that we were seeking to, to solve, is how do we get long power, and how do we have edge in getting long power?
Because we just don't wanna be someone out there just going out and buying power land, uh, and not being able to negotiate the agreements, not being able to finance, uh, the data center builds. There's a lot to it.
We're finance guys, so we understood all the struggles. We understand credit. We understand, you know, how you would finance one of these and get the proper IRR.
And that's kinda how we got here, and we looked at a lot of stuff, and we can talk about the specific transactions if you'd like. But, uh, that was our thinking, and I don't see a better IRR now.
If you can do these deals right, uh, then you can get from doing power land deals. There's a lot of value in power, and we can talk about that too, 'cause there's a lot of reasons that there's all this bottlenecking.
Yeah.
So you mentioned looking for a good opportunity or opportunities to park this cash, and the bedrock deals so far for Emporee have been the $65 million deal with the Hunt family for investment in a private entity for a Midwest data center, and also this Cardinal Data Power investment as well that y'all took a, uh, I believe 8% stake in.
And so could you walk us through what made those deals so attractive, and y'all thought, "These are the ones that we need to use as the foundation for this new strategy"? Yeah, sure.
So we looked at a, a lot of the stuff that the, the Hunt family's working on. Their, their tentacles are throughout the entire, um, power industry, so they're seeing a lot of stuff.
Um, and just from their connections through the, through Anthony and, and Cardinal DataPower now, which was the end scale and, and, uh, Ionic deal. So we,
we looked at pretty much the entire pipeline or portfolio that they were looking at, and this Midwest property is pretty rock solid.
They had put an application to get the additional power through a power contract with the local utility like four years earlier. Uh, they had the contract in hand.
All they had to, all they had to do, or now we have to do, is put a bond down for about 30 million bucks to do the transmission distribution upgrades to, and, and the interconnects to, to bring it onto property.
So we've got 150 megawatts locked down. They're currently using that, uh, Bitcoin mining. Uh, not all of it, but they're- they're using a substantial portion of it.
And then we have to expand the substation on property to bring in the other 149 megawatts, and then the tenant will use that as well. So we're buying that property for $230 million. Uh, Empry Digital is 25% of that.
Uh, we are triple net leasing that, which in this space people are loosely using that term. But a true triple net lease is what we negotiated here as a, you know, as a real estate property person would characterize.
So we have... They- we basically l- almost lose access to the, to the building. So it's true, true triple net lease, like a McDonald's, right? They'll operate it, we'll pass through the power, uh, to them.
Uh, they have all the expense of, of building the data center. They'll bring in their GPUs and their racks and they'll build out the entire system. Uh, they've done all the spec'ing for that.
They've, you know, done all the environmental for that. So they are substantially ready to go. And then we just sit back and collect rent, and it just drops to the bottom line. So I...
If you, if you, if it stays on schedule, it looks like this. It's about $441 million, uh, in rent payments, uh, over 15 years. Uh,
it, the, the extra or the additional power kicks in in year three, and then they'll start paying on that, and that's accounted for in the $441 million.
So effectively, we pay $65 million, and we get $441 million in, in lease payments, and at the end of the day, we still have the property with the power. So from a net present value perspective of what is that worth,
depending on, you know, how you, what discount rate you use, what your debt looks like, but if your debt's at eight and a half percent and you're using a 6% discount rate or something like that, you're gonna end up at 200 or 250 million in value for 65 million, right?
So y- and it's gonna pretty quickly generate cash flow. So the NPV on that to me is a no-brainer. Effectively, you're getting something that's almost worth, you know, three to four times of what you're spending.
So sign me up for that. I'll do that stuff all day long, and that's one of those properties where it's turnkey, right? The power's there, and there's not too many of those opportunities left in this country.
You know, it's gonna all shift, and I don't know when we're gonna run out of those opportunities, but it's gonna all shift to behind the meter. But while we can do these, these are easy turnkey transactions.
So, uh, that investment is not the total amount of Bitcoin that you sold. There's probably s- there's a few more dollars I think you guys may be holding onto.
And you m- I believe you've hinted perhaps at some more AI announcements coming. I don't know how much you can talk to that, but, uh, maybe high level, are you trying to deploy this cash quickly? Uh,
uh, what's the next few quarters look like? Should I... I'm, I do love a good AI deal flow announcement. What should I, what should I be looking for?
So the second one we announced was the Cardinal DataPower, and that one's different, and there's, uh, there's a lot of stuff that we're looking at. But that one, that one is the behind the meter.
Cardinal DataPower is the Hunt's, uh, entity, uh, that they will do behind the meter transactions and, and that's in the Permian. And
they have all the connections between the, you know, power providers, uh, from Hunt Power. Uh, I mean, I think Hunt Power built the first interconnect between the grids in New Mexico and Texas.
Like these guys have been in it since the late '90s, uh, and they're in the oil and gas industry. So this property's interesting.
With this investment, they secured, uh, about a gigawatt of recips, mostly 10 megawatt recips. Uh, and we'll see some partners announcing, uh, you know, that, that energy, uh, collaboration. But that,
if you have a gigawatt of power, you have gas lines coming in, you have a group that has the discipline to be able to turn that power on and reliably, 'cause that's why everyone loves the grid right now, it's reliable power.
But if you can do that behind the meter, I think that's the real edge in Cardinal DataPower, is they can bring that to the hyperscalers. And if we have the... And you
guys are very well aware, you can't get recips right now. No. We have, we have a gigawatt of recips from- That's, that's 1,000 reciprocating engines that... These are huge.
Like, I'm not familiar of any, like, other sites that have, I don't know- It's the biggest... a golf wood site. 1,000 10 megawatt reciprocating [laughs] engines. Yeah. Deafening.
Ho- that's ba- that's acres and acres and acres. This is a huge project. Right. Oh, it's a huge project. It's... Yeah. The, the, the group that is providing these, um,
uh, recips will make an announcement, but they're the biggest of the biggest. Gotcha. Uh- I probably know who they are... and they'll make an announcement after they, after they have their earnings.
But it's, it's material for them. So when... We can't talk about it just yet until they get through their earnings period, but it's a massive...
And it's not just 10 megawatt ones, it's also some 2.5, so it's actually over 1,000 And there's, there's reasons that you, you set it up that way.
But I think you'll see more and more of that, and I think these m- OEMs that are manufacturing these recips are gonna be a big players within this space, uh, in the next coming decade.
So Ryan, kind of to piggyback off of Charlie's question right there, the Hunt family being an ally here is a powerful ally to have given all of their experience in oil and gas, right? I mean, that's...
Y- y- you almost couldn't ask for a better partner in building out some of these sites.
W- will your expansion strategy in the future, and again, I know there's a lot that you can't say 'cause compliance will be breathing down your neck. Yep. But
I mean, is, is the play here going forward to scope out more of those off grid opportunities given this connection, given that incredible portfolio of recips that you're building up?
I mean, I could imagine opportunities up in the Bakken, tons of opportunities in, in the Permian. Uh, there's cheap gas there. They have access to the cheapest gas.
I, I could see us taking larger stakes, additional stakes in Cardinal DataPower as Empiri Digital.
I can see them doing multiple of these types of projects throughout the country where they have some sort of edge on being able to run gas lines and have cheap access to gas, and I think their partnership with the OEM that's doing the recips is much bigger than just this Permian property.
So I think there's a lot to do there, and I think that's the edge, right?
You make, you make money you, when you bring value to a project, and you get access to these projects, and you get looks at these projects when you bring value, and I think that's what the Hunts bring, is they, they bring the ability to provide reliable power.
They're not a counterparty who's gonna, who's gonna fall over. There's a lot of people falling over in this space, right? It's not easy to build a data center, and we're not proposing to be able to do that. But
JV with a group that can build a data center, and then you can provide the power. I, I think that's, I think that's where you will see a lot of announcements.
I think that's where you will see, um, a lot of activity from us and the Hunts. M- Go ahead, Charlie. Well, you know, I...
You know, you mentioned, uh, some money out of Tulsa helped get Empiri off the ground, and it kind of brings me to, you know, looking at this, you've got this, you've got this partnership with Hunt, or this deal with Hunt, and that's a...
Now, the data centers basically have to go after oil money because there's not a lot of, [laughs] there's not a lot of these, like, uh, big, huge capitalized entities like the Hunt, like Hunt Petroleum and otherwise. Um,
you know, what do you see as the future of, of, like, types of partnerships between data centers,
behind the meter oil and gas, and, uh, especially 'cause the oil and gas has go- has undergone a decade of very, um, strict ca- capital discipline, learning a lot of lessons from the private equity boom of the early 2010s.
Yep. Um, you know, are, is it time to take the gloves off and, uh, does that money come out of Tulsa [laughs] anymore? So... Yeah, I, I don't know what form it'll take, but I think they're... You're right.
There's a lot of money there, and just the fact that the Hunts are looking at this and they're deep in it, they've put together an entire team to execute this, and they're spending money.
I think that they see the shift, and versus o- oil and gas and fracking, politically, environmentally, this is, this is like, this is like angel dust. [laughs] Kid gloves. Right? You know? [laughs] Yeah.
So I, you know, I, from a,
from a political perspective, y- it's under, it's hitting some headwinds right now, and that's a whole nother discussion of how rational and justified that is because the number of jobs that will be provided, number of electricians and carpenters and c- I mean, it's...
The... And they're all getting paid w- wages that are substantially more than they're used to. This is all really good.
Um, and then of course there's some backlash, but from an environmental perspective versus fracking, this is amazing. So if the Permian and these families get involved in this sort of stuff, I think it's, it's great.
Ryan, one quick question with regards to the future of the treasury strategy.
What kind of synergies does having a Bitcoin treasury, all that Bitcoin on the balance sheet, I believe it's roughly 1,500 at this point, and also having these AI infrastructure investments, like how does that position Empiri as one of the more novel stocks within this ecosystem by having that dual Bitcoin treasury balance sheet and then also having these investments in these bleeding edge AI infrastructure plays?
Yeah. So we're, we're not taking Bitcoin off the table, right? We're believers in Bitcoin. We believed in Bitcoin. We still believe in Bitcoin.
We think it has a place in the world economy going forward, right, with all the debasement of currencies. So
right now, we are looking at this opportunity to generate cash flow, and when you generate cash flow, you have cash on the balance sheet.
And if you, if you wanna store your cash on the balance sheet, Bitcoin makes a lot of sense. And from the very beginning, we always looked at businesses that generated cash flow so we could aggregate more Bitcoin.
Right now is not the time to aggregate Bitcoin.
Right now is the time to deploy it into these strategic investments, and as they start to spin off cash, uh, I could see us going back into a mode of, of accumulating at least some and probably a substantial amount of Bitcoin back on the balance sheet.
But as far as the Bitcoin goes right now,
I think that we probably continue to bring it down as we identify investments to make, and if we can find more stuff like the Midwest property, and we can deploy some additional cash into, into Cardinal as they're securing additional recips and, you know, specific use cases, then I think that makes a lot of sense.
We'll be keeping an eye on additional deals coming down the pipe, particularly in the oil and gas sector. Ryan, thank you so much for joining, man. Really appreciate it.
We'll have to tag you back in once there's another news item. Colin, Charlie, appreciate it. Thank you. Yeah. Whenever- Thanks, Ryan... you're in Tulsa, come by. Hit me up. [laughs] Absolutely. Cheers. See you around.
Love Ryan of Harry Digital. Smart, timely pivot. We're gonna keep on going. We have in the wings Ben Paladian with BEP Research. We'll bring up and we'll talk compute, maybe some Bloom Energy,
and, uh, excited to have that conversation. But before that, a word from our sponsor, Luxur.
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We've got Ben in the audience. We're gonna bring him on up here. Ben- Hi, guys. Welcome. Welcome to the show. Thanks for hopping in. Good morning, or good afternoon, wherever you guys are.
We're, we're both East, West, and Mid-Coast, so it's time, times, times, uh, very different. Time is an illusion. Yeah. [laughs] Okay.
So, uh, you popped up on my radar as we started really focusing on covering Compute lately. Um, I'm thinking maybe we talk memory, Bloom Energy, maybe, uh, follow up on your piece, Tokens Are The New Oil.
But right now this-- Right now, memory stocks are dragging down the Korean stock market, and therefore kinda, like, causing, causing a lot of existential questioning among some of the weaker-willed AI trade people. Um,
what are your thoughts on the current state of the market, SK Hynix, memory pulling back?
Yeah, so the, the whole idea behind memory and this AI trade is that the idea of having more memory is-- it's like having, like, a bigger brain, right?
So the more context your AI model has, the more data points, hypothetically it will make a better decision, right?
And as we-- we're training bigger models and we're generating more data, you need more ways to store it, uh, your weights and the information quickly to ret-retrieve it.
So that's why NVIDIA with Hynix, you know, many years ago, uh, came up with this idea of high bandwidth memory. So basically taking the memory that we have, like, in our computers and stacking them like lasagna pieces
higher and close to the GPU. And without-- You can't have memory without-- You can't have AI without memory.
So it- it's like almost like peanut butter and jelly when, when it comes to that stuff, so they all come together. Uh, the challenge is, is from, like, a market perspective, uh, memory companies
have, have always been treated like a commodity because it's, like, a fungible type of asset. And you had three players, uh, Micron, Samsung, and SK Hynix, and I guess CXMT out of China, right? Uh, they just IPO'd.
And there's a, there's a world market for that, and there's, there's pricing, and most of the time, consumer electronics companies like Apple would, would buy their memory for the next iPhone or laptops or Dell or whatever.
It-- You never had, uh, those challenges. And I think when there was, like, a big computing cycle, like, I guess PCs or the, the iPhone in 2007, 2008, yeah, memory prices shot up.
And a lot of these, uh, companies were wary of, uh, spending cap-capital on expanding their fabs because they know when there's a downturn in demand, they're gonna be left with all this extra capacity, and then there's no, no one to utilize it.
And now you have this killer app of AI, which is sucking up all the memory, and it's you're not just using a few pieces, you're using gigabytes and terabytes stacked in these data centers. And it's not only NVIDIA.
Every hyperscaler is trying to secure memories, uh, signing, you know, long-term agreements that go into, into 2030, and there's, like, a huge, uh, memory crunch.
And I wrote this piece, uh, last December called The Memory Wars. Uh, we haven't even got into definitive high-resolution world models with video and audio.
Like, right now, we're still playing, uh, agentically with text and code.
Like, the next level is even crazier, and that's why you need to have these improvements in the compute and the memory to, to bring in more, uh, vivid interpretations of AI which haven't been there yet.
On the market dynamics, I, I have this feeling that, you know, nothing against, uh, crypto and things like that, but the Bitcoin market is sort of, uh, soured in the excitement and the altcoins. And I think
a lot of investors or traders were looking for a way to play a new theme. And obviously, memory is something very exciting, and these companies were dogs for many years.
If you look at the charts, they don't really go anywhere, and they, they traded on a factor of book value of what the assets of the company were worth. And now-[clears throat]
Companies like Micron or Hynix are making, you know, 20 years of earnings in like in a few years that they, they never made. And everyone's going crazy and trading them, and it's, it, it's pretty wild.
Uh, it's not for the faint of heart, and you had things go parabolic [clears throat] in the summer into June, or which was last month, and now you're facing these huge drawdowns, and margin cascades, and leverage, and hyper liquid, and like all this other stuff, which fundamentally is it,
it's, it's scary and it's not easy to, to withstand. I mean, I have a small allocation of my portfolio to that, but nothing as big because I can't handle the, these gyrations, but memory is always important.
So it sounds like the memory trade... Like, the memory bottleneck is still definitely on, and I'm trying... You know, I'm, I'm familiar with the volatility. We've been covering Bitcoin for many years.
Um, but it sounds like the, the structural bottleneck is still on. Um, talk me through this. I'm actually kind of curious, especially in light of the CX and T listing.
It seems like a lot of the investors are trying to move down this high bandwidth stack to look at DRAM as, like, a precursor component. But am I...
Like, where among the, like, memory trades, where are the greatest bottleneck? I think really what it comes down to, even it's not even memory, it's packaging. Advanced packaging is...
The idea is you have to stack these pieces of memory together, and this, this miniature, like, li- co- connector wire has to go through all of them exactly.
They were trying to go to 16 high, and I think they got stopped at 14 because it's...
You have to stack all of them exactly perfectly down to the micrometer to get it to work, and you end up wasting a lot of, uh, wafers because, uh, a lot...
You, your yield isn't there because it's so hard to, like, put together.
So getting that automated and not wasting as much and making sure it works is kind of, like, the real bottleneck, and I think that's why you saw Nvidia invest, I think, 1 point...
Or not invest, but forward purchase $1.5 billion in Amkor packaging in Arizona. Uh, you have a lot of these test companies like Lam and Veeco Instruments.
Uh, like, you, you, you need to make sure this stuff ac- You can make it and it's automated, but not ev- not everything comes out 100% right, and you end up throwing away a lot, and that's, that's a big issue, the waste with the yield.
Mm. I think that's, that's, like, the real bottleneck, in my opinion. Ben, qui- a quick question about a temperature check from you and where you think we are in this current cycle. So as...
You know, we've been touching on SK Hynix, Micron, et cetera. SK Hynix down, like, 25% since its date, since its debut on the Nasdaq. Micron down, like, 33% over the last month. What's your take on this price action?
Do you see this as a natural de-leveraging event, considering these stocks were really hot for the first half of 2026?
Or do you think something has structurally changed in the way that the market is pricing these things?
I think, I think any time you have parabolic moves, it, you know, it, it, it shoots too high on the upside and it shoots down on the up downside.
I think moves like this really test your conviction in the company and what they're doing, and if you really believe in the management, and the roadmap, and where you see AI or the technology that's headed.
I mean, I've lived through many drawdowns from 2016 from being an Nvidia in- investor, from, you know, the Bitcoin meltdown in 2018, uh, to 2022. The huge... Every day it was going down and, and a lot of people
want, uh, great returns, but as an investor, you, you get paid for the volatility, right? That's how you earn your, earn, earn your keep.
Uh, th- these things just ran up way too fast, too much leverage, too many leverage products. I saw traders in Korea who, who don't even know what's going on, were getting 500% leverage. Uh, that's just not normal.
That's not investing.
I'm not gonna quote Warren Buffett and say the market is a huge casino, but some of these products that have been created with leverage are just enabling people to gamble and lose, and I'm always against, uh, leverage products because it, they just, they never work out in the end.
Okay, I wanna pivot now from memory to Bloom Energy, which you've been talking about recently. [laughs] I think we, we did a... And this will...
Colin here will actually be able to di- uh, probably tap on this a bit too, 'cause we just started paying attention after Leopold bought, and then, and then we had the, the Bloom Energy FUD, and lately you have been on a tear saying that it sounds like the FUD is overblown.
Um, I believe you tweeted, uh, um, the CEO's response to the Hunter Brooke report recently, which was pretty blunt. Quote, "We have enough scandium... There's enough scandium to power the planet."
Um, this is the CEO of, uh, of, uh, Bloom. "We're not dependent on China. Everything else is proprietary." So we have...
He's just, you know, uh, saying that all these concerns are over- uh, are not, uh, not worthwhile, but we don't... I don't have any details or answers. Ben, enlighten me. You know, what do I make of this?
I mean, I ran a manufacturing company, a commercial LED lighting business. Like, I wouldn't have my investors and customers come up to me and say, "Where are you sourcing your LEDs from? Where are your PCBs from?"
Like, are your customers buying the product? You know, Brookfield is their largest customer, right? They went from five billion to 25 billion, right? They're underwriting the risk.
They're buying- These Bloom boxes on the behalf of hyperscalers and, uh, neo clouds, and they're basically leasing it to them, and they're making the power and making the delta.
So if Brookfield, one of the world's largest asset managers and infrastructure owners, is comfortable with Bloom Energy, I think everyone else should be. I mean, I don't know what the big deal is.
Like, why you have such a hard-on to see where he's getting scandium from. Like, who cares? Like, it's just one part of the, the product. Like, the product works. I know developers that like it. It's quiet.
Like, you, you don't have to wait four years for a turbine from, uh, GE Vernova. It's at parity with cost, and the whole time is how fast can you energize a product for the first token?
'Cause as a developer, you're borrowing at a high interest rate, and you need to turn over the project to the customer.
So I don't know-- And if they're delivering on time and the product is fungible, if some- there's a delay somewhere else, you can just move the Bloom boxes somewhere else. I mean, it, it's a simple solution.
Yes, the CEO's been doing this for twenty-five years. Yes, he was on sixty minutes and, like, t- twenty-five years ago, and he held up this box and one day it's gonna power a home and whatever.
But I, I just don't see, uh, the smoke and mirrors that everyone thinks they see in this company.
I think they're just executing and doing well, and it's, it's much needed to keep this, uh, AI race ahead of China because we're under-electrified as, as a country. I think the Hunter Brooke report didn't...
Like, Hunter Brooke didn't do itself any favors. I mean, the, the head of Hunter Brooke more or less, I believe it was on CNBC or Bloomberg,
compared them to the Theranos of this cycle, which to me is a really unfair characterization from the fact that, like, Theranos literally had a product that didn't work, and that's just not true here.
But I do think that it was somewhat fair to push back on the CEO's contention that they, contention that they don't source any scandium from China, which is just fundamentally not possible if they're going to capitalize on their goals of having multiple gigawatts of these energy cells rolled out, 'cause China has ninety percent of the refining capacity.
So I guess just to ask to a, a more pointed question here, what, what do you make of his insistence that they don't do that?
Um, do you see that as having any supply chain risk given that now China has instituted strict- stricter ca- um, import or export controls on these critical minerals?
And also, what do you make of the contention that the supply of refined scandium every year won't necessarily be enough even for Bloom to reach these like three gigawatt targets that some people on the street are calling for, for their energy cells?
'Cause I think those are the key points of the Hunter Brooke report. That's correct. I mean, he did make those points, and I did speak with, uh, Sammy, uh, l- on the phone. He's a great guy. He, he's a big Knicks fan,
happy for them winning the championship. And, and it-- And Hunter Brooke does great inve- investigative work. Uh, I think probably what they came up with is true.
Maybe all the scandium does come from China, and it's sold through intermediaries in Hong Kong and Thailand or Vietnam, and they're just buying from those. Like, and technically you could say it's not from China.
But, like, uh, Apple went out of its way and says, "Oh, we wanna buy memory from," uh, was it YMTC or I, I... For, for us to sell iPhones in China, and Micron was going crazy like, "Why are you buying Chinese memory?"
Like, why does it c- why does it matter if you buy Chinese memory if you're selling Chinese, uh, made iPhones in China? Like, what's the big deal? Like, these are all just supply chain issues.
And I think I was speaking with some other investors. There's some mines coming online in Canada or Australia, I believe, that would dovetail into the timeline of the ramp of the scandium from Bloom Energy. So maybe
we're investing in some, uh, other mines around the world that we don't know about, but they do exist, and I, I've, I've been told about those companies. But for me,
I'm not gonna go down to the critical mineral of some company's product which they're basically getting twenty-five billion dollars in orders for, that they're, that they're, they're scaling and they have, you know, Brook- Brookfield basically
underwriting them to the wazoo to make sure everything is right because once you deploy these, the, the useful life has to be at least five to ten years, right? It has to work and has to do everything for these guys.
So like, what, like, why are you always questioning all these things? Like what's... Like, like China get soybeans from America. We're gonna question how many soybeans they buy? Like it just... Th- these things, uh,
are, are good questions, but I think
there's other companies [chuckles] on the market today that are doing quest- more questionable things that deserve more media attention than a mineral in this product that this company is selling. Okay.
I wanna, uh, o- one more question on, uh, generation before I, we go to, to, uh, open models. Um, so time to power is like the focus for everything.
Neo clouds, compute, everybody along the stack, it just wants to shorten time to power. Let's assume Bloom Energy, uh, largely can deliver, I think, up to twenty-five mega, uh, gigawatts.
Like, what is the implication in your view for generation overall? 'Cause right now, like you have to, you have to sell your mother to get a t- a gas turbine.
Like, and those take for, those, you know, eighteen, twenty-four, five months, five years to build. What are the implications for the overall time to power thesis if a company like Bloom Energy can deliver?
We're in a race against China. They're super electrified. They have more electricity per capita. They're building nuclear plants at scale. There's less... Uh, in America, we have NIMBYism, like, "Don't build this here.
Oh my God, this is noisy. Oh, the water's gonna get messed" Like, everyone's complaining. In China, it's like a iron fist. Like, "We're putting this data center in your backyard. Tough luck."
Or this, like, power generation. They're just moving ahead.
Obviously, we can't do that here, but at least a company like Bloom could take one of the biggest natural resources that we have, which is natural gas, that we have so much of that we're exporting now around the world in a liquefied na- nature, and taking that and converting that to electricity in a quiet, sustainable manner.
I mean, like, this is like the, the killer app that we, we've been waiting for, and hopefully they can scale this so much and we can use it for homes and commercial buildings.
Natural gas everything because I don't think as a nation we can get enough nuclear online and solar, uh, in the scale because, uh, because we're gonna have s- so much, uh, electricity needs, you know?
Power is everything, and I'm gonna keep, keep on saying that. Like, power equals compute equals revenues. You have all those things, you win. If you don't have one of them, you're a loser.
I mean, that's really what it comes down to. Okay, let's pivot to open models because you had, um, some good insights. You had this, uh, X article.
You've written about it, and this was, mind you, at the beginning of July. Um, the open source war is over. You've tweeted a bit about it.
Um, quote, "Contrary to the obituary wo- obituary wi- uh, writers, the open source AI isn't dead."
Since then, Ben, Jensen Huang made his first tweet co-signed by, like, the entire AI ecosystem except for Anthropic on open models.
What's changed since this article because you have massive industry sign-on to a similar thesis here? Yeah, J- Jensen and I are good friends. We hang out a lot at Denny's, and we- [laughs]... we talk about AI [laughs]
with, uh, the grand slam. Uh- [laughs] Uh, a- actually, I heard he likes chicken fried steak. But no, I've, I've studied Jensen for, you know, over a decade.
I've, I've known about him for over 20 years when I used to work in investment banking. I mean, I have friends that have worked in Nvidia for a long time.
And you look at the parallels of, of technology and the curves, and really what we're seeing is a, a lab like Anthropic is just getting too big and too strong, and they're becoming like a juggernaut. And it's...
They have great products, but the way they're approaching it is they wanna basically decimate the whole ecosystem and create some sort of regulatory capture where they are control everything, even down to the silicon.
They... I think they even went to some of the Korean memory makers like, "Hey, can you give us some materials? Like, we wanna make our own, like, fab and GPUs, like, 'cause we can do it with Claude." Like, like,
don't try-- Like, in business, for business to work, you need to let everyone to kind of make a little bit of money to survive, not just try to put everyone out of business because you're the best.
I, I get that, and they have a great model and everything's good. But the whole point of open source is, is you can't be stuck with Coke or Pepsi for the rest of your life. And then
this Coke, because they make it so well, is like, they say it's, like, $500 a can. And then a similar type of Coke in China or, like, RC Cola is, like, 5 cents a can, and it does-- it gives you that same,
uh, bubbly feeling, and it does most of the same type of work, so, like, why are you paying so much for it, right? I think I said that. Okay. Yeah, you, you used the exact Coke and Pepsi analogy. [laughs] Yeah.
Well, it's funny, Ben, because at the time when, like, you made this analogy and Jensen had put out the letter signed by everybody, um, OpenAI and Anthropic had signed. OpenAI kinda signed late it seems.
Do you think this was a, them realizing they have to join forces with the rest of the industry against their main competitor, Anthropic? Like, you know... I don't know.
H- does, does this change this duopoly Coke, Pepsi thing? Yeah, there was, there, there, this... There's a huge Game of Thrones game theory behind all this stuff. There...
Anthropic as a company has hedged its silicon between Google and then Amazon and then using AMD and then some Nvidia GPUs. They're kind of all over the place.
They're not-- They don't hold alliance to, like, one company, as you can see, and, uh, they're becoming a threat to those companies that they're also being a part of.
I think they're also, like, a threat to Google to some extent. So, uh, OpenAI is somewhat beholden to its investors.
Nvidia is a big investor in OpenAI, and their whole compute stack is co-designed with Nvidia and OpenAI, and they need that to work.
The whole, the whole purpose of frontier versus open model is that there's always gonna be a market for closed models and frontier, uh, because they're better and they're more secure.
For you to run an open model, it actually might even cost you more because you need to set up the hardware, the security, the parameters, and, and do all that stuff yourself.
So the world, the way I see it, is, is a mixture of, you know, frontier models which are really good, like OpenAI or Claude, that are gonna do
most of the, the heavy lifting, and then the grunt work is gonna be done by the open source models w- which could be, come from China, GLM or Kimi, or we have, uh, you know- Oh, new open source models in America from, like, I think Reflection, Reflection is a company, and then- Reflection AI, yeah...
and then obviously Nvidia has its own open source model, Nvidia Nemotron, which is frontier, frontier-level class. So if you're a nation, say, like, you're, uh,
a small country in Europe, say you're Italy and you wanna have sovereign AI, how are you gonna set that up? Obviously you're gonna try to buy Nvidia GPUs, but what model are you gonna run on it?
Are you gonna run OpenAI or Anthropic and pay them billions of dollars a year in API fees, or are you gonna try to get some open source model tailored to the Italian language and culture,
open weights and, uh, and, and modify it to, and tune it to what your country needs? And that's probably, that's what Nemotron is. It's for those people that need all that stuff.
But then you could still also use OpenAI as a harness or, or Claude to, to do all that stuff together. So the quest- it's a mix. It's not one or the other, and I don't see open models as a threat. And to, to give you,
uh, better color on that is the whole Hugging Face hacking incident. So you had the OpenAI model break out and hack Hugging Face, and the next thing you find out is, like, there's no
CrowdStrike or Palo Alto Networks, there was no big publicly traded software company that could help defend against this rogue AI attack except GLM 5.2. So they had to fight fire with fire, right?
They needed an open source model to basically take out this closed source threat. So that's why you need open source models and closed models to live together in this ecosystem to create balance and harmony, or else
being in this closed world, we'll have more problems. So, uh, guess last question is then, um, in light of the open source model, uh, letter signatories, kind of a, a renaissance for open models lately,
what does this mean for our main beat, the NeoClouds and the data centers, the compute providers? Um, is this bullish?
Because right now there's a little bit of ex- existential angst here as token pricing goes down, GPU rental rates, depending on the rig, go down.
What do you think this means, uh, in the medium term, say next year, for, uh, demand for compute? I see a token explosion. I don't see demand of compute going down. It's just only gonna increase, and
we haven't even entered the robotics phase of, of AI at scale or edge cases, and there's still so many people that aren't even using Claude or OpenAI to do, uh,
task work through, like, agentic capabilities. They're just using it as, like, a chatbot. Like, "Hey, what's this bug that I saw? Okay, cool. Yeah."
Or, but, like, if you actually use it for real work or the co-work and it's sequentially doing things for you, and there are agents running in parallel and researching, like, I'm doing that stuff, and it's like, wow, this is, this is pretty groundbreaking.
So you have basically this computer using thousands of other computers at the same time doing... and searches and doing everything and coming back and giving you answers.
Uh, and from a NeoCloud perspective, uh, I said on the, the Jack Farley podcast, or you can see the clip, the NeoClouds, not all of them are created equal. You really need to provide value to your customers,
and it's just not bare metal GPUs. You need to be able to serve different models at different speeds and at the same time give them the uptime. And if you even have an open source model, that's fine.
You still have to host it and charge for it. It's not gonna kill your business 'cause you can have a blend of tokens.
But if you don't have, uh, those services, I think, I think Nebius has a bunch of services, it's sort of like an AWS for, for AI w- with that,
then, then you, you'll fall behind if you're just basically just selling raw compute.
It, it, raw compute at some point will be, it's like a tradable commodity as you can see with, like, the Orange charts or the Silicon data charts. It's what are the value added services that you layer on top of it,
and that's basically, like, a software layer that these NeoClouds like CoreWeave or, or Nebius are adding.
Uh, but if you're just a pure Bitcoin miner that's just plugging in GPUs, I think you're gonna have some challenges in the future. And like I, I said in that video clip from, uh, Batman,
when Bane says, like, "They expect one of us in the wreckage, brother." [laughs] And, uh, you're gonna find a few of these, uh, NeoClouds in the wreckage because you needed them to start the fire, right?
Because no one believed in HPC and, uh, this type of compute.
To, and to get to the, the hyperscalers like Google and Amazon and Microsoft to move, you needed these NeoClouds to exist to show, like, look, there's a real business here. You really need these types of GPUs.
There is demand for it, right? And planting those seeds has created this new ecosystem and, and businesses that didn't exist, you know, five years ago. Ben, thank you so much for your time. Thanks for your insights.
We covered a lot of ground. Yeah. So appreciate, appreciate you, uh, riding with us. Um, hope to have you on again sometime soon and, uh, cheers. Thanks, guys. Thank you, Ben. Have a good one. Bye, you too.
That last comment has echoes in Bitcoin mining and- They expect one of us in the wreckage. You know [laughs]. And this gives you- Yeah... you have raw compute, and this gives you- [laughs]... power over me? Yeah.
Um, but his point about the raw compute won't be enough in the future reminds me of Bitcoin mining pools- During the shift in the China mining ban.
It's not a perfect parallel because in this instance, the miners were selling [lip smacks] hash rate to the pools, right?
But the basic idea being it came to a point where margins were so thin in the mining business that if you just had a mining pool, you couldn't compete, and you had to have additional services like financial, ASIC financing, for example, firmware, et cetera, right?
And it got to the point where the pool was the,
was the service that attracted business and pooled business into your company, and then you used that as a vector to sell into other business models and other business lines.
Hey, we're, we're both-- we both spent some time at Luxor. We know this playbook well. On that note, we are gonna do a quick newsflash. Galaxy Core's Applied Digital. But before that, a word from our sponsor, Ligos.
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All right, Charlie, quick newsflash to end the stream here today, and we will kick it off with Galaxy Digital pricing its three point five billion dollars senior secured note round.
We've covered this a few times on the stream. I just wanted to get this in the newf- newsflash, though, because the pricing finally hit. And the TLDR of the terms for this deal are as follows.
The senior secured notes will be due twenty thirty-one, priced at nine point eight seven five percent for interest.
The aggregate principal is three million five hundred and seven-- or sorry, three billion five hundred and seven million.
They're issued at ninety-nine point five percent of par, so a slight discount for what Galaxy's receiving on the other end for the loan. Again, maturity is August first, twenty thirty-one.
Interest is paid semi-annually, February first and August first, starting February first, twenty twenty-seven.
They amortize semi-annually per the indentured schedule with no payments due until at least ten months after the project completion.
And that project completion is for the phase two of its Helios site, which has CoreWeave as a tenant.
The finance will constr-- the, the con-- uh, finance will help with construction of two buildings and eight dinners-- uh, eight dinners-- [sighs]
eight data center halls, say that ten times fast, totaling four hundred megawatts of utility capacity, but two hundred and sixty megawatts of critical IT.
That's again on a two hundred and sixty acre site in Dickens County, Texas, phase two of the Helios site. This, uh... Galaxy also has provided an uncapped completion guarantee for the notes.
So if the financing falls short, Charlie, they will cover the difference. It's important to understand about this. I'll move on to our next newsflash unless you have any thoughts on this pricing.
Let's go to Core Scientific. What's the play? Yeah, so the investment banks have been having a field day with their targets as they're want to do. This one's coming from Needham and Company, [lip smacks]
where they have raised their price target for Core Scientific from twenty-nine dollars, which they released actually yesterday, to thirty-five dollars as of today.
This comes on the back of the AMD deal that we covered on the stream.
Core Scientific has entered into a hosting deal for AMD and an undisclosed Neocloud for a total consideration of five hundred and thirty megawatts in a fifteen-year deal valued at just over fourteen billion dollars.
Both leases, again, there are two here. One is for three hundred and seventy-seven megawatts to AMD, the other is to a hundred and fift- for, uh, roughly a hundred and fifty megawatts for the undisclosed Neocloud.
[lip smacks] There are three five-year extensions for this deal.
And Needham here says that the lease averages about a hundred and seventy-six million in annual revenue per megawatt, which Needham calculated at about fifteen point three percent weighted yield on cost, while estimating the weighted net operating income margin of nearly ninety-five percent.
For this, the AMD deal net operating income margin is ninety-nine percent, the Neocloud deal eighty-five percent, according to Needham.
And as a result of this deal, Needham has increased its twenty twenty-seven revenue estimate to one point two three four billion, up from nine hundred and seventy-five million, and adjusted EBITDA to nine hundred and ten million, up from seven hundred and twenty-two million.
Its twenty twenty-eight forecast calls for one point seven three three billion of revenue and one point three six eight billion of adjusted EBITDA after the AMD and CoreWeave contracts are fully deployed.
The bear case here, Needham covering its bases, is- Includes construction or power procurement delays, high capital requirements, and colocation revenue arriving too slowly to offset declining mining revenue.
That last one, maybe you'd see it, but the fact of the matter is the mining contingent really didn't have any bearing on their Q2 results. It was vanishingly small compared to their HPC revenue, which was north of,
I believe, 100 million in the Q2 earnings. The construction costs, though, are significant here. We covered this on the stream yesterday.
The estimated cost for the AMD and NeoCloud build will be route- about $11 to $12 million per megawatt, up from their CoreWeave, uh, retrofit in 2024, where construction costs were a lot cheaper.
Because out of all of their peers, Core Scientific was the only one doing this. They-- Again, they pioneered this pivot from Bitcoin mining to AI.
Now, everyone and their grandmother is trying to build one of these data centers, Charlie, as we covered, and the firms that build these things are a small piece of the overall contractor landscape in the United States.
And you have to imagine the bidding wars [chuckles] that go on at these companies, considering there are not as many companies who have specialty in building these data centers as there are demand-- as there is demand for these builds.
Yeah, absolutely. Um, AMD's been on a tear with these, uh, deals. Uh, I- I'll even quote, you know, a reference, uh, that our previous guest had on a different podcast. Ben talking about how AMD, which,
uh, uh, really competes in the CPU market, that as GPUs, uh, are really constrained by memory as the industry switch to m- a- a managing agents, uh, CPUs are much better positioned.
So, uh, perhaps these deals with AMD, uh, could lead to, uh, better long-term positioning as the models and metas for managing AI themselves change.
I think it's very possible that, you know, um, the idea of hosting GPUs, uh, could give way to a, uh, an entire sub-sector of hosting CPUs. So, uh- Yeah, that makes sense to me.
And one last note here before we jump to Applied Digital. Colocation revenue for CoreSite last quarter, that's their HBC segment, was $136.7 million, and their total revenue was $164.2.
So their mining revenue accounted for less than $30 million for their Q2 results.
Going back to Needham's, you know, potential bear cases, or rather the things that could actually not material-- or the things that could impede the materialization of the revenue they forecast.
The fact of the matter is the Bitcoin mining is a, a vanishingly small segment of their total revenue, and it will continue to be so.
So far, they have done a really good job of scaling that back without having any shortfalls in revenue for their Bitcoin mining segment for the entire company. So... All right. Last note from Needham here.
An incredibly bullish call for Applied Digital.
Needham has raised its buy rating to $83 per share for Applied Digital, implying a roughly 215% upside from the current-- or the bank's reference rate of $26.38 per share on July 27th.
They're basing this on a 21X enterprise value to EBITDA multiple applied to their projections for Applied's discounted fiscal 2029 adjusted EBITDA estimate.
The bank forecasts 2.33 billion of adjusted EBITDA that year, down from its previous estimate of 2.37 billion.
Applied is also in advanced discussions, Needham points out, with two existing counterparties to cover 250 megawatts of critical IT load, 100 me- me- megawatts at Polaris Forge and 150 megawatts at Delta Forge.
Their forecast is largely contingent on, or m- or contingent on Applied Digital executing leases for these sites. Should they do so, they believe their targets will hold up.
This was a question analysts asked Applied Digital during the earnings call, I believe, specifically when we should expect a tenant at those sites.
It is worth noting here that Needham is on the sell side for Applied Digital. Um, that's probably why you're seeing such a bullish target.
Nonetheless, they have high hopes for the company, and I think it just underscores, Charlie, as earnings seasons kicks off, we're starting to see deal flow pick back up for these companies.
It's not unusual for companies to hold some of these announcements for earnings season to try to give their stocks a pop and fizzle as they report the numbers.
But as many have pointed out, it's unfortunate, specifically for the Core Scientific team, that they had this truly watershed deal with the little brother of GPU manufacturing for this AI boom in a time when the market's getting absolutely hammered.
If this AMD deal had been announced a year ago, the stock would have absolutely ripped.
But the fact of the matter is it was announced into a market that is being weighed heavily by downward price action and fears that maybe we're getting a little top-heavy in this CapEx cycle. So...
Um, you can be the bear, I'll be the bull. Um, I'm buying here. Uh, not financial advice. On that note, thank you for tuning in to Block Space Live. We do this every weekday, 1:00 PM Eastern.
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I'm Charlie. I'm Colin. We'll see you tomorrow. [outro music]