All right. Hi, everyone, and thank you for joining. My name is Eyal. I'm the COO of BlockchAIn. Three things to know about me. I have a funny Israeli accent, I always stand up when I present, and I never adhere to the deck, so I apologize for that. With me is Jolene.
Yeah. My name is Jolienne Halisky, and I'm the CFO with BlockchAIn. I guess interesting thing about me is I'm Canadian, and I live in Canada. I love coming to this beautiful city as often as I can.
All right. Who are we? We construct and manage data centers, and we have a very strict philosophy that power is king. When we build data centers, when we go and acquire land, that is the very first thing we more than pay attention, we adhere to, basically. Our land always comes with power. Power is first. It always comes with fiber optics, and it always comes in communities, and we learned that through experience, that are less known to push us back. I don't know. I'm sure you do, that over the past year, this has become a fundamental issue when you go and build data centers. You've got to take into consideration the pushback of the community. What do we have today?
We have 65 megawatts energized, we have another 90 megawatts under development, and we have a very ambitious pipeline of 485 megawatts. All these sites exist. They're under evaluation right now. They're not just a number that we threw on the deck. Can we move two of them? Yeah, right. What is the market backdrop? This is no secret, right? You can see for yourselves, and we all hear about it all the time. The demand is through the roof, and this slide basically is why power is king. The demand is through the roof. The available capacity is on the other side of the equation.
That's why in our strategy, when we decided to position ourselves as an AI data center opposing the crypto world from where we come, as our name, as the name of the company may advise, that is why we put that on the top of our flag. In order to meet that demand, because utility just cannot provide power right now, and the lead time is enormous, it takes special connections, it takes special philosophies in order to obtain that kind of power and be able to compete in the market. We like to call this slide the three Ps, or actually our founder does, and then we really relate to that. We believe it's all about people, power, and pipeline. We're small but nimble. We're less than 20 employees, but our project managers are all ex-AWS.
A lot of us worked in one of our sister companies, which is AI-based, and gathered a lot of AI mileage from the inference side or the model training side or the hardware side or the model as a service side. We know AI. I think we jumped one slide ahead.
You were talking people, I thought I-
No.
Wait.
We're talking people as part of people, power, and pipeline.
Go ahead.
Power we discussed, and pipeline. Through the connections that we have, we've been speaking to many potential customers. It's not a big deal to obtain customers nowadays, I must admit. It's more about the capacity. We have several companies lined up waiting for the power that hopefully we can deliver very soon. Just meet the team. Jolene is here and myself, and Jerry Tang is our founder. Gary is with us in the room. He's our Vice President of Sales. Amanda's our Director of Operations. Chris, one of those ex-AWS individuals, has a lot of mileage in building data centers and comes, or came, to our company with a very diligent and robust supply chain to make it easier for us to deliver what we're committed to.
Maybe we'll talk just a couple of minutes about our Chief Executive Officer. He was supposed to be here this week, but he's traveling, doing some work on our supply chain. He was in banking for 14 years. He was one of the senior directors with Natixis. He ran their whole American operations and grew that business from half a billion up to $10 billion in the 14 years that he was there. Then he left banking and became an entrepreneur, built our first data mining center. He was the GC on it, so he knows a lot about power and what it takes to build a successful data center. That's a Bitcoin data mining data center. What else can we say about him? He's that rare combination of he understands finance, he understands operations, and he also understands commercial real estate.
He's amazing knowledge when it comes to power, how to get power, and how to build a successful data center.
We call it the path to contracted megawatts. Development pipeline, we spoke about that, 485 MW. It's very ambitious on one side, but it's very doable on the other because all this number is facilitated by actual sites, like I mentioned before. Site control and build, 90 MW. Contracted power is 65 MW, and we'll speak about that in a separate slide. We have a specific data center that started as a Bitcoin mining site. Or maybe we should have started with that. We're originally a Bitcoin mining data center constructor and management company that shifted its strategy into AI about seven months ago. That has a lot of advantages. That means that we already have sites with power, certified power, licensed power in them, and one of them is that South Carolina site with 65 MW. I think you can move to the next one.
There we go. Our active commercial dialogue. We provide facility, we provide cooling, we provide power. We don't provide the hardware. We're completely agnostic to the type of AI workloads that we are hosting. Basically, we can approach everyone from Neo Clouds to hyperscalers, to bare metal companies, to sovereign clouds. We don't care. The facilities are there. They're either directed at Nvidia chips or at AMD or even Cerebras recently. Apart from that, we're completely agnostic to what we host. Our growth trajectory, again, facilitated by real land. 65 MW secured, as you can see. In the middle, we went public about three months ago, right? Give and take.
On St. Patrick's Day.
On St. Patrick's Day.
Lucky day.
Right. Yeah, the green day. You can see where we're headed, all the way to 375 MW secured. Pretty ambitious. Before the end of 2028. I spoke about our data center in South Carolina, originally a Bitcoin mining site, 65 MW secured, signed DSA. We actually just decommissioned the two Bitcoin mining customers or tenants that we had on-site, and we are now in the midst of repurposing that site from Bitcoin mining to AI. That means building a new shell, and that means placing the gen sets, the UPSs, the transformers, everything you're aware of that makes basically an AI site run. The nice thing about it is that we have a very ambitious, up to unbelievable expected ready-for-service date, which is the end of February 2027.
Before you raise your eyebrows, the reason we can do that is because of a very robust supply chain, very good connections over the years with those who supply all the equipment we need. The land is ours. The power is already secured. A lot of the risks that have to do with creating or constructing a data center are already mitigated. Basically, we're left with just raising the shell and placing the equipment. The power of execution. I spoke a lot about our supply chain. Other than that, we're not using this in South Carolina, but we'll definitely use this in the future. Modular building, and we're in touch with several companies around modular technology. When I say modular, it's not maybe what you think of modular the way it used to be. Today, basically, it's like Lego.
You hook up a few pieces that are pre-manufactured in the factory together. You couldn't notice if it's a shell built from scratch on site or if it's modular or not. It doesn't so much save money, but it definitely shaves off time. The power network. Jolene, you mentioned Jerry, one of the unique things about our founder is his connections with utilities. That is why it is easier for us to say that power comes first because it's obvious power comes first. Everybody wants power to come first, but it's more difficult to implement that. Through these connections and already working together for several years, it is easier for us, even though we're a young and small company, to obtain all those hundreds of megawatts that we showed in the previous slides.
Okay, I'm going to jump in. This is our, I think, the most important slide in our deck. It shows our valuation gap in terms of what our market cap is per megawatt energized and compared to our counterparts, Hut 8, IREN, Core Scientific, TeraWulf, Cipher, Applied Digital, and CoreWeave. This is where our market cap is sitting, considering that we have 65 megawatts of power energized. Here's the issue in terms of why we think we're evaluated at this point, is because we don't have that signed lease. We have to prove upon execution. We have a successful running operation, but as we're transitioning to AI, that's where we feel the gap is coming from. We feel once we sign our first lease, a rerate will happen, then our market cap will start to simulate closer to what we're seeing in the market.
We'd like to compare ourselves and consider ourselves to be the new Applied Digital. Sorry?
Applied Digital.
Yes. It has been. I am going to just take you through some economics of a 20 MW site, and this is one that I am going to illustrate of how the economics come together, how our platform works, and what we are looking at for ROI. On a 20 MW site, that would be a 26 MW, that is a utility load. 20 MW is the critical IT load for the site. There is a total cost of $350 million and a 20x EBITDA multiple expected in terms of enterprise value once the asset is stabilized. This would be a typical lease term for an anchor tenant. It would be initial term of 10 years. You have typically 2 renewals, 7 years each, up to 24 years.
As I mentioned, the 26 MW utility load, that is a PUE of 1.3, and we would like to get that down to 1.25, but we start for conservative purposes at 1.3. $12 million per meggawatt project cost. You can hear some people saying they can build a site for $6 million. That is not a good site, and that is not accurate. There is no way we could feasibly understand how you could build a site for $6 million-$8 million. Yes. Total contract value for the first term is $412 million. $1.2 billion total contract value if the 2 renewals were extended. We only look for strong credit-backed tenants that are tier 1, mostly Neo Clouds. It could be sovereign enterprise, but mostly in that Neo Cloud space. What can I say here? 9-12 month construction time.
We have modified gross lease terms. That means that power is a pass-through, but we are responsible for property management, insurance, and real estate taxes. Annual price increases are built into our leases, 3% escalator per year, or it is actually the greater 3% or 75% of CPI. As I mentioned, the pass-through on energy costs. That gives you the core of our lease negotiations or what we include in our standard leases. Here is the project parameters. It just lays out what the different criteria of the project are. Over on the other side is our target cap stack. For our projects, we want to go in with a 65% debt component loan to cost. The GP/LP platform would take up a 35% space within that optimized cap stack in terms of how we raise funding to develop our projects.
On a total project of $350 million, you are looking at a GP/LP position of $122 million. We would hope to, as the pub co, take a GP position of 51% so that we control the project. Would depend on cash flows, what we can generate in equity, and what is a better way to go? Is it more equity, or should we go with more debt and bring in more LP partners? A lot of flexibility within that targeted cap stack. I just want to look here. Okay. We have a stabilized EBITDA margin of 85%-90%. Stabilized EBITDA would be $30.6 million per year based on these criteria for this lease. Annual revenue of $36 million. I think that is all I want to highlight there. Oh, we also include our power rate at that $0.075 per kWh. Here is our value creation waterfall.
$350 million investment, 20x EBITDA stabilized. Once the asset is up and running and stabilized, would bring you up to about just over $600 million. The value generated out of that, if you take the $612 million minus the debt and investment of $350 million, leaves you with $262 million of a promote fee on recapitalization, and that is split, just for illustrative purposes, 30% to the GP, 70% to the LP. Those could be flip-flopped. Like I said, we are preferring or targeting to come in at 51%. There's a value creation summary over on the right-hand side. In terms of a multiple of invested capital, if you invest $1, you can expect $2-$3 in return within 12 months. Here's our economic summary, and it lays out our four layers of fees.
Depending, there's part of the GP model, there's the four fees. One is the land acquisition fee, another is the developer fee. It's 5% of the construction cost. Then there's the recap promote that we illustrated on the waterfall, and then the ongoing operating fee at 5% per year of revenues. That's our model in terms of how we bring the asset to life and how we monetize. I included some financial statements as well. Here's some highlights from our Q1 filing that was just filed in our 10-Q. This is generally our legacy operations. We've had a positive operating cash flow out of our legacy operations. As Eyal mentioned, these operations are being decommissioned, and we're converting into an AI site.
I think there's some financial information. This is for Eyal, just to finish up in terms of where we're headed.
Force myself to stick to the slide. Public company milestone. I'm trying to see what I didn't mention so far. Already pivoting to HPC and AI workloads, already in our first site. Customer diversification, we spoke about that. We're completely agnostic to the customers that we host. Capacity pipeline and power runway. We have a lot more pipeline than we can currently handle, unfortunately. Or fortunately, depending on how you look at it. It's definitely a seller's market right now. What we're doing, what we're aiming at, what we're focusing on is just obtaining more and more energized sites. That's a real challenge, and we're utilizing all our strengths in order to do it in the quickest way possible.
We wanted to leave time if anybody has any questions. Alan. Only easy ones.
In the data centers that we're looking to develop now? Sure. Absolutely. We have land in Minnesota, and we are with 25 megawatts of assigned DSA, which we are looking to double. We will start constructing very soon. We obtained all the permits. We speak with the township once a week. We just had a call with them yesterday, that's one. Apart from that, we have land in North Carolina, power there is not yet secured. That's why I didn't mention it. It's supposed to be a big site, we're counting on the power to be secured, I guess, in the next six months. That's planned ahead. It's a large site. It's going to be 90 megawatts. We are in the market for acquisition. We're very much in progressing negotiations around two particular sites, one smaller one and one larger one.
This is where, let's say, for the next year, these numbers are coming from. Apart from that, we have a longer-term plan, a few large sites that we're pursuing. Does that answer your question, Alan?
It definitely does, yeah. In terms of issuing POs, issuing deposits for the long lead time items, pushing forward on design. We have a standard design as well in terms of, this is what our type of a data center.
A signature design. Yeah.
Our signature design.
Right.
That's going to be deployed at each of our sites. As Eyal mentioned, in terms of who comes in, who's our tenant, we're agnostic to that and what they're going to use the data center for. We can use this standard design. Of course, with any tenant, there's going to be those design features that you need to incorporate, but that's what this raise allows us to push forward on. It was an interesting experience in terms of the type of backers that we have invested in us, and it was very encouraging.
What would you say some of your biggest challenges are with acquiring sites?
When you acquire sites, you want to acquire a powered site on one side. You want it to be in the right size, not too large, because then it's too expensive, and not too small, depending on the amount of megawatts you're planning for that site. You need physical place to put your chillers, to put your gen sets and so forth. The location. Like I said at the beginning, that's a third pillar. There is more and more pushback in certain communities, in certain states, and you got to be aware of that, because that can be a huge obstacle in your way. We're trying to avoid that. One of the things, I have a team of three people. That's what they do every day. They run around the U.S., they're on the phones constantly, and they hunt for sites.
They're in touch with brokers, and they know the actual owners, and they do it for a long time, so they already have some good connections. That's the three pillars that they're looking at. Pushback of the community, powered, of course, and size of the site.
Yeah. Jerry, our founder himself, visited over 100 sites when he was developing-
South Carolina
his very first site.
Yeah.
He knows. He'll say it himself how he can tell if a site is real or if it's fake. We're not in the entitlement business. We want land that has power secured, and it's either energized currently or it will be within 12 months. We don't want to take on the risk of having to go through the entitlement process. In terms of challenges as well, you spoke to the community sentiment. I think because our projects, and it's intentional, we're keeping our projects small, under 100 MW. That also, sometimes you'll get the most resistance when it's a large hyperscaler project coming in, and the noise and the size. In our areas, like in our South Carolina site, there's data centers of a similar size right around, within 30-kilometer radius. We know the community. We've been there.
They're receptive, friendly to what we're doing.
Support what we're doing, not every community is like that. You have to be cognizant of that, for sure.
Congratulations.
Thank you.
On the project investment, those are every quarter.
Yes.
Who, the GPs invest or the company?
We will take the GP position as the general partner, and we would be seeking LP partners, and that would be mostly from private equity investment.
What is the company return?
When we look at the waterfall. Just flip back over to the waterfall again, because I think that displays it quite nicely. We have the $350 million investment, 20x EBITDA comes in just over $600 million. The value created is $262 million. Depending on the LP versus GP position and what the % is, I just modeled 30% of a GP position, 70% LP. You can see from that, the LP would be returned, and that's after the hurdle rate of, I think we had 8% in this model as a hurdle rate. They would be returned $183 million from that recapitalization promote fee.
Thank you.
You're welcome. Any other questions? Those are all great. Okay.
Thank you so much for your time. Appreciate it.
Yeah. Thank you.