Greetings, welcome to the MARA first quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow a formal presentation. If anyone should require operator assistance, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Robert Samuels, Vice President of Investor Relations. Thank you. You may begin.
Thank you, operator. Good afternoon, everyone, welcome to MARA's first quarter fiscal year 2026 earnings call. Thanks for joining us today. With me on today's call are our Chairman and Chief Executive Officer, Fred Thiel, and our Chief Financial Officer, Salman Khan. Today's call includes forward-looking statements, including those about our growth plans, liquidity, and financial performance. These involve risks and uncertainties, actual results may differ materially. We disclaim any obligation to update these statements except as required by law. For more details, see the Risk Factors section of our latest 10-K and other SEC filings. We'll also reference non-GAAP financial measures like adjusted EBITDA, which we believe are important indicators of MARA's operating performance because they exclude certain items that we do not believe directly reflect our core operations. Please see our earnings release for reconciliations to the most comparable GAAP measures.
We hope you've had the chance to read our shareholder letter and look forward to your feedback. We'll begin with some prepared remarks from Fred and Salman. After their comments, we will open the call to Q&A. I'm going to turn the call over to Fred to kick things off. Fred?
Good afternoon, everyone, and thank you for joining us. Q1 2026 was a redefining quarter for MARA, not an incremental one. This was a quarter where we executed deliberately across multiple fronts at once and moved the company decisively forward. During the quarter, we moved the Starwood joint venture from announcement to execution, closed our acquisition of a majority interest in Exaion, and retired about 30% of our outstanding convertible debt, all while realigning the organization to fit the business strategy. Shortly after quarter end, we announced a definitive agreement to acquire Long Ridge Energy & Power from FTAI Infrastructure. These were not isolated events. They are connected pieces of a strategy that is now fully in motion. That strategy starts with a single conviction.
The next phase of digital infrastructure value creation will be shaped by the control of power, where it is located, when it's available, and how it can best be monetized. AI adoption is accelerating faster than power can be brought online to meet demand. That is not an opinion. It's the defining constraint of this market. Available, connected energy is the bottleneck on AI compute growth. The ability to source, control, and dynamically allocate that power is a structural advantage, and the lack of available power will negatively impact semiconductors related to AI if there's not sufficient capacity to absorb chip supply. Some semiconductor vendors are investing directly in locking up demand, as evidenced by NVIDIA's recent investments.
MARA has positioned itself squarely in the bull's eye with already energized power to enable hyperscalers to, in the near term, energize compute with our previously 1.9 GW of power capacity, and now with the addition of Long Ridge, we're having advanced conversations with multiple prospective tenants across multiple sites. Let me start with Long Ridge. We view Long Ridge as a land and power acquisition to develop a premier compute campus. It is a strategic enabler for our existing Hannibal operations, adding to the site 1,600 acres with a path to grow the existing 200 MW of power to over 1 GW. It will establish a leading AI HPC data center campus in the PJM Interconnection, one of the most active data center and power markets in North America.
In a market where power and infrastructure constraints take years to solve, Long Ridge gives us exactly what is needed to deliver value to shareholders upon closing. This is not a greenfield site. It is a site that is already operational, already generating cash, and that gives us immediate access to the infrastructure, interconnection, and physical footprint required to scale to over 1 gigawatt. The power is there, the land is there, the water is there, the fuel supply is there, and the interconnection is there. The centerpiece of the campus is an approximately 505 megawatt nameplate combined-cycle gas turbine, one of the most efficient in the entire PJM Interconnection. It generated $144 million of annualized adjusted EBITDA in the second half of 2025, with 76% contracted capacity.
This is stable, visible cash flow from the moment we close the transaction. Beyond the power plant, the campus consists of over 1,600 contiguous acres and includes the 200 megawatts of MARA's existing capacity at Hannibal. As of signing, we have already submitted plans to augment the Hannibal interconnect, and we will move quickly post-close to further expand power capacity at the power plant. At close, we plan to retain Long Ridge's skilled team, consisting of about 25 full-time employees that have deep operational knowledge of the facility. They will supplement our existing energy asset operating expertise. Here's what matters most about the scarcity of this asset. If you tried to build this from scratch today, the land, the power, the permitting, the water, the interconnection, you're looking at $2 billion-$3 billion of capital and 7-10 more years of development time.
We're stepping into a platform that is already built, already operational, and already generating cash flow. Assets like this are very hard to come by. Some might even call it a unicorn. When they do, you move. In total, Long Ridge gives us over 1 gigawatt of total potential capacity and a path to scale to 600 gross megawatts of AI and critical IT load over time. This transaction increases our owned and operating capacity by approximately 65%, taking us from about 1.3 gigawatts of energized capacity today to roughly 2.2 gigawatts by closing and including expansion capacity to 2.4 gigawatts. We've been actively engaged with multiple top-tier potential tenants around this asset.
These conversations are now accelerating since announcing this transaction. The current plan calls for an initial 200 MW of AI build-out, with construction beginning around the first half of 2027 and initial capacity coming online in mid-2028. The power plant is not the end product, it's the enabler. It provides reliable control over an increasingly scarce input at a cost of approximately $15 per MWh. This is a cost position that very few can match, as well as a positive cash flow to MARA. To be clear, our existing Bitcoin mining operations at Hannibal will continue without interruption until such time as the data center campus needs the power. MARA does not expect to reduce Long Ridge's current supply of power into the PJM grid. As we develop compute capacity behind the meter, we will pair that demand with incremental generation over time.
Our goal is to continue to operate Long Ridge Energy and ensure that consumers continue to benefit from the reliable power they have been accustomed to. Taken together, Long Ridge gives MARA a scaled power advantage platform, immediate and durable cash flow, and a clear path to build one of the leading digital infrastructure campuses in this market. Next, I'd like to talk about our strategic partnership with Starwood, which has made meaningful progress during the quarter. We moved from announcement to execution, advancing permitting and site preparations across our portfolio and entering active tenant discussions with multiple counterparties, including hyperscalers across 90% of our existing owned and operated sites, including the Long Ridge campus. I want to take a moment to explain why the structure of this partnership matters, because it's fundamentally different from a traditional lease, and that distinction has real economic benefits for MARA and its shareholders.
First, Starwood is a trusted institutional counterparty with global investing expertise and a dedicated data center development platform. Their team has developed, built, and put into operations more than 7 gigawatts of data center capacity worldwide for premier tenants. This means Starwood is a trusted counterparty, having negotiated multiple leases with premier tenants, which we believe accelerates the timeline for site evaluation and lease signing, something we have already seen. Second, Starwood brings captive development and EPC capabilities. They lead design, development, construction, and facility operations, giving MARA an experienced execution partner without having to source and manage third-party contractors. Additionally, their prior experience for constructing sites for premier tenants provides an enhanced certainty regarding their ability to develop on tenant timelines and technical requirements. This trust factor provides prospective tenants more confidence that their timelines and specifications will be met.
Our peers who have never done this before still need to build trust with prospective tenants because they lack a proven track record. Third, the structure is capital efficient. When MARA contributes to sites, its value is determined using pre-agreed site-specific economics tied to power, land, interconnection, and development attributes. That value gives MARA equity credit in the project before joint venture cash contributions are required. To put this in context, on an illustrative 200 MW project, MARA could generate approximately $50 million-$100 million of net annualized stabilized cash flow based on a 9%-15% yield on cost range with little to no incremental equity required beyond the value of the site we contribute. As projects scale, the structure naturally evolves. MARA's site contribution is fixed, so for larger developments, the incremental growth capital becomes more proportionate between the partners.
At that point, the funding model starts to look more like a traditional data center development structure, including the use of construction financing that can support roughly 80% loan-to-value. The key point is that this model allows MARA to monetize the value of its powered land portfolio, preserve significant upside in long-term cash flows, and manage capital exposure in a disciplined way. Most critically, this is not designed to be a one-time transaction. As we continue to aggregate land and power assets, our goal is to contribute sites into the structure repeatedly. Starwood is a capital-efficient engine for turning MARA's powered land portfolio into contracted institutional-grade digital infrastructure at scale. We expect to sign multiple tenant leases by year-end. As the pipeline converts, we'll disclose contracted megawatts.
While the Starwood joint venture addresses the large-scale hyperscale end of the AI infrastructure market, Exion addresses a different but equally important segment: sovereign, enterprise, and private cloud AI compute. Together, they give MARA two distinct pathways into AI, both grounded in the same foundation of energy-backed infrastructure, both serving real and growing demand. Governments and enterprises, particularly across Europe and Canada, are increasingly unwilling to rely solely on hyperscale platforms for their AI infrastructure due to data sovereignty and cost. They want control over compute, data autonomy, jurisdictional compliance, security, and independence. This is not a niche requirement. As AI policy evolves and data sovereignty standards tighten, a meaningful share of AI workloads will require infrastructure that is compliance-ready, jurisdictionally controlled, and trusted.
Exion is built to serve exactly that demand. We continue to build on our proven success in UAE, Finland, and our recent launch in Oman. We are in active discussions with major energy companies in France, Brazil, and Saudi Arabia across energy-rich regions where reliable, scalable power supports long-term digital infrastructure development. We are still early, and we will share a more detailed roadmap as this effort develops. The simplest way to think about it is Starwood and Exion are different expressions of the same thesis. The JV pursues large-scale colocation for hyperscalers. Exion pursues private cloud, sovereign AI, and enterprise deployments in regulated markets where these are critical criteria. Both depend on MARA's core capability of controlling the monetizing energy-backed infrastructure. Together, they expand our addressable market across two large and growing segments of the AI infrastructure opportunity. Finally, Bitcoin mining is the operational foundation we're building from.
Our strategy is to co-locate new infrastructure with our existing mining operations. This allows us to monetize power assets immediately while building on the operational discipline and infrastructure expertise that mining demands. Mining generates revenue today. It preserves the option to redirect capacity toward AI and critical IT loads as those opportunities mature on the same sites. That flexibility is deliberate. It's not incidental to our strategy. It is central to it in that it allows us to best monetize our power and compute. We continue to believe Bitcoin is supported by institutional demand. In our view, that creates a constructive setup over time, with a bias to the upside of institutional buying continues and retail demand returns. We continue to believe Bitcoin will appreciate beyond its current levels. We also took deliberate steps to strengthen the balance sheet during the quarter.
We retired about 30% of our outstanding convertible debt at a discount, reducing potential dilution and increasing our financial flexibility. This was a decision to reduce the capital structure's drag on equity value and give us greater capacity to pursue the highest return opportunities across the business with discipline and without being forced to dilute shareholders. With that, I will turn the call over to Salman to walk through the financial results.
Thank you, Fred. Good afternoon, everyone. Before I walk through the quarterly results, I want to briefly frame the first quarter of 2026 from a strategic and financial perspective. This was a quarter in which we strengthened the balance sheet, reduced potential dilution from convertible notes by as much as approximately 46 million shares or 9% on a fully diluted basis, and continued to align our capital allocation with the strategy. As Fred outlined, we are converting MARA's digital infrastructure with lower cost, large-scale energy capacity into AI and critical IT. Two initiatives are central to that strategy. First, our recent announcement to acquire Long Ridge adds one of the most efficient energy-backed compute campuses with existing cash flows, own generation, existing interconnection, low cost, vertically integrated power generation complex, and a significant development opportunity over time.
This acquisition is next to our existing Bitcoin mining site and is expected to expand our AI expansion in an AI-rich corridor. As we pursue the regulatory approvals and seek consent from Long Ridge debt holders, we believe Long Ridge will provide near-term diversified financial performance while unlocking significant long-term contracted digital infrastructure revenue. Second, the Starwood joint venture gives us a capital-efficient path to monetize the value of our sites by converting them to AI, HPC, and critical IT workloads. It is important to note that in our JV structure and Starwood, our joint venture structure with Starwood, Mara contributes a site into the joint venture once a tenant is signed, for which we receive credit based on the site's power, land, interconnection, and development attributes at predetermined value, as Fred mentioned earlier. That is the power of the joint venture model.
It allows us to convert the embedded value of our existing infrastructure into meaningful ownership in large-scale digital infrastructure opportunities while significantly limiting the incremental capital required from our balance sheet, giving us a higher return on capital than our peers. Let me turn to Bitcoin price in Q1. This was a challenging quarter for the Bitcoin price and reflected broader pressure across risk assets. The decline was driven by a combination of macro uncertainty, tighter risk appetite, and continued pressure on mining economics. For MARA, that backdrop reinforces the importance of operating discipline. We remain focused on fleet efficiency, cost control, and capital allocation rather than pursuing growth for growth's sake. Since quarter end, Bitcoin has rebounded meaningfully, increasing approximately 20% from its March 31st closing price.
While volatility remains inherent to this asset class, the recovery reinforces the value of maintaining Bitcoin as both a reserve asset and a source of strategic financial flexibility. With that context, I'll turn to our Q1 financial performance, capital allocation, and balance sheet activity. Revenues in Q1 of 2026 were $174.6 million compared to $213.9 million in the prior year period. The decline was primarily driven by an 18% decrease in Bitcoin's average price. Which reduced revenue by $33.1 million, and to a lower extent impacted lower production, which accounted for approximately $2.5 million. In addition, other revenues declined approximately $3.7 million, primarily reflecting lower revenue from other digital asset hosting services compared to the prior year period.
During the quarter, we delivered record energized hash rate of 72.2 exahash per second, increasing 33% from 54.3 exahash per second in Q1 of 2025. This growth reflects continued fleet optimization and the deployment of approximately 2.4 exahash of new generation ASIC miners at favorable pricing during the quarter. Our share of available mining rewards reached 5.5%, up from 4.8% in Q4 of 2025. We mined 2,247 Bitcoin, or 25 Bitcoin per day, in the first quarter of 2026. That is approximately 39 fewer BTC than prior year period, reflecting a higher network difficulty level partially offset by our higher hash rate.
We reported a net loss of $1.3 billion, or a $3.31 loss per diluted share this quarter, compared to net loss of $533.4 million, or a $1.55 loss per diluted share in the first quarter of 2025. Approximately $1 billion of this net loss for the first quarter of 2026 was driven by unrealized mark-to-market fair value adjustment for digital assets, a direct reflection of the drop in Bitcoin price during the quarter. A reminder that based on our current Bitcoin holdings, every $10,000 change in Bitcoin price results in an approximate $350 million impact on fair value of digital assets, which is an unrealized mark-to-market adjustment to our income statement.
Adjusted EBITDA for the quarter was negative $1 billion compared to negative $483.6 million in the prior year period. Similar to net loss, this figure is dominated by the Bitcoin mark-to-market change. We use adjusted EBITDA as a supplemental measure of operational performance. A full reconciliation to net loss is included in our shareholder letter and earnings deck. On the cost side, our cost per kilowatt-hour was $0.04 for our own sites in the first quarter of 2026. For context, we believe this remains among the most competitive in the sector at a larger scale.
Our purchase energy cost for Bitcoin for the quarter for our own mining sites was $40,047 in Q1 of 2026, from $35,728 in Q1 of 2025, primarily due to higher network difficulty driven by growth in global hash rate. This resulted in an 8% decline in Bitcoin production at our own mining sites compared to the prior year period. Our daily cost for petahash per day improved 3% year-over-year to $27.6 from $28.5 in Q1 of 2025, and over the past 11 quarters has improved by 42%. We believe this remains among the lowest at scale in our sector.
In the first quarter of 2026, general and administrative expense, excluding stock-based compensation, was $57.7 million, compared to $36.9 million in the prior year period. The increase reflects the scaling of our operations, higher personnel costs associated with headcount growth from the prior year period, and administrative fees in support of our expanded global footprint through acquisition and integration costs. Acquisition and integration costs burden our G&A by $11 million for the first quarter of 2026. As part of our strategic shift towards AI and critical IT, we have realigned our business operations and reduced workforce by 15%, providing combined annualized savings of $12 million. This was a difficult but strategic decision. In addition, we incurred a restructuring charge of $45.9 million due to elimination of certain business initiatives and realignment.
The organization focused on scaling Bitcoin mining is different from the one required to build a digital infrastructure company. This realignment positions the company to pursue AI opportunities, as Fred discussed earlier. Following this restructuring, we expect our quarterly G&A run rate, excluding stock-based compensation and acquisition integration costs, to trend below the Q1 level as these savings are realized over time. Let me address deleveraging our balance sheet and our recent Bitcoin sales. During the quarter, we retired approximately 33% of our outstanding debt, which included 30% of convertible notes reduction at a discount. This reduced potential future dilution, lowered leverage, and improved our ability to allocate capital toward higher return strategic opportunities. We funded a portion of this debt reduction through Bitcoin monetization. Bitcoin is only a reserve asset.
It's not only a reserve asset on our balance sheet, it is also a source of strategic financial flexibility. We will continue to deploy it thoughtfully when doing so creates measurable value for shareholders and intend to use it selectively to strengthen the balance sheet and fund strategic priorities. During the quarter, we sold approximately $1.5 billion of Bitcoin. These funds were used to repurchase at a discount over $1 billion of face value of our 2030 and 2031 notes and reduced our line of credit by $200 million. In addition, we refinanced $150 million of our line of credit at a 7% interest rate versus 10.5% previously.
I also want to highlight that we have not used our at-the-market equity offering program, or ATM, since the end of the 3rd quarter of 2025. We have funded operations and balance sheet actions through Bitcoin monetization, not equity dilution. We think this is an important data point for shareholders as we continue to allocate capital toward the highest return opportunities. Now let me discuss our Bitcoin holdings. We held a total of 35,303 Bitcoin at the end of the quarter, a decrease of 12,228 from the previous year. Of the total, approximately 28% of the holdings were activated and loaned or pledged as collateral. The loan Bitcoin generated approximately $6.4 million of interest income over the 1st quarter of 2026.
Finally, I want to provide additional clarity on the pro forma capital structure we expect to have in place at Long Ridge upon closing the acquisition. Long Ridge's $400 million term loan is expected to be repaid at closing. We are also currently conducting a consent solicitation to waive the change of control provision in Long Ridge's $600 million secured notes, which would allow the notes to remain in place. The $115 million Can-Am facility is similarly expected to remain in place. As a result, total pro forma debt at Long Ridge is expected to be approximately $900 million, down from $1.1 billion previously, with approximately $185 million of tack-on secured notes expected to be issued.
We expect to fund the remaining consideration through a combination of cash on hand, borrowings collateralized by Bitcoin, and potentially proceeds from the sale of Bitcoin, depending on the market conditions at the time of closing. We have also secured a $785 million of dollar of commitment letter backstopped by a bridge loan from Barclays in case needed. We have a plan in place to finance this acquisition, and we are very excited about the Long Ridge, what it will bring to MARA and our stockholders. With that, I will turn it back to our to Fred.
Thank you, Salman. The actions we've taken so far this year were purposeful, and they were interconnected. The Starwood joint venture creates a capital-efficient path to convert our power portfolio into AI infrastructure ownership. Long Ridge adds a differentiated power advantage platform for a premier AI and critical IT campus anchored by our existing Hannibal operations. Exion gives us a second pathway into AI, sovereign and private cloud, domestically and internationally. Balance sheet actions reduce dilution risk and increase our financial flexibility, and Bitcoin mining remains our foundation. We recognize that the market is focused on demonstrated execution, signed contracts, contracted megawatts, and tangible proof that this strategy converts into shareholder value. MARA is redefining itself as a digital infrastructure company, controlling and monetizing electrons to their best value across multiple compute markets. This transition is already underway. Q1 2026 was a meaningful step forward.
With that, I'll turn the call over to the operator to open it up for questions.
Thank you. If you would like to ask a question, press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, to ask a question, press star one on your telephone keypad. We'll pause for a moment while we poll for questions. Your first question comes from Paul Golding with Macquarie Capital. Please state your question.
Thanks so much for taking the question. Congrats on all the progress this quarter. I wanted to ask, as you think high level, and maybe this is for Fred, as you think high level about the approach to expanding on the HPC strategy, on the one hand, you've got multiple tenant prospects across the portfolio of existing sites and through the Starwood JV. On the other hand, you also did an opportunistic deal to acquire the Long Ridge asset. How should we think about your broader strategy between commercializing existing sites and adding capacity through these opportunistic deals?
Was Long Ridge sort of a one-off because of the relationship and it coming to market, or is this, potentially a simultaneous approach that we should see unfold between, assets coming to market that you would, look to acquire versus the existing portfolio? Thanks so much.
Yeah, great question. You know, the Long Ridge deal has been in the works for quite a long time, since we acquired the Hannibal asset originally, actually. The site, you know, obviously Long Ridge provides us with the land that we need to be able to build a true premier campus. The original intention with the Hannibal site was to build a much bigger data center facility. You know, it just took a long while for the respective parties to reach agreement on a deal here, and they obviously had to take it to market through a process to ensure that they were doing the right thing for their shareholders. That has been a deal that's been in the works for quite a long time, actually.
I think going forward, what you should see is, you can think of us as focusing on combination of small sites which are perfect tuck-ins. We recently added a smaller site earlier at the end of last year, for example, which is now operational as a mining site, which has the opportunity to potentially convert into a smaller token factory facility if we want to do that with that site. At the same time, we're gonna continue to look for larger land and power opportunities where we can build significant campuses together with Starwood.
We really have the best of both worlds here because the large scale opportunities, having Starwood as a partner, does really a wonderful job of de-risking the whole process, and ensuring that, you know, we're able to execute properly. At the same time, at the smaller scale sites where we know how to develop smaller sites, especially as you start looking in the world of inference, where a lot of this is moving to ASIC technologies away from, you know, NVIDIA's traditional GPUs. Those facilities now are able to operate more in modular data center formats, which are more akin to what we've been doing all along with Bitcoin mining, where all our sites operate as kind of modular data centers.
We believe building this duopoly, if you would, of being able to develop smaller sites that specifically service inference needs for a variety of potential tenants or end customers, as well as doing the larger sites with Starwood, is a way that we'll be able to build a beautiful portfolio of assets that will provide long-term value to our shareholders.
Thanks so much, Fred. Maybe just as a quick follow-up, was wondering if I could pull on that inference versus training thread a bit.
Mm-hmm. Yep.
Are you able to share any detail around the general mix of interest right now from these prospects? Is it indexing more towards the inferencing use cases, or is it more towards training or equally distributed? Thanks so much.
Sure. When you generically use the word hyperscaler, you're typically talking about somebody who has large amounts of data that they have collected, that they train a model on, that they then use that model to do things. You know, Amazon, Google, Microsoft use data they have to essentially do inference, train a model and then do inference on that model. You have a lot of those sites are a combination of training and inference. If you've been following what Jensen at NVIDIA has been talking about, you know, his belief is that, you know, these training sites will over time do more and more inference. I think the models going forward, you're going to see a need for sites where people can deploy models that they have done in-house, and run them.
These are these token factory type sites, which I think we're going to see a lot more of, where essentially somebody needs the ability to run a handful of megawatts of model scale. We're starting to see already financial players, meaning non-data center players, wanting to now have data center capacity that they can use for. It could be financial trading, it could be healthcare data, it could be other things, where the ability to develop models and run your business using these models has become mission-critical, and therefore you don't want to put it up in the cloud. You want to do it in your own private cloud. This is where Exion marries to this model very attractively.
We're able to engage with kind of any tenant across, whether they want your traditional large hyperscaler site, which is training and inference together typically, or somebody who just wants proprietary air-gapped capacity for either training and/or inference typically together, or just inference and just wants essentially a token factory. They wanna run a Qwen model, they wanna run an open weight model, they literally are just looking for kind of this mix of lowest cost per token with best quality of service. As an example, if you're a financial trading company, you may do model development at a data center where latency is not important because you're really training a model. Once you deploy that model to actually run it, you're gonna run it somewhere on or near-prem, where latency is next to zero.
That's a quality of service. You're willing to pay more per token if the quality of service suits exactly your needs. And if quality of service, meaning latency, speed, and connection time isn't important, then you can run it at a token factory that's more remote. We believe the market's gonna consist of a variety of those tiers, and we're already in talking with enterprise customers doing part of our market research. What we're finding is, you know, there are companies who their public cloud bills, if you would, their invoices have gone from, you know, $100,000s a month to $ millions a month because of the fact they're running models in the public cloud, and they're finding it's just financially not an option.
You're also seeing, however, the large model providers, needing more and more capacity to run their models. As they develop more and more tools, I'll use as an example, you know, Anthropic has just released these new tools for financial analysts, for investment banks. They're doing all of these vertically designed agentic frameworks. You know, these are systems that consume huge amounts of tokens, but they still are running essentially on your data, it's still, you know, Claude that's running in the background. There's a need to be able to run across a huge infrastructure of sites globally to be able to operate these things. I think you're gonna see inference growing, training is still gonna be growing for the foreseeable 6-7 years, I think.
You're just gonna see inference volumes increase dramatically as more and more agentic technology comes to play. You know, we're seeing thousandfold increases in agentic and token consumption when somebody moves from chat to using Cowork or Claude Code, for example. Just talk to any CIO and ask what their token bills are lately, and they'll share with you that token maxi is not something they want to really incentivize people to do.
Really appreciate all that context. Thanks so much.
Yep.
Your next question comes from Chris Brendler with Rosenblatt Securities. Please state your question.
Hi. Thanks, and good afternoon, folks. Wanted to ask on the G&A line has seen a pretty significant increase over the last couple quarters, even if you back out stock-based comp and call out on acquisition expenses. Just sort of trying to reconcile that versus the headcount reductions. I know that you're probably more forward-looking, but, you know, can you talk about a little bit about some of the investments you've made in what areas? I was struck by your comments about, you know, sort of repositioning the organization. You know, as you outsource more and more stuff to Starwood, I would think the organization may not be as large in the future as more and more Bitcoin mining folks are repositioned. Just can you talk about the path of expenses?
You know, it seems like it's a little elevated still in my mind. Thanks.
Salman, you wanna do that?
Sure. Chris, thank you for the question. As you know, we've said this before, we've been growing over the years and we've, as part of our announcement in Q1, we looked at our organization and reorganized ourselves more focused on what is in the pipeline in the future. As we discussed in today's call, we've got the Longridge acquisition, we've got Starwood, which we're very excited about. What you have to remember is that we are still very good at what is Mara good at? Mara is extremely good at securing low-cost power at scale, $0.04 per kWh at 2 gigawatt capacity. That is not. Not many people can claim that they have that amount of power.
We have the operations to manage that from a Bitcoin mining perspective today. That capacity that we have and the additional capacity that we plan to acquire gets dropped into our joint venture in certain cases, for example, at Starwood. Because we maximize our return on that by not having to invest incremental dollars because we get credit for the assets that we drop into the partnership. Our dilution compared to other miners is much lower. I'm just going back to the structure. Long-winded answer. MARA historically was a pure play Bitcoin miner. We were growing, and we had certain technology initiatives.
MARA going forward is continues to remain technology company that happens to be surrounded by energy in the middle and AI and critical IT, where we expect to monetize and generate free cash flow from a long-term perspective. We looked at the overall structure and whether what are the skills that we're missing that we need to add to get there, and what are the skills that we don't need for the growth of our previous pure play Bitcoin mining business. That's what resulted in. In terms of the cost structure, the cost structure for our company size, I would expect, as we have stated, in our prepared remarks, to be lower than what we incurred in Q1.
You have to also realize that when we are having these transformative transactions and acquisitions, there are costs associated with those. As we have disclosed in our adjusted EBITDA disclosures, we will continue to disclose those and isolate those costs so that we can see what are the recurring nature of costs and what are non-recurring nature of those. That way it helps modeling the cost better.
Chris, the other thing is, you know, obviously the transition, takes time in the sense that, if I sign a lease tomorrow, that site is still mining Bitcoin for another 18 months maybe while the site's being built. It's not just a, "We're gonna let go of a whole bunch of operations folks just because we're transitioning the strategy." It takes time.
Okay. My follow-up question was on the funding plan. You know, a lot of former Bitcoin miners have, you know, started shying away from the ATM. You mentioned you haven't used the ATM since September. As you think about your needs, I know you have a lot of cash in Bitcoin in the balance sheet for Longridge, but, you know, are you striving to be more of an investment grade credit and use more traditional equity funding methods in 2026, or is that more of a longer term plan? Thanks.
Couple of things to think about, Chris. The transactions that we're talking about, and we have-- you can look at the examples of what other miners have disclosed with HPC conversions. We expect to, as we've stated previously, we expect to have a few announcements around the tenant in the second half of this year. Usually these transactions are either with an investment-grade counterparty or backstopped, as other people have announced. From a financing perspective, yes, those financings are considered investment-grade from a finance, project finance standpoint.
When you talk about our profile and our cash flows, our goal and intention is to enter into these to create this vehicle where we continue to acquire these low-cost power sites and drop them into the partnership with limited amount of capital needs, depending on the size of the project and continue to have those triple net lease revenues flowing through our P&L. So that generates.
As you get to have more predefined future free cash flows generating for your income, your cash flow statements, then obviously our balance sheet position improves our overall, you know, whether you want to call it investment grade or non-investment grade, then you can have a better conversation around what your balance sheet looks like. As you know, historically, this sector has not been evaluated much or paid attention to when it comes to credit rating agencies. But as, you know, with 2 gigawatt capacity power and so many opportunities to generate free cash flow from a long-term perspective, 15-year risk-free or low risk rate of return type projects, it certainly begs the attention from a rating perspective.
Okay. Thanks so much for the color.
Yeah.
Next question comes from Brett Knoblauch with Cantor Fitzgerald. Please state your question.
Hi, guys. Thanks for taking my question. Fred, on the Long Ridge acquisition,
Outline a path to get that to maybe a 600 MW AI campus? Could you maybe help put a timeframe around that? Where are they in terms of that extra 200 MW kind of grid connect that they're pursuing now? How long would it take maybe to expand the generation, you know, capacity? What approvals would you need?
Sure. The behind the meter expansion is already in process. That's on a shorter timeframe than the grid expansion. The grid expansion application, you know, submission process is what it is. We figure that, as you look at the development timeframe, you know, a 200 megawatt facility will likely take 18-24 months before it comes online. By that time, an additional 200 megawatts behind the meter should be available, and shortly thereafter, we expect the other 200, the remaining 200 megawatts to come online from the grid interconnection. You know, the key is getting the first site up and running for the tenant and then just having the power in the queue and ready to go.
The behind the meter additional capacity is what will come on soonest of the 2 additional capacity increases.
Awesome. Helpful. Then maybe just as a follow-up, I think you guys kind of reiterated, expect, you know, first lease with Starwood to get signed at some point this year. I guess, what's giving you the confidence that this could be executed as quickly as you're expecting?
Competition amongst the prospective tenants to get into the site. You know, we have, as I think we said in our prepared remarks, multiple tenants looking across multiple sites that make up 90% of our capacity today. You know, this market, the demand in this market isn't decreasing. People are getting ever more antsy about getting more capacity. I mean, you can just see what some of the model players have been doing just to garner more capacity out there. You know, you are, as a model provider, you are directly limited in your ability to grow capacity by the amount of compute you have, because you can only have so many clients hitting your model before your compute runs out of gas.
The only thing you can do is yield management and raise your prices. If you look at what some of the model providers have been doing recently, is they have essentially gone from, "Oh, that $200 a month all-in thing, guess what? We're going to have to put a capacity cap on that, and you're going to have to pay higher fees." Because I don't think anybody fully expected the explosion in demand for tokens that has happened once agentic technologies started to be introduced. You know, OpenClaw opened the floodgates for people to start really looking at how to do this. This is not just an enterprise play, and it's not just a consumer play. There are, you know, across the full spectrum of users, people are starting to build agents.
People are starting to use tools like Claude Cowork, for example. You have Google's about to release Remy, I think is the name of their agentic helper, who, if you're in the Google ecosystem, which is a huge part of the SMB market, with, you know, Gmail, Google Calendar, et cetera, that's an agent that'll do essentially what Cowork does, but do it in the cloud, whereas Cowork is local machine-based. That's just gonna drive more and more and more demand. You know, as you add customers, you need to do more inference and, at the same time, your model sizes are growing. You know, look at what Anthropic has said about Mythos. It's, you know, is it 10 or 100 times more compute it needs than the prior model?
When you look at that increment in both model size, and compute requirement for both training and operating it, plus the inference side of it, there's pretty much a just a huge demand for capacity today. You know, we have, as I said, multiple prospective tenants fighting over the opportunity to get into some of the sites, and we're super excited about that. You know, we're happy to be in the position we are with the amount of capacity that we have and with a partner like Starwood, where we're able to take advantage of that.
Awesome. Thanks, Fred. Appreciate it.
Your next question comes from Gregory Lewis with BTIG. Please state your question.
Hey, good afternoon, and thank you for taking my question. You mentioned conversations with both hyperscalers and enterprise customers. You know, curious if there's any preference there from your side? I guess also, you know, if there's any difference in the conversations, then kind of how you think about the customer mix longer term as you build out the HPC business?
I mean, from a per megawatt basis, the hyperscalers are gonna dominate by, you know, a large extent just because of the sheer capacity they need. You know, a single enterprise, 25 megawatts would do, provide huge amount of capacity for an enterprise customer. You know, I think it'll be in the near term, 90/10, and over time, maybe 60/40, but that really is gonna be dependent on how enterprises decide to do things. You know, if they decide to do it, on-prem private cloud, then we have the Exaion solution to service that need, and we're able to go in and, you know, help them operate that. If they want private cloud in a near prem or remote solution, we can do that as well.
We think that the hyperscalers are gonna be the first sets of tenants that we scale with. Over time, you'll see the enterprise kind of customer mix increase.
Got it. Super helpful. I know you mentioned, you know, scaling the Starwood partnership with new sites. I guess just kind of curious if, you know, since announcing that partnership, if there's been any kind of change in how you're thinking about, you know, developing the power portfolio moving forward and kind of if their, you know, long tenured expertise in the power market has kind of helped, you know, potentially scale, you know, what Mara currently has in the power portfolio?
Yeah, I'd say that what is the beauty in the partnership is that we are really good at building pipeline of sites, acquiring land and power at, you know, power at attractive prices and, you know, paying the right price, if you would, for land and power. They are really good at finding tenants, getting sites designed and built and operational, so it's a perfect complement. There's no real overlap in that regard. That's what really makes this relationship work as well as it does. So we're just very focused on continuing to fill that funnel of prospective sites such that we continue to be viewed by the, you know, the prospective tenants as a reliable source of capacity going forward.
Super helpful. Thanks.
Just one other comment I'll make, is that, you know, a key difference between our model and what most of our peers are doing is they are typically starting with 1 reasonably sized site, 250 MW, 300 MW, something like that. Then they have to sink all their attention and capital into getting that site done. Then they go to the second site, then they go to the third. With the Starwood model, we can just go out and acquire, and then they can do their part of the deal, and we can move at a much faster pace and scale much faster than if we were trying to do this all on our own.
I think that's where, while we may be late to the party, I think we're gonna catch up quickly, and I think we're gonna scale past what some of our peers are doing because of the value of this partnership.
Super helpful. Thanks for taking my questions.
Thank you. That's all the time we have for questions today, so I'll hand the floor over to Robert Samuels for closing remarks.
Thanks, operator, and thank you everyone for joining us today. If you do have any questions that were not answered during today's call, please feel free to contact our investor relations team at ir.mara.com. Thanks very much. Enjoy the rest of the day.
Thank you. All parties may disconnect.