LM Funding America Inc Aktie

Good day, and thank you for standing by. Welcome to the LM Funding America's First Quarter 2026 Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Cody Fletcher, Investor Relations. Please go ahead, sir.

Thank you, operator, and thank you all for joining LM Funding America's First Quarter 2026 Earnings Conference Call. Joining us today are Chairman and Chief Executive Officer, Bruce Rodgers; Chief Financial Officer, Richard Russell; and President of U.S. Digital Mining, Ryan Duran. An accompanying supplemental investor presentation has been posted under the Events section of our Investor Relations website.

Before we begin, please note that today's remarks may include forward-looking statements. These statements are subject to risks and uncertainties, and actual results may differ materially. We will also reference certain non-GAAP financial measures.

Please refer to our Form 10-Q for a full reconciliation of these measures to the most comparable GAAP measures and to our SEC filings in the Investors section of our website at lmfunding.com/investors for a more comprehensive discussion of these and other risks.

I will now turn the call over to our Chairman and CEO, Bruce Rodgers. Bruce?

Thank you, Cody, and good morning, everyone. The first quarter of 2026 saw us continue to grow and improve our operations in a softer Bitcoin environment. Since completing our site integrations in 2025, our focus has shifted to running our vertically integrated platform at scale.

We mined 26.1 Bitcoin during the quarter, an increase from 22 Bitcoin in the fourth quarter of 2025. We did this with higher energized hash rate and continued improvements in fleet efficiency.

In March, energized hash rate reached approximately 790 petahash, the highest level in the company's history. And the month delivered 9.6 Bitcoin of production, our strongest of the quarter. On March 31, 2026, our 338.2 Bitcoin treasury was valued at approximately $23.1 million. With the recovery in Bitcoin price since quarter end, our 334 Bitcoin treasury on April 30 was valued at approximately $25.3 million and approximately $27.3 million as of earlier this week.

Despite this trend, our market capitalization continues to trade at a material discount to the value of our Bitcoin holdings alone. While Bitcoin price weakness is driving the reported financial results, the underlying operating profile improved across every relevant measure, Bitcoin produced, energized hash rate, fleet efficiency and uptime.

The first quarter of 2026 represents the first full period in which the platform we assembled in 2025 has operated at scale, and we are very happy with the numbers being produced.

I'll now turn the call over to the President of U.S. Digital Mining, Ryan Duran. Ryan?

Thank you, Bruce. The first quarter of 2026 was the first full period during which our expanded fleet operated at scale across both sites. We produced 26.1 Bitcoin, an increase of 19% over the fourth quarter, while energized hash rate grew from approximately 750 petahash at year-end to approximately 790 petahash at quarter end, the highest in company's history.

In January, we energized our second BC40 Elite immersion cooled unit at Oklahoma, adding approximately 35 petahash via 160 Bitmain S21 immersion miners. The same month, winter Storm Fern gave us an opportunity to demonstrate the value of our grid relationships. We proactively curtailed mining operations and redirected power to the grid, generating approximately $305,000 in energy and curtailment revenue in January with the majority earned in just 3 days during the storm, equivalent to roughly 4 Bitcoin.

In late February, we deployed approximately 300 Bit S19 XP miners at Oklahoma, replacing older hardware and reallocating higher terahash units to Mississippi. The upgrade lifted February production to 8.7 Bitcoin.

March closed the quarter at 9.6 Bitcoin, our highest monthly output and highest hash rate on record. As we move into the second quarter, we are mindful of the seasonal headwinds that warmer temperatures bring to mining efficiency and output. We look to continue incremental fleet upgrades where opportunities present themselves with the goal of partially offsetting those effects and maintaining the competitive position we have built through the first quarter.

Looking at the fleet more broadly, the competitive economics of our hardware are better than the market typically appreciates. ASIC efficiency gains have compressed materially across recent generations. Early generational LEAPs, S9 to S17, S17 to S19 delivered efficiency improvements of 30% to 55%.

The last 2 air-cooled generations have produced gains in the 18% to 23% range, modest by historical standards. The driver is structural. Leading semiconductor foundries are allocating an increased share of advanced manufacturing capacity to AI chip production, extending ASIC lead times and compressing efficiency improvements across the Bitcoin supply chain.

The practical result is that our deployed S19 XP, S21 and S21 immersion fleet retains its competitive position on the network, meaningfully longer than the same generational hardware that would have in prior cycles, a dynamic we expect to persist.

I will turn the call over to Rick.

Thank you, Ryan. Total revenue for the first quarter of 2026 was approximately $2.1 million compared with $2.4 million in the fourth quarter of 2025 and $2.4 million in the first quarter of 2025, a year-over-year decline of approximately 11%.

The decrease reflects a significantly lower Bitcoin price, but partially offset by a 19% sequential increase in Bitcoin produced. Mining margin was approximately 24.1% in the first quarter of 2026 compared to 25% reported in the fourth quarter of 2025.

Mining margin in the quarter was supported by approximately $368,000 in curtailment and energy sales recognized as a reduction of cost of revenues set against an average Bitcoin price that declined from an average of $99,700 in the fourth quarter of 2025 as compared to an average of $75,700 in the first quarter of 2026.

The net loss for the first quarter of 2026 was approximately $10.1 million and the core EBITDA loss was approximately $8.4 million compared with the Q1 2025 net loss of $5.4 million and core EBITDA loss of $2.8 million. Net loss in the first quarter of 2026 reflects a $7 million negative fair market value adjustment on both mine digital assets and Bitcoin collateral receivables since the Bitcoin price declined from approximately $87,500 at year-end to approximately $68,300 on March 31, 2026.

The company's net adjusted cash flow used in operations was approximately $200,000 after adding back the $3.1 million of proceeds from the sale of digital assets to the $3.3 million of net cash used in operating activities.

On March 31, 2026, total assets were approximately $41.8 million, including Bitcoin holdings of 338.2 Bitcoin, of which 174 Bitcoin are held by Galaxy Digital as collateral. The total value of all Bitcoin was approximately $23.1 million in cash of approximately $800,000. Total liabilities were approximately $22.7 million, essentially flat with year-end 2025, consisting primarily of the $10.9 million of the Galaxy Digital Master Digital currency loan and approximately $8.7 million of other notes payable, of which $1.9 million is long term.

During the first quarter, we extended the maturity date of the Galaxy facility to June 26, 2026, providing flexibility to evaluate settlement options as Bitcoin market conditions evolve. As a subsequent event update, the underlying value of our Bitcoin treasury has recovered significantly since the close of the quarter.

As I noted previously, our March 31 Bitcoin treasury was valued at approximately $23.1 million or $1.06 per diluted share.

On April 30, 2026, we held 334 Bitcoin, including the 134 Bitcoins held by Galaxy Digital Collateral, totally valued at approximately $25.3 million or $1.18 per diluted share at a Bitcoin price of approximately $75,800.

As of May 11, that treasury was valued at approximately $27.3 million or $1.27 per diluted share at a Bitcoin price of approximately $81,700. The approximate 21% Bitcoin price recovery since March 31 represents roughly $5 million of incremental Bitcoin fair value across our holdings. Because the substantial majority of our reported Q1 net loss, reflected noncash Bitcoin fair value adjustments, applying the May 11 Bitcoin price to our March 31 balance sheet on a pro forma basis, would reduce our reported Q1 net loss by a comparable amount.

The implied per share value of our Bitcoin treasury held on April 30, 2026, but valued at the May 11 price now stands at approximately $1.27, well above our recent share price and a direct measure of the valuation disconnect we continue to work to close.

Looking through the noncash fair value adjustments, the underlying operating profile remains consistent with the fourth quarter, stable mining margin, higher Bitcoin produced and a manageable balance sheet. The operating leverage embedded in our 2 wholly owned low-cost power type translate directly to margin and cash flow expansion in any Bitcoin price recovery.

I will now turn the call back to Bruce.

Thank you, Rick. Let me close with 4 points. First, the company is operationally in the strongest position in its history, record energized hash rate, record monthly production in March and 2 wholly owned sites running at scale.

Second, during the quarter, we again extended the Galaxy Digital facility maturity this time to June 26, 2026. This helps further preserve our capital structure flexibility of our Bitcoin asset base.

Third, our common equity continues to trade at a material discount to the underlying value of our Bitcoin treasury and the value of our operating platform. Closing that valuation gap remains a primary focus, managing the things we can control like disciplined operating execution, consistent communication with shareholders and selective accretive growth.

Fourth, and the point of which I'd like to close, we remain a focused Bitcoin mining and treasury company. We plan to acquire and mine Bitcoin with low-cost power that presently does not suit HPC or AI compute demands, but may in the future as the profile of those demands evolve.

We continue to evaluate selective expansion in the 5 to 20-megawatt range, including additional capacity in Mississippi. These are assets that fall below the scale threshold required for hyperscaler hosting and appear to be increasingly available at relatively attractive prices in both power and acquisition cost. That positioning is reinforced by the broader market backdrop.

Bitcoin network hash rate has declined approximately 27% from its October 25 peak as public miners reallocate capacity to AI hosting. Five downward difficulty adjustments have been recorded year-to-date. Public miners sold a record 32,000 Bitcoin in the first quarter alone to fund the GPU capital expenditure required for those AI build-outs and more than $70 billion of HPC contracts have been announced across the sector.

Each megawatt of mining capacity that exits the network for an AI workload is a megawatt of reduced difficulty for those of us mining Bitcoin. We view these dynamics as structural rather than cyclical, driven by foundry capacity allocation, accelerating hyperscaler power demand and the persistent spread between the available power costs and the Bitcoin mining revenue per megawatt. We believe the economic logic favors operators of our profile.

Our priorities for the remainder of 2026 are unchanged: Grow Bitcoin production, improve fleet efficiency, increase Bitcoin per share and evaluate accretive acquisitions in the 5 to 20-megawatt range with the same value discipline that produced the Mississippi acquisition. Thank you for your continued support.

Operator, please open the line for questions.

[Operator Instructions]. And our first question is going to come from the line of Matthew Galinko with Maxim Group.

Maybe firstly, given your comments about the impression of efficiency gains across ASIC generations more recently, how does that shape your thinking about adding hash rate to -- if you do acquire an additional site or as you look for fleet optimization? Are you still looking for new ASICs? Or would you purchase us older generations?

It is all driven by electricity tariffs and price and what can you buy electricity for. With the right electricity price then decides what sort of machines look best there and what -- whether it's going to be air cooled or immersion, et cetera. Our driving force is always payback time.

So that being the sooner that, that machine is running at a constant price of constant electricity can pay for itself and be in the black, then that's what we want. And so that's taking us to into the used market or the second from the fastest generation area of machine because it's just where the terahash pay off and the revenues pay off for us.

Got it. And then I guess you touched on continuing to evaluate sites in the 5 to 20-ish megawatt range. Can you maybe talk a little bit more about what you've seen over the last quarter as far as counterparty expectations for what those costs? Have they come down at all? Have you seen more entering the pipeline? Is there more evaluation going on today than a couple of quarters ago? Just a little bit more color on that side.

So the pipeline gets to be pretty robust because people that have a wire going over their land all assume that they are sitting on HPC or Bitcoin Gold. And then you do the due diligence and find out what that wire can carry and where the transformers and substations are and things fall apart quickly. Even when you find the electricity there, then you've got the Bitcoin mining the environmental issues, the noise issue, the heat, where is it going to go? Are you really going to be able to scale an operation on that site with a residential neighborhood or church or school nearby, that kind of thing.

So it's all of those things that drive you to where you can go. And then you asked about pricing. I think our Mississippi transaction sort of sizes it up. People that are exiting Bitcoin to go do HPC and greater things kind of start off with what their cost basis is plus something in terms of what they're hoping to realize. But it's kind of a buyer's market out there for these 5 to 20-megawatt sites.

There's only a few of us left in this microcap land where you can do that kind of thing. So that's probably the explanation why there's less velocity so far this year on those type of acquisitions than we would have thought. And it's all about price reconciliation.

Thank you. Showing there's no further questions, this concludes ML (sic) [ LM ] Funding America's First Quarter 2026 Earnings Conference Call. Thank you for participating, and you may now disconnect. Everyone, have a great day.

Good day, and thank you for standing by. Welcome to the LM Funding America Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Cody Fletcher with Investor Relations. Please go ahead.

Thank you, operator, and thank you all for joining LM Funding America's Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining us today are Chairman and CEO, Bruce Rodgers; CFO, Richard Russell; and President of U.S. Digital Mining, Ryan Duran. For today's call, we have uploaded an accompanying supplemental investor presentation, which can be found under the Events section of our Investor Relations website.

Before we get started, please note that our remarks today may include forward-looking statements. These statements are subject to risks and uncertainties, and actual results may differ materially. We will also reference certain non-GAAP financial measures today. Please refer to our 10-K filing for a full reconciliation of these non-GAAP performance measures to the most comparable GAAP measures.

For a more comprehensive discussion of these and other risks, please refer to our filings with the SEC and at the Investors section of our website at lmfunding.com/investors.

And with that, I'll now turn the call over to our CEO, Bruce Rodgers. Bruce?

Thanks, Cody. Good morning, everyone, and thank you for joining us. 2025 was a transformational year for LM Funding. We entered the year as an early-stage vertically integrated miner with a single-owned site and a modest Bitcoin treasury. We exited as a multisite vertically integrated platform with a significantly larger treasury and a simplified capital structure and the operational foundation to support the next phase of our growth.

Let me walk you through what we accomplished across the year before turning to the specifics of Q4. On the infrastructure side, we started the year completing the ramp-up of our Oklahoma site, our first wholly-owned facility. Over the course of 2025, we completed the acquisition of our 11-megawatt site in Columbus, Mississippi, bringing our total owned capacity to 26 megawatts across 2 facilities.

On the treasury side, we grew our Bitcoin holdings from approximately 150 Bitcoin at the end of last year to just over 356 Bitcoin at December 31, more than doubling our holdings. That growth came through a combination of mining production and disciplined strategic accumulation.

Turning to Q4 specifically. The quarter was about building momentum heading into 2026. We mined 22 Bitcoin during the quarter, up from 17.6 in Q3 as our Mississippi facility continued to ramp up, and our Oklahoma site benefited from cooler operating conditions and improved uptime in the fall months. At December 31, our Bitcoin holdings were valued at approximately $31.2 million based on year-end Bitcoin prices, including the Bitcoin held by Galaxy compared to a market capitalization well below that level.

The net result -- we exit 2025 with a stronger operational platform, larger Bitcoin holdings and a more aligned capital structure. At the same time, our equity continues to trade at a material discount to the value of our Bitcoin treasury and productive infrastructure, a disconnect that we remain focused on and addressing through continued operational execution.

As we enter 2026, our focus shifts from foundation building to scaling. And with our immersion expansion progressing in Oklahoma and our Mississippi site continuing to operate at a steady state, we have the platform to grow production, improve efficiency and increase Bitcoin per share. With that, let me turn it over to Ryan to walk through the operational details for the quarter and the year. Ryan?

Thanks, Bruce. 2025 was the year we built and scaled our mining platform. We started with a single site in Oklahoma at approximately 560 petahash energized, and we exit with 2 wholly-owned sites, Oklahoma and Mississippi, totaling 26 megawatts of capacity and approximately 750 petahash energized across 22.5 megawatts at the end of the year, with further expansion continuing into Q1.

Let me give you some additional context of how this played out operationally. In the first half of the year, we focused on completely exiting from a third-party hosting site and consolidating our entire fleet at our wholly-owned site in Oklahoma. That relocation, which moved roughly 800 machines to our own vertically integrated site, replaced older S19 JPro miners with more efficient S21 and XP hardware.

Our Oklahoma site also benefited from significantly lower power costs compared to what we had previously been paying at the hosted site, which drove significant power cost savings and margin expansion. In Q3, we closed on the acquisition of an 11-megawatt Bitcoin mining facility in Columbus, Mississippi. The acquisition immediately added approximately 7.5 megawatts of energized capacity and approximately 220 petahash of operational hash rate.

This site comes with favorable power pricing of approximately $0.036 per kilowatt hour, one of the most cost-effective power rates in our portfolio. October marked the first full month of production with our newly integrated Mississippi site online, driving a 27% increase in Bitcoin production from 5.9 BTC in September to 7.5 BTC in October.

In Q4, we shifted focus to the next efficiency layer, Immersion. In December, we successfully energized our first BC40 Elite immersion cooled unit in Oklahoma, powering 160 Bitmain S21 immersion miners, which added approximately 35 petahash to our energized hash rate. This marked the beginning of our Immersion program.

On fleet performance, in Q4, we operated approximately 6,850 machines across our 2 sites. The cooler fall and winter conditions in Oklahoma contributed to improved uptime and higher production relative to the curtailment heavy Q2 and Q3 periods. Curtailment and energy sales totaled approximately $135,000 in the quarter, down from $150,000 in Q3, which was expected as a result of cooler temperatures in Q4 and a higher mix of immersion machines, which requires lower curtailment.

More recently, in January 2026, we energized a second immersion container, adding another 35 petahash. In late February, we deployed approximately 300 Bitmain S21 XP miners at Oklahoma, replacing older machines and reallocating higher terahash units to Mississippi, bringing our total energized hash rate to approximately 782 petahash, the highest in company history.

Looking ahead into 2026, we are now operating at record highs in energized hash rate, Bitcoin production and overall fleet efficiency, driven by our 2 vertically integrated sites with structurally low cost power. As the Bitcoin market recovers, we believe our strengthened platform and enhanced economies of scale will deliver strong value to our shareholders.

With that, I'll turn it over to Rick to walk through the financials. Rick?

Thanks, Ryan. For the fourth quarter 2025, total revenue was $2.4 million, up 8.7% sequentially from Q3 and up 19% year-over-year. The sequential increase reflects higher Bitcoin production of 22 Bitcoin in Q4 versus 17.6 Bitcoin in Q3, a 25% improvement, partially offset by a lower average Bitcoin price of approximately $99,700 in Q4 versus $114,000 in Q3.

Mining margin for the quarter was 25% compared to 49% in Q3 2025. The sequential decline was driven primarily by a lower average Bitcoin price, which compressed revenue per coin against a relative fixed cost base. Lower curtailment and energy sales were a secondary factor at approximately $135,000 versus $150,000 in Q3. The reduction netted directly against our cost of revenues and put additional pressure on reported margins.

It's worth noting that lower curtailment also reflects more mining uptime. Q4 production of 22 Bitcoin was up 25% sequentially from Q3, which partially offset the price-driven revenue compression. Taken together, price and reduced energy sales account for the margin compression in the quarter, while the uptime improvement demonstrates the underlying operational progress. We reported a net loss of $18.2 million and a core EBITDA loss of $9.4 million for Q4 2025.

The Q4 net loss reflects 4 primary factors: First, mark-to-market movements in our Bitcoin treasury as Bitcoin price declined from approximately $114,000 at September 30 to approximately $88,000 at December 31, producing an unrealized fair value adjustment of $7.8 million. Second, a noncash $5.4 million impairment loss on mining equipment as a result of the reduced Bitcoin pricing environment; third, depreciation and amortization associated with our expanded asset base; and fourth, increased operating expenses related to the full quarter integration of the Mississippi facility.

These are the expected cost of building and integrating new infrastructure, and they should be evaluated against the strategic and operational progress they enable. For the full year 2025, total revenue was approximately $8.8 million, and we mined approximately 82.3 Bitcoin during the year. Curtailment and energy sales totaled approximately $658,000, showcasing our ability to capitalize on our assets year-round.

Net loss for the year was approximately $27 million and a core EBITDA loss of $10.9 million. More importantly, we grew our Bitcoin holdings from approximately 150 Bitcoin at the start of 2025 to approximately 356 Bitcoin at December 31, which includes 145 Bitcoin reported as a receivable for the Galaxy loan. This is more than doubling our prior year position. That growth came from both mining and strategic purchases, including the 164 Bitcoin acquired in August 2025 and the 47 Bitcoin acquired in December 2025.

Turning to the balance sheet. As of December 31, total assets were $51.3 million with Bitcoin holdings of approximately $31.2 million spread across current long-term and collateral classifications, including the asset base. On the liability side, total liabilities were $22.4 million, the primary component being our $11 million Galaxy Digital Master Digital currency loan and a $7 million short-term note payable. These are manageable relative to our asset base. And more importantly, we put our Galaxy facility to active use in 2025.

Deploying $8 million in October to retire more than 3.3 million shares and 7.2 million warrants in a single transaction. That was a deliberate choice to improve per share economics and simplify our capital structure, and we believe it was the right use of that capital at the time.

In February 2026, we also renegotiated the Galaxy facility, extending the maturity date to April 24, 2026, giving us flexibility to evaluate settlement options on our own time line. As of February 28, 2026, we held 354.7 Bitcoins valued at approximately $23.8 million based on a Bitcoin price of approximately $67,000 or approximately $1.11 per share.

Even after executing the share repurchase, funding 2 capital raises and completing the Mississippi acquisition entirely from our balance sheet, we entered 2026 with a $51 million asset base, growing Bitcoin holdings and equity that remains well in excess of our current market capitalization. Closing that gap is the work we are doing every quarter.

With that, I'll turn it back to Bruce for closing remarks.

Thanks, Rick. Let me leave you with where we stand and where we're going. In 2025, we transitioned from building to scaling, 2 owned sites, 26 megawatts of wholly-controlled capacity, Bitcoin holdings that more than doubled, a capital structure we actively managed to reduce dilution and improve per share economics and an immersion program that is now live and scaling.

As we move through 2026, our priorities are straightforward: grow production, improve efficiency and increase Bitcoin per share. We are already tracking toward record monthly production in early 2026, with February being our highest production month in company history.

Our second immersion unit came online in January 2026, and we continue to evaluate accretive M&A opportunities in the 5 to 20-megawatt range, the same disciplined approach that led us to our Mississippi acquisition at roughly $355,000 per megawatt. We have active invested management, owned infrastructure and low-cost power. Our Bitcoin treasury has grown meaningfully. Our operational footprint has expanded, and our per share intrinsic value has improved, and yet our equity continues to trade at a material discount to NAV. We remain focused on continuing to close that gap through disciplined execution and transparent communication with our shareholders. We like the path we're on and the structure we've built.

Thank you for your continued support. We'll now open the line for questions.

This is Richard Russell. I just want to clarify that we reported a net loss of $17.9 million and a core EBITDA loss of $9.3 million for Q4 2025. We'll take the first question now.

[Operator Instructions] Our first question comes from the line of Matthew Galinko with Maxim Group.

Maybe firstly, will it take time to optimize production from the immersion-cooled units? Or are you kind of just right out of the gate where you want to be?

Ryan, do you want to take that?

Matt. Yes. So we -- right out of the gate, we're maxed out our 2 fog hash containers with S21 immersion miners that are the best we could get. So I guess in that context, yes, we are maxed out at roughly that 35 petahash per container as of right now and what's available on the market. And yes, I hope that answers your question.

All right. Great. And then as far as your pipeline for new site acquisition versus existing site expansion, can you maybe just go through how those 2 buckets look?

Yes. So we're always on the hunt. We're always looking, keeping our finger on the pulse of what's out there. We are looking, as we've always maintained in that less than 20-megawatt range at ideally a power price in that $0.035 to $0.045 range. And that's what we target, whether it be existing sites or greenfields.

And also, we have -- we also do -- our main focus as of right now, I'd say the easiest thing to point to is the additional a little over 3 megawatts that we have available at our current Mississippi site to continue building out. So that's already in our hands.

Got it. And maybe just -- the final question on -- maybe just reiterate how you think about funding new site acquisition and minor acquisition and how your current discount to NAV might influence how you think about capital spending and site acquisition and hash rate expansion?

That's a good question, Matt. It's got the same answer, but a moving target. We have to look at the dollar and then we look at projecting out as to where we want to be in terms of acquiring Bitcoin and holding Bitcoin when Bitcoin realizes price. So we put targets based on projections of where Bitcoin will be and then we sort of back into it.

We're currently trading Bitcoin outside of the range where our forecasts were. So it makes some of our thinking more in the moment than using the long-range discipline. But it really boils down to if you spend $1 today, is it going to -- how much will it increase our Bitcoin holdings 5 years from now or 3 years from now.

And that leans heavily towards both increasing the treasury and increasing the miners when it's at this price point. And then some of the mining opportunities are just timing based. So you have to take the opportunity, when it's there and make it foot towards your future growth development. It's always a challenge, and there's really no formula to it.

[Operator Instructions] Since there are no further questions, I would like to thank everyone for joining us on LM Funding America, Inc.'s Fourth Quarter and Full Year 2025 Earnings Call. You may now disconnect.

Good day, and thank you for standing by. Welcome to the LM Funding America, Inc. Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Cody Fletcher. Please go ahead, sir.

Thank you, operator, and thank you all for joining LM Funding America's Third quarter 2025 Earnings Conference Call.

Joining us today are Chairman and CEO, Bruce Rodgers; President of U.S. Digital Mining, Ryan Duran; and CFO, Richard Russell.

For today's call, we have uploaded an accompanying supplemental investor presentation, which can be found under the Events section of LM Funding's Investor Relations website.

Before we get started, please note that our remarks today may include forward-looking statements. These statements are subject to risks and uncertainties, and actual results may differ materially. We will also reference certain non-GAAP financial measures today. Please refer to our 10-Q filing and our website for a full reconciliation of these non-GAAP performance measures for the most comparable GAAP measures. For a more comprehensive discussion of these and other risks, please refer to our filings with the SEC available on sec.gov and in the Investors section of our website at lmfunding.com/investors.

I'll now turn the call over to our CEO, Bruce Rodgers.

Thanks, Cody. Good morning, everyone, and thank you for joining us. Third quarter was one of execution, integration and disciplined capital allocation, as we continue building LM Funding into a vertically integrated Bitcoin miner with a simple ambition: increase Bitcoin per share and grow intrinsic value over time.

We entered the quarter with momentum from our Oklahoma site and a growing Bitcoin treasury. As summer progressed, we added meaningful scale and strengthened our foundation. In August, we bolstered our balance sheet with $21 million of capital designated primarily for Bitcoin accumulation and quickly deployed a large portion of those proceeds to purchase 164 Bitcoin, accelerating our treasury growth.

Just weeks later, we closed on the acquisition of 11-megawatt facility in Columbus, Mississippi, bringing our total capacity to 26 megawatts across 2 wholly controlled sites. This move expanded our operational base, diversified our power and climate exposure and gave us full control of energy and uptime across a second location.

By the end of September, we had integrated Mississippi, energized additional capacity and exited the month with approximately 304.5 Bitcoin in treasury, valued in at nearly $35 million versus a market capitalization of roughly half that amount. That disconnect between our treasury value alone and our equity valuation underscores the opportunity we are working toward.

Then in October, we advanced 2 core priorities simultaneously. We enhanced our per share economics and positioned our mining fleet to improve productivity. In a private securities repurchase, we retired more than 3.3 million shares and over 7.3 million warrants in a single transaction, reducing dilution, simplifying our capital structure and increasing our Bitcoin per share.

Subsequently, in early November, we announced a $1.5 million stock buyback, further committing our resources to increasing Bitcoin per share. During the same quarter, we secured Bitmain S21 immersion cooled machines to grow our immersion systems at our Oklahoma site. We expect these machines to come online in December.

Importantly, October was also our first full month with Mississippi operating at steady state and the results validate our strategy. Bitcoin production increased 28% sequentially, rising from 5.9 Bitcoin in September to 7.6 Bitcoin in October. Taken together, Q3 and October were about strengthening control of our energy, expanding our mining footprint, growing our treasury and reducing our share count, all in service of improving Bitcoin ownership on a per share basis.

We strongly believe in Bitcoin as a growth asset. We built our company to take advantage of Bitcoin's growth and long-term value proposition. We find inexpensive power machines to add to our Bitcoin holdings, and we are active in the capital markets trying to increase our total Bitcoins held and our Bitcoins per share. It's a long game, and it starts with sound mining operations.

With that, let me turn it over to Ryan for an operational update.

Thanks, Bruce. Operationally, the last 4 months were about turning owned infrastructure into accelerating hash power and building an asset base that compounds efficiency over time. We moved from a single site facility at roughly 0.48 exahash in June to exiting October with roughly 0.71 exahash energized, plus additional growth coming online in December, representing roughly 50% hash rate expansion in build cycle.

That growth came from owning and controlling our power, upgrading fleet mix and integrating our second site in Mississippi. The acquisition added roughly 7.5 megawatts of energized capacity and approximately 230 petahash of installed hash rate at an attractive $0.036 per kilowatt hour power cost, giving us a second low-cost, self-managed facility and a diversified operating base.

Equally important, we quickly integrated Mississippi and the site immediately started contributing to our mining operations. And when we reached our first full month of steady-state operation in October, total production of the company increased, as Bruce mentioned, 27% month-over-month from 5.9 Bitcoin to 7.6 Bitcoin.

This gain reflects not only expanded capacity, but also the compounding benefits of tighter operational control, optimized firmware, refined curtailment and power sales scheduling and more efficient fleet deployment in warmer months. We now operate approximately 6,700 machines across the fleet and additional units staged for deployment behind immersion.

Our energized hash rate held stable through high heat periods, supported by curtailment and energy sales that directly improve our margins, and we position the fleet for stronger winter uptime when performance conditions naturally improve.

Looking forward, we are entering our next efficiency phase. We secured Bitmain S21 immersion cooled units that will add roughly 70 petahash of compute power to our Oklahoma site and are scheduled to energize in December. This upgrade is meaningful. Immersion cooling improves heat transfer, reduces thermal strain, tightens fan load overhead and increases uptime, especially during seasonal peaks.

Combined with the S21's efficiency profile, this gives us a step change in efficiency and should meaningfully increase Bitcoin per megawatt at the site. This is the same philosophy that guided our site acquisition, combine owned power with modern generation hardware and operate it with discipline. We now operate a cleaner, more efficient and fully controlled mining platform, improving uptime and next-gen hardware and immersion coming online.

The foundation is built. From here, the focus is simple: increase production, efficiency and Bitcoin per share. With that, I'll turn it over to Rick to walk through the financials. Rick?

Thanks, Ryan.

For the third quarter, revenue was $2.2 million, up approximately 13% sequentially and 74% year-over-year. The sequential increase reflects stronger average Bitcoin pricing of $114,000 and contributions from the newly operational Mississippi facility for the second half of September.

Mining margins improved to 49%, driven by a shift from hosting fees to self-mining, utilizing our curtailment and energy sales to offset mining expenses and higher fleet efficiency.

Curtailment and energy sales totaled $152,000, down from $223,000 in Q2 due to cooler seasonal temperatures. We reported a net loss of $3.7 million and a core EBITDA loss of $1.4 million, both driven by increased staff costs and payroll expenses. Following quarter end, we executed a substantial balance sheet and equity enhancement initiative, completing an $8 million private repurchase of around 3.3 million shares and 7.3 million warrants financed through our $11 million Galaxy facility secured by Bitcoin.

This transaction removed a large warrant overhang and materially reduced the share count, improving per share economics and shareholder alignment. We paired that with a newly authorized $1.5 million public share repurchase program, which gives us flexibility to act opportunistically when our market value trades meaningfully below our Bitcoin holdings and infrastructure value.

In terms of our balance sheet, at quarter end, LM Funding held cash and cash equivalents of $300,000 and 304 Bitcoin valued at $34.7 million, nearly double our market cap, while our equity was $50 million, nearly 3x our market cap. As of October 31, our Bitcoin treasury stood at approximately 295 Bitcoin, valued at roughly $31.9 million or $2.62 per share compared to a stock price near $1.07 on 12.2 million shares.

Our liquidity, treasury and credit capacity give us flexibility to support operations, growth and continued share repurchases while limiting dilution and preserving long-term upside for shareholders. The numbers tell a clear story, expanding hash rate, improving operating leverage, disciplined cost control and a balance sheet and cap table built to improve per share value over time.

Thanks, Rick. Our focus remains clear: increase Bitcoin per share, expand owned infrastructure and close the gap between intrinsic value and market value. We built a vertically integrated platform that gives us operational control, cost efficiency and treasury leverage.

With Mississippi fully online, Oklahoma adding immersion and Bitmain S21 machines coming online in December, we are entering a phase where scale, efficiency and productivity converge. From a capital strategy standpoint, we will continue to balance Bitcoin accumulation, strategic investment and opportunistic share repurchases that we'll use only when it strengthens the balance sheet without sacrificing per share value.

We have no interest in growing for growth's sake. We're interested in growing per share Bitcoin and per share intrinsic value. We believe deeply in the long-term value of Bitcoin, and we believe just as deeply in the long-term value of LM Funding. Every action we take, every machine deployment, every site decision, every capital move is designed to improve per share ownership, per share cash flow and per share Bitcoin.

We like the path we're on, and we like the structure we've built. LM Funding is one of the few micro-cap miners with active invested management. We've built this business to endure volatility and to scale into the next cycle. Our focus is to keep executing methodically, patiently and with conviction.

Thank you for your continued support. We'll now open the line for questions.

[Operator Instructions] Our first question is going to come from the line of Matthew Galinko with Maxim Group.

Congrats on all the progress over the last few months. With your mining infrastructure pretty radically different from where it was entering '25, I'm curious if you could maybe give us some thoughts on how you think about that your path in '26 as far as the Bitcoin mining infrastructure and equipment goes?

Sure. The Mississippi acquisition has worked really, really well. First off, it's doing what it was supposed to. And then secondly, Greenidge left behind some low-hanging fruit, and they did some things to grow there that they didn't take advantage of that we're now kind of slipping into. And -- so we've got a nice runway there that we didn't anticipate.

So I look for more growth there and on the magnitude of what we've achieved this year, it seems foreseeable. So that's there. Oklahoma, we're adding the 2 immersion machines in there. We'll have that thing built out pretty soon. And then it just starts paying for itself and making money after that. It's going to be a long-term Bitcoin mining site given the energy pricing there.

And this is Rick. We also have the ability to expand in Mississippi by additional 4 megawatts. So...

Got it. Okay. So if I could read between the lines there, it sounds like you're not necessarily pursuing or close on any additional site acquisitions or is that something you're still exploring, but just nothing appealing at this point?

We always have people exploring site acquisitions when we do it based on where the energy tariffs and then we look for a property that goes with those energy tariffs.

Got it. And last question for me and I'll jump back in the queue. Just with the -- I guess, with the perspective that you have the, I guess, mandate now to maximize your Bitcoin per share, how do you, I guess, think about allocating between mining business and directly acquiring additional Bitcoin?

We always say you have to take a dollar and decide whether the price of Bitcoin, the price of the infrastructure, et cetera, and then it's a target of where in the future you want that to pay off. And so we kind of play a long game 5 years on that, looking at what do we think the price of Bitcoin is.

And that means you don't necessarily make a dollar decision based on the current circumstances. You have to make it on a pro forma basis, which kind of makes it a little more black magic, I get it. But it's a long game. So growing the mining helps pay the bills and it has the potential to be accretive to the overall treasury strategy. And then the treasury strategy is a balance between your equities market and the Bitcoin market.

And we'll move on to our next question. Our next question comes from the line of Kev Dede with HCW.

This is Sky Moore calling for Kevin Dede. I've got 2 questions for you all. The first is going to be, with about 15% of your old machines in storage, as reported in the company's October update, how are you guys managing your fleet of these machines going forward?

Ryan, do you want to -- that's kind of granular. You want to handle that?

So yes, those machines are kind of sitting in the wings. As we've hit on, we do have build-out capacity available already immediately at Mississippi. And as Bruce already alluded to as well, we're exploring other opportunities. And we feel strongly that having those machines in the wings is a great way to quickly deploy once that power becomes available. And then as we're doing in Oklahoma, we kind of set our roots in and then upgrade the fleet from there. So that's generally our strategy.

Awesome. My final question is, you mentioned more efficient machines being placed at your current sites. Could you guys provide a current cost of mining 1 Bitcoin or perhaps a range of mining 1 Bitcoin?

Yes. This is Rick. Our current mining costs right now per Bitcoin for this most recent quarter was $66,000. Last quarter, it was like $70,000. So we've been able to reduce it by direct mine cost quarter-over-quarter.

Thank you. This will conclude today's question-and-answer session. Ladies and gentlemen, this will also conclude today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.

Good day, and thank you for standing by. Welcome to the LM Funding America, Inc. Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Cody Fletcher, Director of Orange Group Advisor. Please go ahead.

Thank you, operator, and thank you all for joining LM Funding America's Second Quarter 2025 Earnings Conference Call.

Joining us today are Chairman and CEO, Bruce Rodgers, President of U.S. Digital Mining, Ryan Duran; and CFO, Richard Russell.

For today's call, we have uploaded an accompanying supplemental investor presentation, which can be found under the Events section of LM Funding's Investor Relations website.

Before we get started, please note that our remarks today may include forward-looking statements. These statements are subject to risks and uncertainties, and actual results may differ materially. We will also reference certain non-GAAP financial measures today. Please refer to our 10-Q filing and our website for a full reconciliation of these non-GAAP performance measures to the most comparable GAAP measures. For a more comprehensive discussion of these and other risks, please refer to our filings with the SEC available on sec.gov and in the Investors section of our website at www.lmfunding.com/investors.

I'll now turn the call over to our CEO, Bruce Rodgers. Bruce?

Thanks, Cody. Good morning, and thank you for joining us today. On August 1, we signed a definitive purchase agreement to acquire an 11-megawatt Bitcoin mining site in Columbus, Mississippi, from Greenidge Generation for $3.9 million or approximately $355,000 per megawatt. The 6.4-acre property comes with low power costs and roughly 7.5 megawatts of mining capacity, along with an additional 3,000 KVA transformer. The acquisition is fully funded from our balance sheet with closing expected on or before September 16, 2025.

This acquisition meets our M&A criteria and is precisely the type of attractively priced asset we are targeting. Once closed, this site will increase our wholly owned U.S. power and Bitcoin mining capacity to 26 megawatts, equivalent to approximately 1.7 exahash capacity, assuming latest generation Bitcoin miners at 15 joules per terahash. It will also accelerate our expansion time line compared to greenfield builds, maximizing ROI for our shareholders.

We also made progress towards our 2-megawatt immersion-based expansion in Oklahoma, which we expect to be completed by the end of the year. In our view, immersion cooling delivers superior ROI in climates like Oklahoma by mitigating many of the performance and maintenance challenges faced by traditional air cooled systems. With these strategic expansions firmly underway, we strengthened our operational foundation and positioned LM Funding with a strong growth runway.

In terms of our financial results for the quarter, we mined 18.4 Bitcoin, down slightly from Q1 due to curtailments for hot summer months and the relocation of approximately 800 miners from our third-party hosting site in Kentucky to our wholly owned site in Oklahoma. These S21 and XP next-generation miners replaced our S19j Pro miners and increased our overall fleet efficiency. These miners are also now running on approximately 40% cheaper power, thereby increasing our profitability and mining margins.

In addition, thanks to our strategic transition to a fully integrated model, curtailment and energy sales generated approximately $223,000 in Q2, which helped offset some of the lower Bitcoin production and drove higher mining margins compared to Q1. We ended the second quarter with 155.5 Bitcoin valued at $16.7 million, about 3.25 Bitcoin per share based on June 30 prices and ended July with 150.4 Bitcoin valued at $17.8 million or 3.46 of Bitcoin per share.

I'll now hand it over to Ryan Duran, President of our U.S. Digital Mining subsidiary, to discuss our operations in more detail. Ryan?

Thank you, Bruce. Our vertical integration strategy has given us significantly greater control of our operations. We've reduced power costs, eliminated hosting fees, optimized our fleet efficiency with software upgrades and unlocked high-margin power sales back to the grid. A key milestone late in Q2 was the successful relocation of our remaining machines from a hosted facility to our wholly owned Oklahoma site, completing the final step of our third-party hosting exit initiative.

Our 2-megawatt Oklahoma expansion is progressing on schedule. The two 1-megawatt immersion containers ordered in April are expected to arrive in the third quarter, and we expect energization later this year. We believe immersion cooling provides improved margins through higher efficiency, longer equipment life in harsh environments and the ability to access new markets that are not suitable for air cooling.

Looking ahead to the Mississippi acquisition, the facility, currently operating around 7.5 megawatts, provides an excellent platform to deploy miners we have in storage and apply the firmware optimizations that are already boosting margins at our Oklahoma site. We see a clear path to reach the full 11 megawatts capacity in the coming months, and we look forward to updating you on this progress.

With that, I'll now turn the call over to our CFO, Richard Russell, to review the financial highlights for the second quarter of 2025. Rick?

Thank you, Ryan. For Q2, total revenue was $1.9 million compared with $2.4 million in Q1 2025. The sequential decline was driven by lower Bitcoin production as a result of curtailment during peak summer months and the relocation of third-party host miners to Oklahoma, as Bruce mentioned earlier, partially offset by higher Bitcoin prices. The Q2 2025 average Bitcoin price was approximately $98,100 as compared to Q1 2025 price of approximately $93,600. Curtailment and energy sales increased 49% to approximately $223,000 from $150,000 in Q1 2025.

In June 2025 alone, we generated $55,000 in energy sales and in July, this increased to $66,000. This demonstrates the value of our energy sales program as both [indiscernible] offset and hedge against energy at Bitcoin price volatility. We expect curtailments and energy sales to decrease over the remainder of the year as we enter the cooler temperature months and begin immersion mining. Mining margins for Q2 improved to 41% as compared to 38.5% sequentially, supported by our transition to our lower-cost Oklahoma facility.

The quarter ended June 30, 2025, we reported net income of approximately $60,000 compared to a net loss of $5.4 million in Q1 2025 and a $6.2 million loss in Q2 2024. Core EBITDA for Q2 was $2.6 million versus a negative $2.8 million in Q1 2025, and negative $2.3 million in Q2 2024. As a reminder, our core EBITDA is impacted by the fair market value gain or loss from our treasury depending on Bitcoin price at the respective quarter end.

We finished the quarter with $400,000 in cash and our Bitcoin holdings increased to 155.5 Bitcoins valued at $16.7 million as of June 30, 2025, with an average Bitcoin price of approximately $107,000. During the quarter, we strategically sold a portion of our Bitcoin holding to support ongoing operations and fund expansion projects, while staying firmly committed to our long-term accumulation strategy. Given our disciplined cost management and target growth initiatives, we are confident in our ability to steadily grow our Bitcoin treasury over time, creating long-term value for our shareholders.

Bruce will now provide some thoughts on our outlook and strategy for the remainder of 2025.

Thanks, Rick. Our acquisition in Columbus, Mississippi, for $3.9 million, fully funded by our balance sheet, represents exceptional value at approximately $355,000 per megawatt. Combined with our Oklahoma expansion, we will have up to 26 megawatts of owned capacity, positioning us for accelerated growth while maintaining our disciplined approach to capital allocation.

Our immersion mining deployment in Oklahoma is on track for energization later this year, and we continue to search for accretive M&A opportunities in the 5- to 20-megawatt range, our comfort zone for value creation. We took full advantage of our curtailment in energy sales in the quarter, showcasing the benefits of our power contracts. As seasonal temperatures moderate and we begin to energize our immersion systems, we expect curtailment revenue to trend lower, while Bitcoin production and fleet efficiency increasing, thereby improving our cost per Bitcoin and delivering more consistent uptime.

Above all, we remain committed to our Bitcoin treasury strategy. We were early adopters, adding Bitcoin to our balance sheet in 2021 and have maintained our [indiscernible] approach ever since. Going into April '24 halving, we were among the smallest micro cap miners, yet we continued to operate and grow while many larger peers have been forced to exit, highlighting the resilience of our model and our operational discipline.

Lastly, I'd like to draw attention to the fundamental disconnect between our balance sheet and our market value. Our net book value as of June 30 was $31.9 million, our Bitcoin treasury as of June 30 was valued at $16.7 million and $18 million at Monday's Bitcoin prices. Our fully diluted market cap was $14.7 million as of June 30 and $11.8 million as of last Monday's close.

We remain committed in our conviction that Bitcoin is the world's premier reserve asset, and we continue to explore strategic opportunities to expand our treasury through innovative financing structures, building upon the playbook we were early to adopt.

Thank you for your time this morning and your continued support.

[Operator Instructions] And our first question comes from the line of Kevin Dede of H.C. Wainwright.

This is Michael Donovan on the line for Kevin. Congrats on the Mississippi purchase. I just want to see after, say, Ryan discussed deploying the machines you have in storage, first for the 7.5 megawatts in operation. How many megawatts would still be free after deploying these machines? My back-of-the-envelope math puts like 1,200 units, a little bit over 4.3 megawatts. Is that accurate? I appreciate that.

So the top number is 26 megawatts of capacity, and then you backfill in using the numbers, Ryan rolled off, so 11.5 in Oklahoma when that's finished, and then we'll have 7 in Mississippi once we own it, and then we are expanding that. Yes, so I think to your question, any miners right now that are in storage in Oklahoma will be fully used, absent anything else in Oklahoma and Mississippi.

Okay. So I appreciate that. How should we think about new miner purchases? What do you have planned for there? First deploy everything or are you looking at purchasing any more miners at the time?

So the Mississippi transaction isn't complete as to miners. So we're not certain there yet. But yes, we'll have additional miners we've got to acquire to fill out all this capacity.

I'm showing no further questions at this time. I'll now return it turn it back to Bruce Rodgers for closing remarks.

Tom, do you have more questions for me? Thank you for joining us this morning, and we look forward to speaking to you at the end of this next quarter.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.