Canaan Inc (CAN) 2023 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to Canaan Inc's fourth-quarter and full year 2023 earnings conference call.(Operator Instructions) Please note that this event is being recorded. The company's financial and operating results were released by the newswire services earlier today and are currently available online.

女士們、先生們，感謝大家的支持，歡迎參加嘉楠耘智第四季及 2023 年全年財報電話會議。請注意，該事件正在被記錄。該公司的財務和經營業績已於今天早些時候由新聞專線服務發布，目前可在線查看。

The company has also prepared a presentation for today's call. You may view the presentation and navigate through the slides on the webcast page for the Q4 2023 earnings call on the company's IR website. Joining us today are Canaan Inc's, Chairman and CEO, Mr. Nangeng Zhang, and CFO, Mr. Jin Cheng James.

該公司還為今天的電話會議準備了簡報。您可以在公司 IR 網站上觀看 2023 年第四季財報電話會議網路廣播頁面上的簡報並瀏覽投影片。今天加入我們的還有嘉楠耘智董事長兼執行長張南庚先生和財務長詹金誠先生。

In addition, Mr. Leo Wang, IR Senior Director, Ms. Xi Zhang IR Manager, will also be available during the question-and-answer session. Mr. Zhang will start the call by providing an overview of the company and performance highlights for the quarter. Mr. Cheng will then provide details on the company's operating and financial results for the period before we open the call up for your questions.

此外，投資人關係資深總監Leo Wang先生、投資人關係經理張曦女士也將出席問答環節。張先生將首先介紹公司概況和本季業績亮點。然後，在我們開始徵集您的問題之前，程先生將提供有關公司該期間營運和財務業績的詳細資訊。

Before we continue, I would like to refer you to our safe harbor statement in our earnings press release. Today's call will include forward-looking statements. These statements include, but are not limited to, our outlook for the company, and statements that estimate, or project future results of operations, or the performance of the company.

在我們繼續之前，我想請您參閱我們的收益新聞稿中的安全港聲明。今天的電話會議將包括前瞻性陳述。這些陳述包括但不限於我們對公司的展望，以及估計或預測未來營運績效或公司績效的陳述。

These statements speak only as of the date hereof and the company assumes no obligation to revise any forward-looking statements that may be made in today's press release, call or webcast, except as required by law. These statements do not guarantee future performance and are subject to risks, uncertainties, and assumptions. Please refer to the press release and the risk factors in documents we file with the Securities and Exchange Commission, including our most recent annual report on Form 20-F. For information on risks, uncertainties and assumptions that may cause actual results to differ materially from those set forth in such statements.

這些陳述僅代表截至本新聞稿發布之日的情況，本公司不承擔修改今天的新聞稿、電話會議或網路廣播中可能做出的任何前瞻性陳述的義務，除非法律要求。這些陳述不保證未來的業績，並受到風險、不確定性和假設的影響。請參閱新聞稿以及我們向美國證券交易委員會提交的文件中的風險因素，包括我們最新的 20-F 表年度報告。有關可能導致實際結果與此類聲明中所述結果存在重大差異的風險、不確定性和假設的資訊。

In addition, during today's call and webcast, we'll discuss both GAAP financial measures and certain non-GAAP financial measures, which we believe are useful as supplemental measures of the company's performance. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results in our earnings press release, which is posted on the company's website.

此外，在今天的電話會議和網路廣播中，我們將討論 GAAP 財務指標和某些非 GAAP 財務指標，我們認為這些指標可作為公司業績的補充指標。這些非公認會計原則措施應作為公認會計原則結果的補充，而不是替代或孤立於公認會計原則結果。您可以在我們發佈在公司網站上的收益新聞稿中找到有關這些非公認會計原則衡量標準的其他披露信息，包括與可比公認會計原則結果的調節表。

With that, I will now turn the call over to our Chairman and CEO, Mr. Nangeng Zhang. Please go ahead sir.

現在，我將把電話轉給我們的董事長兼執行長張南庚先生。請先生繼續。

Yes, hello, everyone. This is NG, the CEO of Canaan. Thank you for joining our conference call, our CFO. James Cheng and I are at the company's headquarters in Singapore to share our quarterly results with you. In the fourth quarter of 2023, especially in December, the price of bitcoin in general kept showing an upward trend starting at around $27,000 at the beginning of the quarter and reaching an annual high of about $44,000 by the last week of the quarter.

是的，大家好。我是NG，迦南的執行長。感謝您參加我們的電話會議，我們的財務長。我和 James Cheng 在公司位於新加坡的總部與大家分享我們的季度表現。2023年第四季，尤其是12月，比特幣價格整體維持上漲趨勢，從季度初的27,000美元左右開始，到本季最後一周達到約44,000美元的年度高點。

At the same time, the total network hash rate continued to rise, exceeding 500 exahash per second. The rapid continuous rise in bitcoin price and the increase in transaction fee rewards let to a rapid increase in mining revenue, promoting miners’ willingness to purchase computing power. Furthermore, discussions about the end of the interest rate hike cycle and the upcoming approval of a Bitcoin spot ETF have made industry participants, including miners, more optimistic about the future.

同時，全網算力持續上升，超過每秒 500 exahash。比特幣價格的持續快速上漲和交易手續費獎勵的增加，使得挖礦收入快速增加，促進了礦工購買算力的意願。此外，有關升息週期結束和比特幣現貨ETF即將獲批的討論也讓包括礦商在內的產業參與者對未來更加樂觀。

As a result, both production and sales exceeded expectations in this quarter, especially in December. As the halving event approaches, mining equipment providers are also stepping up destocking efforts with the theme of small profits for fast turnover remaining prevalent this quarter, keeping product ASPs low as expected. In such a rapidly changing market environment, we seized the favorable market window of this quarter, especially in December, achieving a total revenue of USD49 million, including mining machine sales revenue of USD44 million, much higher than the management's expectation of USD34 million revenue in the third quarter conference call. In the last quarter of 2023, we also adjusted the company's strategy and organizational structure according to changes in the market situation, improving R&D and operational efficiency, increasing investment in production capacity, diversifying mining operations and exploring international markets such as North America, Southeast Asia and the Middle East. Completing financing in the capital market, with sufficient funds, enables us to deploy in advance and meet the explosive demand in the upcoming bull market.

因此，本季度，尤其是12月份，產銷量均超出預期。隨著減半事件的臨近，礦機商也在加強去庫存力度，本季仍盛行薄利多銷的主題，產品平均售價維持在預期的低點。在如此快速變化的市場環境下，我們抓住了本季特別是12月的有利市場窗口，實現總收入4900萬美元，其中礦機銷售收入4400萬美元，遠高於管理層預期的2019年收入3400萬美元。2023年最後一個季度，我們也根據市場情勢的變化調整了公司的策略和組織架構，提高研發和營運效率，加大產能投資，多元化挖礦業務並開拓北美、東南亞等國際市場和中東。完成資本市場融資，資金充足，可以提前佈局，滿足即將到來的牛市的爆發性需求。

Now let me go into more detail. After announcing the A14 Series in September 25, 2023. We continued to work diligently over the following quarter to improve performance and the reliability at the whole-machine level and transition the new generation products into mass production.

現在讓我更詳細地介紹一下。2023 年 9 月 25 日宣布 A14 系列後。接下來的一個季度，我們持續努力提升整機層面的效能和可靠性，將新一代產品轉入量產。

The A14 series are expected to begin small-scale deliveries in Q1 2024, with large-scale deliveries expected to concentrate in Q2 to Q3. Meanwhile, the development of our next-generation products is also progressing rapidly. As customary, we will publicly disclose the specific performance of new products after prototype testing is completed.

A14系列預計將於2024年第一季開始小規模交付，大規模交付預計集中在第二季至第三季。同時，我們下一代產品的開發也在快速進展。依照慣例，我們會在樣機測試完成後公開揭露新產品的具體性能。

In addition to mining machines, the company's self-developed integrated air or liquid-cooling mining solutions have been gradually delivered and generating revenue throughout the third and the fourth quarters. These integrated solutions are highly integrated, allowing for rapid deployment and enabling our mining machines to operate in controlled environments, thereby maximizing performance and reducing maintenance costs. These benefits increase customer willingness to purchase our mining machines, putting us in a favorable position in terms of sales. To better test our products we chose to showcase them first in the hot Middle Eastern region, demonstrating our confidence in product performance. In terms of mining machine sales, we achieved approximately 5.47 million terahash per second of computing power sold in the fourth quarter, a year-over-year increase of 192% and a quarter-over-quarter increase of 49%. Mining machine sales revenue reached USD44.1 million, representing a sequential increase of about 49%. Additionally, the contract sales for our A14 series mining machines received enthusiastic bookings from customers this quarter, with accumulated contract sales orders exceeding 7.5 million terahash per second with customer prepayments. The encouraging growth in contract sales orders has elevated the company’s level of customer advances as of the end of 2023.

除礦機外，公司自主研發的一體化風冷或液冷挖礦解決方案已逐步交付，並在第三季和第四季產生收入。這些集成解決方案高度集成，可以快速部署並使我們的礦機能夠在受控環境中運行，從而最大限度地提高性能並降低維護成本。這些好處增加了客戶購買我們礦機的意願，使我們在銷售方面處於有利地位。為了更好地測試我們的產品，我們選擇首先在炎熱的中東地區展示，以展示我們對產品性能的信心。礦機銷售方面，第四季我們實現了約 547 萬太哈希每秒的算力銷售，年增 192%，季增 49%。礦機銷售收入達4,410萬美元，較上季成長約49%。此外，本季A14系列礦機合約銷售訂單受到顧客熱烈預訂，顧客預付款累計合約銷售訂單超過750萬太哈希/秒。截至 2023 年底，合約銷售訂單的令人鼓舞的成長提高了公司的客戶預付款水準。

However, the gross margin of these pre-sales orders is not high. The sudden influx of contract orders will also test the company's delivery capability. We will better balance cash flow and inventory, as well as manage the inventory allocation between contract sales, spot orders, and mining business.

不過，這些預售訂單的毛利率並不高。合約訂單的突然湧入也將考驗公司的交付能力。更好地平衡現金流和庫存，管理合約銷售、現貨訂單和採礦業務之間的庫存分配。

At the end of the fourth quarter, we once again entered into procurement agreements with publicly listed companies such as Cipher Mining Inc. and Stronghold Digital Mining Inc. These include a contract sales order from Cipher for 16,700 units of the A1466 mining machine and another order from Stronghold for 1,100 units of the A1346 mining machine.

四季末，我們再次與Cipher Mining Inc.、Stronghold Digital Mining Inc.等上市公司簽訂採購協議，其中包括Cipher的16,700台A1466礦機的合約銷售訂單和另一筆訂單從Stronghold 購買1,100 台A1346 礦機。

Additionally, earlier deliveries included 11,000 units of the A1346 model to Cipher and 2,000 units to Stronghold, all of which have been delivered to their respective mining sites and installed by Q4, operating smoothly.

此外，早期交付的包括向Cipher交付的11,000台A1346型號和向Stronghold交付的2,000台A1346型號，所有這些都已交付到各自的礦場並於第四季度安裝，運行順利。

In the Southeast Asia region, where we focus on channel sales, we achieved sales of 900,000 terahash per second of computing power in the fourth quarter, contributing to stable sales orders. Our online retail stores targeting overseas markets expanded their reach to four new regions, including Norway, the Dominican Republic, Paraguay and Israel, totaling 46 regions reached by this quarter, meeting the purchasing needs of decentralized individual miners worldwide.

在我們專注於通路銷售的東南亞地區，第四季度我們實現了每秒90萬太哈希算力的銷售，為穩定的銷售訂單做出了貢獻。面向海外市場的線上零售店拓展至挪威、多明尼加、巴拉圭、以色列等4個新地區，截至本季已覆蓋46個地區，滿足全球去中心化個體礦工的採購需求。

Benefiting from factors such as the increase in Bitcoin price, transaction fee rewards, and improved uptime, we achieved mining revenue of approximately $3.7 million in the fourth quarter, representing a growth of about 14% compared to about USD3.3 million in Q3. In the fourth quarter, we mined a total of 101 Bitcoins. The Company continues to maintain a holding strategy in Bitcoin mining business. As of the end of the fourth quarter, we held 909 Bitcoins belonging to the company reaching a historical high. The current market value of our Bitcoin assets, it's almost USD50 million. As of the end of the fourth quarter of 2023, our total energized mining computing power was 1.91 exahash per second.

受惠於比特幣價格上漲、交易費用獎勵和正常運作時間延長等因素，我們第四季實現挖礦收入約 370 萬美元，較第三季約 330 萬美元成長約 14%。第四季度，我們總共開採了 101 個比特幣。公司繼續維持比特幣挖礦業務的控股策略。截至第四季末，我們持有屬於公司的比特幣909枚，達到歷史新高。目前我們比特幣資產的市值接近5,000萬美元。截至 2023 年第四季末，我們的總挖礦算力為每秒 1.91 exahash。

In Kazakhstan, following the acquisition of the necessary Type-2 license for mining, we have been collaborating with our local partners to resume mining operations. Despite challenges such as harsh cold weather and the need to re-establish cross-border accounts, we have made significant progress. We commenced re-energizing our mining machines in the first quarter of 2024, and the majority of them have now been successfully re-energized.

在哈薩克，在獲得必要的2類採礦許可證後，我們一直與當地合作夥伴合作恢復採礦作業。儘管面臨嚴寒天氣和需要重新建立跨境帳戶等挑戰，我們還是取得了重大進展。我們於 2024 年第一季開始為礦機重新通電，目前大多數礦機已成功重新通電。

As a result, these gradually reactivated mining machines have begun generating mining revenues. In 2024, while maintaining our mining strategy, we will continue to adjust and upgrade our specific operating tactics. First, when selecting project opportunities, we will pay more attention to factors such as the legal system and regulatory stability in the project’s located region, enhancing risk control. We will expand our scale while ensuring the security of our company assets.

因此，這些逐漸重新啟動的礦機已經開始產生挖礦收入。2024年，我們將在維持挖礦策略的同時，持續調整升級具體的經營策略。首先，在選擇專案機會時，我們會更重視專案所在地區的法律體系和監管穩定性等因素，加強風險控制。我們將在保證公司資產安全的同時擴大規模。

Secondly, we will shift from cash flow oriented to growth-oriented strategies. Therefore, unlike in the past, we will use more advanced mining machine models for self-mining, prolonging investment span, reducing operational risks, and enhancing the market competitiveness of our mining business.

其次，我們將從現金流導向轉向成長導向。因此，與以往不同的是，我們將採用更先進的礦機型號進行自挖礦，延長投資跨度，降低營運風險，增強挖礦業務的市場競爭力。

Lastly, in addition to cooperative mining models, we will also consider fixed-rate hosting and other ways, such as self-construction or acquisition, to deeply participate in mining operations. As of today, the company has 11 active mining projects globally with a total of 2.8 exahash per second of energized computing power. This energized computing power has increased by 46% compared to the end of the fourth quarter of 2023, mainly due to the re-energization of some machines in Kazakhstan and the energization of machines in other projects.

最後，除了合作挖礦模式外，我們還會考慮固定費率託管以及自建或收購等其他方式深度參與挖礦營運。截至目前，該公司在全球擁有 11 個活躍挖礦項目，總算力為每秒 2.8 exahash。與2023年第四季末相比，這一通電算力增加了46%，主要得益於哈薩克部分機器的重新通電以及其他專案機器的通電。

As of today, we have 2.1 exahash per second of expected computing power to be installed. This refers to the computing power that Canaan has shipped to a targeted mining country, but has not yet been put on the shelf, and we expect to gradually install and power it up in the first and second quarters of this year.

截至今天，我們預計安裝每秒 2.1 exahash 的運算能力。這是指嘉楠耘智已經運往目標挖礦國家，但尚未上架的算力，我們預計在今年第一季和第二季逐步安裝並上電。

We define the estimated total computing power deployed as the sum of the computing power installed and the expected computing power to be put on the shelf. Based on the estimated total computing power deployed, the estimated total power demand of all mining farms is 177 megawatts, with a weighted average electricity cost of around $0.05 per kWh and a weighted average revenue sharing ratio of around 70.9%.

我們將預計部署的總運算能力定義為已安裝的運算能力與預期上架的運算能力總和。根據預計部署的總算力，預計所有礦場的總電力需求為 177 兆瓦，加權平均電費約為每千瓦時 0.05 美元，加權平均收益分成比例約為 70.9%。

In the fourth quarter, the market environment, driven by the price of bitcoin, notably improved, although the performance of the mining machine market lagged behind the bitcoin price change showing continued decrease in the mining machine price.

第四季度，在比特幣價格的推動下，市場環境明顯改善，但礦機市場表現落後於比特幣價格變化，礦機價格持續下跌。

On one hand, the company continued its prudent cost and expense control. On the other hand, following the organizational adjustments, we have a leaner and more efficient team, which is well-prepared for the bull market. Our sales efforts resulted in a significant increase in sales cash inflows, despite some non-cash provisions and impairments associated with our promotional initiatives. These initiatives enabled us to generate crucial cash inflows, and our destocking efforts are nearing completion. In general, our strong sales collection and fundraising contributed to a robust increase in ending cash balance in Q4 2023.

一方面，公司繼續審慎控製成本費用。另一方面，經過組織調整，我們的團隊更加精簡、高效，為多頭市場做好了充分的準備。儘管我們的促銷活動帶來了一些非現金撥備和減值，但我們的銷售努力導致銷售現金流入大幅增加。這些措施使我們能夠產生重要的現金流入，我們的去庫存工作已接近完成。總體而言，我們強勁的銷售回款和籌款活動促進了 2023 年第四季期末現金餘額的強勁成長。

In the fourth quarter of 2023, through the issuance of preferred shares and ATM offerings, the company has secured a net financing amount of about USD86.2 million. In the first quarter of 2024 the company received another USD50 million of financing through the settlement of preferred shares.

2023年第四季度，透過發行優先股和ATM發行，公司已獲得淨融資額約8,620萬美元。2024年第一季度，公司透過優先股結算方式再次獲得5,000萬美元融資。

In the early stages of last year's fourth quarter, we made the judgment that the bear market was bottoming out and the bull market was approaching. However, based on experience, market changes during the bear-to-bull transition are very rapid, requiring early preparation of the supply chain and product layout. In the past, we relied on internal funds and proceeds from customer advancement. Cash from these resources was slower to materialize and constrained our ability to expand during bullish periods, resulting in suboptimal capital utilization. This infusion of funds from preferred shares and ATM offerings has allowed us to advance our supply chain and related production capacity preparations by at least two months, and enabled increased investment in research and development, accelerating product development progress. From a longer perspective, the benefits derived may even exceed the two-month timeframe, positioning us to capitalize on significant market opportunities in the bull market and expand our market share. Since the SEC officially approved the listing and trading of bitcoin spot ETFs, the price of bitcoin has experienced a brief consolidation phase and recently broke through and stabilized above USD50,000. With the combined effect of improved sales and successive financing settlement, our cash and cash equivalents increased from USD41 million at the end of the third quarter to USD96 million at the end of the fourth quarter.

去年四季初期，我們就做出了熊市見底、多頭市場臨近的判決。但根據經驗，熊轉牛期間的市場變化非常迅速，需要及早做好供應鏈和產品佈局的準備。過去，我們依靠內部資金和客戶預付款的收益。這些資源的現金兌現速度較慢，限制了我們在多頭時期的擴張能力，導致資本利用率不理想。這次優先股和ATM發行的資金注入，使我們的供應鏈和相關產能準備提前了至少兩個月，並增加了研發投入，加快了產品開發進度。從更長遠的角度來看，所帶來的效益甚至可能超過兩個月的時間範圍，使我們能夠抓住牛市中的重大市場機會，擴大我們的市場份額。自從美國SEC正式批准比特幣現貨ETF上市交易以來，比特幣價格經歷了短暫的盤整階段，近期突破並穩定在5萬美元上方。在銷售改善和陸續融資結算的共同作用下，現金及現金等價物由三季末的4,100萬美元增加至第四季末的9,600萬美元。

However, we must also recognize that the Federal Reserve interest rate cut cycle has not yet truly begun, financing costs remain high for miners, and there is still uncertainty about the pace of bitcoin’s upward movement, posing ongoing challenges to the industry. The first quarter of 2024 is also the last complete quarter before the halving event, and based on our past experience, this quarter, is a super-wait-and-see period that occurs every four years. Coupled with the multiple factors of the halving, the New Year, and the Chinese Lunar New Year, the market in this quarter is expected to be very subdued. The recovery is likely to occur in the second quarter.

但我們也必須認識到，聯準會降息週期尚未真正開始，礦商融資成本依然居高不下，比特幣上漲速度仍存在不確定性，為產業帶來持續的挑戰。2024年第一季也是減半事件之前的最後一個完整季度，根據我們以往的經驗，這個季度是每四年出現一次的超級觀望期。再加上減半、過年、農曆新年等多重因素，本季市場預計將十分低迷。復甦可能會在第二季出現。

Based on the comprehensive situation outlined above, we are providing a cautious outlook for the first half of 2024. We anticipate revenue of approximately USD33 million in the first quarter of 2024 and approximately USD70 million in the second quarter. This forecast is based on the company's current market and operating conditions, and actual results may vary.

基於上述綜合情況，我們對 2024 年上半年的前景持謹慎態度。我們預計 2024 年第一季營收約為 3,300 萬美元，第二季營收約為 7,000 萬美元。該預測是基於公司目前的市場和經營狀況，實際結果可能會有所不同。

2023 was a challenging year for the entire industry. With unwavering faith, we overcame various obstacles and successfully navigated through the market downturn as planned. Even during times of despair, we enhanced corporate governance and made extensive preparations for the halving and the bull market.

2023年對於整個產業來說是充滿挑戰的一年。憑藉著堅定不移的信念，我們克服重重困難，按計畫成功度過了市場低迷期。即使在最絕望的時候，我們也加強了公司治理，為減半和多頭市場做了大量的準備。

What doesn't kill me only makes me stronger. We have never been more confident in seizing the historic opportunities presented by the Bitcoin bull market. For the industry, 2024 will be a pivotal turning point. In the previous cycle, institutional investors, represented by Wall Street, launched a significant bull market with a USD69,000 price per Bitcoin. I have always said that the next bull market can only, and must be driven by widespread public participation.

那些殺不死我的只會讓我變得更強大。我們對抓住比特幣牛市帶來的歷史性機會從未如此有信心。對產業來說，2024年將是一個關鍵的轉捩點。上一周期，以華爾街為代表的機構投資者發起了一次重大牛市，比特幣價格達到6.9萬美元。我一直說，下一次多頭市場只能、也必須由公眾廣泛參與來推動。

As the New Year begins, the approval of the bitcoin spot ETF is a milestone and can serve as the starting point for the next bull market. We will continue to work diligently, supporting the bitcoin system with computing power, and over the next four years, strive to expand the application of computing power, promote industry development, and enhance social operational efficiency alongside industry-leading partners ultimately, supporting the progress of society.

新年伊始，比特幣現貨ETF的核准是一個里程碑，可以作為下一次多頭市場的起點。我們將繼續努力，用算力支撐比特幣系統，在未來四年裡，努力與行業領先的合作夥伴一起擴大算力的應用，推動行業發展，提升社會運作效率，支持比特幣的進步社會的。

This concludes my prepared remarks. I will now turn the call over to our CFO, James.

我準備好的發言到此結束。我現在將把電話轉給我們的財務長詹姆斯。

Thank you.

謝謝。

Thank you, NG and good day, everyone. This is James speaking at our Singapore headquarters. As NG started at the top of the call, bitcoin price grew significantly in Q4, especially stayed high in December, and the market demand on machines quickly recovered before total hash rate exceeding 500 exahash per second. We seized the short time window of bitcoin price increase, maximized our machine sales through multiple channels, drove customer advanced payment on our new A14 series, promoted diversified deployment in mining, improved operational efficiency by organization optimization, and received a series of fundraising from ATM and preferred shares.

謝謝您，NG，大家好。這是詹姆斯在我們新加坡總部發表的演講。隨著NG的到來，比特幣價格在第四季度大幅上漲，尤其是在12月份保持高位，在總算力超過每秒500 exahash之前，市場對機器的需求迅速恢復。我們抓住比特幣價格上漲的短暫窗口，透過多通路最大化機器銷量，推動新A14系列客戶預付款，推動挖礦多元化部署，透過組織優化提高營運效率，並獲得ATM系列融資和優先股。

Our strong sales collection and fundraising contributed to a positive ending cash balance, which reached USD96 million at the end of Q4, increased from USD41 million at the end of Q3. Frankly speaking, those were a series of better results beyond our previous expectations in November.

我們強勁的銷售回款和籌款活動促成了正期末現金餘額，從第三季末的 4,100 萬美元增加到第四季末的 9,600 萬美元。坦白說，這是一系列超出我們11月份預期的好結果。

Let's start with profit and loss. Q4 total revenue was USD49.1 million, which beat our guidance of USD34 million by 44% favorable variance and represented an increase of 47% quarter-over-quarter. Our revenue from machine sales was USD44 million, and our mining revenue was USD3.7 million.

我們先從獲利和虧損開始。第四季總收入為 4,910 萬美元，比我們指導的 3,400 萬美元高出 44% 的有利方差，較上季成長 47%。我們的機器銷售收入為 4,400 萬美元，挖礦收入為 370 萬美元。

Regarding our machine sales, we delivered total computing power sold of 5.5 million terahash per second, representing a year-over-year growth of 192% and a quarter-over-quarter growth of 46%. And the average selling price increased from USD7.9 per terahash per second in Q3 to USD8.2 per terahash per second in Q4. The increases were mainly driven by our destocking efforts for A13 Series and the improved customer demand.

在機器銷售方面，我們的總算力銷售量為每秒 550 萬太哈希，年增 192%，季增 46%。平均售價從第三季的 7.9 美元/太哈希每秒增加到第四季的每太哈希每秒 8.2 美元。成長主要是由於我們對A13系列的去庫存努力以及客戶需求的改善。

Meanwhile, distributors and the online retail store also contributed to the revenue of machine sales Southeast Asia contributed 900K terahash per second delivery in Q4, mainly from distributors. And our online store first time covered the Kingdom of Norway, Dominican Republic, Paraguay and Israel. Total country and area with shipments reached 46 for the first time. Demand from more and more small-scale miners was satisfied. Considering both factors of power sold and ASP, our revenue from mining machine sales achieved USD44 million, up 49% from USD29.5 million in the last quarter. In addition to mining machines, our self-developed integrated air or liquid cooling mining solutions have been gradually delivered throughout the third and fourth quarters. Accumulated orders from customers was higher than USD4 million, driven by customer recognition of our integrated cooling technology. The revenue from integrated mining solutions in Q4 was USD0.6 million, up 133% from USD0.2 million in Q3, driven by the increased delivered volume. Specifically, for our mining machine sales, we accrued USD55.5 million for inventories write-down, prepayment write-down and provision for reserve for inventory purchase commitments in this quarter. The inventory write-down decreased sequentially by 16% to USD45.1 million, which was driven by the accelerated destocking in this quarter. Those write-downs and provisions are made under US GAAP rules, jeopardizing our gross profit, but do not impact our cash status. If the above write-downs and provisions were excluded, we would have a gross profit for our mining machine sales of USD0.7 million and a gross margin of 1.6%.

同時，經銷商和線上零售店也貢獻了機器銷售收入，東南亞在第四季度貢獻了每秒 900K Terahash 的交付，主要來自分銷商。我們的線上商店首次涵蓋挪威王國、多明尼加共和國、巴拉圭和以色列。出貨國家和地區總數首次達到46個。越來越多的小規模礦工的需求得到了滿足。考慮到售電量和平均售價兩個因素，我們的礦機銷售收入達到 4,400 萬美元，比上季度的 2,950 萬美元成長 49%。除了礦機外，我們自主研發的一體化風冷或液冷挖礦解決方案已在第三季和第四季逐步交付。由於客戶對我們的整合冷卻技術的認可，累計客戶訂單超過 400 萬美元。由於交付量增加，第四季綜合挖礦解決方案營收為 60 萬美元，較第三季的 20 萬美元成長 133%。具體來說，對於我們的礦機銷售，本季我們提列了庫存減記、預付款減記和庫存採購承諾準備金 5,550 萬美元。庫存減記環比下降 16% 至 4,510 萬美元，這是由於本季加速去庫存推動的。這些減記和準備金是根據美國公認會計準則規則制定的，會危及我們的毛利，但不會影響我們的現金狀況。若排除上述減記和撥備，我們的礦機銷售毛利為 70 萬美元，毛利率為 1.6%。

Turning to our mining business, our mining revenue increased 14% quarter-over-quarter. We expanded our mining business in Africa, South America and the Middle East, which resulted in our total energized hash rate accumulated to 1.9 exahash per second in the end of Q4. We mined 101 bitcoins in this quarter and achieved a 35 bitcoins for mining profit.

轉向我們的挖礦業務，我們的挖礦收入較上季成長 14%。我們擴大了非洲、南美和中東的挖礦業務，第四季末我們的總算力累計達到每秒 1.9 exahash。本季我們開採了 101 個比特幣，實現了 35 個比特幣的挖礦利潤。

Gross profit margin reached a record-high 41% for our mining business in this quarter, which was mainly attributed to the average bitcoin price increase from about USD28,000 in the last quarter to over USD36,000 the in this quarter. Please note here that mining profit or loss is defined as the proportion of mining revenues, deducting costs for energy and hosting in terms of mining revenues, without consideration of depreciation for the deployed machines.

本季挖礦業務毛利率創歷史新高41%，主要得益於比特幣平均價格從上季約28,000美元上漲至本季超過36,000美元。這裡請注意，挖礦損益定義為挖礦收入的比例，扣除能源和託管成本後的挖礦收入，不考慮已部署機器的折舊。

Additionally, we and our local partners in Kazakhstan went through a bunch of challenges from cold weather to re-setting up cross border bank accounts. 1.09 exahash per second out of 2.0 exahash per second in Kazakhstan have been successfully re-energized to normal in early January. That makes our total energized computing power to 2.8 exahash in quarter one 2024, which has been deployed in six countries and areas. This enables us to expect a material mining revenue increase in Q1 2024 compared to quarter four. And we continue to expand our mining business with another 2.1 exahash per second machines to be energized in quarter one and quarter two, as CEO mentioned previously.

此外，我們和哈薩克當地的合作夥伴經歷了從寒冷天氣到重新設立跨境銀行帳戶的一系列挑戰。哈薩克每秒 2.0 exahash 中的 1.09 exahash 已於 1 月初成功恢復正常。這使得我們的總算力在 2024 年第一季達到 2.8 exahash，已部署在 6 個國家和地區。這使我們預計 2024 年第一季的材料開採收入將比第四季有所成長。正如執行長之前提到的，我們將繼續擴大我們的挖礦業務，在第一季和第二季將新增每秒 2.1 exahash 的機器。

Shifting to our AI business, AI revenue was USD0.3 million in this quarter, up 59% quarter-over-quarter. This growth was primarily driven by the increased sales volume of our AI products. Now turning to the expenses. Our operating expenses totaled USD39.2 million, decreasing 36% year-over-year and 10% quarter-over-quarter, respectively. Excluding the one-off expenditure for our new generation chips incurred in Q4 2022, our operating expenses decreased 15% year-over-year, which was mainly due to the decrease in staff costs, share-based compensation and Bitcoin impairment.

轉向我們的人工智慧業務，本季人工智慧收入為 30 萬美元，季增 59%。這一成長主要是由我們的人工智慧產品銷售增加所推動的。現在轉向費用。我們的營運費用總計 3,920 萬美元，年比分別下降 36%，季減 10%。剔除2022年第四季新一代晶片的一次性支出，我們的營運支出較去年同期下降15%，主要是由於員工成本、股權激勵和比特幣減損的減少。

The sequential decrease was mainly due to the decreased bitcoin impairment and the realized gain on Bitcoin and second-hand mining machines sold. Please note that according to the accounting rules, when we sell the second-hand machines replaced from our mining business, the realized income will benefit our P&L by offsetting G&A expenses, rather than contributing to the revenue.

環比下降主要是由於比特幣減損損失減少以及出售比特幣和二手礦機實現的收益。請注意，根據會計準則，當我們出售從採礦業務中更換的二手機器時，所實現的收入將透過抵消一般及行政費用而有利於我們的損益，而不是貢獻於收入。

Besides, in this quarter, we incurred a one-off expenditure of USD2.2 million for the organization optimization, which was offset by the decreased annual performance-based bonus. We believe the positive effects of operational efficiency improvement will begin to be reflected in our operating data from quarter one 2024.

此外，本季我們還發生了220萬美元的組織優化一次性支出，但被年度績效獎金減少所抵銷。我們相信，營運效率提升的正面影響將從 2024 年第一季開始體現在我們的營運數據中。

The net result of the foregoing was a Non-GAAP operating loss of USD78.3 million for this quarter, narrowed 29% year-over-year and 20% quarter-over-quarter, respectively. Benefited from the non-cash recognition for deferred tax assets. Non-GAAP net loss was USD53.9 million, narrowed 30% year-over-year and 17% quarter-over-quarter, respectively.

上述結果為本季非 GAAP 營運虧損 7,830 萬美元，年比分別收窄 29%，季減 20%。受益於遞延所得稅資產的非現金確認。非 GAAP 淨虧損為 5,390 萬美元，年比分別收窄 30%，較上季收窄 17%。

Please note that according to US GAAP accounting rules, we recognized the first closing of preferred shares financing as convertible liability, the second closing of preferred shares as forward liability and the pre-delivery ADSs as own-share lending equity, respectively. These financial instruments incurred an excess of fair value over proceeds received and a fair value change. These non-cash accounting treatments hit our Q4 bottom line with total USD70 million. In order to represent our performance more accurately and more comparably, we excluded these impacts from our Non-GAAP measures. In addition, although legally issued, the pre-delivery ADSs were not considered outstanding, and then excluded from basic and diluted earnings per share.

請注意，根據美國公認會計原則會計準則，我們將首次交割的優先股融資確認為可轉換負債，第二次交割的優先股融資確認為遠期負債，將交割前的美國存託憑證確認為自有股份借貸權益。這些金融工具的公允價值超過所收到的款項以及公允價值變動。這些非現金會計處理達到了我們第四季的總利潤 7000 萬美元。為了更準確、更具可比性地反映我們的業績，我們將這些影響排除在我們的非公認會計原則衡量標準之外。此外，儘管是合法發行的，但交付前的美國存託股份並不被視為已發行，因此被排除在基本每股收益和稀釋每股收益之外。

Turning to our balance sheet and cash flow. In Q4, we received USD61.2 million from the ATM and USD24.8 million from preferred shares financing facilities, respectively, and we paid USD35 million to secure our wafer supply by utilizing the fundraising proceeds. The other proceeds were also utilized for the wafer supply prepayment in January 2024.

轉向我們的資產負債表和現金流。第四季度，我們分別從 ATM 獲得了 6,120 萬美元，從優先股融資便利中獲得了 2,480 萬美元，並利用融資收益支付了 3,500 萬美元以確保晶圓供應。其他收益也用於 2024 年 1 月的晶圓供應預付款。

During this quarter, the cash outflow of USD71 million for productions was offset by cash inflow of USD75 million from sales, which was mainly contributed by spot sales of A13 Series and advanced payment for A14 series. So our cash flow from production and operation turned positive with USD4 million. Consequently, at the end of 2023, we held cash and cash equivalents of USD96 million on our balance sheet, which was USD55 million higher than the ending balance of September 30.

本季度，生產現金流出7,100萬美元，被銷售現金流入7,500萬美元所抵消，銷售現金流入主要來自A13系列的現貨銷售和A14系列的預付款。這樣我們的生產經營現金流就轉正了，達到了400萬美元。因此，截至 2023 年底，我們的資產負債表上持有現金和現金等價物 9,600 萬美元，比 9 月 30 日期末餘額增加 5,500 萬美元。

Now moving on to our contract liability. The improved market demand helped us to record a contract advances of USD19.6 million as of 2023 year-end. This balance increased 28.6 times compared to USD0.7 million at the last year-end, and 2.5 times compared to USD5.6 million at the last quarter-end.

現在繼續我們的合約責任。市場需求的改善幫助我們截至 2023 年底預付款 1,960 萬美元。該餘額較上年末的 70 萬美元增長了 28.6 倍，較上季末的 560 萬美元增長了 2.5 倍。

The majority of contract advances came from pre-sales of A14. It included but not limited to those sales contributions from big clients. As previously announced, we secured follow-on purchase orders from Cipher and Stronghold with over 17,000 mining machines. As of the end of Q4, we recorded accounts receivable of USD3 million, declining 69% compared to the end of Q3, as a series payments have been made by customers during Q4. We will continuously evaluate market demand and adopt corresponding credit policies with caution.

大部分合約預付款來自 A14 的預售。其中包括但不限於大客戶的銷售貢獻。如同先前所宣布的，我們從 Cipher 和 Stronghold 獲得了超過 17,000 台礦機的後續採購訂單。截至第四季末，我們應收帳款為 300 萬美元，較三季末下降 69%，主要是由於客戶在第四季度進行了一系列付款。我們將持續評估市場需求，審慎採取相應的信貸政策。

Now turning our attention to our Bitcoin assets. The Bitcoins we held as our own holding asset kept growing in this quarter and reached 909 Bitcoins as of December 31, which is 49 more than 860 at the end of quarter three. We also held 169 Bitcoins received as customer deposit, which declined 209 Bitcoins compared to the balance as of September 30. I want to share with you that we plan to early adopt the FASB new accounting rules on cryptocurrency assets since January 1, 2024, which allow cryptocurrencies to be carried at the fair market value.

現在將我們的注意力轉向我們的比特幣資產。我們以自己的持有資產持有的比特幣在本季持續成長，截至 12 月 31 日達到 909 個比特幣，比第三季末的 860 個比特幣增加了 49 個。我們還持有 169 個作為客戶存款收到的比特幣，與截至 9 月 30 日的餘額相比減少了 209 個比特幣。我想與大家分享的是，我們計劃自 2024 年 1 月 1 日起提前採用 FASB 關於加密貨幣資產的新會計規則，該規則允許加密貨幣以公平市場價值計量。

If adopted with the price at January 1, 2024 on our cryptocurrency held by the end of 2023, we anticipate that the carrying value would increase approximately USD18 million based on latest price difference between market price and booking price. The current fair market value of these our-owned Bitcoins is almost USD50 million. We believe these rules will enhance the transparency and accuracy of our financial statements, as well as provide better clarity to our investors and shareholders.

如果對我們在 2023 年底持有的加密貨幣採用 2024 年 1 月 1 日的價格，根據市場價格與預訂價格之間的最新價差，我們預計帳面價值將增加約 1800 萬美元。我們擁有的這些比特幣目前的公平市場價值接近 5000 萬美元。我們相信這些規則將提高我們財務報表的透明度和準確性，並為我們的投資者和股東提供更好的清晰度。

Turning to our fundraising. From November 28, 2023, the date we reported our Q3 financial results, to December 31, 2023, we utilized the ATM for fundraising with net proceeds of USD61.2 million. In late 2023, we closed the first tranche of preferred shares financing, raising total net proceeds of USD24.8 million. In early January 2024, we closed the second tranche of preferred shares financing, raising total net proceeds of USD49.7 million. The total proceeds of USD136 million fundraising helped us carry out new product R&D and wafer capacity preparation, to secure future mining machine supply after halving. In the first quarter of 2024, we anticipate a revenue of USD33 million, considering many of our customers are waiting for halving to generate more visibility about ROI of CapEx investment. While for quarter two, 2024, we anticipate a revenue of USD70 million, considering A14 series pre-order volume and the potential demand upside after halving.

轉向我們的籌款活動。從2023年11月28日（我們報告第三季財務業績的日期）到2023年12月31日，我們利用ATM進行募款，淨收益為6,120萬美元。2023年底，我們完成了第一期優先股融資，籌集淨收益總額為2,480萬美元。2024 年 1 月初，我們完成了第二期優先股融資，募集資金淨額總計 4,970 萬美元。募資總額1.36億美元幫助我們進行新產品研發及晶圓產能準備，並確保未來減半後的礦機供應。考慮到我們的許多客戶正在等待減半以提高資本支出投資回報率的可見性，我們預計 2024 年第一季的收入將達到 3,300 萬美元。而考慮到 A14 系列的預訂量和減半後的潛在需求上升空間，我們預計 2024 年第二季的營收將達到 7,000 萬美元。

Consequently, the selling price of computing power will remain under pressure. Policy changes regarding cryptocurrencies and mining in different countries will also add uncertainty to industry operations. We may face unforeseen obstacles. Based on the above comprehensive situation, we give a cautious expectation for the first half year of 2024.

因此，算力的售價仍將面臨壓力。各國有關加密貨幣和挖礦的政策變化也將增加產業營運的不確定性。我們可能會遇到不可預見的障礙。綜合以上情況，我們對2024年上半年給予謹慎預期。

Now I would like to briefly walk you through our financial results for the quarter. Revenues in the fourth quarter of 2023 were USD49.1 million, as compared to USD33.3 million in the third quarter of 2023 and USD58.3 million in the same period of 2022. Gross loss in the fourth quarter of 2023 was USD54.1 million, compared to USD69.1 million in the third quarter of 2023 and USD64.1 million in the same period of 2022.

現在我想向您簡要介紹我們本季的財務表現。2023年第四季的營收為4,910萬美元，而2023年第三季的營收為3,330萬美元，2022年同期的營收為5,830萬美元。2023 年第四季的毛虧損為 5,410 萬美元，而 2023 年第三季的毛虧損為 6,910 萬美元，2022 年同期的毛虧損為 6,410 萬美元。

Total operating expenses in the fourth quarter of 2023 were USD39.2 million, compared to USD43.8 million in the third quarter of 2023 and USD60.8 million in the same period of 2022. Non-GAAP loss from operations in the fourth quarter of 2023 was USD78.3 million compared to USD97.4 million in the third quarter of 2023 and USD110 million in the same period of 2022.

2023 年第四季的總營運費用為 3,920 萬美元，而 2023 年第三季為 4,380 萬美元，2022 年同期為 6,080 萬美元。2023 年第四季的非公認會計準則營運虧損為 7,830 萬美元，而 2023 年第三季為 9,740 萬美元，2022 年同期為 1.1 億美元。

Non-GAAP net loss in the fourth quarter of 2023 was USD53.9 million, compared to USD64.7 million in the third quarter of 2023 and USD76.6 million in the same period of 2022. Non-GAAP basic and diluted net loss per ADS in the fourth quarter of 2023 were USD0.30. As of December 31, 2023, the company had cash and cash equivalents of USD96.2 million.

2023 年第四季的非 GAAP 淨虧損為 5,390 萬美元，而 2023 年第三季為 6,470 萬美元，2022 年同期為 7,660 萬美元。2023 年第四季非 GAAP 每股美國存託股基本及稀釋淨虧損為 0.30 美元。截至2023年12月31日，本公司擁有現金及現金等價物9,620萬美元。

And this concludes our prepared remarks. We are now open for questions.

我們準備好的演講到此結束。我們現在歡迎提問。

We will now begin the question and answer session.

我們現在開始問答環節。

(Operator Instructions)

（操作員說明）

Shuang Sun, Guosheng Securities

孫爽，國盛證券

Can you hear me?

你聽得到我嗎？

Yes, please.

是的，請。

(spoken in foreign language) How was your recent customer order? Did you see increased sales in mining machines as miners more aggressively stock mining machines preparing for halving?

（用外語發言）您最近的客戶訂單怎麼樣？隨著礦工更積極地備貨礦機準備減半，您是否看到礦機銷量增加？

In Q4 of 2023, we exceeded our expectations in both our sales and presales orders. Total computing power sold reached 5.5 million terahash per second in this quarter, a year-over-year increase of 192% and a sequential increase of 46% from the previous quarter.

2023 年第四季度，我們的銷售和預售訂單都超出了我們的預期。本季銷售的總算力達到每秒 550 萬兆哈希，年增 192%，季增 46%。

After the approval of the spot bitcoin ETFs in January this year, the Bitcoin price went through a consolidation phase and the market experienced a slight slowdown in orders compared to Q4. This is a normal phenomenon, based on our past experience and observations.

今年1月比特幣現貨ETF核准後，比特幣價格進入盤整階段，市場訂單量較第四季略有放緩。根據我們過去的經驗和觀察，這是正常現象。

Six months before the halving, miners with existing facilities may deploy mining machines quickly to maximize profits. However, about a quarter before the halving, miners tend to adopt a wait-and-see stance. Most miners prefer to make plans for the procurement and deployment of mining machines for the upcoming four-year cycle when they can see more certainty. Generally, around one month before the halving, various market indicators are mostly stabilized and the market will begin to recover. We are also actively preparing for this, including securing production capacity for the new product mass production and consistently engaging in the R&D and tape-out of our next generation products. Thank you.

減半前六個月，擁有現有設施的礦工可能會快速部署礦機以實現利潤最大化。然而，在減半前約四分之一，礦商往往採取觀望立場。大多數礦工更願意為即將到來的四年周期制定礦機的採購和部署計劃，這樣他們可以看到更多的確定性。一般來說，減半前一個月左右，各項市場指標大多趨於穩定，市場將開始復甦。我們也積極準備，包括確保新產品量產的產能，並持續投入下一代產品的研發和流片。謝謝。

Okay. (spoken in foreign language) Has the computing power selling price increased. How were the spot sales compared to contract sales? How were the sales of mining machines with higher power efficiency in terms of sales volume and ASP?

好的。（用外語發言）算力售價是否漲了？與合約銷售相比，現貨銷售如何？更高能效礦機的銷售和均價表現如何？

Entering the Q1 of 2024, the approval of the spot Bitcoin ETF for listing led to a market correction following the initial surge. Despite this, there has been an intensification in machine manufacturers' efforts to de-stock, without an accompanying rise in the spot price for computing power. As of now, all A13 series machines are being sold on the spot market. In contrast the A-14 series mining machines are offered on a futures basis, where the presale prices have seen a gradual increase over the past four months, and it is anticipated that the majority of A14 Series deliveries will be concentrated in the second and third quarters.

進入2024年第一季度，現貨比特幣ETF獲批上市，導致市場在最初的飆升後出現回檔。儘管如此，機器製造商加大了去庫存的力度，但運算能力的現貨價格卻沒有隨之上漲。截至目前，A13系列機器全部在現貨市場上銷售。相較之下，A-14系列礦機以期貨方式供貨，近四個月預售價格逐漸上漲，預計A14系列礦機的大部分交付將集中在二、三期。

In Q4 2023, spot sales reached a computing power of 5.47 million terahash per second and with pre-sale orders surpassing 7.5 million terahash per second. So, the A14 series, with its enhanced computing power and energy efficiency, has garnered market approval. However, due to its future sales nature, many miners with ready-to-use facilities still have shown a preference of spot purchases. This reflects variety needs among the miners.

2023年第四季，現貨銷售算力達到每秒547萬太哈希，預售訂單超過每秒750萬太哈希。因此，A14系列憑藉著增強的算力和能效，獲得了市場的認可。然而，由於其未來的銷售性質，許多擁有現成設施的礦商仍然表現出對現貨購買的偏好。這反映了礦工的多樣化需求。

Okay, thank you.

好的，謝謝。

Lucas Pipes, B. Riley

盧卡斯·派普斯、B·萊利

Thank you very much, operator. Good day, everyone. So, my question is a little bit higher level. Given the environment we're in, with some research and interest in Bitcoin, and network, and obviously the ETF approval, how aggressive do you want to be? Do you want to take on a lot of extra capacity on procure chips to really press forward in this environment, or if you want to be kind of guarded and think about potential downside risks post halving? Just curious how you navigate between greed and fear in this environment.

非常感謝您，接線生。大家好。所以，我的問題有點更高層次。考慮到我們所處的環境，對比特幣和網路進行了一些研究和興趣，顯然還有 ETF 的批准，您希望採取多積極的行動？您是否想在採購晶片方面承擔大量額外產能，以便在這種環境下真正向前推進，或者您是否想保持警惕並考慮減半後潛在的下行風險？只是好奇在這種環境下你如何在貪婪和恐懼之間遊走。

It's very interesting and high-level question. I think there is many uncertainties before the halving. For us, we believe that our goal is to have -- you know, there's only three significant players in this field and we need to make targeted adjustments and customize our product designs, with the best power efficiency and competitive pricing. Also, as you know, AI it's booming, so we need to secure wafer supplements, especially for the second half of this year.

這是一個非常有趣且高水準的問題。我認為減半之前還有很多不確定性。對我們來說，我們相信我們的目標是——你知道，這個領域只有三個重要的參與者，我們需要進行有針對性的調整併定制我們的產品設計，以最佳的功效和有競爭力的價格。另外，如您所知，人工智慧正在蓬勃發展，因此我們需要確保晶圓補充，尤其是今年下半年。

We have already signed some agreements with our suppliers. And for us, we are changing our strategy for self-mining. Before, our target is the cash flow, but from this year, we change our strategy to the growth. So that means we will start to invest on the facilities and they use our best products to do self-mining, especially we will put our majority target at the well-regulated and developed countries.

我們已經與供應商簽署了一些協議。對我們來說，我們正在改變我們的自挖礦策略。以前我們的目標是現金流，但從今年開始，我們的策略轉向了成長。所以這意味著我們將開始投資設施，他們使用我們最好的產品進行自挖礦，特別是我們將把我們的主要目標放在一個監管良好的已開發國家。

I think for the next few months, we have sufficient funds for us to do production and R&D. But for the bull market, we make the judgment that when the timing comes we will use our capital to do the expansion more aggressively than before.

我認為接下來的幾個月，我們有足夠的資金進行生產和研發。但對於多頭市場，我們的判斷是，時機到來時，我們會比以前更積極地利用資金進行擴張。

So I think, for us, the best products, and more importantly, self-mining strategy, plus the capital, will makes us to get a better score for this bull market cycle. I think James can add to this.

所以我認為，對我們來說，最好的產品，更重要的是自挖策略，加上資金，會讓我們在這個牛市週期中獲得更好的成績。我認為詹姆斯可以補充這一點。

Yes, I think it's always difficult or challenging to balance between aggressive and the conservative. And we do fundraising to support our R&D and support our capacity of wafer for future bull market. I think always we made decision together, and NG has a lot of experience in going through the past cycles. So, we always predict the bull market and bear market for future. And then we decided together about how big the investments we are going to spend in the new machine design. A lot of past experience helped, but we always face to new challenges just like mining, just like in different generation of machines., for which we have to solve a lot of challenges in the R&D phase. So, I think it's not easy to describe the order operations, but we always carry the courage to face to the uncertainties. And we go through the kind of balance between very aggressive and very conservative. And then we tried to maximize the performance of machine sales and mining revenue together. So, I think strategically NG lead the company to do all this, but we do have a management team in different areas trying to contribute our best to the decision making. I think that's my understanding. Thank you, Lucas.

是的，我認為在激進和保守之間取得平衡總是很困難或具有挑戰性。我們進行融資來支持我們的研發並支持我們未來多頭市場的晶圓產能。我認為我們總是一起做出決定，NG 在經歷過去的週期中有很多經驗。所以，我們總是預測未來的多頭市場和熊市。然後我們共同決定在新機器設計上要投入多少資金。過去的許多經驗都有幫助，但我們總是面臨新的挑戰，就像採礦一樣，就像在不同世代的機器中一樣，為此我們必須在研發階段解決很多挑戰。所以，我認為描述訂單操作並不容易，但我們始終有勇氣面對不確定性。我們在非常激進和非常保守之間尋求平衡。然後我們試著同時最大化機器銷售和挖礦收入的表現。所以，我認為NG在策略上帶領公司做到了這一切，但我們確實在不同領域有一個管理團隊，試圖為決策做出最好的貢獻。我想這就是我的理解。謝謝你，盧卡斯。

Thank you. Thank you very much for all that.

謝謝。非常感謝您所做的一切。

Thank you.

謝謝。

Kevin Dede from H.C. Wainwright

來自 H.C. 的凱文·德德 (Kevin Dede)溫賴特

Well, gentlemen, thank you very much for having me on the call. First question, just around the self-mining and sort of tangential to Lucas' question about strategic objectives. Understand you're at about 4.9 exahash installed and running, in total. I'm wondering if you think all that will be running by the end of the March quarter? And maybe more specifically what you think you're self-mining hash rate will grow through the balance of the year?

好的，先生們，非常感謝你們邀請我接聽電話。第一個問題，圍繞著自我挖掘，與盧卡斯關於策略目標的問題有點切線。了解您總共安裝並運行了大約 4.9 exahash。我想知道您是否認為所有這些都會在三月季度末運行？也許更具體地說，您認為自挖礦算力將在今年餘下時間成長？

Yes, what I want to mention again is, you know, we start our self-mining business in the second half of 2021. And we have been deploying many projects and gaining both experience and licenses. So, we have deployed more than 5 exahash per second of the computing power and energized over 2.8 exahash per seconds through Central Asia, North Africa, South America, Middle East, and so on.

是的，我想再次提到的是，你知道，我們在 2021 年下半年開始了自挖礦業務。我們已經部署了許多專案並獲得了經驗和許可證。因此，我們已經部署了每秒超過 5 exahash 的算力，並在中亞、北非、南美、中東等地區激發了每秒超過 2.8 exahash 的運算能力。

But in 2024, while maintaining our mining strategy, this year, we will adjust and upgrade our specific operating tactics. First is that we pay more attention to factors such as legal system and regulatory stability. it has the risk of default. So that means we will change our major regions for our mining operations. Even though it may be a little bit costly or we will need a slightly longer deploying time. And also, we will expand our scale. We will shift from cash flow oriented to growth oriented. What we did in the past is that when we had inventories, we would put inventories to do self-mining. This is to make the inventories to generate cash flow for the company.

但2024年，在維持挖礦策略的同時，今年我們將調整升級具體的營運策略。首先是我們更關注法律體系和監管穩定性等因素。它有違約的風險。這意味著我們將改變我們採礦業務的主要區域。儘管這可能會有點昂貴，或者我們需要稍長的部署時間。此外，我們還將擴大我們的規模。我們將從現金流導向轉向成長導向。我們過去做的就是，當我們有庫存的時候，我們就放庫存去做自挖。這是為了使庫存為公司產生現金流。

From now on, our target is to grow the top line business, not only cash flow generating. So that means we will use the best models to do that.

從現在開始，我們的目標是發展營收，而不僅僅是產生現金流。這意味著我們將使用最好的模型來做到這一點。

When using the better machines, it will prolong your investment span and reducing the operational risks such as the mining revenue cannot reach the power cost or something. So, it will longer the lifetime of your entire investment.

當使用更好的機器時，會延長你的投資期限，並降低挖礦收入無法達到電力成本之類的營運風險。因此，它將延長您整個投資的壽命。

Yes. And also, in the past, we used our coverage with hosting companies. We have no self-host facilities and we are not doing any site construction or something. But today, after over three years, we've learned that the value of stable facilities for power restart is very important for this industry. So, we will go deeper to participate in these mining operations, and exploring more collaborations.

是的。而且，在過去，我們使用了託管公司的覆蓋範圍。我們沒有自架設施，我們也不做任何網站建設什麼的。但三年多後的今天，我們了解到穩定的電力重啟設施的價值對這個產業來說非常重要。所以，我們會更深入參與這些挖礦業務，並探索更多的合作。

Yes, Kevin, one thing to mention here is the whole deployed hash rate is 5 exahash and the energized hash rate now is about 2.8 exahash. So, we still have 2.1 exahash to be implemented in Q1 and Q2. We are waiting for the progress update from our partners. So, it's not yet happening and we believe that will happen in Q1 or Q2. So just to make sure you understand the same as us.

是的，Kevin，這裡要提到的一件事是，整個部署的哈希率是 5 exahash，現在的通電哈希率約為 2.8 exahash。因此，我們仍然有 2.1 exahash 要在第一季和第二季實施。我們正在等待合作夥伴的最新進展。所以，這還沒有發生，我們相信這將在第一季或第二季發生。所以只是為了確保您和我們理解相同。

Okay. NG, James, thank you for the detail. NG, you mentioned your next generation machine. I'm going to assume it's going to be the A15. And I'm wondering if some of the costs you incurred include the full tape-out on that chip? And if you could give us an idea on the process geometry? Are we down to maybe three nanometers now? And when do you think that machine may be available for sale?

好的。NG，詹姆斯，謝謝你的詳細資料。NG，你提到了你的下一代機器。我猜這將是A15。我想知道您所產生的一些成本是否包括該晶片的全部流片成本？您能否給我們一些關於工藝幾何的想法？我們現在可能已經降到三奈米了嗎？您認為該機器什麼時候可以出售？

Okay. Usually we will public that details when we have finished the testing, but I think for the machines, we just deployed machines and we are not selling the chips to our customers. So, it's very important to know that the performance of mining machines, which is not determined by the process node of the chips or the manufacture for the wafers. So, from a long time, to avoid the confusion among our customers, we do not emphasize the specific foundry partners. And yes, there are many other reasons, but this is the main reason, let's start focusing on the actual performance metrics of the product.

好的。通常我們會在完成測試後公開這些細節，但我認為對於機器來說，我們只是部署機器，我們不會向客戶出售晶片。所以，了解礦機的性能非常重要，它不是由晶片的製程節點或晶圓的製造決定的。所以，長期以來，為了避免客戶混淆，我們並不強調具體的代工夥伴。是的，還有很多其他原因，但這是主要原因，讓我們開始關注產品的實際性能指標。

Our plan is to have about 20% performance improvement every regeneration. Less than 20% is not very valuable to upgrade a new generation. So, 20% is our target. And also, in the past, I think there are 9 to 12 months between each generation, and today we are working very hard during the period. So that means our target is to have at least one generation this year or, if everything is going 100% right, we will maybe have another generation. It may be Q1 next year or something. And for every generation we will have a 20% improvement. So, I think another target is for the financial side, we want the new generation to have some revenues this year. This is our target and that means we need to put next-generation in mass production this year

我們的計劃是每次再生時性能提高約 20%。低於20%對於升級新一代來說沒有太大價值。所以，20%是我們的目標。而且，在過去，我認為每一代之間有9到12個月的時間，而今天我們在這段時間工作得非常努力。因此，這意味著我們的目標是今年至少擁有一代，或者，如果一切順利，我們可能會擁有另一個世代。可能是明年第一季或什麼的。每一代我們都會有 20% 的進步。所以，我認為另一個目標是財務面，我們希望新一代今年能有一些收入。這是我們的目標，這意味著我們需要在今年將下一代產品投入量產

Yes. this is what I can say now. There's no very accurate numbers and we will have the dead numbers as soon as possible. Yes, we will public it.

是的。這就是我現在可以說的。目前還沒有非常準確的數字，我們將盡快獲得死亡人數。是的，我們將公開它。

Thank you, NG, that that detail was incredibly helpful and I really appreciate it. A last question for me, probably best for James. Inventory was down about 34% Q to Q. I understand that the A13 is now completely out of inventory. I was wondering if maybe you could give us a little insight on the inventory that you are carrying. Maybe how much is, you know, the air-cooled versus liquid-cooled and what your expectations are? And for that mix in the A14 series?

謝謝你，NG，這個細節非常有幫助，我真的很感激。最後一個問題對我來說，可能對詹姆斯來說最好。庫存比上一季下降了約 34%。我想知道您是否可以向我們介紹一下您所持有的庫存。也許，您知道，風冷與液冷的價格是多少？那麼 A14 系列中的混合呢？

Yes, Kevin, I think we are in the transition between A13 series and A14 series. I cannot say we have already completed the inventory clearance of A13, but luckily, A13 can also generate profit for miners after halving in our calculation. So, it looks like the demand is still there and we can still get a lot of A13 for sales orders even in Q1. So, looks like A13 inventory clearance will last in quarter one and quarter two. So, A13 has not been completely cleared yet and A14, I think we will ship a small batch in Q1 like in March, and mass production and mass shipments will happen in quarter two. So, we have already gotten a lot of contract sales orders, Like NG mentioned, 7.5 million terahash., This number is still being updated every day. Looks like customers are still placing orders to get to A14. So, it looks like the transition is better than what I have planned in November. At that time, I was thinking A13 Series will be very difficult to clear, but it looks like the progress is better than what I had expected, the operating cash flow turns out to be positive in Q4, and you know that's looking very good to me

是的，Kevin，我認為我們正處於 A13 系列和 A14 系列之間的過渡期。我不能說我們已經完成了A13的清庫存，但幸運的是，在我們的計算中，A13減半後也能為礦工帶來利潤。所以，看起來需求仍然存在，即使在第一季我們仍然可以獲得大量的 A13 銷售訂單。因此，看起來 A13 庫存清理將持續到第一季和第二季。所以，A13還沒有完全清空，A14，我想我們會像3月份一樣在第一季小批量出貨，第二季會進行量產和批量出貨。所以，我們已經拿到了很多合約銷售訂單，就像NG提到的，750萬太哈。看來顧客仍在下訂單前往 A14。所以，看起來過渡比我在 11 月計劃的要好。當時我就覺得A13系列會很難出清，但是看起來進展比我預想的要好，第四季度營運現金流竟然是正數，你知道這看起來非常好。

Thank you very much. yes, you helped out. I understand that you might not want to be extremely granular regarding I think it's about $142 million of inventory and what might be A13 and what A14, but I appreciate your insights or I think it was good to see the improvement in the fourth quarter. Congratulations on the hard work you gentlemen and your entire team.

非常感謝。是的，你幫忙了。我知道您可能不想非常詳細地了解我認為大約有 1.42 億美元的庫存以及 A13 和 A14 可能是什麼，但我很欣賞您的見解，或者我認為很高興看到第四季度的改善。恭喜先生們和整個團隊的辛勤工作。

Thank you.

謝謝。

Michael Legg - The Benchmark Company

邁克爾萊格 - 基準公司

Thanks. Wanted to talk a little bit about the share count. We ended the quarter with $222 million ADS out there. We closed the second tranche for another $49.7 million. Can we get some guidance on the shares outstanding that you expect for the first quarter and second quarter long revenues, it looks like with the ATM and the tranches, it's moving up pretty high. Can you talk about that?

謝謝。想談談股份數量。本季結束時，我們的美國存託憑證為 2.22 億美元。我們又完成了第二筆 4,970 萬美元的融資。我們能否獲得一些關於您預計第一季和第二季長期收入的已發行股票的指導，看起來 ATM 和分批的股價上漲得相當高。你能談談嗎？

Yes. So, Michael, I think at the end of last November, we announced we have signed a preferred stock sales agreement with a US institutional investor for up to USD125 million as of today, we have successfully completed the settlements of $75 million of the financing. Due to the terms of preferred stock financing agreements, the closing of the third tranche of preferred shares would be contingent upon mutual agreement between both parties. And that means that currently we are not going to immediately execute the third tranche. That means $75 million is the total what we have completed and we are not going to immediately go up to another tranche.

是的。所以，邁克爾，我想去年11月底，我們宣布與一家美國機構投資者簽署了高達1.25億美元的優先股銷售協議，截至今天，我們已經成功完成了7500萬美元的融資結算。根據優先股融資協議的條款，第三批優先股的交割將取決於雙方的共同協議。這意味著目前我們不會立即執行第三階段。這意味著我們已完成的總金額為 7500 萬美元，我們不會立即進行另一筆付款。

And, it's a little bit complicated to say how big the common shares increased, but you can have already seen we have increased the common shares and that's already the common shares converted. I don't think we will increase this number in quarter one, but let's see how it goes. And the second tranche, we have already delivered to the investor, let's see how they are going to convert the preferred shares to common shares. But currently not yet updated to us.

而且，說普通股增加了多少有點複雜，但你已經可以看到我們增加了普通股，這已經是轉換的普通股。我認為我們不會在第一季增加這個數字，但讓我們看看情況如何。第二部分，我們已經交付給投資者，讓我們看看他們將如何將優先股轉換為普通股。但目前還沒有更新給我們。

Okay. And then the $40 million convert liability, long-term liability, can you just explain the terms of that and how that works?

好的。然後是 4000 萬美元的轉換責任，長期責任，你能解釋一下它的條款以及它是如何運作的嗎？

Yeah. From accounting rules, we recognize the fair value of both the first and second tranches of preferred stock based on the valuation from an independent third party through our auditor. They found independent third party to evaluate the preferred stocks. Then we also recognize the pre-delivery shares associated with the preferred stock as an ADS lending equity on a fair value basis.

是的。根據會計準則，我們根據獨立第三方透過審計師的估價確認第一批和第二批優先股的公允價值。他們找到了獨立的第三方來評估優先股。然後，我們也將與優先股相關的預交付股票以公允價值確認為 ADS 借貸股權。

So the accounting treatment of these three segments of preferred share financing, you know, had a certain impact to our bottom line of quarter four 2023, is about $70 million, including the first tranche, and the second tranche, and also the lending preferred shares. So lending equity. So, putting all this together is about $70 million impact on our P&L.

所以這三個優先股融資部分的會計處理，你知道，對我們2023年第四季的淨利潤有一定的影響，大約是7000萬美元，包括第一批和第二批，還有借出的優先股。所以藉貸股權。因此，所有這些加起來對我們的損益影響約為 7000 萬美元。

Okay, great. And do you know the average price you did $61.2 million of your ATM, what was the average price sold?

好的，太好了。您是否知道您的 ATM 機平均售價為 6,120 萬美元，平均售價是多少？

We haven't known the average price in the preferred shares, but we do know that ATM average price we have already put there is $1.99. If I my memory is correct.

我們不知道優先股的平均價格，但我們知道我們已經設定的 ATM 平均價格是 1.99 美元。如果我的記憶是正確的話。

And I have one thing to add on this. For me, and for the comments by company side, after the USD50 million preferred shares settled in January, for at least next three months, we have enough funds for our operation and expansion. Yes, this is what I want to say, yes.

我還想補充一件事。對我來說，對於公司方面的評價來說，一月份5000萬美元優先股結算之後，至少未來三個月，我們有足夠的資金來運作和擴張。是的，這就是我想說的，是的。

Okay. Thank you very much.

好的。非常感謝。

Thank you. Michael,

謝謝。邁克爾，

Thank you, as there are no further questions now I'd like to turn the call back over to the company for any closing remarks.

謝謝，現在沒有其他問題了，我想將電話轉回公司進行結束語。

Thank you once again for joining us today. If you have any further questions, please feel free to reach us through the contact information provided on our website.

再次感謝您今天加入我們。如果您還有任何疑問，請隨時透過我們網站上提供的聯絡資訊與我們聯絡。

Thank you. That concludes the call today. Thank you, everyone, for attending. You may now disconnect.

謝謝。今天的電話會議到此結束。謝謝大家的出席。您現在可以斷開連線。