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Blockspace: AI & Bitcoin
SPCX Falls Below IPO Price, WULF Co-Founder Interview, Nebius Opens AI Stack to 3rd Party Partners
01:06:11
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What's up y'? All?
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Welcome back to Blockspace live, presented by CleanSpark. Coming at y' all fresh on this Wednesday, a new starting time for today's show. Specifically to accommodate our guest interview with Terra Wolf co founder Nazaire Khan. We'll be touching on a lot of topics. The New York Data center and moratorium their sale of their Abernathy JV in Texas and also updates on their anthropic site in Hawesville, Kentucky. But for news, Charlie, SpaceX is coming down from the stars, so to speak. It has fallen below its IPO price. I believe it's just at the IPO price at the time of recording, but it dipped to about $133 per share over the last day. So we'll be unpacking what investors in the market is currently saying about SpaceX since it has fallen down from its flying high position post ipo. After that, we'll be covering Nebius rolling out a new offering for data center partners where they will provide their NEBIA software stack sales pipeline and supply chain to partners who decide to run this stack in their wholly owned data center, a departure from their NEO Cloud model, but one in which might give them some more market share as capital constraints start to squeeze around the data center industry. And we will finish up with a news Flash segment with some headlines covering Equinix, Terra Wolf's buy rating and also Kanan receiving a 180 day additional extension for their NASDAQ delisting.
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So Blockspace goes live weekdays at 1pm Eastern with the exception of today because we have a special guest and we feature quick hits on data centers, AI, emerging tech and markets. If you like what you hear, you'll love the newsletter and newsletter.blockspace media.com and you can read all of our content. If you didn't know, it's not just a live stream. We publish a lot of content. You can find it on Yahoo Finance. All that content and all Blockspace resources are on our website, Blockspace media. That's not blockspace.com that's blockspace media Media. And this live stream turns into a podcast shortly after we wrap up anywhere podcasts are found. This show is brought to you by Clean Spark NASDAQ listed ticker clsk. More on Clean Spark later on in the show. So Colin Elon is teetering with his flagship stock, his flagship IPO SpaceX. I'm going to pull up the chart here and it a picture tells, you know has 5,000, 10,000 words. The stock is down even flat bang even with its IPO listing price of 135. Now remember when they went public, it actually hit the markets at around 150something. IPO investors got in at this price here, 135. That is when they passed the hat around and they're about to go that you can buy shares before it hits the market. However, this morning right at Open SpaceX was down from about 137 down to 132, which would put it below its IPO price. So for a brief moment there, there was absolutely nobody in profit. So right now we only have those who bought at the IPO price of 135 who are flat right now. So I actually, this, this still means that SpaceX is one of the largest companies in the world. It's, let me see, it's down to $1.789 trillion in market cap. And what we have on the horizon is something we've been talking about on the show for a while, which is the share unlocks. I'm going to toss it to you to comment a bit more before we go into the actual share unlock structure.
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Yeah, I guess my first take is Elon Musk is no longer a trillionaire. So everyone can put down the pitchforks and we can put down the knives and the forks for eating the rich on this one. No jokes aside, this seemed inevitable
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how
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rich the stock was when it was, when it was IPO'd. And if you look at some of the, if you look at, well, there's no earnings ratio because they actually had negative earnings in their most recent, most recent update. But if you look at the price to sales ratio and a number of other financial metrics, it just has a sky high valuation even now, one would argue, and I do think to your point, Charlie, the fear of dilution and further share unlocks is really what seems to be driving this along with debt and cash burn concerns. Right now SpaceX only has about 4% float. It's squarely between 4 and 5%. And a number of shares from insiders will start unlocking in August following their Q2 financials. So to me this reads a little bit like the market trying to get ahead of that. And there are also again some concerns on just how much they're going to have to spend on Capex to realize all of these pie in the sky tech futuristic aspirations that they have in terms of putting orbital data centers in space, all of those things.
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Yeah, if you're just paying attention to their social media and their public announcements about what they do, they did put out a really cool, actual more specific model of their AI satellite that they have planned to put into orbit into Constellation, which is really cool and they made some cool videos. But the reality on the ground is. You like how I made that connection. The reality on the ground is that the stock is facing considerable unlock headwinds. And I'm going to pull up the numbers here. So this is the chart. We've shown this chart a few times here already. This is on Tokenomics AI and this shows the current circulating shares of SpaceX shares. Currently 4.2 shares of all outstanding shares are in circulation. This changes on August 17th and 18th when a total of 11 and then shortly thereafter 13.6% of all shares will be unlocked. And those are mainly institutional and employee shares. And then we have kind of a waterfall for the over the course of the fall until November and then December when the a significant amount of institutional and then again more institutional and employee shares unlock, bringing the total float in late November to 33% of shares circulating and then 58% of shares circulating a year after the IPO, which would be which earlier this June. So June 2027, Elon's shares get unlocked.
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The final boss unlock, the final boss,
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42% of the company. Very impressive. We've identified this in that we see this in crypto tokens a lot. The VCS get a bunch and they have to hold them locked for a long time. And then the actual circulating shares in the market is comparatively low to the entire actual supply. So you see this phenomenon here in this stock. There's another kind of interesting detail, Colin, that I think we've not talked about, which is there is a condition. The SpaceX's staggered ship share unlock actually included a performance based bonus. So and it was of an extra 10% of eligible locked shares could have unlocked early only if the stock closed at or above $175 for at least 5 of the 10 consecutive trading days leading into the Q2 earnings release date. Now, I think the Q2 earnings are for early August. My, my screen says August 6th. So it's basically right in the smack dab of most companies Q2 earnings. So if the stock goes up again, in fact there's almost like savvy investors who are watching the unlock as the kind of instrument to be cautious of. They would not want the stock to go to 175 and hang there for five of the 10 consecutive days leading up to the Q2 earnings. So where does that leave us? I'm going to put my little investor hat on and say, I really want to own Space X, I really, really want to own Space X. Five years from now, do I want to own it? While 95.8% of all the shares of SpaceX have not hit the market yet, while the company is valued at, you know, near three figures times earnings, do I want that? I don't think so. So this really does not pass the gut check as far as what I would consider to be a good value buy.
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Yeah. And I think that's the cleanest way to put it, and it's what the market's wrestling with right now. SpaceX was interesting enough after its IPO to trade it because there was clearly a lot of demand and it ended up skyrocketing above $200 following its public offering. But that momentum has completely evaporated in the current market and with where investors heads are at with regards to how much the stock is valued at. And the data is on their side with this. So some bears have pointed to the fact that SpaceX will need something like roughly $84 billion a year in fresh capital for CapEx and other operating costs, which seems pretty insane, but considering how much money they've been raising with that $25 billion bond they issued, which also is from the most recent update that we've had on it. It was Underwater as of July 2. Most of those bonds took a haircut. Now, there's some kind of. There are questions as to whether or not that is specifically speaking to SpaceX's credit, or if it's speaking to what the bond market in general is doing with how Treasuries have been ripping. And investors are asking for increasingly larger percentage, a larger increase to interest rates in order to stay at pace of inflation. But they're also just. There's the element that IPOs just revert to a more sane mean after they are launched. A Truest wealth study of 30 major tech IPOs over 15 years found that they averaged a 55% peak decline in their first year. And six of the 10 biggest 2026 IPOs are trading below their first day close. So we've seen this with Coinbase, we saw this with Facebook, a number of IPOs, they always end up having these spectacular debuts. Core weave is the same way. And then they end up reversing because there's too much enthusiasm, it's too frothy. So I think time is Definitely not on SpaceX's side with regards to the immediate future for its prospects for the stock price being lifted. And I think a lot of People like you, Charlie, are looking at this, including myself saying this is definitely a stock that I would love to own in the future, but I'm not going to buy it at 100x revenue. It's not quite at the 100x right now, I don't think, but when it peaked it was like at 111 or 112x revenue. That's, that's crazy, you know that and that, that's not even considering earnings because like I said, we couldn't get an earnings ratio for them because their earnings were negative in their most recent SEC filing. So I believe that was for Q1 and I don't know if 2025 was any better for the full year. But all that being said, a lot of headwinds and SpaceX is really selling a vision of the future and that's great. That's part of the reason why the stock is so high. But the actual benefits or gains from that future are probably further off than not. A lot of Elon's timelines are pretty aggressive in terms of when he thinks that he can get technology up and running. And for most investors it's not a question of if, it's when. And the more far flung aspirations for orbital data centers, et cetera, will likely take more time than even the biggest of bulls with SpaceX would be willing to admit.
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So yeah, I mean you say that but, and, but now Tesla is almost like the Kleenex of electric car and Elon is mass producing them at a scale that a lot of people claimed a lot of very legitimate, a considerable amount of like analysts and engineering and investors said was not, not possible. And they're here, they're doing it. So you know, measure that against his other really grandiose claims. I will say when it comes to like engineering things, Elon is able to build, you know, futuristic hardware and solve engineering problems that people thought were distant future, but at what cost?
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Yeah, those products speak for themselves. I think it's just a question of timeline. Right? Like is that vision of the future worth a nearly as you said, three figure multiple on the revenues right now? Probably not. I think that if you're looking at stocks being you're basically buying future cash flow, that's not going to come for a while still, who knows how quick. But I wouldn't be surprised if these orbital data centers and some of the more fancy tech that being marketed for SpaceX doesn't take longer than not. But like you said, Elon's companies execute. So it seems like for most of this a matter of time. And as we've covered before, AI will plug the gap for revenue in the time being because XAI really is emerging as one of the premier compute providers. If GROK isn't the best model, although that's also seeming to change with some of the the new GROK model, it's
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pretty, it's pretty sharp. It's not frontier, but it's getting there. I mean Grok 5, GPT 6 and Fable 2 could be right around the corner. It's a very good time to be a consumer as long as you're not the one holding SpaceX stock from the peak. I think we should probably get onto the next one. We're going to go back to the clouds, the NEO clouds, specifically Nibias after a word from our sponsor CleanSpark.
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We are CleanSpark, America's Bitcoin miner, a publicly traded company with the largest operating hash rate powered entirely by self operated infrastructure across four states. This is our proof of work and we are setting the standard for what's next. Learn more about the intersection of energy and bitcoin@cleanspark.com if Bitcoin's actually the best
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money and it's the thing that people
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should accumulate and it's the best risk
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adjusted asset, I'd lose zero sleep about whether or not that's gonna happen. I just asked the question of when is Liberty Matrix map that you're running on large pieces of data.
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The Bitcoin miners can absorb that energy
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and in many ways this feels like
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a second bite at the apple to build a new Internet. All right Charlie, let's see what Nibius is up to. Interesting press release that hit today covered it here on Block Space. The headline reads nebius Opens AI Cloud Stack to Partner Owned Data Centers. Reading directly from the article, Nibius announced Wednesday that infrastructure partners can deploy its full stack AI cloud platform inside their own data centers, expanding the capacity available to Nebius customers. Nebius described the structure as Asset Light partners finance and own the facilities and hardware, allowing Nebius to add compute capacity without funding the full infrastructure costs. Nibia said it has signed initial agreements under this model. It did not identify the partners or disclose their locations, plan capacity, financial terms or expected revenue. That last part I think will be really important for contextualizing just exactly what the deal structure looks like for this. But the tldr, building on what I just read essentially NVS is expanding their AI platform, their software platform and their entire suite to have optionality on compute that they don't actually own. So Nebius currently runs Neo clouds, of which 75% are fully owned data centers. They own all the brick and mortar and run the data centers themselves. And then 25% roughly are co located at other data centers, other powered shells, which is a departure from Core Weave, which I think most people position as Nibius's clearest competitor. Where Core Weave is basically all co located. They've decided to go asset light in the sense that they only want to own the GPUs and the software stack and they don't want to have to deal with the data centers themselves. NEBS is doing them one better here and saying we don't even need to own the GPUs, we have the software stack. If you have GPUs and you are having trouble selling that capacity, we will come in and we will help you with that by giving you access to our platform. And this does a few things for them that make this, I think a big selling point to some folks and I'll get some investor reactions up here in a second. But Nebius has the design for the hardware architecture and they also have access to supply chain OEMs and Nvidia relationships software. They have the software services stack and sales pipelines to actually get this compute to an end customer. And then all of the other heavy lifting, because Nibias has already done most of this in terms of building out its suite. The other heavy lifting in terms of financing these data centers, getting them on, off the ground, Worrying about the PPAs and electrical infrastructure, all of that is pushed onto the partners in this case. And I can't help but read this as something of a capital access workaround in some senses, Charlie, because NBS is basically saying you worry about the capital, you worry about the deployment, we'll bring the Software and the AI Suite so NEVs doesn't actually have to go out and seek new financing, whether it be from debt or equity, to build these data centers. And they still increase their footprint with at least access to Nevius cloud infrastructure.
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Right.
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I would imagine that they're not going to retain the lion's share of the revenue from these deals, but they are expanding the scope of their of of their platform's use. This will invite more GPUs to be running on Nubius's cloud infrastructure and it will continue to push end users of that compute and customers through the Nebius ecosystem, even if they don't own the infrastructure themselves.
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Yeah, it's almost like Nebius is entering like a franchise model or maybe like the McCloud model? Yeah, yes. Like a franchise cloud model or when intel did the intel inside sticker on the computers because it's almost like you're buying the quality of the design architecture and hosting itself and so you can feel more confident. So it's like partners of Nebius get the repute and they get to ride on the operational excellence coattails while Nibius can offload, can de risk some of their like fundraising and the money side because the whole neocloud sector is pulled back and is, you know, after a mini little deep seek moment after Meta announced, they're going and they're entering into the sector. Like what do you do? This, this does seem to, to me like provide a little optionality for Nebius. Cool, cool pivot, cool idea. I think this is. Yeah, yeah.
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The Meta news is lurking in the background here for sure. I think that's important to point out because now a lot of investors are asking, well, you're going to go up against one of the most heavily capitalized and successful companies in the world. They're going to basically replicate your model and be able to do it at scale, probably execute much more quickly. They will not have the same barriers to financing as some of the smaller players will. So it's kind of created this ripple effect throughout the Neo clouds of how valuable is this business model really? And also raising concerns as we've seen credit start to tighten some in some instances and the fact that some of These bonds, like SpaceX for instance, are actually trading below their initial pricing. Real questions are starting to persist about how much more capex can be poured into these builds or how much more are investors and banks willing to fund these things. So overall it seems like a lot of, I mean the market reacted favorably. This Nibius is up a few percentage points today. Now the wider market is rallying, so it's kind of hard to separate that from just general noise. But overall most investors seem to view it very favorably. Now, kind of take this with a grain of salt. Pretty sure this guy is pretty heavily long Nibias, but he says this is probably the biggest announcement and most important strategic decision in the company's history. This is investor Daniel Koss on X. It will take time until the market understands how huge this is. Let me try to explain how massive Nebius can Now add capacity 10x faster without any dilution or Capex or risk, with ultra high margins globally and while simultaneously making their offering better for customers. That to me generally seems to be the bull case. The only thing I'll kind of push back on is this idea that the ultra high margins angle and they can add capacity 10x faster. They are adding gpus to the overall fleet that is running under Nebius's ecosystem, but they don't actually own any of that capacity. So I think if for investors interested in Nebius, my first question would be, what are the actual deal terms for this? I imagine they'll be bespoke per each partner. But is there a revenue sharing agreement, is there a licensing agreement to use this infrastructure where they just pay Nibius a flat fee every year to have access to it? What is the actual accrual in terms of Nibius for how they're extracting revenue from this? And how much of the moat is about actually owning the software stack and the pipeline versus actually owning the computers themselves, which will generate much more revenue if Nebius were just owning the GPUs themselves and selling out that compute.
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Yeah, I mean, and yeah, and again, against the backdrop of this, as I was thinking through this, you could interpret this as Nebius is going comparatively asset light. In that they're going asset light, they're probably avoiding holding too much of the compute on their balance sheet. The depreciation of that compute, again subject of hot debate. So if they can offload that risk onto their counterparties, then that seems like a pretty great differentiated strategy to me. So on that note, we have our guest Nazar Khan in the audience. We'll get to him. But before we talk Terra Wolf, let's hear a word from our sponsor, Luxor. You are muted.
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Thank you, Charlie. This episode of Blockspace Live is brought to you by Luxor's Commander Bitcoin miner management software built for enterprise operations. Luxor's Commander gives you real time fleet monitoring, bulk remote commands across your fleet and intelligent miner, that's an automated profitability engine that runs every five minutes and tests your fleet's power settings against live energy and hash rate markets. ERCOT back tests show 10% improved profitability with intelligent mining versus binary mining. Commander Pro is a hundred dollars per megawatt or a 25 basis point pool fee adder. Roughly half the cost of competition and you can try it for free for 60 days. So if you'd like to learn more, go to Luxor tech forward slash Commander to get started. Alrighty, Charlie. Let's get the one and only nas. Not little NAS X is Aircon up here to talk about the latest with Terror Wolf. A lot to unpack today. Nazaire. Welcome to the show, my man.
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Thank you, thank you. NAS is all you need no, no extra initials or letters. I'm here.
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Well, Nas, appreciate you joining. Welcome back. Lot to unpack today. Obviously there's the anthropic deal. We also want to touch on Abernathy and Terror Wolf's decision to sell their stake in that. And of course we also have to talk about the data center moratorium in New York. So I think that's a good place to start. Can you just briefly address how this data center moratorium will impact Terra Wolf? I understand that in terms of Lake Mariner, Lake mariners in the clear, it's been cleared for a while, so it will not impact that site specifically. But I'm curious about how it might impact the Lake Hawkeye slash Lake Cayuga site. Your CEO Paul Prager tweeted yesterday that, quote, these decisions will not affect Cayuga Lake Hawkeye schedule. And I'm curious is that specifically because y' all expect the moratorium to lapse by the time that construction gets underway. How exactly will it cause any problems or not for that site?
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Sure. First, as you said, with all of the contracts we've signed to date with Core42 and FluidStack and Google, all of those buildings are fully permitted. They're in construction, they're in finance. And so there's no impact whatsoever on any of that capacity in terms of the expansion of Lake Mariner, which is an incremental 250megawatts as well as a Lake Hawkeye site. You know, we've always targeted kind of power delivery in the 29 time frame. And so given that timeline, you know, 12 month moratorium or whatever it ends up being, we don't think overall impacts the schedule for the delivery of data center capacity at that site. So Paul's tweet yesterday was really in line with just kind of how we've thought about the overall timeline for the sites as well. You know, taking a step back, I think it's important to just recognize the guidance that we've been given giving the market is that we're going to sign up 250 to 500 megawatts of critical IT load per year. We did that last year between the core 42 announcements and the Fluid stack and Google, we just signed, as you mentioned earlier, a 401 megawatt deal with Anthropic, which is again squarely in the middle of that range. We've got our site in Eastern Kentucky, the Muskie site, coming up. That's 500 megawatts of ground gross power that's available in the third quarter of 2028. In 29, we've got Morgantown, which is the site that we have in Maryland. We've got the expansion Lake Mariner, we got Cayuga. So we have a couple different ways to kind of get to that. You know, 250 to 500 megawatts in 29, and then 2030, we have another 500 at Muskie lined up. So with what we have in the portfolio today, that guidance that we've been giving you of 250 to 500, we feel extremely confident that we're going to be able to follow through and deliver upon. And that's why Paul, you know, tweeted yesterday and saying, hey, yes, there's a moratorium out there. Yes, you know, state's going to take a look at it, which we actually welcome. We actually think it's not a bad thing for people to take a step back and say, okay, hey, how are we going to actually meet the needs of this significant demand that is coming from data centers? What's the way to do that? We think we've been a model of how that should be done, whether it's transitioning old brownfield sites or how we've worked with union labor at our sites. And so again, something for us that we think will reflect well on the work we've done, but again, overall, it doesn't really impact the overall timing and delivery of the capacity for those sites.
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B
I appreciate that answer, and I think that this is something we have actually have an investment note that we'll be covering towards the end of the show from Rose and Blatt, saying that the market really overreacted to the moratorium. Considering what Terra Wolf already has in place and the timelines that you all discussed for the expansion at Mariner and at Lake Hawkeye, I want to turn to.
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But I do think just before we leave that subject, though. So I think the, the, the, the, the part of the overreaction I think is generally the market is trying to decipher who is going to have megawatts and when.
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Right.
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If you were just to add up everyone's stated megawatts, you know, you ask us and you ask for 40 other people, you add that all up, that's going to be a really big number. And I would bet a dollar that the actual number of data centers that come up will be some number less than that. And so everyone's trying to figure out how much less.
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Right.
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So I think everyone agree that it's going to be less than whatever everyone's saying it's how much less? Is it 5%? Is it 50, is it 95%? And so any kind of news that signals hey, there could be an impact on that. I think people kind of sell first and then kind of ask questions, questions later. And that's where I think for Terra Wolf, you know, what we pride ourselves on is given that we come from a power background, our understanding of when we're the megawatts and the pipelines that we're telling you we think are very credible and real. And so whether it's what we've done at Hville, right, we acquired a site earlier this year and within six months we were able to sign up Anthropic for a long term lease on it. Again that was all happened within six months. Right. That's a testament to the credibility and the proximity within. We say power is available to what that, what that really means. And so I think that's a broader question. I think that the market is generally grappling with is how to make heads or tails of all of these numbers that add up to hundreds of gigawatts of total potential data center supply and where is it really going to come from? And again from our perspective that scrutiny is actually good because I do think that again that number is going to be something less than what everyone says. And going back to the 250 to 500 megawatts of critical IT load per year that you know, I mentioned earlier, for us, you know that's really a north star in guiding how we manage or building the business and if we're able to properly implement and execute upon that, which again we have a very high degree of confidence that we will be able to you add that up over four years. I mean you're talking about, you know, two gigs of potential capacity. And so we've already, we're already, you know, 800 some odd megawatts, you know, towards that two gig number. And so we think, you know, we're well situated to be able to deliver on that overall target.
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B
Nas, quick question before I move on to my next, my next few because I've got a lot. Do you have a hard stop at 3:15 or can we keep you for a little.
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C
Yeah, you can get. Yeah, I'm good, I'm good.
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B
Okay, cool. Well I'll keep rolling on this then because I, I have kind of two more questions with regards to the moratorium. The first one I want to address is Paul Prager said that y' all plan to have on site generation at Cayuga. I'm Wondering if there are any worries about some more stringent regulation coming down the pipe. Because the New York State Legislature's bill for the moratorium had this pretty hard line provision where it said all on site generation must be renewable. Are you expecting that to come out of this executive order in the working group? Do you feel like that is maybe an unrealistic expectation that actually won't make it through in whatever the new regulations for data centers in New York will be following this moratorium, period? What's your sense of where the ball is rolling there?
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C
So I think one is that I'll answer more broadly than kind of get into specifics generally. Right. Part of the reason we're in this situation is the overall market constructs that existed to be able to decide where new power should be needed, when it should be needed and how it should come online really haven't worked as intended. Right. I mean there was a big wave of deregulation in the power markets in the late 80s and 90s and part of that was, is the market was going to be able to decipher when new power was needed, what type of power it was and where it was going to come. Fast forward to today. I think most people would agree that that didn't really work. Right. So I think data centers in some sense have become part of the catalyst for looking and saying, okay, hey, how should this all work? What is the right market construct? How should this work? What are the objectives that the market is solving for? And so within the executive or the prior bill that you'd mentioned, there was this comment that it all should be kind of renewable power and renewable power only. I think that is obviously a perspective and a view on, hey, this is how we think we should meet the, the needs for any incremental power that's coming. If you, if you rewind back a couple of years, Right. The State of New York had a Target that by 2050 they would be entirely reliant upon zero carbon generation as a source of power. And so when you have nuclear, that's kind of a baseline zero carbon renewable resource. When you have wind and solar, you know, these are intermittent resources that are non dispatchable. So again, that's one approach on hey, how are we going to solve this? Does that necessarily mean it's going to be the final answer? I don't think so.
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Right.
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I think there's probably a number of iterations that we have to go through to come to what that looks like. And I think Paul's comment really was that the need for Incremental power to kind of feed data centers is not just for data centers. If you look at the overall electrification of the grid as well, there are more and more things are being kind of run on electricity rather than combustible fuel. That. So there's another driver for kind of overall demand. And within that, I think Paul's making the point that, hey, if there is a way that these aggregated demand loads can also speak to some of the power that they're going to need, that may be a more efficient way. Right. So if you think about location, right. If you have the load there and the gen there, that may be a more efficient way. You don't have to build as much transmission to be able to move the power from one place to the next where it's being used. To the extent that it's a high demand site where there's, you know, quite a bit of power being used, it could actually be a resource back to the grid because it now has both generation it can put onto the grid, it has a load that could maybe move around and be able to match some of the changes in the need from the grid. And so I think in the long run, we do see that the ability to add incremental power generation paired with these loads could be a structure that's beneficial to the overall market and could be a part of the solution in addressing, hey, how is this grid supposed to work? And how should we kind of transition from where we are right now? Where most people agree is that we're not where we need to be to get to a place where we do want to be. And so I think, again, data centers in that sense can be a real catalyst for the investment that's been talked about for the grid for a number of years here and kind of be a pathway to find a solution that is kind of a better place than we are today.
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B
So to book in this nas, I'd like to unfortunately pull up a Truth Social post. I don't, I don't go on Truth Social very much, but, you know, it
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can only be one person.
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This is our fearless leader.
- [36:27]
B
Yeah, this is coming from President Trump and I'm not going to read the full diatribe here, but he says one of the biggest driving forces in the future for jobs are data centers. They are big, strong, bold, and you got to love that. And money machines for the state in which they are built. Governor Katie Kathy Hochul, for political reasons, has determined that all data centers are being built or to be built in New York State, terminated all Data centers being built or to be built in New York State, which is not actually what's happening. But he basically says New York has changed this policy immediately. They must not be allowed to cause us to lose data centers, AI and all the incredible new technology to China or other countries. I'm curious if this data center moratorium does change how Ter Wolf looks at New York for expansion opportunities in the future, will this lead?
- [37:14]
C
Yeah, well, while we're talking about kind of data points, right. I mean, Governor Hochul was also on a podcast earlier today talking about the moratorium and how, what she thinks about it, right. And I think she was pretty clear on that in saying that it wasn't really a ban, but more of a pause. And she wanted to give the various jurisdictions that these data centers are coming into the proper tools to work with those companies to be able to get those data centers online. And so if we take kind of her words at face value, I think, you know, the way she's thinking about it, right, is that this is kind of a, an approach to be able to kind of put some methodology and structure to this large scale demand that's coming and give those jurisdictions that may not have all of the tools, the proper tools to be able to engage and work with these various companies. And so that's again, on the face of it, not a bad place, right? If you think about it, this is massive investments coming into these locales. We're spending close to $4 billion at our site in Lake Mariner. And so how that works, how that impacts property tax base, how it works for local employment, how we're working with the unions, I mean, all of those are real and valid questions that we should be dealing with. And we've had a pretty open and transparent policy of engaging with all of the various local stakeholders and telling, telling them what we're up to, how we're going about it, and you know, what I like to tell folks is that, you know, we can't, the expectation shouldn't be that you're always going to agree on 100 of the things. Like I can't agree with 100 of things with my wife, right? So there's no way that I'm going to agree with 100 things with anybody if I can't do it with my wife. And again, that doesn't mean that that's a bad thing. That just means that, you know, there are going to be differences of opinions. And so it's not that we need to agree on 100, it needs to be, be that There is a proper level of transparency of what's happening, what we're trying to get done, what the concerns are and how we deal with it. And so I think, again, if the intent of Governor Hochul's moratorium really is just to kind of provide that playing field, I think, you know, it could be helpful. And it could be particularly helpful for folks like us who've already been doing that and have been engaging in that. And we think, you know, we have a solution that various, you know, jurisdictions will like. And so we think, you know, if you go up to Lake Mariner and Barker county, that, you know, there'll be a number of folks there that will tell you they've enjoyed kind of the work that we've done. And I've been grateful for kind of the, what we have brought to that part of the state. So. So, again, long way of saying, you know, if that's the approach, you know, we think, again, it could be beneficial, and we think in the long run it will further kind of highlight the value of what we do and the sites that we have. And, you know, we're again, always more than open to have a discussion with folks and walk them through what it is we're doing and how we're going about it.
- [40:04]
A
I only, I only got one question I'm going to interject here as we switch gears. You guys got the Anthropic deal. That's pretty big. Cloud's my preferred vibe coding platform. That's like my window into it. How did you win the bid for this? I, I, you know, what's, what's the secret here? They're a pretty premier company to have on the other end of the deal.
- [40:28]
C
Yeah.
- [40:28]
B
Especially considering the site, like y' all said, you announced it, and within six months you had Anthropic signed. So seems like breakneck pace.
- [40:36]
C
Yeah, the whole industry is at breakneck pace.
- [40:38]
A
Right.
- [40:38]
C
And so even before we had signed the agreement to purchase that, that site, you know, we were already in discussions with a number of different counterparties around capacity there. I think, you know, what we have found in the Anthropic team is a very entrepreneurial group that's looking to establish, you know, one of the premier companies in the world. And so aligning ourselves with a partner and customer like that is extremely compelling and exciting. And if you look at what we've been able to do with them. Right. I mean, we've been working with the Anthropic team, you know, going back to last summer, you know, the end user for capacity at the site in Lake Mariner is Anthropic as well. You know, we have a lease agreement, fluid stack, who kind of then subleases that capacity to Anthropic. And so we've gotten, we've had the pleasure and the good fortune of working closely with the Anthropic team for over a year now in understanding, you know, what their needs are, where they're looking to grow and also just kind of how they work. And so fortunately, you know, we think, you know, we found a good partner with them. And so when we had the hospital site, you know, they were one of the, you know, the first, you know, calls that we had made and saying, hey, you know, we've got the site coming and this would be a good way to expand. And what's interesting with the Anthropic team, right, is is that as they look to kind of build a business, you know, where Anthropic was a year ago was different where they are today and likely will be very different from where they're going to be a year from today. And so we're working with them on kind of what that trajectory could look like of where they're going to be, not just where they are. And so again, that was the case when we did something with them a year ago that that's the case, you know, kind of within this lease as well. And likely, you know, what we do, you know, hopefully what we do with them, you know, over the course of the next year or two will also kind of have that constant kind of forward looking view of, you know, where, where the company is going and what does that need, what needs they have and how can we kind of support that. And so what's interesting, you know, within this deal that we signed with Anthropic is we did not have a direct investment grade counterparty at the time that we signed the lease. So we got a number of questions from folks saying, hey, it says a investment grade karna party will come. And so one view right within Anthropic is that likely at some point here in the near future, whether that's measured in months or a year or two, Anthropic may or likely will be investment grade themselves. Right? Again, if you just kind of look at their growth in ARR, where they've been over the last, just even over the past year, where they're looking to go, they're likely to go public here, they will likely go public at a valuation that's over a trillion dollars. There's not that many companies in the world that have that kind of evaluation. And so we were willing to kind of work with them on where they're going rather than kind of where they sit exactly today. And so it's that kind of entrepreneurial view that we bring to the table that we think we bring to the table. And likewise, you know, we found, you know, wholesale, you know, kind of wholeheartedly in the Anthropic team as well. So it's been a wonderful relationship and we're, you know, fortunate that they were willing to kind of work with us on that as well.
- [43:48]
B
So, Nas, on that note, and you kind of touched on it here, but if you could just underscore the point. So in the press release where y' all say that the lease is backed by investment grade credit, so can you just. Whose credit is that? Exactly?
- [44:03]
C
So there's. Yeah. So the two paths are that anthropic themselves, you know, over time, becomes investment grade. And again, I would say that will likely happen. The timing of that, you know, is, you know, kind of TBD or, you know, whoever the hardware they're you. They're they're using, you know, they could kind of step in, and whether they step in for the full 20 years or some period that's shorter than that, depending upon what anthropic looks like, could not be another path. And so we're actively working with Anthropic on and doing that. And as I said, we're looking at where they're going rather than kind of, you know, where they sit today or where they were yesterday. And so that's the view that we took again early on, folks said, hey, you know, that's a little bit different than we've done before. And our response was, is what we did a year ago is what we thought the market needed and where the market was going kind of, you know, for the year ahead. If you look back, you know, we were the first to do that structure. Subsequent to that, we had a number of our peers, you know, follow up on that exact same structure. And now, you know, we've kind of taken a look and said, hey, we don't necessarily need to replicate exactly that. Do we need a highly rated credit counterparty underlying this lease? Absolutely. But there's not kind of, you know, one specific way that that may come about that could kind of come about with either of these two paths.
- [45:23]
B
So on that kind of extending this thread further, Nas, and I know you're not Terror Wolf CFO Patrick Fleury, so I'm sorry for throwing this one to you and you can definitely docket if you want, but given that there is potentially the option to have investment grade credit backing this project in the near term, is that some of the rationale as to why Terra Wolf decided to as Patrick Fleury leverage loans for part of the financing for this is that stopgap.
- [45:56]
A
You dropped out briefly. Could you restate that?
- [45:58]
C
Yeah.
- [45:59]
B
My question is looking at the potential for future investment grade credit for this site, is that part of the rationale behind what Patrick Fleury said recently on an interview that you are looking at leveraged loans in the interim to secure capital for this site? Can we view that as kind of a stopgap until you get to something like that? I'm just curious why going for something like a mix of leveraged loans and secured notes rather than just notes outright.
- [46:27]
C
So again, Patrick is the cfo, and Patrick is the best CFO kind of in the space. And so I will try to do my part to address that. And again, I will probably not capture everything that Patrick would say, but. But a couple things here. So. So one is that we are going to go after the capital markets that provide the most efficient source of financing. When we did a went to the high yield bond market last year, we were the first company to kind of go into that market to raise debt to, for construction, for a data center.
- [47:01]
A
Right.
- [47:01]
C
And so Patrick, and you know, we work very closely with the team at Morgan Stanley, spent a tremendous amount of time thinking through, hey, where is the most efficient market to be able to raise this debt, get us into the market, get great pricing and allow us to really run hard at buildings, facility. And so that was not a foregone conclusion before we started that process. Right. The view that Patrick took, it was a testament again to his ability to understand where the capital is coming from, what the capital is looking for and what we can kind of feed into that. So going forward, we're always going to be thinking about different markets to be able to bring that capital in. And so whether that's leveraged loan market, project finance market, high yield market, it could be a mix or any of the above depending upon where the market is and what we need. And so again, that's a testament to Patrick and his experience and expertise in being able to understand those markets and being able to bring us, you know, bring terrible into the proper market to do that. So I think Patrick's comment on that was more around just, hey, there are multiple ways that we can raise this capital and we're always going to look at all of them and ensure that we're getting kind of the best execution for the company with respect to kind of when we actually go to the market to raise that debt. Again, whether it's a leverage loan, whether it's a high yield, whether it's a project finance, whether or anything, any other market that may be out there, we will, at that point in time have a clear view on who the credit counterparties are, what the ratings are, and they will likely be investment grade or better. And we will kind of, you know, finance it on the, on the back of that. And so there is not an expectation that we're going to have some sort of interim financing that we know we have in place for, you know, some short period of time that's then taken out at some subsequent time. I think when we do go to the market, we'll have a total package. That total package may have some on ramps and off ramps for different investment grade counterparties. That could be the case. But we will have kind of a full package with investment grade counterparties at the time that we go into the markets because ultimately, to be able to get the best cost of capital for the construction, we're going to need kind of that clarity and that certainty. And so again, if I misstate anything, Patrick will likely text me here within the next couple of minutes. But I'll let you can just blame me.
- [49:12]
B
You know, I put you on the hot seat with that one. I think you, you channeled your inner flurry pretty well with that, though. Nas, to wrap up here, just one or two more questions and I want to turn our attention to the Abernathy JV sale. What's the rationale behind this? Is this basically saying we need to free up resources for our real winning sites? Right now I'm curious as to why Terra Wolf decided to step away from that JV in Texas.
- [49:37]
C
Sure. When we first signed that jv, you know, we have a great relationship with Fluidstack. They've been great partners with us. We looked at that as a potential channel for further growth. Right at the time we signed that deal, we had signed up Fluidstack as a customer at the Lake Mariner site. Fluidstack's been doing a number of things. They've continued to build their platform. And so we looked at it as a potential channel for growth and kind of entering into these JVs, whether it was a food stack or potentially with other counterparties. There's another way for us to grow the platform as we got into it. You know, there's a lot that goes into putting these projects together. And so for that site in particular, you know, we were at 84 megawatts of net critical IT capacity. And so it's one of those things where whether you're doing 84 megawatts or you're doing 484 megawatts, the time, you know, that's required around those projects isn't that much different. And so it was really a and a look and saying, hey, where is our time kind of best spent and where are our resources kind of best allocated? And so kind of dedicating both the time and the resources to sites that we fully own, that we own 100% of. Right? So all the effort that we're putting in, we're getting 100% of that benefit on the back end. And sites where we can kind of continue to grow and build a platform. Again, Muskie, you know, we've got a gigawatt there where, you know, we've got expansion at Lake Mariner. So sites that we wholly own and sites that we can continue to grow and expand are where we should be spending both our time, which is kind of, you know, some of the most valuable things we have, as well as the capital and the resources that we have. And so that was really the decision there. And so again, flutestack remains a wonderful partner. We work very closely with them up at the Lake Mariner site. But the view was, is, hey, let's kind of exit the jv, let flutestack run with that and kind of reallocate our resources, you know, to wholly owned sites where we can kind of continue to build and grow.
- [51:32]
B
All right, nas, last question. This one actually comes from the audience and sorry, the investors, the wolf investors aren't going to be, aren't going to let y' all rest on your laurels after the anthropic deal. They're wondering what's coming next. So this is coming from jzs, JZ Squared. What are the operational and executional challenges you anticipate as you work to get Muskie fully approved and built, if anyone.
- [51:56]
C
So the execution challenges, right? I mean, in that deal, we are working with Kentucky Power, which is a subsidiary of aep, which is one of the largest investor owned utilities in the country. And they've been a wonderful partner to work with as well. And if you think about this, right, this is an approach where the utility is seeing the demand that's coming from data centers and saying, hey, we're the utility here. We best understand the transmission system, we best understand how to bring power generation to bear. Let us do our thing and let's work with the customer and clearly outline to the customer what our requirements are. Right? So as a part of that transaction, we're operating under their industrial IGS tariff. We're required to post kind of credit for both the transmission and energy pieces that we will take. And then we get to focus on building the data center, right? Building identifying the customer and building the data center. The first power that we have available there is the third quarter of 2028. And so there are a few things that we need to do on the front end to solidify the timeline for delivery of the data center capacity. Again, AEP has taken the responsibility to deliver the transmission and the power. And so once we get that locked in, which we hope to do, so, you know, the next, you know, few months, we will then be back at it, right? Talking to customers around, taking that capacity down. And the benefit of that site is, is, you know, there's another 500 megawatts right behind it coming in 2030 as well. And so again, that's a gigawatt. That's again, the AEP from a transmission perspective has fully diligence, approved, signed off on, we've got a sign, you know, kind of transmission agreement with them. So it's not really on us to kind of get the site ready. What's interesting with that site is it used to be a mountaintop coal mine, right? So basically they stripped kind of coal off the top of a mountain. There's now coal is no longer there. So there's a big, wide open space. It's likely to be nothing other than an industrial site. And. And so we're working with the local community there to kind of get things dialed in so we can have those discussions. So it's really, again, getting the pieces together again. We went through a similar exercise in Hawesville, right? We had purchased the site, was had a different use case at that site. We needed to work with the local communities and getting them informed about what we were doing, how we were doing it, what that meant for them. And once we had that all dialed in, then we were able to kind of go out to the market and find, finalize things with anthropic with respect to lease. And so we're in the middle of that same process on Muskie as well. So it's again, it's a lot of the similar things that we did in Hawesville for the site that we have in Western Kentucky that we're doing here in Eastern Kentucky. And so the benefit is kind of, we've, you know, been through this process pretty recently. We're working through that. As soon as again we get some of those things aligned with the local community again on the timing, what we're doing, how it's all going to work. You know, we'll again be in front of all of the various, you know, friends and partners we have that are looking for capacity. And so hopefully again it's kind of an another execution similar to what we've done in Hawesville, Kentucky already.
- [54:57]
B
We'll be keeping our eyes peeled for updates on it. As always, plenty going on in Yalls corner of the world. Nas, thank you so much for joining. Really appreciate it man. Thanks for going a little over with us.
- [55:09]
C
Pleasure.
- [55:09]
A
Thank you.
- [55:10]
B
Yeah, best of luck with the rest of the year.
- [55:12]
C
Wonderful. We'll see you guys.
- [55:13]
A
Thank you so much for your time. See you around. Love when we get sharp. C Suite folks on this show. Great conversation. We'll have it up later if you want to listen to the full episode. We'll drop the full episode on our RSS feed standalone this weekend for you to review it. We're gonna keep on rolling with a quick news flash section. Yes. New segment added to the show. Newsflash. After a word from our sponsor, Lygos.
- [55:55]
B
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- [56:37]
A
All right. Sometimes when there's too many news items and they're a little brief, we can't hit them all in their own dedicated section. So we're going to do a little thing called a news flash. We're going to hit the top stories from the timeline today. A lot of these brought to you by us here at Blockspace. The first one on the docket is Equinix Chief Business Officer John lynn to depart July 18th. The story here is Equinix said Wednesday that Chief Business Officer John Lin will separate from the data center operator effective July 18th. Company made the filing Tuesday with the SEC filing lists. July 8th is the earliest reported event date. Equinix will distribute Lynn's responsibilities along with its senior leadership team under transition plan. They anticipate revealing a new chief product officer soon, but did not identify filing, did not name a replacement for Lynn. Lynn has been with Equinix since 2009 as Director of innovation and was promoted to executive vice president and general manager of data Center Services in January 2022 after he served as president of the Americas. Equinix previously credited Lynn with helping develop Equinix Cloud Exchange, later renamed Equinix Fabric, and he helped lead the $3.6 billion acquisition of 29 Verizon data centers in 2017. I'm tossing it to you, Colin, for the second story.
- [58:14]
C
Yeah.
- [58:14]
B
Quick note on this. Equinix is the largest data center real estate investment trust. They pivoted to that Model 15. They've got 270 data centers across 36 countries. So that's why we've got this story up there.
- [58:28]
A
If you've never they're like a conventional but and this is the thing is, you know, we cover almost like the emerging new neo type of data. These are established data center. There's just it's not as fancy, it's not bells and whistles, but they are the biggest. Yeah.
- [58:42]
B
And John Lynn was critical to a number of successes. According to his track record there. Equinix previously credited him with developing the Equinix cloud exchange. He also helped lead $3.6 billion acquisition of 29 Verizon data centers in 2017. So seems like an important departure. Stock's down. I don't think it's on the news. I think it's just following what tech stocks have been doing over the last few days. But we'll leave that where it is. And I will move on to a quick note from Rosenblatt. They're reiterating a buy rating on Terra wolf with a $30 price target. This is the note that I referenced in that interview with NAS just a few minutes ago. Quoting here from Block Space, Terra Wolf Shares fell about 7% Tuesday to $19.41 as investors reacted to New York's moratorium on state permits for new large data centers. Rosenblatt securities analyst Chris Brindler said Wednesday that the market response was overdone and reiterated a buy rating with a $30 target quote. Fortunately, this is from Brindler. We view this development as more headline risk than structural as the enforcement mechanism simply doesn't reach the company's existing New York platform. That's largely true as we talked about with NAS on our segment. That being said, the expansion, Lake Mariner and Lake Cayuga, that site are up in the air until this is resolved. Now, the timeline for Lake Cayuga and for the Lake Mariner expansion will probably fall outside of the moratorium. As Nas said, their timeline for building these out is out into 2029, I believe he said during the interview. So a bit of overreaction from the market here. And also I think this goes to show maybe not with sophisticated investors, but with how people are presenting this. I've seen bitcoin mining investors and AI investors call this a ban. And it's not a ban, it's a pause on building them. I mean, the president himself called it a termination for all data centers in the state, which just isn't true. So jitters and spooks aside, terror Wolf clearly still has a path, according to Rosenblatt, for that 30 price target. And I would also just add, if you look at what's going on in Kentucky with Hawesville and their aspirations for Muskie, that to me seems to be where the bulk of development will be over the coming years. And clearly the anthropic deal at Hawesville is, you know, we'll probably look back as a bedrock deal for the company.
- [61:20]
A
Yep, you hear that Colin? And I just said that the president tweeted something false rather he truth social
- [61:27]
B
he charles about to say he truth
- [61:29]
A
something truth he truth the lie. Okay, last story for the day. Here we go. Canaan OG Bitcoin Miner Bitcoin miner manufacturer staves off NASDAQ delisting by getting a 180 day NASDAQ extension to regain the $1 bid price. Here's the story. On Wednesday, Nasdaq granted the Bitcoin mining equipment maker another 180 days to regain compliance with the exchange's minimum bid requirement puts the new deadline January 11, 2027. If the ads closing bid price reaches at least $1 for 10 consecutive business days before the new deadline, Nasdaq will provide written confirmation if that requirement's met and Kanan will be able to remain listed. Kanin says in its Form 6K filing the company intends to continue monitoring the closing bid price of its ADSs between now and January 11th and we'll evaluate all available options during the second compliance period to rectify the deficiency and regain compliance. So the target is a dollar to stay in the game, stay listed on Nasdaq. Kanan goes back 13 years. Founded in 2013. Develops ASIC computing, first ASIC miner.
- [62:55]
B
I mean, they've developed the first commercially viable asic.
- [62:58]
A
Yeah. And they've managed to remain, you know, somewhat relevant. They. You can still buy Canon. They've come out with a new model every few years and they're. They've got a bit of, you know, some loyalists. And I think everybody who's done a tour in bitcoin mining has like run a canaan or two or a few hundred over the years. It's kind of. Yeah, it's like the right of passage.
- [63:30]
B
Although I've heard from some bitcoin miners over the last few years that their new Avalons are actually very competitive, which is great, but also very unfortunate considering that competitiveness is coming at a time when bitcoin miners no longer want to buy your Asics, they want to buy gpus instead.
- [63:47]
A
Do you have the fastest horse in a race when everybody cares about race cars? I don't know.
- [63:56]
B
When everyone's driving Formula one cars now, I think that's the backdrop for this. If you look at the bitcoin mining manufacturers, I would have to imagine a lot of them are in crisis mode right now. Your largest customers, the public miners, are gone. Cash price is so anemic right now, that deal flow for new machines has to be in the gutter. And a lot of miners are looking at the secondary market and saying, I can buy a gen old machine for pennies on the dollar. And I'm just going to run that because I don't really see any benefit in paying a premium for something new when I can't even ROI it in a reasonable time frame. And I think that if you looked into Bitmain or Microbt and Kanan as well, their sales have got to be suffering right now, unless they're building out new pipelines and jurisdictions with cheap enough power. But then there's also a question of will they be able to retain foundry allocation. We've been covering AI inference chips, ASIC chips here on the show a few times. Nothing material is probably pressing them yet. But if AI ASICs end up really taking off and you have some of the most heavily capitalized companies in the world vying for that wafer space, you do have to ask yourself, what does that leave for the bitcoin mining manufacturers, especially when you consider that their revenues are probably suffering right now and their ability to up the ante each year for additional wafer allocation probably in question right now.
- [65:24]
A
That wraps up for the day you just listen to Blockspace live which goes live every weekday at 1pm Eastern. Featuring quick hits on AI data centers, emerging markets and emerging tech, this show is brought to you by CleanSpark, NASDAQ listed ticker CLSK, shout out CleanSpark and all of our sponsors. I'm Charlie.
- [65:50]
B
I'm Colin.
- [65:51]
A
And we'll see you tomorrow.