George Sutton: Thank you. It’s great to see the conditional agreement. I just wondered if you could walk us through the project level financing side of this and sort of how do these ultimately come together in your mind? Is it a combination of construction loan financing and project financing? And any sense of the market dynamics there that we should know about?
Wes Cummins: Yeah. Thanks, George. So I’ve talked about this publicly before. So the way these agreements, we’ve been marketing this since mid-September. And when you think about this, you should think about marketing. People do — our potential customers do a lot of due diligence on the site. You answer a significant number of questions, site visits, all of those things that you would expect in the due diligence. And then you’ll typically go into a ROFR period, a right of first refusal period where someone gets exclusivity that you won’t sell it outside of anyone. And I’m not talking about our specific agreement now, I’m just talking about the way that we’ve experienced this working. And then you work to get to a contract. And then post the contract, you go to project level finance.
We are engaged with multiple parties on the project level finance side. We have been for a while. We haven’t — we’re not waiting. We weren’t waiting for an agreement to go to project level finance. But on the project level finance side, you’ll get in the neighborhood of 65% to 80% loan to cost at the project level. So this won’t go at the corporate level. It goes down at the site level, just like we’ve done with all of our Bitcoin sites. And then there’s what we call the equity component, which I always look at as we work through this is more of a — people would refer to in our industry as like mezz debt. So you have the construction finance, that debt runs kind of in the 7.5% to 8% type cost range. And then you have the mezz piece, the equity piece.
And then you have our contribution to it and our contribution, we can have continued construction, we broke ground continued construction on the site in Ellendale, and we’ve put a significant amount of money into that already. So I think we’re close to where we will need to be on the equity portion of that. And the remainder will come in from project level finance and then this mezz debt piece where typically someone will get kind of a high — mid to high teens return on their capital and it’s generally first money out and then maybe retains a small piece of ownership, call it 4%, 5% — 3%, 5% in the site itself. And so that’s the process that we’re in now.
George Sutton: So I wondered if you could walk through the 400 megawatts that you’re ultimately marketing, obviously 100 megawatts now effectively spoken for. Just, it’s very clear to us that the demand side of the equation here is going to be pretty significant. Just curious what you’re seeing as you’re going to market with the other 300 megawatts of opportunity.
Wes Cummins: Yeah, so demand was robust. We had two parties very deep in diligence last year. As of the thing that we have seen, which has been interesting in January, as we kicked the year off, we’ve had several more parties show up, three more in the last week. And it feels almost like kind of panic looking for capacity just in the last couple of weeks. So we’re seeing a lot of interest and the parties that are involved would easily take more than the capacity that we have. So it’s nice to get the first one close to over the finish line, but the expectation for me is that over the next month or two months, we’re going to have the full 400 booked out. And as a reminder, I think when we think about this, the biggest issue that we face, which is a high quality issue, is how much do we carve out for ourselves because we want to carve some of this out for ourselves for our own cloud solution.
And I think that’s really the question mark, what’s the highest and best value for these, for our assets, because we want to carve some out for ourselves, but we have a massive amount of demand for the capacity that we have. And, George, the reason we have that demand is, the 400 megawatts that we have is 400 megawatts that could come online over the next 18 months. Right? The power is available, the land is there, permitting, we’re in a really good position in a market that is already short capacity and I think it’s going to get worse over the next few months.
George Sutton: So last question for me on the Sai Computing side. Obviously we understand the supply chain challenge. Looking past that, I’m just curious on the demand side. So you mentioned you’ve got another four clusters that could ship here soon. Is there any demand challenge that you’re seeing or has anything changed there or is it really just a limitation on the supply chain side?
