LM Funding America (NASDAQ:PWCM), referred to as PowerCompute on its earnings call, reported a third-quarter profit as it mined more Bitcoin, reduced secured debt and prepared to install 600 new mining machines. Revenue fell from a year earlier, however, as the average value of the Bitcoin it mined declined.
Third-quarter revenue was approximately $1.9 million, down 13.3% from $2.2 million a year earlier, Chief Financial Officer Richard Russell said. Net income was approximately $400,000, or $0.20 per basic and diluted share, compared with a net loss of approximately $3.7 million in the year-ago quarter.
The company mined 23.9 Bitcoin during the quarter, up 35.8% from 17.6 Bitcoin a year earlier. Over the same period, the average value of the Bitcoin mined fell 37.5% to approximately $71,000 from $114,000, Russell said. Digital mining revenue declined to approximately $1.7 million from $2 million.
Mining margin improves as equipment refresh continues
Mining margin, after accounting for curtailment and energy sales, rose to 50.7% from 29% in the second quarter and 49% a year earlier. Russell attributed the sequential improvement to lower energy costs, higher energy sales and selective idling of machines during peak hours, partially offset by a lower average Bitcoin price.
Chairman and CEO Bruce Rodgers said the energy cost to mine one Bitcoin, after curtailment and energy sales, was about $35,000, down from approximately $58,000 a year earlier. The company’s blended net power cost was about $0.024 per kilowatt hour during the quarter, though Rodgers cautioned that its variable market rates will fluctuate.
PowerCompute paid approximately $1 million in cash in November for 600 Antminer S21++ machines to replace older equipment at its Columbus, Mississippi, site. Rodgers said the new machines are expected to add 80 to 85 petahash per second of net hash rate when deployed in mid-December, bringing the total to about 880 petahash per second.
That estimate replaces the company’s earlier projection of 964 petahash per second, which had assumed a 3.5-megawatt expansion in Mississippi. Hash rate had fallen to approximately 718 petahash per second at Sept. 30 from 771 at June 30 because of degradation in older machines, before rising to about 800 at Oct. 31 as newer machines were installed.
Asked about the effect of the new machines on future mining margins, Russell said the outcome would be difficult to determine because of Bitcoin price uncertainty. He added that curtailment would likely decline in the fourth quarter, potentially increasing average power costs, while the newer miners would produce more at roughly the same power draw.
Debt reduction and liquidity
PowerCompute repaid and terminated its Bitcoin-backed credit facility with Arch Lending in late September. Secured debt fell to about $1.25 million at Sept. 30 from approximately $19.4 million at June 30, Rodgers said. The company extended the remaining secured note’s maturity to Dec. 31, 2027, after quarter-end.
Under the Arch settlement, the lender sold approximately 267.4 of the 307 Bitcoin held under the facility to satisfy the debt and returned the remaining 39.6 Bitcoin to PowerCompute, Russell said. The company held 63.8 Bitcoin valued at approximately $5.3 million at Sept. 30, and none was pledged as collateral.
Russell said total liquidity, including cash, Bitcoin and marketable securities, was approximately $6 million at quarter-end. The company also sold approximately 1.5 million shares through its at-the-market program during the quarter, raising $2.8 million in net proceeds for miner investments and working capital.
The company’s quarterly filing includes a going-concern disclosure tied in part to the decline in Bitcoin prices, cash used in operations and the remaining secured note, Russell said.
Power capacity and computing plans
PowerCompute owns or controls 26 megawatts of interconnected power across sites in Oklahoma and Mississippi. Rodgers said the company increased its contracted demand in Mississippi to 11 megawatts from 8.5 megawatts without incurring capacity commitment charges under a new Tennessee Valley Authority data-center rate.
The company is also testing high-performance computing at its Oklahoma site, listing GPU capacity on Vast.ai. Rodgers described the program as early-stage but said utilization had exceeded expectations. He said the company would consider how to use 3.5 megawatts in Mississippi that are not currently powering Bitcoin miners or GPUs after completing the equipment refresh.
About LM Funding America (NASDAQ:PWCM)
LM Funding America, Inc. is a specialty finance company that provides funding solutions to nonprofit community associations in the United States. Its core business involves advancing funds against delinquent association assessments, helping community associations maintain cash flow while pursuing collection of unpaid amounts from property owners. The company has offered several assessment-receivable funding programs, including traditional and cooperative arrangements. These programs are designed to provide associations with an alternative to waiting for delinquent assessments to be collected and may include services related to receivables management and collection support.
