PowerCompute (NASDAQ:PWCM) reported second-quarter financial results on Friday. The transcript from the company's second-quarter earnings call has been provided below.

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Summary

PowerCompute reported total revenue of $2.1 million for Q2 2026, a 9.8% increase year-over-year, driven by an increase in Bitcoin mining activities.

The company is transitioning its business model to include hosting, AI infrastructure, and high-performance computing, leveraging its 26 megawatts of owned power capacity.

A proof-of-concept deployment with a single GPU was initiated, aimed at gaining operational experience in AI compute, with future revenue potential estimated between $20 to $50 million annually upon full buildout.

PowerCompute refinanced its debt with Arch Lending, reducing interest expenses and allowing the company to retain Bitcoin holdings as collateral.

Net loss for the quarter was $4.6 million, largely due to losses on digital assets and increased interest costs, compared to a net income of $100,000 in the prior year.

Management emphasized the strategic importance of low-cost power and the potential market for AI compute, while also focusing on liquidity management and operational scaling.

Full Transcript

OPERATOR

Good day and thank you for standing by. Welcome to the PowerCompute second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message that your hand is raised. To withdraw your question, please press star 11 again.

Please be advised today's conference is being recorded. I would like to hand the conference over to your speaker today, Bill Carlson. Please go ahead.

Bill Carlson, Investor Relations

Thank you, operator, and thank you all for joining us on PowerCompute's second quarter 2026 earnings conference call. Joining us today are Chairman and Chief Executive Officer Bruce Rogers, Chief Financial Officer Richard Russell, and President of U.S. Digital Mining, Ryan Duran. An accompanying supplemental investor presentation has been posted under the Events section of our Investor Relations website. Before we begin, please note that today's remarks include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements are not guarantees of future results and are subject to risks and uncertainties that could cause actual results to differ materially. Important factors include, among others, our ability to retain the listing of our securities on the NASDAQ Capital Market; our liquidity and our ability to obtain additional financing on acceptable terms; the short-dated nature of our credit facility and our ability to renew it; the early stage of our AI infrastructure business and our lack of operating history in it; the volatility of Bitcoin prices and risks related to the use of Bitcoin as collateral; and our ability to secure customers and capital for any conversion of our power capacity. Any statements regarding the potential revenue opportunity from a full buildout of our power capacity are illustrative estimates only. They are not guidance, not a forecast for any period, and are subject to substantial execution, capital, and market risks. We will also reference certain non-GAAP financial measures.

Please refer to our Form 10-Q for a full reconciliation to the most comparable GAAP measures and to our SEC filings and the Investors section of our website at power-compute.com/investors for a more comprehensive discussion of these and other risks. I will now turn the call over to Chairman and Chief Executive Officer Bruce Rogers.

OPERATOR

Bruce, please go ahead.

Bruce Rogers, Chairman and Chief Executive Officer

Thank you and good morning, everyone. This is a transformational time for our company. In July we expanded our business to include hosting, AI infrastructure, and high-performance computing to take advantage of the 26 megawatts of power under our control. As of July 22, we trade on NASDAQ under our new name PowerCompute and our new ticker PWCM. The business you know as LM Funding America still exists, but the name we carried no longer captured where we were headed.

Our owned power is the foundation of this strategy. We control 26 megawatts across two sites: a 15-megawatt site in Calumet, Oklahoma, and an 11-megawatt site in Columbus, Mississippi, both energized, industrial-zoned, and operating today. Power is priced at approximately 3.7 cents per kilowatt hour in Oklahoma and 3.5 cents per kilowatt hour in Mississippi, a blended average of 3.6 cents. Our power is priced at variable market rates and will fluctuate.

Our roughly 22 megawatts currently power Bitcoin mining, and all or part of that capacity is addressable for AI and HPC. We are also in discussions with our Oklahoma power provider regarding a potential expansion, and we continue to evaluate additional low-cost power sites. Those discussions are preliminary and we cannot predict whether they will result in an agreement. We believe the defining constraint in AI infrastructure has shifted from space and fiber to power.

Greenfield grid connection and permitting can take years. Our sites are energized now. The same attributes that make a strong mining site—owned power, low cost, operational infrastructure, and room to scale—are what AI compute customers are looking for, and we think that convergence creates a timely opportunity for us. Our first steps are deliberately small. In July we acquired our first GPU and listed that capacity on the Vast AI compute marketplace.

This is a proof-of-concept deployment. It generated no revenue in the second quarter, and revenue in the third quarter will be immaterial. Its purpose is to build operational experience and give us direct visibility into demand. In parallel, we are marketing approximately 4 megawatts of currently available energized capacity at our Columbus, Mississippi site for colocation and hosting. The full 11-megawatt site is convertible to HPC and we would redeploy mining capacity there for the right customer commitment.

We are also evaluating modular containerized data center solutions for converting power infrastructure to GPU compute and engaging vendors so that we can move quickly when we are ready over the long term and, assuming a full buildout of our existing 26 megawatts, we have said we believe this could represent a $20 to $50 million annual revenue opportunity. I want to be clear about what that is: an example estimate of the opportunity at full buildout, not guidance and not a forecast for any period.

Realizing it requires substantial additional capital, customer contracts we've not yet signed, and execution over multiple years. We have no assurance any of that will occur, but we value the opportunity to pursue $20 to $50 million in annual revenue potential by building on the assets we already own and operate. Second quarter marks the beginning of this work rather than the result of it. I'll now turn the call over to Rick to review the financial results.

Richard Russell, Chief Financial Officer

Thank you, Bruce. Total revenue for the second quarter of 2026 was $2.1 million, essentially flat compared with $2.1 million in the first quarter of 2026 and an increase from $1.9 million in the second quarter of 2025. This represents a year-over-year increase of 9.8% for the quarter. This revenue growth reflects an increase in the number of miners actively mining and a decrease in difficulty rate, partially offset by a lower average Bitcoin price.

We mined 27.9 Bitcoins in the second quarter of 2026, up from 26.1 Bitcoins in the first quarter of 2026 and up from 18.4 Bitcoins in the second quarter of 2025. On June 30, 2026, our 318 Bitcoins were valued at approximately $18.6 million when Bitcoin was valued at $58,400. Our mining margin, after including curtailment and energy sales, was 29% in the second quarter of 2026 compared with 24.1% in the first quarter of 2026. The mining margin for the second quarter of 2025 was 41% when Bitcoin was much higher.

Mining margin in the current quarter was supported by $145,000 in curtailment and energy sales, which was recognized as a reduction of cost of revenues, set against an average Bitcoin price that declined to $72,000 in the second quarter of 2026 from around $75,700 in the first quarter of 2026. The average Bitcoin price in the second quarter of 2025 was $98,000. Net loss for the second quarter of 2026 was around $4.6 million, while our core EBITDA loss was $2.8 million, compared with second quarter of 2025 net income of $100,000, while core EBITDA income was $2.6 million.

The change for the prior year quarter primarily reflects a loss on fair value of digital assets and digital asset receivables, $23 million, versus a gain of around $3.8 million in the prior year quarter, together with $460,000 of increased interest costs primarily attributed to the imputed interest cost of the Galaxy loan, and $280,000 of increased digital mining cost of revenues from higher Bitcoin mined. On June 30, 2026, total assets were around $37.1 million, including 318 Bitcoins, of which 174 were being held by Galaxy Digital as collateral.

The total value of all Bitcoin was around $18.6 million, and cash was $900,000. Total liabilities were around $21.6 million, consisting primarily of $10.8 million on the Galaxy Digital match currency loan and $8.5 million of other notes payable, of which $1.9 million is long term. As a subsequent event update, we refinanced and consolidated our three existing debt facilities totaling $18 million with Arch Lending, secured by 307 Bitcoins from our treasury.

The Arch facility replaced an $11 million loan from Galaxy Digital and $7 million of loans from another lender used to purchase our Oklahoma and Mississippi facilities. We initially entered into a bridge loan with Arch to consolidate the three loans. Then, on August 3, 2026, we entered into a Bitcoin-backed facility with a revolving 30-day term bearing an interest rate of 2% APR. The debt we retired carried a blended annual rate of around 13%, consisting of $7 million of notes at 12% and an $11 million non-interest-bearing facility with Galaxy but with imputed interest from the call feature.

The Arch facility is shorter in duration than the debt that we replaced, and its rate and availability are subject to renewal. The Arch structure lets us hold our Bitcoin at a low cash carrying cost rather than sell it. We retain participation in Bitcoin appreciation between the contractual floor and ceiling of the collar, with the ability to reset those levels as the facility renews. I will now turn the call back to Bruce.

Bruce Rogers, Chairman and Chief Executive Officer

Thank you, Rick. So let me close with where we are focused. Our near-term priority is proving out the model, running our proof of concept at Oklahoma, learning what demand for this capacity actually looks like, and using what we learn to decide how quickly to convert additional owned megawatts in Oklahoma and Mississippi from mining to AI and HPC. This is a single GPU today. It is deliberately small because we would rather learn cheaply before we commit capital at scale.

We are not starting from zero, though. We already own the power, the sites, and the operating experience this transition requires. We have real work ahead and we intend to do it deliberately. At the same time, managing liquidity remains a near-term priority. The refinancing we completed after quarter-end reduced our interest expense. Though the facility is shorter in duration than the debt it replaced, and substantially all of our Bitcoin is pledged as collateral, the structure lets us hold our Bitcoin rather than sell it.

We retain participation in Bitcoin appreciation between the contractual floor and the ceiling, with the ability to reset those levels as the facility renews. Between owned low-cost power infrastructure and a large and growing market for AI compute, we believe PowerCompute has an opportunity to convert this quarter's announcements into tangible results. We look forward to updating you on our progress. Thank you for your continued support. Operator, please open the line for questions.

OPERATOR

Thank you. Ladies and gentlemen, if you have a question or a comment at this time, please press star 11 on your telephone. If your question has been answered or you wish to remove yourself from the queue, please press star 11. Again, we will pause for a moment while we compile our Q&A roster. Our first question comes from Matthew Galinko with Maxim Group. Your line is open.

Matthew Galinko, Analyst at Maxim Group

Hey, thanks for taking my questions. Maybe if we could start with, I think it's been a few weeks now since you announced the potential for hosting AI/HPC at your infrastructure. Have you had any initial discussions with potential counterparties to provide a colo-style arrangement? Or, you know, can you just give us any color of how the beginnings of that process is going?

Bruce Rogers, Chairman and Chief Executive Officer

We haven't announced anything definitive and it'd be premature to do that, but the answer to your question is yes, we are talking to counterparties and sorting through it.

Matthew Galinko, Analyst at Maxim Group

Got it, thank you. And then in the prepared remarks, I think you mentioned exploring containerized type AI or GPU infrastructure to maybe scale up the single GPU pilot that you're doing now. You know, again, I understand it's maybe a little bit early to be, you know, going into which direction you might go, but can you maybe add some color to what the economics of that might look like or what operations might look like? And, you know, would you be able to fund the acquisition of a container?

Would you kind of replace your mining wholesale with, you know, containerized GPU infrastructure? Just, you know, how do you kind of envision that path playing out if that's the direction you go?

Bruce Rogers, Chairman and Chief Executive Officer

Yeah, Matt, I'd love to answer every one of those questions, but I can't. But I can answer a bunch of the questions. There are folks out there that are manufacturing containers for HPC. They are sophisticated enough to require NDAs and wrap this up pretty tightly. It's also sophisticated enough to come with willing financial partners on both sides of it to advance that because of the potential of all of the other cheap places you could possibly run these things, and while the AI curve and the price for compute is so high.

So that's kind of the color and context. I wish I could tell you some material developments, but we're not to that point yet.

Matthew Galinko, Analyst at Maxim Group

Got it. And maybe if I could get a last question in: with regards to any capacity expansion potential at your existing sites, what are the steps you need to do? And maybe just on a local level, how would you say your counterparties are—what is the willingness to deploy an AI data center there? Do you expect pushback on a local level? Thanks.

Bruce Rogers, Chairman and Chief Executive Officer

I think you're probably going to more of a community-by-community on the pushback question. And so the pushback question in Oklahoma is you're in the middle of an oil patch, there's no community, so any expansion there doesn't have any social or headline risk. Our facility in Columbus is in a community that I used to live in, believe it or not. And like all places, there's some anti-data sentiment there that you can find on Facebook. But we had a really, a very nice interview with the local newspaper there, the Columbus Dispatch, where Todd Liebel, our vice president operations there, fielded every question, any question, and was pretty forthright with them. And I think it came off quite well that we complement the community because they would be facing brownouts otherwise, in that our ability to shut off our power and deliver power to them at peak is being seen as a community benefit, or at least being positioned there. So I hope that's responsive to what you're asking. I'll give you another shot at it if it's not.

Matthew Galinko, Analyst at Maxim Group

No, that's great. I appreciate it. I'll jump back in the queue. All right, thanks again.

OPERATOR

Ladies and gentlemen, if you have a question or a comment at this time, please press star 11 on your telephone. There being no further questions, this concludes PowerCompute's second quarter 2026 earnings conference call. Thank you for participating. You may now disconnect.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.