00:00 Speaker A
I’m sure you’ve seen these stories recently, Azure of the difficulty building AI infrastructure, building out these data centers. You know, Core Weve stock has gotten absolutely hammered the past six weeks because of delays in building out their sites. What, how hard is it to bring these sites to life and what challenges do you anticipate over the next year?
00:23 Speaker B
So there’s two things there. One is expectation management. We actually have told the customer we’re going to deliver the data center, start delivering the first data hall in Q2 of 2027. That gives us ample runway and a conservative delivery schedule to make sure that we’re able to push to deliver on time, rather than be crunched on a schedule that’s really tight already. And second, it’s all about do you have the local labor? Do you have the general contracting? Because there are so many of these data centers being built, are there the people to actually build and manage these?
01:00 Speaker B
So with Jacob’s Engineering as a design and engineering firm, we have an engineering group and we have a construction group. Then local contractors like MMR, Cajun, Turner, these are all local contractors on electrical, civil, mechanical in the state of Louisiana that have already committed to our facility and the manpower required to build this site. Then what goes into the data center? It’s the actual supply chain. Verve is our partner on from a supply chain perspective, delivering long lead time items.
01:40 Speaker B
Many of those we’re actually going to skid so we can actually do a lot of the manufacturing and the uh assembly offsite. And so when we bring it on site, it’s a faster execution and deployment as well. So I think giving customers more conservative schedules, meanwhile bringing together a group of partners that have already committed to those expectations is critical. And that’s why it took us a little bit longer to announce this deal because if we just announced a customer deal, that would have been great, we would have to figure out how to actually deliver after signing the contract.
02:19 Speaker B
Here, we signed all of these commitments at the same time and so we’re not only delivering a commitment to the customer, but we have commitments from all of our partners that they are going to deliver on that same commitment.
02:35 Speaker A
So the market rewarding Hut 8, uh also a couple of your competitors, but on the other side of the spectrum, you have the market worried about a company like Oracle and Blue Owl Capital and perhaps Oracle having too much debt and Blue Owl Capital not supporting their initiatives. Is the market right to have those debt fears?
03:04 Speaker B
There’s a lot of dollars being deployed into infrastructure today. And at the end of the day, these are long-term commitments. For us, we had multiple customers that we were negotiating, dealing with and working with, and credit is so important. Is this a customer that in all scenarios, AI strong, AI weaker, but in all scenarios will pay on their lease obligations. And that’s why having this Google backstop and this financial backstop on all lease payments, roughly about $7 billion throughout the course of this project.
03:45 Speaker B
on all minimum power bills, about a billion dollars on other pass through expenses like insurance, operations, taxes and so forth. Having that commitment is critical because Google, in our opinion, is one of the most creditworthy companies in the world. They have a strong core business through their search engine that is able to generate one of the best cash flows as a company in the whole world. Then they have Gemini, they have their own TPUs in terms of manufacturing their own chips.
04:23 Speaker B
They own YouTube, they own Android, they own Waymo for car uh collection. I think the next frontier of AI training is not just text training of the web, but on video recognition as well. So if you think about the all the footage that they pick up in those Waymo cars, all the video uh footage that they have in uh in on YouTube, we are massive believers not to even mention Quantum which they’re leading in as well. And so we’re big believers that Google has strong cash flows, one of the best in the world and that they also have a diversified business stream and is able to continue to grow and become a stronger and stronger business and partnering with them having their financial back stop and guarantee behind this project.
05:14 Speaker B
I think has given us, our lenders, our partners all a ton of confidence in the value of this specific deal.
