About Applied Digital

Applied Blockchain, Inc. designs, builds, and operates next-generation digital infrastructure. The company has three primary business streams, artificial intelligence (AI) cloud services, high performance computing (HPC) datacenter hosting, and crypto datacenter hosting. AI Cloud Service The company’s AI Cloud service operates through its Sai Computing brand and provides cloud services applicable to artificial intelligence. On October 13, 2022, the company formed Sai Computing, LLC (Sai Computing). Sai Computing was formed to provide artificial intelligence and machine learning application customers with access to machines and a hosting environment. On May 15, 2023, the company announced the formal launch of its AI cloud services business through Sai Computing. On May 25, 2023, the company formed Sai Computing Holdings LLC (Sai Holdings) and Sai-Foundry Computing LLC (Sai-Foundry). Sai Holdings serves as the parent entity over Sai Computing and Sai-Foundry, and Sai-Foundry will serve as the joint venture entity between the company and Foundry Technologies (Foundry). The company has a 98% ownership interest in Sai-Foundry and consolidate the entity. To support its AI Cloud Services business, the company has placed orders for over 26,000 Graphics Processing Units (GPUs). The company has also entered into two contracts with colocation service providers for secure space and energy for its hosting services. The company’s strategy is to use a mix of third-party colocation centers and its HPC datacenters to deliver AI Cloud services to customers. HPC Datacenter Hosting The company’s HPC datacenter business designs, builds, and operates Next-Gen datacenters which are designed to provide massive computing power and support high-compute applications within a cost-effective model. On December 14, 2022, the company announced the beginning of construction of a 5 megawatt (MW) facility next to the company’s operating 100-MW hosting facility in Jamestown, North Dakota. The company subsequently determined to increase the capacity of this facility to 9 MW. This separate and unique building, designed and purpose-built for GPUs, will sit separate from the company’s crypto hosting buildings and will host more traditional high performance computing applications, such as natural language processing, machine learning, and additional HPC developments. This facility is expected to be brought online in the second half of calendar year 2023. During early calendar year 2023, the company began testing HPC hosting at this facility. The systems in this facility passed initial testing in the second calendar quarter of 2023. The company has plans to expand its HPC hosting capacity up to 200 MW through build outs at existing and future locations. Crypto Datacenter Hosting The company’s crypto datacenter hosting business provides infrastructure and colocation services to crypto mining customers. With expert advisors in the fields of power, crypto mining operations, procurement, and construction, the company has designed and implemented a plan for a prefabricated facility and organization within the facility that can be delivered and installed quickly and maximize performance and efficiency of the facility and its customers’ crypto mining equipment. The company provides energized space for customers to host computing equipment. The company has a colocation business model where its customers place hardware they own into its facilities and it provides operational and maintenance services for a fixed fee. The company typically enters into long-term fixed rate contracts with its customers. As of May 31, 2023, the company had approximately 285 MW of capacity online and available to service crypto mining customers. Additionally, there is another 200 MW of capacity the company has committed to energize, all of which is contracted for under multi-year arrangements. During the fiscal year ended May 31, 2023, the company entered into a joint venture agreement with GMR Limited (GMR) to form Highland Digital Holdings, LLC (Highland Digital). Highland Digital is dormant and the company has no plans to use the entity for any activities. Strategy The key elements of the company’s strategy include continued expansion of businesses; leveraging leading equipment vendors to grow operations while minimizing risk; securing scalable power sites; vertically integrating power assets; and site selection criteria (such as geographic diversity and environmental impact). Customers The company has material customer concentration in its crypto datacenter hosting business. The company has entered into service contracts with Spring Mud, LLC (a subsidiary of GMR Limited); Bitmain Technologies Limited; Arrakis, Inc.; Hashing LLC; Marathon Digital Holdings, Inc.; and Global Operating Infrastructure, LLC (GOI), who have collectively contracted to use the entire capacity of its three crypto hosting datacenters. In December 2021, the company entered into a Service Order with GOI pursuant to which it provides energized space for mining activities of GOI. The company’s hosting arrangements with Spring Mud and GOI are therefore considered related party transactions. History The company was formerly known as Applied Blockchain, Inc. and changed its name to Applied Digital Corporation in November 2022.