Ionic Digital (NASDAQ:IOND) reported third-quarter revenue of $49 million and net income of $17 million as the company works to secure customers for its remaining data center capacity in Texas.
On the earnings call, Chief Executive Officer Andy Stewart said Ionic’s top priority is putting approximately 500 gross megawatts of near-term grid power at its Ward County and Midland sites under contract. The company is shifting away from Bitcoin mining toward high-performance computing and AI data center development.
Leasing drives quarterly results
Digital infrastructure leasing generated $44 million, or approximately 90%, of third-quarter revenue. Bitcoin mining contributed $5 million. Gross profit was $39 million, while adjusted gross profit was $44 million, resulting in an adjusted gross margin of 89%.
Chief Financial Officer Chris Hickman said the digital infrastructure segment’s 99% margin reflected the triple-net structure of its Nscale lease, under which the tenant pays operating costs, taxes, insurance and maintenance. The mining segment was approximately break-even at the gross margin level, partly because of higher seasonal power costs, and Hickman said mining margins are expected to remain near break-even.
General and administrative expenses were $26 million, including $12 million in nonrecurring direct-listing costs and $5 million in noncash stock-based compensation. Excluding those items, expenses were approximately $9 million.
Net income was $0.38 per diluted share. Hickman said the result included two largely offsetting noncash items: a $73 million gain on the fair value of Bitcoin and a $66 million charge from an increase in the fair value of warrants issued in the company’s June private placement. Adjusted EBITDA was $35 million, with a 71% margin.
Ward County expansion and Texas policy
Ionic has 323 gross megawatts under contract with Nscale at Ward County, including an incremental 89 megawatts expected to be delivered in 2027. That leaves 377 gross megawatts available for development at the site. Stewart said the company plans to launch a formal targeted marketing process for that capacity in the coming weeks.
Nscale has a right of first refusal on the available Ward County capacity, but Stewart said it does not lock Ionic into a set price. To retain the capacity, he said, Nscale must meet or exceed every term of the best offer received.
The Electric Reliability Council of Texas, or ERCOT, provisionally classified Ionic’s 466-megawatt Ward County expansion request under Baseload Pathway (b) in its Batch Zero process. Stewart said the classification applies to existing projects that have achieved initial energization and represents a higher priority within ERCOT’s framework.
Asked whether ERCOT would finalize Batch Zero decisions by Dec. 10, Stewart said he did not know, although he saw a high probability that the process would continue before the new administration takes office in January. The effect of any subsequent policy changes remains undetermined, he said.
Stewart said the company’s marketing timeline had shifted because of ERCOT’s verification process, but predevelopment work had continued. He also said that a potential $3.5 billion to $4 billion turnkey development at Ward County would require a strong credit counterparty.
On when the uncontracted capacity might generate revenue, Stewart said early 2028 was a realistic timeframe given the size and complexity of the facilities being discussed. Hickman added that the 2028 timing was associated with a turnkey development, while a powered shell could still be completed by the end of 2027. Both structures remain under consideration.
Midland transition and financial outlook
At Midland, Ionic has four sites with a combined 112 megawatts of energized grid power. Stewart said work has focused on preparing the land for long-term data center development, and the company still expects to move the sites off Bitcoin mining over the next six to 12 months. He said interest has come from a range of prospective customers.
Ionic reaffirmed its 2026 outlook, including midpoint revenue of $192.5 million and adjusted EBITDA of $140 million. Capital expenditures are expected to total $45 million to $60 million for the year, up from $14 million through the first nine months, as spending on Ward County’s substation upgrade and predevelopment work increases.
Hickman said approximately $30 million of the $175 million in digital infrastructure leasing revenue included in the 2026 outlook is expected to be cash rent; the balance reflects noncash straight-line lease accounting. Cash rent began Aug. 1, and the company collected approximately $7 million in the third quarter. It expects $135 million in cash rent in 2027.
Ionic ended the quarter with no debt, $381 million in cash and 2,954 Bitcoin valued at $247 million, for approximately $628 million in liquidity. Since quarter-end, it sold 737 Bitcoin for approximately $62 million in net proceeds. Hickman said the company intends to continue monetizing its Bitcoin to fund development and other strategic initiatives, with the timing depending on capital needs.
About Ionic Digital (NASDAQ:IOND)
Ionic Digital, Inc is a digital-asset mining company focused primarily on the production of bitcoin. Its operations center on deploying and managing specialized computing equipment, commonly known as application-specific integrated circuits, to validate transactions and earn bitcoin rewards through the Bitcoin network.
The company was established in connection with the restructuring of Celsius Network and the transfer of Celsius-related mining assets to a new, creditor-owned business. Ionic Digital’s mining activities have been associated with facilities in the United States, including operations in Texas and New York.
