Should not rely on our forward-looking statements as predictions of future events. In particular, those described in our Risk Factors that will be included in our Form 10-Q for the quarter ended Septemin our recently filed S-1 prospectus. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call. Statements on this call include forward-looking statements, future financial results, our goals and expectations regarding future revenue growth, profitability, use of IPO proceeds and investments in our business, our anticipated capital expenditures and our estimates regarding our capital requirements, our ability to acquire new customers and successfully engage and expand usage of our existing customers, the cost of success of our marketing efforts, our ability to promote our brand, our reliance on key personnel and ability to identify, recruit and retain skilled personnel, our ability to effectively manage our growth, our ability to compete effectively with existing competitors and new market entrants and the growth rates of the markets in which we compete. Today, Backblaze will discuss the quarterly financial results that were distributed earlier this afternoon. On the call with me today are Gleb Budman, Co-Founder, CEO and Chairperson of the Board and Frank Patchel, Chief Financial Officer. Good afternoon and welcome to Backblaze’s third quarter 2021 earnings call. James Kisner, Vice President of Investor Relations. I would now like turn the conference of your host, Mr. Thank you for standing by and welcome to the Backblaze Q3 2021 Earnings Conference Call. Ittai Kidron - Oppenheimer Company - AnalystĮric Martinuzzi - Lake Street Capital - Analyst Patchel - Chief Financial Officer Analysts:

Gleb Budman - Chief Executive Officer and Chairperson of the Boardįrank P. James Kisner - Vice President of Investor Relations ( NASDAQ: BLZE) Q3 2021 earnings call dated Dec. Backblaze writes: “as our analysis suggests, unless you can continue to grow your plots, there will come a time when it’s no longer profitable.” The company’s post also acknowledges concerns regarding the electricity consumption and hardware requirements of various cryptocurrencies and their impact on the electronics market.Backblaze Inc. The company still intends to offer the option to farm Chia in the cloud to its customers, because “we love watching people experiment with storage,” but it doesn’t mince words about the value of mining Chia. If the steady growth model is accurate, costs exceed income “around week 28.”īackblaze notes that it was never planning to hold Chia speculatively, so it made no sense for the company to mine under the assumption that coins might dramatically increase in value at some point in the future. Under the exponential growth model, Backblaze’s theoretical 150PB farming pool would cease generating net revenue if it launched more than seven weeks from the time the company performed its initial analysis. Once costs were factored into the equation, the math didn’t favor Chia mining. This seems to be the case for individuals as well several people I know who launched Chia mining farms when the cryptocurrency was new have already retired from the market after their earnings plunged. In this model, the long tail of earnings doesn’t leave Backblaze earning anything after 16 weeks, but the company still earns the overwhelming percentage of its revenue within the first three months. The company assumed that it would allocate 150PB of its storage, that the value of Chia would remain constant, and that it would make $250,000 its first week. This, however, was not the most serious problem.īackblaze’s estimates indicate that even using 150PB of its own storage buffer is not enough capacity to make money on Chia in the long term.

The cost of buying enough SSDs to keep things rolling represented a serious expense according to the company.

That’s good for farming, but bad for plotting (plotting Chia is incredibly hard on SSDs, but requires them to work at any kind of speed). First, its business is largely HDD-based. Once it had some expertise under its belt, it turned its attention to the larger question of whether a storage provider like itself could make money in such an endeavor.īackblaze ran into two problems. Backblaze initially decided to get mining up and running in the cloud as a way to provide a service to its customer base. In fact, the company’s estimates suggest making money with Chia is quite difficult.

Backblaze earnings