Hut 8 Mining Corp. (Nasdaq | TSX: HUT) ("Hut 8" or the "Company"),
one of North America's largest, innovation-focused digital asset
mining pioneers, and high performance computing infrastructure
provider, announced its financial results for the quarter ended
September 30, 2023 (“Q3 2023”). All dollar figures are in Canadian
Dollars (“CAD”), unless otherwise stated.
“Our team continued to be laser-focused on closing our merger
with USBTC in the third quarter, and made material progress in
achieving key milestones, including securing shareholder approval
of the merger and obtaining the final order approving the plan of
arrangement from the Supreme Court of British Columbia,” said Jaime
Leverton, CEO of Hut 8. “Now that the SEC has declared New Hut’s
Registration Statement effective, we are working hard to close this
transaction before the end of the month to form an organization
that will be poised to capture upside by charting a new path in the
industry as a uniquely diversified infrastructure-first company
with increased access to more stable energy markets, new
capex-light and scalable fiat-based revenue streams like hosting
and managed services, strong high performance computing operations,
and expanded proprietary mining operations across North
America.”
“Throughout the third quarter, we weathered continued pressure
on our mining business while realizing a modest increase in
revenues from our high performance computing operations, which was
driven by sales booked in the first half of 2023,” said Shenif
Visram, CFO of Hut 8. “We have continued to focus on prudently
managing our costs, which partially offset our mining results,
while actively seeking ways to grow the business, including through
opportunities like the court-approved stalking horse bid to acquire
four natural gas facilities in Ontario totalling 310 MW which if
successful, could provide us with both access to energy pricing
certainty and future revenue generating optionality.”
Q3 2023 HIGHLIGHTS
- Revenue decreased by $14.7 million to $17.0 million during the
quarter ended September 30, 2023 compared to $31.7 million during
the quarter ended September 30, 2022 (“Q3 2022”).
- The Company mined 330 Bitcoin in the quarter ended September
30, 2023, an approximately 66% decrease compared to the quarter
ended September 30, 2022, primarily due to an increase in average
Bitcoin network difficulty causing a decrease in Bitcoin mined, the
impact of the suspension of operations at the Company’s North Bay
facility, a halt in the Company’s graphic processing units (“GPU”)
mining activities due to the Ethereum network’s change in consensus
mechanism from proof-of-work to proof-of-stake during Q3 2022, and
ongoing electrical issues at the Company’s Drumheller
facility.
- The Company’s high performance computing (“HPC”) operations
generated $4.5 million of primarily monthly recurring revenue in Q3
2023 compared to $4.4 million in Q3 2022 as a result of new sales
partially offset by customer churn. The new sales do not reflect
the recently signed five-year agreement with Interior Health, as
the revenue earned from the agreement will commence later in
2023.
- As previously reported, the Company encountered issues at the
Drumheller site, primarily stemming from high energy input levels
that have been causing miners to fail. This has materially reduced
operations, which are currently at approximately 27% of our
installed hash rate at the site. Throughout the remediation
process, the team implemented new custom firmware across all miner
models designed to lower the power supply's maximum output voltage,
ensuring our equipment operates within safe limits; increased
repair staff and added an additional repair centre shift; and
procured new hardware to expedite repairs and accelerate the speed
at which we bring miners back online. The electrical issues at the
Drumheller site were compounded by high energy rates in the third
quarter which further increased curtailment at the site.
- The Company’s installed hashrate was 2.6 EH/s (excluding the
Company’s North Bay facility) as of September 30, 2023 compared to
2.6 EH/s as of June 30, 2023.
BITCOIN INVENTORY AND VALUE
As at September 30, 2023, the Company had a total self-mined
Bitcoin balance held in custody or pledged as collateral of 9,366
with a market value of $341.4 million. During Q3 2023, 330 Bitcoin
were mined and 100 Bitcoin were sold, for which the Company
received proceeds of $3.9 million.
OPERATING AND FINANCIAL OVERVIEW
For the periods ended
September 30 |
Three Months Ended |
|
Nine Months Ended |
(CAD thousands, except per share amounts) |
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
2022 |
|
Operating
results |
|
|
|
|
|
Digital assets mined |
|
330 |
|
|
982 |
|
|
|
1,204 |
|
2,870 |
|
|
|
|
|
|
|
Financial
results |
|
|
|
|
|
Total revenue |
$ |
16,980 |
|
$ |
31,671 |
|
|
$ |
55,184 |
$ |
128,849 |
|
Net (loss) income |
|
(53,580 |
) |
|
(23,786 |
) |
|
|
38,210 |
|
(56,145 |
) |
Mining Profit(i) |
|
3,802 |
|
|
9,300 |
|
|
|
9,592 |
|
57,113 |
|
Adjusted EBITDA(i) |
|
(11,620 |
) |
|
9,418 |
|
|
|
121,720 |
|
(61,609 |
) |
|
|
|
|
|
|
Per
share |
|
|
|
|
|
Net income - basic |
$ |
(0.24 |
) |
$ |
(0.12 |
) |
|
$ |
0.17 |
$ |
(0.31 |
) |
Net income - diluted |
$ |
(0.24 |
) |
$ |
(0.12 |
) |
|
$ |
0.17 |
$ |
(0.31 |
) |
(i) Non-IFRS
measure - see "Non-IFRS Measures" section below. Certain
comparative figures have been restated where necessary to conform
with current period presentation. |
|
|
|
|
As at |
(CAD
thousands) |
|
|
|
September 30, 2023 |
December 31, 2022 |
Financial
position |
|
|
|
|
|
Cash |
|
|
|
$ |
21,140 |
$ |
30,515 |
|
Total digital assets |
|
|
|
|
341,660 |
|
203,627 |
|
Total assets |
|
|
|
|
496,629 |
|
412,937 |
|
Total liabilities |
|
|
|
|
99,250 |
|
61,547 |
|
Total shareholders’ equity |
|
|
|
|
397,379 |
|
351,390 |
|
Working Capital (ii) |
|
|
|
|
297,281 |
|
215,490 |
|
(ii) Calculated
as current assets less current liabilities. |
|
- Revenue decreased by $14.7 million to $17.0 million during Q3
2023 compared to $31.7 million during Q3 2022. The Company mined
330 Bitcoin in Q3 2023, an approximately 66% decrease compared to
Q3 2022, primarily due to an increase in average Bitcoin network
difficulty resulting in a decrease in Bitcoin mined, a halt in the
Company’s graphic processing units (“GPU”) mining activities due to
the Ethereum network’s change in consensus mechanism from
proof-of-work to proof-of-stake during Q3 2022, the impact of the
suspension of operations at the Company’s North Bay facility, and
ongoing electrical issues at the Company’s Drumheller facility
which continued from the fourth quarter of 2022. The decline in
revenue from the Company’s digital asset mining operations were
also partially offset by a higher Digital Asset Revenue per Bitcoin
Mined(i) due to the increase in the daily average closing Bitcoin
price in the current quarter versus the comparative quarter. The
Company’s HPC operations generated $4.5 million of primarily
monthly recurring revenue in Q3 2023 compared to $4.4 million in Q3
2022 as a result of new sales partially offset by customer churn.
The new sales do not reflect the recently signed five-year
agreement with Interior Health, as the revenue earned from the
agreement will commence later in 2023.
- Cost of revenue consists of site operating costs and
depreciation. The cost of revenue was $21.4 million for the third
quarter of 2023 compared to $45.6 million in the period year
period. Site operating costs consist primarily of electricity costs
as well as personnel, network monitoring, and equipment repair and
maintenance costs at our digital asset mining and HPC operations.
Site operating costs for Q3 2023, were $11.2 million, of which $8.7
million were attributable to our mining operations and $2.5 million
were attributable to our HPC operations. The site operating costs
for Q3 2022 were $20.3 million, of which $18.0 million were
attributable to our mining operations and $2.3 million were
attributable to our HPC operations. The Mining Cost per Bitcoin(i)
for Q3 2023 was $26,279 per Bitcoin, compared to $18,297 per
Bitcoin in the prior year for the same quarter. The increase was
due to higher power consumption per Bitcoin mined due to increased
Bitcoin network difficulty, suspension of operations at the
Company’s North Bay facility, and ongoing electrical issues at the
Drumheller facility, which was partially offset by the Company’s
decision to curtail, and lower average energy prices compared to
prior year same quarter. The increase in site operating costs
related to the HPC operations is primarily due to increased
occupancy and repairs and maintenance to improve the Company’s
facilities partially offset by lower software costs. Depreciation
expense decreased to $10.2 million during Q3 2023 compared to $25.3
million in the same quarter of 2022, primarily driven by the lower
net book value of digital asset mining plant and equipment after
the recognition of a non-cash impairment charge during the fourth
quarter of 2022 as part of annual impairment testing.
- Net loss for Q3 2023 was $53.6 million and net loss per share
was $0.24, compared to net loss of $23.8 million and net loss per
share of $0.12 in the prior year’s quarter. The increase in net
loss from Q3 2022 to Q3 2023 is primarily driven by the $20.0
million impairment of deposits related to the power purchase
agreement with Validus Power Corp. (“Validus”) recorded in Q3 2023,
and a loss on revaluation of digital assets recorded to income or
loss with a change of negative $17.5 million, partially offset by
an increase in gross profit of $9.5 million.
- Mining Profit(i) was $3.8 million for Q3 2023, compared to $9.3
million in the prior year’s quarter. The decrease in Mining
Profit(i) compared to the prior year’s quarter is mainly due to the
lower quantity of Bitcoin mined due to increased Bitcoin network
difficulty, halt in the Company’s GPU mining activities due to the
Ethereum network’s change in consensus mechanism from proof-of-work
to proof-of-stake during Q3 2022, the impact of the suspension of
operations at the Company’s North Bay facility, and the ongoing
electrical issues at the Company’s Drumheller facility noted above,
and was partially offset by lower average power prices and a higher
daily average closing Bitcoin price.
- Adjusted EBITDA(i) was negative $11.6 million for Q3 2023,
compared to a positive Adjusted EBITDA(i) of $9.4 million in the
prior year’s quarter, primarily driven by a loss on revaluation of
digital assets of $10.1 million versus a gain on revaluation of
digital assets of $7.3 million in the comparative quarter, a lower
digital asset Mining Profit(i).
For more information, please refer to the Company’s management's
discussion & analysis (the “MD&A”) and the Company’s
unaudited condensed consolidated interim financial statements for
the nine months ended September 30, 2023 and 2022. These documents
are available on the Company's website at hut8.com, under the
Company's SEDAR+ profile at www.sedarplus.ca, and under the
Company's EDGAR profile at www.sec.gov.
NON-IFRS MEASURES AND RATIOS
This press release makes reference to certain measures and
ratios that are not recognized under IFRS and do not have a
standardized meaning prescribed by International Financial
Reporting Standards (“IFRS”). They are therefore not necessarily
comparable to similar measures or ratios presented by other
companies. The Company uses non-IFRS measures and ratios including
“Mining Profit”, “Adjusted EBITDA”, “Digital Asset Revenue per
Bitcoin Mined”, and “Mining Cost per Bitcoin” as additional
information to complement IFRS measures by providing further
understanding of the Company’s results of operations from
Management’s perspective and should not be viewed as alternatives
to, or replacements of, measures of operating results and liquidity
presented in accordance with IFRS.
The following tables and definitions reconcile non-IFRS measures
and ratios used by the Company to analyze the operational
performance of Hut 8 to their nearest IFRS measure and should be
read in conjunction with the Company’s unaudited condensed
consolidated interim financial statements for the nine months ended
September 30, 2023 and 2022.
________________________ (i) Non-IFRS measure
or ratio - see "Non-IFRS Measures and Ratios" section below.
Certain comparative figures have been restated where necessary to
conform with current period presentation.
Mining Profit
“Mining Profit” represents gross profit (revenue less cost of
revenue), excluding depreciation and revenue and site operating
costs directly attributable to hosting services and high
performance computing operations. Mining Profit shows profitability
of the Company’s core digital asset mining operation, without the
impact of non-cash depreciation expense. Mining Profit measure
provides investors the ability to assess the profitability of the
mining operations exclusive of general and administrative
expenses.
The following table reconciles gross (loss) profit to our
non-IFRS measure, Mining Profit:
For the periods ended September
30 |
Three Months Ended |
|
Nine Months Ended |
(CAD thousands) |
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
Gross (loss) profit |
$ |
(4,469 |
) |
$ |
(13,940 |
) |
|
$ |
(15,327 |
) |
$ |
(1,326 |
) |
|
|
|
|
|
|
Add (deduct): |
|
|
|
|
|
Revenue from hosting |
|
– |
|
|
– |
|
|
|
– |
|
|
(751 |
) |
Revenue from high performance computing |
|
(4,506 |
) |
|
(4,403 |
) |
|
|
(13,193 |
) |
|
(12,404 |
) |
Site operating costs attributable to hosting and high performance
computing |
|
2,540 |
|
|
2,304 |
|
|
|
7,524 |
|
|
6,986 |
|
Depreciation |
|
10,237 |
|
|
25,339 |
|
|
|
30,588 |
|
|
64,608 |
|
Mining Profit |
$ |
3,802 |
|
$ |
9,300 |
|
|
$ |
9,592 |
|
$ |
57,113 |
|
Adjusted EBITDA
“Adjusted EBITDA” represents EBITDA (net income or loss
excluding net finance income or expense, income tax or recovery,
depreciation, and amortization) adjusted to exclude non-cash
share-based compensation, fair value gain or loss on revaluation of
warrants, non-recurring impairment charges or reversals of
impairment, and costs associated with one-time or non-recurring
transactions. Adjusted EBITDA is used to assess profitability
without the impact of non-recurring non-cash accounting policies,
capital structure, taxation, and one-time or non-recurring
transactions. This performance measure provides a consistent
comparable metric for profitability of the Company across time
periods.
The following table reconciles net (loss) income to our non-IFRS
measure, Adjusted EBITDA:
For the periods ended September
30 |
Three Months Ended |
|
Nine Months Ended |
(CAD thousands) |
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
Net (loss) income |
$ |
(53,580 |
) |
$ |
(23,786 |
) |
|
$ |
38,210 |
|
$ |
(56,145 |
) |
|
|
|
|
|
|
Add (deduct): |
|
|
|
|
|
Net finance expense |
|
2,487 |
|
|
1,865 |
|
|
|
5,356 |
|
|
4,700 |
|
Depreciation and amortization |
|
10,413 |
|
|
25,683 |
|
|
|
31,118 |
|
|
65,524 |
|
Impairment of deposits related to power purchase agreement |
|
20,000 |
|
|
– |
|
|
|
20,000 |
|
|
– |
|
Share based payment |
|
2,258 |
|
|
1,895 |
|
|
|
7,770 |
|
|
5,171 |
|
Foreign exchange loss |
|
1,024 |
|
|
844 |
|
|
|
733 |
|
|
1,528 |
|
One-time transaction costs |
|
2,423 |
|
|
– |
|
|
|
17,598 |
|
|
1,611 |
|
North Bay decommissioning costs |
|
140 |
|
|
– |
|
|
|
1,059 |
|
|
– |
|
Deferred income tax expense |
|
3,127 |
|
|
– |
|
|
|
– |
|
|
9,593 |
|
Sales tax expense |
|
– |
|
|
– |
|
|
|
– |
|
|
913 |
|
Loss (gain) on revaluation of warrants |
|
– |
|
|
2,917 |
|
|
|
(212 |
) |
|
(94,504 |
) |
Gain on lease liability remeasurement |
|
(339 |
) |
|
– |
|
|
|
(339 |
) |
|
– |
|
Loss on sale of plant and equipment |
|
427 |
|
|
– |
|
|
|
427 |
|
|
– |
|
Adjusted EBITDA |
$ |
(11,620 |
) |
$ |
9,418 |
|
|
$ |
121,720 |
|
$ |
(61,609 |
) |
Digital Asset Revenue per Bitcoin Mined
“Digital Asset Revenue per Bitcoin Mined” represents revenue,
excluding revenue from hosting services and high performance
computing operations, measured on a per Bitcoin mined basis during
a period. Digital Asset Revenue per Bitcoin Mined is used and
provides investors the ability to assess the average revenue earned
per Bitcoin mined during a period by the Company’s digital asset
mining operations.
The following table reconciles revenue to our non-IFRS ratio,
Digital Asset Revenue per Bitcoin Mined:
For the
three months ended(CAD thousands, except per Bitcoin amounts) |
September 30, 2023Q3 |
|
September 30, 2022Q3 |
|
Revenue |
$ |
16,980 |
|
$ |
31,671 |
|
|
|
|
Deduct: |
|
|
Revenue from high performance computing |
|
(4,506 |
) |
|
(4,403 |
) |
Digital asset revenue |
|
12,474 |
|
|
27,268 |
|
|
|
|
Divided by: |
|
|
Number of Bitcoin mined |
|
330 |
|
|
982 |
|
Digital Asset Revenue per Bitcoin Mined |
$ |
37,800 |
|
$ |
27,768 |
|
Mining Cost per Bitcoin
“Mining Cost per Bitcoin” represents the cost of revenue,
excluding site operating costs attributable to hosting services and
high performance computing operations, and depreciation, measured
on a per Bitcoin mined basis during a period. Mining Cost per
Bitcoin is used and provides the investors the ability to evaluate
the efficiency of the Company’s digital asset mining operations
exclusive of general and administrative expenses.
The following table reconciles cost of revenue to our non-IFRS
ratio, Mining Cost per Bitcoin:
For the periods ended September
30 |
Three Months Ended |
|
Nine Months Ended |
(CAD thousands, except per Bitcoin amounts) |
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
Cost of revenue |
$ |
(21,449 |
) |
$ |
(45,611 |
) |
|
$ |
(70,511 |
) |
$ |
(130,175 |
) |
|
|
|
|
|
|
Add (deduct): |
|
|
|
|
|
Site operating costs attributable to hosting and high performance
computing |
|
2,540 |
|
|
2,304 |
|
|
|
7,524 |
|
|
6,986 |
|
Depreciation |
|
10,237 |
|
|
25,339 |
|
|
|
30,588 |
|
|
64,608 |
|
Mining cost |
|
(8,672 |
) |
|
(17,968 |
) |
|
|
(32,399 |
) |
|
(58,581 |
) |
|
|
|
|
|
|
Divided by: |
|
|
|
|
|
Number of Bitcoin mined |
|
330 |
|
|
982 |
|
|
|
1,204 |
|
|
2,870 |
|
Mining Cost per Bitcoin |
$ |
(26,279 |
) |
$ |
(18,297 |
) |
|
$ |
(26,909 |
) |
$ |
(20,411 |
) |
CORPORATE UPDATES
Hut 8 and U.S. Data Mining Group, Inc., doing business as US
Bitcoin Corp (“USBTC”) continue to make progress on the proposed
business combination pursuant to which the two companies will
combine in all-stock merger of equals (the “Transaction”). The
combined company will be named “Hut 8 Corp.” (“New Hut”) and will
be a U.S.-domiciled entity. The Transaction is expected to
establish New Hut as a large scale, publicly traded Bitcoin miner
focused on economical mining, highly diversified revenue streams,
and industry leading environmental, social, and governance (ESG)
practices.
On September 13, 2023, Hut 8 announced that at a special meeting
of the Company’s shareholders, shareholders voted in favour of the
resolutions, approving the Transaction. On September 18, 2023, the
Company announced that it obtained a final order approving the plan
of arrangement with USBTC from the Supreme Court of British
Columbia.
On July 17, August 24, and September 19, 2023, respectively, the
Company announced that it filed further amendments to its
registration statement on Form S-4 (as amended, the “Registration
Statement”) with the U.S. Securities and Exchange Commission (the
“SEC”).
On November 9, the Registration Statement was declared effective
by the SEC.
The Transaction is particularly strategic as it will establish
New Hut with geographic diversity across its self-mining business,
which will include differentiated energy sources in a variety of
markets and improve efficiencies at the miner level by using
proprietary, purpose-built software that can identify and mitigate
machine and energy price issues in real-time. Notably, it will
further diversify capex-light fiat revenue lines of business by
adding USBTC’s 220 MW hosting and 680 MW managed services
businesses to Hut 8’s existing HPC and repair centre operations.
Completion of the Transaction is subject to USBTC stockholder
approval and other customary closing conditions. Hut 8 expects the
Transaction to close by November 30, 2023.
On August 11, 2023, the Company announced that it entered into a
transaction support agreement (the “Support Agreement”) with
Macquarie Equipment Finance Ltd. (“Macquarie”) a subsidiary of
Macquarie Group Limited, a global financial services group, in
support of an opportunity to potentially acquire certain assets of
Validus and Validus’ subsidiaries (collectively, the “Validus
Entities”). Validus was previously a supplier of energy to the
Company’s mining facility in North Bay, Ontario. Macquarie is a
secured creditor of the Validus Entities under an existing secured
lease and participation agreement.
Pursuant to an order of the Ontario Superior Court of Justice
(Commercial List) (the "Court") issued on August 10, 2023, on
application by Macquarie, KSV Restructuring Inc. (“KSV”), a
licensed insolvency trustee with extensive experience in
receivership mandates, was appointed as receiver of the property,
assets, and undertakings of the Validus Entities (KSV in such
capacity, the "Receiver").
Subject to the satisfaction of certain conditions, under the
terms of the Support Agreement, a stalking horse bid (the “Stalking
Horse Bid”) is to be submitted to the Receiver in support of a
proposed sale and investment solicitation process to be carried out
in respect of the Validus Entities.
On November 3, 2023, the Company announced that it received
approval from the Court to submit a stalking horse bid as part of
the Support Agreement. In connection with the Stalking Horse Bid,
the Court has also approved the implementation of a sale and
investment solicitation process (“SISP”) to be carried out in
respect of the Validus Entities.
If the Stalking Horse Bid is ultimately declared the successful
bid in the SISP, as further approved by the Court, and completed in
accordance with its terms, a new Ontario subsidiary of the Company
("BidCo") will become the owner of the assets of
certain Validus Entities. Macquarie will receive a minority equity
interest in BidCo of approximately 20% and a subsidiary of Hut 8
will be the majority owner with the remaining approximately 80%. On
completion of the Stalking Horse Bid in accordance with the SISP,
BidCo would acquire, free and clear of any encumbrances (excluding
certain permitted encumbrances) four natural gas power plants
located in Ontario:
- 40 MW facility in Kapuskasing
- 110 MW facility in Kingston
- 120 MW facility in Iroquois Falls
- 40 MW facility and Bitcoin mine in North Bay
In addition, a successful stalking horse bid is expected to
result in the full and final resolution of all litigation claims
and counterclaims currently pending between Hut 8 and certain
Validus Entities. Further details in respect of any stalking horse
bid will be provided if and as conditions warrant and subject to,
among other things, the acceptance of a Stalking Horse Bid by the
Receiver and approval of the Court.
CONFERENCE CALL
Hut 8 Mining Q3 2023 webcast will commence at 10 a.m. ET,
today.
To join the live webcast, please visit
https://ow.ly/UzQJ50Q3GnE
Analyst Coverage of Hut 8 Mining:
A full list of Hut 8 Mining analyst coverage can be found here:
https://hut8.com/investors/
About Hut 8Through innovation, imagination, and
passion, Hut 8’s seasoned executive team is bullish on building and
operating computing infrastructure that powers Bitcoin mining,
traditional data centres, and emerging technologies like AI and
machine learning. Hut 8's infrastructure portfolio includes seven
sites: five high performance computing data centres across British
Columbia and Ontario that offer cloud, co-location, managed
services, A.I., machine learning, and VFX rendering computing
solutions, and two Bitcoin mining sites located in Southern
Alberta. Long-distinguished for its unique treasury strategy, Hut 8
has one of the highest inventories of self-mined Bitcoin of any
publicly-traded company globally. Follow us on X (formerly known as
Twitter) at @Hut8Mining.
FORWARD-LOOKING INFORMATIONThis press release
includes “forward-looking information” and “forward-looking
statements” within the meaning of Canadian securities laws and
United States securities laws, respectively (collectively,
“forward-looking information”). All information, other than
statements of historical facts, included in this press release that
address activities, events or developments that the Company expects
or anticipates will or may occur in the future, including such
things as future business strategy, competitive strengths, goals,
expansion and growth of the Company’s businesses, operations, plans
and other such matters is forward-looking information.
Forward-looking information is often identified by the words “may”,
“would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”,
“believe”, “estimate”, “expect” or similar expressions. In
addition, any statements that refer to expectations, projections or
other characterizations of future events or circumstances contain
forward-looking information. Specifically, such forward-looking
information included in this press release include, but are not
limited to, statements with respect to the following: the Company’s
position and ability to seize opportunities in the digital asset
industry; the Company’s ability to advance the HODL strategy in the
long-term; the Company’s growth strategy; expectations for other
economic, business, regulatory and/or competitive factors related
to the Company or the Bitcoin industry generally; projected hash
rate, expenses and profitability; the ability of the Company to
react to digital asset price volatility; fluctuating power and
energy costs; the ability of the Company to navigate increased
network difficulty; the remediation of the operational issues at
the Company’s Drumheller facility, and the timing thereof; the
expected outcomes of the Transaction, including New Hut's assets
and financial position; the ability of Hut 8 and USBTC to complete
the Transaction on the terms described herein, or at all,
including, receipt of required regulatory approvals, USBTC
stockholder approval, stock exchange approvals and satisfaction of
other closing customary conditions; the expected timing of the
closing of the Transaction; the expected synergies related to the
Transaction in respect of strategy, operations and other matters;
projections related to expansion; expectations related to New Hut’s
hashrate and self-mining capacity; expected ESG efforts and
commitments; and the ability of New Hut to execute on future
opportunities; the timing and completion (if at all) of a Stalking
Horse Bid; the timing and completion (if at all) of a proposed sale
and investment solicitation process; the timing of the proceedings
in respect of the Receiver; and the expected resolution of
litigation claims between Hut 8 and certain Validus Entities.
Statements containing forward-looking information are not
historical facts, but instead represent management’s expectations,
estimates and projections regarding future events based on certain
material factors and assumptions at the time the statement was
made. Material assumptions include: assumptions regarding the level
of demand and financial performance of the digital asset industry;
effective tax rates; the U.S./Canadian dollar exchange rate;
inflation; access to capital; timing and receipt of regulatory
approvals; acquisition and divestiture activities, operational
expenses, returns on investments, transaction costs, fluctuations
in energy prices and the Company’s energy requirements, the ability
to obtain requisite approvals and the satisfaction of other
conditions to the consummation of the Transaction and the Stalking
Horse Bid on the proposed terms or at all; the anticipated timeline
for the completion of the Transaction and the Stalking Horse Bid;
the ability to realize the anticipated benefits of the Transaction
and the Stalking Horse Bid; the ability to implement the business
plan for New Hut, including as a result of a delay in completing
the Transaction or difficulty in integrating the businesses of the
companies involved (including the retention of key employees); the
potential impact of the consummation of the Transaction on
relationships, including with regulatory bodies, employees,
suppliers, customers, competitors and other key stakeholders; and
the outcome of any litigation proceedings in respect of the
Company’s legal dispute with Validus.
Forward-looking information is necessarily based on a number of
opinions, assumptions and estimates that, while considered
reasonable by Hut 8 as of the date of this press release, are
subject to known and unknown risks, uncertainties, assumptions and
other factors that may cause the actual results, level of activity,
performance or achievements to be materially different from those
expressed or implied by such forward-looking information, including
but not limited to: security and cybersecurity threats and hacks;
malicious actors or botnet obtaining control of processing power on
the Bitcoin network; further development and acceptance of the
Bitcoin network; changes to Bitcoin mining difficulty; loss or
destruction of private keys; increases in fees for recording
transactions in the Blockchain; erroneous transactions; reliance on
a limited number of key employees; reliance on third party mining
pool service providers; regulatory changes; classification and tax
changes; momentum pricing risk; fraud and failure related to
digital asset exchanges; difficulty in obtaining banking services
and financing; difficulty in obtaining insurance, permits and
licenses; internet and power disruptions; geopolitical events;
uncertainty in the development of cryptographic and algorithmic
protocols; uncertainty about the acceptance or widespread use of
digital assets; failure to anticipate technology innovations;
climate change; currency risk, lending risk and recovery of
potential losses; litigation risk; business integration risk;
changes in market demand; inflationary pressures and the rising
cost of capital; changes in network and infrastructure; system
interruption; changes in leasing arrangements; counterparty risk;
failure to achieve intended benefits of power purchase agreements;
potential for interrupted delivery, or suspension of the delivery,
of energy to the Company’s mining sites; the Company’s and USBTC’s
ability to establish and maintain strategic collaborations,
licensing or other arrangements, and the terms of and timing such
arrangements; the timing to consummate the Transaction; the failure
to satisfy the conditions to close the Transaction; the inherent
risks, costs and uncertainties associated with not achieving all or
any of the anticipated benefits and synergies of the Transaction,
or the risk that the anticipated benefits and synergies of the
Transaction may not be fully realized or take longer to realize
than expected; the timing and completion (if at all) of the
Stalking Horse Bid; statements with respect to the SISP; and the
expected resolution of litigation claims between Hut 8 and certain
Validus Entities; the ability to implement business plans,
forecasts, and other expectations; the ability to identify and
realize additional opportunities and other risks related to the
digital asset mining and data centre business. For a complete list
of the factors that could affect the Company, please see the “Risk
Factors” section of the Company’s Annual Information Form dated
March 9, 2023, and Hut 8’s other continuous disclosure documents
which are available on Company’s website at hut8.com, under the
Company’s SEDAR+ profile at www.sedarplus.ca and under the
Company’s EDGAR profile at www.sec.gov.
These factors are not intended to represent a complete list of
the factors that could affect Hut 8, USBTC, or New Hut; however,
these factors should be considered carefully. There can be no
assurance that such estimates and assumptions will prove to be
correct. Should one or more of these risks or uncertainties
materialize, or should assumptions underlying the forward-looking
statements prove incorrect, actual results may vary materially from
those described in this press release as intended, planned,
anticipated, believed, sought, proposed, estimated, forecasted,
expected, projected or targeted and such forward-looking statements
included in this press release should not be unduly relied upon.
The impact of any one assumption, risk, uncertainty, or other
factor on a particular forward-looking statement cannot be
determined with certainty because they are interdependent and Hut
8’s future decisions and actions will depend on management’s
assessment of all information at the relevant time. The
forward-looking statements contained in this press release are made
as of the date of this press release, and Hut 8 expressly disclaims
any obligation to update or alter statements containing any
forward-looking information, or the factors or assumptions
underlying them, whether as a result of new information, future
events or otherwise, except as required by law. Except where
otherwise indicated herein, the information provided herein is
based on matters as they exist as of the date of preparation and
not as of any future date, and will not be updated or otherwise
revised to reflect information that subsequently becomes available,
or circumstances existing or changes occurring after the date of
preparation.
ADDITIONAL INFORMATION ABOUT THE TRANSACTION AND WHERE
TO FIND IT In connection with the transaction, that, if
completed, would result in New Hut becoming a new public company,
New Hut has filed a registration statement on Form S-4 (as amended,
the “Registration Statement”) with the U.S. Securities and Exchange
Commission’s ("SEC"). USBTC and Hut 8 urge investors, shareholders,
and other interested persons to read the Registration Statement,
including any amendments thereto, the Hut 8 meeting circular, as
well as other documents filed or to be filed with the SEC and
documents to be filed with Canadian securities regulatory
authorities in connection with the transaction, as these materials
do and will contain important information about USBTC, Hut 8, New
Hut and the transaction. New Hut also has, and will, file other
documents regarding the transaction with the SEC. This press
release is not a substitute for the Registration Statement or any
other documents that may be sent to Hut 8’s shareholders or USBTC's
stockholders in connection with the transaction. Investors and
security holders are or will be able to obtain free copies of the
Registration Statement and all other relevant documents filed or
that will be filed with the SEC by New Hut through the website
maintained by the SEC at www.sec.gov or by contacting the investor
relations department of Hut 8 at info@hut8.io and of USBTC at
info@usbitcoin.com.
NO OFFER OR SOLICITATION This press release is
not intended to and shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended (the “Securities Act”) or in a transaction exempt from the
registration requirements of the Securities Act.
INVESTOR CONTACT:Sue Ennissue@hut8.io
MEDIA CONTACT:Erin
Dermererin.dermer@hut8.io
Hut 8 (TSX:HUT)
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