Strong quarterly revenue of $53.3
million
Bitcoin holdings increased 17% to
6,460
Adjusted EBITDA(i) of
$27.1 million
High
performance computing business delivered solid financial
results
TORONTO, May 12, 2022 /PRNewswire/ -- Hut 8 Mining Corp.
(Nasdaq: HUT) (TSX: HUT) ("Hut 8" or the "Company"), one of
North America's largest,
innovation-focused digital asset mining pioneers, supporting open
and decentralized systems since 2018, is pleased to announce its
financial results for the quarter ended March 31, 2022. All dollar figures are in
Canadian Dollars ("CAD"), unless otherwise stated.
"We made measurable progress in the first quarter of 2022,
significantly advancing our diversification strategy by completing
the acquisition of five data centres and cementing our role as the
only digital asset mining company that is delivering the high
performance computing infrastructure to support companies in the
blockchain and Web 3.0 spaces," said Jaime
Leverton, CEO of Hut 8. "Thanks to our leadership role in
the digital asset mining industry backed by our HODL strategy, we
are uniquely positioned to seize opportunities in this burgeoning
industry as they arise."
"Our mining operations, thanks in large part to the installation
of nearly 9,600 new MicroBT miners, continued to deliver strong
results during the first quarter," said Shane Downey, CFO of Hut 8. "We realized strong
revenue and profitability while advancing our HODL strategy, and
are confident that we have the fundamentals in place to serve us
for the long term."
Q1 2022 HIGHLIGHTS
- Revenue increased 67% to $53.3
million during the quarter ended March 31, 2021, with our self-mining operations
generating $49.3 million of revenue
on 942 Bitcoin mined.
- The Company installed 9,592 new MicroBT M30S, M30S+, and M31S+
miners at the Drumheller and
Medicine Hat facilities in
Alberta. The installation of these
miners brought the Company's operating capacity to 2.54 EH/s, an
increase of 27% from December 31,
2021.
- The acquisition of TeraGo Inc.'s cloud services and colocation
data centre business was completed on January 31, 2022, establishing the Company as a
leader in high performance computing, with five data centres across
Ontario and British Columbia and approximately 400
commercial customers. The high performance computing operation
currently contributes monthly recurring revenue of approximately
$1.6 million.
(i)
Non-IFRS measure - see "Non-IFRS Measures" section
below.
|
-
- The Company expanded its management team with the appointment
of Erin Dermer as Vice President
Marketing, Communications, and Public Affairs; James Beer as Senior Vice President Operations;
and Josh Rayner as Vice President
Sales. Collectively, these individuals bring more than 45 years of
leadership of experience to the Company to support the growth of
its operations.
OPERATING AND FINANCIAL
OVERVIEW
For the
periods ended March 31
|
|
|
Three Months
Ended
|
(CAD thousands,
except per share amounts)
|
|
|
|
2022
|
2021(i)
|
Operating
results
|
|
|
|
|
|
Digital assets mined
|
|
|
|
942
|
539
|
|
|
|
|
|
|
Financial
results
|
|
|
|
|
|
Total revenue
|
|
|
|
$
53,333
|
$
31,983
|
Net
income
|
|
|
|
55,708
|
19,134
|
Mining profit (ii)
|
|
|
|
32,906
|
17,498
|
Adjusted EBITDA (ii)
|
|
|
|
27,109
|
16,181
|
|
|
|
|
|
|
Earnings Per
Share
|
|
|
|
|
|
Net
income - basic
|
|
|
|
$
0.33
|
$
0.17
|
Net
income - diluted
|
|
|
|
$
0.31
|
$
0.15
|
(i)
Non-IFRS measure - see "Non-IFRS
Measures" section below.
(ii)
Certain comparative figures have been
restated where necessary to conform with current period
presentation.
|
|
|
|
|
|
As At
|
(CAD
thousands)
|
|
|
|
March 31,
2022
|
December 31,
2021
|
Financial
position
|
|
|
|
|
|
Cash
|
|
|
|
$
78,524
|
$
140,127
|
Total digital assets
|
|
|
|
367,600
|
323,946
|
Total assets
|
|
|
|
753,443
|
720,709
|
Total liabilities
|
|
|
|
102,886
|
154,741
|
Total shareholder's equity
|
|
|
|
650,557
|
565,968
|
|
|
|
|
|
|
|
- Revenue for the quarter ended March 31,
2022, was $53.3 million
compared to $32.0 million in the
prior year period. The increase was primarily driven by the
Company's digital asset mining operations, where the Company mined
942 Bitcoin and generated $49.3
million of revenue, versus 539 Bitcoin mined and
$30.6 million of revenue in the prior
year period. The increase in Bitcoin mined is due to the deployment
of incremental higher efficiency miners during the quarter in 2022
compared to the same period in 2021. The increase in revenue due to
higher number of Bitcoin mined was partially offset by a decrease
in average Bitcoin price, which resulted in average revenue per
Bitcoin mined of $52,327 for the
quarter compared to $56,692 in the
prior year's quarter. Hosting revenue was $0.8 million for the quarter compared to
$1.4 million in the prior year's
quarter. The decrease in hosting revenue is due to a reduced number
of hosting clients, as the Company acquired the digital asset
mining equipment from one of two historical hosting customers in
December 2021.
- The Company's newly acquired high performance computing
operations added $3.3 million of
revenue, reflecting two months' worth of contributions. The Company
estimates that recurring revenue from the high performance
computing business will increase 15-18% over the course of 2022.
Hut 8's preliminary view is that this acquired business will
generate gross margins ranging between 35% and 40%, with
opportunities to further optimize margins going forward.
- Cost of revenue consists of site operating costs and
depreciation and was $36.9 million
for the first quarter of 2022 compared to $19.8 million in the prior year period. Site
operating costs consist primarily of electricity costs as well as
personnel, network monitoring, software licensing and equipment
repair and maintenance costs at our mining and high performance
computing operations. Site operating costs for the quarter ended
March 31, 2022 were $18.5 million, of which $16.9 million was attributable to our mining
operations and $1.6 million was
attributable to our high performance computing operations. The
average cost of mining each Bitcoin for the first quarter of 2022
was approximately $18,000, compared
to approximately $25,900 in the prior
year for the same period. The decrease is primarily due to
deployment of a larger and significantly more efficient fleet of
mining equipment. Depreciation expense increased to $18.4 million during the first quarter of 2022
compared to $5.8 million in the same
period of 2021, driven by the increased number of miners deployed
during the quarter as well as $0.7
million of additional depreciation from our newly acquired
high performance computing operations.
- Net income was $55.7 million and
net income per share was $0.33 for
the three months ended March 31,
2022, compared with net income of $19.1 million and net income per share of
$0.17 for the same period in 2021.
The change was driven by the higher revenue and non-cash gain on
revaluation of warrant liability recorded in first quarter of 2022
partially offset by lower general and administrative expenses
incurred in first quarter of 2021.
- Adjusted EBITDA(i) (a non-IFRS measure) increased by
$10.9 million for the quarter ended
March 31, 2022, compared to the same
period in 2021. The increase was driven by higher digital asset
mining profit(i), partially offset by higher general and
administrative expenses incurred to support the growth in the
Company's operations.
- Digital assets consist of Bitcoin, which had a balance of 6,460
Bitcoin and a market value of $367.6
million as of March 31, 2022.
This balance consisted of 4,460 Bitcoin held in custody and 2,000
held under lending arrangements.
NON-IFRS MEASURES
This press release makes reference to certain measures that are
not recognized under IFRS and do not have a standardized meaning
prescribed by IFRS. They are therefore not necessarily comparable
to similar measures presented by other companies. The Company uses
non-IFRS measures including "Adjusted EBITDA" and "Mining profit"
as additional information to complement IFRS measures by providing
further understanding of the Company's results of operations from
Management's perspective.
The following tables reconcile non-IFRS measures 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
unaudited condensed consolidated interim statement of operations
and comprehensive income (loss) and unaudited condensed
consolidated interim statement of cash flows included in the
unaudited condensed consolidated interim financial statements for
the quarter ended March 31, 2022.
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. Mining
profit shows profitability of the Company's core digital asset
mining operation, without the impact of non-cash depreciation
expense.
The following table reconciles Gross profit to our non-IFRS
measure, Mining profit:
For the three months
ended March 31
|
2022
|
2021
|
Gross profit
|
$
16,455
|
$
12,207
|
|
|
|
Add
(deduct):
|
|
|
Revenue from hosting
|
(751)
|
(1,426)
|
Revenue from high performance computing
|
(3,290)
|
-
|
Site operating costs
attributable to hosting and high
performance
computing
|
2,127
|
915
|
Depreciation
|
18,365
|
5,802
|
Mining
profit
|
$
32,906
|
$
17,498
|
(i) Non-IFRS measure -
see "Non-IFRS Measures" section below.
|
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 digital assets, 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-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 income to our non-IFRS
measure, Adjusted EBITDA:
For the three months
ended March 31
|
2022
|
2021
|
Net income
|
$
55,708
|
$
19,134
|
|
|
|
Add
(deduct):
|
|
|
Net
finance expense (income)
|
1,292
|
(348)
|
Depreciation and amortization
|
18,594
|
5,802
|
Share based payment
|
1,299
|
2,756
|
Gain on disposition of digital assets
|
-
|
(182)
|
Foreign exchange
|
711
|
431
|
Share based payment taxes withholding
|
-
|
1,246
|
One-time transaction costs
|
1,611
|
-
|
Deferred income tax expense (recovery)
|
1,121
|
(13,370)
|
Sales tax expense
|
913
|
712
|
Gain on revaluation of warrants liability
|
(54,140)
|
-
|
|
$
27,109
|
$ 16,181
|
CONFERENCE CALL
Hut 8 Q1 2022 conference call will commence at 10 a.m. ET, today, May 12,
2022. Those wishing to join via telephone should dial in 5
minutes early:
- Within Canada: 1-866-455-3403
access code: 81669575#
- Within the US: 1-866-374-5140 access code: 81669575#
Analyst Coverage of Hut 8
Mining:
A full list of Hut 8 Mining analyst coverage can be found
here.
FORWARD-LOOKING
INFORMATION
This 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; estimates of increased
recurring revenue from the Company's high-performance computing
business and the amount thereof; and the Company's estimated
margins of the high performance computing business and its ability
to optimize margins in the future.
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, the
expected impact of the COVID-19 pandemic, inflation, access to
capital, timing and receipt of regulatory approvals, acquisition
and divestiture activities, operational expenses, returns on
investments and transaction costs.
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
cryptocurrency 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
cryptocurrency, failure to anticipate technology innovations, the
COVID19 pandemic, climate change, currency risk, lending risk and
recovery of potential losses, litigation risk, business integration
risk, changes in market demand, changes in network and
infrastructure, system interruption, changes in leasing
arrangements, and other risks related to the cryptocurrency 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 17, 2022 and Hut 8's other continuous
disclosure documents which are available on www.sedar.com.
These factors are not intended to represent a complete list of
the factors that could affect Hut 8; 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.
Neither the Toronto Stock Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the Toronto
Stock Exchange) accepts responsibility for the adequacy or accuracy
of this release.
ABOUT HUT 8
Hut 8 is a digital asset mining company with industrial-scale
operations in Alberta, Canada. The
Company is one of North America's
largest innovation-focused digital asset miners, supporting open
and decentralized systems since 2018. Located in energy rich
Alberta, Canada, Hut 8 has one of
the highest installed capacity rates in the industry and one of the
largest holdings of self-mined Bitcoin relative to other digital
asset miners and publicly traded companies globally. Hut 8 is
executing on its strategy of mining and holding Bitcoin, while
building a diversified business and revenue strategy to grow and
protect shareholder value, regardless of Bitcoin price action. The
Company's multi-pronged business strategy includes profitable
digital asset mining, white-label high-performance compute hosting,
as well as yield & income programs leveraging its Bitcoin held
in reserve. Having demonstrated rapid growth and a stellar balance
sheet, Hut 8 was the first publicly traded miner on the TSX and the
first Canadian miner to be listed on The Nasdaq Global Select
Market. Through innovation, imagination, and passion, Hut 8 is
helping to define the digital asset revolution to create value and
positive impacts for its shareholders and generations to come.
INVESTOR CONTACT: Sue Ennis,
sue@hut8mining.com; MEDIA CONTACT: Erin
Dermer, erin.dermer@hut8mining.com
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