Strong quarterly revenue of $43.8 million
Bitcoin holdings increased 14.6% to 7,406 in
Q2
Achieved adjusted EBITDA(i)
of $6.8 million
TORONTO, Aug. 11,
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 and high performance computing
infrastructure provider, is pleased to announce its financial
results for the quarter ended June 30,
2022. All dollar figures are in Canadian Dollars ("CAD"),
unless otherwise stated.
"We have been anticipating market volatility for nearly a year
and took proactive measures to successfully navigate the current
downturn through the balance of the cycle," said Jaime Leverton, CEO of Hut 8. "Our continued
growth in digital asset mining operations and in our Bitcoin
reserves, coupled with our first full quarter generating
uncorrelated fiat revenue in our high performance computing
business, has positioned us well to drive future success."
"Our operational orientation and conservative, balance sheet
first approach continued to serve us well in the second quarter,"
said Shane Downey, CFO of Hut 8. "We
generated strong revenue in our digital asset mining business, made
strides in solidifying and growing our high performance computing
business and remain focused on the continued health of the company
overall."
Q2 2022 HIGHLIGHTS
- Revenue increased by $10.3
million to $43.8 million
compared to $33.5 million for the
quarter ended June 30, 2021 ("Q2
2021").
- The Company mined 946 Bitcoin in the quarter ended June 30, 2022 ("Q2 2022"), a 71% increase
compared to the same period in 2021 due to an increase in hashrate
from additional highly efficient miners and initial ramping of
activities at Hut 8's third mining site in North Bay, Ontario.
- Hut 8's high performance computing operations generated
$4.7 million of revenue in the
quarter, the majority of which is monthly recurring revenue.
- Hut 8's mining site in North Bay,
Ontario has been gradually ramping up with approximately 20
MW of power and approximately 5,800 miners installed as of
June 30, 2022, which are adding
approximately 565 PH/s to Hut 8's mining capacity.
- The Company installed 7,199 new MicroBT M30S, M30S+, and M31S+
miners at the Drumheller, Alberta,
Medicine Hat, Alberta, and
North Bay, Ontario facilities
during Q2 2022. The installation of these miners brought Hut 8's
operating capacity to 2.78 EH/s as of June
30, 2022, an increase of 9% in hashrate compared to
March 31, 2022.
- The Company further strengthened its executive team with the
appointment of Aniss Amdiss as Chief Legal Officer, effective
July 11, 2022.
_______________________
|
(i)
|
EBITDA, Adjusted EBITDA
and mining profit are non-IFRS performance measures; refer to the
Non-IFRS Measures section of this press release.
|
FINANCIAL SUMMARY
For the periods
ended June 30
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
(CAD thousands,
except per share amounts)
|
2022
|
2021
|
|
2022
|
2021
|
|
|
Operating
results
|
|
|
|
|
|
|
|
Digital assets
mined
|
946
|
553
|
|
1,888
|
1,092
|
|
|
|
|
|
|
|
|
|
|
Financial
results
|
|
|
|
|
|
|
|
Total
revenue
|
$
43,845
|
$
33,549
|
|
$
97,178
|
$
65,532
|
|
|
Net (loss)
income
|
(88,067)
|
(4,040)
|
|
(32,359)
|
15,094
|
|
|
Mining profit
(i)
|
14,904
|
19,329
|
|
47,813
|
37,272
|
|
|
Adjusted EBITDA
(i)
|
6,762
|
14,356
|
|
33,871
|
30,608
|
|
|
|
|
|
|
|
|
|
|
Per
share
|
|
|
|
|
|
|
|
Net income -
basic
|
$
(0.49)
|
$
(0.03)
|
|
$
(0.19)
|
$
0.13
|
|
|
Net income -
diluted
|
$
(0.49)
|
$
(0.03)
|
|
$
(0.19)
|
$
0.12
|
|
(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)
|
|
|
|
June 30,
2022
|
December 31,
2021
|
|
|
Financial
position
|
|
|
|
|
|
|
|
Cash
|
|
|
|
$
60,132
|
$
140,127
|
|
|
Total digital
assets
|
|
|
|
188,812
|
323,946
|
|
|
Total
assets
|
|
|
|
572,868
|
720,709
|
|
|
Total
liabilities
|
|
|
|
63,585
|
154,741
|
|
|
Total shareholder's
equity
|
|
|
|
509,283
|
565,967
|
|
|
Revenue for Q2 2022, was $43.8
million compared to $33.5
million in Q2 2021. The increase was primarily driven by the
Company's digital asset mining operations, where the Company mined
946 Bitcoin and generated $39.1
million of revenue, versus 553 Bitcoin mined and
$31.4 million of revenue in Q2 2021.
The increase in Bitcoin mined is due to the significant increase in
Hut 8's average hashrate stemming from the expansion of the
Company's highly efficient mining fleet and ramp-up activities of
the Company's new site in North Bay,
Ontario. The Company's newly-acquired high performance
computing operations generated $4.7
million of primarily recurring revenue in the quarter.
Net loss for Q2 2022 was $88.1
million and net loss per share was $0.49, compared to net loss of $4.0 million and net loss per share of
$0.03 for the same period in 2021.
The change reflects the non-cash revaluation loss on digital
assets, partially offset by higher revenue and the non-cash
revaluation gain on warrants liability.
Mining profit(i) was $14.9
million in Q2 2022, compared to $19.3
million in Q2 2021. The change is mainly due to a lower
average Bitcoin price and increased average power costs, which were
partially offset by the revenue associated with the higher number
of Bitcoin mined.
Adjusted EBITDA(i) was $6.8
million, compared to $14.4
million in Q2 2021. Increased revenues from mining
operations and contributions from high performance computing
operations were offset by compressed mining margins due to lower
average Bitcoin price and higher general and administrative
expenses incurred to support the growth in Hut 8's mining and high
performance computing operations.
Cost of revenue consists of site operating costs and
depreciation and was $47.7 million
for Q2 2022 compared to $16.6 million
in Q2 2021. Site operating costs for the quarter ended June 30, 2022, was $26.8
million, of which $24.5
million was attributable to our mining operations and
$2.3 million to our high performance
computing operations. The average cost of mining each Bitcoin for
Q2 2022 was approximately $25,900,
compared to approximately $24,700 per
Bitcoin in Q2 2021. The increase in average cost of mining Bitcoin
was primarily due to higher power prices, partially offset by the
deployment of a more efficient mining fleet. Depreciation expense
increased to $20.9 million during Q2
2022 compared to $3.0 million in Q1
2021, driven by the significant deployment of new mining equipment
over the past twelve months as well as $1.3
million of additional depreciation from our newly acquired
high performance computing operations.
For more information, please refer to the Management's
Discussion & Analysis and the unaudited condensed interim
consolidated financial statements of the Company for the three and
six months ended June 30, 2022 and
2021. These documents will be available on the Company's website at
www.hut8mining.com, under the Company's SEDAR profile at
www.sedar.com, and under the Company's EDGAR profile at
www.sec.gov.
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 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
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 financial
statements for the three and six months ended June 30, 2022 and 2021.
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 the investors the ability to assess the profitability of
the mining operations exclusive of general and administrative
expenses.
The following table reconciles Gross profit to our non-IFRS
measure, Mining profit:
|
Three Months
Ended
|
|
Six Months
Ended
|
For the periods
ended June 30
|
2022
|
2021
|
|
2022
|
2021
|
Gross profit
(loss)
|
$
(3,841)
|
$ 16,917
|
|
$ 12,614
|
$ 29,124
|
|
|
|
|
|
|
Add
(deduct):
|
|
|
|
|
|
Revenue from
hosting
|
–
|
(2,193)
|
|
(751)
|
(3,618)
|
Revenue from high
performance computing
|
(4,713)
|
–
|
|
(8,001)
|
–
|
Site operating costs
attributable to hosting
|
243
|
1,628
|
|
797
|
2,986
|
Site operating costs
attributable to high
performance computing
|
2,311
|
–
|
|
3,885
|
–
|
Depreciation
|
20,904
|
2,977
|
|
39,269
|
8,780
|
Mining
profit
|
$ 14,904
|
$ 19,329
|
|
$ 47,813
|
$ 37,272
|
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 and 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-cash
accounting policies, capital structure 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 (loss) to our non-IFRS
measure, adjusted EBITDA:
For the periods
ended June 30
|
Three Months
Ended
|
|
Six Months
Ended
|
(CAD
thousands)
|
2022
|
2021
|
|
2022
|
2021
|
Net income
(loss)
|
$ (88,067)
|
$
(4,040)
|
|
$ (32,359)
|
$
15,094
|
|
|
|
|
|
|
Add
(deduct):
|
|
|
|
|
|
Net finance
costs
|
1,543
|
(639)
|
|
2,835
|
(987)
|
Depreciation and
amortization
|
21,247
|
2,977
|
|
39,841
|
8,780
|
Share based
payment
|
1,977
|
1,768
|
|
3,276
|
4,524
|
Gain on used of
digital assets
|
–
|
–
|
|
–
|
(182)
|
Foreign exchange loss
(gain)
|
(27)
|
212
|
|
684
|
643
|
Share based payment
taxes withholding
|
–
|
–
|
|
–
|
1,245
|
One-time transaction
costs
|
–
|
470
|
|
1,611
|
470
|
Deferred income tax
recovery (expense)
|
8,472
|
12,590
|
|
9,593
|
(780)
|
Sales tax
expense
|
–
|
1,018
|
|
913
|
1,801
|
Reevaluation of
digital assets
|
104,898
|
–
|
|
104,898
|
–
|
Gain on revaluation of
warrants
|
(43,281)
|
–
|
|
(97,421)
|
–
|
Adjusted
EBITDA
|
$
6,762
|
$
14,356
|
|
$
33,871
|
$
30,608
|
CORPORATE UPDATES
Hut 8 anticipates that based on the current installed hashrate
and scheduled deliveries of new miners, the Company will reach 3.55
EH/s organically by the end of 2022.
As part of the Company's ongoing integration of the recently
acquired high performance computing operations, Hut 8 rationalized
certain low-margin product and service offerings during the second
quarter. Hut 8 believes these improvements will better position the
Company to realize profitable revenue growth in 2023. As a result,
the Company has withdrawn the revenue growth guidance provided in
its Q1 2022 results.
CONFERENCE CALL
Hut 8's Q2 2022 conference call will begin at 10 a.m. ET on August 11,
2022. Those wishing to join via telephone should dial in 5
minutes early:
- Within Canada and the US:
1-888-664-6392 access code: 62590720#
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; the Company's estimated margins of
the high performance computing business and its ability to optimize
margins in the future; expectations for other economic, business,
regulatory and/or competitive factors related to the Company or the
Bitcoin industry generally; and projected hash rate, expenses and
profitability.
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, transaction costs and fluctuations in energy prices
and the Company's energy requirements.
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, 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, counterparty risk, failure to achieve intended
benefits of power purchase agreements, including securing full
power benefits at current sites, the ability to implement business
plans, forecasts, and other expectations, and 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 17, 2022 and Hut 8's other
continuous disclosure documents which are available on Company's
website at www.hut8mining.com, under the Company's SEDAR profile at
www.sedar.com 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; 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.
About Hut 8
Hut 8 is one of North America's largest
innovation-focused digital asset miners, led by a team of
business-building technologists, bullish on bitcoin, blockchain,
Web 3.0 and bridging the nascent and traditional high performance
computing worlds. With two digital asset mining sites located
in Southern Alberta and a third site in North Bay,
Ontario, all located
in Canada, Hut 8 has one of the highest capacity rates in the
industry and one of the highest inventories of self-mined Bitcoin
of any digital asset miner or publicly-traded company globally.
With 36,000 square feet of geo-diverse data centre space and cloud
capacity connected to electrical grids powered by significant
renewables and emission-free resources, Hut 8 is revolutionizing
conventional assets to create the first hybrid data centre model
that serves both the traditional high performance compute (Web 2.0)
and nascent digital asset computing sectors, blockchain gaming, and
Web 3.0. Hut 8 was the first Canadian digital asset miner to list
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.
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SOURCE Hut 8 Mining Corp