Strong quarterly revenue of $31.7 million
Bitcoin
holdings increased 13.3% in Q3 to 8,388 as of September 30, 2022
Achieved adjusted
EBITDA(i) of $2.1
million
TORONTO, Nov. 10,
2022 /CNW/ - 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 September 30,
2022 ("Q3 2022"). All dollar figures are in Canadian Dollars
("CAD"), unless otherwise stated.
"Throughout the quarter, we remained laser focused on optimizing
our operations across both mining and high performance computing,
while continuing to grow our HPC capabilities and attract new
Blockchain customers," said Hut 8 CEO Jaime
Leverton. "With the largest self-mined unencumbered
Bitcoin stack of any publicly traded company, we
continue to mine at modest costs despite fluctuating power prices,
increasing network difficulty, and sustained pressure on the price
of Bitcoin."
"Our conservative approach to managing our balance sheet
continues to be paramount for us at Hut 8," said Shane Downey, CFO of Hut 8. "Notably, we
improved our mining capacity by 10% while reducing the average cost
to mine each Bitcoin by 29%, when compared to the
second quarter of 2022. We remain steadfastly committed to
effectively managing capital in today's challenging environment and
believe we are well positioned to deliver shareholder value in 2023
and beyond."
Q3 2022 HIGHLIGHTS
- Revenue decreased by $18.6
million to $31.7 million in Q3
2022 compared to $50.3 million for
the quarter ended September 30, 2021
("Q3 2021").
- The Company mined 982 Bitcoin in Q3 2022, an 8.5%
increase compared to Q3 2021 due to an increase in hashrate from
the expansion of the Company fleet of miners and mining
activities.
- Hut 8's high performance computing operations generated
$4.4 million of revenue in the
quarter, the majority of which is monthly recurring revenue.
- The Company installed an aggregate of 2,205 new MicroBT M30S,
M30S+, M30S++ and M31S+ miners at its three mining sites during Q3
2022. The installation of these miners brought Hut 8's operating
capacity to 3.07 EH/s as of September 30,
2022, an increase of 10% in hashrate compared to
June 30, 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 September 30
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
(CAD thousands,
except per share amounts)
|
2022
|
2021
|
|
2022
|
2021
|
|
|
Operating
results
|
|
|
|
|
|
|
|
Digital assets
mined
|
982
|
905
|
|
2,870
|
1,997
|
|
|
|
|
|
|
|
|
|
|
Financial
results
|
|
|
|
|
|
|
|
Total
revenue
|
$
31,671
|
$
50,341
|
|
$
128,849
|
$
115,873
|
|
|
Net (loss)
income
|
(23,786)
|
23,374
|
|
(56,145)
|
38,468
|
|
|
Mining profit
(i)
|
9,300
|
33,509
|
|
57,113
|
70,596
|
|
|
Adjusted EBITDA
(i)
|
2,078
|
30,720
|
|
35,949
|
61,328
|
|
|
|
|
|
|
|
|
|
|
Per
share
|
|
|
|
|
|
|
|
Net income -
basic
|
$
(0.12)
|
$
0.16
|
|
$
(0.31)
|
$
0.30
|
|
|
Net income -
diluted
|
$
(0.12)
|
$
0.15
|
|
$
(0.31)
|
$
0.28
|
|
|
(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,
2022
|
December 31,
2021
|
|
|
Financial
position
|
|
|
|
|
|
|
|
Cash
|
|
|
|
$
33,021
|
$
140,127
|
|
|
Total digital
assets
|
|
|
|
223,420
|
323,946
|
|
|
Total
assets
|
|
|
|
561,918
|
720,709
|
|
|
Total
liabilities
|
|
|
|
67,141
|
154,741
|
|
|
Total shareholder's
equity
|
|
|
|
494,777
|
565,968
|
|
|
Revenue for Q3 2022 was $31.7
million compared to $50.3
million in Q3 2021. The decrease was primarily driven by the
Company's digital asset mining operations, where the Company mined
982 Bitcoin and generated $27.3
million of revenue, versus 905 Bitcoin mined
and $47.9 million of revenue in Q3
2021. The increase in Bitcoin mined is due to the
increase in Hut 8's average hashrate. The Company's newly-acquired
high performance computing operations generated $4.4 million of primarily recurring revenue in
the quarter.
Net loss for Q3 2022 was $23.8
million and net loss per share was $0.12, compared to net income of $23.4 million and net income per share of
$0.16 for the same period in 2021.
The change reflects the lower revenue from digital asset mining
operations and higher cost of revenue in Q3 2022.
Mining profit(i) was $9.3
million in Q3 2022, compared to $33.5
million in Q3 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 $2.1
million, compared to $30.7
million in Q3 2021. Contributions from high performance
computing operations were offset by compressed mining margins.
Cost of revenue consists of site operating costs and
depreciation and was $45.6 million
for Q3 2022 compared to $21.2 million
in Q3 2021. Site operating costs for the quarter ended September 30, 2022, was $20.3 million, of which $18.0 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 Q3 2022 was approximately
$18,300, compared to approximately
$17,700 per Bitcoin in
Q3 2021. The increase in average cost of mining
Bitcoin was due to a combination of increased
Bitcoin network difficulty and higher power prices,
largely offset by the deployment of a more efficient mining fleet.
Notably, the cost decreased by $7,600
or 29% as compared to the quarter ended June
30, 2022 primarily due to improved energy prices.
Depreciation expense increased to $25.3
million during Q3 2022 compared to $5.2 million in Q3 2021, driven by the
significant deployment of new mining equipment over the past twelve
months as well as $1.3 million of
depreciation from our newly acquired high performance computing
operations.
For more information, please refer to the Management's
Discussion & Analysis and the unaudited condensed consolidated
interim financial statements of the Company for the three and nine
months ended September 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 nine months ended September 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
|
|
Nine Months
Ended
|
For the periods
ended September 30
|
2022
|
2021
|
|
2022
|
2021
|
Gross profit
(loss)
|
$
(13,940)
|
$ 29,107
|
|
$ (1,326)
|
$ 58,231
|
|
|
|
|
|
|
Add
(deduct):
|
|
|
|
|
|
Revenue from
hosting
|
–
|
(2,406)
|
|
(751)
|
(6,024)
|
Revenue from high
performance computing
|
(4,403)
|
–
|
|
(12,404)
|
–
|
Site operating costs
attributable to hosting
|
–
|
1,616
|
|
797
|
4,417
|
Site operating costs
attributable to high
performance computing
|
2,304
|
–
|
|
6,189
|
–
|
Depreciation
|
25,339
|
5,192
|
|
64,608
|
13,972
|
Mining
profit
|
$
9,300
|
$ 33,509
|
|
$ 57,113
|
$ 70,596
|
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 September 30
|
Three Months
Ended
|
|
Nine Months
Ended
|
(CAD
thousands)
|
2022
|
2021
|
|
2022
|
2021
|
Net income
(loss)
|
$ (23,786)
|
$
23,374
|
|
$ (56,145)
|
$
38,468
|
|
|
|
|
|
|
Add
(deduct):
|
|
|
|
|
|
Net finance (income)
costs
|
1,865
|
(186)
|
|
4,700
|
(1,173)
|
Depreciation and
amortization
|
25,683
|
5,192
|
|
65,524
|
13,972
|
Share based
payment
|
1,895
|
2,801
|
|
5,171
|
7,325
|
Gain on disposition of
digital assets
|
–
|
–
|
|
–
|
(182)
|
Foreign exchange
loss
|
844
|
759
|
|
1,528
|
1,402
|
Share based payment
taxes withholding
|
–
|
–
|
|
–
|
1,246
|
One-time transaction
costs
|
–
|
455
|
|
1,611
|
923
|
Deferred income tax
(recovery) expense
|
–
|
(5,676)
|
|
9,593
|
(6,455)
|
Sales tax
expense
|
–
|
4,001
|
|
913
|
5,802
|
Reevaluation (gain)
loss of digital assets
|
(7,340)
|
–
|
|
97,558
|
–
|
(Gain) loss on
revaluation of warrants
|
2,917
|
–
|
|
(94,504)
|
–
|
Adjusted
EBITDA
|
$
2,078
|
$
30,720
|
|
$
35,949
|
$
61,328
|
CORPORATE UPDATES
On September 15, 2022, the
Ethereum network changed its consensus mechanism from
proof-of-work to proof-of-stake, and as a result, the Company is no
longer using its fleet of graphics processing units ("GPUs") to
mine the Ethereum network. Hut 8 is re-deploying its
fleet of GPUs into certain high performance computing data centres
and will continue to explore new opportunities to leverage the
hardware, including in the zero-knowledge proof and Layer 2 space,
as well as rendering and machine learning.
On November 9, 2022, the Company
delivered a notice of event of default to Validus Power Corp.
("Validus"), a third-party supplier of energy to the Company's
mining facility in North Bay,
Ontario. Validus has failed to achieve certain key
operational milestones by the dates contemplated under the terms of
the power purchase agreement ("PPA") it entered into with the
Company. Validus has also demanded that the Company make payments
for delivery of energy that are higher than those negotiated under
the terms of the PPA. Hut 8 has been in ongoing dialogue with
Validus in an attempt to mitigate the operational and commercial
impacts arising from the Validus defaults and Validus' failure to
meet its contractual obligations under the PPA. However, such
mitigation efforts have been unsuccessful to date and the Company
was required to deliver the notice of event of default.
The Company intends to pursue all legal remedies available to it
to enforce the terms of the PPA and will provide additional updates
to the market in respect of the North
Bay facility as appropriate. Notwithstanding the notice of
event of default, the Company is exploring alternatives to mitigate
any potential effect on its operations, including through potential
organic and inorganic growth opportunities. There is no assurance
that energy will continue to be delivered on an uninterrupted basis
to North Bay under the terms of
the PPA. Such actions may hinder the Company's ability to continue
its mining activities at the North
Bay site, and if any such mining activities are continued,
they may not be performed at previously disclosed rates.
For more information, refer to the Management's Discussion &
Analysis of the Company referred to above.
CONFERENCE CALL
Hut 8's Q3 2022 conference call will begin at 10 a.m. ET on November
10, 2022. Those wishing to join via telephone should
dial in 5 minutes early:
- Toll-free (North America):
1-888-664-6392 access code: 91939832#
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; the Company's ability to
re-deploy its fleet of GPUs into other revenue generating
activities; 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 COVID-19 pandemic (or a
material escalation thereof); 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 the Company's PPA
with Validus; potential for interrupted delivery, or suspension of
the delivery, of energy to the Company's mining 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