Transaction is expected to dramatically enhance
trajectory of the digital asset mining business:
5.6 EH/s installed self-mining capacity at five
sites across North America
Combined Company's diversification strategy to
expand significantly, establishing
new, fiat revenue generating lines of business:
220 MW of hosting infrastructure at King
Mountain, Texas
Managed infrastructure operations powered by 680
MW at Kearney, Nebraska,
Granbury, Texas, and King Mountain
Texas sites
Gross energy across self-mining, hosting, and
managed infrastructure operations
sites totaling approximately 825 MW
Transaction expected to accelerate achievement of
ESG objectives by adding
renewable energy and zero carbon emission energy from wind, hydro,
and
nuclear sources
Bill Tai to
maintain role as Board Chair, Jaime
Leverton to continue as CEO, Asher
Genoot to continue as President, Michael
Ho to become Chief Strategy Officer,
Shenif Visram to continue as CFO
Combined Company to be named "Hut 8 Corp." and
domiciled in the United
States
This news release constitutes a "designated
news release" for purposes of the
Company's prospectus supplement dated August
17, 2022 to its short form base
shelf prospectus dated August 5,
2022. All dollar amounts in this release are in
USD unless otherwise noted.
TORONTO and MIAMI, Feb. 7,
2023 /PRNewswire/ -- Hut 8 Mining Corp. (Nasdaq: HUT) (TSX:
HUT) ("Hut 8" or the "Company"), a large, innovation-focused
digital asset mining pioneer and high performance computing
infrastructure provider, and U.S. Data Mining Group, Inc. dba US
Bitcoin Corp ("USBTC"), builder and strategic operator of four
Bitcoin mining centres across the United
States, announced today that each of their Boards
of Directors have unanimously approved a definitive business
combination agreement (the "Business Combination Agreement") under
which the companies will combine in an all-stock merger of equals
(the "Transaction"). The combined company will be named "Hut 8
Corp." ("New Hut" or the "Combined Company") 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 best practices in ESG.
"Our established track record of creating shareholder value
through organic growth and strategic acquisitions while maintaining
a balance sheet-first approach has positioned us perfectly to
advance our growth trajectory through this business combination,"
said Jaime Leverton, CEO, Hut 8.
"Bringing together Hut 8's operational track record and diversified
revenue streams with US Bitcoin's scalable mining sites, sizeable
hosting business, and industry-leading managed infrastructure
operations not only accelerates our diversified strategy and
positions us for near-term growth, but also establishes us as a
strong, U.S.-based player that is ready and able to seize
additional opportunities as they arise."
New Hut will have access to approximately 825 MW of gross energy
across all six sites with self-mining, hosting, and managed
infrastructure operations.
- It will have 5.6 EH/s of installed self-mining capacity and 244
MW of total energy available at five sites with current self-mining
operations: Medicine Hat, AB;
Drumheller, AB; Niagara Falls, NY; Granbury, TX; and King Mountain, TX. The 1.7
EH/s installed self-mining production at the King Mountain, TX site
is owned by the King Mountain Joint Venture in which USBTC has a
50% membership interest alongside a leading energy partner (the
"King Mountain JV"). USBTC continues to address a legal dispute
with the City of Niagara Falls, NY
over operations at the site in the same city. While operations
continue uninterrupted, the team has a contingency plan in place
that it will pursue should a resolution not be met.
- New Hut will manage 220 MW of hosting infrastructure at its
King Mountain, TX site, powered by a mix of sources including wind
and nuclear, supporting multiple clients, including some of the
industry's largest miners. Hosting is owned by the King Mountain
JV.
- The Combined Company will manage 680 MW of infrastructure
operations powered by energy from a mix of sources including
renewable and zero-emission in Kearney, NB and Granbury and King Mountain, TX. This unique,
leading-edge service offering gives Bitcoin mine site owners the
opportunity to have USBTC's professionals manage all day-to-day
operations, hosting, site management, and maintenance using
purpose-built site management software.
"We've been searching for the right partner to join us on our
ambitious growth journey for some time and are confident that Hut 8
is the perfect fit," said Michael
Ho, co-founder and CEO of USBTC. "We were initially
attracted to Hut 8's strong track record, admirable fiscal
management through all market cycles, and like-minded approach to
generating diversified lines of revenue. Through this process,
we've determined that the strategic impact this Transaction will
drive is significant: we see a clear path to leveraging our
collective vision to drive innovative technology advancements and
become a second-to-none operator."
"The combination of Hut 8 and USBTC is an important step, but
it's truly just the beginning," said Asher Genoot, co-founder and
President of USBTC. "We believe that New Hut will challenge
industry paradigms and set the standard for operating rigor and
team culture. We are laser-focused on identifying opportunities to
capture untapped value across the mining ecosystem. Together, we
will become an exceptional self-mining operator, hosting provider,
strategic operator of managed infrastructure, purveyor of high
performance computing infrastructure, and industry-leading ASIC
repair and sales hub, underpinned by world-class operating
technology and IP to drive growth."
The Transaction will create a leading Bitcoin mining company
operating in North America with
strong financial and operating metrics. Under the Business
Combination Agreement, New Hut will be led by a combined Board of
Directors and management team of Bitcoin miners, energy experts,
and business leaders, bringing together the proven cultures,
strengths, and capabilities of both companies.
"This Transaction has given us the opportunity to leverage the
significant, unencumbered Bitcoin stack we have HODLed to date,"
said Jaime. "During the interim period, we plan to cover our
operating costs through a combination of selling the Bitcoin we
mine, selling from our stack and/or exploring various debt options,
as agreed under the terms of the Business Combination Agreement.
Upon a successful close of the Transaction, we will take the
opportunity to carefully review and determine our go-forward
treasury strategy."
Details of the Transaction and
strategic rationale
Pursuant to the Business Combination Agreement, shareholders of
Hut 8 will receive, for each Hut 8 share, 0.2 of a share of New Hut
common stock (the "Hut Consideration"), which will effectively
result in a consolidation of the Hut 8 shares on a 5 to 1 basis.
Stockholders of USBTC will receive, for each share of USBTC capital
stock, 0.6716 of a share of New Hut common stock (the "USBTC
Consideration" and together with the Hut Consideration, the
"Consideration"). Based on the 5-day VWAP for the Hut 8 shares on
the Nasdaq as of the last trading day prior to the date of this
announcement, the aggregate Consideration implies a combined market
capitalization of approximately U$990 million.
Upon consummation of the Transaction ("Closing"), existing Hut 8
shareholders and USBTC stockholders will each collectively own, on
a fully-diluted in the money basis, approximately 50% each of the
stock of the Combined Company. Following completion of the
Transaction, Hut 8 and USBTC will each become wholly-owned
subsidiaries of New Hut.
Key strategic, financial, and operational advantages of the
combined business include1:
_________________________
|
1 Hut 8's
North Bay facility is not accounted for in the calculations
provided as legal proceedings are underway with the site's third
party energy provider. In addition, USBTC's former facility in
Pecos, Texas is not accounted for in the above calculations as it
has been transferred to one of USBTC's former lenders as part of a
debt extinguishment transaction.
|
- Strengthens financial position and flexibility. The
combined balance sheet creates greater financial stability through
market cycles and allows New Hut to grow and invest in new
opportunities. Through increased scale and U.S. headquarters, the
Combined Company anticipates being included in new indices and
enjoying improved access to capital.
- Catapults New Hut's diversification strategy forward.
New Hut is expected to generate monthly recurring fiat hosting
revenues from long-term clients, Bitcoin mining sites looking to
maximize the potential of their facilities through managed
infrastructure operations, from equipment sales to customers, and
from the MicroBT-certified repair centre business serving customers
across North America and
Northern Europe.
- Maintains commitment to advancing the high performance
computing traditional data centre business. New Hut remains
committed to supporting and growing the HPC business, which
continues to be a cornerstone of the Combined Company's diversified
strategy, generating monthly recurring revenue from approximately
370 North American customers.
- Creates a strengthened, proven, and trusted senior
leadership team and Board of Directors with a track record of value
creation. The combined executive team will lead New Hut's
approximately 210 team members to deliver on the existing and
proven strategy of growing long-term sustainable operations.
- Grows pipeline of opportunities. The Transaction
combines a pipeline of growth opportunities at existing,
greenfield, and brownfield sites.
- Enhances position in one of the world's high-potential
Bitcoin mining regions. The merger solidifies New Hut as a
Bitcoin mining entity with operating capacity at high-quality sites
in Alberta, Canada, and
Texas, Nebraska, and New
York in the United
States.
- Advances commitment to driving improvements across all ESG
metrics. While the team is committed to shared ESG goals, the
Transaction improves New Hut's overall energy mix to include wind,
hydro, and nuclear sources.
- Improves energy expertise and hedging
capabilities. The USBTC team brings significant leadership
in energy origination, development, demand response, hedging, grid
stabilization, and analytics to New Hut, significantly enhancing
the Combined Company's ability to better plan around stable and
predictable energy usage and mitigate fluctuating prices across
markets.
Transaction Summary and
Timing
Under the terms of the Business Combination Agreement, the
Transaction will be effected by way of a court-approved plan of
arrangement (the "Arrangement") involving Hut 8 under the Business
Corporations Act (British
Columbia) and a statutory merger (the "Merger") involving
USBTC under the laws of the State of
Nevada. The Arrangement will require the approval of at
least 66 2/3% of the votes cast by the shareholders of Hut 8 voting
at a special meeting of Hut 8's shareholders (the "Meeting"). The
Merger is also subject to the approval of USBTC stockholders.
Completion of the Transaction is subject to regulatory and court
approvals and other customary closing conditions. Regulatory
approvals expected to be required include receipt of approval under
the Competition Act (Canada) and
under the United States Hart-Scott-Rodino Antitrust Improvements
Act. In addition, the Arrangement will require the approval of the
Supreme Court of British Columbia,
New Hut's common stock will require approval for listing on the
Toronto Stock Exchange and The Nasdaq Capital Market. The Business
Combination Agreement includes non-solicitation provisions for both
Hut 8 and USBTC, with Hut 8 maintaining a fiduciary out to accept a
superior proposal, subject to USBTC's right to match and other
customary exceptions. Hut 8 is required to pay USBTC a termination
fee of US $10.0 million in certain
circumstances.
Officers and Directors of Hut 8 have entered into support and
voting agreements with USBTC, agreeing to vote their Hut 8 shares
in favour of the Arrangement. Officers, Directors, and certain
stockholders of USBTC have entered into a stockholder support
agreement with Hut 8, agreeing to vote their USBTC stock in favour
of the Merger.
It is anticipated that the Meeting and the receipt of the
written consent of USBTC stockholders will occur in the second
quarter of 2023. Closing is expected to occur thereafter, subject
to satisfaction of the closing conditions under the Business
Combination Agreement.
Pursuant to the Business Combination Agreement, Hut 8 has also
agreed to provide USBTC with secured bridge financing during the
interim period, with the expected amount of such financing ranging
from US$6.0 - $6.5 million, subject to the completion of
definitive loan documentation.
Following completion of the Transaction, the shares of New Hut
will trade on the Toronto Stock Exchange and the Nasdaq Stock
Market, subject to approval or acceptance of each exchange in
respect of the Transaction.
Board of Directors'
approval
Each of Hut 8's and USBTC's respective Board of Directors have
unanimously approved the Business Combination Agreement and the
Transaction. Stifel GMP provided a fairness opinion to the Board of
Directors of Hut 8 stating that, as of the date of such opinion,
and based upon the scope of review and subject to the assumptions,
limitations and qualifications stated in such opinion, the USBTC
exchange ratio provided for in the Business Combination Agreement
is fair, from a financial point of view, to Hut 8. The Board of
Directors of Hut 8 also received a second, independent fairness
opinion from the Duff & Phelps Opinions Practice of Kroll, LLC
stating that, as of the date of such opinion and based upon the
scope of review and subject to the assumptions, limitations and
qualifications stated in such opinion, the USBTC exchange ratio
provided for in the Business Combination Agreement is fair, from a
financial point of view, to Hut 8.
Governance
Following the closing of the Transaction, the Combined Company
will be domiciled in the United
States and will be led by a proven leadership team that
builds on the strengths and capabilities of both companies. The
senior executive team and Board of Directors of Hut 8 will be
enhanced by the addition of new members of USBTC who have
significant knowledge and experience to support the combined
operations. The Board of Directors of New Hut will consist of 10
directors, comprised of 5 directors from Hut 8 and 5 directors from
USBTC.
The key senior management team and directors will include:
- Chair of the Board – Bill
Tai
- Chief Executive Officer – Jaime
Leverton
- President – Asher Genoot
- Chief Strategy Officer – Michael Ho
- Chief Financial Officer – Shenif Visram
Advisors and counsel
Hut 8 has engaged Stifel GMP as its exclusive financial advisor
and Bennett Jones LLP and Skadden, Arps, Slate, Meagher & Flom
LLP as its legal advisors in connection with the Transaction. USBTC
has engaged Needham & Company as its exclusive financial
advisor and Stikeman Elliott LLP, Greenberg Traurig, P.A., and
Brown Rudnick LLP as its legal advisors on the Transaction.
For further information on the terms and conditions of the
Transaction, please refer to the Business Combination Agreement in
its entirety and the management proxy circular to be mailed to Hut
8 shareholders for the Meeting in due course, which will be
available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
Additional details about the Transaction can be found in a joint
investor presentation, which will be available on
www.hut8.io/investors and www.usbitcoin.com. Shareholders are
encouraged to read the management proxy circular and other relevant
materials when they become available.
Analyst call
The conference call will begin at 8:30
a.m. ET on February 7,
2023.
- To join the conference call without operator assistance, you
may register and enter your phone number at
https://app.webinar.net/JB0rqRaVWYj to receive an instant,
automated call back that will place you in the conference
- Those joining via operator should dial in 5-10 minutes early
to: 1-888-664-6392 (toll-free, North
America) and use access code: 28360816#
About Hut 8
Hut 8 is a large innovation-focused digital asset miner, 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
high capacity rate and large inventory of unencumbered, self-mined
Bitcoin. 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.
About US Bitcoin Corp
Founded by a team of visionary entrepreneurs and experienced
executives, USBTC is an efficient, eco-friendly, and large scale
North American mining company. Through cutting-edge technology and
a relentless commitment to operational excellence, USBTC seeks to
set the standard for what is possible in its industry.
With campuses in New York,
Nebraska, and Texas, USBTC aims to monetize electrons at
scale, operating hundreds of megawatts of Bitcoin mining
infrastructure both independently and on behalf of clients. USBTC
prides itself on deploying next-generation software and hardware
innovations to deliver results across its self-mining, hosting, and
site management verticals.
Cautionary note regarding
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 Hut 8 expects or anticipates will or
may occur in the future, including such things as future business
strategy, competitive strengths, goals, expansion and growth of Hut
8'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", "allow", "believe", "estimate",
"expect", "predict", "can", "might", "potential", "predict", "is
designed to", "likely" or similar expressions. In addition, any
statements in this press release that refer to expectations,
projections or other characterizations of future events or
circumstances contain forward-looking information and include,
among others, statements with respect to: (i) the expected outcomes
of the Transaction, including New Hut's assets and financial
position; (ii) 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, shareholder approvals,
court approvals, stock exchange approvals and satisfaction of other
closing customary conditions; (iii) the expected synergies related
to the Transaction in respect of strategy, operations and other
matters; (iv) projections related to expansion; (v) expectations
related to the Combined Company's hashrate and self-mining
capacity; (vi) acceleration of ESG efforts and commitments; and
(vii) the ability of the Combined Company to execute on future
opportunities, among others.
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. While considered reasonable by Hut 8 and USBTC as of the date
of this press release, such statements 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: the ability to obtain requisite shareholder approvals
and the satisfaction of other conditions to the consummation of the
Transaction on the proposed terms or at all; the ability to obtain
necessary stock exchange, regulatory, governmental or other
approvals in the time assumed or at all; the anticipated timeline
for the completion of the Transaction; the ability to realize the
anticipated benefits of the Transaction or implementing the
business plan for the Combined Company, 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 ability to realize synergies and cost
savings at the times, and to the extent, anticipated; the potential
impact on mining activities; the potential impact of the
announcement or consummation of the Transaction on relationships,
including with regulatory bodies, employees, suppliers, customers,
competitors and other key stakeholders; the outcome of any
litigation proceedings in respect of USBTC's legal dispute with the
City of Niagara Falls, New
York; 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; 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; 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; failure to achieve intended benefits of power
purchase agreements; potential for interrupted delivery, or
suspension of the delivery, of energy to the Combined Company's
mining sites. 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 the Company's profile on the System for Electronic
Document Analysis and Retrieval at www.sedar.com and on the
EDGAR section of the U.S. Securities and Exchange Commission's
("SEC") website at www.sec.gov.
These risks 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 New Hut'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 each of Hut 8 and USBTC 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 is
expected to file a registration statement on Form S-4 (the "Form
S-4") with the U.S. Securities Exchange Commission (the "SEC").
USBTC and Hut 8 urge investors, shareholders, and other interested
persons to read, when available, the Form S-4, including any
amendments thereto, the Hut meeting circular, as well as other
documents to be filed with the SEC and documents to be filed with
Canadian securities regulatory authorities in connection with the
Transaction, as these materials will contain important information
about USBTC, Hut, 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 Form S-4 or any
other documents that may be sent to Hut's shareholders or USBTC's
stockholders in connection with the Transaction. Investors and
security holders will be able to obtain free copies of the Form S-4
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.
Hut 8 investor contact: Sue Ennis, sue@hut8.io; Hut 8 media
contact: Erin Dermer, erin.dermer@hut8.io; USBTC
contact: Matt Prusak, mprusak@usbitcoin.com
Photo -
https://mma.prnewswire.com/media/1997349/Hut_8_Mining_Corp_Hut_8_and_US_Bitcoin_announce_merger_of_equals.jpg
View original
content:https://www.prnewswire.co.uk/news-releases/hut-8-and-us-bitcoin-announce-merger-of-equals-to-create-a-preeminent-digital-asset-mining-hosting-managed-infrastructure-operations-and-high-performance-computing-organization-301740489.html