Strong annual revenue of $150.7 million including $16.9 million from the high performance computing
business
Bitcoin holdings increased 64.7% in 2022 to
9,086 at year end
Achieved Adjusted EBITDA of $32.0 million in 2022
TORONTO, March 9, 2023 /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 year and quarter ended
December 31, 2022. All dollar figures
are in Canadian Dollars ("CAD"), unless otherwise stated.
"While 2022 was a challenging time for the entire industry, we
fared well thanks to our team's commitment to operational
excellence, our diversified lines of business, and our strong
growth profile," said Jaime
Leverton, CEO. "As we look ahead, we will continue to uphold
these operating principles as we work to close our business
combination with USBTC and begin operating as a US-domiciled,
digital asset mining, hosting, managed infrastructure operations,
and high performance computing organization."
"We continued to fastidiously manage our finances through Q4,
which allowed us to navigate sustained Bitcoin price suppression,
fluctuating power prices, and increased network difficulty," said
Shenif Visram, CFO. "As a result, we increased our mining
production by more than 28% year over year, and increased our fiat
revenues by $16.9 million with the
addition of our high performance computing business."
2022 HIGHLIGHTS
- Revenue decreased by $23.1
million to $150.7 million
during the year ended December 31,
2022 compared to $173.8
million during the year ended December 31, 2021.
- The Company mined 3,568 Bitcoin in 2022, a 28.1% increase
compared to 2021 due to an increase in hashrate from the expansion
of the Company's fleet of miners and mining activities.
- Hut 8's high performance computing operations generated
$16.9 million of revenue in 2022, the
majority of which is monthly recurring revenue.
- The Company installed an aggregate of 21,455 new MicroBT M30S,
M30S+, M30S++ and M31S+ miners at its three mining sites during the
year ended December 31, 2022. The
installation of these miners brought Hut 8's installed hashrate to
2.5 EH/s (excluding the Company's North
Bay facility and GPU mining) as of December 31, 2022, an increase of 25.0% in
hashrate compared to December 31,
2021. The Drumheller
facility experienced diminished production as a result of
electrical issues.
HASHRATE UPDATE
Hut 8 currently has an installed hashrate of approximately
2.5 EH/s, which excludes the Company's North Bay facility that is not operational as
of March 9, 2023.
BITCOIN INVENTORY AND VALUE
As at December 31, 2022, the
Company had a total self-mined, unencumbered and held in custody
Bitcoin balance of 9,086 with a market value of $203.6 million. During the fourth quarter of
2022, 100% of self-mined Bitcoin was deposited into custody.
OPERATING AND FINANCIAL OVERVIEW
For the periods
ended December 31
|
Three Months
Ended
|
|
Twelve Months
Ended
|
(CAD thousands,
except per share amounts)
|
2022
|
2021
|
|
2022
|
2021
|
Operating
results
|
|
|
|
|
|
Digital assets
mined
|
698
|
789
|
|
3,568
|
2,786
|
|
|
|
|
|
|
Financial
results
|
|
|
|
|
|
Total
revenue
|
$
21,833
|
$
57,901
|
|
$ 150,682
|
$ 173,774
|
Net (loss)
income
|
(186,668)
|
(111,178)
|
|
(242,813)
|
(72,711)
|
Mining Profit
(i)
|
3,333
|
39,146
|
|
60,446
|
108,127
|
Adjusted EBITDA
(i)
|
(3,915)
|
35,264
|
|
32,034
|
96,593
|
|
|
|
|
|
|
Per
share
|
|
|
|
|
|
Net income -
basic
|
$
(0.90)
|
$
(0.67)
|
|
$
(1.29)
|
$
(0.54)
|
Net income -
diluted
|
$
(0.90)
|
$
(0.67)
|
|
$
(1.29)
|
$
(0.54)
|
(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)
|
|
|
|
December 31,
2022
|
December 31,
2021
|
Financial
position
|
|
|
|
|
|
Cash
|
|
|
|
$
30,515
|
$ 140,127
|
Total digital
assets
|
|
|
|
203,627
|
323,946
|
Total
assets
|
|
|
|
412,937
|
720,708
|
Total
liabilities
|
|
|
|
61,547
|
154,740
|
Total shareholder's
equity
|
|
|
|
357,390
|
565,968
|
Working Capital
(ii)
|
|
|
|
215,490
|
442,016
|
(ii)
Calculated as current assets less current liabilities.
|
- Revenue for the year-ended December 31,
2022 was $150.7 million
compared to $173.8 million in the
prior year. The decrease was primarily driven by the Company's
digital asset mining operations, where the Company mined 3,568
Bitcoin and generated $133.0 million
of digital asset mining revenue, versus mining 2,786 Bitcoin and
generating $165.4 million of digital
asset mining revenue in the prior year. The Bitcoin price decrease
during 2022 offset the impact on revenue of mining an increased
number of Bitcoin compared to the prior year. The increase in the
number of Bitcoin mined is due to the increase in Hut 8's average
hashrate compared to the prior year. This was partially offset by
electrical issues at the Company's Drumheller facility which impacted Bitcoin
production, digital asset mining curtailments at the Company's
Drumheller facility, and the
suspension of mining operations at the Company's North Bay facility during the fourth quarter
of 2022. The Bitcoin price decrease during 2022 resulted in average
revenue per Bitcoin mined of approximately $37,300 in 2022 compared to average revenue per
Bitcoin mined of approximately $59,400 in 2021. The Company's hosting services
contributed $0.8 million of revenue
during the year compared to $8.4
million in the prior year. Hosting services revenue
decreased as Hut 8 acquired the remaining hosted digital asset
miners during 2022 to allocate toward self-mining operations. The
Company's newly-acquired high performance computing operations
generated $16.9 million of primarily
recurring revenue in 2022.
- Cost of revenue consists of site operating costs and
depreciation and was $175.6 million
for the year ended December 31, 2022,
compared to $85.0 million in the
prior year. Site operations costs for 2022 were $81.8 million, $8.4
million of which relates to our high performance computing
("HPC") operations. The average site operating costs of mining each
Bitcoin for 2022 was approximately $20,600, compared to approximately $22,100 in the prior year period, with the
decrease primarily due to more efficient miners deployed at the
Company's mining facilities, partially offset by higher energy
prices in the year and increased network difficulty as compared to
the prior year. Depreciation expense increased to $93.9 million during 2022 compared to
$23.3 million in 2021, driven by the
increased number and overall cost of miners deployed during the
year along with $5.1 million of
additional depreciation from the newly acquired HPC operations.
Notably, Hut 8 employs a two year depreciation schedule for its
miners, which is a conservative timeline by industry
standards.
- For the year ended December 31,
2022, the Company identified indicators of impairment for
its digital asset mining cash generating units ("CGUs") and tested
its digital asset mining CGUs for impairment. Management has
determined the recoverable amount as the Value in Use ("VIU") for
the three digital asset mining CGUs based on geographical area and
distinct cashflows: Medicine Hat,
Drumheller, and North Bay. These CGUs include mining
infrastructure and mining server plant and equipment. For the year
ended December 31, 2022, the Company
assessed the VIU of the digital asset mining CGUs. Due to depressed
digital asset mining economics, specifically decline in the price
of Bitcoin throughout periods during 2022, the Company recorded an
impairment charge on its digital asset mining CGUs. The difference
between the pre-impairment carrying value and recoverable amount of
the Company's digital asset mining CGUs is $98.6 million.
- For the year ended December 31,
2022, the Company identified indicators of impairment for
its graphics processing unit ("GPU") mining group of assets and
tested its GPU mining group of assets for impairment. Management
has determined the recoverable amount of GPU mining group of assets
to be its fair value less costs of disposal ("FVLCD"). Due to the
Ethereum Merge in 2022, where the Ethereum network changed its
consensus mechanism from proof-of-work to proof-of-stake, the
Company was unable to mine the Ethereum network using the GPU
mining group of assets. The Company was unsuccessful in finding an
alternative digital asset to mine with profitable mining economics
using the GPU mining group of assets. As a result, the Company
recorded an impairment charge on its GPU mining group of assets.
The difference between the pre-impairment carrying value and the
recoverable amount of the Company's GPU mining group of assets is
$15.2 million.
- Net loss for 2022 was $242.8
million and net loss per share was $1.29, compared to net loss of $72.7 million and net loss per share of
$0.54 in the prior year. The change
reflects the lower revenue from digital asset mining operations,
higher cost of revenue, $113.9
million of impairment on digital asset mining CGUs and GPU
mining group of assets, and loss on revaluation of digital assets
recorded to net loss of $134.8
million due to the Bitcoin price decrease during 2022.
- Mining Profit(i) was $60.4
million in 2022, compared to $108.1
million in 2021. The change is mainly due to a lower average
Bitcoin price and increased average power costs, which were
partially offset by the impact to revenue from the higher number of
Bitcoin mined.
- Adjusted EBITDA(i) was $32.0
million, compared to $96.6
million in 2021. Contributions from high performance
computing operations were offset by compressed mining margins.
_____________________________
|
(i) Non-IFRS measure - see "Non-IFRS
Measures" section below. Certain comparative figures have been
restated where necessary to conform with current period
presentation.
|
For more information, please refer to the Company's management's
discussion & analysis (the "MD&A") and the Company's
consolidated financial statements for the years ended December 31, 2022 and 2021. These documents are
available on the Company's website at hut8.io, 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 "Mining Profit" and "Adjusted EBITDA"
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 consolidated financial statements for the years ended
December 31, 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 investors the ability to assess the profitability of the
mining operations exclusive of general and administrative
expenses.
The following table reconciles gross profit (loss) to our
non-IFRS measure, Mining Profit:
For the periods
ended December 31
|
Three Months
Ended
|
|
Twelve Months
Ended
|
(CAD
thousands)
|
2022
|
2021
|
|
2022
|
2021
|
Gross profit
(loss)
|
$ (23,373)
|
$
30,567
|
|
$ (24,967)
|
$
88,798
|
|
|
|
|
|
|
Add
(deduct):
|
|
|
|
|
|
Revenue from
hosting
|
–
|
(2,352)
|
|
(751)
|
(8,376)
|
Revenue from high
performance computing
|
(4,487)
|
–
|
|
(16,891)
|
–
|
Site operating costs
attributable to hosting
|
–
|
1,616
|
|
797
|
4,417
|
Site operating costs
attributable to high
performance
computing
|
2,189
|
–
|
|
8,378
|
–
|
Depreciation
|
29,004
|
9,315
|
|
93,880
|
23,288
|
Mining
Profit
|
$
3,333
|
$
39,146
|
|
$
60,446
|
$
108,127
|
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, 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 December 31
|
Three Months
Ended
|
|
Twelve Months
Ended
|
(CAD
thousands)
|
2022
|
2021
|
|
2022
|
2021
|
Net income
(loss)
|
$ (186,668)
|
$
(111,178)
|
|
$ (242,813)
|
$
(72,711)
|
|
|
|
|
|
|
Add
(deduct):
|
|
|
|
|
|
Net finance (income)
costs
|
1,970
|
(326)
|
|
6,670
|
(1,498)
|
Depreciation and
amortization
|
29,004
|
9,315
|
|
94,528
|
23,288
|
Impairment
|
113,876
|
–
|
|
113,876
|
–
|
Share based
payment
|
1,742
|
2,550
|
|
6,913
|
9,876
|
Gain on disposition of
digital assets
|
–
|
–
|
|
–
|
(182)
|
Foreign exchange (gain)
loss
|
(252)
|
1,741
|
|
1,276
|
3,143
|
Share based payment
taxes withholding
|
–
|
–
|
|
–
|
1,246
|
One-time transaction
costs
|
3,505
|
2,033
|
|
5,116
|
2,956
|
Deferred income tax
expense
|
–
|
12,076
|
|
9,593
|
5,620
|
Sales tax
expense
|
–
|
4,892
|
|
913
|
10,694
|
Revaluation loss of
digital assets
|
37,214
|
–
|
|
134,772
|
–
|
(Gain) loss on
revaluation of warrants
|
(4,306)
|
114,161
|
|
(98,810)
|
114,161
|
Adjusted
EBITDA
|
$
(3,915)
|
$
35,264
|
|
$
32,034
|
$
96,593
|
CORPORATE UPDATES
On February 7, 2023, Hut 8 Mining
Corp. 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 that each of their boards of directors had
unanimously approved a definitive 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") 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
environmental, social, and governance ("ESG").
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.
- New Hut 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.
- Notably, the USBTC team brings significant leadership in energy
origination, development, demand response, hedging, grid
stabilization, and analytics to New Hut, significantly enhancing
New Hut's ability to better plan around stable and predictable
energy usage and mitigate fluctuating prices across markets.
In addition, New Hut is committed to supporting and growing the
HPC business, which continues to be a cornerstone of New Hut's
diversified strategy, generating monthly recurring revenue from
approximately 370 North American customers.
CONFERENCE CALL
Hut 8 Mining Q4 2022 conference call will commence at
10:00 a.m. ET, today, March 9, 2023.
- To join the conference call without operator assistance, you
may register and enter your phone number at https://bit.ly/3YEOkEJ
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: 42748613#
Analyst Coverage of Hut 8 Mining:
A full list of Hut 8 Mining analyst coverage can be found here:
https://hut8.io/investors/
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 operational digital asset mining sites
located in Southern Alberta, 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 over 36,000 square
feet of geo-diverse data centre space and cloud capacity connected
to electrical grids powered by significant renewables and
predominantly emission-free sources, 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.
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; 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 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, shareholder approvals, court approvals, stock exchange
approvals and satisfaction of other closing customary conditions;
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, 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. 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, fluctuations in energy prices and
the Company's energy requirements, the ability to obtain requisite
approvals (including shareholder, stock exchange, regulatory, and
court approvals) and the satisfaction of other conditions to the
consummation of the Transaction on the proposed terms 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 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; the outcome of any litigation proceedings
in respect of USBTC's legal dispute with the City of Niagara Falls, New York; and the
outcome of any litigation proceedings in respect of the Company's
legal dispute with Validus Power Corp.
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;
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; 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.io, 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.
View original
content:https://www.prnewswire.co.uk/news-releases/hut-8-reports-operating-and-financial-results-for-2022-301767587.html