Digihost Announces 2023 Year End Financial Results and Provides Operational Update
- Increased revenue and Adjusted EBITDA for 2023 showcase Digihost's financial growth.
- Acquisition of a 60 MW power plant in North Tonawanda, NY, and partnerships highlight transformative year.
- Plans to boost hashing power to 6 EH by 2024 and expand operations in low-cost energy markets.
- Financially, revenue reached $26.11 million, with Adjusted EBITDA up by 207% to $1.59 million.
- Minimal long-term loans payable of $0.356 million indicate a strong financial position.
- Completion of significant milestones in 2023, including Bitcoin mining hashrate increase and revenue stream expansion.
- Operational achievements in 2024 include multi-year hosting agreement and increase in hash rate.
- Cash, BTC, and cash deposits of approximately $6.2 million as of March 31, 2024, show financial growth.
- Plans to diversify mining operation and access clean energy sources for strategic growth.
- At-the-Market Financing update details issuance of subordinate voting shares for gross proceeds.
- Company's outlook focuses on expanding operational footprint and increasing hashing power by 4EH by the end of 2024.
- None.
Insights
The report of Digihost Technology Inc. indicating an increase in revenue and Adjusted EBITDA for the year ended December 31, 2023, signals potential operational efficiency and growth, despite the challenging environment of the blockchain sector. The acquisition of a 60 MW power plant and diversification into colocation services and energy sales demonstrates a strategic move towards reducing dependency on digital currency mining. This diversification is particularly pertinent considering the volatile nature of cryptocurrency markets. The company's ability to fund energy costs and capital expenditures through the monetization of its Bitcoin production, rather than equity dilution, bodes well for shareholder value preservation.
However, the comprehensive loss reported for the year and the significant depreciation and amortization expenses warrant attention. These factors could indicate high capital expenditure requirements and the rapid depreciation of mining equipment, which is common in the industry due to the fast-paced technological advancements. Investors will need to weigh the company's growth prospects against these costs and the potential impact on future profitability.
From a market perspective, Digihost's expansion into new revenue streams and its plan to increase hashing power align with current trends in the blockchain industry, which is seeing increased demand for energy-efficient mining operations. The focus on low-cost, under-utilized renewable energy sources could enhance the company's competitive advantage and appeal to environmentally conscious investors. Additionally, the increase in cash and Bitcoin holdings provides a buffer against operational risks and potential market downturns.
However, the broader market implications of Digihost's financial performance must be considered in the context of the cryptocurrency sector's volatility and regulatory uncertainties. While the company's strategic moves appear sound, market sentiment and regulatory changes could significantly influence future performance.
The company's report highlights a substantial increase in its Bitcoin mining hashrate and the acquisition of high-performance miners, which is a critical factor in maintaining competitiveness in the cryptocurrency mining industry. The planned deployment of the S19 XPs before the next Bitcoin halving could result in a substantial increase in efficiency, as the halving event typically increases the value of mining rewards due to reduced supply.
The repayment of a secured loan facility also suggests prudent financial management, reducing the company's debt burden and potentially improving its creditworthiness. However, the reliance on Bitcoin's market price, which is reflected in the valuation of the company's holdings, introduces significant risk. The fluctuating nature of cryptocurrency prices can lead to unpredictable impacts on the company's financial health, necessitating careful monitoring by stakeholders.
HOUSTON, April 03, 2024 (GLOBE NEWSWIRE) -- Digihost Technology Inc. (“Digihost” or the “Company”) (Nasdaq: DGHI; TSXV: DGHI), an innovative U.S. based blockchain technology and computer infrastructure company, is pleased to provide a summary of the Company’s audited financial results for the year ended December 31, 2023 (all amounts in U.S. dollars, unless otherwise indicated), and a 2024 year-to-date update on operations. The Company’s audited consolidated financial statements and management’s discussion and analysis (“MD&A”) for the year ended December 31, 2023 have been filed and made accessible under the Company’s continuous disclosure profile on EDGAR at www.sec.gov/edgar and on SEDAR+ at www.sedarplus.ca.
Michel Amar, Chairman and CEO of Digihost, commented, “Despite a challenging 2023, the Company is very pleased to announce that is has reported an increase in revenue over the prior year as well as an increase in Adjusted EBITDA. 2023 was a transformative year for Digihost as we completed the acquisition of a 60 MW power plant in North Tonawanda, NY, and entered into agreements with established partners that enabled us to differentiate our revenue steams.”
Amar continued, “Looking forward to 2024, the Company is positioned to significantly increase its hashing power by the end of the year, with the goal of reaching approximately 6 EH. Digihost will continue to target locations and markets with low-cost, under-utilized renewable energy where the Company can help support local communities. The Company also expects to continue to expand its electrical infrastructure and data centers to provide operational control and security over its assets.”
Highlights for Fiscal 2023 are as follows:
- Revenue of
$26.11 million , compared to$24.19 million in the prior year, as the Company diversified its revenue verticals through various colocation agreements and the sale of energy; - Adjusted EBITDA* of
$1.59 million , an increase of207% over 2022; - Total assets of
$42.30 million ; - Property, plant, and equipment consisting primarily of the Company’s Bitcoin (“BTC”) miners and mining support infrastructure of
$33.38 million . - Minimal long-term loans payable of
$0.35 6 million.
| (U.S.$ in thousands except per share data) | Year Ended | |
| December 31 2023 | December 31 2022 | |
| Revenue from digital currency mining | 18,128 | 24,190 |
| Revenue from colocation services | 1,675 | - |
| Revenue from sale of electricity | 3,037 | - |
| Revenue from sale of energy | 3,272 | - |
| Cost of sales | (20,856) | (20,278) |
| Depreciation and amortization | (14,923) | (10,709) |
| Gross profit (loss) | (9,667) | (6,797) |
| General and administrative and other expenses | (5,396) | (8,292) |
| Gain on sale of property, plant, and equipment | - | 1,141 |
| Loss on settlement of debt | - | (294) |
| Foreign exchange | (1,377) | 3,973 |
| Gain (loss) on disposition of cryptocurrencies | 946 | (11,574) |
| Loss on digital currency option calls | - | (1,950) |
| Change in FV of loan payable | (311) | - |
| Change in FV of promissory note receivable | 51 | - |
| Other Income (expense) | 55 | (51) |
| Change in fair value - Miner Lease Agreement | (268) | 1,693 |
| Gain (loss) on revaluation of digital currencies | 11 | (3,257) |
| Impairment of goodwill and data miners | (1,364) | (2,817) |
| Operating income (loss) | (17,321) | (28,227) |
| Revaluation of warrant liabilities | (4,522) | 32,010 |
| Private placement issuance costs | - | (695) |
| Net financial expenses | (42) | (296) |
| Net income (loss) before income taxes | (21,885) | 2,791 |
| Income tax expense | - | - |
| Deferred tax (expense) recovery | - | 1,537 |
| Net income (loss) for the year | (21,885) | 4,329 |
| Foreign currency translation adjustment | 1,263 | (3,659) |
| Revaluation of digital currency, net of tax | - | (3,706) |
| Total comprehensive income (loss) for the year | (20,622) | (3,036) |
| Basic and diluted income (loss) per share Weighted average number of subordinate voting shares outstanding – diluted | (0.77) 28,573,101 | 0.16 27,227,284 |
* ADJUSTED EBITDA – NON-IFRS MEASURE
Adjusted EBITDA is a non-IFRS financial measure and should be read in conjunction with, and should not be viewed as an alternative to or replacement of, measures of operating results and liquidity presented in accordance with IFRS. Readers are referred to the reconciliations of non-IFRS measures included in the Company’s MD&A and in the table below.
The following table provides a reconciliation of net income to Adjusted EBITDA for the fiscal years ended December 31, 2023 and 2022.
| Twelve months ended December 31, | ||
| 2023 | 2022 | |
| $ | $ | |
| Income (loss) before other items | (21,729,107) | 4,329,342 |
| Taxes and Interest | 42,134 | (1,299,263) |
| Depreciation | 14,923,419 | 10,709,108 |
| Revaluation of warrant liabilities | 4,522,523 | (32,010,637) |
| FV Changes | 999,020 | 11,115,067 |
| Gain on sale of equipment | - | (1,140,658) |
| Impairment of goodwill and PPE | 1,363,941 | 2,816,783 |
| Transaction costs | - | 695,170 |
| Share based compensation | 1,620,777 | 3,296,238 |
| Adjusted EBITDA | 1,586,404 | (1,488,850) |
The Company achieved significant milestones during 2023:
- The Company completed an all-cash acquisition of a 60 MW power plant in North Tonawanda, NY;
- Achieved a Bitcoin mining hashrate of 2 EH/s, representing an increase of
180% on a year-over-year basis; - Acquired approximately 1,700 high performance BTC miners during Q1 2023;
- Expanded its revenue streams by entering into new colocation and energy sale agreements, as approximately
31% of the Company’s 2023 revenues are for services outside of digital currency mining; and - Consistent with management’s ongoing commitment to minimize equity dilution for its shareholders, the Company monetized a portion of its BTC production to fully fund its energy costs and capital expenditures during the year.
The growth generated by Digihost during 2023 has continued into the first quarter of 2024. To date, operational achievements of the Company for 2024 are the following:
- Signed a multi-year hosting agreement with one of the world’s leading manufacturers of digital currency mining servers. Under the agreement, Digihost will receive an upfront deposit along with 4,640 S19 XPs (21.5W/TH), which equates to approximately 14MW of hosting. The Company plans to deploy these next generation, highly energy efficient and high-performance miners prior to the next Bitcoin halving. The deployment is expected to result in a hash rate increase of approximately 700 PH/s, bringing Digihost’s total hash rate to 2.4 EH/s;
- The Company held cash, BTC and cash deposits of approximately
$6.2 million as of March 31, 2024 (based on a BTC price of$71,333 as of March 31, 2024 per CoinMarketCap), as compared to$2.8 million as of December 31, 2024 (based on a BTC price of$42,265 as of December 31, 2023 per CoinMarketCap), representing an increase of approximately121% since the end of 2023; - Repaid in full a
$0.7 million secured loan facility.
Operations Update
Presently, Digihost’s consolidated operating capacity across its three sites represents approximately 90MW of available power and is mining at hashrate of 2 EH/s.
Outlook
Digihost’s strategic growth plan is to continue to diversify its mining operation while accessing clean sources of energy. The Company plans to execute on this plan by expanding its current operational footprint in New York and Alabama and is working towards accessing power and building infrastructure in other locations by the end of 2024 that would lead to an increase in the Company’s hashing power by approximately 4EH.
At-the-Market Financing Update
On March 4, 2022, the Company entered into an offering agreement with H.C. Wainwright & Co., LLC (the “Agent”) as agent, pursuant to which the Company established an at-the-market equity program (the “ATM Program”). From the commencement of the ATM Program through December 31, 2023, the Company issued 556,954 subordinate voting shares in exchange for gross proceeds of
Subsequent to year-end through the expiry of the ATM Program on March 23, 2024, the Company issued 3,600 subordinate voting shares in exchange for gross proceeds of
About Digihost
Digihost is a growth-oriented technology company focused on the blockchain industry. The Company operates from three sites in the U.S. and, in addition to managing its own operations, provides hosting arrangements at its facilities.
For further information, please contact:
Digihost Technology Inc.
www.digihost.ca
Michel Amar, Chief Executive Officer
T: 1-818-280-9758
Email: michel@digihost.ca
Cautionary Statement
Trading in the securities of the Company should be considered highly speculative. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
Except for the statements of historical fact, this news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking information”) that are based on expectations, estimates and projections as at the date of this news release and are covered by safe harbors under Canadian and United States securities laws. Forward-looking information in this news release includes information about potential further improvements to profitability and efficiency across mining operations, including, as a result of the Company’s expansion efforts, potential for the Company’s long-term growth, and the business goals and objectives of the Company. Factors that could cause actual results to differ materially from those described in such forward-looking information include, but are not limited to: future capital needs and uncertainty of additional financing; share dilution resulting from equity issuances; risks relating to the strategy of maintaining and increasing Bitcoin holdings and the impact of depreciating Bitcoin prices on working capital; development of additional facilities and installation of infrastructure to expand operations may not be completed on the timelines anticipated by the Company, or at all; ability to access additional power from the local power grid; a decrease in cryptocurrency pricing, volume of transaction activity or generally, the profitability of cryptocurrency mining; further improvements to profitability and efficiency may not be realized; development of additional facilities to expand operations may not be completed on the timelines anticipated by the Company; ability to access additional power from the local power grid; an increase in natural gas prices may negatively affect the profitability of the Company’s power plant; the digital currency market; the Company’s ability to successfully mine digital currency on the cloud; the Company may not be able to profitably liquidate its current digital currency inventory, or at all; a decline in digital currency prices may have a significant negative impact on the Company’s operations; the volatility of digital currency prices; and other related risks as more fully set out in the Annual Information Form of the Company and other documents disclosed under the Company’s filings at www.sedarplus.ca. The forward-looking information in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available to the Company. In connection with the forward-looking information contained in this news release, the Company has made assumptions about: the current profitability in mining cryptocurrency (including pricing and volume of current transaction activity); profitable use of the Company’s assets going forward; the Company’s ability to profitably liquidate its digital currency inventory as required; historical prices of digital currencies and the ability of the Company to mine digital currencies on the cloud will be consistent with historical prices; the ability to maintain reliable and economical sources of power to run its cryptocurrency mining assets; the negative impact of regulatory changes in the energy regimes in the jurisdictions in which the Company operates; and there will be no regulation or law that will prevent the Company from operating its business. The Company has also assumed that no significant events occur outside of the Company's normal course of business. Although the Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainties therein. The Company undertakes no obligation to revise or update any forward-looking information other than as required by law.
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