Digihost Announces US$4 Million Private Placement

Rhea-AI Summary

Digihost Technology Inc. (Nasdaq / TSXV: DGHI), a U.S.-based blockchain and computer infrastructure company, has announced a US$4 million private placement of equity securities. The placement involves 3,636,363 units at US$1.10 per unit, a 9% premium to the recent closing price. Each unit includes one subordinate voting share and one warrant, with warrants exercisable at US$2.00 per share for three years.

The proceeds will fund infrastructure expansion acquisitions and working capital. The private placement, subject to regulatory approvals, is expected to close around August 9, 2024. No securities were offered to Canadian residents, and the offering is not registered under U.S. securities laws.

Positive

• Raised US$4 million in private placement
• 9% premium on unit price compared to recent closing price
• Warrants provide potential for additional capital at US$2.00 per share
• Funds allocated for infrastructure expansion and working capital

Negative

• Potential dilution of existing shareholders
• Subject to regulatory approvals and closing conditions

Financial Analyst

Digihost's $4 million private placement at a 9% premium signals investor confidence in the company's growth prospects. The $2.00 warrant exercise price, nearly double the unit price, suggests optimism for future share appreciation. However, the dilutive effect of issuing 3,636,363 new units could pressure existing shareholders.

The funds earmarked for infrastructure expansion align with the company's growth strategy in the competitive blockchain sector. This could potentially enhance Digihost's market position and operational capacity. Yet, investors should note that expansion in this volatile industry carries risks, especially given the cyclical nature of cryptocurrency markets.

The premium pricing and institutional investor participation are positive indicators, but the company's ability to effectively deploy capital and generate returns in a rapidly evolving tech landscape remains important for long-term value creation.

Legal Expert

The private placement's structure raises several regulatory considerations. Digihost's dual-listing on Nasdaq and TSX Venture Exchange necessitates compliance with both U.S. and Canadian securities laws. The explicit exclusion of Canadian residents from the offering suggests a strategic approach to regulatory navigation.

The company's emphasis on pending approvals, including from the TSX Venture Exchange, underscores the complex regulatory landscape for crypto-related businesses. Investors should be aware that regulatory hurdles could potentially delay or impact the closing of this transaction.

The disclaimer regarding U.S. securities laws highlights the unregistered nature of the offering, likely relying on exemptions for private placements. This approach may limit secondary market liquidity for these securities, an important consideration for potential investors.

HOUSTON, Aug. 06, 2024 (GLOBE NEWSWIRE) -- Digihost Technology Inc. (“Digihost” or the “Company”) (Nasdaq / TSXV: DGHI), an innovative U.S. based blockchain technology and computer infrastructure company, is pleased to announce that the Company has entered into subscription agreements with certain institutional investors for gross proceeds of up to US$4 million in a private placement of its equity securities (the “Private Placement”), comprised of 3,636,363 units of the Company (“Units”) at a purchase price of US$1.10 per Unit, representing a premium of 9% to the most recent closing price of the Shares on Nasdaq. Each Unit is comprised of one subordinate voting share of the Company (a “Share”) and one warrant (a “Warrant”), with each Warrant entitling the holder to purchase one additional Share. The Warrants have an exercise price of US$2.00 per Share and exercise period of three years from the issuance date.

The net proceeds of the Private Placement will be used by the Company primarily for acquisitions related to infrastructure expansion and for general working capital purposes. The consummation of the Private Placement is subject to the receipt of all required corporate and regulatory approvals, including the approval of the TSX Venture Exchange, and other customary closing conditions, and is expected to occur on or about August 9, 2024.

No securities were offered or sold to Canadian residents in connection with the private placement.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the 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. This news release shall not constitute an offer of securities for sale in the United States. The securities being offered have not been registered under the United States Securities Act of 1933, as amended, and such securities may not be offered or sold within the United States absent registration under U.S. federal and state securities laws or an applicable exemption from such U.S. registration requirements.

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 the Private Placement, including closing of the Private Placement and approval of the TSX Venture thereof and the use of net proceeds from the Private Placement, 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: the failure to satisfy the conditions to closing of the Private Placement; 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; effects on Bitcoin prices as a result of the most recent Bitcoin halving; 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 and www.SEC.gov/EDGAR. 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. 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.

FAQ

What is the size and price of Digihost's private placement announced on August 6, 2024?

Digihost announced a US$4 million private placement, offering 3,636,363 units at US$1.10 per unit.

What does each unit in Digihost's (DGHI) private placement consist of?

Each unit consists of one subordinate voting share and one warrant to purchase an additional share at US$2.00 for three years.

When is the expected closing date for Digihost's (DGHI) private placement?

The private placement is expected to close on or about August 9, 2024, subject to regulatory approvals and closing conditions.

How will Digihost (DGHI) use the proceeds from the August 2024 private placement?

The proceeds will be used primarily for acquisitions related to infrastructure expansion and for general working capital purposes.