Hut 8 Operations Update for December 2023
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Insights
The acquisition of a 63 MW substation by Hut 8 Corp. signifies a strategic investment in infrastructure that bolsters the company's capacity for self-mining and hosting services. The substation purchase, coupled with the lease of additional land, provides Hut 8 with the opportunity to engage in demand response programs, which are agreements with the energy grid to reduce power consumption during peak demand in exchange for financial incentives. This could lead to a reduction in operational costs and an increase in profit margins. The energy market is increasingly accommodating for such flexible energy consumers, especially in Texas, which has a deregulated market and often experiences high price volatility.
Furthermore, the approval by the United States Bankruptcy Court for Hut 8 to proceed with mining operations in the wake of Celsius Network LLC's bankruptcy proceedings is another pivotal development. By providing managed services to the newly created MiningCo, Hut 8 is expanding its operational scope and revenue streams. The oversight of approximately 12 EH/s computing capacity and over 300 MW of energy under the contract could substantially increase Hut 8's market share in the digital asset mining industry. This contract will likely have a positive impact on the company's financial performance, assuming the stability of the cryptocurrency market and operational efficiency.
Hut 8's report highlights a significant increase in Bitcoin production in December 2023 compared to the previous month, despite operational adjustments for maintenance. This growth is attributable to improved transaction fees and efficiencies gained from the deployment of proprietary software at Canadian mining sites. For investors, the increase in Bitcoin reserves to 9,195 BTC represents an enhanced asset base, which could be leveraged in various ways to support the company's financial health, especially during market downturns.
The expansion of Hut 8's mining operations and the resultant increase in self-mined Bitcoin reserves are critical metrics for stakeholders. These factors directly impact the company's valuation, especially in an environment where Bitcoin's price can be highly volatile. The ability to efficiently mine and hold a substantial amount of Bitcoin could provide a buffer against market fluctuations and position the company as a robust player in the digital asset space.
The strategic growth initiatives undertaken by Hut 8, such as the substation purchase and the expansion of its mining and hosting operations, are capital-intensive moves that indicate the company's commitment to scaling up its infrastructure. The capital outlay of approximately $7.1 million for the substation and land signifies a long-term investment that could enhance the company's competitive edge. However, it's crucial to monitor the return on investment (ROI) and how it impacts the company's balance sheet and cash flow.
Investors should also consider the implications of Hut 8's managed services agreement following the Celsius Network LLC bankruptcy. This deal could provide a steady stream of revenue and diversify income sources. However, the success of such ventures is contingent upon the execution of the construction and operational management of the sites, which can be complex and risk-laden. The financial performance of these initiatives should be evaluated against the backdrop of Hut 8's overall operational efficiency and the volatile nature of cryptocurrency markets, which can influence both operational costs and revenue potential.
Company purchased 63 MW substation in Culberson County, Texas to support near term growth optionality
Company software is driving efficiencies at Hut 8’s Canadian mining sites
At 9,195, Hut 8 continues to have one of the largest self-mined Bitcoin reserves of any publicly traded company
MIAMI, Jan. 05, 2024 (GLOBE NEWSWIRE) -- Hut 8 Corp. (Nasdaq | TSX: HUT), ("Hut 8” or the “Company”) one of North America’s largest, most innovative digital asset mining pioneers and high performance computing infrastructure providers is proud to share its operations report for December 2023.
| December 2023 | November 2023 | |
| Total energy capacity under management | 839 MW1 | 839 MW1 |
| Total deployed miners under management | 205,7592 | 207,3992 |
| Total hashrate under management | 21.5 EH/s3 | 21.6 EH/s3 |
Self-Mining4 | ||
| Deployed miners5 | 73,943 | 75,078 |
| Deployed hashrate6 | 7.2 EH/s | 7.3 EH/s |
| Bitcoin produced | 453 BTC | 390 BTC |
| Bitcoin on balance sheet7 | 9,195 BTC | 9,129 BTC |
| Managed Services8 | ||
| Energy capacity under management | 680 MW | 680 MW |
| Deployed miners under management | 166,347 | 166,775 |
| Hashrate under management | 17.9 EH/s | 17.9 EH/s |
| Hosting | ||
| Deployed miners under management | 76,734 | 76,737 |
| Hashrate under management | 8.6 EH/s | 8.6 EH/s |
Notes:
(1) Includes all Self-Mining, Managed Services, and Hosting infrastructure, including
(2) Includes all miners that are racked in Self-Mining, Managed Services, and Hosting infrastructure with power and networking, including all miners at the Echo site (King Mountain, TX).
(3) Includes all Self-Mining, Managed Services, and Hosting hashrate, including
(4) Self-Mining operations for Hut 8 Corp. include all operations at the Echo site (King Mountain, TX).
(5) Deployed miners are defined as miners that are physically racked, with power and networking.
(6) Indicates the target hashrate of all deployed miners.
(7) As of month-end.
(8) The Managed Services figures reflected in this table include the Self-Mining and Hosting metrics from the sites where Hut 8’s Managed Services business is an additional service layer in the operation of the site (at Charlie, Delta, and Echo – site details below). As a result, the sum of the Self-Mining, Managed Services, and Hosting numbers will not add up to the “Total energy capacity under management”, “Total deployed miners under management”, and “Total hashrate under management” figures that are also reflected in the table.
“Throughout December, our first full month operating as Hut 8 Corp., we saw unseasonably warm temperatures across many parts of the continent, which helped to stabilize energy costs at several of our sites; at the same time, we realized efficiency improvements at our Canadian sites after switching operations over to our purpose-built software,” said Jaime Leverton, CEO of Hut 8. "As we continued to focus on driving strong operating results, we also moved ahead with several strategic growth initiatives including the purchase of a new substation in Texas, which we believe will give us the optionality to engage in demand response and a combination of self-mining and hosting once the site buildout is completed.”
Highlights:
- On December 31, Hut 8 signed a definitive agreement to purchase a 63 MW substation and 1.9 acres of land for approximately
$7.1 million . The Company also entered into a lease for 20 additional acres of land in Culberson County, Texas. This transaction gives the Company the optionality to build out a front-of-the-meter site, engage in demand response programs, and expand our self-mining capabilities or our hosting capacity in the near- to medium-term. - On December 28, the United States Bankruptcy Court for the Southern District of New York granted approval for Hut 8 to proceed with its full mining operations plan in connection with the Celsius Network LLC bankruptcy proceedings. The plan provides for the transfer of Celsius Network LLC’s mining operations to a newly-created “MiningCo” and Hut 8 will provide end-to-end managed services for MiningCo’s operations at five sites in Texas, including the design and development, engineering, financial modeling, budgeting, accounting, construction management, procurement, logistics, and RFP coordination at the fifth and largest site in Cedarvale. It is expected that when construction is complete at Cedarvale, the Company will oversee approximately 12 EH/s computing capacity (122,000 miners) and more than 300 MW of energy under the contract.
- In December, despite modest month-over-month changes in operational metrics as mainly self-mining machines were temporarily pulled offline for regular maintenance and repair, Hut 8 produced 63 more Bitcoin than in November, which is attributable to an increase in transaction fees and improved efficiency gains realized at Hut 8’s Foxtrot and Golf sites in Medicine Hat and Drumheller after completing the implementation of the Company’s purpose-built proprietary software at those sites.
Hut 8’s expanded digital asset mining geographical footprint now includes the following sites:
Owner | Energy Capacity | Self-Mining | Managed Services | Hosting | ||
| Alpha | Niagara Falls, NY | Hut 8 | 50 MW | Yes | Yes | |
| Charlie | Kearney, NB | Managed1 | 100 MW | Yes | Yes | |
| Delta | Granbury, TX | Managed1 | 300 MW | Yes | Yes | |
| Echo | King Mountain, TX | Joint Venture2 | 280 MW | Yes | Yes | Yes |
| Foxtrot | Medicine Hat, AB | Hut 8 | 67 MW | Yes | ||
| Golf | Drumheller, AB | Hut 8 | 42 MW | Yes |
Notes:
(1) Hut 8’s Managed Services subsidiaries lead all aspects of site operations, including accounting, curtailment, and customer relations at the Charlie and Delta sites, which are owned by a multi-billion dollar AUM sustainable infrastructure investment firm. The Managed Services subsidiaries also lead all aspects of site operations at the Echo site.
(2) The Company has a
About Hut 8
Through innovation, imagination, and passion, Hut 8 Corp.’s seasoned executive team is bullish on creating value at the intersection of infrastructure and energy through Bitcoin mining and hosting, groundbreaking managed services, energy arbitrage, operating traditional data centers, and capitalizing on emerging technologies like AI and machine learning. Headquartered in Miami, Florida, Hut 8 Corp.’s infrastructure portfolio includes eleven sites: five high performance computing data centers across British Columbia and Ontario that offer cloud, co-location, AI, machine learning, and VFX rendering computing solutions, and six Bitcoin mining, hosting, and managed services sites located in Alberta, New York, Nebraska, and Texas. Long-distinguished for its unique treasury strategy, Hut 8 Corp. has one of the highest inventories of self-mined Bitcoin of any publicly-traded company globally. For more information, visit www.hut8.com and follow us on X (formerly known as Twitter) at @Hut8Mining.
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 and New Hut expect or anticipate will or may occur in the future, including such things as future business strategy, competitive strengths, goals, expansion and growth of the business, 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. Specifically, such forward-looking information included in this press release includes statements relating to the diversification of the Company’s North American-wide operations; the Company’s expectations for capacity and energy at Cedarvale and future growth in economical mining operations, high performance computing, extensive hosting operations, and the managed services business.
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 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, 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 COVID19 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 mining sitesand other risks related to the digital asset mining and data centre business. For a complete list of the factors that could affect Hut 8, please see the “Risk Factors” section of Hut 8’s Registration Statement on Form S-4 dated November 7, 2023, available under the Company’s EDGAR profile at www.sec.gov, in addition to the “Risk Factors” section of Hut 8 Mining Corp.’s Annual Information Form dated March 9, 2023, and Hut 8’s other continuous disclosure documents which are available under the Company’s SEDAR+ profile at www.sedarplus.ca and EDGAR profile at www.sec.gov.
Hut 8 Corp. Investor Relations
Sue Ennis
Hut 8 Corp. Media Relations
Erin Dermer
FAQ
What did Hut 8 Corp. purchase in Culberson County, Texas?
How many miners and total hashrate does Hut 8 Corp. have under management?
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