Hut 8 Mining Corp. (Hut 8) engages primarily in the business of the mining of digital assets – with an operational focus on utilizing specialized equipment to solve complex computational problems to validate transactions on different blockchains and receiving Bitcoin in return for successful services.
Additionally, the company operates cloud and colocation date centre facilities in Canada targeting enterprise customers seeking high performance computing services.
The company is a leading digit...
Hut 8 Mining Corp. (Hut 8) engages primarily in the business of the mining of digital assets – with an operational focus on utilizing specialized equipment to solve complex computational problems to validate transactions on different blockchains and receiving Bitcoin in return for successful services.
Additionally, the company operates cloud and colocation date centre facilities in Canada targeting enterprise customers seeking high performance computing services.
The company is a leading digital asset mining company with industrial scale operations in North America. The company holds more unencumbered self-mined Bitcoin than any other publicly-listed digital asset mining company in the world. The company is committed to growing shareholder value by increasing the capacity and efficiency of its digital asset mining operations, as well as the quantum and value of its Bitcoin holdings, combined with revenue diversification via the company’s high performance computing operations and by deploying environmental, social and governance (ESG) initiatives.
The company has three wholly-owned subsidiaries: Hut 8 Holdings; Hut 8 Asset Management, and Hut 8 HPC. Hut 8 has two primary drivers of its income:
Digital Asset Mining – the company deploys advanced high-performance computing technologies at its mining facilities to mine the Bitcoin Network. The company receives Bitcoin as a reward for its mining activities.
High Performance Computing Operations – the company generates fiat-denominated revenue from third party customers via provision of cloud and colocation services.
Digital Asset Mining
The company has two facilities in operation, one in Drumheller, Alberta and the second in Medicine Hat, Alberta. The sites are within two and a half hours by car from each other. The Drumheller Facility is consisting of 37 mining Containers. The Medicine Hat Facility has 56 mining Containers. The company has a third facility located in North Bay, Ontario.
Power
For the Drumheller Facility, the company entered into an agreement with ATCO, the electric utility provider for the Drumheller area, for the provision of power. For the Medicine Hat Facility, the company entered into an agreement with the City of Medicine Hat which operates its own power utility, which supplies the Medicine Hat Facility with the electricity for the 56 Containers on site.
For the Drumheller Facility, the distance from the transmission poles owned by ATCO Electric Ltd. (ATCO) is approximately 40 metres. The Drumheller Facility receives up to 42 MW of energy from the grid and is therefore exposed to fluctuations in the price of power. The Medicine Hat Facility has a total installed power capacity of 67 MW, of which 42 MW is delivered by a power plant that is owned by the city of Medicine Hat at a fixed rate. An additional approximately 25 MW of power at the Medicine Hat Facility is provided from the power plant and is exposed to fluctuations in the price of power.
Monitoring and Repair
The company monitors the intake air temperature, hash board temperature, voltage, hash rate, in container air temperature, exhaust air temperature, and humidity of each container. The company entered into a repair services agreement with MicroBT that allows it to complete in-warranty work on MicroBT miners for all of North America on-site at the Medicine Hat Facility.
Custody Policy
The company has entered into a custodial services agreement with NYDIG pursuant to which NYDIG serves as custodian for certain of its Bitcoin. NYDIG holds the company’s Bitcoin in trust for its benefit, and NYDIG Trust Company LLC (NYDIG) has no right, interest, or title in its custodied Bitcoin.
High Performance Computing Operations
The business consists of five data centres spanning across Canada offering cloud and colocation services.
Cloud Services
The company provides cloud services that seek to meet the complex and evolving IT needs of its customers. The company provides Infrastructure as a Service for compute, storage, disaster recovery cloud solutions, and more. These solutions allow the company to compete in the cloud services market. The company offers customized cloud storage and compute offerings to customers across Canada, providing, a virtualized computing environment that customers can access on-demand without to acquiring or maintaining expensive server equipment. The company can also provide offsite cloud storage for key backup and disaster recovery situations, including utilizing partnerships with software and hardware vendors, such as VMware, Microsoft, Veeam Software, Zerto, and Pure Storage. The company has begun offering graphics processing unit (GPU) based services for the Artificial Intelligence, Machine Learning and Media and Entertainment markets.
Colocation Services
The company provides data centre colocation services that protect and connect customers’ valuable information assets. The company provides connectivity on redundant routes in and out of the facilities. Hosting and colocation revenue is derived from set-up fees for new installations and monthly recurring charges based on the number of cabinets and/or the quantity of cage space, power requirements, managed services provided and internet/data bandwidth requirements. Other services, such as providing disaster recovery space and infrastructure, are provided under custom contractual arrangements.
The company also offers a variety of managed hosting solutions, which may require it to manage various aspects of a customer’s hardware, software or operating systems in public or privately accessible environment. The company offers disaster recovery services on a custom basis. These facilities can be provisioned at the data centre location and can provide customers with the capability to restore office functionality with direct access to their information located in the data centre.
The company’s network can provide these customers internet and/or secure private interconnections between the data centre facility and the customer’s office location(s). Data centre services customers typically include national government agencies, financial services companies, IT service providers, content and network service providers, and small and medium businesses which rely on the company to store and manage their critical IT equipment and provide the ability to directly connect to the networks that enable an information-driven economy.
Data Centre Facilities
The company’s data centres provide IT solutions to a roster of small and medium-sized businesses, enterprises, public sector and technology service providers. Hut 8 has approximately 80,000 square feet of gross data centre space in the five facilities it operates across Canada.
Mississauga, Ontario: Hut 8 operates a 10,000 square foot of AT 101 SOC2 Type 2 compliant data centre facility in Mississauga, Ontario that was previously managed by BlackBerry Limited and built to a tier 3 standard. This facility predominantly serves the Greater Toronto Area.
Vaughan, Ontario: Hut 8 operates a 9,500 square feet of AT 101 SOC2 Type 2 compliant data centre facility in Vaughan, Ontario, serving the Greater Toronto Area.
Kelowna, British Columbia: Hut 8 operates its 18,000 square feet of AT 101 SOC2 Type 2 compliant data centre in Kelowna. The data centre is built to a tier 3 standard and the location in Kelowna.
Vancouver, British Columbia: The company operates two AT 101 SOC2 Type 2 compliant data centre facilities in downtown Vancouver. Its first facility is approximately 7,000 square feet. The facility has redundant fibre facilities between the data centre and the ‘telco hotel’, 555 West Hastings, in downtown Vancouver. The second facility is 7,000 square feet and is served by multiple fibre optic lines. Both facilities are used to service the Greater Vancouver Area.
Seasonality
The primary seasonality that the company experiences is related to potential changes in electricity prices based on volatility in market natural gas prices. Electricity is one of the most significant expenses incurred in the company’s Bitcoin mining operations.
Competition
Digital Asset Mining: The company’s main competitors include, but are not limited to, the following companies: Argo Blockchain PLC; Bitfarms Ltd.; Cipher Mining Inc.; Greenidge Generation Holdings Inc.; Iris Energy Limited; Marathon Digital Holdings Inc.; Riot Platforms, Inc.; Stronghold Digital Mining Inc.; and TeraWulf Inc.
High Performance Computing: The company competes with a number of data centre and cloud services providers in both Toronto and Vancouver. These include the major telecommunications providers such as Bell Canada, Rogers Communications Inc., and Cogeco Inc., but also include a number of data centre providers including Centrilogic, Cologix, Inc. and Equinix, Inc.
History
Hut 8 Mining Corp. was incorporated under the laws of the province of British Columbia in 2011.
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