Hut 8 Corp
For the period ended Jun 30, 2024. Filed Aug 13, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 13, 2024
HUT$52.65+14.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0001558370-24-008203
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0001558370-24-011968
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 153 previous paragraphs and 197 current paragraphs.
78 unchanged; 61 reworded; 50 added; 14 removed; 0 previous and 8 current paragraphs rearranged.
Tables are not compared: 33 previous and 33 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (50)
Current report
Until April 30, 2024, we also had self-mining operations at two sites located in Kearney, Nebraska (“Kearney”) and Granbury, Texas (“Granbury”).
Current report
West Texas Site
Current report
On July 9, 2024, we entered into a power purchase agreement and other definitive agreements for a site in West Texas with exclusive access to 205 MW of immediately available power capacity and land. The site is adjacent to a wind farm and connected to the ERCOT grid and is well-positioned to support a variety of high-density compute applications, including Bitcoin mining and AI.
Current report
Convertible Note Purchase Agreement
Current report
On June 21, 2024, we entered into a Purchase Agreement with a Coatue Fund, and the Guarantor, providing for the purchase and sale of a convertible note in the principal amount of $150.0 million. The convertible note is a senior unsecured obligation of and guaranteed by the Guarantor pursuant to the Guaranty. We intend to use the proceeds from the sale to fund growth capital expenditures and for general corporate purposes. See Note 9.Loans and notes payable to the Unaudited Condensed Consolidated Statements found elsewhere in this Quarterly Report for additional information on the Transaction.
Current report
Arrangement with Ionic Digital
Current report
On June 19, 2024, we amended our four-year agreement with Ionic to provide end-to-end managed services across all of Ionic’s Bitcoin mining operations as well as future upside opportunities related to building and managing new sites. Under the amended agreement, we expect to earn an aggregate of $15.0 million per year in management fees in addition to reimbursement for direct passthrough operating expenses, compared to $20.4 million per year under the original agreement.
Current report
Coinbase Credit Facility
Current report
On June 17, 2024, our subsidiary entered into the Second Amended and Restated Credit Agreement with Coinbase. The Second Amended and Restated Credit Agreement extends the final maturity date to June 16, 2025, modifies the LTV thresholds for a margin call, margin release or breach of the Second Amended and Restated Credit, and modifies the interest rate at a rate equal to (a) the greater of (x) the federal funds rate on the date of the applicable borrowing and (y) 3.25%, plus (b) 6.0%. See Note 9.* Loans and notes payable* to the Unaudited Condensed Consolidated Statements found elsewhere in this Quarterly Report for additional information on the Second Amended and Restated Credit Agreement.
Current report
Our cost to mine a Bitcoin (excluding hosted facilities) for the three months ended June 30, 2024 was $26,232 compared to $11,321 for the three months ended June 30, 2023. The increase was primarily due to the Halving event in April 2024 which decreased the Bitcoin reward from 6.25 Bitcoin per block to 3.125 Bitcoin per block, in addition to an increase in average network difficulty during the period (84.8T for the three months ended June 30, 2024 compared to 49.5T for the three months ended June 30, 2023). This was partially offset by a decrease in our energy cost per MWh (see below for further discussion on energy cost per MWh).
Current report
Our cost to mine a Bitcoin (excluding hosted facilities) for the six months ended June 30, 2024 was $22,962 compared to $10,059 for the six months ended June 30, 2023. The increase was also primarily due to the Halving event in April 2024 and an increase in average network difficulty during the period (81.1T for the six months ended June 30, 2024 compared to 44.8T for the six months ended June 30, 2023), partially offset by a decrease in our energy cost per MWh (see below for further discussion on energy cost per MWh).
Current report
Inclusive of hosted facilities, our cost to mine a Bitcoin for the three months ended June 30, 2024 was $26,232 compared to $14,907 for the three months ended June 30, 2023. As of April 30, 2024, we were no longer self-mining at hosted facilities, and we did not incur hosting costs during the three months ended June 30, 2024, so our cost to mine a Bitcoin for the three months ended June 30, 2024 consisted solely of energy costs.
Current report
Energy cost per MWh for the six months ended June 30, 2024 was $35.40 compared to $35.99 for the six months ended June 30, 2023, and the decrease was also primarily driven by lower energy costs at our newly built Salt Creek site in addition to credits received for participating in ancillary demand response programs. The current period reflects six months of combined company self-mining activity at our Alpha, Medicine Hat, Salt Creek, and King Mountain sites while the prior period reflects six months of USBTC’s self-mining activity at our Alpha and King Mountain sites.
Current report
Hosting cost per MWh for the three months ended June 30, 2024 was nil compared to $60.11 for the three months ended June 30, 2023. The decrease was due to us no longer self-mining at the Kearney and Granbury sites as of April 30, 2024, and we did not incur any hosting costs during the current quarter.
Current report
Bitcoin mined for the three months ended June 30, 2024 and 2023 was 279 and 740, respectively. The decrease in Bitcoin mined was primarily due to the Halving, an increase in network difficulty (84.8T for the three months ended June 30, 2024 compared to 49.5T for the three months ended June 30, 2023), the relocation of miners from the Kearney and Granbury sites to Alpha and Salt Creek, and planned downtime at the Salt Creek site to fortify the upstream electrical infrastructure supporting the facility.
Current report
Bitcoin mined for the six months ended June 30, 2024 and 2023 was 995 and 1,263, respectively. The decrease in Bitcoin mined was also driven by the Halving, an increase in network difficulty (81.1T for the six months ended June 30, 2024 compared to 44.8T for the six months ended June 30, 2023), the relocation of miners from the Kearney and Granbury sites to Alpha and Salt Creek, and planned downtime at the Salt Creek site to fortify the upstream electrical infrastructure supporting the facility.
Current report
Total energy capacity under management increased from 730 MW as of June 30, 2023 to 1,075 MW as of June 30, 2024. The increase was due to addition of 310 MW of natural gas power generation facilities as a result of the Far North transaction and 3 MW of traditional data centers as a result of the Business Combination. These increases were partially offset by the transition of our previously managed Kearney and Granbury sites totaling 400 MW.
Current report
For a reconciliation to our most directly comparable financial measure, calculated and presented in accordance with GAAP, please see “—Results of Operations” below.
Current report
(2) Non-recurring transactions for the three months ended June 30, 2024 represent approximately $1.5 million of miner relocation costs, $0.7 million of restructuring costs, offset by a $2.2 million tax refund. Non-recurring transactions for the three months ended June 30, 2023 represent a gain from a legal settlement of $1.5 million.
Current report
Digital Assets Mining revenue was $13.9 million and $15.9 million for the three months ended June 30, 2024 and 2023, respectively. The decrease was primarily driven by a decrease in Bitcoin mined due to the Halving, an increase in network difficulty, the relocation of miners from the Kearney and Granbury sites to Alpha and Salt Creek, and planned downtime at the Salt Creek site to fortify the upstream electrical infrastructure supporting the facility. Bitcoin mined (excluding our net share of the King Mountain JV) for the three months ended June 30, 2024 and 2023 was 212 and 568, respectively. This was partially offset by an increase in average revenue per Bitcoin mined (excluding our net share of the King Mountain JV), which was about $65,700 for the three months ended June 30, 2024 compared to about $27,900 for the three months ended June 30, 2023.
Current report
Managed Services revenue was $9.0 million for the three months ended June 30, 2024, consisting of $6.0 million in management fees, $1.6 million in cost reimbursements, and $1.4 million in the form of customer equity. Managed Services revenue was $4.7 million for the three months ended June 30, 2023, consisting $3.1 million in fees and $1.6 million in cost reimbursements. The increase was primarily driven by management fees related to the Ionic Management Services Agreement signed at the end of January 2024, partially offset by a decrease in management fees related to the Kearney and Granbury sites; during the three months ended June 30, 2024 we received only one month of management fees for Kearney and Granbury compared to three months of management fees received during the three months ended June 30, 2023.
Current report
Cost of revenue for Digital Assets Mining for the three months ended June 30, 2024 and 2023 was $7.5 million and $10.5 million, respectively, driven by a decrease in costs after completing the relocation of our fleet from hosted to owned sites, including to our new site, Salt Creek, which has a favorable energy profile, the implementation of our proprietary curtailment system, resulting in more efficient management of our energy costs, and credits from participation in ancillary demand response programs. The three months ended June 30, 2024 includes three months of costs at the Medicine Hat site, which was acquired as a result of the Business Combination.
Current report
Cost of revenue for Managed Services for the three months ended June 30, 2024 and 2023 was $3.1 million and $1.5 million, respectively. The $1.6 million increase was primarily driven by a $1.0 million increase in reimbursable payroll costs and a $0.6 million increase in other site operating costs driven by the addition of the five Ionic sites.
Current report
G&A expenses were $17.9 million and $5.2 million for the three months ended June 30, 2024 and 2023, respectively. The $12.6 million increase in G&A expenses was driven by: (i) a $6.7 million increase in stock-based compensation, (ii) a $2.4 million increase in salary and benefit costs due to added headcount as part of the Business Combination and to support our growth, (iii) a $2.0 million increase in other G&A expenses related to the relocation of miners from Kearney and Granbury to Alpha and Salt Creek and additional headcount and cost centers as part of the Business Combination, (iv) a $1.0 million increase in insurance expenses due to the increased coverage required as a publicly listed entity, (v) a $1.0 million increase in professional fees for corporate development initiatives and items related to operating as a public company, (vi) $0.7 million in investor relations and regulatory related expenses due to becoming a publicly listed entity, and (vii) $0.7 million in restructuring costs. The increase in expenses was partially offset by a $1.9 million decrease in sales tax expense driven by a $2.2 million refund of sales taxes in Canada for the years prior to the Business Combination.
Current report
Losses on digital assets
Current report
Legal settlement
Current report
Legal settlement was nil and $1.5 million for the three months ended June 30, 2024 and 2023, respectively. USBTC became a plaintiff in a malpractice lawsuit in September 2021. In April 2023, USBTC settled the lawsuit for a gross amount of $3.1 million. In May 2023, USBTC received approximately $1.5 million, net of legal fees.
Current report
Other income (expense)
Current report
Other income (expense) totaled $14.4 million and ($2.3) million for the three months ended June 30, 2024 and 2023, respectively. The increase of $16.7 million was primarily due to a $17.2 million unrealized gain on derivatives and a $0.7 million in foreign exchange gain, partially offset by a $0.9 million decrease in equity in earnings of unconsolidated joint venture and a $0.4 million increase in interest expense.
Current report
Adjusted EBITDA was ($57.5) million and $14.8 million for the three months ended June 30, 2024 and 2023, respectively. The decrease was primarily driven by the $71.8 million loss on digital assets. For a reconciliation to our most directly comparable financial measure calculated and presented in accordance with GAAP, please see “—Results of Operations—Adjusted EBITDA reconciliation” above.
Current report
Six Months Ended June 30, 2024 and 2023
Current report
Adjusted EBITDA reconciliation:
Current report
Revenue
Current report
Total revenue for the six months ended June 30, 2024 and 2023 was $87.0 million and $36.2 million, respectively, and consisted of Digital Assets Mining, Managed Services, HPC, and Other.
Current report
Digital Assets Mining revenue was $44.3 million and $23.5 million for the six months ended June 30, 2024 and 2023, respectively. This increase was primarily driven by an increase in the average price of Bitcoin in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, partially offset by a decrease in Bitcoin mined driven by the Halving, an increase in average network difficulty, the relocation of miners from the Kearney and Granbury sites to Alpha and Salt Creek, and planned downtime at the Salt Creek site to fortify the upstream electrical infrastructure supporting the facility. The average revenue per Bitcoin mined (excluding our net share of the King Mountain JV) was about $55,100 during the six months ended June 30, 2024 compared to about $26,300 during the six months ended June 30, 2023. Bitcoin mined (excluding our net share of the King Mountain JV) for the six months ended June 30, 2024 and 2023 was 803 (excluding the Bitcoin mined at Drumheller) and 894, respectively. Average network difficulty for the six months ended June 30, 2024 and 2023 was 81.1T and 44.8T, respectively.
Current report
Other
Current report
Other revenue was $17.7 million and $2.5 million for the six months ended June 30, 2024 and 2023, respectively. Other revenue for the six months ended June 30, 2024 consisted of $7.3 million in equipment sales, $4.9 million in hosting cost reimbursements, $3.2 million in hosting services revenue, $2.2 million in power revenues, and $0.1 million in equipment repair revenue. Other revenue for the six months ended June 30, 2023 consisted primarily of hosting services revenue.
Current report
Managed Services
Current report
Other
Current report
Gains on digital assets
Showing the first 40 of 50 passages. Open the source sections for the rest.
Removed paragraphs (14)
Previous report
Our cost to mine a Bitcoin (excluding hosted facilities) for the three months ended March 31, 2024 was $20,419 compared to $9,072 for the three months ended March 31, 2023. The increase was primarily driven by an increase in average network difficulty during the period (77.4T versus 40.1T for the three months ended March 31, 2024 and 2023, respectively) and also due to an increase in our energy cost per MWh (see below for further discussion on energy cost per MWh).
Previous report
Bitcoin mined for the three months ended March 31, 2024 and 2023 was 716 (excluding Bitcoin mined at the Drumheller site) and 326, respectively. The increase in Bitcoin mined was primarily due to the addition of Legacy Hut miners from the Business Combination, partially offset by an increase in average network difficulty during the period (77.4T versus 40.1T for the three months ended March 31, 2024 and 2023, respectively).
Previous report
Further details on our cost of mining and our energy and hosting costs are shown in the table below.
Previous report
Cost of revenue
Previous report
Depreciation and amortization
Previous report
General and administrative expenses
Previous report
For a reconciliation to Hut 8’s most directly comparable financial measure calculated and presented in accordance with GAAP, please see “—Results of Operations” below.
Previous report
Digital Assets Mining revenue was $30.4 million and $7.6 million for the three months ended March 31, 2024 and 2023, respectively. This was driven by an increase in the average price of Bitcoin in the current quarter versus the prior year quarter and the inclusion of the Medicine Hat site from the Business Combination. The average price per Bitcoin mined was about $51,300 during the three months ended March 31, 2024 compared to about $23,400 during the three months ended March 31, 2023. Bitcoin mined for the three months ended March 31, 2024 and March 31, 2023 was 592 (excluding the Bitcoin mined at Drumheller) and 326, respectively.
Previous report
Cost of revenue
Previous report
Depreciation and amortization
Previous report
General and administrative expenses
Previous report
Gains on digital asset
Previous report
Other (expense) income
Previous report
Net cash (used in) provided by operating activities was ($26.3) million and $1.5 million for the three months ended March 31, 2024 and 2023, respectively.
Reworded paragraphs (61)
Previous wording
Hut 8 is a leading, vertically integrated operator of large-scale energy infrastructure built to extract maximum value from every electron we facilitate. We acquire, design, build, manage, and operate data centers that power compute-intensive workloads such as Bitcoin mining, high performance computing, and AI.
Current wording
Hut 8 is an energy infrastructure operator and Bitcoin miner with self-mining, hosting, managed services, and traditional data center operations across North America. We acquire, design, build, manage, and operate data centers that power compute-intensive workloads such as Bitcoin mining, high performance computing, and AI.
Previous wording
As of March 31, 2024, our energy capacity under management in our mining business totaled 884 MW across six sites in North America. Additionally, we had more than 36,000 square feet across five cloud and colocation data centers in Canada and four natural gas power generation facilities in Ontario, Canada totaling 310 MW.
Current wording
As of June 30, 2024, our total energy capacity under management was 1,075 MW across eighteen sites: 762 MW across nine Bitcoin mining sites in North America, 310 MW across four natural gas power generation facilities in Canada, and 3 MW across five cloud and colocation data centers in Canada.
Previous wording
Currently, the majority of our revenue is derived from Digital Assets Mining (also referred to as self-mining), which principally consists of mining Bitcoin. Our self-mining business spanned five sites during the three months ended March 31, 2024:
Current wording
Currently, the majority of our revenue is derived from Digital Assets Mining (also referred to as self-mining), which principally consists of mining Bitcoin. Our self-mining business spanned four sites during the three months ended June 30, 2024:
Previous wording
As of April 30, 2024, we are no longer self-mining at the Charlie and Delta sites. We receive digital asset mining rewards via third party mining pool operators, Foundry and Luxor. Mining pools allow us to combine our computing power with other miners, increasing the chances of solving a block and getting paid by the network. The pools distribute our pro-rata share of Bitcoin rewards based on the computing power we contribute. During the three months ended March 31, 2024 and 2023, the Bitcoin reward for solving a block was 6.25 Bitcoin. On April 19, 2024, the Bitcoin reward for solving a block was halved to 3.125 Bitcoin.
Current wording
We receive digital asset mining rewards via third party mining pool operators, Foundry Digital LLC and Luxor Technology Corporation. Mining pools allow us to combine our computing power with other miners, increasing the chances of solving a block and getting paid by the network. The pools distribute our pro-rata share of Bitcoin rewards based on the computing power we contribute. On April 19, 2024, the Bitcoin reward for solving a block was halved from 6.25 Bitcoin to 3.125 Bitcoin.
Previous wording
As the adoption of Bitcoin continues to grow and the market valuation of Bitcoin rises, we anticipate a surge in demand for Bitcoin, prompting the entry of new miners into the market. This influx of participants results in the increase of the Bitcoin network’s hash rate. Consequently, existing miners must scale their own hash rate to maintain a competitive edge in solving blocks and acquiring rewards. While we anticipate this trend to persist, we aim to grow our hashrate as we continue to scale our portfolio of underlying energy infrastructure.
Current wording
As the adoption of Bitcoin continues to grow and the market valuation of Bitcoin rises, we anticipate a surge in demand for Bitcoin, prompting the entry of new miners into the market. This influx of participants results in the increase of the Bitcoin network’s hash rate. Consequently, existing miners must scale their own hash rate to maintain a competitive edge in solving blocks and acquiring rewards. While we anticipate this trend to persist, we aim to grow our hash rate as we continue to scale our portfolio of underlying energy infrastructure.
Previous wording
As of March 31, 2024, including our net share of the King Mountain JV, we owned approximately 54,500 miners totaling approximately 5.5 EH/s with an average fleet efficiency of 32.4 J/TH.
Current wording
As of June 30, 2024, including our net share of the King Mountain JV, we owned approximately 49,400 miners totaling approximately 4.8 EH/s with an average fleet efficiency of 31.7 J/TH.
Previous wording
Our Managed Services business provides to institutional partners such as digital asset mining site owners, governments, and data center developers an end-to-end partnership model for energy infrastructure development, including:
Current wording
Our Managed Services business provides institutional partners with an end-to-end partnership model for energy infrastructure development, including:
Previous wording
As of March 31, 2024, we managed 767 MW of infrastructure under this program across four sites in the United States, which included 400 MW owned by Marathon Digital, 280 MW owned by the King Mountain JV, and 87 MW owned by Ionic.
Current wording
As of June 30, 2024, we managed 582 MW of energy capacity under this program across six sites in the United States, which included 280 MW owned by the King Mountain JV and 302 MW owned by Ionic.
Previous wording
We also enter into hosting contracts to operate mining equipment on behalf of third parties within our facilities. Hosting services include the provision of mining equipment and energized space and the monitoring, troubleshooting, and repair and maintenance of customer mining equipment. Hosting services revenue is generated through fees that may be fixed or based on a profit-sharing arrangement, typically with reimbursement for passthrough costs.
Current wording
We also enter into hosting contracts to operate mining equipment on behalf of third parties within our facilities. Hosting services include the provision of mining equipment and energized space and the monitoring, troubleshooting, repair, and maintenance of customer mining equipment. Hosting services revenue is generated through fees that may be fixed or based on a profit-sharing arrangement, typically with reimbursement for passthrough costs.
Previous wording
We provide capacity and energy to the grid through the natural gas power plants in Ontario, Canada through the majority-owned Far North entities. The power generation facilities that are connected to the Independent Electricity System Operator, which operates Ontario’s power grid, primarily generate revenue from capacity sales. Revenue generated from electricity sales is variable and depends on several factors including but not limited to the supply and demand for electricity, generation capacity in the market, and the prevailing price of natural gas.
Current wording
We provide capacity and energy to the grid through the natural gas power plants in Ontario, Canada through the majority-owned Far North entities. The power generation facilities that are connected to the IESO, which operates Ontario’s power grid, primarily generate revenue from capacity sales. Revenue generated from electricity sales is variable and depends on several factors including but not limited to the supply and demand for electricity, generation capacity in the market, and the prevailing price of natural gas.
Previous wording
The King Mountain JV is a 50/50 joint venture with one of the world’s largest renewable energy producers. The King Mountain JV has 280 MW of self-mining and hosting operations colocated behind-the-meter at a wind farm in McCamey, Texas. Hut 8 acquired its 50% membership interest in December 2022 through a competitive auction process in connection with the Chapter 11 bankruptcy filing of Compute North. As part of the acquisition, Hut 8 also assumed the TZRC Secured Promissory Note.
Current wording
The King Mountain JV is a 50/50 joint venture with one of the world’s largest renewable energy producers. The King Mountain JV has 280 MW of self-mining and hosting operations colocated behind-the-meter at a wind farm in McCamey, Texas. A subsidiary of Hut 8 acquired a 50% membership interest in December 2022 through a competitive auction process in connection with the Chapter 11 bankruptcy filing of Compute North. As part of the acquisition, the Hut 8 subsidiary also assumed the TZRC Secured Promissory Note.
Previous wording
As of March 31, 2024, the King Mountain JV owned approximately 18,000 miners for self-mining (about 1.8 EH/s) and hosted approximately 68,200 miners (about 7.8 EH/s) for Marathon Digital at its wholly owned King Mountain site, which has a total capacity of 280 MW.
Current wording
As of June 30, 2024, the King Mountain JV owned approximately 18,000 miners for self-mining (about 1.8 EH/s) and hosted approximately 68,200 miners (about 7.6 EH/s) for Marathon Digital at its wholly owned King Mountain site, which has a total capacity of 280 MW.
Previous wording
We account for the King Mountain JV using the equity method of accounting, resulting in reporting the King Mountain JV as an unconsolidated joint venture. Additionally, our 50% portion of monthly distributions from the King Mountain JV are swept to pay down the TZRC Secured Promissory Note. See Note 8 and Note 9 to the consolidated financial statements found elsewhere in this Quarterly Report for additional information on the King Mountain JV and TZRC Secured Promissory Note.
Current wording
We account for the King Mountain JV using the equity method of accounting, resulting in reporting the King Mountain JV as an unconsolidated joint venture. Additionally, our 50% portion of monthly distributions from the King Mountain JV are swept to pay down the TZRC Secured Promissory Note. See Note 8.Investments in unconsolidated joint venture and Note 9.Loans and notes payable to the Unaudited Condensed Consolidated Statements found elsewhere in this Quarterly Report for additional information on the King Mountain JV and TZRC Secured Promissory Note.
Previous wording
Below is the condensed consolidated income statement for the King Mountain JV for the three months ended March 31, 2024 and 2023.
Current wording
Below is the condensed consolidated income statement for the King Mountain JV for the three and six month periods ended June 30, 2024 and 2023.
Previous wording
The Far North JV is an approximately 80/20 joint venture in partnership with Macquarie. We acquired an approximately 80% membership interest in February 2024 through a stalking horse bid transaction in connection with the sale of certain assets of Validus Power Corp. and certain of its subsidiaries. The Far North JV holds certain mining and electrical equipment formerly owned by Hut 8, in addition to four natural gas power plants totaling 310 MW in Ontario, Canada, including:
Current wording
The Far North JV is an approximately 80/20 joint venture in partnership with Macquarie. We acquired an approximately 80% membership interest in the Far North JV in February 2024 through a stalking horse bid for the acquisition of certain assets of Validus Power Corp. and certain of its subsidiaries. The Far North JV holds certain mining and electrical equipment formerly owned by a subsidiary of Hut 8, in addition to four natural gas power plants totaling 310 MW in Ontario, Canada, including:
Previous wording
The Company entered into an ISDA Agreement with NYDIG and executed four covered call options trades for 2,125 Bitcoin during April 2024. The Bitcoin were transacted from the existing Bitcoin holdings and are being pledged as collateral with NYDIG Custody.
Current wording
We entered into an ISDA Agreement with NYDIG and executed four covered call options trades for 2,125 Bitcoin during April 2024, for proceeds of $20.8 million. The Bitcoin were transacted from the existing Bitcoin holdings and are being pledged as collateral with NYDIG Custody.
Previous wording
During the three months ended March 31, 2024, the price of Bitcoin ranged from $39,600 to $73,100. During the three months ended March 31, 2023, the price of Bitcoin ranged from $16,600 to $28,500.
Current wording
During the three months ended June 30, 2024 and 2023, the price of Bitcoin ranged from $58,100 to $71,700 and $25,100 to $30,700, respectively. During the six months ended June 30, 2024 and 2023, the price of Bitcoin ranged from $39,600 to $73,100 and $16,600 to $30,700, respectively.
Previous wording
Bitcoin network difficulty and hashrate
Current wording
Bitcoin network difficulty and hash rate
Previous wording
Bitcoin network difficulty, which varies directly with Bitcoin network hashrate, directly affects the results of our operations. We define Bitcoin network difficulty, multiplied by two to the thirty-second power (difficulty * 2˄32), as the measure of how many SHA-256d hashes, on average, are required to record a new block on the Bitcoin blockchain. The Bitcoin protocol is designed such that one block is generated, on average, every 10 minutes, no matter how much hashrate is on the network. To keep the time interval between blocks fixed at 10 minutes, the Bitcoin network adjusts its “network difficulty” every 2,016 blocks (or roughly every two weeks) such that the average number of SHA-256d hashes needed to find a new block is normalized at 10 minutes based on the time interval between blocks for the last 2,016 blocks.
Current wording
Bitcoin network difficulty, which varies directly with Bitcoin network hash rate, directly affects the results of our operations. We define Bitcoin network difficulty, multiplied by two to the thirty-second power (difficulty * 2˄32), as the measure of how many SHA-256d hashes, on average, are required to record a new block on the Bitcoin blockchain. The Bitcoin protocol is designed such that one block is generated, on average, every 10 minutes, no matter how much hash rate is on the network. To keep the time interval between blocks fixed at 10 minutes, the Bitcoin network adjusts its “network difficulty” every 2,016 blocks (or roughly every two weeks) such that the average number of SHA-256d hashes needed to find a new block is normalized at 10 minutes based on the time interval between blocks for the last 2,016 blocks.
Previous wording
For example, as Bitcoin network hashrate increases, the time interval between new blocks decreases. The Bitcoin network will then adjust its difficulty upward to require more hashes, on average, to record a new block. Network difficulty is an integer.
Current wording
For example, as Bitcoin network hash rate increases, the time interval between new blocks decreases. The Bitcoin network will then adjust its difficulty upward to require more hashes, on average, to record a new block. Network difficulty is an integer.
Previous wording
Average network difficulty and average network hashrate were 77.4T and 553.9 EH/s, respectively, for the three months ended March 31, 2024, compared to 40.1T and 287.0 EH/s, respectively, for the three months ended March 31, 2023.
Current wording
Average network difficulty and average network hash rate were 84.8T and 606.9 EH/s, respectively, for the three months ended June 30, 2024, compared to 49.5T and 354.3 EH/s, respectively, for the three months ended June 30, 2023. Average network difficulty and average network hashrate were 81.1T and 580.4 EH/s, respectively, for the six months ended June 30, 2024, compared to 44.8T and 320.9 EH/s, respectively, for the six months ended June 30, 2023.
Previous wording
During the three months ended March 31, 2024 and 2023, the Bitcoin reward for solving a block was 6.25 Bitcoin. Since April 2024, the Bitcoin reward for solving a block has decreased to 3.125 Bitcoin. The Bitcoin network is programmed such that the Bitcoin block reward is halved every 210,000 blocks mined, or approximately every four years (the “Halving”). This reduction in reward spreads out the release of Bitcoin over a long period of time as an ever smaller number of coins are mined with each Halving. The maximum supply of Bitcoin is 21,000,000 Bitcoin, which is projected to be fully mined around the year 2140.
Current wording
During the three and six months ended June 30, 2023, the Bitcoin reward for solving a block was 6.25 Bitcoin. Since April 19, 2024, the Bitcoin reward for solving a block has decreased to 3.125 Bitcoin. The Bitcoin network is programmed such that the Bitcoin block reward is halved every 210,000 blocks mined, or approximately every four years (the “Halving”). This reduction in reward spreads out the release of Bitcoin over a long period of time as an ever smaller number of coins are mined with each Halving. The maximum supply of Bitcoin is 21,000,000 Bitcoin, which is projected to be fully mined around the year 2140.
Previous wording
Bitcoin Halving events impact the amount of Bitcoin we mine which, in turn, may have a potential impact on our results of operations. The last Halving occurred in April 2024 and the next Halving is expected to occur in March 2028.
Current wording
Bitcoin Halving events impact the amount of Bitcoin we mine which, in turn, may have a potential impact on our results of operations. The next Halving is expected to occur in March 2028.
Previous wording
The following table presents our key performance indicators for the three months ended March 31, 2024 and 2023.
Current wording
The following table presents our key performance indicators for the three and six months ended June 30, 2024 and 2023.
Previous wording
Our profitability in self-mining is heavily dependent upon our cost to mine a Bitcoin, calculated as all-in electricity and hosting costs divided by Bitcoin mined during the respective periods and includes our net share of the King Mountain JV. Our management reviews the cost to mine a Bitcoin excluding hosted facilities and inclusive of hosted facilities.
Current wording
Our profitability in self-mining is heavily dependent upon our cost to mine a Bitcoin, calculated as the sum of total all-in electricity expense, net of credits from participation in ancillary demand response programs, and hosting costs divided by Bitcoin mined during the respective periods and includes our net share of the King Mountain JV. Our management reviews the cost to mine a Bitcoin excluding hosted facilities and inclusive of hosted facilities.
Previous wording
Inclusive of hosted facilities, our cost to mine a Bitcoin for the three months ended March 31, 2024 was $24,594 compared to $12,348 for the three months ended March 31, 2023. In addition to the drivers mentioned above, our hosting cost per MWh increased due to a higher variable hosting rate that is tied to hashprice.
Current wording
Inclusive of hosted facilities, our cost to mine a Bitcoin for the six months ended June 30, 2024 was $25,053 compared to $13,846 for the six months ended June 30, 2023. The increase was driven by the Halving event in April 2024, an increase in average network difficulty during the period (81.1T for the six months ended June 30, 2024 compared to 44.8T for the six months ended June 30, 2023) and an increase in our hosting cost per MWh due to a higher variable hosting rate that is tied to hashprice. This was partially offset by a decrease in our energy cost per MWh (see below for further discussion on energy cost per MWh) and a decrease in energy consumption at hosted facilities after exiting the Kearney and Granbury sites.
Previous wording
Energy cost per MWh for the three months ended March 31, 2024 was $40.06 compared to $34.76 for the three months ended March 31, 2023. The current quarter reflects three months of combined company self-mining activity at our Alpha, Medicine Hat, and King Mountain sites while the prior quarter reflects three months of USBTC’s self-mining activity at our Alpha and King Mountain sites. The weighted average increase was driven by slightly higher energy costs at our Medicine Hat site, acquired as part of the Business Combination, compared to our King Mountain site, which made up the majority of our self-mining activity in the prior quarter.
Current wording
Energy cost per MWh for the three months ended June 30, 2024 was $31.71 compared to $37.34 for the three months ended June 30, 2023, and the decrease was primarily driven by lower energy costs at our newly built Salt Creek site in addition to credits received for participating in ancillary demand response programs and efficient economic curtailment of miners using our proprietary software. The current quarter reflects three months of combined company self-mining activity at our Alpha, Medicine Hat, Salt Creek, and King Mountain sites while the prior quarter reflects three months of USBTC’s self-mining activity at our Alpha and King Mountain sites.
Previous wording
Hosting cost per MWh for the three months ended March 31, 2024 was $68.72 compared to $64.23 for the three months ended March 31, 2023. The increase was due to a higher variable hosting rate (tied to hashprice) at the Charlie and Delta sites during the current quarter compared to the prior quarter. As of April 30, 2024, we are no longer self-mining at the Charlie and Delta sites.
Current wording
Hosting cost per MWh for the six months ended June 30, 2024 was $68.72 compared to $61.34 for the six months ended June 30, 2023. The increase was due to a higher variable hosting rate (tied to hashprice) at the Kearney and Granbury sites during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.
Previous wording
Energy capacity under management includes the energy capacity of our self-mining and hosting infrastructure, as well as the energy capacity of the sites that we manage for our clients under the Managed Services line of business.
Current wording
Energy capacity under management (mining) includes the energy capacity of our self-mining and hosting infrastructure, as well as the energy capacity of the sites that we manage for our clients under the Managed Services line of business. Total energy capacity under management includes energy capacity under management (mining) plus energy capacity from our natural gas power generation facilities and traditional data centers.
Previous wording
Energy capacity under management for the three months ended March 31, 2024 was 884 MW compared to 772 MW for the three months ended March 31, 2023. The increase was due to the addition of Medicine Hat, a 67 MW self-mining facility that we own, as a result of the Business Combination, and the addition of an 87 MW digital assets mining facility owned by Ionic, due to the signing of a four-year agreement with our Managed Services business, partially offset by the transition of a previously managed site totaling 42 MW in Pecos, Texas.
Current wording
Energy capacity under management (mining) as of June 30, 2024 was 762 MW compared to 730 MW as of June 30, 2023. The increase was due to: (i) the addition of Medicine Hat, a 67 MW self-mining facility that we own as a result of the Business Combination, (ii) the addition of five digital assets mining facilities owned by Ionic, totaling 302 MW, through a Management Services Agreement with Ionic, and (iii) the addition of Salt Creek, a 63 MW facility that we own.
Previous wording
We principally mine Bitcoin, so the majority of our Digital Assets Mining revenue is derived from the service of providing hashrate to mining pools in exchange for our share of the block reward and transaction fees, less any mining pool fees charged by the mining pool operator. We record revenue upon receipt of Bitcoin at its spot price at the beginning of the day (midnight UTC time), as determined by our principal market, which is Coinbase Prime. Bitcoin’s spot price may fluctuate on a daily basis, which impacts the amount of revenue recorded.
Current wording
We mine Bitcoin, so the majority of our Digital Assets Mining revenue is derived from the service of providing hash rate to mining pools in exchange for our share of the block reward and transaction fees, less any mining pool fees charged by the mining pool operator. We record revenue upon receipt of Bitcoin at its spot price at the beginning of the day (midnight UTC time), as determined by our principal market, which is Coinbase Prime. Bitcoin’s spot price may fluctuate on a daily basis, which impacts the amount of revenue recorded.
Previous wording
Included in cost of revenue for Digital Assets Mining are power costs inclusive of curtailment credits, hosting expense, facility labor costs, occupancy costs, and all repair and maintenance expenses including facility infrastructure and miners.
Current wording
Included in cost of revenue for Digital Assets Mining are power costs inclusive of curtailment credits, hosting expense, facility labor costs, occupancy costs, and repair and maintenance expenses including facility infrastructure and miners.
Previous wording
Our depreciation expense consists mainly of depreciation for mining equipment and assets related to our HPC operations. As miners are received and put into service, amounts reflected as deposits are transferred to property and equipment and depreciation commences. Depreciation expense also includes an immaterial amount of depreciation for other property and equipment not directly associated with our mining or HPC activities. We capitalize the cost of our miners and record depreciation expense on a straight-line basis over the estimated useful life of the machines, which is generally four years. See Note 2.Basis of presentation, summary of significant accounting policies and recent accounting pronouncements–Property and equipment in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information on estimated useful lives.
Current wording
Our depreciation expense consists mainly of depreciation for mining equipment and assets related to our HPC operations. As miners are received and put into service, amounts reflected as deposits are transferred to property and equipment and depreciation commences. Depreciation expense also includes an immaterial amount of depreciation for other property and equipment not directly associated with our mining or HPC activities. We capitalize the cost of our miners and record depreciation expense on a straight-line basis over the estimated useful life of the machines, which is generally four years. See Note 2.Basis of presentation, summary of significant accounting policies and recent accounting pronouncements–Property and equipment in our Unaudited Condensed Consolidated Statements included elsewhere in this Quarterly Report for additional information on estimated useful lives.
Previous wording
General and administrative expenses include, but are not limited to, payroll, stock-based compensation, legal fees, professional fees, non-refundable sales taxes, contracted services, security services, investor relations and shareholder costs, and insurance premiums.
Current wording
General and administrative expenses (“G&A”) include, but are not limited to, payroll, stock-based compensation, legal fees, professional fees, non-refundable sales taxes, contracted services, security services, investor relations and shareholder costs, and insurance premiums.
Previous wording
Gains on digital asset and realized gain on sale of digital assets
Current wording
Gains on digital assets and realized gains on sale of digital assets
Previous wording
We adopted ASU No. 2023-08,Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”), effective July 1, 2023, under which Bitcoin is revalued every reporting period at fair value with changes in fair value recognized in net income. We regularly exchange our newly mined Bitcoin for fiat currency to fund operating expenses.
Current wording
We adopted ASU 2023-08, effective July 1, 2023, under which Bitcoin is revalued every reporting period at fair value with changes in fair value recognized in net income. We regularly exchange our newly mined Bitcoin for fiat currency to fund operating expenses.
Previous wording
Other income (expense) includes foreign exchange gain (loss), interest expense, and equity in earnings of unconsolidated joint venture. Equity in earnings of unconsolidated joint venture is primarily attributed to our 50% share of the King Mountain JV’s net income or loss. See “—Joint Ventures—King Mountain JV” for additional information on the King Mountain JV.
Current wording
Other income (expense) includes foreign exchange gain (loss), interest expense, unrealized gain on derivatives including call options, and equity in earnings of unconsolidated joint venture. Equity in earnings of unconsolidated joint venture is primarily attributed to our 50% share of the King Mountain JV’s net income or loss. See “—Joint Ventures—King Mountain JV” for additional information on the King Mountain JV.
Previous wording
Our provision for income taxes consists of U.S. deferred federal taxes. A valuation allowance is recorded against substantially all of our net deferred tax assets, which are composed primarily of federal and state net operating loss carryforwards, stock-based compensation, non-goodwill intangibles, investments in joint ventures, and lease liabilities; in addition, we have deferred tax liabilities resulting from our derivative and right-to-use assets. Our ability to offset our deferred tax liabilities with our deferred tax assets is limited due to restrictions on the ability to offset taxable income by more than eighty percent with federal net operating losses. As a result, we have recorded a deferred tax liability for the expected amount of future taxable income that is not covered by net operating losses. We evaluate our ability to recognize our deferred tax assets annually by considering all positive and negative evidence available as prescribed by the FASB under its general principles of ASC 740,Income Taxes.
Current wording
Our provision for income taxes consists of U.S. deferred federal taxes. A valuation allowance is recorded against substantially all of our net deferred tax assets, which are composed primarily of federal and state net operating loss carryforwards, stock-based compensation, non-goodwill intangibles, investments in joint ventures, and lease liabilities; in addition, we have deferred tax liabilities resulting from our derivative and right-to-use assets. Our ability to offset our deferred tax liabilities with our deferred tax assets is limited due to restrictions on the ability to offset taxable income by more than eighty percent with U.S. federal net operating losses. As a result, we have recorded a deferred tax liability for the expected amount of future taxable income that is not covered by net operating losses. We evaluate our ability to recognize our deferred tax assets annually by considering all positive and negative evidence available as prescribed by the FASB under its general principles of ASC 740,Income Taxes.
Previous wording
In addition to our results determined in accordance with GAAP, we rely on Adjusted EBITDA to evaluate our business, measure our performance, and make strategic decisions. Adjusted EBITDA is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) before interest, taxes, depreciation and amortization, further adjusted by the removal of non-recurring transactions, depreciation and amortization embedded in the equity in earnings (losses) from an unconsolidated joint venture, foreign exchange gains or losses, the impairment of long-lived assets, net income (loss) attributable to noncontrolling interest, and stock-based compensation expense in the period presented. You are encouraged to evaluate each of these adjustments and the reasons our Board and management team consider them appropriate for supplemental analysis.
Current wording
In addition to our results determined in accordance with GAAP, we rely on Adjusted EBITDA to evaluate our business, measure our performance, and make strategic decisions. Adjusted EBITDA is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) before interest expense, income tax provision, depreciation and amortization, further adjusted by the removal of gains on the extinguishment of debt (if applicable), unrealized gains (losses) on derivatives, depreciation and amortization embedded in the equity in earnings (losses) from an unconsolidated joint venture, foreign exchange gains or losses, gain or loss on the sale of property and equipment (if applicable), non-recurring transactions, loss from discontinued operations, net income (loss) attributable to noncontrolling interest, and stock-based compensation expense in the period presented. You are encouraged to evaluate each of these adjustments and the reasons our Board and management team consider them appropriate for supplemental analysis.
Previous wording
Total revenue for the three months ended March 31, 2024 and 2023 was $51.7 million and $15.6 million, respectively, and consisted of Digital Assets Mining, Managed Services, HPC, and Other.
Current wording
Total revenue for the three months ended June 30, 2024 and 2023 was $35.2 million and $20.5 million, respectively, and consisted of Digital Assets Mining, Managed Services, HPC, and Other.
Showing the first 40 of 61 pairs. Open the source sections for the rest.
Rearranged current paragraphs (8)
Current report — wording carried from elsewhere
(1) Net of the accretion of fair value differences of depreciable and amortizable assets included in equity in earnings of unconsolidated joint venture in the Consolidated Statements of Operations and Comprehensive Income (Loss) in accordance with ASC 323. See Note 8.Investments in unconsolidated joint ventureof our Unaudited Condensed Consolidated Financial Statements for further detail.
Current report — wording carried from elsewhere
Cost of revenue for Other for the three months ended June 30, 2024 was $7.5 million and consisted primarily of $3.2 million in cost of hosting services revenue, of which $3.1 million is electricity costs, $2.0 million in cost of equipment sold, and $2.3 million in cost of power revenues. Cost of revenues for Other for the three months ended June 30, 2023 was nil.
Current report — wording carried from elsewhere
Losses on digital assets were $71.8 million and nil for the three months ended June 30, 2024 and 2023, respectively. The decrease primarily consists of decreases in the market value from the last reporting period to the current reporting period of our Bitcoin in accordance with ASU 2023-08, effective July 1, 2023, which requires us to recognize our digital assets at fair value with changes recognized in net income during the reporting period. The price of Bitcoin on March 31, 2024 was $71,289 compared to the price of Bitcoin on June 30, 2024 of $62,668, such that the decrease in Bitcoin price during the quarter resulted in the loss of $71.8 million.
Current report — wording carried from elsewhere
Loss from discontinued operations was $1.7 million and nil for the three months ended June 30, 2024 and 2023, respectively. On March 6, 2024, we announced the closure of our Drumheller site in Alberta, Canada in connection with restructuring and optimization initiatives designed to strengthen financial performance. The $1.7 million loss was related to the closure of our Drumheller site.
Current report — wording carried from elsewhere
HPC revenue was $6.7 million and nil for the six months ended June 30, 2024 and 2023, respectively. The revenue for the six months ended June 30, 2024 represents six months of combined company activity in connection with the Business Combination and consists of recurring revenue from small and medium enterprises predominantly domiciled in Canada.
Current report — wording carried from elsewhere
High Performance Computing – Colocation and Cloud
Current report — wording carried from elsewhere
Cost of revenue for HPC for the six months ended June 30, 2024 and 2023 was $5.1 million and nil, respectively. The cost of revenue reflects six months of activity in connection with the newly acquired HPC business from the Business Combination.
Current report — wording carried from elsewhere
Depreciation and amortization expense was $23.0 million and $7.0 million for the six months ended June 30, 2024 and 2023, respectively. The increase was primarily driven by property and equipment acquired through the Business Combination and the Far North transaction. Additionally, during the three months ended March 31, 2024, management performed an operational efficiency review of its mining equipment ahead of the anticipated Halving. The outcome was a change in the expected useful life of our MicroBT M31S and M31S+ and Canaan Avalon servers. The mining equipment was originally estimated to have a useful life of four years from the date the mining equipment was put into service. After the operational efficiency review, the mining equipment was estimated to have a useful life of five months as of January 1, 2024. The result is a change in estimate and applied prospectively, which increased depreciation expense by $3.6 million for the six months ended June 30, 2024.