Hut 8 Corp
For the period ended Sep 30, 2024. Filed Nov 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.
Sep 30, 2024 · Filed Nov 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 2024-06-30; filed 2024-08-13.
0001558370-24-011968
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-13.
0001558370-24-015423
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 197 previous paragraphs and 186 current paragraphs.
89 unchanged; 67 reworded; 27 added; 36 removed; 5 previous and 3 current paragraphs rearranged.
Tables are not compared: 33 previous and 35 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 (27)
Current report
GPU-as-a-Service
Current report
On September 26, 2024, we launched our GPU-as-a-Service offering as our inaugural GPU cluster came fully online. The cluster, hosted at a tier-three data center in Chicago, Illinois, comprises multiple HPE Cray supercomputers powered by 1,000 NVIDIA H100 GPUs. We have entered into a contract with an AI cloud services provider pursuant to which the provider pays us a fixed infrastructure fee and a share of its revenues from the sale of its services at the cluster.
Current report
Miner Fleet Upgrade
Current report
On November 6, 2024, we entered into an agreement to purchase 31,145 BITMAIN Antminer S21+ ASIC miners at $15.00 per terahash with initial deliveries expected in Q1 2025.
Current report
Call Option Trade
Current report
During October 2024, we sold covered call options on Bitcoin for proceeds of $2.9 million to generate cash flow on a portion of our digital assets. We have pledged Bitcoin as collateral with one of our digital asset custodians in a quantity equal to the notional amount for the covered call options sold. The covered call options are only exercisable upon the date of expiry, are automatically exercised if the underlying reference price is greater than the strike price of the call option, and are settled with delivery of the underlying Bitcoin. The reference price is the BRR at 4:00pm London time for a given date.
Current report
Anchorage Loan Conversion
Current report
On September 27, 2024, we entered into a Debt Repayment Agreement with Anchorage to exchange the $37.9 million outstanding balance of the Anchorage Loan (exclusive of $1.5 million of deferred financing costs) as of the agreement date for 2,313,435 shares of our common stock (the “Conversion”). Upon completion of the Conversion, the outstanding loan and all of our other related obligations, including those of our subsidiaries, under the Anchorage Loan were satisfied, and we recorded a gain on debt extinguishment of $6.0 million. See Note 10.Loans and notes payable in our Unaudited Condensed Consolidated Statements included elsewhere in this Quarterly Report for additional information.
Current report
Launch of GPU-as-a-Service Business
Current report
On September 26, 2024, we launched our GPU-as-a-Service offering as our inaugural GPU cluster came fully online under our wholly owned subsidiary Highrise AI, Inc., which has its own management team. The cluster, hosted at a tier-three data center in Chicago, Illinois, comprises multiple HPE Cray supercomputers powered by 1,000 NVIDIA H100 GPUs. We have entered into a contract with an AI cloud services provider pursuant to which the provider pays us a fixed infrastructure fee and a share of its revenues from the sale of its services at the cluster.
Current report
Bitmain Partnership and Hosting Services Agreement
Current report
On September 19, 2024, we expanded our partnership with Bitmain by launching a next-generation ASIC miner. These miners will be hosted at the 205 MW Texas Panhandle site (“Vega”) through a hosting agreement with Bitmain that includes a capacity of approximately 15 EH/s. Deployment of these miners is planned for the second quarter of 2025.
Current report
The agreement includes a fixed hosting fee and provides us with an option to purchase all or a portion of the hosted machines at a set price within six months of their energization. As of the three months ended September 30, 2024, we made a $32.0 million deposit toward this purchase option.
Current report
Cost of electricity
Current report
Electricity prices are a significant factor affecting our results of operations. We manage our cost of electricity through participation in various demand response programs, power purchase agreements, and curtailment of miners when electricity prices make it unprofitable to mine Bitcoin.
Current report
(2) Non-recurring transactions for the three months ended September 30, 2024 primarily represent a $13.5 million contract termination fee received from MARA Holdings and a release of relocation fees that were over-accrued in the prior period. Non-recurring transactions for the three months ended September 30, 2023 were nil.
Current report
Cost of revenue
Current report
Digital Asset Mining
Current report
Depreciation and amortization
Current report
General and administrative expenses
Current report
Adjusted EBITDA was $5.6 million and $11.5 million for the three months ended September 30, 2024, and 2023, respectively. This decline was primarily driven by a $8.5 million increase in general and administrative expenses (net of stock-based compensation expense and a release of over-accrued relocation fees), a $1.4 million increase in losses on digital assets, and a $0.6 million decrease in equity earnings from unconsolidated joint ventures. These impacts were partially offset by a $4.5 million increase in gross margin (excluding the one-time $13.5 million termination fee).
Current report
Nine Months Ended September 30, 2024 and 2023
Current report
Cost of revenue
Current report
Digital Asset Mining
Current report
Cost of revenue for Managed Services for the nine months ended September 30, 2024 and 2023 was $8.7 million and $5.3 million, respectively. The $3.4 million increase was primarily due to increased reimbursable site operating costs driven by the addition of the five Ionic sites, partially offset by the termination of the PMAs for the Kearney and Granbury sites that occurred on April 30, 2024.
Current report
Depreciation and amortization
Current report
General and administrative expenses
Removed paragraphs (36)
Previous report
West Texas Site
Previous 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.
Previous report
Convertible Note Purchase Agreement
Previous 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.
Previous report
Arrangement with Ionic Digital
Previous 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.
Previous report
Coinbase Credit Facility
Previous 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.
Previous report
Derivatives Trades
Previous report
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 report
Key Components of our Results of Operations
Previous report
We have organized our operations into four reportable segments: Digital Assets Mining, Managed Services, HPC, and Other. These segments reflect the way we evaluate our business performance and manage our operations.
Previous report
We derive revenue from our four business segments: Digital Assets Mining, Managed Services, HPC, and Other. For additional information on how we recognize revenue in each of these segments, please see “—Critical Accounting Policies and Estimates.”
Previous report
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 report
Managed Services revenue is derived from fixed monthly management fees based on power capacity of the customer’s data center, plus the reimbursement of certain operating costs, which vary each month. We may also be entitled to a share of additional hosting services revenue we help generate for the customer, and further cash flows may be driven from other incentive bonuses and certain energy management services.
Previous report
Our HPC business earns revenue by providing colocation, cloud, and connectivity services to clients in exchange for a fee. The fee structure is based on two models: allocation and consumption. Under the allocation model, customers pay a fixed recurring monthly fee based on a set amount of resources assigned. The consumption model is generally a function of additional consumption of compute, storage, network or power usage above and beyond the contractual commitment.
Previous report
Other revenue may include: (i) hosting service fees that may be fixed or based on a profit-sharing arrangement, typically with reimbursement of passthrough costs, (ii) equipment sales, (iii) equipment repair revenue from repairing machines owned by third parties, and (iv) power revenues.
Previous report
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 report
Cost of revenue for Managed Services primarily consists of passthrough costs for expenses paid by us that are reimbursed by our customers on top of our managed services fee. These typically include facility labor costs, allocated corporate labor costs, and all repair and maintenance expenses including facility infrastructure and miners.
Previous report
Included in cost of revenue for HPC are energy costs, network management costs, third party license fees, labor costs, repair and maintenance of HPC equipment, and facility costs.
Previous report
Other cost of revenue may include passthrough costs for hosted customers, cost of equipment sold, cost of equipment repair for third parties, and cost of power revenues.
Previous report
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 report
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 report
Gains on digital assets and realized gains on sale of digital assets
Previous report
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 report
Income tax benefit (provision)
Previous report
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 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.
Previous report
Other income (expense)
Previous report
Six Months Ended June 30, 2024 and 2023
Previous report
Revenue
Previous report
Other
Previous report
Cost of revenue for Managed Services for the six months ended June 30, 2024 and 2023 was $5.9 million and $3.9 million, respectively. The $2.0 million increase was primarily driven by a $1.9 million increase in reimbursable payroll costs and a $0.1 million increase in other site operating costs.
Previous report
Other
Previous report
Legal settlement
Previous report
Loss from discontinued operations
Reworded paragraphs (67)
Previous 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.
Current wording
As of September 30, 2024, our total energy capacity under management was 1,322 MW across twenty sites: 967 MW across ten Bitcoin mining sites in North America, 310 MW across four natural gas power generation facilities in Canada, 3 MW across five cloud and colocation data centers in Canada, and 42 MW at a non-operational site in Canada. During the quarter ended September 30, 2024, we also brought online 1,000 NVIDIA H100 GPUs for our GPU-as-a-Service business.
Previous wording
We have four reportable business segments: Digital Assets Mining, Managed Services, High Performance Computing — Colocation and Cloud, and Other.
Current wording
We have four reportable business segments: Digital Asset Mining, Managed Services, High Performance Computing – Colocation and Cloud, and Other.
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 four sites during the three months ended June 30, 2024:
Current wording
Currently, one of our largest revenue streams is derived from Digital Asset Mining (also referred to as self-mining), which consists entirely of mining Bitcoin (43% of total revenue for the nine months ended September 30, 2024 and 26% of total revenue for the three months ended September 30, 2024).
Previous 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.
Current wording
As of September 30, 2024, including our net share of the King Mountain JV, we owned approximately 49,400 miners totaling approximately 4.7 EH/s with an average fleet efficiency of 32.0 J/TH. In addition to miners, this business segment also includes the mining infrastructure related to our owned and leased sites used for self-mining.
Previous wording
Our HPC business spans five locations in Canada (Mississauga, Ontario; Vaughan, Ontario; Kelowna, British Columbia; and two locations in Vancouver, British Columbia) with more than 36,000 square feet of geo-diverse data center space powered by predominantly emission-free energy sources. The fee structure for our HPC business is based on two models: allocation and consumption. Under the allocation model, customers pay a fixed recurring monthly fee based on a set amount of resources assigned. The consumption model for both colocation and cloud businesses is generally a function of additional consumption of compute, storage, network, or power usage above and beyond the contractual commitment. The high-density colocation services available in some of our locations position us well to support the increasing demand for power densities driven by AI and GPU requirements, along with traditional CPU performance increases. In addition to colocation services, our cloud services are a core product offering: we support public and private cloud, managed backup, business continuity and disaster as a recovery service, and high performance high-capacity storage solutions. Our infrastructure is designed to support a variety of compute, storage, and network workloads across traditional enterprise, B2B, machine learning, visual effects, and AI. The data centers are geo-diverse and carrier neutral with network diversity and redundancy from multiple telecommunications providers.
Current wording
Our HPC business spans five locations in Canada (Mississauga, Ontario; Vaughan, Ontario; Kelowna, British Columbia; and two locations in Vancouver, British Columbia) with a total energy capacity of 3 MW and more than 36,000 square feet of geo-diverse data center space powered by predominantly emission-free energy sources. Our infrastructure is designed to support a variety of compute, storage, and network workloads across traditional enterprise, B2B, machine learning, visual effects, and AI. This segment serves computing needs unrelated to Digital Asset Mining. The data centers are geo-diverse and carrier neutral with network diversity and redundancy from multiple telecommunications providers.
Previous wording
We may enter into equipment sale contracts when we believe there is an opportunity to generate profit from selling machines and other mining equipment. For example, reports have been released which indicate that players in the mining equipment business adjust the prices of miners according to Bitcoin mining revenues, which means there may be times where we believe miners are overvalued in relation to their projected cash flows. We may also repair miners for third parties in exchange for a fee, as we have a fully equipped, MicroBT-certified repair center space at our Medicine Hat site.
Current wording
We may enter into equipment sale contracts when we believe there is an opportunity to generate profit from selling machines and other mining equipment. For example, as market prices of miners fluctuate, there may be opportunities where we believe the market value of miners exceeds the prices that we can procure them for. We may also repair miners for third parties in exchange for a fee, as we have a fully equipped, MicroBT-certified repair center space at our Medicine Hat site.
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 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.
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. Power revenue is strictly derived from the 80% interest we have in the Far North JV.
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. 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.
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.
Previous 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.
Current wording
As of September 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 7.7 EH/s) for MARA Holdings 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.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.
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. As part of the acquisition of our 50% interest in the King Mountain JV, we also assumed the TZRC Secured Promissory Note. Our 50% portion of any distributions made from the King Mountain JV are swept to pay down the TZRC Secured Promissory Note. See Note 9.Investments in unconsolidated joint venture and Note 10.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 and six month periods ended June 30, 2024 and 2023.
Current wording
Below is the condensed consolidated income statement for the King Mountain JV for the three and nine month periods ended September 30, 2024 and 2023.
Previous wording
Our board of directors and management team also evaluate Adjusted EBITDA for the King Mountain JV, which is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) before interest income, income tax, depreciation and amortization. We use Adjusted EBITDA to assess the King Mountain JV’s financial performance because it allows us to compare the operating performance on a consistent basis across periods by removing the effects of the King Mountain JV’s capital structure.
Current wording
Our board of directors and management team also evaluate Adjusted EBITDA for the King Mountain JV, which is a non-GAAP financial measure. We define Adjusted EBITDA as net (loss) income before depreciation and amortization and interest income. We use Adjusted EBITDA to assess the King Mountain JV’s financial performance because it allows us to compare the operating performance on a consistent basis across periods by removing the effects of the King Mountain JV’s capital structure.
Previous wording
Net income (loss) is the GAAP measure most directly comparable to Adjusted EBITDA. This non-GAAP financial measure should not be considered as an alternative to the most directly comparable GAAP financial measure. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in such presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of Adjusted EBITDA in the future, and any such modification may be material. Adjusted EBITDA has important limitations as an analytical tool and you should not consider Adjusted EBITDA in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA may be defined differently by other companies in our industry, our definition of this non-GAAP financial measure may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.
Current wording
Net (loss) income is the GAAP measure most directly comparable to Adjusted EBITDA. This non-GAAP financial measure should not be considered as an alternative to the most directly comparable GAAP financial measure. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in such presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of Adjusted EBITDA in the future, and any such modification may be material. Adjusted EBITDA has important limitations as an analytical tool and you should not consider Adjusted EBITDA in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA may be defined differently by other companies in our industry, our definition of this non-GAAP financial measure may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.
Previous 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.
Current wording
During the three months ended September 30, 2024 and 2023, the price of Bitcoin ranged from approximately $49,100 to $70,000 and $24,900 to $31,900, respectively. During the nine months ended September 30, 2024 and 2023, the price of Bitcoin ranged from approximately $38,500 to $73,800 and $16,500 to $31,900, respectively.
Previous 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.
Current wording
Average network difficulty and average network hash rate were 87.0T and 622.6 EH/s, respectively, for the three months ended September 30, 2024, compared to 53.3T and 381.3 EH/s, respectively, for the three months ended September 30, 2023. Average network difficulty and average network hashrate were 83.1T and 594.6 EH/s, respectively, for the nine months ended September 30, 2024, compared to 47.7T and 341.2 EH/s, respectively, for the nine months ended September 30, 2023.
Previous 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.
Current wording
During the three and nine months ended September 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
The following table presents our key performance indicators for the three and six months ended June 30, 2024 and 2023.
Current wording
The following table presents our key performance indicators for the three and nine months ended September 30, 2024 and 2023.
Previous wording
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 wording
Our cost to mine a Bitcoin (excluding hosted facilities) for the three months ended September 30, 2024 was $31,482 compared to $15,020 for the three months ended September 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 (87.0T for the three months ended September 30, 2024 compared to 53.3T for the three months ended September 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).
Previous wording
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 wording
Our cost to mine a Bitcoin (excluding hosted facilities) for the nine months ended September 30, 2024 was $25,249 compared to $11,367 for the nine months ended September 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 (83.1T for the nine months ended September 30, 2024 compared to 47.7T for the nine months ended September 30, 2023), partially offset by a decrease in our energy cost per MWh (see below for further discussion on energy cost per MWh).
Previous wording
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 wording
Inclusive of hosted facilities, our cost to mine a Bitcoin for the three months ended September 30, 2024 was $31,482 compared to $17,274 for the three months ended September 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 September 30, 2024, so our cost to mine a Bitcoin for the three months ended September 30, 2024 consisted solely of energy costs.
Previous 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.
Current wording
Inclusive of hosted facilities, our cost to mine a Bitcoin for the nine months ended September 30, 2024 was $26,277 compared to $15,039 for the nine months ended September 30, 2023. The increase was driven by the Halving event in April 2024, an increase in average network difficulty during the period (83.1T for the nine months ended September 30, 2024 compared to 47.7T for the nine months ended September 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 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.
Current wording
Energy cost per MWh for the three months ended September 30, 2024 was $28.83 compared to $42.73 for the three months ended September 30, 2023. 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
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 wording
Energy cost per MWh for the nine months ended September 30, 2024 was $32.89 compared to $38.08 for the nine months ended September 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 nine months of combined company self-mining activity at our Alpha, Medicine Hat, Salt Creek, and King Mountain sites while the prior period reflects nine 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 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 wording
Hosting cost per MWh for the three months ended September 30, 2024 was nil compared to $60.33 for the three months ended September 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.
Previous 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.
Current wording
Hosting cost per MWh for the nine months ended September 30, 2024 was $68.72 compared to $60.91 for the nine months ended September 30, 2023. The increase was due to a higher variable hosting rate (tied to hashprice) at the Kearney and Granbury sites during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.
Previous wording
Bitcoin mined represents the number of Bitcoin we mined during the respective periods and includes our net share of the King Mountain JV. Our management looks at this metric as it directly impacts our Digital Assets Mining segment and King Mountain JV for the respective periods.
Current wording
Bitcoin mined represents the number of Bitcoin we mined during the respective periods and includes our net share of the King Mountain JV. Our management looks at this metric as it directly impacts our Digital Asset Mining segment and King Mountain JV for the respective periods.
Previous wording
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 wording
Bitcoin mined for the three months ended September 30, 2024 and 2023 was 234 and 675, respectively. The decrease in Bitcoin mined was primarily due to the Halving and an increase in network difficulty (87.0T for the three months ended September 30, 2024 compared to 53.3T for the three months ended September 30, 2023).
Previous wording
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 wording
Bitcoin mined for the nine months ended September 30, 2024 and 2023 was 1,229 and 1,938, respectively. The decrease in Bitcoin mined was primarily due to the Halving and, an increase in network difficulty (83.1T for the nine months ended September 30, 2024 compared to 47.7T for the nine months ended September 30, 2023).
Previous 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.
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, traditional data centers, and our non-operational site in Canada.
Previous 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.
Current wording
Energy capacity under management (mining) as of September 30, 2024 was 967 MW compared to 730 MW as of September 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 asset mining facilities owned by Ionic, totaling 302 MW, through a Management Services Agreement with Ionic, (iii) the addition of Salt Creek, a 63 MW facility that we own, and (iv) the addition of Vega, a 205 MW facility that we own. These increases were partially offset by the transition of our previously managed Kearney and Granbury sites totaling 400 MW.
Previous wording
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 wording
Total energy capacity under management increased to 1,322 MW as of September 30, 2024 from 730 MW as of September 30, 2023. The increase was due to: (i) the addition of 310 MW of natural gas power generation facilities as a result of the Far North transaction, (ii) 3 MW of traditional data centers as a result of the Business Combination, and (iii) the addition of Drumheller, a 42 MW self-mining facility that we own 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.
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 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.
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), gain (loss) on derivatives, depreciation and amortization embedded in the equity in earnings (losses) from an unconsolidated joint venture, foreign exchange gain, gain on the sale of property and equipment (if applicable), non-recurring transactions, net income 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 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.
Current wording
Total revenue for the three months ended September 30, 2024 and 2023 was $43.7 million and $21.7 million, respectively, and consisted of Digital Asset Mining, Managed Services, HPC, and Other.
Previous wording
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 wording
Digital Asset Mining revenue was $11.6 million and $15.6 million for the three months ended September 30, 2024 and 2023, respectively. The decrease was primarily driven by a decrease in Bitcoin mined due to: (i) the Halving, and (ii) an increase in network difficulty. Bitcoin mined (excluding our net share of the King Mountain JV) for the three months ended September 30, 2024 and 2023 was 190 and 553, 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 $61,100 for the three months ended September 30, 2024 compared to about $28,100 for the three months ended September 30, 2023.
Previous wording
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 wording
Managed Services revenue was $20.8 million for the three months ended September 30, 2024, consisting of $4.1 million in management fees, $1.9 million in cost reimbursements, $1.3 million in the form of customer equity, and $13.5 million in termination fees. Managed Services revenue was $4.8 million for the three months ended September 30, 2023, consisting of $3.4 million in management fees and $1.4 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, and the $13.5 million termination fee received from MARA Holdings related to the termination of the PMAs for the Kearney and Granbury sites that occurred on April 30, 2024.
Previous wording
Other revenue was $8.9 million and nil for the three months ended June 30, 2024 and 2023, respectively. Other revenue for the three months ended June 30, 2024 consisted of $3.6 million in equipment sales, $2.4 million in hosting cost reimbursements, $1.4 million in hosting services revenue, and $1.5 million in power revenues from our natural gas power plants that were acquired as part of the Far North JV.
Current wording
Other revenue was $7.9 million and $1.4 million for the three months ended September 30, 2024 and 2023, respectively. Other revenue for the three months ended September 30, 2024 consisted of $1.8 million in hosting cost reimbursements, $0.6 million in hosting services revenue, $5.4 million in power revenues from our natural gas power plants that were acquired as part of the Far North JV, and $0.1 million in equipment repair revenue.
Previous wording
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 wording
Cost of revenue for Digital Asset Mining for the three months ended September 30, 2024 and 2023 was $7.3 million and $10.9 million, respectively. This decrease was 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 September 30, 2024 includes three months of costs at the Medicine Hat site, which was acquired as a result of the Business Combination.
Previous wording
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 wording
Cost of revenue for Managed Services for the three months ended September 30, 2024 and 2023 was $2.8 million and $1.4 million, respectively. The $1.4 million increase was primarily driven by a $0.8 million increase in reimbursable payroll costs and a $0.6 million increase in other reimbursable site operating costs driven by the addition of the five Ionic sites.
Previous wording
Cost of revenue for HPC for the three months ended June 30, 2024 and 2023 was $2.5 million and nil, respectively. The cost of revenue reflects three months of activity in connection with the newly acquired HPC business from the Business Combination.
Current wording
Cost of revenue for HPC for the three months ended September 30, 2024 and 2023 was $2.6 million and nil, respectively. The cost of revenue reflects three months of activity in connection with the newly acquired HPC business from the Business Combination.
Previous wording
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 wording
Cost of revenue for Other for the three months ended September 30, 2024 was $4.9 million and consisted primarily of $2.6 million in cost of hosting services revenue, which included $2.2 million in electricity costs, and $2.3 million in cost of power revenues from our natural gas power plants that were acquired as part of the Far North JV. Cost of revenue for Other for the three months ended September 30, 2023 was $1.2 million and consisted entirely in cost of hosting services revenue.
Showing the first 40 of 67 pairs. Open the source sections for the rest.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Our self-mining business spanned four sites during the three months ended September 30, 2024:
Current report — wording carried from elsewhere
The fee structure for our HPC business is based on two models:
Current report — wording carried from elsewhere
We believe high-density colocation services available in some of our locations position us well to support the increasing demand for power densities driven by AI and graphics processing unit (“GPU”) requirements, along with traditional central processing unit (“CPU”) performance increases. In addition to colocation services, our cloud services are a core product offering: we support public and private cloud, managed backup, business continuity and disaster as a recovery service, and high performance high-capacity storage solutions.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Previous report — wording carried elsewhere
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 report — wording carried 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.
Previous report — wording carried elsewhere
High Performance Computing – Colocation and Cloud
Previous report — wording carried elsewhere
Legal settlement was nil and $1.5 million for the six 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.