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The trade, first disclosed in February, is expected to enhance Hut 8's mining capabilities and further diversify its sources of revenue. An industry observer noted that this would make the company "perhaps the most diversified business model among public peers." The merged company will be named Hut 8 Corp. and will be based in the United States. It plans to list on the Nasdaq and the Toronto Stock Exchange with the trading symbol "HUT."
Consulting firms Institutional Shareholder Services (ISS) and Glass Lewis & Co. recommended that Hut 8 shareholders approve the deal last month. The deadline is on Friday, and the vote will be counted on September 12. Once Hut 8's registration statement becomes effective, the approval process for the American Bitcoin company's shareholders will begin. In addition, to complete the transaction, a final order from the Supreme Court of British Columbia is also required, with the order scheduled to be issued on September 15. If the necessary approvals are obtained, the deal may be completed by September 30, as stated in the August 30 announcement.
The Significance of the Deal
Wolfie Zhao, Research Director of the research department TheMinerMag at mining consulting firm BlocksBridge, pointed out that Hut 8 and the American Bitcoin company complement each other in terms of Bitcoin balances, capital expenditure intensity, production costs, and geographic distribution.
He told Blockworks, "After the merger, Hut 8 will become another mining giant with multiple sites spread across various provinces in Canada and states in the United States, possibly one of the most diversified business models among public peers, including self-mining, hosting, site management, and high-performance computing."
As of June 30, Hut 8 had an installed hash rate of 2.6 exahashes per second (EH/s). In the second quarter of this year, the company reported a year-on-year decline in annual revenue and Bitcoin production. The American Bitcoin company operates campuses in New York, Nebraska, and Texas, running hundreds of megawatts of Bitcoin mining infrastructure on behalf of clients. After the merger, the company expects its self-mining capacity to reach 7.5 EH/s across six mining facilities.
As of August 31, one of Hut 8's major competitors, Riot Platforms, had hash power of 10.7 EH/s, while Marathon Digital had 19.1 EH/s.
In a research report from February, the consulting firm Architect Partners stated that the portfolio of sites owned and managed by the American Bitcoin company accelerated Hut 8's growth trajectory through greater operational scale. The portfolio also allows Hut 8, headquartered in Toronto, to increase its sources of hydro, wind, and nuclear energy.
The report also noted, "Additionally, the combined entity has multiple sources of revenue beyond self-mining, including hosting for other miners, data center management, equipment sales, and machine repair. This reduces reliance on Bitcoin prices and allows for business in fiat currencies."
In fact, Hut 8's CEO, Jaime Leverton, stated in a release in August that Hut 8 is "not in the business of chasing exahashes." He added during the company's Q2 earnings call that diversification is crucial ahead of Bitcoin's next halving event planned for April 2022. Leverton noted that the company bolstered its high-performance computing capabilities in 2022 and plans to operate with the American Bitcoin company's hosting and management infrastructure.
"We're very bullish on the diversification strategy," Leverton added last month. "But I think in our space, you're going to continue to see miners grow their businesses in different ways." |
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Post time 31-10-2023 07:40:02