Mr. Jaime Leverton reports

HUT 8 REPORTS OPERATING AND FINANCIAL RESULTS FOR Q2 2023

Hut 8 Mining Corp. has released its financial results for the quarter ended June 30, 2023.

"We continued to build momentum toward closing our transaction with USBTC by progressing toward receiving regulatory approvals to proceed and improving our projected post-merger self-mining capacity to 7.5 EH/s," said Jaime Leverton, CEO of Hut 8. "That said, we are not here to simply chase exahash: we have been unique in our approach to growing our business primarily through inorganic means, and have done so with an infrastructure-first mindset. We believe that there is value to be captured beyond proprietary mining, which is why we acquired the HPC business. We are confident that this merger positively positions us on a path to growth by expanding into more stable energy markets and increasing our exposure to capex-light, scalable, fiat-based revenue streams like hosting and managed infrastructure operations, which includes purpose-built site management software, while improving our self-mining capabilities."

"While we continued to face mining challenges during the second quarter at Drumheller, which are reflected in decreased revenue and fewer Bitcoin mined, we were successful in strategically managing our costs," said Shenif Visram, CFO of Hut 8. "In our high performance computing business, we signed a significant five-year contract during the period, and will begin to realize that revenue later this year. In the meantime, we have more than 1 MW of data centre capacity and existing infrastructure readily available to meet customers' AI and other high performance computing demands."

Q2 2023 HIGHLIGHTS

Revenue decreased by $24.6 million to $19.2 million during the quarter ended June 30, 2023 compared to $43.8 million during the quarter ended June 30, 2022 ("Q2 2022").

The company mined 399 Bitcoin in the quarter ended June 30, 2023, an approximately 58% decrease compared to the quarter ended June 30, 2022, primarily due to an increase in average Bitcoin network difficulty resulting in decrease in Bitcoin mined, the impact of the suspension of operations at the company's North Bay Facility, and ongoing electrical issues at the company's Drumheller facility.

The company's high performance computing ("HPC") operations generated $4.2 million of primarily monthly recurring revenue in Q2 2023 compared to $4.7 million in Q2 2022 as a result of the discontinuation of certain low-margin products and service offerings, customer churn, which were partially offset by new sales. The new sales do not reflect the newly signed five-year agreement with Interior Health, as the revenue earned from the agreement will commence later in 2023.

As previously reported, the company encountered issues at the Drumheller site, primarily stemming from high energy input levels that have been causing miners to fail. This has materially reduced operations, which are currently at approximately 20% of our installed hash rate at the site. The team has implemented new custom firmware across all miner models designed to lower the power supply's maximum output voltage, ensured our equipment operates within safe limits, increased repair staff, added an additional repair centre shift, and procured new hardware to expedite repairs and accelerate the speed at which we bring miners back online. The electrical issues at the Drumheller site have been compounded by high energy rates which further increased curtailment at the site.

The company's installed hashrate was 2.6 EH/s (excluding the company's North Bay facility) as of June 30, 2023 compared to 2.6 EH/s as of March 31, 2023.

BITCOIN INVENTORY AND VALUE

As at June 30, 2023, the company had a total self-mined Bitcoin balance held in custody or pledged as collateral of 9,136 with a market value of $368.7 million. During the second quarter of 2023, 399 Bitcoin were mined and 396 Bitcoin were sold, for which the company received proceeds of $14.7 million.

Revenue decreased by $24.6 million to $19.2 million during the quarter ended June 30, 2023 compared to $43.8 million during the quarter ended June 30, 2022 ("Q2 2022"). The company mined 399 Bitcoin in the quarter ended June 30, 2023, an approximately 58% decrease compared to the quarter ended June 30, 2022, primarily due to an increase in average Bitcoin network difficulty resulting in decrease in Bitcoin mined, halt in the company's graphic processing units ("GPU") mining activities due to the Ethereum network's change in consensus mechanism from proof-of-work to proof-of-stake during the third quarter of 2022, the impact of the suspension of operations at the company's North Bay Facility, and ongoing electrical issues at the company's Drumheller facility which continued from the fourth quarter of 2022. Revenue from the company's digital asset mining operations also declined as a result of lower Digital Asset Revenue per Bitcoin Mined(i) due to the decrease in the daily average closing Bitcoin price in the current quarter versus the comparative quarter. The company's high performance computing operations generated $4.2 million of primarily monthly recurring revenue in Q2 2023 compared to $4.7 million in Q2 2022 as a result of the discontinuation of certain low-margin products and service offerings, customer churn, which were partially offset by new sales. The new sales do not reflect the newly signed five-year agreement with Interior Health, as the revenue earned from the agreement will commence later in 2023.

Cost of revenue consists of site operating costs and depreciation. The cost of revenue was $23.8 million for the second quarter of 2023 compared to $47.7 million in the same period in 2022. Site operating costs consist primarily of electricity costs as well as personnel, network monitoring, and equipment repair and maintenance costs at our digital asset mining and high performance computing operations. Site operating costs for the quarter ended June 30, 2023 were $14.3 million, of which $11.8 million were attributable to our mining operations and $2.5 million were attributable to our high performance computing operations. The site operating costs for the quarter ended June 30, 2022 were $26.8 million, of which $24.5 million were attributable to our mining operations and $2.3 million were attributable to our high performance computing operations. The Mining Cost per Bitcoin(i) for the second quarter of 2023 was $29,551 per Bitcoin, compared to $25,611 per Bitcoin in the prior year for the same quarter. The increase was due to higher power consumption per Bitcoin mined and ongoing electrical issues at the Drumheller facility, which was partially offset by the company's decision to curtail, lower average energy prices, and increased efficiencies in the miners deployed compared to prior year same quarter. The increase in site operating costs related to the high performance computing operations is primarily due to increased repairs and maintenance to improve the company's facilities. Depreciation expense decreased to $9.5 million during the second quarter of 2023 compared to $20.9 million in the same quarter of 2022, primarily driven by the lower net book value of digital asset mining assets after the recognition of non-cash impairment charge during the fourth quarter of 2022 as part of annual impairment testing.

Net loss was $16.7 million and net loss per share was $0.08 for the three months ended June 30, 2023, compared to net loss of $88.1 million and net loss per share of $0.49 for the same period in 2022. The change was primarily driven by the lower non-cash revaluation loss on digital assets recorded to income or loss, partially offset by the lower non-cash gain on revaluation of warrant liability, resulting in lower net loss. Additionally, the net loss per share was lower due to greater weighted average number of shares outstanding for earnings per share purposes under International Accounting Standards 33.

Mining Profit(i) was $3.2 million for the quarter ended June 30, 2023, compared to $14.9 million in the prior year's quarter. The decrease in Mining Profit(i) compared to the prior year's quarter is mainly due to the decrease in price of Bitcoin, lower quantity of Bitcoin mined due to increased Bitcoin network difficulty, halt in the company's GPU mining activities due to the Ethereum network's change in consensus mechanism from proof-of-work to proof-of-stake during the third quarter of 2022, impact of the suspension of operations at the company's North Bay Facility, and the ongoing electrical issues at the company's Drumheller facility noted above, and was partially offset by lower average power prices.

Adjusted EBITDA(i) was negative $2.7 million for the quarter ended June 30, 2023, compared to a negative Adjusted EBITDA(i) of $98.1 million in the prior year's quarter, primarily driven by a lower loss on revaluation of digital assets, partially offset by a lower digital asset Mining Profit(i), and the aforementioned electrical issues at the company's Drumheller facility. Contributions from HPC operations were offset by lower margins in digital asset mining operations.

For more information, please refer to the company's management's discussion & analysis (the "MD&A") and the company's unaudited condensed consolidated interim financial statements for the six months ended June 30, 2023 and 2022. These documents are available on the company's website at hut8.io, under the company's SEDAR profile at www.sedar.com, and under the company's EDGAR profile at www.sec.gov.

CORPORATE UPDATES

Hut 8 and U.S. Data Mining Group, Inc., doing business as US Bitcoin Corp ("USBTC") continue to make progress on the proposed business combination pursuant to which the two companies will combine in all-stock merger of equals (the "Transaction"). The combined company will be named "Hut 8 Corp." ("New Hut") and will be a U.S.-domiciled entity. The Transaction is expected to establish New Hut as a large scale, publicly traded Bitcoin miner focused on economical mining, highly diversified revenue streams, and industry leading environmental, social, and governance (ESG) practices.

On June 15, 2023, The company announced that it filed a further amendment to its Form S-4 Registration Statement (the "Amended Registration Statement") with the U.S. Securities and Exchange Commission (the "SEC").

As disclosed in the Amended Registration Statement:

New Hut's expected installed self-mining capacity has increased from the previously disclosed 7.02 EH/s to 7.5 EH/s at mining facilities in Medicine Hat and Drumheller in Alberta; Niagara Falls, New York; Kearney, Nebraska; and Granbury and King Mountain, Texas upon the close of the Transaction. The improvement is due to the energization of additional miners at USBTC's sites.

The 1.7 EH/s installed self-mining capacity at the King Mountain, Texas site is owned by the King Mountain Joint Venture in which USBTC has a 50% membership interest alongside a leading energy partner.

On July 17, 2023, The company announced that it filed a further amendment to its Form S-4 Registration Statement with the U.S. Securities and Exchange Commission (the "SEC").

The Transaction is particularly strategic as it will establish New Hut with geographic diversity across its self-mining business, which will include differentiated energy sources in a variety of markets, and improve efficiencies at the miner level by using proprietary, purpose-built software that can identify and mitigate machine and energy price issues in real-time. Notably, it will further diversify capex-light fiat revenue lines of business by adding USBTC's 220 MW hosting and 680 MW managed infrastructure operations businesses to Hut 8's existing HPC and repair centre operations. Completion of the Transaction is subject to obtaining the remaining regulatory approvals, shareholder approval, court approval, and other customary closing conditions. Hut 8 expects the Transaction to close by September 30, 2023.

On August 11, 2023, The company announced that it has entered into a transaction support agreement (the "Support Agreement") with Macquarie Equipment Finance Ltd. ("Macquarie") a subsidiary of Macquarie Group Limited, a global financial services group, in support of an opportunity to potentially acquire certain assets of Validus Power Corp. ("Validus") and Validus' subsidiaries (collectively, the "Validus Entities"). Validus was previously a supplier of energy to the company's mining facility in North Bay, Ontario. Macquarie is a secured creditor of the Validus Entities under an existing secured lease and participation agreement.

Pursuant to an order of the Ontario Superior Court of Justice (Commercial List) (the "Court") issued on August 10, 2023, on application by Macquarie, KSV Restructuring Inc. ("KSV"), a licensed insolvency trustee with extensive experience in receivership mandates, has been appointed as receiver of the property, assets, and undertakings of the Validus Entities (KSV in such capacity, the "Receiver").

Subject to the satisfaction of certain conditions, under the terms of the Support Agreement, a stalking horse bid (the "Stalking Horse Bid") is to be submitted to the Receiver in support of a proposed sale and investment solicitation process to be carried out in respect of the Validus Entities.

A Stalking Horse Bid, if ultimately successful, is expected to result in the full and final resolution of all litigation claims and counterclaims currently pending between Hut 8 and certain Validus Entities. Further details in respect of any Stalking Horse Bid will be provided if and as conditions warrant and subject to, among other things, the acceptance of a Stalking Horse Bid by the Receiver and approval of the Court.

CONFERENCE CALL

Hut 8 Mining Q2 2023 conference call will commence at 10 a.m. ET, today.

To join the conference call without operator assistance, you may register and enter your phone number at https://ow.ly/vmjc50PqkLA to receive an instant, automated call back that will place you in the conference

Those joining via operator should dial in 5-10 minutes early to: 1-888-664-6392 (toll-free, North America) and use access code: 388162 #

About Hut 8

Through innovation, imagination, and passion, Hut 8's seasoned executive team is bullish on building and operating computing infrastructure that powers Bitcoin mining, traditional data centres, and emerging technologies like AI and machine learning. Hut 8's infrastructure portfolio includes seven sites: five high performance computing data centres across British Columbia and Ontario that offer cloud, co-location, managed services, A.I., machine learning, and VFX rendering computing solutions, and two Bitcoin mining sites located in Southern Alberta. Long-distinguished for its unique treasury strategy, Hut 8 has one of the highest inventories of self-mined Bitcoin of any publicly-traded company globally. Follow us on X (formerly known as Twitter) at @Hut8Mining.

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