Mr. Asher Genoot reports

HUT 8 REPORTS OPERATING AND FINANCIAL RESULTS FOR THE SIX MONTHS ENDED DECEMBER 31, 2023

Hut 8 Corp. has released its financial results for the six months ended Dec. 31, 2023.

"Our results this period demonstrate the strength and potential of the new Hut 8. Our thesis for the merger was to combine the operating scale and discipline of U.S. Bitcoin Corp. with the strong balance sheet, access to capital markets and liquidity of Hut 8 Mining Corp. Since closing, we have focused tirelessly on driving efficiencies through a comprehensive restructuring program. While there is still work to do, I am proud of the progress we have made," said Asher Genoot, chief executive officer of Hut 8. "Our goal is to continue building a profitable, diversified business during fiscal year 2024. With this in mind, we will continue to focus on driving top-line revenue growth and cost reduction across the business.

"Looking ahead, we are focused on two pillars of growth: strengthening and growing our self-mining business, and continuing to diversify our broader business. We currently have more than 1,100 megawatts of energy development capacity under exclusivity, which represents nearly 63 exahash of capacity if filled with current-generation miners. As we head into the halving, we maintain a strong balance sheet with what we believe to be healthy and manageable debt. This will allow us to invest in growth while reducing the need for external capital and limiting shareholder dilution.

"We have already proven that we can operate at scale, with approximately 27 exahash under management across our self-mining, hosting and managed services business lines as of the end of February. We believe our ability to build sites quickly and cost-efficiently, without sacrificing quality, is unmatched, and our team has a single-minded focus on building a best-in-class operating business. With our capabilities, resources and team, I am more confident than ever that we will build a lasting, generational business committed to maximizing shareholder value."

Six months ended Dec. 31, 2023, financial and operational highlights

U.S. Data Mining Group Inc., doing business as U.S. Bitcoin (USBTC), and Hut 8 Mining completed an all-stock merger of equals (the business combination) on Nov. 30, 2023. USBTC was deemed the accounting acquirer in the transaction, so the company's results of operations reflect only USBTC's performance up until the completion of the business combination on Nov. 30, 2023. The company's results of operations for the combined company start on Dec. 1, 2023.

There was also a change of year-end for the accounting acquirer, USBTC, from June 30 to Dec. 31. As a result, the company is filing transition-period financial statements as a bridge between USBTC's last year-end, which was June 30, 2023, and Hut 8's new year-end, which is Dec. 31, 2023. The outcome of this is a six-month set of financials, including audited financials for the six months ended Dec. 31, 2023, and unaudited financials for the six months ended Dec. 31, 2022:

• Operating portfolio totalled 839 megawatts (MW) across 11 sites in North America, comprising six digital asset mining sites, and five cloud and co-location data centres as of Dec. 31, 2023.
• Self-mining hashrate totalled approximately 6.3 exahashes per second (EH/s) as of Dec. 31, 2023, including the company's net share of the King Mountain joint venture (JV).
• Revenue increased by $14.6-million to $60.6-million from $46-million in the six months ended Dec. 31, 2022. Net income improved to $6.2-million compared with a net loss of $81.3-million in the six months ended Dec. 31, 2022.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased by $49.5-million to $62.3-million from $12.8-million in the six months ended Dec. 31, 2022.
• During the six months ended Dec. 31, 2023, 1,244 bitcoin were mined. As of Dec. 31, 2023, the company had a total self-mined bitcoin balance of 9,195, which represented a market value of approximately $388.1-million. As of Feb. 29, 2024, the company had a total self-mined bitcoin balance of 9,110 bitcoin, which represented a market value of approximately $557.3-million.
• Cost to mine a bitcoin for owned facilities, including the company's net share of the King Mountain JV, was $16,353, versus $16,447 for the six months ended Dec. 31, 2022. Cost to mine including hosted miners was $18,815, versus $16,305 in the six months ended Dec. 31, 2022.

Select six months ended Dec. 31, 2023, financial results

Revenue for the six months ended Dec. 31, 2023, increased by 32 per cent to $60.6-million from $46-million in the prior period, and consisted of $41.5-million in digital assets mining revenue, $12.6-million in managed services revenue, $1.1-million in high-performance computing -- co-location and cloud revenue, and $5.4-million in other revenue. Other consists primarily of hosting services revenue and equipment sales, if any.

Cost of revenue (exclusive of depreciation and amortization) for the six months ended Dec. 31, 2023, was $34.3-million versus $27.8-million in the prior period, and consisted of $26.5-million in cost of revenue for digital assets mining, $3.4-million in cost of revenue for managed services, $700,000 in cost of revenue for high-performance computing -- co-location and cloud, and $3.8-million in cost of revenue for other.

Depreciation for the six months ended Dec. 31, 2023, was $10.6-million versus $11.8-million in the prior period. The reduction was due to a lower net book value of plant and equipment after the recognition of a non-cash impairment charge in the prior period.

General and administration expenses for the six months ended Dec. 31, 2023, were $37.6-million versus $10.6-million in the prior-year period. This increase was due to non-recurring items related to the business combination and a sales tax accrual recorded in the current period.

Net income for the six months ended Dec. 31, 2023, improved to $6.2-million compared with a net loss of $81.3-million in the prior-year period. Net income was impacted by the company's decision to early adopt ASU 2023-08, the new FASB (Financial Accounting Standards Board) fair-value accounting rules, which led to a $32.6-million gain on the revaluation of the company's digital asset holdings in the six months ended Dec. 31, 2023.

Adjusted EBITDA for the six months ended Dec. 31, 2023, increased by 386 per cent to $62.3-million from $12.8-million in the prior-year period. Adjusted EBITDA includes the gain from the early adoption of ASU 2023-08.

As of Dec. 31, 2023, the company held 9,195 bitcoin on its balance sheet, representing a market value of approximately $388.1-million. As of Feb. 29, 2024, the company held 9,110 bitcoin on its balance sheet, representing a market value of approximately $557.3-million.

Conference call

The Hut 8 Q4 2023 webcast will commence at 8:30 a.m. ET, today.

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Analyst coverage of Hut 8 mining:

• A full list of Hut 8 analyst coverage can be found at the company's website.

About Hut 8 Corp.

Hut 8 is an energy infrastructure operator and bitcoin miner with self-mining, hosting, managed services and traditional data centre operations spanning 10 sites across North America. Headquartered in Miami, Fla., Hut 8 operates five bitcoin mining, hosting and managed services sites in Alberta, New York, Nebraska and Texas, and five high-performance computing data centres in British Columbia and Ontario.

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