Mr. Michel Amar reports
DIGIHOST REPORTS A RECORD 172 BITCOINS MINED IN Q4 2021 IN ADDITION TO A 328% INCREASE IN Q4 Y/Y BITCOIN PRODUCTION AND ANNOUNCES RESTATEMENT OF Q3 2021 FINANCIAL STATEMENTS
Digihost Technology Inc. has released unaudited bitcoin production updates for the quarter and month ended Dec. 31, 2021. All amounts are expressed in United States dollars unless otherwise indicated.
Year-over-year quarterly comparison
The company mined approximately 108.11 more bitcoin in Q4 2021, compared with Q4 2020, representing an increase of approximately 168 per cent. Using the Dec. 31, 2021, and Dec. 31, 2020, closing bitcoin prices (from CoinDesk), the value of the company's bitcoin mined in Q4 2021 increased by approximately $6.6-million, or 328 per cent compared with Q4 2020.
Production highlights for December, 2021
Mined 61.53 bitcoin during the month, increasing total holdings to 631.86 bitcoin valued at approximately $29.3-million as of Dec. 31, 2021, based on a bitcoin price of $46,306.
- Total ethereum holdings of 1,000.89 ethereum valued at approximately $3.7-million as of Dec. 31, 2021, based on an ethereum price of $3,683.
- Total digital asset inventory value consisting of bitcoin and ethereum of approximately $33-million as of Dec. 31, 2021.
- Year-to-date deposits of approximately $34.5-million on equipment and infrastructure targeted to be installed in Q1 2022 pertaining to the company's bitcoin mining operations.
- During the month of December, the company received 2,480 new, technologically advanced, high-performance M30 bitcoin miners for use in its mining operations.
- The company's current hashrate was approximately 415 petahashes (PH) at Dec. 31, 2021, and is expected to increase to approximately 1.2 exahashes (EH) by the end of Q1 2022.
Bitcoin mining update
For the 12-month period ended Dec. 31, 2021, the company's mining fleet produced 520.63 bitcoin, with production broken down as follows:
- Quarter 1, 2021: 105.26 bitcoin;
- January: 33.70;
- February: 35.02;
- March: 36.54;
- Quarter 2, 2021: 109.97 bitcoin;
- April: 37.52;
- May: 34.26;
- June: 38.19;
- Quarter 3, 2021: 133.02 bitcoin;
- July: 51.28;
- August: 44.07;
- September: 37.67;
- Quarter 4, 2021: 172.38 bitcoin;
- October: 41.84;
- November: 69.01;
- December: 61.53.
Year-over-year monthly comparison
The company mined approximately 35.15 more bitcoin in December, 2021, compared with December, 2020, representing an increase of approximately 133 per cent. Using the Dec. 31, 2021, and the Dec. 31, 2020, closing bitcoin prices (from CoinDesk), the value of the company's bitocin mined in December, 2021, increased by approximately $2.3-million, or 455 per cent, over December, 2020.
The company mined an additional 39.36 bitcoin during Q4 2021 compared with Q3 2021, representing an increase of 30 per cent. Based on Dec. 31, 2021, and Sept. 30, 2021, closing bitcoin prices (from CoinDesk), the value of the company's bitcoin mined in Q4 2021 increased by approximately $2.2-million, or 37 per cent, quarter over quarter.
Corporate updates for December, 2021
- As announced by the company in a press release on May 12, 2021, the company previously agreed to purchase approximately 10,000 new miners from Northern Data AG. As of Dec. 31, 2021, approximately 6,500 of those miners had been received. The remaining miners from that order are expected to arrive at Digihost's data centre over the course of the next two months in the following tranches:
- 2,000 in January, 2022;
- 1,400 in February, 2022.
- Digihost continues to participate in demand response programs in New York State to reduce marginal carbon emissions at its facility.
- The company's strategic co-mining agreement with Bit Digital USA Inc. is in process, with expected completion of the deployment of BTBT miners in Digihost's premises by the end of Q2 2022.
- The company executed a 99-year ground lease of its mining farm.
- A portion of the miners received during Q4 2021 were related to the company's miner lease agreement with Northern Data N.Y. LLC, pursuant to which the parties have agreed to split a portion of the mining rewards received and energy costs incurred for the miners put in service pursuant to that lease agreement. One hundred per cent of the miners subject to that lease agreement are expected to be in service by the end of Q1 2022.
- As announced in a March 24, 2021, press release, the company previously signed a binding agreement for the purchase of a 60-megawatt (MW) power plant located in the state of New York. As of Dec. 31, 2021, Digihost had received all planning board permits and compliance approvals required to ramp up the facility buildout, with an expected completion time frame of mid-February, 2022. The company is currently continuing to wait for final public service commission approval of the power plant acquisition.
Michel Amar, the company's chief executive officer, stated: "The final quarter of 2021 proved to be an extremely productive quarter for our mining operations, as we increased our bitcoin production by 30 per cent over the prior quarter. We finished the year by mining the single highest amount of bitcoin mined by the company in any given quarter in the company's history, and, with shipments of our previously purchased miners accelerating over the coming months, we expect our bitcoin production to continue to increase as we scale up our operations."
Restatement of interim financial statements
The company also announces a restatement and reissue of its interim unaudited financial statements for the three and nine months ended Sept. 30, 2021, as well as a restatement and reissue of the accompanying management discussion and analysis (MD&A) for the three and nine months ended Sept. 30, 2021. The amended interim statements and amended MD&A are available under the company's profile on SEDAR.
As a result of a reassessment of existing timing differences (in connection with a review of the company's financial statements by the company's independent auditors), management determined that a deferred tax provision of $1,498,085 should be recorded as an expense for Q3 2021, increasing the company's total long-term deferred tax liability to $2,073,709 at quarter end. The company's deferred tax balance relates primarily to timing differences between accounting and tax reporting related to the recording of depreciation expense on the company's property, plant and equipment, unrealized gains and losses on digital currencies, and share-based compensation. The deferred tax provision recorded by the company in the amended interim statements is a non-cash charge for fiscal 2021 and is recorded on the company's balance sheet as a long-term, deferred tax liability. This deferred tax provision is an estimate of potential future taxes payable with the timing of payment being indeterminable as of Sept. 30, 2021.
The company has sufficient tax attributes available to offset taxable income generated during the nine-month period ended Sept 30, 2021.
As a result of the updates to the amended interim statements, the company had a net loss of $771,154, compared with the previously reported net income of $762,931, for the three months ended Sept. 30, 2021, and had a net loss of $977,046, compared with the previously reported net income of $521,039, for the nine months ended Sept. 30, 2021. Furthermore, at Sept. 30, 2021, total liabilities were $7,501,696, rather than the previously reported $5,493,626, and total shareholders' equity was $66,978,402, rather than the previously reported $68,986,473. The restatements had no impact on the company's record revenue from digital currency mining, gross profit, operating income, earnings before interest, taxes, depreciation and amortization (EBITDA) or adjusted EBITDA for both the three and nine months ended Sept. 30, 2021, on the company's cash flows for the nine months ended Sept. 30, 2021, or on the company's cash or total assets at Sept. 30, 2021.
For more information, please refer to Note 3 and Note 19 of the amended interim statements, where the change is described, as well as the entirety of the amended interim statements and the amended MD&A.
Grant of restricted share units
The company also announces the grant of restricted share units (RSU) to certain officers, directors, management, key consultants and employees of the company.
The company granted an aggregate of 1,424,250 RSUs pursuant to the company's restricted share unit plan. Each RSU entitles the holder thereof to receive one subordinate voting share of the company. The RSUs will vest in three equal tranches, on Jan. 4, 2023, 2024 and 2025.
About Digihost Technology Inc.
Digihost is a growth-oriented blockchain technology company primarily focused on bitcoin mining. Through its self-mining operations and joint venture agreements, the company is currently hashing at a rate of approximately 415 petahashes with plans to expand to a hashrate of 3.6 exahashes by the end of 2022.
We seek Safe Harbor.
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