Mr. Shane Downey reports

HUT 8 ACHIEVES SECOND CONSECUTIVE RECORD-LEVEL QUARTERLY REVENUE IN Q2-2021

Hut 8 Mining Corp. has released its financial results for the quarter ending June 30, 2021.

Bitcoin inventory and value

Hut 8 continues to strategically emphasize its hold strategy, taking active steps to generate Canadian and U.S. dollars to help finance operating expenses, so as to avoid selling bitcoin. During the second quarter of 2021, 100 per cent of self-mined bitcoin was deposited into custody. As of June 30, 2021, the company had a total bitcoin balance of 3,824 with a market value of $166-million. Hut 8's current bitcoin balance, including 2,000 bitcoins loaned as part of the company's fiat yield strategy, is approximately 4,240 bitcoins, reflecting a market value of approximately $245-million.

Hash rate and computing power

Hut 8 currently has an installed hash rate of 1.37 exahashes (E/H). Given pending orders, the company has additional contracted hash rate of 1.3 E/H (including 1,600 gigahash equivalent), bringing contracted hash rate to approximately 2.7 E/H.

Based on current network dynamics, the company anticipates0 daily settlement once all contracted equipment is hashing will equate to 20 to 25 bitcoins per day.

Q2 2021 highlights:

• Second consecutive record quarterly revenue, hitting $33.5-million in Q2 2021, with the company's self-mining operations generating $31.4-million of revenue and the company's expanded hosting service generating $2.2-million. The company mined 553 bitcoins in Q2 2021, all of which was added to the company's self-mined bitcoin balance.
• The company successfully became the first Canadian digital asset miner to list its common shares on the Nasdaq. Further, Hut 8 is the only Toronto Stock Exchange-listed miner to achieve listing on the Nasdaq Global Select Market, which has the highest initial financial and liquidity requirements of any Nasdaq market tier. This achievement gives the company access to a substantially increased pool of investors, both for purposes of future capital raises and providing improved liquidity to current and future shareholders.
• Hut 8 closed a public offering on June 15, 2021, raising gross proceeds of $115-million, providing flexibility in the face of market uncertainty for the company to continue making strategic investments, summarized as follows:
  • Two opportunistic purchases directly from MicroBT of 11,953 M30S, M30S+ and M31S miners, representing compute power of 1.08 E/H;
  • Investment in 10,000 high performance Nvidia CMPs, which will initially be deployed to mine the ethereum network and settle in bitcoin. These Nvidia chips, delivery of which is expected to occur throughout August and September, 2021, will consume only 3.5 to 4.0 megawattts of power, while operating at approximately 1,600 gigahashes. The company anticipates settlement in bitcoin will result in 2.0 to 3.0 bitcoin per day;
  • Investment into the power purchase agreement (PPA) and new power facility with Validus Power Corp. The initial phase of this facility is currently expected to be operational late in the fourth quarter of 2021 and will substantially increase Hut 8's power capacity on a physical offtake basis at a compelling power rate of 2.74 cents per kilowatt-hour, subject to an annual adjustment mechanism, for the five-year term of the PPA.
• The company launched several ESG-related (environmental, social and corporate governance) initiatives, including establishing a robust recycling program to limit waste volumes sent to landfill, installation of low-emission LED (light-emitting diode) lighting throughout all facilities and electrification of the company's fleet of on-site vehicles.

"It is gratifying to see the core strengths of Hut 8, namely our people and operational excellence, combine to advance our commitment to building a diversified leader in the digital asset infrastructure space," commented Shane Downey, chief financial officer of the company. "Hut 8's disciplined approach to managing our balance sheet, while prioritizing the efficient accumulation of bitcoin, served us well in Q2 2021, and that as we continue to focus on execution, we are well-positioned heading into the back half of 2021 and into 2022."

                              OPERATING AND FINANCIAL OVERVIEW
                          (in thousands, except per-share amounts)   
   
                                                                 For the periods ended June 30
                                            Three months ended                Six months ended
                                          2021            2020            2021            2020
Operating results
Digital assets mined                       553             795           1,092           1,910
Financial results
Total revenue                          $33,549          $9,230         $65,532         $21,970
Net income (loss)                      (20,430)          2,840          15,094          (7,390)
Mining profit                           19,144             697          37,086             995
Adjusted EBITDA (loss)                  14,356              65          30,608            (322)
Per share
Net income -- basic (loss)               (0.17)           0.03            0.13           (0.08)
Net income -- diluted (loss)             (0.16)           0.03            0.12           (0.08)

• Revenue for Q2 2021 of $33.5-million was up significantly versus $9.2-million in the prior-year period. This result stems from 553 self-mined bitcoins generating $31.4-million of revenue, compared with 795 bitcoins and $9.2-million revenue from mining in the prior-year period. The company also generated $2.2-million of revenue from hosting services, versus nil in the prior-year period, reflecting two hosting customers, the second of which was on-boarded in late May, 2021.
• Site operating costs for Q2 2021 were $13.8-million, up from the prior-year period of $9.2-million, related principally to increased power consumption, driven by a substantial increase in average hash rate as well as Alberta power prices.
• Net loss in Q2 2021 was $20.4-million, versus net income of $2.8-million in Q2 2020, with the difference stemming primarily from unrealized revaluation adjustment related to a change in loan receivable classification.
• Adjusted EBITDA in Q2 2021 was $14.4-million, versus $100,000 in the prior-year period, driven by the expansion of Hut 8's operations and the improvement in bitcoin mining economics.
• Digital assets consist of bitcoin, which had a self-mined balance of 3,824 bitcoins and a market value of $166-million as of June 30, 2021. This balance consisted of 1,824 bitcoins held in custody and 2,000 held under lending arrangements.

About Hut 8 Mining Corp.

Hut 8 is one of North America's largest innovation-focused digital asset miners, supporting open and decentralized systems since 2018. Located in energy-rich Alberta, Canada, Hut 8 has one of the highest installed capacity rates in the industry and holds more self-mined bitcoin than any crypto miner or publicly traded company globally. Hut 8 is executing on its commitment to mining and holding bitcoin, and has a diversified business and revenue strategy to grow and protect shareholder value regardless of bitcoin's market direction. The company's multipronged business strategy includes profitable digital asset mining, white-label high-performance compute hosting, as well as yield and income programs leveraging its bitcoin held in reserve.

We seek Safe Harbor.