Mr. Jimmy Vaiopoulos reports

HUT 8 REPORTS THIRD QUARTER 2020 FINANCIAL RESULTS

Hut 8 Mining Corp. has released its financial results for the third quarter ended Sept. 30, 2020.

Q3 2020 highlights:

• Quarterly revenue of $5.8-million with mining profit margin of negative 37 per cent;
• Revaluation gain related to Hut 8's bitcoin holdings of $5.6-million for the quarter with a bitcoin price at quarter-end of $10,788 (U.S.);
• Net loss of $900,000 and negative adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $2.9-million;
• Renegotiated key terms with lender to provide more downward flexibility with bitcoin collateral and saving Hut 8 nearly $500,000 per year in interest expense;
• Hosting revenue of $500,000 from Hut 8's first hosting client with six megawatts of latest-generation bitcoin mining equipment;
• Transferred the management of site operations from Bitfury to Hut 8, providing savings of over $1.5-million per year;
• Made a bitcoin equipment order for 275 petahashes per second, of which 154 petahashes per second using 6.7 megawatts were installed this quarter, with the remainder expected to be installed by the end of 2020;
• Hut 8 became the first company to enter and exit the Toronto Stock Exchange Sandbox successfully, which solidifies its place as a TSX issuer.

Q3 2020 overview

Q3 2020 was the first full quarter after the bitcoin halving, where bitcoin production was cut in half while the network hash rate continued to rise, making it one of the most difficult periods for bitcoin miners to operate. To put this into context, it became 140 per cent more difficult to mine for a bitcoin from just before the halving in May, 2020, to Sept. 30, 2020, while the bitcoin price increased by 9 per cent in that same period. The economics of mining bitcoin have significantly improved subsequent to Q3 2020.

Hut 8 also recognized $500,000 of hosting revenue after signing up its first client with six megawatts of latest-generation bitcoin mining equipment. This is a new revenue stream for Hut 8 and provides consistent recurring revenue with its available electrical capacity and existing infrastructure.

Hut 8 has continued to find ways to reduce costs in Q3 2020 through many successful initiatives in the quarter. In July, 2020, the company renegotiated its credit facility terms with Genesis Global Capital LLC and successfully reduced the interest rate from 9.85 per cent to 8.00 per cent per annum, saving approximately $500,000 per year.

Another initiative during Q3 2020 was that Hut 8 transferred the Clarke chips from its Drumheller facility to Medicine Hat, which brought together Hut 8's higher efficiency chips with its best electricity pricing at Medicine Hat. Also, Hut 8 completed the transfer of the management of operations of both the Medicine Hat and Drumheller facilities from Bitfury to Hut 8, providing for savings of over $1.5-million per year. With full control over the sites, Hut 8 will continue to streamline operations while maintaining the highest industry standards.

Hut 8's strategy of mining and holding bitcoin continued to pay off as there was a $5.6-million gain on the remeasurement of bitcoin holdings in Q3 2020. Additionally, by only strategically selling bitcoin at higher prices, Hut 8 recorded a $200,000 gain on the use of digital assets. Over all, for Q3 2020, Hut 8 recorded a net loss of approximately $900,000 and a negative adjusted EBITDA of $2.9-million.

More than halfway through the quarter, Hut 8 completed the installation of 1,000 M31S and 1,000 M31S Plus mining equipment at its Medicine Hat facility. The equipment collectively increased Hut 8's mining power by approximately 154 petahashes per second using 6.7 megawatts of power. The remainder of the equipment purchase, which consists of 1,590 M30S units, is expected to be shipped late November, 2020, and will provide an additional 140 petahashes per second using approximately 5.3 megawatts.

Hut 8 also achieved a milestone when it became the first company to successfully exit the TSX Sandbox, which solidifies Hut 8 as a TSX-listed issuer. Hut 8 was also the first issuer to be listed to the TSX through the TSX Sandbox and has been trading on the senior TSX since early October, 2019.

This release should be read in conjunction with the company's unaudited condensed consolidated interim financial statements and corresponding management discussion and analysis for the three and nine months ended Sept. 30, 2020, filed on SEDAR and posted on the company's website.

About Hut 8 Mining Corp.

Hut 8 is a bitcoin mining company with industrial-scale operations in Canada. Hut 8 creates value for investors through low production costs and appreciation of its bitcoin inventory. The company provides investors with direct exposure to bitcoin without the technical complexity or constraints of purchasing the underlying cryptocurrency. Investors avoid the need to create on-line wallets, wire money offshore and safely store their bitcoin.

The company's common shares are listed under the symbol HUT on the TSX and as HUTMF on the OTCQX Exchange.

We seek Safe Harbor.