Hut 8 Corp. (NASDAQ: HUT) (TSX: HUT) signed a four year deal with junior bitcoin miner Ionic Digital to provide managed services across all of its Bitcoin mining operations.
The company said on Thursday that this includes Ionic’s existing facilities in Midland, Texas, and both the development and operation of its Cedarvale site in Ward County, Texas. The company anticipates being able to reach approximately 240 megawatts between the two sites. Meanwhile, Hut will also continue to host 8,500 of Ionic miners at its alpha site in Niagara Falls, New York.
Managed services consists of the daily logistics and management duties includes design and development, engineering, financial modelling and budgeting and more. When the fleet reaches full capacity, it will be able to achieve a hashrate of 12.7 EH/s, which wouldn’t exactly make it a competitor with the biggest names in the sector—those being Hut 8, Marathon Digital Holdings (NASDAQ: MARA) and others—but should be enough to pull in enough BTC to make it worthwhile.
“Our managed services offering is distinct within the industry and ultimately differentiated Hut 8 as the best partner to manage Celsius’ mining operations through Ionic Digital,” Jaime Leverton, CEO of Hut 8, said.
“We have been designing Ionic’s Cedarvale site since signing the interim management agreement in December and are thrilled to have construction underway and be actively managing the company’s mining operations.”
Part of the deal includes a contribution agreement in which Hut 8 gets 374,261 shares of Ionic Digital stock for approximately 6.3 million by May 31, 2024 or when Ionic registers with the U.S. Securities and Exchange Commission before going public.
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Ionic Digital arrives with positive cash position and no debt
Established on Thursday, Ionic Digital acquired 127,000 bitcoin mining machines as part of bankruptcy proceedings with Celcius Mining LLC. This bumped its mining infrastructure by 87 MW across four facilities. The transaction comes in addition to the deal with Hut 8.
Ionic Digital held a valuation of approximately $740 million on a net asset basis under the Celsius chapter 11 plan. Furthermore, the Celsius plan also came with USD$225 million in cash with no post-acquisition debt hangover.
“With our substantial mining fleet and infrastructure managed in our partnership with Hut 8, seasoned leadership team, and strategic vision, Ionic Digital is ready to make an impact as a leading bitcoin miner,” said Matt Prusak, CEO of Ionic Digital.
“We want Ionic to be a company that believes in transparency and doing what is right for our shareholders. Our focus is on turning energy into value, reliably and responsibly.”
Ionic Digital plans to do business in Texas to take advantage of the state’s crypto-friendly policies as well as its energy market. The company also intends to lower its energy costs while maintaining compliance with the standards of the Electric Reliability Council of Texas (ERCOT), and also get involved in energy management programs.
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