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Sunday, Feb 25, 2024
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.


Hut 8 Mining closes merger of equals with US data mining company

The new company can access approximately 825 MW of gross energy, distributed across six operational sites

Hut 8 Mining closes merger of equals with US data mining company
Photograph of a Bitfury BlockBox AC mining datacenter at Hut 8 in Medicine Hat, Alberta. Image via Curtis Huisman via Wikimedia Commons.

Hut 8 Mining Corp. (NASDAQ: HUT) (TSX: HUT) closed its merger with U.S. Data Mining Group, US Bitcoin Corp (USBTC) in an all-stock merger of equals.

The combined company said on Thursday that its new name will be Hut 8 Corp and it will be a U.S. based entity.

The transaction will cause Hut 8 common shares to stop trading on Nasdaq and the Toronto Stock Exchange before the opening of trading on December 4, 2023. After which, shares of the new combined company will take over under the symbol HUT.

Shareholders of Hut 8 get 0.2 of a share of the combined company’s common stock for each Hut 8 share they hold, effectively consolidating the Hut 8 shares on a 5 to 1 basis. Stockholders of USBTC will receive 0.6716 of a share of the new issue for each share of USBTC capital stock they hold.

“This business combination is the largest M&A transaction that has ever transpired within our industry and represents a highly strategic union of two organizations with complementary strengths, that together, will prove to equal more than the sum of their parts,” said CEO Jaime Leverton.

“We are excited to move forward and continue growing, with a pipeline of greenfield and brownfield opportunities, integration across the mining value chain, leading operational leverage and expertise, and diverse and uncorrelated fiat revenue streams.”

The new company can access approximately 825 megawatts (MW) of gross energy, distributed across six operational sites where it engages in Bitcoin mining, as well as hosting, and managed service operations.

It operates self-mining facilities with an installed capacity of 7.5 Exahash per second (EH/s) at six sites spread out across the United States and Canada. The company also exclusively owns 50 per cent of the 1.7 EH/s self-mining production at a site in King Mountain, Texas through its membership in the King Mountain JV, a partnership it shares with a prominent energy company.

The company also manages 220 MW of hosting infrastructure, powered by a range of energy sources, including wind and nuclear. This infrastructure serves a multitude of clients, including some of the industry’s largest miners.

Beyond that, the new combined company’s managed services division oversees 680 MW of energy, drawn from various sources, including renewables and zero-emission alternatives. These services are spread across locations in Kearney, New Brunswick, as well as Granbury and King Mountain, Texas.

This offering provides Bitcoin mine site owners with the opportunity to have experts handle day-to-day operations, hosting, site management and maintenance, all facilitated by purpose-built site management software.

Read more: Hut 8 Mining proposes merger with U.S.-based data and Bitcoin mining group

Read more: British Columbia’s top court gives the nod to Hut 8 and US Bitcoin merger

Bitcoin miners are preparing for the halving

The countdown to the Bitcoin halving is on and it registers approximately 140 days away on April 19, 2024.

The Bitcoin halving is a pre-programmed event that occurs approximately every four years, or after every 210,000 blocks mined on the Bitcoin blockchain. During a halving, the reward that miners receive for validating and adding new transactions to the blockchain is cut in half.

This reduction in the mining reward is designed to limit the supply of new Bitcoins entering circulation, making it harder to mine and helping to control inflation. As a result, Bitcoin halvings are seen as a significant event in the cryptocurrency world, often leading to increased attention, speculation and potential effects on the price of Bitcoin due to the reduced rate of supply growth.

Typically these events include a vast price increase over the next year or so of production.

Bitcoin mining chart showing price fluctuations throughout its history. Noteworthy are 2017 and 2021. Image via Coingecko.

 The last halving happened in 2020 with the one before it being 2016.

Bitcoin miners ramp up their equipment and power purchases the months leading up to Bitcoin’s halving, reducing their overhead costs by purchasing the best equipment and ensuring their electrical bills are the lowest by adding technology like immersion tanks when they’re not operating in a colder climate.

Riot Platforms (NASDAQ: RIOT) signed a purchase agreement with application-specific integrated circuit (ASIC) manufacturer, MicroBT for an order of 33,280 Bitcoin miners to help build out its Bitcoin mining facility at Corsicana, Texas.

The order replaced 6,000 older miners with newer, upgraded models. When the order is full, Riot expects its total self-mining hash rate will be over 20.2 exahash per second (EH/s).

Not to be outdone, Marathon Digital Holdings (NASDAQ: MARA) introduced its second international deployment with a 27 MW Bitcoin mining project in Paraguay earlier this month. It is completely powered by hydroelectric energy from the country’s Itaipu Dam.

Marathon and Paraguay energy firm, Penguin Group will collaborate to bring the full 1.1 EH/s online in the coming months through a joint venture structured in two stages.

The first stage, expected to be operational in November, will utilize seven MW to power approximately 0.3 EH/s of Marathon’s miners. The second phase, set to come online in 2024, will use 20 MW to power approximately 0.8 EH/s of Marathon’s miners.

Marathon presently employs 19.2 EH/s of operational hashrate.


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