Company Overview May 2021 - Hut 8 Mining
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Company Overview
May 2021
Disclaimer This management presentation is intended to provide an overview of the business of Hut 8 Mining Corp. (“Hut 8” or the “Company”). This presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or subscribe for securities of the Company or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. Hut 8 has filed a registration statement (including a prospectus) with the U.S. Securities and Exchange Commission (“SEC”) for an offering of securities from time to time (the “Registration Statement”). If the Company were to conduct an offering of securities in the future, it would be made under the Company’s Registration Statement and only by means of a prospectus supplement. Before any investment, you should read the prospectus in the Registration Statement, including, when available, the applicable prospectus supplement for a particular offering of securities, and other documents filed with the SEC for more complete information about the Company and any such offering. In the event that the Company conducts an offering of securities in the future, you may obtain a copy of the prospectus supplement and accompanying prospectus for the offering by visiting EDGAR on the SEC website at www.sec.gov, or by contacting the underwriters of the offering. This presentation includes market share, industry and other statistical information that the Company has obtained from independent industry publications, government publications, market research reports and other published independent sources. Such publications and reports generally state that the information contained therein has been obtained from sources believed to be reliable. Although the Company believes these publications and reports to be reliable, it has not independently verified any of the data or other statistical information contained therein, nor has it ascertained or validated the underlying economic or other assumptions relied upon by these sources. The Company has no intention and undertakes no obligation to update or revise any such information or data, whether as a result of new information, future events or otherwise, except as, and to the extent required by applicable securities laws. Certain statements in this presentation may constitute “forward-looking” statements. When used in or in relation to this presentation, such statements use words including, but not limited to, “may”, “will”, “expect”, “believe”, “plan”, “intend”, “anticipate”, "future" and other similar terminology (including negative variations thereof) and include, without limitation, statements or information with respect to: the Company’s future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), planned expansion and business prospects and opportunities. These forward-looking statements reflect the current expectations of Hut 8’s management regarding future events, operating performance or other achievements, or potential matters relating to any of the foregoing, of the Company, but involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such statements reflect management’s current views and are based on certain assumptions; the reader must take note that there is no certainty that the Company will achieve or undertake any specific activity in respect thereto. They are, by necessity, only estimates of future results, performance, achievements or developments, and the actual results, performance, achievements or developments may differ materially from these statements due to a number of known and unknown factors, uncertainties and risks, including the risks specified in the section entitled "Risk Factors" of the Company's most recently filed Annual Information Form and its other continuous disclosure filings available under its corporate profile on www.sedar.com and on EDGAR on the SEC website at www.sec.gov. Investors are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking information herein is qualified by these cautionary statements, and although any forward-looking information contained herein is based on what management believes are reasonable assumptions, there can be no assurance that actual results or outcomes will be consistent with these forward-looking statements. Any forward-looking statements are made as of the date of this presentation, and, except as may be required by applicable law, the Company does not assume any obligation to update or revise them to reflect new information, events, circumstances or otherwise. The information contained in this presentation, including information related to bitcoin and the cryptocurrency industry generally, is derived from management of the Company and otherwise from publicly available information and does not purport to contain all of the information that an investor may desire to have in evaluating whether or not to make an investment in Hut 8. The information has not been independently verified, which may prove to be imprecise, and is subject to material updating, revision and further amendment. While management is not aware of any misstatements regarding any industry data presented herein, no representation or warranty, express or implied, is made or given by or on behalf of Hut 8 as to the accuracy, completeness or fairness of the information or opinions contained in this presentation and no responsibility or liability is accepted by any person for such information or opinions. No opinion, whether express or implied, is made as to any correlation between the current and historical price of bitcoin and the future financial performance of the Company, nor should any such opinion be inferred.
Disclaimer (cont.)
This presentation may have been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic
transmission. You are responsible for protecting against viruses and other destructive items. Your receipt of this electronic transmission is at your own risk and it is your responsibility to take
precautions to ensure that it is free from viruses and other items of a destructive nature. As a consequence of the above, neither the Company nor any director, officer, employee or agent of any of
them or any affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the presentation distributed to you in electronic format and the hard
copy version that may be made available to you.
The presentation makes reference to certain measures that are not recognized under IFRS and do not have a standardized meaning prescribed by IFRS. They are therefore unlikely to be
comparable to similar measures presented by other companies. The Company uses non-IFRS measures including "EBITDA," “EBITDA margin,” "Adjusted EBITDA," “Adjusted EBITDA margin,”
“Mining Profit,” and "Cost per Bitcoin” as additional information to complement IFRS measures by providing further understanding of the Company’s results of operations from Management’s
perspective.
Throughout this presentation, the following terms are used, which do not have a standardized meaning under IFRS.
EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization)
• “EBITDA” represents net income or loss excluding net finance income or expense, income tax or recovery, depreciation, and amortization.
• “Adjusted EBITDA” represents EBITDA adjusted to exclude share-based compensation, fair value loss or gain on revaluation of digital assets, write-offs, and costs associated with one-time
transactions (such as listing fees).
• “Adjusted EBITDA Margin” represents Adjusted EBITDA as a percentage of revenue.
EBITDA is used to show ongoing profitability without the impact of non-cash accounting policies, capital structure, and taxation. This provides a consistent comparable metric for profitability.
“Mining Profit” represents gross profit (revenue less cost of revenue), excluding depreciation. “Mining Profit Margin” represents Mining Profit as a percentage of revenue. Mining Profit and Mining
Profit Margin show the cash expenses against the revenue without the impact of non-cash accounting policies such as depreciation.
“Cost per Bitcoin” represents cost of revenue excluding depreciation, divided by the number of Bitcoin mined in the period. This metric is commonly referenced in the Bitcoin mining industry and is
important to gain an understanding of the profitability in reference to the price of Bitcoin.Introduction
Jaime Leverton Shane Downey, CPA, CA Sue Ennis
Chief Executive Officer Chief Financial Officer Head of Corporate Development
▪ Seasoned corporate executive with 20+ years of senior ▪ As CFO, Shane is responsible for all financial related ▪ Seasoned business development manager and strategic
leadership experience working in the technology industry operations, including strategic planning, financial advisor to companies operating in the FinTech,
modeling and risk management blockchain and financial services sectors
▪ As CEO, Jaime focuses on improving operational
efficiencies, accelerating growth and driving strategic ▪ Prior to Hut 8, Shane served as the VP of Acquisitions & ▪ As Head of Corp Dev, Sue is responsible for managing
transformation Finance for York Group of Companies, CFO of Polaris investor relations and other strategic corporate initiatives
Infrastructure and was a Managing Director in the
▪ Prior to Hut 8, Jaime served as the Chief Commercial ▪ Previously, Sue served as the SVP of Global Partnerships
Corporate Finance division at BMO
Officer of eStruxture Data Centers at Shyft Network, a blockchain-based credentials
▪ Shane started his professional career as a CPA and verification platform
▪ Jaime received her MBA from Dalhousie University and
worked in the M&A Advisory practices of PWC and KPMG
B.S. from the University of Ottawa ▪ Sue received her B.S. in Political Science from McMaster
▪ Shane earned his Bachelors' degree in Applied University
Economics & Management from Cornell University
4By The Numbers
Company Overview 3,522 209 MW
Total Self-Mined Bitcoin Held(1) Total Contracted Power Capacity(2)
Headquarters: Toronto
Mining Site 1: Medicine Hat, Alberta
1,300 PH/s 1,600 GH/s
Mining Site 2: Drumheller, Alberta
Total Contracted Hashrate Total Contracted Hashrate for
for BTC Mining(3) Ethereum Mining(3)
• Pioneer in cryptocurrency mining
Multiple Revenue Streams
• One of the largest operators in the Western
Hemisphere (109 MW of Installed Power Self-Mining Hosting Interest Income
Capacity)
• Successfully navigated through various market
cycles
• Largest holdings of self-mined BTC of any 1.
2.
Total amount of bitcoin owned as of May 12, 2021, as disclosed in the Company’s Q1 2021 MD&A.
In April 2021, Hut 8 finalized a new power agreement with Validus Power Corp., expanding total power capacity from 109 MW to 179 MW
publicly traded company(4) 3.
by Q1 2022E with an additional 30 MW available for future deployment.
Hut 8 purchased 5,400 M30s mining machines from MicroBT, increasing the Company’s hashrate to 1,300 PH/s by July 2021. The
Company also purchased 10,000 NVIDIA GPUs to mine Ethereum with a payout in BTC. The NVIDIA GPUs are expected to be fully
installed by August 2021 and deliver 1,600 GH/s, which yields a similar daily earning potential as 500 PH/s being utilized to mine Bitcoin
(based on current network dynamics).
4. Based on publicly available corporate filings and press releases through May 2021, Hut 8 has more self-mined BTC than any of its publicly 5
traded digital asset mining competitors, including Marathon, Riot, Argo, Bitfarms and Hive.Investment Highlights
One of the Most Established Digital Asset Mining Operations in North America
Rapidly Expanding Total Mining Capacity and Building a Diversified, Profitable Fleet
Largest Holdings of Self-Mined BTC of any Public Company Worldwide(1)
Diversified Business with Numerous Catalysts Driving Stable Revenue Growth
One of the Most Credible & Complete Management Teams in the Industry
1. Based on publicly available corporate filings and press releases through May 2021, Hut 8 has more self-mined BTC than any of its publicly traded digital asset mining competitors, including Marathon, Riot, Argo, Bitfarms and Hive. 6Growth Through Market Cycles
By August 2021, Hut 8 will have a fully deployed fleet,
With 109 MW of existing power capacity, Hut 8’s current
enabling the Company to mine an expected 10 bitcoins
operations exceed any other publicly traded mining company(1)
per day based on current network dynamics
Power Capacity (MW)(2) Hashrates
209 PH/s (BTC Mining)
GH/s (Ethereum Mining) 1,600
1,300
1,073
144
952
784
109 109
95
2018A 2019A 2020A 2021E 2022E 2018A 2019A 2020A 2021E
Note: Chart above depicts the maximum Hashrate as of the last day in periods 2018-2020A, and the
1. Based on publicly available corporate filings and press releases through May 2021, Hut 8 has more power capacity installed Company’s anticipated maximum implied Hashrate at quarter end upon receiving and installing the
today (109 MW) than any of its publicly traded digital asset mining competitors, including Marathon, Riot, Argo, Bitfarms and Hive. M30S mining machines ordered from MicroBT (all 5,400 expected by July 2021) and 10,000 NVIDIA
2. In April 2021, Hut 8 finalized a new power agreement with Validus Power Corp., expanding total power capacity from 109 MW to GPUs. The NVIDIA GPUs are expected to be fully installed by August 2021 and deliver 1,600 GH/s,
179 MW by Q1 2022E with an additional 30 MW available for future deployment. which yields a similar daily earning potential as 500 PH/s being utilized to mine Bitcoin (based on 7
current network dynamics).Energy Rich Province of Alberta, Canada Offers Significant
Runway To Expand Mining Operations
Alberta, Canada
is a business
friendly Widely available
jurisdiction that real estate for new
is rich in wind facility development
and natural Recent power
gas(1) agreement with
Freezing
Validus nearly
temperatures and
doubles the
high wind optimal
Company’s Total
for crypto mining
Contracted Power
Capacity(2)
1. According to Alberta, Canada’s ”Natural Gas Vision and Strategy” Report, the province produces roughly two-thirds of Canada’s natural gas.
2. In April 2021, Hut 8 finalized a new power agreement with Validus Power Corp., expanding total power capacity from 109 MW to 179 MW by Q1 2022E with an additional 30 MW available for future deployment. 8Scaled, Balanced and Profitable Fleet
One of the world’s largest digital asset mining operations comprised of a diversified, highly profitable fleet of ASICs and
cutting-edge GPUs
Q1 2021 Representative
▪ Proactive fleet management strategy limits capex exposure
Fleet Composition
▪ Diversified portfolio of ASICs and cutting-edge GPUs (# of Mining Units)(2)
▪ 1.3 EH/s and 1,600 GH/s by August 2021(1)
▪ 24/7 on site, in-house fleet services team
10,100
15,000
3,688
4,305
Fully Depreciated Mid-Cycle New Contracted
1. Hut 8 purchased 5,400 M30s mining machines from MicroBT, increasing the Company’s hashrate to 1,300 PH/s by July 2021. The
Company also purchased 10,000 NVIDIA GPUs to mine Ethereum with a payout in BTC. The NVIDIA GPUs are expected to be fully
installed by August 2021 and deliver 1,600 GH/s, which yields a similar daily earning potential as 500 PH/s being utilized to mine Bitcoin
(based on current network dynamics).
2. Representative Fleet Composition is as of Q1 2021. Fleet Composition excludes all miners managed on behalf of Hosting clients.
9We Mine and Hold Bitcoin Long-Term
Hut 8 owns more self-mined bitcoin than any other publicly traded company worldwide(1)
BTC Holdings Market Value of BTC Holdings (in $ CAD millions)
$74,091
BTC Holdings BTC Holdings ($ in CAD millions)
3,271 (2)
BTC Price ($ in CAD)
2,989
$242.4
2,615
$9,135
$8,991
$5,486
891
$27.3
$14.3
$8.0
Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2018 Q1 2019 Q1 2020 Q1 2021
1. Based on publicly available corporate filings and press releases through May 2021, Hut 8 has more self-mined BTC than any of its publicly traded digital asset mining competitors, including Marathon, Riot, Argo, Bitfarms and Hive.
2. Historical BTC market prices have been sourced from Hut 8’s quarterly earnings and MD&A filings. 10Our Growth Strategy
Expand Power Grow and
Capacity Optimize Fleet
Scale Broaden
Hosting Digital Assets
Services That We Mine
and Hold
Generate Yield on Holdings
11Strategic Opportunities and Partnerships
Hut 8 is uniquely positioned to capitalize on several of growth initiatives in collaboration with its strategic partners
Advancing ESG
Objectives
Diversify Revenue ▪ Focus on sustainable
Streams mining practices
▪ Hired Head of Power
Improve Mining and Sustainability and
▪ 4% yield on BTC holdings established a diverse
Efficiency
loaned to Galaxy Digital and board of directors
Expand Total Addressable Genesis Mining
▪ Hut 8 and Validus are
Market ▪ Using Luxor’s proprietary ▪ Expand hosting capabilities exploring co-
technology, Hut 8 plans to
development of
Maximize Hashrate earn revenue from
industrial-size, mobile
Rewards ▪ Leverage Nvidia GPUs Ethereum block reward,
energy generation
to mine Ether and transaction fees and Miner
platform
participate in the DeFI Extractable Value
▪ Joined Foundry USA, market opportunity ▪ Luxor partnership also
North America’s largest
enables Hut 8 to mine
mining pool, and
Ethereum with payout in
reduced fees by 90%
BTC – a more cost-effective
BTC mining strategy
12Experienced Management Team
Blue-chip management team with extensive experience and technical expertise involving cloud and data center
management, complex computing, operations, finance as well as the broader Power, Energy and Infrastructure industry
Jaime Leverton Shane Downey Jason Zaluski Ronnie Yu Sue Ennis Tanya Woods
CEO CFO Head of Head of Power & Head of EVP of
Technology Sustainability Corporate Regulatory
Development Affairs
Prior Experiences:
13Financial Highlights
Financial Highlights
Bitcoin Mined
BTC Mined Avg. BTC Price BTC halving event
▪ Significant leverage to rising bitcoin prices 2,816
$57,301
2,405
1,965
▪ Commitment to diversification:
1,432
1,116 $23,098
– Generating yield on holdings 795 $14,156
515 539
372
– Hosting line of business $10,583 $11,064 $12,025
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2019 2019 2019 2019 2020 2020 2020 2020 2021
Total Revenue Mining Profit(1)
($ in CAD millions) BTC halving event Mining Hosting Yield $32.5 ($ in CAD millions) BTC halving event
$28.3 $26.8 1.4
$17.9
$15.4 $16.0
$14.9
$12.1 $12.7 $13.1 30.6
$9.2 1.3
$5.8 $3.8
0.5 11.8 $2.4
5.3 $0.1 $0.6
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 ($0.5)
2019 2019 2019 2019 2020 2020 2020 2020 2021 ($2.1)
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2019 2019 2019 2019 2020 2020 2020 2020 2021
Note: All financial data above has been sourced from Hut 8’s quarterly earnings and MD&A filings. 1. Mining Profit represents gross profit (revenue less cost of revenue), excluding depreciation. 15
Note: Figures above, except for Bitcoin mined, are in CAD $.Balance Sheet and Capitalization
Balance Sheet Summary ($ in CAD millions) Capitalization Structure – As of May 12, 2021
($ in CAD millions) Dec 31, 2020 March 31, 2021
Shares Outstanding: 119,513,437
Cash $2.8 $39.8
Options Outstanding:
Digital Assets Held In Custody 102.0 168.3 606,667
(Avg. Exercise Price $4.92 CAD)
Digital Assets, Loan Receivable - 74.1
Warrants Outstanding:
Long-Term Assets 39.9 55.0 10,537,377
(Avg. Exercise Price $4.26 CAD)
Total Assets $145.2 $339.8
Restricted Share Units
1,858,334
Outstanding:
Total Liabilities 29.6 23.0 Deferred Share Units
127,500
Outstanding:
Shareholder’s Equity 115.6 316.8
Total Liabilities &
$145.2 $339.8
Shareholder’s Equity
Note: All financial data above has been sourced from Hut 8’s Q1 2021 MD&A filing. 16Thank You!
✓ Digital Assets Mining Pioneer
✓ Scaled, Modern, Diversified Fleet
The Most ✓ Diversified Business with Numerous Catalysts Driving Stable Revenue Growth
Experienced &
Innovative Digital
Asset Miner in the
Western Hemisphere ✓ Most Credible & Complete Management Team in the Industry
✓ Committed to ESG; Established a Diverse Board & Appointed a Head of Power & Sustainability
17APPENDIX
Board of Directors
Bill Tai Jaime Leverton Joe Flinn Alexia Hefti Jeremy Sewell
Chairman of Board CEO Board Director Board Director Board Director
Highly successful venture 20+ years of senior Joe Flinn is the CFO of Alexia Hefti is the CEO of Jeremy Sewell is a widely
capitalist with 20+ start-up leadership experience Seaboard Transport eGovern, a UAE-based accomplished commercial,
companies becoming working in the technology Group, An industry leader company that works with financial and operating
publicly listed companies industry in bulk petroleum and governments and executive with significant
chemical transportation corporations to assist them digital asset industry
Among first investors in Prior to Hut 8, Jamie served
services in implementing blockchain experience
Canva, Color Genomics, as the Chief Commercial
solutions
Dapper Labs, Safety Officer of eStruxture Data Previously, Joe served as Jeremy served as the
Culture, Twitter, Wish.com Centers the CFO of Sysco Canada Alexia also co-founded former CFO at Bitfury
and Zoom and was the President of Deloitte’s blockchain tax Group and eCurrency
MBA from Dalhousie
Clarke Freight practice in Canada and
Co-Founder and Chairman University and B.S. from the MBA from Stanford
Transportation Group Dubai and is a lawyer
of Treasure Data, University of Ottawa University
qualified to practice in New
iAsiaWorks and Ipinfusion
York
MBA from Harvard Business
School
19HOW A BITCOIN TRANSACTION WORK
Someone requests a Transaction broadcasted to Miners verify the
transaction P2P computers (Nodes) transaction
Transactions combined to New block added to Transaction is
form a data block existing Blockchain complete
20THE BITCOIN ECOSYSTEM ENGINE
A system that adds transactions
A computer designed to solve
& provides security to the Bitcoin
MINING blockchain; how new bitcoins A MINER a mathematical algorithm
(i.e. the Bitcoin code)
enter the market
HOW IT WORKS
Bitcoin transactions are Once a block is formed, Once solved, the The new block of For solving the puzzle,
pooled together in a miners compete to solve transactions are verified transactions is miners are rewarded
“block” & encrypted by the puzzle “verified” by the attached to a chain of with Bitcoin
a complex puzzle network prior blocks, hence
Difficult to solve, yet “blockchain” Currently, 6.25 BTC per
simple to verify block/ Blocks are
(Sudoku) solved, on avg., every
10 min.
21THE PATH TO PROFITABLE MINING
Power Costs of
(hashrate) Production
ANNUAL MINING PROFITABILITY
= [( )] – [( ) ( )]
Hut 8’s
Hut 8’s hashrate
Network hashrate )( )(
x
Priceof
BTC
x 6.25
block reward )(
x
52,560
blocks/year
Priceof
miners
+
Cost of
electricity )(
+ corporate
expenses*
* Rent, employees, public company expense,etc.
• Network hash rate
• Its hash rate HUT 8
HUT 8 • Price of BTC
• Cost of electricity DOESN’T
CONTROLS • Block reward & # of blocks/year
• Corporate expenses CONTROL • Price of miners
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