COMPANY OVERVIEW TSE Ticker: HUT.TO - OTCQX: HUTMF April 2021 - Hut 8 Mining
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COMPANY OVERVIEW TSE Ticker: HUT.TO April 2021 OTCQX: HUTMF
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. 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. 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.
This presentation does not constitute an offer to sell or a solicitation of an offer to buy any securities of Hut 8 in the United States. The securities of Hut 8 have not been, and will not be, registered under the
United States Securities Act of 1933, as amended, or any state securities laws, and such securities may not be offered or sold in the United States or to U.S. persons unless registered or exempt therefrom.
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.
2
Disclaimer (CONT’D)
This presentation and its contents are confidential and are being supplied to you solely for your information and may not be reproduced, further distributed or published in whole or in part by any other
person. Neither this presentation nor any copy of it may be taken or transmitted into or distributed in any other jurisdiction which prohibits the same except in compliance with applicable laws. Any failure to
comply with this restriction may constitute a violation of applicable securities law. Recipients are required to inform themselves of, and comply with, all such restrictions or prohibitions and the Company
does not accept liability to any person in relation thereto. By receiving a copy of this presentation, you hereby agree to be bound by the foregoing provisions.
The presentation presents certain non-GAAP (“GAAP” refers to Generally Accepted Accounting Principles) financial measures to assist readers in understanding the Company’s performance. These non-
GAAP measures do not have any standardized meaning and therefore are unlikely to be comparable to similar measures presented by other issuers and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with GAAP. Management uses these non-GAAP measures to supplement the analysis and evaluation of operating performance.
This presentation presents certain non-GAAP (“GAAP” refers to Generally Accepted Accounting Principles) financial measures to assist readers in understanding the Company’s performance. These non-
GAAP measures do not have any standardized meaning and therefore are unlikely to be comparable to similar measures presented by other issuers and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with GAAP. Management uses these non-GAAP measures to supplement the analysis and evaluation of operating performance.
The following terms are used, which are not found in the Chartered Professional Accountants of Canada Handbook and do not have a standardized meaning under GAAP.
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.
3
CAPITAL
OTCQX: HUTMF
Company Ticker:
TSX: HUT
MARKETS
52 Week Low/High: 0.51-15.98
Shares Outstanding: 119,513,437
PROFILE
Warrants: 10,537,377
Options: 643,334
RSU’s: 1,858,334
BTC on Balance Sheet: 3233 as at March 24, 2021
4
Chief Executive Officer
JAIME LEVERTON
• MBA with a concentration in Marketing • Telfer School of Management Award for
Informatics Private Sector Leadership in Advanced
Technology
• 20 years working in Technology (IBM, Bell,
BlackBerry, National Bank, Cogeco Peer 1, • Infrastructure Masons: Champion of the
eStruxture) Global Digital Infrastructure Industry
• Career primarily focused on Strategic • Claim to Fame: Brokering deals, opex &
Transformation & High Growth Initiatives distressed asset turnaround &
transformation for $1B+ market cap
• Women in IT Channel Hall of Fame enterprises.
5
EXECUTIVE TEAM
SHANE SUE JASON TANYA MELINA JAMES
DOWNEY ENNIS ZALUSKI WOODS NERON CRESSWELL
CFO Head of Investor Head of Technology General Counsel, EVP of Human Resources Head of Site Operations
Chartered Professional Relations & Corporate Experienced Technologist & Regulatory Affairs Human Resources manager Construction and industrial
Accountant and experienced Development Strategist. Specialization in BA, LLB, LLM, LLM; award- with 10+ years of professional maintenance management
public company CFO in Chartered Investment cryptocurrency mining winning specialist experience. specialist
renewable energy sector; Manager; Financial Services, facilities and blockchain in Technology, Global Trade,
Background in cross-border Emerging Technology, and infrastructure services. and IP Law; Co-founded
M&A both in principal and Canada's first trade
Innovation champion. Over
advisory capacities; Seasoned 12+ years in partnership & association for blockchain and
corporate lender with relationship development in crypto; advisor to UNESCO,
experience across multiple Financial Services, Asset ISO, and former Government
sectors Management, Blockchain and of Canada and Ontario
Crypto currency. Securities Commission crypto
advisor.
6
BITCOIN ADOPTION IS ACCELERATING
PayPal launches new
service enabling
cryptocurrency as a
funding source for its 26
million merchants
(October 2020)
Insurance giant
MassMutual buys
$100 Million worth of
bitcoin
“I like bitcoin even more now than I did then. I think we are in – Paul Tudor Jones
the first inning of bitcoin, & it’s got a long way to go.” October 2020
7
CURRENT
Medicine Hat Drumheller
Self-mining2 Hosting Self-mining TOTAL
ASSET
Blockbox AC 48 8 44 100
Installed Power1 57 MW 9 MW 43 MW 109 MW
BASE
Hashpower1 735 PH/s N/A 338 PH/s 1073 PH/s
1. Figures reflect full operational capacity. Actual figures vary daily based on optimizing efficiency from the price of bitcoin,
mining difficulty and electricity costs, which are dynamic and move frequently. In addition, BlockBoxes may be
temporarily placed in standby mode for normal maintenance.
2. Includes M31S and M31S+ installed in September 2020, does not include M30S ordered.
8
Highest amount of self-mined Bitcoin
1 of any publicly traded company
Most robust management team
2 in the crypto mining space
INVESTMENT 3
Cutting edge diversified fleet of
HIGHLIGHTS
mining equipment: ASIC & GPU
Strategy for success, and proven revenue
4 generation, regardless of Bitcoin market cycle
Power capacity expansion
5 with a focus on ESG
9EQUIPMENT FLEET PHILOSOPHY
OUR • Often miners end up chasing giant capital balloons to roll over
equipment when bitcoin economics change
ADVANTAGE: • Our philosophy is regular equipment refresh cycle; Avoid chasing
giant capital balloons to roll over entire fleet; Refresh 25% every 6-
12 months based on Bitcoin economics
Proactive Fleet • Reduces our exposure to equipment supply/demand constraints
Management, Road Map • Hut8 reduces our capital expenditure risk with a well-balanced
& Equipment Refresh portfolio of cutting-edge new equipment but also profitable older
Cycle equipment
10EXPERIENCED EQUIPMENT MANAGERS
Solid, 3+ years Different operational 24/7 repair & services Best-in-class mining On-site repair &
managing our fleet modes allow for personnel on the equipment to proximity of locations
hands-on proactive management ground maximize compute per
of maximum output, per megawatt
machine, given mining
economics.
11LOCKED-IN, LOW COST OF
ELECTRICITY ADVANTAGE
Positive
10-yr
working
electricity supply
Medicine Hat, agreement &
relationship with
Alberta government &
land lease
community
Abundance of Freezing cold
gas, wind, & temperatures &
green energy high winds
12GROWTH STRATEGY
Purchased Nvidia Cutting Edge GPU Miners
1 2
Joined Foundry Mining Pool; reduced costs by 50%;
access to Miner Treasury Management Services; to mine Ethereum & participate in profitable
generate yield, high-security custody; derivative products DeFI space with a payout in Bitcoin
4% yield on 1,000 BTC
(3012 Bitcoin on balance) 6 3 New equipment install-attained goal
of 1.0E/H; on track for 1.3 E/H Q2
Full fleet of equipment mining & in
the money & dynamic fleet upgrade 5 4 Power expansion to 100MW with
optionality to scale further Q4 2021
13ESG INITIATIVES
ESG investing by Only female
institutional investors CEO in the bitcoin
has increased by 34% mining industry, Disruptive ESG
globally since 2014, top 20 in the Energy power MOU
over $30trillion commodity industry signed & under
invested in ESG as a whole exploration
Looking to
Research has proven
Diverse bring on a Head
an increase in diversity
leadership of Sustainability
=19% higher revenue
team within the next
driven by innovation
60 days
14Power agreement will enable Hut 8 to
01 initially secure up to 100MW of new
power from the project on a physical off-
take basis at highly competitive pricing
HUT 8 FINALIZES KEY
POWER PURCHASE Agreement includes significant optionality to
AGREEMENT THROUGH
expand Hut 8 Mining operations if the Company
02 decides to scale beyond the first 100MW; the
anticipated commercial operation launch date of
PARTNERSHIP WITH an initial 35MW is early Q4, 2021
VALIDUS POWER Portion of the energy production for the project
will be generated from captured waste gas and
03 converted to electricity by leveraging cutting-edge
mobile power plant solutions to be provided by
Validus Power Corp., which will support and
advance Hut 8's long-term ESG objectives
15HUT 8 BUYS $30M WORTH OF
NVIDIA'S CUTTING-EDGE
CRYPTOCURRENCY MINING GPU'S
Opportunity &
Ability to flexibility to
Adds
mine alternative participate in the
approx.
blockchain; DeFi market;
1600GH to
Ethereum, with a currently $39.83B in
existing
payout in locked value &
capacity
Bitcoin interest yields of up
to 50% (source)
16BOARD OF DIRECTORS
BILL TAI CHRIS ELDREDGE JOE FLINN JAIME LEVERTON SANJIV SAMANT JEREMY SEWELL
Chairman Director Director Director Director Director
Bill Tai is a venture capitalist & Chris Eldredge is the former Joseph Flinn joins Hut 8 Jaime Leverton is a highly Sanjiv Samant is a Managing Jeremy Sewell is an
also the Founding president & CEO of DuPont following 12 years of senior accomplished technology Partner at Round13 Capital accomplished & experienced
Chairman of Treasure Fabros Technology (“DFT”), a leadership at Sysco executive & industry thought where he founded & runs the international commercial,
Data successfully acquired by NYSE listed data center Corporation, where he played leader with a long history of Round13 Growth Fund, financial & operating
ARM Corp; Founding Chairman focused real estate investment an integral role as both Chief driving high growth mandates. focused on investing in later executive, with extensive
of IPInfusionTokyo:4813, trust. While in this role, Mr. Financial Officer of Sysco With more than 20 years of stage Canadian growth digital asset industry
Founding Chairman & Eldredge repositioned the Canada, & President of Sysco leadership in the Canadian opportunities in technology & experience with former CFO
CEO iAsiaworks (IPO via company & established its Canada’s Eastern Division, & 2 technology industry, she joined healthcare. roles at Bitfury Group &
Goldman Sachs & Morgan expansion strategy which years as President of Clarke Hut 8 from her most recent Silicon Valley CBDC platform
Stanley) & past Board Director eventually led to its sale to Freight Transportation Group, role as the Chief Commercial fintech innovator eCurrency.
of 8 publicly listed companies. Digital Realty Trust for US$7.9 a major national freight carrier. Officer at eStruxture Data His career also covers audit ,
billion. Centers. compliance & governance
expertise as a UK qualified
accountant with 10 years in
public practice in London.
17APPENDIX
18HOW 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
19THE BITCOIN ECOSYSTEM ENGINE
A system that adds transactions
A computer designed to solve a
& provides security to the Bitcoin
MINING blockchain; how new bitcoins AMINER 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 transactionsis miners are rewarded
“block” & encrypted by the puzzle “verified” by the attached to a chain of with Bitcoin
acomplex puzzle network prior blocks, hence
Difficult to solve, yet “blockchain” Currently, 6.25 BTCper
simple to verify block/ Blocks are
(Sudoku) solved, on avg., every
10 min.
20THE PATH TO PROFITABLE MINING
Power Costs of
(hashrate) Production
ANNUAL MINING PROFITABILITY
= [( )( )( )( )] – [( ) ( )( )]
Hut 8’s hashrate Priceof Costof Hut 8’s
6.25 52,560 Priceof
Network hashrate
x BTC
x block reward
x blocks/year
+ electricity + corporate
miners
expenses*
* Rent, employees, public company expense,etc.
• Network hash rate
• Its hashrate HUT 8
HUT 8 • Price of BTC
• Cost of electricity DOESN’T
CONTROLS • Corporateexpenses
• Block reward & # of blocks/year
CONTROL • Price of miners
21GLOSSARY
• Hodl – slang in the cryptocurrency community for holding • Block – a file that contains a “permanent” record of
the cryptocurrency rather than selling it. A person who does transactions
this is known as a Hodler.
• Mining (BTC) – the processing of transactions in the digital
• Average # of BTC mined each day = (Block Reward) currency system, in which the records of current Bitcoin
x (6x/hr) x (24 hrs/day) As of May 11, 2020: (6.25 transactions, known as a blocks, are added to the record of
BTC/Block) x (6x/hr) x (24 hrs/day) = 900 BTC per past transactions, known as the block chain
day on avg. • Hash Rate – The Measure of a Miners Performance – # of
• Bitcoin (BTC) – a type of digital currency in which a record calculations a miner can perform in 1 second as it works to
of transactions is maintained & new units of currency are solve the BTC code
generated by the computational solution of mathematical • Block Reward – The amount of BTC “awarded/earned” for
problems, & which operates independently of a central bank; successfully mining/verifying a block
a unit of bitcoin
• Blockchain – a system in which a record of transactions
made in bitcoin or another cryptocurrency are maintained
across several computers that are linked in a peer-to-peer
network
22GLOSSARY
Miners
• Bitcoin is “mined” by bitcoin miners. There is only a limited amount of bitcoin out there to find. The Bitcoin protocol is permanently
limited the total number of bitcoin to 21 million. Bitcoin mining involves a peer-to-peer computer interaction that secures & verifies
Bitcoin transactions. Bitcoin is awarded to miners as payment for carrying out the task of validating bitcoin transactions.
• Miners deploy the specific software & computational power at their disposal to compete with other miners in solving complex
mathematical problems. Whoever successfully uses cryptographic hash functions to solve a block containing the latest bitcoin
transaction data is rewarded with bitcoin. They also add the solved block to the blockchain, enabling the bitcoin ecosystem to
continue functioning. They key here is that the miner that solves the block first is the one who gets rewarded.
The Blockchain
• The Bitcoin ecosystem depends on the blockchain. The blockchain is the technology behind bitcoin & most other prominent
cryptocurrencies. The blockchain is a public ledger that can be accessed at any time by anyone on the Bitcoin network. The
blockchain is not stored in a central server. Instead, it is spread around the globe using a vast network of private computers that
simultaneously store data & execute computations. Each computer on the Bitcoin network serves as a node of the blockchain &
contains a copy of the entire bitcoin transaction record. Mining serves the function of adding new blocks to the blockchain, thus
keeping track of every bitcoin transaction.
• The blockchain protocol prevents problems like counterfeiting & debasement from undermining the value of bitcoin without the
intervention of a central authority.
23GLOSSARY
Digital Wallets
• With all of the exchanges happening on the blockchain through mining, there must be a place for individuals to store their bitcoin.
Rather than holding a collection of bills, coins, & bank cards, a digital wallet can be used to store bitcoin & other cryptocurrencies.
• Unlike the blockchain, a digital wallet is exclusively controlled by its owner. There are many different types of bitcoin wallets but
they all must follow the Bitcoin protocol to send & receive funds within the network. Digital wallets can hold a multitude of assets,
whether it be fiat currencies, commodities, or cryptocurrencies.
Traders
• Traders buy & sell bitcoin using traditional currencies or other cryptocurrencies. They may trade bitcoin on exchanges or they may
work outside the exchanges as independent brokers. Traders speculate on the likelihood that bitcoin will go up or down in value in
the short term. They will buy or sell based on their speculations, & if they are right they can profit.
Merchants
• Merchants can be retailers or any other business that choose to accept bitcoin as a form of payment. The more merchants that
accept bitcoin as a form of payment, the more bitcoin is legitimized as a currency & means of exchange.
24Q4 FISCAL 2020 RESULTS
25Q4 FISCAL 2020 RESULTS
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