North America's Largest BTC Hodler & Bitcoin Miner - TSE Ticker: HUT.TO OTCQX: HUTMF - Hut 8 ...
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North America’s Largest BTC Hodler & Bitcoin Miner TSE Ticker: HUT.TO OTCQX: HUTMF January 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. 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
WHY HUT 8?
We are one of North America's largest Bitcoin
mining operation; Fleet management
grandmasters; and Bitcoin Hodlers
01 02 03 04 05
Potential for Uniquely Equipment fleet Substantial New CEO with
growth positioned to management & Bitcoin holdings a proven
out-mine the electricity economics on balance record
competition advantage sheet
4
Company Ticker: TSX HUT
CAPITAL
52 Week Low/High: 0.51- 8.46
Shares Outstanding: 112,491,023
MARKETS
Total Debt: $20 Million USD
Warrants: 15,884,339
PROFILE
Options: 646,667
RSU’s: 706,667
BTC on Balance Sheet: 2851 as at September 30
th
, 2020
5
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 and High Growth Initiatives distressed asset turnaround &
transformation for $1B+ market cap
• Women in IT Channel Hall of Fame enterprises.
6
BITCOIN ADOPTION IS ACCELERATING
PayPal launches
new service Narratives driving bitcoin adoption:
enabling
cryptocurrency as • Institutional demand, and not enough supply
a funding source
• Demand for a hedge against global fiscal and
for its 26 million monetary stimulus in response to COVID $30T put
merchants into world economy in 2020 (bitcoin is digital gold:
(October 2020) finite, scarce, cannot be debased, high mobility)
Insurance giant • Global acceleration of digital revolution, adoption of
MassMutual buys digital cash and central bank digital currency
$100 Million worth (CBDC) initiatives (45+ central banks around the
of bitcoin world actively developing CBDC; China has
completed digital yuan pilot)
Source: coindesk 2020
“I like bitcoin even more now than I did then. I think we are – Paul Tudor Jones
in the first inning of bitcoin, and 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 38 94
Installed Power1 55 MW 7 MW 42 MW 104 MW
BASE
Hashpower1 667 PH/s N/A 330 PH/s 1,007 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.
8KEYS TO PROFITABILITY
Hut 8 is one of the oldest and one of the
few miners actively mining with new &
legacy equipment in the money.
01 02 03 04 05
Multi-generation Low cost of Large amount of Equipment fleet Reduced corporate
mining equipment electricity, high Bitcoin holdings management and expenses and
that is in the money power output, (hodlers at heart!) chip cycle strengthened our
winning hashrate optimization plan balance sheet
9BALANCE SHEET BTC HOLDINGS
as at September 30, 2020
Source: Publicly listed company quarterly reports September 30, 2020
10HUT 8'S WINNING HASH RATE.
WHY DOES THIS MATTER?
Source: Publicly listed company quarterly reports September 30, 2020 as at September 30th, 2020
• Our hashrate is the ability to win • Why is ours so high? We have a proactive and dynamic equipment fleet management strategy that enables
block rewards versus the competition us to have multi-generational equipment in the money, protect against equipment supply constraints
11SINCE 2018…
Source: Publicly listed company quarterly reports September 30, 2020
12BITCOIN HOLDINGS VS. MARKET CAP
Source: Yahoo Finance as at December 31st 2020
13EQUIPMENT FLEET PHILOSOPHY
INDUSTRY • Often miners end up chasing giant capital balloons to roll over
equipment when bitcoin economics change
HEADWIND: • 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
Capital expenditure risk • Reduces our exposure to equipment supply/demand constraints
that comes with trying to • Hut8 reduces our capital expenditure risk with a well-balanced
guess chip cycle timing portfolio of cutting-edge new equipment but also profitable older
equipment
14LOCKED-IN, LOW COST OF
ELECTRICITY ADVANTAGE
10-yr
electricity supply
Medicine Hat, agreement &
Alberta land lease
Electricity On-site
from natural expertise
gas & wind maximizing
power output
15STRONGER BALANCE SHEET
$
Renegotiated key terms Hosting revenue of $0.5 Transferred the Current BTC Holdings: 2851
with lender to provide million from Hut 8’s first management of site
more downward flexibility hosting client with 6MW operations from Bitfury
with bitcoin collateral and of latest generation to Hut 8, providing
save Hut 8 nearly bitcoin mining equipment; savings of over $1.5
$500,000 per year in Ongoing monthly hosting million per year.
interest expense. revenue per client net of KE P T
CALM
fees $102,105/month.
A ND
HODL’D
ON
16AN IMPLICIT & MATERIAL UNDERVALUED
CALL OPTION ON THE COMMODITY PRICE
Source: Yahoo Finance as at December 31st 2020
• Mining is an option play on an emerging asset • If Bitcoin reaches 20% of gold's market cap • Each subsequent Bitcoin bull market is
class of Bitcoin with strong downside Bitcoin energy demand will rise to -70GW creating even longer periods of super profits
protection (10X) this would require investment in real for miners.
world infrastructure on an unprecedented scale 17Grow fiat revenue streams on hodl'd BTC BTC
1 yield account opened with Genesis on January 6th
2021, 4% Rate of Return.
2 Growing hosting partnership
GROWTH &
BTC HEDGE 3 Exploring multiple opportunities for expansion
STRATEGY 4 Upgrade and maintain a dynamic fleet of
producing and in the money mining equipment
Alternative sources of recurring revenue
5 in process and to be announced
Be the blue chip, gold standard for institutional
6 investment in a bitcoin proxy with strong
downside protection
18BOARD 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
and also the Founding president and CEO of DuPont following 12 years of senior accomplished technology Partner at Round13 Capital accomplished and experienced
Chairman of Treasure Fabros Technology (“DFT”), a leadership at Sysco executive and industry where he founded and runs international commercial,
Data successfully acquired by NYSE listed data center Corporation, where he played thought leader with a long the Round13 Growth Fund, financial and operating
ARM Corp; Founding focused real estate an integral role as both Chief history of driving high growth focused on investing in later executive, with extensive
Chairman of investment trust. While in this Financial Officer of Sysco mandates. With more than 20 stage Canadian growth digital asset industry
IPFusionTokyo:4813, role, Mr. Eldredge Canada, and President of years of leadership in the opportunities in technology experience with former CFO
Founding Chairman and repositioned the company and Sysco Canada’s Eastern Canadian technology industry, and healthcare. roles at Bitfury Group and
CEO iAsiaworks (IPO via established its expansion Division, and 2 years as she joined Hut 8 from her Silicon Valley CBDC platform
Goldman Sachs & Morgan strategy which eventually led President of Clarke Freight most recent role as the Chief fintech innovator eCurrency.
Stanley) and past Board to its sale to Digital Realty Transportation Group, a major Commercial Officer at His career also covers audit ,
Director of 8 publicly listed Trust for US$7.9 billion. national freight carrier. eStruxture Data Centers. compliance and governance
companies. expertise as a UK qualified
accountant with 10 years in
public practice in London.
19APPENDIX
20THE BITCOIN ECOSYSTEM ENGINE
A system that adds transactions
A computer designed to solve
& provides security to the Bitcoin
MINING blockchain; how new bitcoins AMINER 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 hashrate Priceof 6.25 52,560 Costof Hut 8’s
x Priceof
Network hashrate
x BTC block reward
x blocks/year
+ electricity + corporate
miners
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 • Corporate expenses
• Block reward & # of blocks/year
CONTROL • Price of miners
22GLOSSARY
• 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 and 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, and which operates independently of a central successfully mining/verifying a block
bank; 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
23HUT 8
MINING
CORP.
(IN CANADIAN DOLLARS)
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