Earnings call transcript: Hut 8’s Q4 2023 shows strong revenue growth

Hut 8 Corp (NASDAQ:HUT) reported a robust financial performance for Q4 2023, with revenue increasing by 69% year-over-year to $162.4 million. The company’s net income surged to $331.4 million, up from $21.9 million in the prior year. The stock reacted positively, rising by 7.59% to $15.87, reflecting investor confidence in the company’s strategic initiatives and financial health. According to InvestingPro analysis, the stock currently appears undervalued, with impressive year-over-year returns of over 65%. The company maintains a healthy financial position with a market capitalization of $1.49 billion.

Key Takeaways

• Revenue grew by 69% year-over-year, reaching $162.4 million.
• Net income increased significantly to $331.4 million.
• Institutional ownership rose from 12% to 55%.
• The company’s stock price increased by 7.59% post-earnings.
• Strategic focus on AI and high-performance computing markets.

Company Performance

Hut 8’s Q4 2023 results demonstrate significant growth compared to the previous year, driven by strong revenue and income figures. The company has positioned itself well in the digital infrastructure and Bitcoin mining sectors, capitalizing on the growing demand for high-performance computing.

Financial Highlights

• Revenue: $162.4 million, up 69% year-over-year
• Net Income: $331.4 million, compared to $21.9 million in the previous year
• Adjusted EBITDA: $555.7 million, up from $85.7 million
• Strategic Bitcoin reserve: 10,171 Bitcoin, valued at $949.5 million

Outlook & Guidance

Hut 8 is targeting the energization of its Vega data center by Q2 2025, with an expected annualized revenue of approximately $125 million from its Bitmain agreement. The company continues to explore strategic partnerships and financing mechanisms to support its growth initiatives.

Executive Commentary

CEO Astrid Ganoit emphasized the company’s strategic focus, stating, "We believe the value of energy will continue to rise as technology fuels both daily life and world-changing innovation." She also noted, "Last year was about restructuring, this year is about growth," highlighting the company’s forward-looking growth strategy.

Risks and Challenges

• Energy costs: Potential volatility in energy prices could impact operational costs.
• Market competition: Increasing competition in the digital infrastructure and Bitcoin mining sectors.
• Regulatory environment: Changes in regulations could affect operations and profitability.
• Technological advancements: Rapid technological changes may require continuous innovation.
• Economic conditions: Broader economic downturns could impact demand and financial performance.

Q&A

During the earnings call, analysts inquired about the company’s selective approach to project announcements and its flexibility in capital allocation. Hut 8 confirmed ongoing discussions with potential large-scale data center customers, highlighting its strategic focus on growth and market expansion.

Full transcript - Hut 8 Corp (HUT) Q4 2024:

Conference Moderator: Good morning, and welcome to Hut eight’s Full Year twenty twenty four Financial Results Conference Call. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded and a transcript will be available on Hut eight’s website. In addition to the press release issued earlier today, you can find Hutt eight’s annual report on Form 10 ks on the company’s website at www.hutt8.com, under the company’s EDGAR profile at www.sec.com and under the company’s SEDAR Plus profile at www.sedarplus.ca. Unless otherwise noted, all numbers referred to during this call are denominated in U.

S. Dollars. Comments made during this call may include forward looking statements within the meaning of applicable securities laws regarding Hut eight Corp. And its subsidiaries. The statements may reflect current expectations and as such are subject to a variety of risks and uncertainties that could cause actual results to differ materially from current expectations.

These risks and uncertainties include, but are not limited to, factors discussed in Hut eight’s Form 10 K for the twelve months ended 12/31/2024, as well as the company’s other continuous disclosure documents. Except as required by applicable law, Hut eight undertakes no obligation to update or review any forward looking statements. During the call, management may also make references to certain non GAAP measures that are not separately defined under GAAP, such as adjusted EBITDA. Management believes that non GAAP measures taken in conjunction with GAAP financial measures provide useful information for both management and investors. Reconciliation between GAAP and non GAAP results are presented in the tables accompanying the press release, which can be viewed on Hut eight’s website.

I would now like to turn the call over to Astrid Ganoit, CEO of Hut eight.

Astrid Ganoit, CEO, Hut 8: Good morning, everyone, and thank you for joining us today. Just over a year ago, when I stepped into the role of CEO, I made a commitment to our Board, our shareholders and our team to set Hut eight on a new trajectory. Today, I’ll discuss how we delivered on that commitment in 2024 through a comprehensive transformation that we believe has positioned our business for profitable growth and long term value creation. A transformation of the scale does not happen overnight nor does it happen without deliberate design. Executing on our commitment required a clear vision, rigorous planning and the conviction to make tough, but necessary decisions.

Guided by these principles, we focused relentlessly on execution and built the foundation for what we intend to grow into an enduring generational business at the intersection of energy and technology. Before I discuss the key objectives that drove this transformation and the impact it has had on our business, I want to take a step back to something more fundamental, an idea about who we are and what we are building. Next (LON:NXT) slide please. At the heart of everything we do is a simple conviction. We believe the value of energy will continue to rise as the technology is fueling both daily life and world changing innovation place ever greater demand on a constrained electrical grid.

Over the past year, this dynamic has accelerated as AI catalyzed a surge in demand for power in the digital infrastructure sector. Our ambition is to build a platform that can meet this demand at scale across energy intensive technologies for decades to come. But conviction alone is not enough. If the past year has reinforced anything, it is that execution is the bridge between conviction and reality. And execution requires people, a team with the discipline and grit required to make tough decisions, navigate volatile markets and turn strategy into results.

It also requires the trust and conviction of shareholders, analysts and partners who believe in what we are building and stand with us in making it a reality. So before we turn to the year behind us, I want to recognize the people who have made our progress possible. Some of you have been with us since the very beginning, when we first set out to pioneer a power first approach to digital infrastructure development. Others have joined us more recently recognizing the scale of the opportunity ahead. Regardless of when you came on board, we’re grateful for your trust and conviction.

Next slide please. Today, I’ll discuss how we delivered on our commitment to set Hut eight on a new trajectory in 2024. Then Shawn will review our financial results and explain how we’ve refined our reporting structure to better reflect how we operate today and where we’re heading next. Finally, I’ll outline how we are building on the foundation in 2025. Next slide please.

Over the past year, we executed on a comprehensive transformation of the legacy Huday business, driving measurable improvements in key areas of business performance while setting what we believe is a resilient foundation for profitable long term growth. This transformation was driven by three objectives. First, optimizing operations through a comprehensive restructuring program. Second, fortifying our capital strategy to support balanced risk adjusted growth. And third, developing a high velocity utility scale power origination pipeline.

Let’s discuss each in turn. Next slide please. Optimization was the foundation of our transformation. We use the term optimized deliberately. Our restructuring program was driven by calculated trade offs designed to drive sustained profitability while setting a foundation for growth rather than indiscriminate cost cutting.

Data driven analysis informed the shutdown of our underperforming Drumheller site, the energization of our new Salt Creek site, the relocation of our fleet from hosted to owned facilities and the rollout of our proprietary energy curtailment software Reactor across the legacy Hut eight portfolio acquired in the business combination. These initiatives delivered measurable impact including a 30% reduction in our average energy cost per megawatt hour from Q4 twenty twenty three to Q4 twenty twenty four. They supported an approximately eight point increase in gross margin per bitcoin mined over that same period. And earlier in 2024, our continued focus on value engineering enabled us to complete our latest Salt Creek project in an all in cost of approximately $250,000 per megawatt, approximately $100,000 per megawatt less than our first greenfield development site in ERCOT. Beyond metric impact, we institutionalized decision making rigor and operational discipline at every level of our organization.

We restructured our team, optimized headcount and recruited veteran leaders from the energy and digital infrastructure sectors. In parallel, we expanded our in house development program, enhanced our proprietary operating technology and established a data science function to optimize energy consumption across our portfolio. We believe these investments have extended our competitive advantage in rapid, cost efficient infrastructure development. Yet optimization is not static. The optimal solution will evolve as decision variables shift.

So while we believe we have built a solid foundation, we are committed to driving value through continuous improvement in the years to come. Next slide please. Our second objective was to fortify our capital strategy. A well designed capital structure should not only provide resilience against market volatility, but also enable agile, flexible growth. In a capital intensive business like digital infrastructure development, these are critical advantages.

To reinforce these advantages, we executed an integrated capital strategy focused on risk reduction, market access, liquidity expansion, proactive treasury management and institutional alignment. Strategic deleveraging was central to our approach. We converted the $37,900,000 balance of our Anchorage Digital Loan to equity and unencumbered $827 Bitcoin initially pledged under our coinbase loan. Thoughtfully structured debt continues to serve as a valuable tool to fuel our growth. This includes our existing project level financing at the TZRC joint venture, which is ring fest at the subsidiary level with no recourse to the parent entity and our coin based loan, which was amended this year to among other things remove the parent guarantee.

In addition, in 2024, we entered into a strategic partnership with Coatue, whose convertible note investment reflects their conviction in our long term value creation potential. Expanding market access and deepening liquidity were equally critical. Together with our inclusion in the Russell three thousand, shelf eligibility broadened our investor base and created new capital pathways, enabling us to launch a $500,000,000 ATM program, which we announced alongside a $250,000,000 stock repurchase program. Together these programs support a robust capital formation toolkit that bolsters our ability to navigate the volatile markets in which we operate. Further strengthening our capital position, we introduced a proactive treasury management framework designed to enhance capital efficiency and generate risk adjusted returns that outperform idle cash.

Under this framework, we expanded our strategic Bitcoin reserve with the purchase of $9.90 Bitcoin, growing our strategic Bitcoin reserve to more than 10,000 Bitcoin with a market value of approximately $950,000,000 at year end. Together with cash on hand, our liquidity position enables us to act decisively to capture compelling growth opportunities while instilling counterparty confidence in our ability to execute on large scale development initiatives. The strength of our capital structure is increasingly reflected in our shareholder base. Institutional ownership of Hut eight increased from approximately 12% at the end of Q1 twenty twenty four to approximately 55% at year end, a testament to our focus on long term value creation. The institutionalization of our business was marked by key milestones like a strategic investment from Co2 and the conversion of our Anchorage loan to equity.

Today, we continue to engage actively with strategic capital partners to strengthen our financial and competitive position. In summary, we believe the integrated capital strategy we have implemented is now aligned with the scale of our ambition. Looking ahead, we will continue to focus on optimizing our capital structure, exploring non dilutive sources of funding whenever possible. Our long term aim is to drive down our cost of capital, minimize enterprise risk and maximize shareholder value as we build our business. Next slide please.

The final pillar of our transformation was building the engine of our Power First strategy, a high velocity utility scale power origination pipeline. In a supply constrained market, access to power is a competitive advantage. Outside value creation, however, requires a disciplined, strategic approach to site selection and portfolio construction. This level of rigor is only possible with the development pipeline of institutional scale and velocity. Over the past year, we have engineered our origination strategy around these interdependent pillars.

Increasing scale has expanded and diversified our opportunity set, allowing us to secure what we believe to be the right assets under the right conditions at the right time. Meanwhile, increasing velocity has brought in deal flow visibility equipping us with the market context and conviction required to rapidly advance high potential opportunities to exclusivity. Together these pillars enable disciplined capital allocation to opportunities we believe will drive superior risk adjusted returns. At year end, our pipeline of development capacity under diligence had more than quadrupled to 12,000 megawatts, while capacity under exclusivity had more than doubled to 2,800 megawatts. Securing exclusivity is a critical milestone in our development process because it defines a clear pathway to ownership, either through exclusivity agreements that prevent the sale of designated land and power capacity to another party or through a tendered interconnection agreement.

Origination is above all a matter of people and execution. It is a highly specialized discipline that requires deep market expertise, regulatory insight, commercial acumen and industry credibility. These capabilities are neither widely held nor easily acquired, which is why building the right team has been one of my highest priorities since the early days of building our business. Today, our Power Native team has many decades of collective experience across the development value chain, led by former senior executives and team members from some of North America’s largest generation owners, utilities, energy investment firms, infrastructure developers and trading desks. It is the foundation of our utility scale origination platform.

More than that, we believe it is a source of durable competitive advantage that positions us to scale with uncommon speed and discipline. With that said, our focus now shifts to execution as we continue to advance the highest potential opportunities in our pipeline. I’ll return to this later. Next slide please. Today, we operate from a position of strength.

We have optimized our operations, built a world class team and embedded institutional discipline at every level of the organization. We have fortified our capital strategy to drive balanced, risk adjusted growth. And we have built a high velocity utility scale origination pipeline spanning 12,000 megawatts, setting the foundation for disciplined long term value creation. Next slide please. Before I turn it over to Sean, I want to set the stage for what comes next.

The transformation we executed over the past year is meaningful only to the extent that it drives long term shareholder value. Maximizing shareholder value requires us to not only deliver on our strategic priorities, but also to communicate our outcomes under a framework that enables investors to accurately assess our financial performance, operational efficiency, risk management and long term growth strategy. A key enabler of this clarity is our reporting structure. It functions as a critical bridge between the internal reality of our business and how that reality is understood and evaluated by the market. A well structured reporting framework should provide investors, management and the broader market with the transparency and insight needed to make informed benchmarking, valuation and investment decisions.

Over the past year as we executed our transformation, it became clear that our legacy reporting structure did not adequately align with our transformed business. Built around narrow operational capabilities like Bitcoin mining and managed services, it did not reflect the Power First strategy and platform driven business model through which we manage and assess the performance of the business. Instead, it elevated specific activities within each layer of our platform such as Bitcoin mining and managed services to standalone segments while under representing distinct and fundamental value drivers like power acquisition and digital infrastructure development. Ultimately, it no longer aligned with how we deploy capital, scale our platform and drive sustainable returns. With that, I’ll turn it over to Sean to explain how our new reporting structure addresses these challenges.

Sean, CFO, Hut 8: Thanks Asher, and good morning, everyone. It’s a privilege to be here today as we reflect on a year of transformation and growth. As outlined by Asher, we’ve refined our reporting structure to provide a clearer, more comprehensive view of how each layer of our platform contributes to growth, profitability and value creation in the context of our overall business. This structure more accurately reflects how we think about cost of capital, capital allocation and risk management, as well as how we scale our business with the goal of maximizing long term shareholder value. Let’s take a closer look at this new reporting structure before turning to our results.

Next slide please. Going forward, we will report under three core segments or layers as we like to call them internally Power, Digital Infrastructure and Compute, each corresponding to a component of our integrated energy infrastructure platform. A fourth segment, Other, will capture revenue from activities that fall outside the framework of our core platform. Aligning our financial reporting with how we manage the business operationally will deliver four key benefits. First, it will enhance financial transparency by offering more granular insights into revenue composition, cost structures and profitability dynamics at each layer of our platform.

Second, it will establish a link between our Power First model and the outcomes driven by it, enabling investors to better understand platform synergies across power, digital infrastructure and compute. Third, it will support more effective benchmarking by structuring our disclosures in a way that allows investors to assess our performance relative to other market participants across the value chain. And fourth, it will enhance our capital allocation framework by aligning our disclosures with how we deploy capital across the business lines addressed by our platform. With that said, let’s turn to our results for the full year of 2024. As a reminder, the current period reflects the performance of the combined company, while the comparison period reflects eleven months of U.

S. Bitcoin Corp’s performance as a standalone business prior to the merger and one month of the combined company’s performance. Note that our results for the comparison period have been restated under our new reporting structure. Next slide please. Our revenue grew 69% year over year to $162,400,000 for the twelve months ended 12/31/2024.

Net income was $331,400,000 net of income tax provision of $113,500,000 versus $21,900,000 in the prior year and adjusted EBITDA was $555,700,000 versus $85,700,000 in the prior year. Both net income and adjusted EBITDA reflect a gain on digital assets of $509,300,000 in accordance with the new FASB fair value accounting rules. As we continue to scale our business, a strong balance sheet will be a crucial foundation for disciplined, agile capital allocation, while enabling us to withstand and thrive across market cycles. We caused the year with a strong liquidity position supported by a strategic Bitcoin reserve of 10,171 with a market value of $949,500,000 reinforcing our ability to deploy capital efficiently and pursue growth initiatives from a position of strength. Now, let’s take a deeper look at our business through the lens of our new reporting structure beginning with our Power segment.

Next slide please. The Power segment corresponds to the power layer of our platform, where we acquire, develop and manage critical energy assets such as interconnects and powered land. As of year end, our Power layer comprised ten twenty megawatts of energy capacity under management across 15 sites in The United States and Canada. We generate revenue from our power assets through our Power Generation (HM:PGV) and Managed Services businesses. In Power Generation, we own and operate four natural gas power plants in Ontario, Canada with three ten megawatts of total capacity under a joint venture with Macquarie.

These facilities generate revenue through capacity contracts and merchant energy sales within the independent energy electricity system operator, which manages the Ontario electrical grid. In managed services, we provide end to end energy infrastructure development, construction and operation services to third party power asset owners. Managed services agreements are typically structured under a fixed fee model based on power capacity under management with cost reimbursements for certain pass through expenses. Some agreements include incentive bonuses and energy management services that enable us to further monetize our expertise in power management and optimization. Power segment revenue more than doubled year over year to $56,600,000 driven by an $11,400,000 increase in power generation revenue and a $22,400,000 increase in managed services revenue.

Growth in managed services revenue was driven by the full ramp up of our MSA with Ionic Digital, which was terminated in December 2024, along with proceeds from a $13,500,000 termination fee from Marathon related to exiting the Kearney and Granbury sites. Next slide please. The second segment of our new reporting structure is digital infrastructure. This segment corresponds to the digital infrastructure layer of our platform, where we design, build, monetize and operate purpose built facilities for energy intensive applications. Our objective in this segment is to maximize long term returns from our power layer by developing and monetizing infrastructure that supports high value compute applications for third party customers.

As of year end, our digital infrastructure layer comprised five Bitcoin mining data centers, five traditional data centers and one non operational site. As markets and technologies evolve, we expect this layer to expand beyond its current focus areas, supporting emerging applications and diversifying our portfolio into new infrastructure verticals such as AI and other large scale HPC data centers. The Digital Infrastructure business segment consists of CPU colocation and ASIC colocation services. We monetize these services through agreements structured under fixed fee or consumption based models, some of which incorporate profit sharing and cost reimbursements for pass through expenses such as electricity. While contract structures and margin profiles vary across workloads, the underlying drivers of infrastructure profitability are fundamentally similar.

Key cost drivers including power costs, cooling, facility utilization and operational efficiency apply across workloads and applications. A key advantage of our application agnostic approach to digital infrastructure development is its inherent flexibility. We retain the ability to monetize our power on an asset by asset basis, accounting for market dynamics and risk return trade offs before deploying capital. This approach allows us to optimize risk adjusted returns by monetizing each power asset with what we believe to be the highest value use case at any given time while mitigating the risk of underutilized or stranded assets. Beyond capital efficiency, our model is designed to reduce exposure to sector specific volatility.

By diversifying our digital infrastructure segment revenue mix across ASIC, CPU and potentially other emerging workloads, we aim to decrease our reliance on any single market while smoothing earnings fluctuations inherent to high growth technology driven end markets. This enables us to capture upside in fast growing markets while maintaining the flexibility to scale back exposure to more cyclical sectors as needed. Ultimately, we believe this framework positions our digital infrastructure segment for scalable long term value creation by ensuring each asset in our Power portfolio is optimized for risk adjusted returns, maintaining operational flexibility and reinforcing capital efficiency. Digital Infrastructure segment revenue more than doubled year over year to 17,500,000 driven primarily by a $5,200,000 increase in CPU colocation revenue, which reflects a full year of revenue recognition at our five traditional data centers in Canada, where we provide cloud and colocation services to more than two fifty customers across government, financial services, media and other industries. Top line growth also reflects a $4,000,000 increase in ASIC colocation revenue related to our agreement with IONIQ Digital, which was terminated effective 11/08/2024.

In the coming quarters, our Digital Infrastructure segment will reflect revenue from our ASIC colocation agreement with Bitmain, which is expected to generate approximately $125,000,000 in annualized revenue upon full ramp. Development of our Vega site where the agreement will be launched remains on track for energization in the second quarter of twenty twenty five. Next slide please. The third segment of our new reporting structure is compute. This segment corresponds to the compute layer of our platform, where we acquire, monetize and operate specialized hardware for energy intensive technologies like ASIC Compute for Bitcoin mining and GPU Compute for AI workloads.

As of year end, our compute layer comprised 5.5 exahash per second of ASIC compute capacity for Bitcoin mining and 1,000 NVIDIA (NASDAQ:NVDA) H100 GPUs for AI compute operated through our GPU as a service subsidiary, HiRise AI. We also provided CPU based cloud solutions through our five traditional data centers in Canada. Our Compute segment is designed to capture the economics of compute markets. It also enables us to develop deep firsthand operational expertise in the technologies we support in our digital infrastructure layer. By operating specialized hardware such as ASICs for Bitcoin mining and GPU for AI workloads, we generate data driven insights that inform infrastructure design, development and operation strategies designed to enhance long term returns in our digital infrastructure layer.

While Bitcoin mining, AI compute and other emerging technologies serve distinct end markets, they share investment risk characteristics. Revenue in both ASIC and GPU compute markets, for example, is closely tied to supply demand volatility, rapid hardware evolution and short obsolescence cycles. These dynamics necessitate aggressive capital recovery and yield similar risk return profiles. Compute segment revenue increased 24% year over year to $80,700,000 driven by a $7,300,000 increase in Bitcoin mining revenue, a $6,700,000 increase in recurring data center cloud revenue, which reflects a full year of revenue recognition at our five traditional data centers in Canada, and a $1,800,000 contribution from our GPU as a service business. Given the capital intensive nature of compute, where hardware requires significant upfront investment and depreciates rapidly, we will continue to prioritize capital efficient strategies to maximize returns and minimize risk as we scale this segment.

This discipline is exemplified by our structured purchase option at Vega for $15 a hash of Bitcoin mining capacity, which reduces capital exposure versus an outright hardware acquisition and the launch of HiRise AI as a subsidiary business targeting the GPU as a service market. Next slide please. The fourth segment of our new reporting structure Other comprises revenue generated from operating activities outside the core scope of our platform model. While our primary focus remains on the three core layers of our platform, we continually evaluate opportunities to leverage our expertise in power, digital infrastructure and compute to enhance risk adjusted returns. Over time, we may expand in the complementary business lines that align with our strategic capabilities.

Full year other segment revenue was $7,600,000 consisting of Bitcoin mining equipment sales and repairs. Next slide please. Over the past year, we set out to build a stronger more resilient Hutt eight, one capable of executing at scale, navigating volatility and driving long term shareholder value. We accelerated our pipeline, securing high potential power assets at a pace that reflects our growing conviction in energy and digital infrastructure. We refined our capital strategy to balance growth with prudent risk management, enabling us to act decisively without compromising stability.

And we invested in the people, processes and technology required to scale with uncommon speed and discipline, embedding institutional rigor at every level of the business. Today, we stand on a foundation that feels markedly stronger than it did just a short while ago. Our strategy is clear, our balance sheet is fortified and our team is built to execute. The best is yet to come and I look forward to sharing our continued progress in the year ahead. Asher, back to you.

Astrid Ganoit, CEO, Hut 8: Thanks, Sean. Before outlining our roadmap for 2025 and the early progress we’ve made against our strategic priorities, I want to take a step back and put everything into context. In 2024, we fundamentally transformed the legacy Hut eight business, optimizing operations, fortifying our capital strategy and developing a high velocity utility scale power origination pipeline. To enhance transparency and investor insight, we also realigned our financial disclosures to more accurately reflect our business model and long term strategy. Now that this transformation is complete, we can channel the foundation and the momentum we’ve created into a new phase of growth and expansion.

It’s an incredibly exciting time for our business and I’m eager to share how we’re thinking about what lies ahead. Next slide please. It all begins here with our development flywheel, a framework designed to compound returns and drive long term value creation as we scale. In 2025, our goal is to accelerate this flywheel by advancing four drivers of value creation origination, investment, monetization and optimization. Each of these drivers plays a distinct yet interdependent role in our Power First strategy.

First, I’ll outline the function of each driver and its role in our 2025 roadmap. Then I’ll illustrate this model in action by discussing Riverbend, a large scale campus in Louisiana that we recently acquired. The first driver of our development flywheel is origination. A scaled diversified pipeline is essential to the expansion of our power layer and enables us to capture demand in high growth segments like AI data centers where power access is the gating factor for infrastructure development. Last year, we built a high velocity utility scale origination pipeline spanning 12,000 megawatts under diligence, enabling us to take a disciplined, strategic approach to site selection and portfolio construction.

In 2025, we will continue to prioritize near term access to scarce power by seeking to source both front of the meter and behind the meter assets, while diversifying our pipeline across geographies and use cases. Within this framework, our origination strategy will focus on securing high value power assets that can immediately support AI or other HPC applications, as well as assets where Bitcoin mining can serve as a transitional load to monetize the site while we secure AI or HPC customers. By increasing both the scale and velocity of our origination pipeline, we aim to enhance our ability to execute quickly and capitalize on development opportunities across a range of end markets and customer profiles. The next driver of our development flywheel is investment. Investment converts pipeline assets into tangible value accretive components of our platform.

Our capital allocation framework is designed to optimize for risk adjusted returns by balancing capital efficiency with scalable long term value creation. In 2025, our investment strategy will prioritize lower cost of capital segments like co location while leveraging creative financing mechanisms such as our purchase option at Vega and our Bitcoin pledge financing model for fleet upgrades to optimize cost of capital and mitigate enterprise risk. Given the substantial capital requirements for digital infrastructure development, particularly in HPC, we will continue to deepen our engagement in project level financing markets, cultivate strategic capital partnerships and actively evaluate financing structures to advance high potential developments like Riverbend. Above all, we will maintain a disciplined yet opportunistic approach to capital allocation, aiming to deploy capital only when projected returns meet or exceed our thresholds for value creation. We now turn to monetization, the third driver of our development flywheel.

Monetization transforms our power assets into revenue generating infrastructure. In 2025, we will continue to take a power first approach to digital infrastructure development, monetizing each power asset with the use case we believe will deliver the highest risk adjusted returns at present than maximizing portfolio yield over time by transitioning suitable assets to higher return use cases. This means leveraging Bitcoin mining infrastructure to underwrite acquisitions and rapidly monetize power assets, particularly when they are not immediately viable for traditional data center workloads like AI compute. As demonstrated by our Vegas data center development, suitable sites can begin their lives as Bitcoin mining data centers with the potential to be repurposed for other high return workloads in the future. We believe our phased value creation model provides a structural advantage over markets with more complex commercialization dynamics.

Our ability to rapidly deploy capital, energize sites and generate revenue enables us to scale our power footprint often faster and more cost effectively than developers bound by traditional data center development cycles. Ultimately this strategy accelerates payback periods, enhances capital efficiency and generates reinvestable cash flows that fuels further expansion of our platform. The final driver of our development flywheel is optimization. In 2025, we will continue applying our first principles approach to innovation and digital infrastructure design, development and operations to optimize capital efficiency while driving long term infrastructure flexibility and scalability. Historically, our extensive in house development capabilities have enabled us to design, build and scale Bitcoin mining infrastructure at a fraction of the cost and time of traditional outsource models.

This structural advantage has shortened payback periods, accelerated speed to revenue, enhanced capital efficiency and driven superior returns on invested capital. As we expand our digital infrastructure layer, we tend to extend these efficiencies across a broader range of infrastructure verticals and form factors, reinforcing our ability to scale rapidly and sustain capital efficient growth. Beyond cost and operational efficiencies, optimization also means rethinking traditional infrastructure models to expand addressable markets and drive long term asset value. Our integrated platform model drives deep insight into the technical and commercial challenges that inform infrastructure design and performance, enabling us to develop and implement innovations that enhance performance, reduce costs and enhance the flexibility of our digital infrastructure assets. Take Vega for example, where we apply this approach to develop a new data center form factor that helps bridge the gap between Bitcoin mining and HPC data center architecture, while retaining the cost advantages and rapid deployment timelines that define our model.

By integrating high density racks, liquid to chip cooling and HVAC supported air cooling, we optimized the site for high density ASIC deployments while incorporating design elements that enhance flexibility for future workloads. This balance of performance, efficiency and capital discipline exemplifies our approach to optimization and value creation. As we scale, we will continue to challenge legacy design assumptions, drive cost advantages and create infrastructure that is more flexible, efficient and monetizable across evolving digital workloads. By aligning origination, investment, monetization and optimization under a single power first framework, we can rapidly transform opportunities into tangible value. To see how this model operates in practice, let’s turn to a recent addition to our portfolio Riverbend, where our integrated approach enabled us to identify and secure a high potential power asset in an emerging data center market.

Next slide please. Last quarter, I noted that three projects in our development pipeline together representing over four thirty megawatts of capacity held promise for large scale AI data center projects. Riverbend, a 300 megawatt utility scale power asset in Louisiana with 200 megawatts of dedicated IT load was among those that I highlighted. Last week, we secured this campus and the process that led to the acquisition exemplifies both our team’s power sector expertise and the rigorous approach we take to identify, evaluate and commercialize new development prospects. It also illustrates how we systematically analyze markets to find regions and sites that can support large scale digital infrastructure over the long term.

Seeking to expand beyond our mature Texas footprint, we surveyed the country for regions with abundant power availability, resilient infrastructure and pro business regulatory frameworks. Our Power Native team, which includes former utility executives, generation developers and energy traders then conducted a thorough analysis of grid dynamics and generation pockets. Drawing on deep regulatory insight and commercial acumen, we identified three key factors that made Louisiana particularly appealing for large scale digital infrastructure. First, the state’s diverse fuel mix provided cost competitive, reliable energy. Second, new governor led tax incentives and strong local support fostered a business friendly environment.

Finally, the state’s strategic position between Dallas Fort Worth and Atlanta offered a dual benefit. It could serve as an overflow market for tenants in Texas or as a cost effective alternative to the more saturated Southeastern Corridor. Once we recognize the potential of Louisiana, we assess numerous properties statewide to find a suitable campus. That diligence led us to West Feliciana Parish where we acquired five ninety two acres of land now known as our River Bend Campus. This site features direct access to the Mississippi River providing for abundant water resources and sits at an elevation of 100 feet well above the five hundred year flood level at 67 feet.

Working in close coordination with Entergy (NYSE:ETR) Louisiana, the Governor’s office, local developers and parish officials, we confirmed land use feasibility culminating in zoning and planning approval in January 2025. Our Riverbend campus is located 1.5 miles from a one gigawatt nuclear plant and seven miles from a 300 megawatt solar facility. We believe existing high voltage transmission lines on-site create a viable path to scale beyond one gigawatt of capacity. The site further benefits from 3.6 gigawatts of existing two thirty kV lines and substantial fiber capacity, including seven distinct campus entrances and thirty year IRU dark fiber linking major hubs like San Francisco and Northern Virginia. We believe these converging strengths, ample space, robust transmission lines and diverse connectivity are essential prerequisites for large scale data center operations.

Throughout the entire process, our extensive collaboration with Entergy Louisiana and various government stakeholders not only mitigated acquisition risks, but also demonstrated our ability to operate at a utility level. While Meta (NASDAQ:META)’s subsequent announcement underscored Louisiana’s rising potential for digital infrastructure development, I’ll emphasize that Riverbend is just one example of the rigorous approach to power origination we take to build a scaled pipeline of highly attractive development opportunities. Ultimately, Riverbend exemplifies our distinct power first approach to digital infrastructure development, illustrating the rigor of origination, investment, monetization and optimization that underpins our entire development flywheel. As we advance through 2025, we will continue to leverage our deep power sector expertise to identify other high potential sites that enable us to address surging demand for load capacity across emerging applications like AI compute. This disciplined approach underpins our commitment to delivering outsized returns and building an enduring generational business at the intersection of energy and technology.

Next slide please. I’ll take one final step back as I conclude my remarks. Everything we’ve discussed today from the transformation of our business to the refinement of our reporting structure and our roadmap for 2025 is anchored in a principle I share when I first outlined the early impact of our restructuring program several months ago. We prioritize fundamentals above all else and we invest capital only when we believe it will create enduring shareholder value. Looking ahead to 2025 and beyond, this principle will guide us forward.

While others may fixate on short term metrics or fleeting trends, we will continue to take a power first innovation driven approach to develop, commercialize and operate the critical infrastructure that underpins the breakthrough technologies of today and tomorrow. The market will not always agree with our approach, but there is a simple conviction at the heart of everything we do and we will continue to follow that conviction because we believe it is the path to building a generational business at the intersection of energy and technology. Thank you again for your continued support. It has been an honor to lead Hut eight as CEO over the past year. Operator, please open the line for Q and A.

Mike Colonnais, Analyst, A.C. Wainwright: Thank you.

Conference Moderator: Our first question comes from Mike Colonnais with A. C. Wainwright. Your line is open.

Mike Colonnais, Analyst, A.C. Wainwright: Hi, good morning guys. Congrats on all the progress you made in 2024 with the business and the plans here for 2025. I was wondering if we could start, if you could provide more detail around your capital allocation priorities for 2025. You obviously have this large development pipeline in now Riverbend, an exciting new site for you. So it’d be great to get a better sense as to how you plan to deploy capital either to develop Bitcoin mining infrastructure or HPCAI damage centers?

And also how you’re thinking about acquiring additional Bitcoin in the open market following the purchase you made back at the end of last year?

Astrid Ganoit, CEO, Hut 8: Thanks, Mike. Really appreciate that. As we look at the layers of our business and we think about power, digital infrastructure and compute, we’ll continue to invest into the power layer because we believe that’s the foundation that drives value across the rest of the business. And so you’ll see right now with our fleet upgrade coming in this quarter, that will bring our fleet efficiency on the Big One mining side of the business from 32 joules per terra hash to around 20.5 joules per terra hash with about 10.3 zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero zero When we look on the other side of the business, which is data center development and HPC development, we’re extremely excited by the potential of what’s possible and the scale.

When we look at these large project sites, every 100 megawatts is about $1,000,000,000 of development and capacity development. With the right investment grade counterparties, we can pull about 70% to 80% project level financing on the construction loan. And we’ve seen in the spread between SOFR plus 200 bps or up to SOFR plus four fifty bps for non IG counterparties. And so we will use different mechanisms of project level financing, subsidiary financing in addition to parent level financing to drive growth across all layers of the infrastructure stack and continue to accelerate growth with the foundation being on power development.

Mike Colonnais, Analyst, A.C. Wainwright: Appreciate the color there, Asher. And if you could just provide some more detail on how conversations with prospective AI customers have evolved since last quarter. Just curious to see what inning they are in their due diligence process as it relates to evaluating Hut’s power assets. And if the Co2 relationship is really helping to accelerate those conversations?

Astrid Ganoit, CEO, Hut 8: Thanks, Mike. I’ve kind of taken this approach from the very beginning when we started this, which is Hut eight will be a lot more thoughtful about what we share to the market and really share updates as they become definitive. As we continue to commercialize both Riverbend and other opportunities in our commercialization pipeline, We’ll continue to work hard. You guys have our commitment that myself and Sean spend a majority of our time on this segment of the business because we’ve already built such a great flywheel on the low redundancy, pick one computes out of the business. So we continue to have active deep conversations with different counterparties and we’ll share more with the market as they become definitive.

Mike Colonnais, Analyst, A.C. Wainwright: Great. Thank you for taking the questions.

Conference Moderator: One moment for our next question. Our next question comes from Patrick Molli with Piper Sandler. Your line is open.

Patrick Molli, Analyst, Piper Sandler: Yes. Good morning. Thanks for taking the question. So you saw a pretty significant step up in the amount of power under exclusivity as well as the development pipeline. Can you talk about where the incremental opportunities are coming from and how we should think about your ability to convert or like what pace you expect to convert some of the development pipeline into power under exclusivity?

And then just lastly, as we sit here today, how much of your power under exclusivity could be used for AI HPC data centers? Thanks.

Astrid Ganoit, CEO, Hut 8: Thanks, Patrick. So today as we look at kind of end of Q4 twenty twenty four, ’12 point ’3 gigawatts of total pipeline capacity of which 2.8 gigawatts are under exclusivity. The Riverbend project was an example of a project that was under exclusivity for quite some time under a one way kind of purchase and sale agreement, which we executed and now own the property. We’re looking at projects across the ecosystem in The U. S.

From Kansas City, West Virginia, Michigan, Florida, Ohio, Indiana. And so we continue to focus the pipeline on sites that are focused on AI data center development, some in Tier one markets or others that have dual purposes as well. But there are some sites that are purely just for the HPCAI side of the business and others that have this dual purpose. We are less interested in developing sites that only have kind of one purpose. And so we’ve been very thoughtful in building and adjusting our development pipeline over the last twelve months to address the demand both that we see that exist today, but also as we see the energy landscape evolve over the years to come.

Patrick Molli, Analyst, Piper Sandler: Okay. And then just as a follow-up on the Riverbend site, any idea of like what the potential CapEx per megawatt would look like there? I understand maybe depending on the deal terms, maybe the tenant would cover a portion of that, but just broadly, what would you expect that CapEx per megawatt to be, really help with our models? Thanks.

Astrid Ganoit, CEO, Hut 8: I think that’s right. The kind of rough range is around $10,000,000 a megawatt. That will adjust a bit based on kind of the tenants’ demands. And as you know, some of these structures are on a triple net yield on cost model and others are on a more gross modified lease. So any adjustments to that CapEx depending on the tenants’ needs will obviously have an impact on that lease rate.

Patrick Molli, Analyst, Piper Sandler: All right, great. That’s it for me. Thanks.

Conference Moderator: One moment for our next question. Our next question comes from Bill Poponasso with KBW. Your line is open.

Bill Poponasso, Analyst, KBW: Good morning and thanks for taking my questions. Ashraf, can you shed some light on the managed services business following the IONIQ Digital contract termination? What does the landscape look like today? And do you see more growth opportunities in the market? Or should we expect growth coming mainly from self mining and hosting?

Astrid Ganoit, CEO, Hut 8: Thanks, Bill. Yes, so on kind of the IONIQ partnership and relationship there, we obviously reserve our rights there, but are focused on kind of the highest and best use of time right now in terms of where we see the biggest growth towards our business and the biggest catalyst for that growth. As we look at the managed services business, we actually have a team and we just brought on a new person as well to that team to continue looking and growing. I think the profile of customer there is really financial investors looking to get exposure and we become that counterparty. So for example, our managed services business that we had with Generate Capital and they took over the Compute North assets, that was a great relationship.

In addition to our managed services at the Key Mountain JV with Nexera, great relationship. Both of these counterparties have kind of a common theme where they’re financial investors into this asset class and less have an ambition of being operators within this asset class. And so we’ll look at other areas of growth for managed services, but within the largest driver of shareholder creation in the company is obviously continuing to build power and digital infrastructure capacity and be able to find co located customers specifically on the AI business and also co locating on the digital asset side of the business as well. Managed services is a great business line to offset some of our SG and A and it’s a high margin kind of service based business. But the largest value drivers of stockholder value to our company, we believe, will be through the other pillars.

Bill Poponasso, Analyst, KBW: Appreciate that color. And then just shifting to the AI HPC strategy, it seems like the market is constantly evolving at this point here on the AI HPC side. Criteria is becoming more specific, whether it be training versus inference, location, energization timelines. Can you speak to the level of competition in sourcing new sites and how that may or may not be impacting HUD’s strategy here with the development pipeline? Thank you.

Astrid Ganoit, CEO, Hut 8: Thanks, Phil. I think the unique differentiator of Hut eight is our ability to develop this pipeline and the ability to develop energy assets better and faster than many. When we looked at this opportunity from day one, it was never about we have one, two or three sites that we want to convert to AI and that’s kind of our business and we’re kind of that’s it. It was really about, all right, there’s this big demand for energy. We’ve always been able to capture that demand and scale to it and let’s cater our development pipeline in order to meet these demands from these different industries.

I would say over the course of the last year, we’ve learned a lot. We’ve built a lot of really deep meaningful relationships. And I actually had a conversation with a large data center operator recently and we got connected through another counterparty and they said, I’ve been hearing Hadeep’s name all around. I’m like, look, we’re just trying to catch up. It’s like, well, you’re catching up pretty quickly.

I hear about you guys all over and all good things. And so look, we’re very, very fortunate that we’ve been accepted well. We’ve built good and deep and meaningful relationships. And we understand power. We understand power both in regulated and unregulated markets.

We understand power on a front of meter basis, on a behind the meter basis. And we understand power generation as well when people are talking about island facilities. We own four power generation facilities today that we’ve operated for well over a year now. And so I think as we think about what the market demand is, I think we’ve done a good job of adjusting in and catering our development pipeline in order to cater towards that market. And I think that will continue to be our competitive edge as we start showing the market that we can build these asset classes as well.

Phase one is build, deliver the product everyone knows. And phase two is we’re going to continue to optimize the digital assets and digital infrastructure like we have historically on the Bitcoin mining side of the business when we think about Tier zero data centers. The Vega facility to remind everybody is a two zero five megawatt liquid cooled data center, liquid cooling to the rack and each rack is around 200 kilowatts per rack density. We’re building that for around $400,000 a megawatt. Think about that.

Liquid cooling, 200 kilowatts per rack, NVIDIA block holes are around 120 to 130. We have fiber connectivity, we have power and we have cooling, both liquid and air for the air components of the servers. And we’re doing that for around $400,000 per megawatt, which is cheaper than I think many people have built air cooled Bitcoin mining facilities. And so look, I think for us that’s the long term strategy here in the data center market is how do we deliver what people are kind of thinking of okay, well how do they deliver traditional Tier three data centers? And Phase two after that is how do we deliver them and how do we deliver them cost effectively with innovation around that stack as well.

So you’ll see kind of this multi layered approach as we continue to build over the years to come.

Bill Poponasso, Analyst, KBW: Thanks for that color Asher and congrats again on the attractive Riverbend acquisition.

Conference Moderator: One moment for our next question. Our next question comes from John Taddara with Needham. Your line is open.

John Taddara, Analyst, Needham: Great. Thanks for taking my question. Congrats on the progress and all the plans for the rest of 2025 and beyond. I guess as it relates to the development pipeline and then maybe specifically on Rumivend, do you ultimately think there’s going to be a couple customers at that site or do you think it would be one? And then I know Mike kind of asked on this, I don’t know if we fully got to it, but has there just been any slowdown in conversation regarding some of the Microsoft (NASDAQ:MSFT) news, which we have our own thoughts on, but just wondering if any change in those customer conversations?

And then I have one more follow-up.

Astrid Ganoit, CEO, Hut 8: Sure. Happy to answer. Good to see you again, John. On the customer side, right now, most of the customers we’re speaking to want large scale campuses and large scale campuses that have the path towards a gigawatt, especially in new markets that they would go into. And so we have multiple customers that we’re speaking to around different commercialization opportunities.

And so we are having deep and engaging conversations with multiple customers. However, the customers we’re speaking to also are looking at large scale campuses. I do believe, however, long term, not today, but enterprise will continue to grow and you’ll start seeing kind of multi tenant campuses as that market continues to grow. But I think today we’re seeing ample demand from a large campus site. And then in terms of demand, I mean, we haven’t seen a slowdown from pre kind of deep seeking news and pre Microsoft news at PTC (NASDAQ:PTC), which is one of the largest kind of like data center gatherings in January to post deep seeking news, post kind of Microsoft news.

We’ve seen if not the same more increased heightened of demand and velocity of those conversations. So we continue to see investments on this infrastructure side on this investment cloud and continue to dive deep in the discussions that we’ve had.

John Taddara, Analyst, Needham: Great. That’s super helpful. And then just my follow-up, you had mentioned earlier you want to be very thoughtful about what you share with the market. Some of your peers have announced these and I’m just wondering if it’s like an LOI is considered something big enough that you would share that to the market or if that’s something where I guess on that side you would almost wait for a finalized lease to be shared. Just any kind of commentary on the distinction?

Astrid Ganoit, CEO, Hut 8: Yes, John. We’ve decided not to share LOIs as definitive because at the end of the day, LOIs lay out the foundation of what the deal is. The definitive documents actually lock people up in those commitments. And we think the reason we have not decided not to share LOIs is because one, I think it actually hurts the negotiating leverage you have with counterparties when they know that the market is expecting you to close. And if you don’t, you’re going to hurt them.

So they have more leverage in that conversation. And we want to be very thoughtful around the agreements at this quantum of dollars and scale and risk. And so our perspective is definitive means a definitive document, not a letter of intent.

John Taddara, Analyst, Needham: Got it. Understood. Thank you and congrats on everything so far, Asher.

Astrid Ganoit, CEO, Hut 8: Thanks so much. Appreciate the support.

Conference Moderator: One moment for our next question.

Astrid Ganoit, CEO, Hut 8: And we’ll run a little bit over to be able to answer all the questions as well.

Conference Moderator: Our next question comes from Stephen Glaglala with Jones Street. Your line is open.

Stephen Glaglala, Analyst, Jones Street: Yes, sure. And Sean, thanks for the question. On the Riverbend site, I just had a follow-up there. The application noted, Hutt would lease the facility to a hyperscale tenant. And I just wanted to see if you can confirm if you’re still focused on a hyperscaler tenant there or another or other customer types as well.

Astrid Ganoit, CEO, Hut 8: So the way I think you can think about kind of our customer profile is folks that can actually commit to campuses of this scale and folks that we’re able to finance as well that have the credit worthiness to finance. So obviously, hyperscale is a large category within that set. I think the Louisiana permitting news, we had ideally not liked it to be picked up like it got picked up. And so we’ve tried to continue to be restrained and thoughtful in our approach, even though the kind of that news got picked up. But look, any projects of this scale, I think you need a really credit worthy counterparty in order to be able to finance this thoughtfully and to drive the types of returns that these data centers have potential driving.

Stephen Glaglala, Analyst, Jones Street: Thanks. And then can you just maybe update us too on where you stand with the natural gas assets as it relates to sort of strategic alternatives?

Astrid Ganoit, CEO, Hut 8: Definitely. We’ve kind of shared last year that we’ll look at kind of the best and highest use cases of those assets as we progress. Look, we’ve had a lot of learning, especially as these islanded kind of concepts become more and more mainstream as people think about data centers and how do you build these kind of multi gigawatt campuses. And so it’s been a great learning ground from us to understand power generation and how we think about that from the islanding campus. But these assets specifically, why don’t I pass the tone over to Sean and he can give a little bit more updates?

Sean, CFO, Hut 8: Yes. Thanks, Asher. And Stephen, thanks for the question. Good to see you today. As Asher said, these assets I think gave the team a lot of familiarity with owning and operating power plants.

And I think that’s beneficial to the future as we think about island generation. As it stands with the plants and where we are with them today, there’s a few near term catalysts and we’re going to see how those play out. But I think generally speaking, we’re in the same we continue to evaluate our options from a strategic perspective there. So stay tuned on news for those as the year progresses.

Astrid Ganoit, CEO, Hut 8: All right, great. Thank you.

Conference Moderator: One moment for our next question. Our next question comes from Joseph Vafi with Canaccord Genuity. Your line is open.

Joseph Vafi, Analyst, Canaccord Genuity: Hey guys, good morning and my congrats also on progress so far here. Maybe we kind of start at high level looking at your acquisition and development pipeline. Is there a gating factor here on further site acquisition in 2025 or kind of a rough model. Is there a gating factor? Is it capital?

Is it suitability of sites that make sense? Operational bandwidth to be able to move simultaneous projects forward. Just how you’re looking at the opportunity if indeed we’re kind of right now in a market where some of these scarce assets get acquired and they get scarcer over time? And now a quick follow-up.

Astrid Ganoit, CEO, Hut 8: Thanks for the question, Joe. Yes, look, all the variables you just talked about, we talk about pretty often. I think it goes without saying we move at a pretty high velocity across multiple pillars. And even when we had our Board meetings, they were always surprised by how much we’re working on, how much we’re doing. Look, we have real constraints as we think about growth, right?

And I think for us, it’s less about what are the right opportunities, more so what are the right opportunities that we’re going to prioritize, right opportunities that we’re going to prioritize capital deployment, the right opportunities that we’re going to prioritize bandwidth and team and the right opportunities that we’re going to prioritize that help build the foundation for the future we’re trying to create. And so I think we feel very fortunate and

Sean, CFO, Hut 8: grateful that this last year from when I

Astrid Ganoit, CEO, Hut 8: spoke to you all to where we are today, I think the business is completely different. The types of partners that we’re working on are different and the opportunities that are at our fingertips are radically different as well. And so for us, it’s continuing to build on that, continuing to scale, but also being prudent capital allocators and being very, very thoughtful about how we grow and making sure that it’s an accretive manner and that we’re prioritizing the highest and best uses of capital deployed for long term shareholder creation. And so I think Joe, it’s a struggle I always face because there’s so many things that we can work on in choosing the right ones that can drive the most value. And that was think to an earlier question about managed services, Ionic, like, yes, can we go drive some value there?

Can we go and try to get a termination fee we believe we’re owed? Yes. Is that the highest and best use of our time that drives the most value for our shareholders today? Probably not. We’ve expanded across all areas of the business.

Our legal team continues to grow just the amount of velocity of contracts that we do. In contracts we go every time I speak to Victor, our Chief Legal Officer, he talks about do we need more people? We’re doing so many things. And so look, I think we continue to prioritize and we’ll continue to show the market growth in this new year. Last year was about restructure, this year is about growth.

Joseph Vafi, Analyst, Canaccord Genuity: Great. And then just switching gears over to Vega, Bitmain agreement, just if we could double click there a little bit on maybe potential timeline to hashing. And then kind of what you’re looking for kind of at a high level if you were going to to go ahead and exercise that purchase option on that agreement as it stands now? Thanks a lot.

Astrid Ganoit, CEO, Hut 8: Thanks, Joe. Our target continues to be Q2 of this year. We’re really proud and excited about the progress that we’ve had. We shared some of those in our socials. And then from an execution standpoint, the beauty about this agreement is we have a great hosting co location agreement when we start energizing the site and we have six months to make that decision.

So let’s hope that Bitcoin continues to run and that becomes a really easy decision, but ultimately I don’t think we need to make a decision now and we can make it in real time as we have that option period to our advantage.

Joseph Vafi, Analyst, Canaccord Genuity: Great. Thanks, Asher.

Conference Moderator: One moment for our next question. Our next question comes from Brett Knobloch with Cantor Fitzgerald. Your line is open.

Brett Knobloch, Analyst, Cantor Fitzgerald: Hi, guys. Thanks for taking my question and congrats on the results. Maybe just to start off with Vega. I believe you guys probably said at a minimum it would be $135,000,000 of annualized revenue and it seems like kind of lower that to $125,000,000 So I guess any reason why the reduction there?

Astrid Ganoit, CEO, Hut 8: Hey, Brett. Thanks for that. I think as we look at the uptime, I think ultimately we’re looking at what the energy rates are and we’re thinking about kind of on a curtailment adjusted basis. And so we see that the kind of underlying natural gas prices in Aerocont have adjusted a little bit and if we need to adjust for that curtailment. So that’s the biggest driver there and maybe $135,000,000 again if we see kind of energy rates kind of adjust, but it’s really adjusting for potential curtailment that we see, which obviously would impact top line.

Brett Knobloch, Analyst, Cantor Fitzgerald: Perfect. Thank you. And then regarding River Bend, could you maybe just touch a bit on what you guys need to do to get that site ready in order to sign a contract from an infrastructure standpoint? Is it building a substation? Have you started building that substation?

How much capital do you think you need to put into that site before you could potentially sign a lease?

Astrid Ganoit, CEO, Hut 8: We’ve already started kind of moving dirt on that ground preparing for the switch yard that Entergy Louisiana is building for us getting the substation ready to make sure kind of the value of the project and near term amortization continues to do so. If we think about that to the overall development cost of

Sean, CFO, Hut 8: a data center, obviously that’s kind

Astrid Ganoit, CEO, Hut 8: of single digit percentage points. And so I think we’ll continue to develop in areas that we believe add value to the opportunity, but not take massive capital risk before we’ve kind of shared with the market what the customer is. And look, some structure that we’ve kind of been discussing and seen as well and I think we’ll be able to sell the market after the fact on these things. But you don’t need definitive to necessarily start breaking ground. Some customers are willing to have some advanced payments to make sure you keep timelines.

And so I think look all that will come to fruition as we kind of share with the market once we have more definitive updates.

Brett Knobloch, Analyst, Cantor Fitzgerald: Awesome. Thank you guys. Really appreciate it.

Conference Moderator: One moment for our next question. Our next question comes from George Sutton with Craig Hallum Capital Group. Your line is open.

Astrid Ganoit, CEO, Hut 80: Hey, good morning guys. This is Logan on for George. Congrats on all the progress here this morning. Maybe just one on the Vegas side. As we think about that potentially being upgraded down the road for an AI use case, do you see any difference in the potential end user for an upgraded Vega side as compared to Riverbend keeping in mind that that is ostensibly a hyperscale kind of customer?

Like would you see Vega being maybe more suited for enterprise customers? Or do you see any difference there?

Astrid Ganoit, CEO, Hut 8: Yes. So the biggest difference is as we think about kind of Riverbend, our intention plan is a full kind of Tier three data center with all the redundancy that you would imagine a Tier three data center. Vega, we don’t have that redundancy that we’ve built in. Actually a couple of future iterations of this design will include the optionality to be able to add it in. Right now from a spacing perspective, we just didn’t add in the ability to kind of add in the generators and backup in phase in this kind of V1 of our design.

I think honestly as I look into the future, let’s use ASICs, the compute layer in mining as the analogy. Old miners that were less efficient and those ASICs were sent to places like South America and Africa where there is a cheaper cost of power because using The U. S. Infrastructure that’s more expensive to build wasn’t the best and highest use case of that infrastructure. So I think when we think about these projects and when we think about Vega, it’s great for a counterparty that wants speed towards energization.

And ultimately, I think long term, it’s great for a counterparty that will start caring about how much a data center costs relative to their lease rate because there will be I mean the block list today will not be the newest and greatest hardware and there will need to be a place that they go to where they’re a lot more sensitive on lease rates and energy costs where today that’s not the case. And so I think as we’re thinking about this ecosystem, we’re not just thinking about how do we secure an opportunity today, show the market that we can secure data center contracts and build, but long term like where’s our competitive edge, where’s our competitive moat and how do we also build the foundations of that today as well.

Astrid Ganoit, CEO, Hut 80: Got it. That’s helpful. That’s all for me. I’ll hop back in the queue.

Conference Moderator: Thank you. I’m not showing any further questions at this time. So this also does conclude today’s presentation. You may now disconnect and have a wonderful day.

Astrid Ganoit, CEO, Hut 8: Thank you, everybody.

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