Hut 8 Corp. [HUT] Filings

10-Q 1 hut-20240930x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission file number 001-41864

Hut 8 Corp.

(Exact name of registrant as specified in its charter)

Delaware	92-2056803
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1101 Brickell Avenue, Suite 1500
Miami, Florida	33131
(Address of principal executive offices)	(Zip Code)

(305) 224-6427

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	HUT	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of November 12, 2024, the registrant had 93,581,092 shares of its common stock outstanding.

Table of Contents

Table of Contents

		Page

Introductory Note		2
Cautionary Statement Regarding Forward-Looking Statements		3

PART I – FINANCIAL INFORMATION		4
Item 1. Financial Statements		4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		52
Item 3. Quantitative and Qualitative Disclosures About Market Risk		72
Item 4. Controls and Procedures		72

PART II – OTHER INFORMATION		73
Item 1. Legal Proceedings		73
Item 1A. Risk Factors		73
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		73
Item 3. Defaults Upon Senior Securities		73
Item 4. Mine Safety Disclosures		73
Item 5. Other Information		73
Item 6. Exhibits		74

Signatures		75

Table of Contents

Introductory Note

On February 6, 2023, U.S. Data Mining Group, Inc., a Nevada corporation doing business as “US BITCOIN” (“USBTC”), Hut 8 Mining Corp., a corporation existing under the laws of British Columbia (“Legacy Hut”), and Hut 8 Corp., a newly-formed Delaware corporation, entered into a business combination agreement pursuant to which, among other things, Legacy Hut and its direct wholly-owned subsidiary, Hut 8 Holdings Inc., a corporation existing under the laws of British Columbia, amalgamated to continue as one British Columbia corporation (“Hut Amalco”) and both Hut Amalco and USBTC became wholly-owned subsidiaries of Hut 8 Corp. (the “Business Combination”). On November 30, 2023, the Business Combination was completed and Hut 8 Corp. began trading on the Nasdaq Stock Market LLC (“Nasdaq”) on December 4, 2023. Given that the Business Combination closed on November 30, 2023, the information included in this Quarterly Report on Form 10-Q (the “Quarterly Report”) principally describes Hut 8 Corp.’s business and operations following the closing of the Business Combination, but includes the historical financial statements of USBTC, the accounting acquirer, and related management’s discussion and analysis for the three and nine months ended September 30, 2023, which describes the business, financial condition, results of operations, liquidity, and capital resources of USBTC prior to the Business Combination.

As used in this Quarterly Report, unless otherwise noted or the context otherwise requires:

●

references to the “Company,” “Hut 8,” “we,” “us,” “our” and similar terms refer to Hut 8 Corp. and its consolidated subsidiaries including those existing prior to the consummation of the Business Combination;

●

references to “USBTC” refer to U.S. Data Mining Group, Inc. and its consolidated subsidiaries prior to the consummation of the Business Combination; and

●

references to “Legacy Hut” refer to Hut 8 Mining Corp. and its consolidated subsidiaries prior to the consummation of the Business Combination.

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Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, as well as assumptions, that, if proven incorrect or do not materialize, could cause our results to differ materially from those expressed or implied by these forward-looking statements. Forward-looking statements are generally identified by the words “intend,” “plan,” “may,” “should,” “will,” “project,” “estimate,” “anticipate,” “believe,” “expect,” “continue,” “potential,” “opportunity,” and similar expressions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements.

Forward-looking statements in this Quarterly Report may include, for example, statements about:

●

expectations relating to our future financial performance;

●

the ability to expand our business or enter into new lines of business and provide new offerings, services, and features and make enhancements to our business;

●

the ability to compete with existing and new competitors in existing and new markets and offerings;

●

the ability to acquire new businesses or pursue strategic transactions;

●

the outcome of any material litigation to which the Company is a party;

●

the ability of our cash flows generated from operating activities to meet our anticipated cash requirements in the short-term;

●

our ability to access to the capital markets for any long-term funding not provided by operating cash flows and cash on hand;

●

the expectations regarding the effects of existing and developing laws and regulations; and

●

global and domestic economic conditions and their impact on demand for our markets and offerings.

The following factors or events, among others, could cause actual results to differ materially from those described in the forward-looking statements:

●

our ability to establish and maintain strategic collaborations or other arrangements, and the terms of and timing such arrangements;

●

changes in our financial or operating performance or more generally due to broader stock market movements and the performance of peer group companies;

●

competitive pressures in the markets in which we operate;

●

changes in laws or regulations; and

●

changes in general economic conditions.

For additional information concerning factors that could cause actual conditions, events or results to materially differ from those described in the forward-looking statements, please refer to the section titled “Risk Factors” in Part I, Item 1A of our Transition Report on Form 10-K for the transition period from July 1, 2023 to December 31, 2023 (the “Annual Report”) and in Part II, Item 1A of this Quarterly Report.

We operate in a competitive and rapidly changing environment. The risks and uncertainties described and referred to above are not exhaustive and further information concerning us and our business, including factors that potentially could materially affect our business, financial condition, or operating results, may emerge from time to time. You should read this Quarterly Report and the documents that we reference in this Quarterly Report and have filed as exhibits to this Quarterly Report with the understanding that our actual future results, performance, and achievements may be materially different from what we expect. We qualify all of our forward-looking statements with these cautionary statements and urge you not to place undue reliance on any forward-looking statements. The forward-looking statements in this Quarterly Report speak only as of the date of this Quarterly Report. Except as required by law, we do not assume any obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Hut 8 Corp. and Subsidiaries

Condensed Consolidated Balance Sheets

(in USD thousands, except share and per share data)


	September 30,		December 31,
	2024		2023
	(Unaudited)		(Audited)
Assets
Current assets
Cash	$	72,282	$	30,504
Restricted cash		629		453
Accounts receivable, net		6,067		3,336
Deposits and prepaid expenses		28,025		18,457
Digital assets – held in custody		1,306		4,963
Equipment held for sale		—		3,907
Income taxes receivable		1,943		—
Total current assets		110,252		61,620

Non-current assets
Digital assets – held in custody		305,499		282,997
Digital assets – pledged as collateral		269,663		100,550
Property and equipment, net		194,107		118,069
Operating lease right-of-use asset		20,654		14,534
Deposits and prepaid expenses		37,845		5,540
Investment in unconsolidated joint venture		80,113		82,656
Investments		9,956		—
Intangible assets, net		14,698		17,279
Goodwill		56,436		57,595
Total non-current assets		988,971		679,220
Total assets	$	1,099,223	$	740,840

Liabilities and stockholders' equity
Current liabilities
Accounts payable and accrued expenses	$	31,322	$	43,757
Deferred revenue		5,635		2,700
Operating lease liability, current portion		2,614		1,226
Finance lease liability, current portion		5,030		748
Covered call options		921		—
Loans and notes payable		64,956		64,127
Total current liabilities		110,478		112,558

Non-current liabilities
Operating lease liability, less current portion		18,821		13,736
Finance lease liability, less current portion		20,208		661
Loans and notes payable, less current portion		232,341		123,320
Deposit liability		1,734		2,317
Deferred tax liabilities		3,145		609
Total non-current liabilities		276,249		140,643
Total liabilities		386,727		253,201

Commitments and contingencies

Stockholders’ equity
Preferred stock, $0.01 par value; 25,000,000 shares authorized; no shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		—		—
Common stock, $0.01 par value; 1,000,000,000 shares authorized; 93,512,499 and 88,962,964 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		935		889
Additional paid-in capital		623,263		576,241
Retained earnings (accumulated deficit)		79,405		(100,252)
Accumulated other comprehensive income		312		10,761
Total Hut 8 Corp. stockholders’ equity		703,915		487,639
Non-controlling interests		8,581		—
Total stockholders’ equity		712,496		487,639
Total liabilities and stockholders’ equity	$	1,099,223	$	740,840

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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Hut 8 Corp. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited, in USD thousands, except share and per share data)


	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
		2024	2023			2024	2023
Revenue:
Digital Asset Mining	$	11,611	$	15,565	$	55,880	$	39,069
Managed Services		20,820		4,777		39,072		14,976
High Performance Computing – Colocation and Cloud		3,421		—		10,112		—
Other		7,883		1,361		25,627		3,835
Total revenue		43,735		21,703		130,691		57,880

Cost of revenue (exclusive of depreciation and amortization shown below):
Cost of revenue - Digital Asset Mining		7,257		10,875		31,346		27,427
Cost of revenue - Managed Services		2,812		1,422		8,693		5,319
Cost of revenue - High Performance Computing – Colocation and Cloud		2,610		—		7,699		—
Cost of revenue - Other		4,880		1,229		18,604		1,274
Total cost of revenue		17,559		13,526		66,342		34,020

Operating expenses (income):
Depreciation and amortization		10,462		4,486		33,465		11,454
General and administrative expenses		16,175		4,171		54,073		15,757
Losses (gains) on digital assets		1,552		185		(201,180)		185
(Gain) loss on sale of property and equipment		(444)		—		(634)		445
Realized gain on sale of digital assets		—		—		—		(2,376)
Impairment of digital assets		—		—		—		1,431
Legal settlement		—		—		—		(1,531)
Total operating expenses (income)		27,745		8,842		(114,276)		25,365
Operating (loss) income		(1,569)		(665)		178,625		(1,505)

Other income (expense):
Foreign exchange gain (loss)		703		—		(976)		—
Interest expense		(7,938)		(5,723)		(20,231)		(18,955)
Gain on debt extinguishment		5,966		—		5,966		23,683
Gain on derivatives		2,704		—		19,923		—
Equity in earnings of unconsolidated joint venture		1,495		2,075		8,457		8,717
Total other income (expense)		2,930		(3,648)		13,139		13,445

Income (loss) from continuing operations before taxes		1,361		(4,313)		191,764		11,940

Income tax provision		(453)		(61)		(2,975)		(672)

Net income (loss) from continuing operations	$	908	$	(4,374)	$	188,789	$	11,268

Loss from discontinued operations (net of income taxes of $nil, $nil, $nil, $nil, respectively)		—		—		(9,364)		—

Net income (loss)		908		(4,374)		179,425		11,268

Less: Net (income) loss attributable to non-controlling interests		(261)		—		232		—
Net income (loss) attributable to Hut 8 Corp.	$	647	$	(4,374)	$	179,657	$	11,268

Net income (loss) per share of common stock:
Basic from continuing operations attributable to Hut 8 Corp.	$	0.01	$	(0.10)	$	2.10	$	0.26
Diluted from continuing operations attributable to Hut 8 Corp.	$	0.01	$	(0.10)	$	1.95	$	0.25

Weighted average number of shares of common stock outstanding:
Basic		91,182,107		43,197,355		90,178,607		42,954,301
Diluted		96,407,378		43,197,355		97,984,059		44,203,215

Net income (loss)	$	908	$	(4,374)	$	179,425	$	11,268
Other comprehensive income (loss):
Foreign currency translation adjustments		8,057		—		(10,379)		—
Total comprehensive income (loss)		8,965		(4,374)		169,046		11,268
Less: Comprehensive (income) loss attributable to non-controlling interest		(395)		—		162		—
Comprehensive income (loss) attributable to Hut 8 Corp.	$	8,570	$	(4,374)	$	169,208	$	11,268

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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Hut 8 Corp. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited, in USD thousands, except share data)

Nine Months Ended September 30, 2023


				Additional				Accumulated Other		Total
	Common Stock			Paid-in		Accumulated		Comprehensive		Stockholders'
	Shares	Amount		Capital		Deficit		Income		Equity
Balance, December 31, 2022	41,469,204	$	415	$	131,338	$	(122,140)	$	—	$	9,613
Issuance of common stock – net of retroactive application of recapitalization	1,987,936		20		750		—		—		770
Cancellation of restricted stock awards – net of retroactive application of recapitalization	(968,388)		(10)		651		—		—		641
Stock-based compensation – net of retroactive application of recapitalization	704,449		7		386		—		—		393
Net income	—		—		—		17,328		—		17,328
Balance, March 31, 2023	43,193,201	$	432	$	133,125	$	(104,812)	$	—	$	28,745
Stock-based compensation	—		—		314		—		—		314
Net loss	—		—		—		(1,686)		—		(1,686)
Balance, June 30, 2023	43,193,201	$	432	$	133,439	$	(106,498)	$	—	$	27,373
Cumulative effect upon adoption of ASU 2023-08	—		—		—		38		—		38
Issuance of common stock – stock option exercises – net of retroactive application of recapitalization	4,963		—		2		—		—		2
Stock-based compensation	—		—		303		—		—		303
Net loss	—		—		—		(4,374)		—		(4,374)
Balance, September 30, 2023	43,198,164	$	432	$	133,744	$	(110,834)	$	—	$	23,342

Nine Months Ended September 30, 2024


						(Accumulated
				Additional		Deficit)				Accumulated Other		Total
	Common Stock			Paid-in		Retained		Non-controlling		Comprehensive		Stockholders'
	Shares	Amount		Capital		Earnings		Interests		Income (Loss)		Equity
Balance, December 31, 2023	88,962,964	$	889	$	576,241	$	(100,252)	$	—	$	10,761	$	487,639
Issuance of common stock – stock option exercises	341,013		3		129		—		—		—		132
Issuance of common stock – restricted stock unit settlements	148,842		2		(2)		—		—		—		—
Issuance of common stock – restricted stock unit settlements, net of withholding taxes	4,046		—		(30)		—		—		—		(30)
Acquisition of subsidiary with noncontrolling ownership interests	—		—		—		—		8,743		—		8,743
Stock-based compensation	—		—		4,474		—		—		—		4,474
Foreign currency translation adjustments	—		—		—		—		35		(11,109)		(11,074)
Net income	—		—		—		250,876		—		—		250,876
Net loss attributable to non-controlling interest	—		—		—		—		(169)		—		(169)
Balance, March 31, 2024	89,456,865	$	894	$	580,812	$	150,624	$	8,609	$	(348)	$	740,591
Issuance of common stock – stock option exercises	722,404		8		275		—		—		—		283
Issuance of common stock – restricted stock unit settlements	745,959		7		(7)		—		—		—		—
Issuance of common stock – restricted stock unit settlements, net of withholding taxes	1,881		—		(10)		—		—		—		(10)
Issuance of common stock – deferred stock unit settlements	17,850		—		—		—		—		—		—
Stock-based compensation	—		—		7,010		—		—		—		7,010
Foreign currency translation adjustments	—		—		—		—		(99)		(7,263)		(7,362)
Net loss	—		—		—		(71,866)		—		—		(71,866)
Net loss attributable to non-controlling interest	—		—		—		—		(324)		—		(324)
Balance, June 30, 2024	90,944,959	$	909	$	588,080	$	78,758	$	8,186	$	(7,611)	$	668,322
Issuance of common stock – stock option exercises	171,822		2		65		—		—		—		67
Issuance of common stock – restricted stock unit settlements	82,283		1		(1)		—		—		—		—
Issuance of common stock – debt extinguishment	2,313,435		23		30,162		—		—		—		30,185
Stock-based compensation	—		—		4,957		—		—		—		4,957
Foreign currency translation adjustments	—		—		—		—		134		7,923		8,057
Net income	—		—		—		647		—		—		647
Net income attributable to non-controlling interest	—		—		—		—		261		—		261
Balance, September 30, 2024	93,512,499	$	935	$	623,263	$	79,405	$	8,581	$	312	$	712,496

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Reflects the retrospective application of the 0.6716 share consolidation pursuant to the Business Combination effective November 30, 2023.

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Hut 8 Corp. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited, in USD thousands)


	Nine Months Ended
	September 30,		September 30,
	2024		2023
Operating activities
Net income	$	179,425	$	11,268
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		33,465		11,454
Amortization of operating right-of-use assets		996		130
Non-cash lease expense		1,270		73
Stock-based compensation		16,441		1,651
Equity in earnings of unconsolidated joint venture		(8,457)		(8,717)
Distributions of earnings from unconsolidated joint venture		11,000		23,100
Digital Asset Mining revenue		(55,880)		(39,069)
Hosting revenue earned in digital assets		(3,871)		(433)
(Gains) losses on digital assets		(201,180)		185
Impairment of digital assets		—		1,431
Realized gain on sale of digital assets		—		(2,376)
Deferred tax assets and liabilities		2,536		2
Gain on debt extinguishment		(5,966)		(23,683)
Non-cash income		(3,578)		—
Foreign exchange loss		976		—
Amortization of debt discount		4,047		4,838
(Gain) Loss on sale of property and equipment		(634)		445
Gain on derivatives