Because of the crypto cold, many miners have had to slash expenses or combine in order to survive.
According to Hut 8 CEO Jamie Leverton, the bankruptcy of crypto exchange FTX and broader crypto market turbulence were not major considerations in the decision to merge crypto mining business Hut 8 with US Bitcoin Corp.
On February 8, Leverton stated that the transaction was mostly about diversifying revenue and assisting in the scaling of the merged firms, stating:
“I think this deal would have happened regardless. The ability for us to bring these businesses together we think is so incredibly complementary.”
The all-stock merger was announced on February 7, with the merged business, now known as Hut 8 Corp. or “New Hut,” located predominantly in the United States rather than Canada.
Concerning the November crash of FTX, Leverton stated that anxieties were “beginning to lessen a little bit,” and interest in the crypto business was returning.
“I think we’re seeing a lot of interest come back into this sector,” she continued, “and we’ve seen considerable appreciation throughout the market so far in 2023.”
The combination of the two mining businesses would “give an enormous level of scale,” she added, adding that there will be “diversified income programs,” which is a smart strategy for both companies separately.
According to reports, New Hut will have access to around 825 megawatts spread over six plants in New York, Texas, and Alberta, Canada. It will have a total combined mining capacity of 5.6 exahashes per second (EH/s).
Commenting on the choice of site, Leverton stated that it was in the best interest of the firm to have “diversified regions,” adding: “One of the positives here is [that the merger is] giving us that geographic diversification. On both sides of the border, regulatory situations are unpredictable.”
Hut 8 has a mining facility in North Bay, Ontario, but activities have been halted owing to a legal dispute with its energy source.
US Bitcoin’s Niagara plant has its own challenges, including an ongoing fight with the City of Niagara Falls over noise concerns from neighbors.
In a presentation on February 8, the business presented further details on the transaction. The deal is scheduled to completion in the second quarter of 2023, subject to shareholder, regulatory, and stock exchange clearances.
Earlier this week, Leverton stated that the company intends to finance its operational costs during the interim period by selling the Bitcoin it mines and examining alternative financial options.
On the day the transaction was announced, Hut 8 shares fell 8%. Furthermore, Hut shares fell 1.2% on the day to $2.12 in after-hours trading, according to MarketWatch. The stock is now trading 86% lower than its all-time high of $15.28 set in November 2021.
