Hut 8 Mining, a public cryptocurrency mining company today announced the purchase of an additional 12 BlockBox Data Centers at its bitcoin mining facility in the City of Drumheller, Alberta, Canada. The BlockBoxes were previously owned by blockchain technology company, the Bitfury Group.
Prior to closing the purchase, the additional 12 BlockBoxes will be upgraded to include 12 Petahash per second (PH/s) Bitfury Clarke ASIC chips, manufactured by Bitfury. These BlockBoxes increase Hut 8’s bitcoin mining capacity by 14.4 MW and approximately 144 PH/s.
When combined with its operations in the City of Medicine Hat, Alberta, and upon completion of the technology upgrades described herein, Hut 8 will operate a total of 85 BlockBoxes, representing an aggregate maximum of 100.3 MW of fully-funded operating capacity generating approximately 784 PH/s. The BlockBox technology upgrades are expected to be completed and operational next month.
In addition, and as part of this transaction, Hut 8 will reduce the monthly management fee paid per BlockBox to Bitfury from the existing rate of $2,500 to $2,000. As a result, the company reported it will save in excess of $500,000 annually from the rate reduction.
“Our goal is to be the largest bitcoin miner in the world. By increasing our operating capacity by over 20% through this transaction, Hut 8 will further solidify its position as the largest cryptocurrency miner in Canada and one of the largest bitcoin miners in the world.”
Subject to approval by the TSXV, the 12 new BlockBoxes, at a cost of US$13,000,000, will be financed through:
- (i) a loan from the Bitfury Group (Bitfury) for USD $9,000,000
- (ii) USD $2,000,000 in Hut 8 shares priced at $3.15
- (iii) USD $2,000,000 in cash
The loan will be unsecured, carry a 12% coupon and have a 24-month term for the first $6.0 million. The balance would be repaid at the earlier of maturity date of the Galaxy Digital loan already outstanding or such date as the Galaxy Digital loan is repaid early. There are no additional fees and no penalty for prepayment. Hut 8’s current capital structure consists of 85,227,858 common shares outstanding, 2,882,222 warrants and 965,000 options.
Since beginning its mining operations in December 2017, Hut 8 has mined over 4,400 bitcoins.