Hut 8 Corp. Q1 FY2025 earnings call

• Strategic Context: 2024 was about restructuring the legacy business, and 2025 is focused on building on that with a development flywheel aligning origination, investment, monetization, and optimization under a Power First Strategy. - American Bitcoin Launch: Launched American Bitcoin through agreements for Colocation, Managed Services, and Shared Services, converting cyclical Bitcoin mining economics into stable revenue streams. - Investments: Invested $63.3 million in property and equipment, completed a fleet upgrade with a 79% increase in deployed hash rates and 37% improvement in efficiency, and made progress on projects like the Vega data center and River Bend site. - Operational Leverage: Developed software tools for energy optimization and ASIC operations at Vega and across the platform.

Power: Segment revenue decreased from $9.9 million to $4.4 million year-over-year, primarily due to an $8.2 million reduction in managed services revenue following the termination of the Managed Services agreement with Ionic Digital, partially offset by a $2.7 million increase in Power generation revenue from natural gas Power plants in Ontario. Digital Infrastructure: Revenue dropped from $5.8 million to $1.3 million YOY, mainly because of the termination of the ASIC Colocation agreement with Ionic Digital. Compute: Segment revenue fell from $32.1 million to $16.1 million YOY, driven by planned downtime related to the fleet upgrade and topline pressure from the April 2024 Bitcoin halving, but ended the quarter with 9.3 exahash of deployed hash rate and a 37% improvement in fleet efficiency.

• Expect mining economics to improve significantly in the second quarter with the completed fleet upgrade. - Progress on projects like Vega and River Bend is ongoing, with expectations of continued growth and development. - American Bitcoin is aimed to go public, and Hut 8 intends to focus on becoming an integrated energy infrastructure platform with lower cost of capital.

• Market volatility in Bitcoin price impacting financial results. - External headwinds in the Bitcoin mining sector, such as halving effects and network difficulty changes. - Execution risks in data center projects, including potential challenges in site development and customer contract negotiations.

Q: George Sutton inquired about the River Bend message and the Colocation agreement with American Bitcoin.

A: Asher Genoot responded, discussing the yield-on-cost model for projects, initial site work at River Bend, and the logic behind the Colocation agreement with American Bitcoin involving revenue streams from Colocation, Managed Services, and Shared Services.

Q: Paul Golding asked about the Vega direct-to-chip liquid cooling architecture and its relevance to hyperscalers.

A: Asher Genoot explained the benefits of the liquid cooling architecture for Bitcoin mining and its potential application in hyperscale and HPC use cases, highlighting cost efficiency and future-proofing.

Q: John Todaro asked about HPC customer conversations and JV milestones.

A: Asher Genoot stated they are working on securing customer contracts at River Bend and other sites, focusing on definitive agreements rather than LOIs, and have increasing interest in projects.

Q: Patrick Moley asked about the decline in Power under diligence/exclusivity and Hut 8's Bitcoin strategy.

A: Asher Genoot attributed the decline to filtering projects for focus, and discussed Hut 8's strategy of using Bitcoin on the balance sheet for investment in projects and American Bitcoin's role in Bitcoin accumulation.

Q: Brett Knoblauch asked about the carve-out timing and Hut 8's Bitcoin strategy.

A: Asher Genoot discussed the carve-out timing, American Bitcoin's operation as a separate entity, and Hut 8's goal to take American Bitcoin public and be an energy infrastructure platform with lower cost of capital.

Q: Bill Papanastasiou asked about negotiations with HPC counterparties and GB200s overheating.

A: Asher Genoot mentioned relationships with counterparties as long-term partnerships, focusing on win-win solutions, and the approach to site diligence and deal structuring.

Q: Mike Grondahl asked about HPC site negotiations and American Bitcoin milestones.

A: Asher Genoot discussed the possibility of other HPC sites being announced before River Bend and American Bitcoin's milestones including going public, private capital transactions, and exahash growth.

Q: Brian Dobson asked about American Bitcoin's evolution and Bitcoin treasury model.

A: Asher Genoot outlined American Bitcoin's three-layer strategy: Bitcoin mining, accumulation financing, and becoming a Bitcoin household brand.

Q: Stephen Glagola asked about Hut 8's data center team differentiation.

A: Asher Genoot emphasized the importance of site quality, minimizing execution risks, and taking a long-term oriented mindset to build trust with counterparties in data center negotiations