Hut 8 reports increased revenue in 2019

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Canada-based Hut 8 Mining Corp, a public listed company on the Toronto Stock Exchange, recently published its 2019 annual financials, showing total revenue of C$82 million (US$58 million). The company is one of the world’s largest digital currency transaction processing companies by operating capacity and market capitalization. Their announced earnings signify a 66% increase from the previous year’s figure.

The surge in earning results are primarily because of two major operational expansions that increased petahash capacity by 19.6%. Hut 8 launched the company’s flagship facility in Medicine Hat, which became operational in mid-2018 then later added 12 more BlockBoxes that became operational in early 2019.

These infrastructure expansions significantly raised the operational cost of the company resulting in a profit margin of 45%, compared to the 50% profit margin the year before. The Toronto company also reported C$33.5 million (roughly US$23.7 million) in adjusted EBITDA, an increase of 73% from the previous year’s C$19.3 million (around US$13.65 million). They repaid C$5.3 million of outstanding debt. 

“2019 was a milestone year for Hut 8 as we achieved bottom-line profitability which allowed for growth in operating capacity and paying down debt,” said Jimmy Vaiopoulos, chief financial officer at Hut 8. “We are proud to have had a successful first full year as a public company while also graduating to the TSX via the TSX Sandbox.”

Hut 8 stock jumped on the news rising by +18.42% to close at CAD 0.90. The results also revealed a total gain of C$4.3 million (US$3.04 million) for the last year. In contrast, the company reported a loss of C$ 17.9 million (around US$12.66 million) the previous year.

Hut 8 owns and operates two sites in Canada, including 94 BlockBox AC data centers with a current maximum operating capacity of 107 MW and 952 PH/s. At the end of 2019, it purchased nine Blockbox AC data centers from the Bitfury Group worth $7 million. Once those are fully operational, the company is expecting to run at approximately 963 PH/s and 109.4 MW.

Shortly after the annual report was published also came the news that Gerri Sinclair resigned from the company’s board of directors, effective that same day. 

“The Board of Directors and Hut 8 management would like to thank Gerri Sinclair for her valued contribution over the past two years and wish her the best in her future endeavors,” said Andrew Kiguel, CEO of Hut 8.

Hut 8’s management and Board are evaluating alternatives regarding appointing a new independent director to fill the vacancy.  They have signaled that the Bitcoin halving may have a negative impact on their 2020 earning if there is a corresponding increase in the price of digital currency. They anticipate that there will be a drop in hashrate as less efficient processors shut down, consequently reducing competition.