Company providing end-to-end managed services for all of Ionic Digital’s mining operations, including four existing sites in Texas and Ionic’s Cedarvale site, where construction is underway
Hut 8 to continue hosting 8,500 Ionic Digital miners at the Company’s Alpha site
Hut 8 taking an equity stake in Ionic Digital
MIAMI - Feb. 01, 2024 (GLOBE NEWSWIRE) -- Hut 8 Corp. (Nasdaq | TSX: HUT), ("Hut 8” or the “Company”) one of North America’s largest, most innovative digital asset mining pioneers and high performance computing infrastructure providers, today announced that it has signed a four-year agreement with Ionic Digital to provide end-to-end managed services across all of its Bitcoin mining operations. The agreement includes Ionic’s four existing sites in Midland, Texas and the development and operation of its Cedarvale site located in Ward County, Texas, which is designed to reach approximately 240 MW. Hut 8 will also continue to host approximately 8,500 Ionic Digital miners at Hut 8’s Alpha site in Niagara Falls, New York.
“Our managed services offering is distinct within the industry and ultimately differentiated Hut 8 as the best partner to manage Celsius’ mining operations through Ionic Digital,” said Jaime Leverton, CEO of Hut 8. “We have been designing Ionic’s Cedarvale site since signing the interim management agreement in December and are thrilled to have construction underway and be actively managing the company’s mining operations.”
Hut 8 is providing end-to-end managed services for Ionic Digital’s operations, including the design and development, engineering, financial modeling, budgeting, accounting, construction management, procurement, logistics, and RFP coordination at its Cedarvale site. It is expected that when construction is complete, Hut 8 will oversee approximately 127,000 miners with nameplate hashrate of approximately 12 EH/s and more than 300 MW of energy infrastructure in year one of the managed services agreement.
Under the agreement, Hut 8 is expected to earn an aggregate of $81,504,800 in cash payments in addition to reimbursement for direct passthrough operating expenses. The four year agreement includes a milestone to extend to a five year agreement if key targets are met. If the term extension is triggered, Hut 8 is expected to earn $101,881,000 in addition to reimbursement for direct passthrough operating expenses. In addition to the fees payable pursuant to the mining services agreement, Hut 8 expects to receive the following equity interests as compensation under the agreement: (i) up to 1.59405% in restricted Ionic Digital common stock, with 0.31881% of Ionic Digital stock vesting annually; provided that the last tranche of 0.31881% of stock will not vest if the agreement is not extended for the fifth year; and (ii) warrants to purchase up to 1.59405% of Ionic Digital common stock, with each tranche of 0.31881% Ionic Digital stock granted at the end of each year of the agreement; provided that the last tranche of 0.31881% of Ionic Digital stock will not be granted if the agreement is not extended for the fifth year.
Hut 8 has also entered into a contribution agreement with Ionic Digital pursuant to which Hut 8 has acquired 374,261 shares of Ionic Digital common stock in exchange for a cash payment of $6,378,000. Pursuant to the contribution agreement, Hut 8 will be required to acquire a further 374,261 shares of Ionic Digital common stock for a cash payment of $6,378,000 on the earlier of: (i) May 31, 2024, and (ii) the date on which Ionic Digital’s Registration Statement of Form 10 is declared effective by the U.S. Securities and Exchange Commission.
Hut 8 has also been provided with certain customary investor rights, including, for so long as the agreement is in effect, the right to appoint two directors to the board of Ionic Digital, one of which will be assumed by Asher Genoot, President of Hut 8.
Ionic Digital will be a well-capitalized industrial mining company. Under the Celsius chapter 11 plan, Ionic Digital was valued at approximately $740 million on a net asset basis and will be vested with substantially all of the Celsius mining assets. Additionally, under the Celsius plan, Ionic will receive $225 million in cash (subject to certain adjustments) and have no debt.
About Hut 8
Through innovation, imagination, and passion, Hut 8 Corp.’s seasoned executive team is bullish on creating value at the intersection of infrastructure and energy through Bitcoin mining and hosting, groundbreaking managed services, energy arbitrage, operating traditional data centers, and capitalizing on emerging technologies like AI and machine learning. Headquartered in Miami, Florida, Hut 8 Corp.’s infrastructure portfolio includes eleven sites: five high performance computing data centers across British Columbia and Ontario that offer cloud, co-location, AI, machine learning, and VFX rendering computing solutions, and six Bitcoin mining, hosting, and managed services sites located in Alberta, New York, Nebraska, and Texas. Long-distinguished for its unique treasury strategy, Hut 8 Corp. has one of the highest inventories of self-mined Bitcoin of any publicly-traded company globally.