Hut 8 Corp. Q2 FY2025 earnings call

• The second quarter marked progress in executing the 2025 strategy, with investments yielding measurable returns, a shift to contracted assets in the asset commercialization profile, and the power-first innovation-driven strategy unlocking growth potential.
• American Bitcoin commenced Bitcoin mining operations as a consolidated subsidiary on April 1, 2025, leveraging Hut 8's managed services and ASIC colocation services. The asset commercialization profile shifted from merchant exposure to contracted assets, with key milestones including contracts with American Bitcoin, energizing the Vegas site, and securing 5-year capacity agreements for power plants in Ontario.
• The power-first innovation-driven approach is a differentiator, seen in developments like the Vega site and the Riverbend project, which demonstrates the ability to deliver innovative infrastructure for emerging AI workloads. The new brand reflects the company's evolution at the intersection of energy and technology.

Power Segment: Revenue for the quarter was $5.5 million, a $7.8 million year-over-year decline in managed services due to the termination of the managed services agreement with Ionic Digital, partially offset by a $2.8 million increase in power generation revenue from Ontario's natural gas-fired power plants. Segment cost of revenue declined from $5.4 million to $5 million.

Digital Infrastructure Segment: Revenue was $1.5 million, a $3.8 million year-over-year decrease driven by the termination of the ASIC colocation agreement with Ionic Digital. Segment cost of revenue was $2.1 million, down $2.2 million year-over-year due to the same termination.

Compute Segment: Revenue rose $18.5 million year-over-year to $34.3 million, driven primarily by a $16.4 million increase in Bitcoin mining revenue from infrastructure and ASIC fleet upgrades, and a $2.3 million increase in GPU-as-a-Service revenue. Segment cost of revenue was $14.7 million for the quarter versus $8.7 million in the prior year, driven by increased costs in Bitcoin mining and GPU as a Service.

• American Bitcoin is on track to complete its go-public transaction via a stock-for-stock merger with Griffin Digital, with the Form S-4 declared effective by the SEC. Hut 8 expects to retain a controlling interest in American Bitcoin upon completion.
• The development pipeline includes approximately 10,800 megawatts under diligence and 3,100 megawatts under exclusivity, with a focus on engaging with prospective AI data center development partners and commercializing projects like Riverbend.
• The company aims to scale its infrastructure platform across existing and emerging verticals, leveraging its power and digital infrastructure businesses.

• Risks associated with forward-looking statements, including uncertainties that could cause actual results to differ from expectations, as detailed in the company's Form 10-Q, 10-K, and other continuous disclosure documents. - Accounting treatment and intercompany activity presentation could impact how consolidated results are interpreted, though the commercial framework is designed to balance capital-efficient scalability for American Bitcoin and infrastructure-like returns for Hut 8.

Q: Patrick Moley from Piper Sandler asked about the 500 megawatts of power under exclusivity, seeking details on composition and intended use.

A: Asher Genoot responded that the origination team is focused on sites for AI customers and dual-purpose sites in Texas, with more details to come in upcoming quarters.

Q: Darren Aftahi from ROTH Capital followed up on the 3.1 gig portfolio, asking about the percentage of dual-purpose vs. exclusive next-gen compute.

A: Asher Genoot said about a gigawatt of runway for Bitcoin mining, with the remainder being dual-purpose or for AI compute, and the team is working on staging power availability for growth.

Q: Joseph Vafi from Canaccord asked about American Bitcoin's exahash plan.

A: Asher Genoot stated that Hut 8 contributed 10.2 exahash to American Bitcoin, with the Vegas site bringing total optionality over 25 exahash, and plans to scale to 50 exahash in phases.

Q: Nick Giles from B. Riley Securities inquired about developing Riverbend without announcements and marketing developed assets.

A: Asher Genoot said Riverbend has started deploying capital, with other sites having different development approaches, and the focus is on building a pipeline for scalable growth.

Q: Stephen Glagola from Jones Trading asked about prioritizing powered shell vs. build-to-suit leases and monetizing the American Bitcoin stake.

A: Asher Genoot discussed different lease structures, emphasizing scaling with partners and monetizing megawatts as assets convert, and the long-term vision for the American Bitcoin stake.

Q: Paul Goding from Macquarie clarified CapEx for PowerShell projects and development strategy.

A: Asher Genoot clarified CapEx figures, noting speed of execution and modular builds for power delivery, with Riverbend expanding to a gigawatt with customer engagement.

Q: Brian Vieten from Needham & Company asked about investment for exclusivity and next biggest geographies.

A: Asher Genoot said exclusivity costs vary, with a focus on multiple geographies including Texas, Louisiana, Chicago, Kansas, and Pennsylvania/Ohio.

Q: Michael Colonnese from H.C. Wainwright asked about American Bitcoin's private placement proceeds and Bitmain purchase option.

A: Asher Genoot stated American Bitcoin's capital is for Bitcoin/ASICs, and Hut 8 is comfortable with the Bitmain agreement, excited for American Bitcoin's public debut.

Q: Greg Lewis from BTIG asked about Hut 8 investing in American Bitcoin.

A: Asher Genoot explained the separation of businesses to focus on stabilized assets, with strong shareholder demand for American Bitcoin's growth.

Q: Chris Brendler from Rosenblatt Securities asked about prioritizing American Bitcoin for contracts and HPC steps.

A: Asher Genoot said Hut 8 aims to commercialize megawatts across various use cases, and they are close with lenders for project financing related to HPC projects like Riverbend.