FTX and cryptocurrency market volatility wouldn’t have prevented the Hut 8 merger, according to CEO
Because of the crypto winter, many miners have had to cut costs or consolidate in order to survive.
According to Hut 8 CEO Jamie Leverton, the collapse of crypto exchange FTX and overall crypto market turmoil were not major factors in the decision to merge crypto mining firm Hut 8 with US Bitcoin Corp.
On February 8, Leverton stated that the merger was primarily about diversifying revenue and assisting in the scaling of the combined businesses, stating:
“I think this deal would have happened regardless. The ability for us to bring these businesses together we think is so incredibly complementary.”
The all-stock merger was announced on February 7, with the combined company, now known as Hut 8 Corp. or “New Hut,” based primarily in the United States rather than Canada.
Concerning the November collapse of FTX, Leverton stated that fears were “starting to subside a little bit,” and interest in the crypto industry was returning.
“I think we’re seeing a lot of interest come back into this space,” she continued, “and we’ve seen significant appreciation across the space so far in 2023.”
The combination of the two mining companies will “provide an incredible amount of scale,” she added, adding that there will be “diversified revenue programmes,” which is a good strategy for both companies separately.
According to reports, New Hut will have access to approximately 825 megawatts spread across six facilities in New York, Texas, and Alberta, Canada. It will have a total combined mining capacity of 5.6 exahashes per second (EH/s).
Commenting on the choice of location, Leverton said that it was in the best interest of the business to have “diversified geographies,” adding:
“One of the advantages here is [that the merger is] giving us that geographic diversification. There’s uncertainty in regulatory environments on both sides of the border,”
Hut 8 has a mining facility in North Bay, Ontario, but operations have been halted due to a legal dispute with its energy supplier.
US Bitcoin’s Niagara facility has its own issues, including an ongoing dispute with the City of Niagara Falls over noise complaints from residents.
In a presentation on February 8, the firm provided additional details on the merger. The deal is expected to close in the second quarter of 2023, subject to shareholder, regulatory, and stock exchange approvals.
Earlier this week, Leverton stated that the company intends to cover its operating costs during the interim period by selling the Bitcoin it mines and exploring various debt options.
On the day the merger was announced, Hut 8 stock fell 8%. Furthermore, Hut shares fell 1.2% on the day to $2.12 in after-hours trading, according to MarketWatch. The stock is currently trading 86% lower than its all-time high of $15.28 set in November 2021.