Digihost Reports Positive Second Quarter 2022 Results
August 16 2022 - 06:00AM
Digihost Technology Inc. (“
Digihost” or the
“
Company”) (Nasdaq: DGHI; TSXV: DGHI), an
innovative U.S. based Bitcoin (“
BTC”) mining
company, announces unaudited financial results for the second
quarter ended June 30, 2022 (all amounts in U.S. dollars, unless
otherwise indicated).
“Digihost is pleased to present its second
quarter financial results, highlighted by a 129% increase in
Bitcoins mined during Q2 2022 compared to Q2 of 2021,” said Paul
Ciullo, CFO of Digihost. “Even though there have been considerable
challenges in the markets and crypto space in general, the Company
has experienced positive momentum to date in the second half of
2022, highlighted by the acquisition of a new facility in the state
of Alabama. Significant progress has already been made to develop
the new site which has 22MW of high voltage infrastructure in
place. We are currently projecting the commencement of mining
operation in early Q4 of this year.”
Ciullo continued: “Since inception, the Company
has made significant investments in infrastructure coupled with its
dedication to securing access to clean and renewable energy sources
and being a leading ESG organisation. These foundational goals have
led to year-to-date revenue generation from mining of $14.8M, an
increase of 49% over the preceding year, year-to-date realized net
income of $20.9, EBITA of $22.42 million, and earnings per share of
$0.79.”
First half of 2022 Financial
Highlights
- Revenue from digital currency
mining of $14.8 million reported for the six-month period ended
June 30, 2022, compared to $9.9 million for the six-month period
ended June 30, 2021, an increase of 49%;
- For the six-month period ended June
30, 2022, the Company mined a total of 438.86 BTC compared to
215.23 BTC for the six-month period ended June 30, 2021;
- Operating income for the six-month
period ended June 30, 2022 of $18.2 million, an increase of 76%
over the same period for the prior year;
- Realized net income of $20.9
million for the six-month period ended June 30, 2022, compared to
realized net income of $10.1 million over the same period for the
prior year;
- EBITDA* of $22.42 million for the
six-month period ended June 30, 2022, compared to $11.77 million
over the same period for the prior year, an increase of 90%;
- Total assets of $69.3 million;
- Cash and cash equivalents of $13.7
million as at June 30, 2022;
- Working capital of $13.9 million as
at June 30, 2022;
- Property, plant and equipment
consisting primarily of the Company’s BTC miners (57%) and mining
infrastructure (43%) of $42.9 million;
- Raised CAD$13.3 million of
institutional equity financing in a private placement at a premium
to market price; and
- Closed and fully repaid a $10
million committed, collateralized revolving credit facility.
Q2 Highlights
- Revenue from digital currency
mining increased by $2.4 million to $7.5 million compared to $5.1
million for the quarter ended June 30, 2021;
- The Company mined 251.68 Bitcoin in
the quarter ended June 30, 2022, a 129% increase compared to the
same period in 2021 due to an increase in hashrate from its highly
efficient miners and initial testing and ramping of activities at
North Tonawanda;
- Realized net income of $3.6 million
for the three-month period ended June 30, 2022;
- EBITDA* of $3.1 million for the
three-month period ended June 30, 2022;
- The Company has been building out
its new Alabama facility which will initially have 22 MW of power
with plans to expand to 55MW in Q1 of 2023. Miners are expected to
be installed during Q4.
* EBITDA is a non-IFRS financial measure and
should be read in conjunction with, and should not be viewed as an
alternative to or replacement of, measures of operating results and
liquidity presented in accordance with IFRS and refer readers to
reconciliations of non-IFRS measures included in the Company’s
MD&A.
(U.S.$ except per share data) |
Six Months Ended |
|
June 302022 |
June 302021 |
Revenue from digital currency mining |
14,772,937 |
|
9,879,628 |
|
Cost of power and production costs |
(3,922,717 |
) |
(3,352,367 |
) |
Miner lease agreement |
(5,204,416 |
) |
- |
|
Depreciation and amortization |
(4,204,219 |
) |
(1,471,424 |
) |
Gross profit |
1,441,585 |
|
5,055,837 |
|
General and administrative and other expenses |
(2,846,671 |
) |
(1,936,383 |
) |
Gain on sale of property, plant and equipment |
2,340,658 |
|
939,516 |
|
Loss on settlement of debt |
- |
|
(279,070 |
) |
Foreign exchange |
1,042,880 |
|
- |
|
Other Income |
156,679 |
|
- |
|
Change in fair value - Miner Lease Agreement |
(894,973 |
) |
- |
|
Loss on sale of digital currencies |
(12,174,435 |
) |
- |
|
Revaluation of warrant liabilities |
33,734,693 |
|
10,288,574 |
|
Loss on revaluation of digital currencies |
(2,948,364 |
) |
- |
|
Share based compensation |
(1,637,583 |
) |
(3,771,306 |
) |
|
|
|
Operating income |
18,214,469 |
|
10,297,168 |
|
Net financial expenses |
(238,204 |
) |
(214,486 |
) |
Net income before taxes |
17,976,265 |
|
10,082,682 |
|
Deferred tax recovery |
2,946,842 |
|
- |
|
Net income for the period |
20,923,107 |
|
10,082,682 |
|
Foreign currency translation adjustment |
(871,751 |
) |
807,948 |
|
Revaluation of digital currency, net of tax |
(3,706,624 |
) |
(1,640,267 |
) |
Total comprehensive income for the period |
16,344,732 |
|
9,250,363 |
|
Basic and diluted income per shareWeighted average number of
subordinate voting shares outstanding – diluted |
0.7926,647,397 |
|
0.5518,486,810 |
|
Green Initiatives
Some key Company performance measures from its
Green Initiatives include:
- Strategically located warehouses in
NYISO’s “Upstate” region, where over 90% of the power generated
comes from zero-emissions sources (nuclear, hydro, solar, and
wind).
- Digihost recently entered into a
long-term Community Solar contract through its energy partner,
EnergyMark. The 7.5MW DC Solar array will generate roughly
9,800,000 kWh’s annually. It is located in LeRay, NY and is owned
and operated by a subsidiary of NextEra Energy. Digihost signing on
to be a long term “Anchor Subscriber” to this project allows for
this developer to get the project financed and constructed. This
aids in further renewable energy development throughout New York
State.
- In addition to our participation in
Community Solar and commitment to locally produced renewable and
zero-emissions electricity, Digihost has participated in Demand
Response programs since 2018 with a nearly perfect performance
rating. During peak demand days on the grid, and when energy prices
are skyrocketing and there are risks of brownouts, Digihost helps
grid reliability by rapidly and fully reducing consumption down to
essentially zero usage. These programs have several benefits for
local rate payers but also the environment. Since Digihost turns
off power, NYISO does not need to call on a rapid response
generation source which would increase prices for local rate
payers, and it also doesn’t have to import more electricity from
less desirable generation sources; like coal from
Pennsylvania.
- Digihost was nominated for a “Data
Center Dynamics – Carbon Champion Award” in 2021.
- Digihost & CPower were
nominated and recently awarded the Environment + Energy Leader
Project of The year Award (Press release here:
https://www.prnewswire.com/news-releases/cpower-wins-environment--energy-leader-project-of-the-year-award-for-work-with-crypto-mining-customer-digihost-301588878.html).
- Digihost and CPower are partnering
on a pilot program to track and monitor carbon reductions through
Demand Response programs.
North Carolina Expansion
The Company is pleased to announce that it
acquired 25 acres of land in North Carolina with a request for
allocation of up to 200MW of power. The Company is currently in
discussions with potential JV partners.
Normal Course Issuer Bid
Program
During May 2022, Digihost announced that it had
received approval to undertake, at the Company’s discretion, a
normal course issuer bid program (“NCIB”) to
purchase up to 1,219,762 of its subordinate voting shares for
cancellation. The NCIB was commenced due to the fact that, from
time to time, the Company may consider that the market price of its
subordinate voting shares do not accurately reflect the underlying
value of the Company’s business.
The Company is suspending use of the NCIB at
this time until further notice.
At-the-Market Financing
Update
On March 4, 2022, the Company entered into an
offering agreement with H.C. Wainwright & Co., LLC as agent,
pursuant to which the Company established an at-the-market equity
program (the “ATM Program”). From the commencement
of the ATM Program through to the date hereof, the Company has not
issued any securities pursuant to the ATM Program. Following the
suspension of the NCIB, the Company will resume the use of the ATM
Program and may issue securities pursuant to the ATM Program from
time to time, if the Company determines that such issuances would
be beneficial.
About Digihost
Digihost is a growth-oriented blockchain
technology company primarily focused on BTC mining. Through its
self-mining operations and joint venture agreements, the Company is
currently hashing at a rate of approximately 650 PH/s.
For further information, please contact:
Digihost Technology
Inc.www.digihost.caMichel Amar, Chief Executive
Officer T: 1-818-280-9758Email: michel@digihost.ca
Cautionary StatementTrading in
the securities of the Company should be considered highly
speculative. No stock exchange, securities commission or other
regulatory authority has approved or disapproved the information
contained herein. Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
Forward-Looking
StatementsExcept for the statements of historical fact,
this news release contains “forward-looking information” and
“forward-looking statements” (collectively, “forward-looking
information”) that are based on expectations, estimates and
projections as at the date of this news release and are covered by
safe harbors under Canadian and United States securities laws.
Forward-looking information in this news release includes
information about potential further improvements to profitability
and efficiency across mining operations including, as a result of
the Company’s expansion efforts, acquisitions of equipment and
infrastructure, potential for the Company’s long-term growth, and
the business goals and objectives of the Company. Factors that
could cause actual results to differ materially from those
described in such forward-looking information include, but are not
limited to: the ability to obtain regulatory approval for and
complete acquisitions of equipment and infrastructure on the terms
as announced or at all; the ability to successfully integrate the
acquisitions of equipment and infrastructure on an economic basis
or at all; future capital needs and uncertainty of additional
financing, including the Company’s ability to utilize the Company’s
at-the-market offering program (the “ATM Program”) and the prices
at which the Company may sell securities in the ATM Program, as
well as capital market conditions in general; share dilution
resulting from the ATM Program and from other equity issuances;
risks relating to the strategy of maintaining and increasing
Bitcoin holdings and the impact of depreciating Bitcoin prices on
working capital; regulatory and other unanticipated issues that
prohibit us from declaring or paying dividends to our shareholders
that are payable in Bitcoin; continued effects of the COVID19
pandemic may have a material adverse effect on the Company’s
performance as supply chains are disrupted and prevent the Company
from operating its assets; development of additional facilities to
expand operations in Alabama may not be completed on the timelines
anticipated by the Company, or at all; approval of the Public
Service Commission or other regulatory or board approvals being
received on a timely basis, or at all; the acquisition of North
Tonawanda, New York facilities closing on timely basis, or at all;
ability to access additional power from the local power grid; a
decrease in cryptocurrency pricing, volume of transaction activity
or generally, the profitability of cryptocurrency mining; further
improvements to profitability and efficiency may not be realized;
the digital currency market; the Company’s ability to successfully
mine digital currency on the cloud; the Company may not be able to
profitably liquidate its current digital currency inventory, or at
all; a decline in digital currency prices may have a significant
negative impact on the Company’s operations; the volatility of
digital currency prices; and other related risks as more fully set
out in the Annual Information Form of the Company and other
documents disclosed under the Company’s filings at www.sedar.com.
The forward-looking information in this news release reflects the
current expectations, assumptions and/or beliefs of the Company
based on information currently available to the Company. In
connection with the forward-looking information contained in this
news release, the Company has made assumptions about: the current
profitability in mining cryptocurrency (including pricing and
volume of current transaction activity); profitable use of the
Company’s assets going forward; the Company’s ability to profitably
liquidate its digital currency inventory as required; historical
prices of digital currencies and the ability of the Company to mine
digital currencies on the cloud will be consistent with historical
prices; the ability to maintain reliable and economical sources of
power to run its cryptocurrency mining assets; the negative impact
of regulatory changes in the energy regimes in the jurisdictions in
which the Company operates; the ability to adhere to Digihost’s
dividend policy and the timing and quantum of dividends based on,
among other things, the Company’s operating results, cash flow and
financial condition, Digihost’s current and anticipated capital
requirements, and general business conditions; and there will be no
regulation or law that will prevent the Company from operating its
business. The Company has also assumed that no significant events
occur outside of the Company's normal course of business. Although
the Company believes that the assumptions inherent in the
forward-looking information are reasonable, forward-looking
information is not a guarantee of future performance and
accordingly undue reliance should not be put on such information
due to the inherent uncertainties therein.
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