Digihost Technology Inc. (“
Digihost” or the
“
Company”) (Nasdaq: DGHI; TSXV: DGHI), an
innovative U.S. based Bitcoin (“
BTC”) mining
company, is pleased to provide a summary of the Company’s audited
financial results for the year ended December 31, 2021 (all amounts
in U.S. dollars, unless otherwise indicated), and provide a 2022
year-to-date update on operations. The Company’s audited
consolidated financial statements and management’s discussion and
analysis (“
MD&A”) for the year ended December
31, 2021 have been filed and made accessible under the Company’s
continuous disclosure profile on SEDAR at www.sedar.com.
Michel Amar, Chairman and CEO of Digihost,
commented: “We are very pleased to report that 2021 has been a
transformative year for the Company. The record-breaking results
achieved by our team clearly illustrate the growth trajectory of
Digihost as measured by the significant improvement in 2021
operating performance relative to 2020. Digihost’s management team
executed on the Board’s strategic growth plan through the
acquisition of new high performance BTC miners, entering into
strategic partnerships and securing access to clean and renewable
sources of power consistent with Digihost’s stated objective of
fostering environmentally and socially responsible growth. I am
happy to report that the momentum generated in 2021 has continued
into 2022 as we work towards meeting our goal of being a leading
blockchain technology company.”
Highlights for Fiscal 2021 are as
follows:
- Revenue of $24.95 million, an
increase of 602% over 2020;
- Net income of $0.3 million,
compared to a net loss of $5.19 million for the year ended December
31, 2020;
- EBITDA* of $14.01 million, adjusted
for share-based compensation, an increase of 1,601% over 2020;
- Total assets of $80.03 million, an
increase of 384% over December 31, 2020;
- Cash and cash equivalents of $34.41
million as at December 31, 2021 an increase of 658% compared to
December 31, 2020;
- Working capital of $30.70 million,
an increase of 1,760% over December 31, 2020;
- Property, plant and equipment
consisting primarily of the Company’s BTC miners (73%) and mining
infrastructure (27%) of $38.14 million, an increase of 487%
compared to December 31, 2020;
- Net book value per weighted average
share (diluted): $3.13, an increase of 251% compared to December
31, 2020.
* EBITDA is a non-IFRS financial measure and
should be read in conjunction with, and should not be viewed as an
alternative to or replacement of, measures of operating results and
liquidity presented in accordance with IFRS and refer readers to
reconciliations of non-IFRS measures included in the Company’s
MD&A.
(U.S.$ in thousands except per share data) |
Year Ended |
|
December 312021 |
December 312020 |
Revenue from digital currency mining |
24,952 |
|
3,553 |
|
Cost of sales |
(10,542 |
) |
(4,163 |
) |
Depreciation and amortization |
(3,281 |
) |
(3,387 |
) |
Gross profit (loss) |
11,129 |
|
(3,997 |
) |
General and administrative and other expenses |
(10,646 |
) |
(1,788 |
) |
Gain on sale of property, plant and equipment |
1,552 |
|
- |
|
Loss on settlement of debt |
(390 |
) |
- |
|
Foreign exchange |
359 |
|
- |
|
Gain on disposition of cryptocurrencies |
291 |
|
63 |
|
Other Income |
98 |
|
44 |
|
Change in fair value - Miner Lease Agreement |
529 |
|
- |
|
Insurance Proceeds |
- |
|
110 |
|
|
|
|
Operating income (loss) |
2,923 |
|
(5,568 |
) |
Net financial expenses |
(333 |
) |
(258 |
) |
Net income (loss) before income taxes |
2,590 |
|
(5,826 |
) |
Income tax expense |
(127 |
) |
- |
|
Deferred tax (expense) recovery |
(2,173 |
) |
635 |
|
Net income (loss) for the year |
289 |
|
(5,191 |
) |
Foreign currency translation adjustment |
(385 |
) |
118 |
|
Revaluation of digital currency, net of tax |
1,724 |
|
1,983 |
|
Total comprehensive income (loss) for the year |
1,629 |
|
(3,090 |
) |
Basic and diluted loss per shareWeighted average number of
subordinate voting shares outstanding – diluted |
0.0122,420,720 |
|
(0.4411,715,524 |
) |
The Company met significant milestones during
2021, highlighted by the following achievements:
- Closed approximately CAD$70,000,000
in equity financings;
- Uplisted the Company’s exchange
listing from the TSXV to the Nasdaq Capital Market;
- Entered into a binding agreement to
purchase a 60MW power plant in upstate New York (news release –
March 24, 2021);
- Executed a purchase agreement for
10,600 high performance BTC miners and accepted delivery of 7,200
of those miners by December 31, 2021;
- Engaged international audit firm
Raymond Chabot Grant Thornton LLP;
- Increased the Company’s BTC
holdings by 478 BTC during 2021 to a total balance of 632 BTC as at
December 31, 2021.
The momentum generated by Digihost during 2021
has continued into the first quarter of 2022. Since the beginning
of 2022, to-date, operational achievements of the Company are as
follows:
- The Company has mined 172.77 BTC,
compared to 101.69 BTC mined during the same period in 2021, an
increase of 70% year-over-year;
- Digihost acquired 100 BTC on March
10, 2022, for investment purposes, at a cost of $39,320 per
BTC;
- Accepted delivery of the balance of
all 10,600 high performance BTC miners acquired during 2021;
- Steadily increased the Company’s
hashrate as new BTC miners were deployed. The Company’s hashrate
increased to approximately 415PH at December 31, 2021 from
approximately 215PH at September 30, 2021, and has continued to
grow to the current hashrate of approximately 720PH;
- The Company is currently mining at
a rate of approximately 3.35 BTC per day;
- Closed a $10,000,000 committed,
collateralized revolving credit facility;
- Raised CAD$13,300,000 of
institutional equity financing in a private placement at a premium
to market price;
- Secured premises in Houston, Texas
to expand business operations.
Michel Amar commented: “Digihost continues to be
very active in both debt and equity capital markets in order to
optimize the Company’s capital structure, fund both existing
operations and future growth and to allow the Company to continue
to increase its BTC holdings. With existing cash and cash
equivalents on hand of approximately $50 million the Company is
currently well capitalized to fund all aspects of its
business.”
Outlook
In 2021, the Company had adjusted EBITDA of
$14.01 million and operated at an average hashrate of approximately
275PH. Upon full deployment of the 10,600 BTC miners now delivered
and received, the Company anticipates increasing its hashrate to
approximately 1.5EH in 2022, approximately 5.5 times the Company’s
average hashrate of 275PH in 2021. At its current computing power
of 720PH, the Company is generating approximately 3.35 BTC per day
which would result in a production rate of approximately 6.7 BTC
per day at an anticipated computing power of 1.5EH, based upon
current network difficulty. Digihost is currently able to leverage
its existing workforce to reach increased production levels without
incurring additional costs, thereby decreasing the Company’s
SG&A expenses as a percentage of total revenue.
Another critical success factor in Digihost’s
strategic growth plan is access to clean sources of energy and
on-demand program, interruptible power with utilities which will
allow Digihost the ability to provide urgent power needs for local
communities during extreme weather conditions. During 2021, the
Company launched its DigiGreen initiative (news release: June 7,
2021), an industry-leading plan to reduce the Company’s already low
carbon footprint by operating its business in an environmentally
and socially responsible way. Currently, over 90% of the energy
consumed by the Company in its BTC mining operations is from
sources that create zero carbon emissions.
The following table provides a breakdown of the
sources of energy consumed by Digihost in its BTC mining
operations:
Table: BTC mining
operationshttps://www.globenewswire.com/NewsRoom/AttachmentNg/6d07154f-f605-4140-85dd-577170fa23bf
During 2021, the Company entered into a binding
agreement for the purchase of a 60MW independent power project in
upstate New York (news release: March 14, 2021). The power facility
has the capacity to accommodate approximately 17,000 new BTC
miners. To-date, all required permits from the city of North
Tonawanda, NY have been received and the Company is currently
awaiting receipt of Public Service Commission approval to close the
acquisition. The Company has completed significant infrastructure
installation work on site at the facility and is currently running
uninterrupted mining operations as it works toward completing the
deployment of additional miners. The Company continues to pursue
opportunities for expansion and vertical integration of clean
sources of energy and has several initiatives it is currently
pursuing.
Equity Financing
The Company also announces that it has closed
its previously announced private placement of equity securities
(the “Offering”). The offering was for gross
proceeds of approximately CAD$13.3 million in a private placement
of its equity securities and consisted of the sale of 3,029,748
subordinate voting shares of the Company
(“Shares”) (or common share equivalents) and
warrants to purchase up to 3,029,748 subordinate voting shares
(“Warrants”), at a purchase price of CAD$4.40 per
Share and associated Warrant. The Warrants have an exercise price
of CAD$6.25 per Share and exercise period of three and one-half
years from the issuance date.
The net proceeds of the Offering will be used by
the Company primarily to acquire additional BTC miners, expand
infrastructure and for general working capital purposes. In
connection with the Offering, the investor and the Company canceled
existing warrants to purchase up to 1,248,440 subordinate voting
shares of the Company at an exercise price of CAD$9.42 per share
issued in March 2021 and existing warrants to purchase up to
1,781,308 subordinate voting shares of the Company at an exercise
price of CAD$7.11 issued in April 2021.
H.C. Wainwright & Co. acted as the exclusive
placement agent for the Offering. H.C. Wainwright & Co.
received (i) a cash commission equal to 8.0% of the gross proceeds
of the Offering and (ii) 242,380 non-transferable broker warrants
(the “Broker Warrants”). Each Broker Warrant
entitles the holder thereof to purchase subordinate voting shares
at an exercise price of CAD$6.25 per subordinate voting share at
any time for a period of three and one-half years from the issuance
date.
The securities issued in the Offering are
subject to customary resale restrictions in the United States with
no resale restrictions in Canada. No securities were offered or
sold to Canadian residents in the Offering.
This news release shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be
any sale of the securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
This news release shall not constitute an offer of securities for
sale in the United States. The securities being offered have not
been, nor will they be, registered under the United States
Securities Act of 1933, as amended, and such securities may not be
offered or sold within the United States absent registration under
U.S. federal and state securities laws or an applicable exemption
from such U.S. registration requirements.
At-the-Market Financing Update
On March 4, 2022, the Company entered into and
commenced an offering agreement with H.C. Wainwright & Co., LLC
(the “Agent”) 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 the date hereof, the Company has not issued any
securities pursuant to the ATM Program.
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 720PH.
For further information, please contact:
Digihost Technology
Inc.www.digihost.caMichel Amar, Chief Executive
Officer T: 1-818-280-9758Email: michel@digihost.ca
Cautionary Statement
Trading 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 Statements
Except 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 (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; risks relating to the
strategy of maintaining and increasing Bitcoin holdings and the
impact of depreciating Bitcoin prices on working capital; 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; 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; 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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