Hut 8 Corp. (NASDAQ:HUT) Q3 2025 Earnings Call Transcript

Hut 8 Corp. (NASDAQ:HUT) Q3 2025 Earnings Call Transcript November 4, 2025

Hut 8 Corp. beats earnings expectations. Reported EPS is $-0.07, expectations were $-0.16.

Operator: “

Suzanne Ennis: “

Asher Genoot: “

Sean Glennan: “

Patrick Moley: ” Piper Sandler

George Sutton: ” Craig-Hallum

Dylan Dupuis: ” ROTH Capital Markets

Brian Dobson: ” Clear Street

Stephen Glagola: ” JonesTrading

Joseph Vafi: ” Canaccord Genuity

John Todaro: ” Needham & Company

Chris Brendler: ” Rosenblatt Securities Inc.

Brett Knoblauch: ” Cantor Fitzgerald

Mike Grondahl: ” Northland Securities

Bill Papanastasiou: ” KBW

Matthew Galinko: ” Maxim Group LLC

Nick Giles: ” B. Riley

Benjamin Sommers: ” BTIG

Operator: Thank you for standing by. At this time, I would like to welcome everyone to the Hut 8 Third Quarter 2025 Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over to Sue Ennis, Head of Investor Relations. You may begin.

Suzanne Ennis: Good morning, and welcome to Hut 8’s Third Quarter 2025 Financial Results Conference Call. Joining us today are our CEO, Asher Genoot; and our CFO, Sean Glennan. Following the presentation, we will open the line for questions. This event is being recorded, and a transcript will be made available on our website. In addition to the press release issued earlier today, our full quarterly report on Form 10-Q is available at hut8.com, on our EDGAR profile at sec.gov and on our SEDAR+ profile at sedarplus.ca. Unless otherwise indicated, all figures discussed today are in U.S. dollars. Certain statements made during this call may constitute forward-looking statements within the meaning of applicable securities laws. These statements reflect current expectations and are subject to risks and uncertainties that could cause actual results to differ materially.

Certain key risks are detailed in our Form 10-K for the year ended December 31, 2024, and our other continuous disclosure documents. Except as required by law, we assume no obligation to update or revise any forward-looking statements. During the call, management may reference non-GAAP measures such as adjusted EBITDA. We believe these metrics alongside GAAP results provide valuable insight into our performance. Reconciliations of GAAP and non-GAAP results are included in the tables accompanying today’s press release available on our website. With that, I’ll turn the call over to our CEO, Asher Genoot.

Asher Genoot: Thank you, Sue, and good morning, everyone. Earlier this year, we introduced our 2025 strategy. At its foundation is our development flywheel, a framework designed to compound returns through 4 integrated stages of platform development, origination, investment, monetization and optimization. This model defines how we scale across our power, digital infrastructure and compute layers under a unified power-first architecture. The third quarter marked a clear inflection point in the velocity of that flywheel. That acceleration is evident not only in our financial results, but also in the step change extension of our near-term growth runway. Together, these outcomes reflect the strength of a diversified platform operating as a single integrated engine.

Let’s begin with our results. I’ll share the highlights now before turning it over to Sean for a detailed review later in the call. In the third quarter of 2025, we delivered revenue of $83.5 million, up 91% year-over-year. This increase was driven primarily by the expansion of Bitcoin mining revenue through American Bitcoin, the purpose-built Bitcoin accumulation vehicle we launched earlier this year. American Bitcoin has scaled rapidly since its debut on the NASDAQ, contributing to significant top line growth in our Compute segment. Because American Bitcoin is a consolidated subsidiary, its revenue is reported entirely within our Compute segment. Meanwhile, the infrastructure and services it consumes from Hut 8 are treated as intercompany transactions and eliminated in consolidation despite representing real and recurring economic activity.

In effect, what appears in compute today reflects only the surface layer of a robust commercial engine fueled by our power and digital infrastructure businesses. Importantly, our results reflect not only top line growth, but also early evidence of commercial and financial synergies across the platform. Net income was $50.6 million versus $0.9 million in the prior year period, and adjusted EBITDA was $109 million versus $5.6 million in the prior year period. These metrics reflect a $76.6 million gain on digital assets versus a $1.6 million loss on digital assets during the prior year period, both recorded in accordance with FASB’s fair value accounting guidance. Beyond strong headline performance, the third quarter demonstrates the structural advantage we have unlocked by carving out the majority of our legacy Bitcoin mining business into a stand-alone entity.

That separation has clarified our mandate and streamlined our capital allocation framework, enabling us to focus on scaling lower cost of capital businesses such as colocation. During the third quarter, that clarity drove tangible momentum at the foundation of our development flywheel, for power layer. From the outset, we recognize that large load technologies like Bitcoin mining and AI computing are at their core functions of how effectively energy can be harnessed, deployed and monetized. That insight shaped how we built Hut 8. We engineered the business around power expertise and designed it to transcend any single application. Today, surging computational demand has transformed energy from a background input into a defining constraint to growth.

For us, that constraint represents an advantage. Hut 8 was built from day 1 with a power first innovation-driven strategy. By integrating power, digital infrastructure and compute assets at scale, we aim to address energy demand from the world’s most transformative technologies for decades to come. Early last year, shortly after I became CEO, we began translating our Power First strategy into our external reporting. We introduced new performance metrics such as energy capacity under management and energy capacity under exclusivity, which reflected the utility-grade depth and rigor with which our power native team operated and scaled the business. At the time, our focus on energy was contrarian in a sector still oriented around [ exahash ] and other end application metrics.

Since then, the exponential rise of AI and the broad adoption of energy-based performance metrics have validated our founding conviction that energy is not merely an input, but a structural source of value creation and competitive advantage. This shift underscores a fundamental distinction in the role of power within our business. For many, power is a reporting overlay on a legacy model or a reactive pivot to capture new value. For us, it has always been the foundational driver of our growth, the lens through which we scale, deploy capital and allocate resources. The development flywheel we introduced earlier this year codifies that foundation. It defines how we originate, invest in, monetize and optimize critical infrastructure assets across 4 interconnected stages.

By aligning these stages under a single power-first framework, we can systematically convert development opportunity into tangible value with increasing speed and capital efficiency. As the benefits of this framework have compounded across our organization, our flywheel has entered a new phase of scale and execution. In the third quarter, that momentum drove the launch of our largest expansion initiative to date. Spanning 4 U.S. locations with a combined 1,530 megawatts of utility capacity, this initiative has the potential to more than double the scale of our platform, diversify our presence across strategic energy markets and position us to meet growing demand across energy-intensive applications. It underscores both the depth of our development pipeline and the scalability of our platform.

In conjunction with the launch of this initiative and building on our early sector leadership in power-first growth and performance metrics, we refined our reporting framework to more precisely capture the maturity and velocity of our development flywheel. This refinement is formalized in a new stage of our development pipeline, energy capacity under development, which is positioned between energy capacity under exclusivity and energy capacity under management. Capacity under development bridges origination and monetization, providing greater visibility into late-stage projects that have advanced beyond exclusivity. It applies to sites where critical development work is underway, including the execution of land and power agreements, site design and infrastructure build-out and engagement with prospective customers.

Capacity advances from exclusivity to development, ultimately converting to energy capacity under management upon monetization. In the near term, our focus is on commercializing the 4 sites in our expansion portfolio, representing 1,530 megawatts of energy capacity under development. The sites range in scale from 50 megawatts to 1 gigawatt of utility capacity, each selected for near-term power access and the potential to support commercialization across a range of advanced technologies. Guided by our first principles approach to digital infrastructure, we continue to advance design and commercialization initiatives with prospective customers. Where appropriate, we will seek to incorporate next-generation architecture that enables rapid, capital-efficient deployment and the flexibility to support a range of customer requirements.

Across our expansion portfolio and broader development pipeline, we continue to execute against a long-held ambition to build a platform that evolves alongside energy-intensive technologies for decades to come. From the world-shaping innovations of today to the nascent ideas of tomorrow and the breakthrough is yet to be achieved. Today, the conversation is rightly dominated by AI. The scale and intensity of AI compute demand is unlike anything in the power sector has seen. But we believe this is only the first chapter of a much longer story. We believe the same power infrastructure that underpins AI and high-performance computing today will, over time, form the backbone for a broader class of next-generation technologies. While it is still early, we’re beginning to see directional interest from adjacent sectors that recognize that large-scale power infrastructure will be foundational to what comes next.

Our platform is designed for that future, and we are building it for now. As always, we will remain disciplined in how we structure and underwrite new opportunities, deploying capital only where we see a clear path to long-term value creation. We will not chase trends, and we’ll continue to prioritize durable returns over short-term gain as we strive to build an enduring generational business at the intersection of energy and technology. With that, I’ll turn it over to Sean.

Sean Glennan: Thanks, Asher. Before I review our third quarter 2025 results by segment, I want to briefly clarify our reporting structure, particularly as it relates to American Bitcoin. Because American Bitcoin is a consolidated subsidiary, revenue from its Bitcoin mining operations is reported within our Compute segment. However, revenue earned by Hut 8 through our managed services and ASIC colocation agreements with American Bitcoin within our Power and Digital Infrastructure segments, respectively, is eliminated in consolidation as is revenue from our shared services agreement with American Bitcoin. With that context, let’s turn to our results. We begin with Power, which consists of power generation and managed services.

Segment revenue declined year-over-year from $26.2 million to $8.4 million, reflecting the full impact of the wind down of our managed services agreement with Ionic Digital in late 2024. The resulting $17.8 million reduction in managed services revenue was partially offset by a $1.9 million increase in power generation revenue, driven by elevated demand across our portfolio of 4 natural gas-fired power plants in Ontario. While these results capture the termination of our MSA with Ionic, they do not reflect the full earnings power of our Power segment. During the quarter, we expanded our managed services agreement with American Bitcoin to 325 megawatts of contracted capacity, the largest in our history. This milestone supports the broader structural shift we have executed this year from merchant exposure to long-term contracted revenue.

At quarter end, more than 85% of our energy capacity under management is commercialized under executed agreement with terms of 1 year or longer, positioning our Power segment for greater earnings visibility and recurring returns. Segment cost of revenue rose from $5 million to $6.5 million, reflecting a $3.6 million increase in power generation cost of revenue due to higher output during the period. This was partially offset by a $2.1 million decrease in managed services cost of revenue following the termination of our MSA with Ionic. We turn next to digital infrastructure, which consists of ASIC colocation and CPU colocation. Segment revenue increased 31% year-over-year to $5.1 million, driven primarily by the ramp-up of our ASIC colocation activity at our Vegas site, which was initially energized in June 2025.

Revenue generation commenced under an ASIC colocation agreement with BITMAIN, supporting nearly 15 exahash of capacity delivered by the next-generation ASIC machines we co-developed with the manufacturer. In August and September, American Bitcoin exercised its option to purchase those machines. As a result, our colocation agreement with BITMAIN concluded in September. We subsequently transitioned to managed services and ASIC colocation agreements with American Bitcoin and continue to operate the fleet under these agreements. Because American Bitcoin is a consolidated subsidiary, revenue from these agreements is eliminated in consolidation and therefore, not reflected in reported segment results for our Power and Digital Infrastructure segments, respectively.

Operationally, Vega remains active. Financially, revenue is now recognized as intercompany rather than third party. Segment cost of revenue rose modestly year-over-year to $3.8 million. This $0.1 million increase was mainly driven by higher electricity and connectivity costs across our 5 traditional data centers in Canada. Finally, we turn to compute, which consists of Bitcoin mining, data center cloud and GPU as a Service. Compute segment revenue increased more than fivefold year-over-year from $13.7 million to $70 million. Top line growth was driven primarily by the expansion of Bitcoin mining revenue from American Bitcoin. During the quarter, American Bitcoin deployed approximately 14.9 exahash of additional installed mining capacity at Vega, increasing Hut 8’s total hash rate from approximately 12 exahash to approximately 26.8 exahash.

Of that total, approximately 25 exahash was attributable to American Bitcoin at quarter end. Supported by a higher average price of Bitcoin during the period, this expansion delivered $54.3 million in incremental Bitcoin mining revenue. Segment also benefited from a $2.6 million increase in GPU as-a-Service revenue from Highrise AI, our wholly owned subsidiary. Gains from Bitcoin mining and GP-as-a-Service operations were partially offset by a $0.5 million decline in data center cloud revenue driven by customer churn. Segment cost of revenue increased from $8.9 million to $22 million year-over-year, consistent with the significant expansion of operations and top line growth we achieved across the segment during the quarter. Revenue growth significantly outpaced cost increases, resulting in substantial operating leverage.

Segment gross profit grew tenfold from $4.8 million to $48 million year-over-year, and gross margin expanded by 33.5 percentage points to 68.6%. Taken together, our third quarter performance reflects the strength of our integrated platform model and the accelerating momentum of our development flywheel. As we look ahead to the remainder of the year, our focus turns to execution across both our recently launched 1,530-mgawatt expansion initiative and our broader 8,650-megawatt development pipeline at quarter end. To deliver at utility scale, we must operate from a position of both strength and flexibility and always with an eye towards the future. That has been a guiding principle of our capital strategy since I stepped into the CFO role just over a year ago.

And over the past 12 months, we’ve executed on that strategy to build a financial foundation purpose-built for balanced risk-adjusted growth. The foundation of this strategy is our fortress balance sheet. Today, 3 key pillars support that foundation, an actively managed strategic Bitcoin reserve, disciplined access to capital markets and a focus on responsible leverage. The first pillar is our strategic Bitcoin reserve. At quarter end, we held 13,696 Bitcoin in reserve with a market value of approximately $1.6 billion, of which 10,278 Bitcoin were held by Hut 8 and 3,418 Bitcoin were held by American Bitcoin. Since February 2024, when Ashra became CEO, we have benefited from nearly $1 billion in incremental value and liquidity from these holdings.

That includes $689 million in contributions from Bitcoin price appreciation, $265 million in new Bitcoin-backed credit facilities with Coinbase and Two Prime at a blended cost of capital of 8.2% and approximately $32 million in premiums realized through covered call option strategies. These results validate our conviction that Bitcoin when actively and responsibly managed becomes a productive reserve asset that enhances liquidity, provides optionality and reduces reliance on equity. The second pillar is disciplined access to capital markets. During the quarter, we significantly reinforced this pillar with the addition of a $200 million revolving credit facility with Two Prime and the launch of a new $1 billion at-the-market equity program. Simultaneously with the launch of our new ATM program, we closed our previous ATM with 40% of its capacity unutilized.

Shares issued under the prior program were sold on average at a 50% premium to the average trading price during the period, underscoring a disciplined approach focused on minimizing excess dilution. The third and final pillar is responsible leverage. There’s a joke among financing bankers that goes something along the lines of this. Just because I’ll give you leverage doesn’t mean you should take it. Leverage is often easy to add but expensive and painful to unwind. We, as a management team, understand these realities, and they inform our decision-making on a daily basis as stewards of shareholder capital. When paired with a fortress balance sheet, responsible leverage fuels operating growth and provides strategic flexibility. As we continue to execute on our business plan, we will aim to make capital decisions in a manner designed to minimize enterprise risk and support long-term growth.

In closing, the third quarter marked a clear inflection point in both our 2025 strategy and the velocity of our development flywheel. We believe this reflects a business with structural advantage, proven commercial velocity and a long runway for continued growth and value creation at the intersection of energy and technology. Backed by a fortress balance sheet, disciplined capital framework and diversified platform spanning power, digital infrastructure and compute, we are executing from a position of strength as we build what we believe will become a category-defining business for the next era of energy-intensive innovation. Operator, please open the line for Q&A.

Q&A Session

Operator: [Operator Instructions] Your first question comes from the line of Patrick Moley with Piper Sandler.

Patrick Moley: Little bit of a two-parter for me. Would love to get an update on just how conversations have trended with potential AI — HPC tenants since the last earnings call? And then second, there appears to be a notable difference in how the market is valuing your power pipeline relative to some of your competitors that being, there seems to be a steep discount placed on the 1.5 gigawatts that you currently have under development. So just wondering if you have any thoughts on what has led to this disconnect and whether you think it’s warranted.

Asher Genoot: Great to hear from you. I’ll start on the second and go into the first. I think the second one is simple. People want to see us execute and prove out the ability to convert the power pipeline, and then we’ll get more value for it, which I think is fair. And so for the investors that are waiting to see execution, I think they’ll see value contributed to that pipeline as that execution leads that. That’s to your second question. On to the first, it’s no surprise, market is very hot over the last couple of months, a ton of demand. The conversations we’re having have progressed even faster. When we think about a deal, and I know a lot of folks are on this call around this question, and so might as well go into it a little bit in detail here.

When we think about a deal, we think about it holistically. Who is the customer? What are the commitments we’re making to that customer? How are we going to finance that agreement? Where is our supply chain going to come from? And how are we going to build that site? All coupled together with the local relationships that we have with the communities, the state to create a project that is set up for success and that could actually execute. If we look at the timelines in which customers want these data center delivered, they’re faster than any historical data center timelines from a greenfield build to delivery to the customer. And so it’s really important in our opinion to have these specific pillars as a part of the deal concrete and solidified as you deliver and commit to these obligations on these long-term contracts that we hope to continue to grow and scale with customers as we build credibility and delivery execution with them in the overall market.

Operator: Your next question comes from the line of George Sutton with Craig-Hallum.

George Sutton: Ashar, you made an interesting comment that you felt AI is only the first chapter of the story. There are other chapters to come and you’re positioning yourself for that. Can you be a little bit more specific about what you’re referring to there?

Asher Genoot: Yes. When we started the business and when I say started the business, U.S. Bitcoin Corp., which then merged into Hut 8, the thesis was that as technologies evolve, their consumption on power will increase. And we started with Bitcoin mining because we felt like it was an under-computered sector that allowed us to arbitrage electrons and energy and capture load and help build that new generation. The thought when we started the business was always we would be more than just a Bitcoin mining company. At the time, the foresight was not to AI and data centers, but we looked at green hydrogen, we looked at carbon capture, a lot of other technologies, industrial batteries, a lot of those, the economics did not actually pencil out as we go deeper.

And obviously, AI and where it stands today, we think is an incredible opportunity due to the changing tide in the scale of these sites that allow you to be a leading platform within the world in competing today as a newcomer rather than an existing incumbent. The technology is changing, so you can innovate right now at the forefront of the sector as well. And so what I believe we did in the Bitcoin mining sector is we’re a leader in that industry today. And we did not want to pivot out of that technology and just focus on the next new shiny object. We want to layer that into our platform. And that was one critical portion of what we did this quarter with American Bitcoin. I think many thought it was not possible. And with that spin out, if you look at the financials of American Bitcoin in this first quarter, I mean American Bitcoin did $64 million in revenue at about $28 million in cost at 56% margin.

I mean that’s a great first quarter in this public debut as a public company when the company was only started in Q2 of this year. And so as we think about our ability to scale and grow within that sector, which we first started, we think we’re a leading provider and leading operator within that industry, and we look to do the same in the data center market. As we look forward into the future, there’s additional demand that we see from a power perspective from advanced manufacturing from large-scale campuses that drive robotics, other energy-intensive use cases as well. And it’s interesting because some of the sites that we have in our pipeline, folks have reached out because locally, people know that we have access to that land or that power and have had other use cases reach out as well.

I think right now, we stay hyper-focused on being a leader within the data center industry platform. And once we feel like we have a very strong foothold in that market and are a leader within that market, the platform of Hut 8 will be more than just a data center platform. It is already more than just a Bitcoin mining data center platform, and that’s the vision for the company. But until then, we stay relentlessly focused on developing and competing within this sector and becoming a market leader before being distracted and looking to expand anything else.

Operator: Your next question comes from the line of Darren Aftahi with ROTH Capital Markets.

Dylan Dupuis: This is Dylan on for Darren. I guess on the 1.5 gigawatts, where do you stand in terms of progress securing some of the longer lead time items that might help with some of the build time visibility in terms of whichever of the 4 sites you’re sort of working on consistently or one or the other?

Asher Genoot: Great question. And so all 4 of these sites, we have land control and then the utility agreements as well. And so for those projects, we have in sequence right now based on customer demand. And all of these projects, power is actually available for development. And so to your point on long lead time items and also execution in terms of who’s going to be our partners in delivering execution of the sites as well in terms of labor as that’s another shortage in the market. We feel comfortable in the ability to be able to deliver at a time that the market expects today. We have continued to increase our reserve of long lead time items like high to medium voltage breakers at the substation. There are a lot of our projects in which we’re designing that we’re actually using similar equipment across sites even if the transmission level voltage is at a certain scale, we dropped down to 34.5. And so we can create commonality across sites irregardless of where those sites are located and what the transmission level voltage is.

And by doing that and adding that into our design, we’re able to procure equipment that is valuable and can move around from site without having to take that risk on supply chain on a single site. And so we continue to do that and continue to scale in that reserve that we have as well.

Operator: Your next question comes from the line of Brian Dobson with Clear Street.

Brian Dobson: So the business has evolved tremendously over the past year, and we’re about to enter ’26. What key themes do you expect to emerge next year? And what do you believe Hut will look like when we’re discussing the company at this time next year?

Asher Genoot: The market demand has only increased since we started this journey, especially as of recently. I think next year is a year of execution. Next year is a year that companies need to deliver on the promises they made to customers in the market, and that’s extremely important in order to be able to maintain that credibility and build into it. Right now, there’s an opportunity if you have power, if you have land, and demand is there because it’s such a shortage of power that exists. But that demand will only come back to you if you execute on the promises that you make today and you deliver on those promises. So I see next year as a year of execution for data center providers, for actual AI companies that have raised the capital and need to deploy and show the growth rates of those businesses as well.

For Hut 8, we’ll be along our journey of executing on those data center platforms that we announced to the market and deliver, and we need to show progress and continued updates on where we are, both on the sites that we already have announced and are developing and constructing in addition to new sites and new projects. I think for us, as we provide more transparency into our pipeline as we start segmenting our pipeline from diligence to exclusivity to development and management, we hope to have people understand where are projects within our pipeline, what is the probability of outcome that they become successful and they can provide — put a different weighting on each megawatt within each stage of our business. And so for us, what’s really important is the transparency to the market and the execution to the market when we announce deals, so they’re able to much better understand our business and the evolution and growth of that business past just the initial sites or 2.

Operator: Your next question comes from the line of Stephen Glagola with Jones.

Stephen Glagola: For the 300 megawatts of gross capacity at Riverbend, what is your expected ready for service date for a hypothetical [ colo ] lease there? And additionally, maybe you could share any updated milestones or timelines regarding the plans to scale the site to 1 gigawatt.

Asher Genoot: Expectation is end of 2026. The IT capacity we’re looking at, at 300 megawatts utility is roughly 216 to 224 megawatts in IT capacity. And currently, we sent some photos on my X account in regards to the delivery of the Switchyard. [ Entergy ] has been doing a phenomenal job in the progress that they’ve made at the Switchyard. We’ve already started moving forward on a lot of civil work for the last few months. The substation is in process of being built right now as well, and you’ll start seeing more active construction as well. But delivery is expected for end of 2026, and that’s where we think there’s a lot of value in that site. As we look at the overall campus, the beauty of finding this project in this site was the high density of transmission line capacity that flows through the campus and its proximity to generation nearby as well and allowing for the physical capacity to deliver power to the system.

We’ve been in deep discussions with [ Entergy ] on the scale of that campus. We spent a lot of work on that in Q2 as well with one of our customers that had an interest in wanting to look at that campus being larger than just 300 megawatts. We believe that the ability to do that exists, and we have had deep discussions with [ Entergy ], we’ll be sharing more on those updates post announcement of the first deal.

Operator: Your next question comes from the line of Joseph Vafi with Canaccord.

Joseph Vafi: Just, I thought maybe we kind of drill down a little bit on the Bitcoin holdings here a little bit. Clearly, it is a differentiator versus some of your peers. And it does feel like some of the GPU as a service demand is really rising. Just wondering how you’re looking at that as you work on your power pipeline. Clearly, there’s value there, but it might be a little longer term to realize the GPU as a service could be a little shorter term, leveraging power that you already have and your balance sheet. Just wondering how you’re thinking about that in kind of the pecking order of efforts and developments right now.

Asher Genoot: The GPU business is actually the first business we looked at before data centers. And this was pre our merger with Hut 8. We looked at deploying our first cluster of GPUs. And at the time, the market and scale were much smaller. Unfortunately, it took about a year in 2023 to get through the merger. And so we were about a year delayed in our strategy to deploy those GPUs. But we launched Highrise during that period of time. And when we launched, it was a bit subscale with a little over 1,000 GPUs that we have in that business. But as you mentioned, the demand for compute is extremely high today and combining compute with power creates even more value. And so from a risk profile perspective, investing in GPUs and investing in ASICs, we see as a similar risk profile.

If you’re unhedged, you’re taking compute price risk. If you’re hedged, then you’re taking counterparty risk on what the value of that contract is. And so with that said, that’s why as a structural build, we built Hut 8 to be the energy infrastructure platform to invest into the longer depreciating assets. American Bitcoin, we spun out to continue to invest into ASICs. And then Highrise, we incubated as a separate company with a separate balance sheet to invest into the GPUs as well. And so there are definitely conversations in which Highrise is kind of on the back of Hut 8 conversations in regards to the power infrastructure we have and can it be just a colo deal or also colo compute in some regards. Obviously, as we look at the scale of projects, we’re extremely sensitive to what is Highrise’s ability to bring on capital, what scale do we step into that?

How do we think about dilution and equity versus debt on raising for GPUs, but definitely something that is a part of these discussions and that we look to grow if the opportunities are there, but heads down focus on having a couple of long-term lease agreements as well that anchor the cash flows of Hut 8 as a business.

Operator: Your next question comes from the line of John Todaro with Needham.

John Todaro: I guess on the 1.5 gigawatts, just can you frame up a little bit more what would ultimately be earmarked for HPC AI and then getting at one of the earlier questions, just a little bit more details on maybe some of those other use cases like advanced manufacturing or something else that you might look at for the other capacity.

Asher Genoot: So we’ll go into kind of detail on each site in short order after we kind of share some of the more recent efforts that we have across data centers. So it’s really interesting. I’ll give you an example. One of the sites is a gigawatt site and on the map you see that’s in Texas and it’s in Corpus Christi, right? That’s near the coast. We have 700 megawatts that come available in Q4 of next year and then 300 megawatts following in the 24 months after that. That site, we had never planned for kind of AI use cases because of its proximity to the coast. We saw it as an opportunity for Bitcoin mining or advanced manufacturing. There’s a lot of manufacturing that you’re seeing. You see SpaceX, Tesla, so forth, building facilities in Corpus Christi.

But to our surprise, we’ve actually had recent demand for that site, not just from kind of AI labs or Neo clouds, but from hyperscalers as well and have been exploring test fits. And so I’m not saying that customers will end up landing at some of those sites, but the amount of demand for power right now is extremely high, as everyone knows on this call. And so we’re focusing right now on commercializing, executing and announcing and delivering the sites that are high on the list in data center markets, but some of these other properties where we develop the opportunity from the ground up, have a very low-cost basis because of the development work that we put in. Right now, all of our sites are being looked at across the board, even sites that historically we wouldn’t have looked at it.

Another example of that is Vega. Vega is a site that we built to show the market what a low density — low redundant high density 200 kilowatts per rack of direct liquid to chip cooling could look like. That site, we have behind the meter at a co-op territory in Vega, which is right near Amarillo, Texas. There’s some curtailment obligation because you’re in a small co-op that we don’t want to hit the peak curve so we want to be able to curtail when this constraint needs it for the local co-op. But, now customers are looking at that too and said, you know what, maybe we’ll take that. We’re okay with some of those curtailment it’s a really interesting world that we’re living in. A couple of campuses are kind of straight down the fairway in terms of this just works for AI.

We don’t see us putting Bitcoin there, and we haven’t had any discussions around other advanced kind of manufacturing use cases. And then the other ones that we thought we were putting in our pipeline for some of those in the long term are now being looked at as well from a data center perspective. And so I think you’ll see more and more competition for power outside of just data centers. Everyone is focusing on data centers, manufacturing as you look at the overall kind of demand curve is a big percentage of that increase. We see that in Louisiana. You’re seeing multi-hundred megawatt deals that get announced on the Hyundai plant that they’re building, other LNG facilities that they’re building. And so I think you’ll see increased competition on that power.

I mean relationships with communities will really matter. Do they want you, your business what you bring to the community there or not. And so across the board, we think this will be kind of a multifaceted growth in terms of how energy plays out within the U.S. But for us at Hut 8, again, staying very focused on the data center platforms. We had built sites for kind of this longer-term initiative. But today, we’re seeing demand on those as well that we originally weren’t planning for data centers.

Operator: Your next question comes from the line of Chris Brendler with Rosenblatt.

Chris Brendler: I just wanted to follow up on that last question and answer on the competitive environment for power. And I guess as I look at your 4 categories, where is the competitive pressure? Because not surprisingly, it seems like power is very popular these days. So where does that competitive pressure show up in your pipeline as it moves between diligence, exclusivity and development? And how is Hut 8 positioned to sort of win in this environment? I’d love to get like a sort of more of a high-level view of Hut 8’s strengths when it comes to finding sourcing and closing on power sources, that would be great.

Asher Genoot: When we think about power development, there’s 3 types of ways to consume power, front of the meter, behind the meter and then net new generation build where you actually build your own generation. front of the meter, it’s about, are you finding the right place in the transmission line that other people aren’t looking at. And Louisiana is a perfect example of that in that site that we found. We looked at places that other people weren’t looking. We had a perspective that we bet on, on where the markets were heading and if this would be valuable or not. That obviously is becoming more and more competitive as more entrants come in and the power and the value of power continues to be realized from the local landowner and farmer to the developer to obviously the larger platforms and hyperscalers.

Behind the meter is interesting because I think we’ve pioneered in the focus on our team in terms of behind-the-meter assets. We have 280 megawatts behind the meter at our King Mountain site with a joint venture with Dexterra. We have 205 megawatts at our Vegas site. And so about 0.5 gigawatt of behind-the-meter platforms in our portfolio today. I think that’s really unique and interesting for a company because you don’t have as many of those deals. And recently, we’ve had more announced within the data center space, but we’ve done, I think, the most within the market, especially within Texas of existing generation plants and how do we allow to be able to pull power and co-locate a data center there as well. And lastly, it’s generation. We think there will be a continued theme of bringing your own generation, whether interconnected to the grid or not and more acceptability by customers.

Although we did not want to kind of continue to drive and own the power plants that we have today and we said we’d find strategic value for those in the long term, having owned those power plants over the last 1.5 years has continued to increase our learnings and understanding of how to run generation, how to run natural gas power plants. That’s about 30% of our portfolio today in which we run 4 natural gas power plants in Ontario. And so I think the expertise that we have and behind the meter in generation will continue to create that moat and that value advantage because we can go to generators and say, look, we’ve been able to go and amend these SGIAs to be able to co-locate data centers, and we’ll walk you through the process of how to do that.

On the generation side, we have experience in doing so, and we can bring that to the table as well, whether we partner with folks or do it ourselves. On the front of the meter side, it’s getting more competitive, but it’s focusing on areas that are underappreciated, under-looked at and also developing those from the ground up as well. The other really important thing is, look, a lot of people on this call today are here saying, Ashley, where the hell is your deal? Where is your announcement? There’s been a bunch of great announcements done this week. And as we live in this era where there’s so much demand and excitement over this category and over this asset class, I think it remains important to be disciplined and be focused on are we doing the right deals that drive value, not just to our share price in the short term, but also as we execute on these deals and the economics and the structure flow into the market.

There are many sites that we look at, and I believe are overpriced because people want to make generational wealth because they found a piece of land in the middle of nowhere and now want to flip it to some data center developer. And those transactions are happening. But what is the value of those transactions? Are you able to commercialize them? Are you taking a lot of development risk? Secondly, I mean, there are deals that we have walked away from, and I could have announced those deals to the market sooner and haven’t kept you guys waiting for this long. But were those the right deals to lock in for 15 years? Were we taking the right risk reward based on what we believe is in the market from a structure perspective, from a credit perspective, from a pricing perspective.

And so I appreciate all the analysts and shareholders who are on the call today for being patient with us. But we’ve lived through markets where in moments of excitement and moments of extreme growth, people just want to see growth at all costs. we’ve also been on the other side of those markets where momentum slows down for a little bit. And have you structured those deals thoughtfully, have you managed your balance sheet thoughtfully. 2022, we’ve learned a lot of those lessons. And so in markets that are exciting today, we will grow, but we will also grow with the mindset that we are able to manage through any volatility that the world throws at us because I promise you all, there will be volatility in the next 15 years as we sign these long-term agreements.

And it’s important to think about can we manage through that as a business or not. It’s a little bit of a longer-winded answer to your question by seeing a lot of people on this call today were wanting to talk about exactly this and when the hell are we announcing our deal. And so I wanted to give a little bit more background to why we haven’t shared something with the market yet.

Chris Brendler: That’s fantastic. Great color there. My follow-up question is on American Bitcoin. I think last reported number was 64% pro forma ownership, but with their large ATM filing a couple of months ago, I imagine that’s going down. Do you expect — or can you give us an updated pro forma ownership percentage? And should we start thinking about 2026 being unconsolidated? When does that flip?

Asher Genoot: Right now, the consolidation, even if we flip under 50.1%, we have a super vote there, right? And so we continue to maintain voting control within the company until we’ll consolidate for the foreseeable future. And we’ll share updates in regards to the business and we — and kind of growth there. To date, the company has roughly 4,000 Bitcoin. And so dilution has been not — it has not been the $2.1 billion ATM that we announced as it’s been minimal and thoughtful. And so our ownership percentage has remained roughly intact.

Operator: Your next question comes from the line of Brett Knoblauch with Cantor Fitzgerald.

Brett Knoblauch: As we look at your power pipeline, how should we decipher kind of maybe like what percentage do you think is going to be used for an AI data center in some form or fashion versus maybe Bitcoin mining as [ ADTC ] has plans to reach 100 exahash, which obviously they’re going to need a lot more power capacity, which bodes well for you guys. But how should we look at your power portfolio split between what your new on the data center side and on the Bitcoin mining side?

Asher Genoot: We have sites that we’ve developed that we historically believed that we’re not interesting for data centers. Obviously, that’s changing the landscape that we’re in today. We’re also designing the next generation of data centers to be able to be valuable as well, where we’re able to quickly transition from Bitcoin to AI, and it will be accretive for Hut 8 and American Bitcoin because if any of those transitions happen, American Bitcoin would obviously be bought out at a premium and they would be able to get their return on their investments, and we would be able to get longer-term agreements by delivering short-term power. And so today, as we look at our overall pipeline, we have a team that can build and operate Bitcoin mining facilities on turnkey, and we have the ability and infrastructure to scale that very quickly.

Obviously, we’re building those muscles and continue to scale those muscles in more Tier 3 data center development, whether it be kind of Five9 core network stack and GPUs or [ 39 plus Five9 ]. But overall, as we look at our development pipeline, we think we have ample demand for both of those businesses. At the end of the day, American Bitcoin has exahash target goals, but the most important goal that it has is increasing Bitcoin per share. And so it’s not at a race to increase exahash at all costs. It’s doing so thoughtfully with the right structures and ultimately increasing Bitcoin per share over the long term, and it’s done a great job of doing that since we launched that company. And so as of right now, we don’t see large competing interest in regards to data centers in AI, but we’ll share more of that in the coming quarters if we start seeing more constraint there.

Operator: Your next question comes from the line of Mike Grondahl with Northland.

Mike Grondahl: The 1.5 gigawatts under development where you’re making a lot of progress, roughly how much of that do you see ready for use in ’26 versus ’27?

Asher Genoot: It’s a matter of our ability to be able to have the supply chain and the execution of that capacity. We have a lot of that power that becomes available and it’s building the substation and data center [ field masher ], which is a great problem to have. And so Riverbend is obviously a large site that everyone knows about. We talked about Corpus Christi. We have another site in West Texas. We have a site in Chicago as a part of that overall platform. We’ll actually share more detail on each of those sites. So everyone on this call and the broader markets and customers can kind of all see it as well. But overall, today, it’s really about executing on those sites and being able to deliver them thoughtful and on time.

I think building these data centers and these time lines is a lot to ask for our vendors and our partners in building and whether it be subcontractors, EPC. And so doing so thoughtfully and making sure we set the proper expectations with customers where we can deliver and execute for them as well.

Operator: Your next question comes from the line of Bill Papanastasiou with KBW.

Bill Papanastasiou: As we near towards the first 3 months of ABTC trading independently, Asher would just love to hear your thoughts on the future opportunity here for Bitcoin mining and whether the strategy is changing at all given the AI HPC diversification play that’s clearly accelerating across the peer group.

Asher Genoot: As we’re developing our pipeline, we’re looking to continue to develop and the large-scale operators and platforms for AI and data centers and a lot of the deals you’ll see coming from Hut 8 announced will be on that front. We also have assets in our pipeline that we believe are great position for Bitcoin as well and has ample runway for American Bitcoin to run at scale. Look, I think if we think about the company launching from day 1 in April 1 of this year, becoming a public company on the NASDAQ about a month or so ago. And today, having about 4,000 Bitcoin on their balance sheet by themselves, 25 exahash mining 8 Bitcoin to 10 Bitcoin a day. I mean that’s really impressive for a period of time that it’s built.

The business is obviously still going through price discovery in the public markets. We have early investors that are heavily in the money. There are lockups will be coming up in about a month or so. And so I think managing those nuances getting to a stabilized state at ABTC and ultimately continue to focus on building Bitcoin per share for the underlying shareholders. We can’t control where the share price goes, how high it goes, how low it goes, we can control the underlying operating business. That’s the same mindset I had with Hut 8 when we took over and the stock was about $6, and we just focus on the fundamentals and the rest will work itself out. And so that’s our same thought process with ABTC. We think as a structural kind of initiative, a strategic initiative, we were very happy by the outcomes of it thus far.

No doubt that we’ll go through some volatility there as shares become released into the market. But overall, I think the structural ability for us to have ABTC for us to have high rise and then the infrastructure business of Hut 8. I believe that the market will see that continue to play out and the value of that over time. We were able to increase our amount of exahash, the amount of Bitcoin that we mined, the margins we mine without any dilution to Hut 8 that a parent company that was value accretive for ABTC shareholders and obviously value accretive for Hut 8 shareholders in a risk-adjusted anti-dilutive way as well. And so I think structurally, how we’re forming the foundation of this business will only compound. And although the numbers people care less about this quarter compared to us announcing a deal, look, we beat all expectations across kind of the categories in this quarter, and we look forward to continuing to execute and developing and scaling this platform.

Operator: Your next question comes from the line of Matthew Galinko with Maxim Group LLC.

Matthew Galinko: Can you touch on the role that your Bitcoin reserve plays in accessing project financing and financing for site build?

Asher Genoot: Happy to do so. The 2 prime example is a great example of that in addition to Coinbase. So when we think about the stack that we have on the balance sheet today, and Sean, I’ll have him chime in right after this as well because his perspective on this has definitely changed since he joined us day 1 and asked me, when are we selling this as this immediate versus what he’s been able to do thus far with it. We’ve been able to, as Sean mentioned, write cover calls and drive a yield on that Bitcoin that we have, right? Because that’s right way risk, we get covered at a much higher price. We’re okay with that world, and we can use that money to fund the business. Additionally, we’re able to bring on really low cost of capital on Bitcoin-backed loans with revolvers that we have that we can pull, pay back.

We don’t have penalties in doing so. So the structure of the ability to pull on that value is really important as well. And so as we think about do we hold that Bitcoin at Hut 8, does that long term, all our Bitcoin exposure at ABTC and Hut 8 is more cash and just developing data centers, we’ll have that story play out in the coming, call it, year as our data center platform continues to mature and ABTC continues to mature as well. Sean, I don’t know if you have any thoughts on your perspective of kind of Bitcoin on the balance sheet and the value that it has. But I think for us, the larger strategic element of where does Bitcoin stay? Is it at Hut 8? Is it at ABTC in the long term as we think about exposure, and we’ll share that with the market as the data center platform continues to mature.

Sean Glennan: Yes. Thanks, Asher. And as we went through in the prepared remarks, we talked about the $689 million in contributions from price appreciation, the $265 million in Bitcoin-backed facilities that we’ve raised and then approximately $32 million in covered call premiums. But it goes beyond that, right? Like that’s direct access to capital. I think there’s also a read-through to our balance sheet as you look at the stack. And so as we work with very large counterparties, creditworthiness is something that they’re very focused on. And I think they take a look at our balance sheet, and I think it answers a lot of their questions very quickly. So it’s not something we need to dwell on. It’s become a check-the-box exercise, which I think has been really valuable as we’ve entered into the new business line of AI data centers where the numbers are much bigger than they had been in Bitcoin mining.

Operator: Your next question comes from the line of Nick Giles with B. Riley.

Nick Giles: Maybe another question for Sean. I was wondering if you could just give us a little more color around how project financing discussions have progressed or are you seeing any changes in terms since your last update? And then given some of the other deals we’ve seen across the space, has your thinking around structure changed at all?

Sean Glennan: Yes. Thanks a lot, Nick. So for one, the project financing market remains extremely healthy. If you look over the past month, we’ve seen 2 enormous deals, one with Meta and one with Vantage with Blue Owl in the mix on the first one. And so there’s a tremendous amount of capital out there to support data center growth. I think the market remains bifurcated between investment-grade and noninvestment-grade off-takers and what that looks like from a loan to capital and a credit spread perspective. That hasn’t really changed. But suffice to say, the market remains extremely healthy, both from a bank and private credit perspective. There’s lots of capital to support it. As we think about some of the new structures that have emerged, I think we will look at everything out there that we think will create shareholder value, provide mitigants against enterprise risk.

And I think one of the most important things that you can avail yourself of on the financing of these is nonrecourse sort of — nonrecourse project financing. And what that does is it insulates the parent company from any debt issues at the subsidiary level. And that’s something that I think is really valuable, and we’ll continue to evaluate those structures. But again, long story short, the market is extremely healthy. And I think we’re not really worried about the ability to finance these projects over the long term.

Operator: Your next question comes from the line of Ben Sommers with BTIG.

Benjamin Sommers: So I just wanted to ask about the site in Illinois. I guess kind of curious what the demand profile is for the site given it’s a little smaller than some of the sites in Texas in the pipeline or Riverbend and just kind of how we think about potentially expanding in that region.

Asher Genoot: We originally developed that site because most of our sites weren’t in Tier 1 markets, and we want to have a campus that was there that could be a nice tuck-in add-on. What we’ve seen from demand in the market is exactly that, a tuck-in site for people who have sites nearby, a burst site for some AI labs as well and enterprise as well. And so that site is — and then also is an opportunity for Highrise and GPUs as a nice kind of step in opportunity as well for that business. And so we’re exploring opportunities there. Right now, we’re prioritizing our supply chain and the focus on some of our larger campuses as the demand is there, and so we’d like to commercialize those first. But this is a site that we think is valuable even though it’s a smaller site, we’re focusing on it for more strategic reasons of who we place there rather than just looking at kind of the economics because relatively smaller in scale compared to other sites that we’re commercializing.

Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.