Hut 8 Mining Corp. (NASDAQ:HUT) Q3 2022 Earnings Call Transcript

Chris Brendler: Okay. And then like the summer weather versus winter weather, does that also have an impact? Like, should we expect to go back up in the fourth quarter or stay around here?

Shane Downey: Well, that gets to a broader question that typically in Alberta, our primary markets, there is some seasonality to power markets, but not particularly large or dramatic. So it’s needless to say, unfortunately, it’s difficult to handicap in light of the broader uncertainty in global markets today. But again, as of as of now, we’ve been comforted in seeing things sort of normalized relative to where they were in the middle part of this year.

Chris Brendler: Okay. One last one for me. Along the same lines, if look at the gross margin in the HPC business came down a little bit. Was that power related or something else?

Shane Downey: On the HPC side, no, I would say not power related. We continued to €“ the rationalizations that we sort of announced and spoke to as part of our Q2 earnings really taking hold here in Q3, i.e., it was very late in Q2 that that some of those sort of product rationalizations occurred. So yes, think of it as sort of a very modest and anticipated impact on margins in Q3. And then really points back to that that same message that we’ve delivered previously that this sort of an intentional move on our part and we really do think positions us well for growth as we head into 2023.

Chris Brendler: Yes. So it’s nice to have a little diversification these days. Thanks a lot, Shane. Appreciate it.

Shane Downey: Pleasure.

Operator: Your next question comes from Kevin Dede from HCW. Kevin, please go ahead.

Kevin Dede: Thank you.

Jaime Leverton: Good morning, Kevin.

Kevin Dede: Hi. Hi. Hi. Hi, Shane. Thanks for having me. Can we drill in a little bit pardon upon on North Bay, where €“ how much of the almost 3.1 exahash is there? and how much of that is at risk? What sort of timeline do you think you can offer with regard to your negotiation with Validus? And if everything goes sort of the ugly scenario way, I guess, what of that 3.6 target is something that we shouldn’t consider hashing maybe the early part of next year, as much of that as you can quantify, please.

Jaime Leverton: Yes. So as we’ve previously disclosed, North Bay was running at approximately 25 megawatts compared to our Alberta sites, which are combined over 100 megawatts. So it’s been our smallest site. And I can’t give you a timeline. It’s really difficult to handicap how long this will take to resolve with Validus.

Kevin Dede: So of that 25, is it all running now? How much of it ran through the third quarter, do you think they just pulled…

Jaime Leverton: It is running now and it

Kevin Dede: Oh, it’s running. Okay. Okay.

Jaime Leverton: It’s running right now and it has been running consistently through €“ it ran consistently throughout the third quarter.

Kevin Dede: Okay. So have you filled all 25 megawatts? Is it at full capacity?

Jaime Leverton: It is yes.

Kevin Dede: With that sort of the €“ yes, okay, with the M30 machines? Okay.

Jaime Leverton: Yes.

Kevin Dede: All right. That helps a lot. Thanks Jamie. On the…

Jaime Leverton: No problem.

Kevin Dede: Yes. On the Zenlayer side, can you give us some insight on how you’re progressing there? Any insight on how they may be helping you fill out capacity utilization at the former TeraGo sites?

Jaime Leverton: The Zenlayer partnership, which we announced a few weeks ago and we actually had a great €“ a great meeting with the team in Toronto, two weeks ago now. The hardware is still being delivered, so the environments we don’t expect to be stood up for, I’d have to double check on the timeline, but towards the end of this year is when those environments will be stood up and available to start to be sold into.