1. What is this announcement about?
On Monday, February 22, 2021, Hut 8 announced that it has entered into an exclusive Memorandum of Understanding to advance partnership discussions with Validus Power Corp. In short, we are seeking to secure an agreement so that we can create new revenue streams and energy solutions for our bitcoin mining operations.
2. Why is this significant?
- Exclusive advancement with first-mover status: This exclusive partnership discussion between these two Canadian companies represents a major advancement towards digital energy. With the potential partnership, Hut 8 would be the first Bitcoin Miner to take advantage of a cutting-edge turn-key mobile power plant and data center fleet – to leverage alternative fuel sources, including, but not limited to, by-product gas from petroleum industry, This will reduce emissions and convert what is currently unused energy into bitcoin -responsibly scalable and on-demand.
- Leading cross-sector innovation: The partnership discussions show forward-thinking leadership and both companies’ dedication to future-forward innovation to truly ignite change across the energy, data, blockchain and fintech ecosystems.
- Co-developed products and services with holistic outcomes: The teams are exploring the co-development of an industrial-scale, mobile energy generation program. The program will also support and advance long-term ESG objectives while delivering financial innovation and positive overall outcomes.
- Reliable, fixed-cost power: Validus Power Corp. provides its customers the ability to efficiently generate reliable power, wherever and whenever it is needed, which is critical for Hut 8 to support its mining operations.
- Alternative energy innovation: Generation of low-cost electricity by leveraging alternative fuel sources, such as those from the petroleum industry, and converting into digital energy, marks a significant milestone in the relationship between the energy and Bitcoin mining industries.
3. What are Hut 8 and Validus focused on with this partnership?
The partners are focused on showcasing how Bitcoin infrastructure and innovative energy solutions can be used together to provide future-forward collaborative solutions and new ways to generate revenue.
This partnership and our innovation plans are expected to leverage the strength of cryptography and mathematics within a technological industrial scale framework, to create value across sectors.
4. Why is Hut 8’s first-mover approach significant?
Recently ranked 11th (of 10,000) on the 2021 OTCQX® Best 50, the Hut 8 leadership team is continually looking for ways to challenge traditional approaches in order to find innovative, powerful, new streams of revenue, and industry-leading solutions – a mindset now being applied to their ESG and carbon footprint reduction strategy.
The leadership team at Hut 8 is dedicated to building and exploring alternative mining practices. The future of our industry and our commitment to our investors is to continuously push new, creative ways of thinking which drive our competitive advantage. Just like we invest in hardware and get ahead of the supply constraints, the same thoughtful approach needs to be applied to our energy & ESG objectives.
5. What is flare gas?
A gas flare, alternatively known as a flare stack, flare boom, ground flare, or flare pit is a gas combustion device used in industrial plants such as petroleum refineries, chemical plants and natural gas processing plants.
6. What solution is being driven here and why?
Hut 8 is working to increase its capacity by converting waste gas into energy for Bitcoin mining. Being able to put harmful flare gas and other less sustainable energy sources to use in an eco-friendly way while advancing democratic finance, and tech innovation, is a privilege and a responsibility we take seriously at Hut 8.
As business leaders, it is our responsibility to develop strategies and solutions that both drive Hut 8 revenue, deliver shareholder value, and also create new forms of value that address much larger global priorities. The relationship we are developing with Validus allows us to do exactly this.
7. Mobile energy? Can the innovation being developed here be offered outside of Canada?
Alberta, Canada is our home base and we work closely with our energy providers there.. As a growing company we are always evaluating where the best economics are. We focus on scale and size of market, and with ESG as a strategic priority, we also believe the bigger the impact, the better.
8. What do you mean by diversity of revenue streams?
The business of bitcoin mining is an essential service to the global bitcoin network; the network doesn’t run without the miners. We are rewarded for running the network with bitcoin, but as a company with the expertise we have today, we see an opportunity to lead as innovators and create new revenue streams for Hut 8 and Hut 8 shareholders, in addition to our current Bitcoin mining operations.
This is an exciting area of exploration we are undertaking with Validus as part of this phase of our relationship. Our intention is to develop a solution that benefits us from a resource perspective but also creates an additional revenue stream. We want to participate in selling energy back to the grid during peak times as a part of Hut 8’s collaboration with Validus.
If the power price is such that we generate more revenue selling power than we do by mining bitcoin, we’ll do whatever is more profitable and helps protect us and our shareholders in Bitcoin down cycles.
To provide a recent example, if we had the ability to sell power back to the Texas grid we would have done so to help our friends in Texas out, in a moment of need. This project is about building mobile sites that are grid connected so we can support the grid during peak times and profit share accordingly.
9. How much more power will this give you?
Hut 8 has 109 MW of power and attained its goal of 1.0 E/H in early 2021. Hut 8 is on track for 1.3 E/H in Q2. Scalable energy and capacity expansion is a major priority for the company. Innovative technology designed to provide power to gridless regions will allow Hut 8 to achieve a mobile grid (think cell towers instead of copper wires). This would provide a work-around for grid-powered mining and reduce the demand on energy grids and wired networks. The generation of low-cost electricity converted from alternative fuel sources such as those from the Oil & Gas industry, marks a significant milestone for innovation improving the relationship between energy and bitcoin mining industries.
10. What is ESG?
Environmental, Social, and Corporate Governance (ESG) refers to the three central factors used by investors to measure the sustainability and societal impact of an investment in a company or business. Today, ESG companies are considered to be relevant and are sought out by investors and funds with sustainability, social and corporate governance mandates. Companies who are prioritizing and implementing measures in their operations to achieve positive returns and long-term impact on society, environment, and the performance of the business often have an ESG strategy.
11. Why does Hut 8 care about ESG?
Climate change is a priority issue affecting well billions of people on this planet. It is our responsibility to ensure our innovation is forward thinking and responsive to environmental concerns. We are here to build and scale awesome solutions, not cause harm to the planet.
There is a lot of misunderstanding and mythology around bitcoin and bitcoin mining. Like many big internet and data-driven companies much larger than ours, we need energy to run our business. But being agile and aware of shifting investor priorities, including those around ESG, is a key strategy to our success overall. This is why we must seek out agile and impactful innovation partners and opportunities – which is what we are doing here with our relationship with Validus.
Being able to put harmful flare gas and other less sustainable energy sources to use in an eco-friendly way while also advancing democratic finance, and Bitcoin infrastructure technology is a privilege and a responsibility we take seriously. As business leaders committed to a brighter future for people and the planet, we must stay cognizant of the ways we can meet business needs and create new forms of value that take into account much larger global priorities. The relationship we have with Validus allows us to do exactly this.