Cloud Hosting

Quarterly revenue of $19.0 million including $4.5 million from the high performance computing business

9,133 self-mined Bitcoin held in custody on March 31

TORONTO, May 11, 2023 /PRNewswire/ -- Hut 8 Mining Corp. (Nasdaq: HUT) (TSX: HUT) ("Hut 8" or the "Company"), one of North America's largest, innovation-focused digital asset mining pioneers,and high performance computing infrastructure provider, is pleased to announce its financial results for the quarter ended March 31, 2023 ("Q1 2023"). All dollar figures are in Canadian Dollars ("CAD"), unless otherwise stated.

"In early 2023, we experienced a confluence of events: electrical issues at our Drumheller site caused equipment failures, while fluctuating energy prices and increased network difficulty affected our mining operations," said Jaime Leverton, CEO of Hut 8. "We also reached an all-time operational high of 1.72 EH/s at our Medicine Hat facility and announced a merger of equals with USBTC, and since then have made progress on key regulatory files required to complete the transaction."

"We continued to strategically manage our finances in Q1 while addressing challenges at the Drumheller site," said Shenif Visram, CFO. "Although we continue to see good client demand in our high performance computing business, the issues on the mining side of the business reflect a decrease in revenue and Bitcoin mined, which the entire leadership and operations team is proactively working to resolve."

"Leading up to the halving, we will continue to focus on strategically increasing our stack of Bitcoin and growing our HPC business including exploring opportunities in the growing Artificial Intelligence market," said Jaime. "We expect that our proposed business combination with USBTC will increase our installed self-mining hashrate to 7.02 EH/s, enhance our geographic reach into new energy markets, and further diversify our lines of business with capex-light, scalable, fiat-based revenue streams, positively distinguishing us from pureplay digital asset miners, who post-halving, are likely to have more exposure to diminishing returns driven by an increasing global hashrate and additional competition from sovereign nations and well-funded new entrants."

Q1 2023 HIGHLIGHTS

BITCOIN INVENTORY AND VALUE

As at March 31, 2023, the Company had a total self-mined, unencumbered, and custodied Bitcoin balance of 9,133 with a market value of $352.0 million. During the first quarter of 2023, 475 Bitcoin were mined and 428 Bitcoin were sold, for which the Company received proceeds of $14.5 million.

OPERATING AND FINANCIAL OVERVIEW

For the three months ended March 31

Three Months Ended

(CAD thousands, except per share amounts)

2023

2022

Operating results

Digital assets mined

475

942

Financial results

Total revenue

$ 19,021

$ 53,333

Net income

108,503

55,708

Mining Profit (i)

2,590

32,906

Adjusted EBITDA (i)

(3,697)

27,109

Per share

Net income - basic

$ 0.49

$ 0.33

Net income - diluted

$ 0.47

$ 0.31

(i) Non-IFRS measure - see "Non-IFRS Measures" section below. Certain comparative figures have been restated where necessary to conform with current period presentation.

As at

(CAD thousands)

March 31,2023

December 31,2022

Financial position

Cash

$ 15,904

$ 30,515

Total digital assets

352,436

203,627

Total assets

541,453

412,937

Total liabilities

70,811

61,547

Total shareholders' equity

470,642

351,390

Working Capital (ii)

339,855

215,490

(ii) Calculated as current assets less current liabilities.

For more information, please refer to the Company's management's discussion & analysis (the "MD&A") and the Company's unaudited condensed consolidated interim financial statements for the three months ended March 31, 2023 and 2022. These documents are available on the Company's website at hut8.io, under the Company's SEDAR profile at http://www.sedar.com, and under the Company's EDGAR profile at http://www.sec.gov.

______________________________

(i)Non-IFRS measure - see "Non-IFRS Measures" section below. Certain comparative figures have been restated where necessary to conform with current period presentation.

NON-IFRS MEASURES

This press release makes reference to certain measures that are not recognized under IFRS and do not have a standardized meaning prescribed by IFRS. They are therefore not necessarily comparable to similar measures presented by other companies. The Company uses non-IFRS measures including "Mining Profit" and "Adjusted EBITDA" as additional information to complement IFRS measures by providing further understanding of the Company's results of operations from Management's perspective and should not be viewed as alternatives to, or replacements of, measures of operating results and liquidity presented in accordance with IFRS.

The following tables and definitions reconcile non-IFRS measures used by the Company to analyze the operational performance of Hut 8 to their nearest IFRS measure and should be read in conjunction with the Company's unaudited condensed consolidated interim financial statements for the three months ended March 31, 2023 and 2022.

Mining Profit

"Mining Profit"represents gross profit (revenue less cost of revenue), excluding depreciation and revenue and site operating costs directly attributable to hosting services and high performance computing operations. Mining Profit shows profitability of the Company's core digital asset mining operation, without the impact of non-cash depreciation expense. Mining Profit measure provides investors the ability to assess the profitability of the mining operations exclusive of general and administrative expenses.

The following table reconciles gross (loss) profit to our non-IFRS measure, Mining Profit:

For the three months ended March 31

2023

2022

Gross (loss) profit

$ (6,207)

$ 16,455

Add (deduct):

Revenue from hosting

(751)

Revenue from high performance computing

(4,495)

(3,290)

Site operating costs attributable to hosting and high performance computing

2,433

2,127

Depreciation

10,859

18,365

Mining Profit

$ 2,590

$ 32,906

Adjusted EBITDA

"Adjusted EBITDA"represents EBITDA (net income or loss excluding net finance income or expense, income tax or recovery, depreciation, and amortization) adjusted to exclude non-cash share-based compensation, fair value gain or loss on revaluation of digital assets and warrants, non-recurring impairment charges or reversals of impairment, and costs associated with one-time or non-recurring transactions. Adjusted EBITDA is used to assess profitability without the impact of non-cash accounting policies, capital structure, taxation, and one-time or non-recurring transactions. This performance measure provides a consistent comparable metric for profitability of the Company across time periods.

The following table reconciles net income to our non-IFRS measure, Adjusted EBITDA:

For the three months ended March 31

2023

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Hut 8 Reports Operating and Financial Results for Q1 2023 USA ... - PR Newswire