Digihost Technology Inc. (“
Digihost” or the
“
Company”) (Nasdaq: DGHI; TSXV: DGHI), an
innovative U.S.-based blockchain technology and computer
infrastructure company, is pleased to provide a summary of the
Company’s audited financial results for the year ended December 31,
2022 (all amounts in U.S. dollars, unless otherwise indicated), and
a 2023 year-to-date update on operations. The Company’s audited
financial statements and management’s discussion and analysis
(“
MD&A”) for the year ended December 31, 2022
have been filed and made accessible under the Company’s continuous
disclosure profile on EDGAR at www.sec.gov/edgar and on SEDAR at
www.sedar.com.
Michel Amar, Chairman and CEO of Digihost,
commented, “We are very pleased to report that, despite a
challenging economy, the Company has reported positive earnings per
share for 2022. During the past year we acquired and successfully
completed the build-out of our new mining facility in Alabama,
worked to optimize existing operations, and improved our financial
flexibility by significantly reducing debt on our balance sheet.
With the Company’s recently completed acquisition of a 60 MW power
plant in North Tonawanda, NY, Digihost is well positioned to
substantially increase its hashing power in 2023. The Company
continues to seek out strategic opportunities to grow its computing
power through access to clean and renewable sources of power,
consistent with Digihost’s stated objective of fostering
environmentally and socially responsible development.”
Highlights the year ended December 31
Fiscal 2022 are as follows:
- Revenue of $24.19 million, with the
Company’s mining operations producing 60% more Bitcoin
(“BTC”) than in the prior year;
- Net income of $4.33 million ($0.16
per share), which compared to a net loss of $3.13 million (-$0.14
per share) for the year ended December 31, 2021;
- EBITDA* of $13.74 million, an
increase of 394% over 2021;
- Total assets of $52.60
million;
- Cash and cash equivalents of $4.65
million as at December 31, 2022;
- Property, plant, and equipment
consisting primarily of the Company’s BTC miners and mining
equipment of $41.81 million;
- Working capital of $2.87 million at
year-end;
- Total liabilities of $5.42 million
as at December 31, 2022, a decrease of 87% over the previous year
end; and
- Basic (and diluted) net income per
share: $0.16, an increase of 214% compared to December 31,
2021.
(U.S.$ in thousands except per share data) |
Year Ended |
|
December 312022 |
December 312021 |
Revenue from digital currency mining |
24,190 |
|
24,952 |
|
Cost of sales |
(20,278 |
) |
(10,542 |
) |
Depreciation and amortization |
(10,709 |
) |
(3,281 |
) |
Gross profit (loss) |
(6,797 |
) |
11,129 |
|
General and administrative and other expenses |
(8,352 |
) |
(10,646 |
) |
Gain on sale of property, plant, and equipment |
1,141 |
|
1,552 |
|
Loss on settlement of debt |
(294 |
) |
(390 |
) |
Foreign exchange |
3,973 |
|
359 |
|
Gain (loss) on disposition of cryptocurrencies |
(11,574 |
) |
291 |
|
Loss on digital currency option calls |
(1,950 |
) |
- |
|
Other Income (expense) |
(51 |
) |
98 |
|
Change in fair value - Miner Lease Agreement |
1,693 |
|
529 |
|
Loss on revaluation of digital currencies |
(3,257 |
) |
- |
|
Impairment of goodwill and data miners |
(2,817 |
) |
- |
|
|
|
|
Operating income (loss) |
(28,285 |
) |
2,923 |
|
Revaluation of warrant liabilities |
32,010 |
|
1,551 |
|
Private placement issuance costs |
(695 |
) |
(4,973 |
) |
Net financial expenses |
(238 |
) |
(333 |
) |
Net income (loss) before income taxes |
2,792 |
|
(832 |
) |
Income tax expense |
- |
|
(127 |
) |
Deferred tax (expense) recovery |
1,537 |
|
(2,173 |
) |
Net income (loss) for the year |
4,329 |
|
(3,132 |
) |
Foreign currency translation adjustment |
(3,659 |
) |
48 |
|
Revaluation of digital currency, net of tax |
(3,706 |
) |
1,724 |
|
Total comprehensive income (loss) for the year |
(3,036 |
) |
(1,360 |
) |
Basic and diluted income (loss) per share |
0.16 |
|
(0.14 |
) |
Weighted average number of subordinate voting shares outstanding –
diluted |
27,221,284 |
|
21,781,806 |
|
|
|
|
|
|
* EBITDA – NON-GAAP MEASURE
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. EBITDA is a metric
used by management which is income (loss) from operations, as
reported, before interest, tax, and adjusted for removing other
non-cash items, including, depreciation, and further adjusted to
remove acquisition related costs. Management believes EBITDA is a
useful financial metric to assess its operating performance on a
cash basis before the impact of non-cash items and acquisition
related activities.
The table below provides a reconciliation of net
income to EBITDA for the fiscal years ended December 31, 2022 and
2021.
Year ended Dec 31 |
|
|
2022 |
|
2021 |
|
|
$ |
|
$ |
|
Net income (loss) before other items |
4,329 |
|
(3,132 |
) |
Taxes and net financial expenses |
(1,299 |
) |
2,633 |
|
Depreciation |
10,709 |
|
3,281 |
|
EBITDA |
13,739 |
|
2,782 |
|
|
|
|
|
|
|
The Company achieved significant milestones
during 2022:
- Closed approximately CAD$13.3
million in equity financings;
- Acquired 25 acres of land in North
Carolina in conjunction with ongoing negotiations to access a 200MW
power infrastructure program that would be expected to be completed
and ready for operation by the end of 2024;
- Purchased property in Alabama to
expand the Company’s operational capacity. The site consists of
approximately 160,000 square feet of office and industrial
warehouse space with initial access to 28 MW of power with a total
capacity of up to 55 MW;
- The Alabama Phase 1 build-out was
completed on schedule and on budget and began mining operations in
Q4 2022;
- Repaid in full a $10 million
secured loan facility; and
- Increased the Company’s BTC mined
by 313 BTC during 2022 to a total of 832 BTC for the year ended
December 31, 2022.
The momentum generated by Digihost during 2022
has continued into the first quarter of 2023. To-date, achievements
of the Company in 2023 are the following:
- The Company mined approximately 182
BTC during Q1;
- Digihost acquired approximately
1,700 high performance BTC miners in Q1;
- The Company completed an all-cash
acquisition of a 60 MW power plant in North Tonawanda, NY.
Following the acquisition, Digihost’s current operating capacity is
close to 100MW representing approximately 2 EH of computing
power;
- The Company is currently mining at
a rate of approximately 2 BTC per day. Assuming a continuation of
the current level of network difficulty, the Company expects to
produce approximately 6 BTC per day during Q2 2023 as a result of
the installation of the above-mentioned miners and increasing
current hashing power from approximately 700PH to 2EH;
- Of the Company’s 2EH of hashing
power, approximately 1.25 EH will be self-mined and approximately
750 PH under JV hosting partnerships;
- Outside of normal course trade
payables and short-term amounts owed, Digihost remains debt free
with the exception of approximately $0.8 million of mortgage debt
secured by its Alabama facility; and
- Consistent with management’s
commitment to avoid equity dilution for its shareholders, the
Company has continued to monetize a portion of its BTC production
to fully fund its energy costs.
Outlook
Digihost’s strategic growth plan is to continue
to diversify its mining operation while accessing clean sources of
energy. The Company will execute on this plan by expanding its
current operational footprint in New York and Alabama and is
working towards accessing power and building infrastructure in
North Carolina by the end of 2024 that would lead to an increase in
the Company’s hashing power by approximately 4EH.
Monthly Production Highlights for March
2023
- Mined approximately 72 BTC during
the month, an increase of 57% compared to the previous month;
- Of the 72 BTC mined, approximately
56 were self-mined with the remainder under JV hosting
partnerships;
- The Company held cash, BTC and cash
deposits of approximately $3.0 million as of March 31, 2023.
At-the-Market Financing
Update
On March 4, 2022, the Company entered into 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 September 30, 2022, the Company issued 2,100 subordinate
voting shares at an average share price of $1.18. During the three
months ended December 31, 2022, the Company did not issue any
subordinate voting shares pursuant to the ATM Program.
Subsequent to year-end through March 31, 2023,
the Company issued 233,466 subordinate voting shares in exchange
for gross proceeds of $380,590, at an average share price of
approximately $1.63, and received net proceeds of $365,463 million
after paying commissions of $11,417 to the Agent and incurring
$3,709 of other transaction fees.
About Digihost
Digihost is a growth-oriented technology company
focused on the blockchain industry. The Company operates from three
sites in the U.S. and, in addition to managing its own operations,
provides hosting arrangements at its facilities.
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
StatementsExcept 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, 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: future capital needs and
uncertainty of additional financing, including the Company’s
ability to utilize the Company’s at-the-market offering program
(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; share dilution resulting from the ATM Program and from
other equity issuances; risks relating to the strategy of
maintaining Bitcoin holdings and the impact of depreciating Bitcoin
prices on working capital; regulatory and other unanticipated
issues that prohibit us from declaring or paying dividends to our
shareholders that are payable in Bitcoin; development of additional
facilities to expand operations may not be completed on the
timelines anticipated by the Company: ability to access additional
power from the local power grid; an increase in natural gas prices
may negatively affect the profitability of the Company’s power
plant: 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 and www.sec.gov/edgar. 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;
the ability to maintain reliable and economical sources of power to
run its cryptocurrency mining assets; the negative impact of
regulatory changes in the energy regimes in the jurisdictions in
which the Company operates; the ability to adhere to Digihost’s
dividend policy and the timing and quantum of dividends based on,
among other things, the Company’s operating results, cash flow and
financial condition, Digihost’s current and anticipated capital
requirements, and general business conditions; 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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