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 unaudited financial results for the period ended March
31, 2023 (all amounts in U.S. dollars, unless otherwise indicated),
and a 2023 year-to-date update on operations. The Company’s
unaudited consolidated financial statements and management’s
discussion and analysis (“
MD&A”) for the
three-month period ended March 31, 2023 have been filed and made
accessible under the Company’s continuous disclosure profile on
SEDAR at www.sedar.com and are also accessible on the U.S.
Securities and Exchange Commission’s (the “
SEC”)
EDGAR website at www.sec.gov/EDGAR.
Comparative Financial Highlights for the
Three-Month Period Ended March 31, 2023
- Revenue from digital currency
mining and sale of energy of $4.1 million reported for the
three-month period ended March 31, 2023, compared to $7.3 million
for the three-month period ended March 31, 2022. The decrease in
revenue is primarily driven by the period over period decline in
the price of Bitcoin (“BTC”);
- The Company mined approximately 168
BTC for the three-month period ended March 31, 2023, at an average
BTC price of approximately US$22,877 (calculated from BTC prices
per CoinMarketCap), compared to the three-month period ended March
31, 2022, where the Company mined approximately 178 BTC at an
average price of Bitcoin of approximately US$41,317 (calculated
from BTC prices per CoinMarketCap);
- Adjusted EBITDA* for three-month
period ended March 31, 2023 of $0.70 million;
- Total assets of $51.90 million as
at March 31, 2023;
- Cash and cash equivalents of $3.43
million as at March 31, 2023;
- Property, plant, and equipment
consisting primarily of the Company’s BTC miners and mining
infrastructure of $41.25 million.
(U.S.$ in thousands except per share data) |
Three Months Ended |
|
March 312023 |
March 312022 |
Revenue from digital currency mining |
3,809 |
|
7,312 |
|
Revenue from sale of energy |
295 |
|
- |
|
Cost of sales |
(3,055 |
) |
(5,199 |
) |
Cost of power plant operations |
(270 |
) |
- |
|
Depreciation and amortization |
(3,223 |
) |
(1,532 |
) |
Gross profit (loss) |
(2,444 |
) |
581 |
|
General and administrative and other expenses |
(924 |
) |
(1,338 |
) |
Gain on sale of property, plant, and equipment |
- |
|
2,341 |
|
Foreign exchange |
(47 |
) |
(770 |
) |
Gain on disposition of cryptocurrencies |
873 |
|
- |
|
Change in FV of loan payable |
(165 |
) |
- |
|
Other Income |
7 |
|
84 |
|
Change in fair value - Miner Lease Agreement |
(225 |
) |
379 |
|
Loss on revaluation of digital currencies |
10 |
|
- |
|
Share based compensation |
(401 |
) |
(764 |
) |
Operating income (loss) |
(3,316 |
) |
513 |
|
Revaluation of warrant liabilities |
(5,617 |
) |
11,956 |
|
Net financial expenses |
(159 |
) |
(84 |
) |
Net income (loss) before income taxes |
(9,093 |
) |
12,384 |
|
Deferred tax (expense) recovery |
- |
|
(369 |
) |
Net income (loss) for the year |
(9,093 |
) |
12,383,938 |
|
Foreign currency translation adjustment |
49 |
|
947 |
|
Revaluation of digital currency, net of tax |
- |
|
(621 |
) |
Total comprehensive income (loss) for the year |
(9,043 |
) |
12,341,605 |
|
Basic and diluted income (loss) per shareWeighted average number of
subordinate voting shares outstanding – diluted |
(0.32)28,315,111 |
|
0.4725,918,400 |
|
* Adjusted EBITDA is a non-IFRS financial
measure and should be read in conjunction with and should not be
viewed as alternatives to or replacements of measures of operating
results and liquidity presented in accordance with IFRS. Readers
are referred to the reconciliations of non-IFRS measures included
in the Company’s MD&A and at the end of this press release.
The Company achieved significant milestones
year-to-date 2023:
- The Company has self-mined
approximately 265 BTC;
- Digihost acquired approximately
1,700 high performance BTC miners during Q1 2023;
- The Company completed an all-cash
acquisition of a 60 MW power plant in North Tonawanda, NY.
- The Company is currently
self-mining at a rate of 1 EH and hosting at 770 PH for a total of
1.770 EH;
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 December 31, 2022, the Company issued 2,100 subordinate
voting shares at an average share price of $1.18.
During the three months ended 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 after
paying commissions of $11,417 to the Agent and incurring $3,709 of
other transaction fees.
Nasdaq Deficiency Notice
Following a discussion with The Nasdaq Stock
Market LLC (“Nasdaq”) on May 15, 2023, Digihost
expects to receive a notice (the “Notice”) on or
about May 16, 2023 from Nasdaq indicating that, as a result of not
having timely filed its Annual Report on Form 20-F (the
“Form 20-F”) for the fiscal year ended December
31, 2022 (“Fiscal Year 2022”), the Company is not
in compliance with Nasdaq Listing Rule 5250(c)(1), which requires
timely filing of all required periodic reports with the SEC.
Upon receipt thereof, the Company does not
expect that the Notice will have any immediate impact on the
listing of the Company’s securities, which are expected to continue
to trade on Nasdaq, subject to the Company’s compliance with the
other continued listing requirements of Nasdaq. Under the Nasdaq
Listing Rules, the Company has 60 calendar days from the date of
the Notice to submit a plan of compliance to Nasdaq. If Nasdaq
accepts the plan, Nasdaq can grant the Company an exception of up
to 180 calendar days from the original due date of the Form 20-F to
regain compliance. However, there can be no assurance that Nasdaq
will accept the Company’s plan to regain compliance or that the
Company will be able to regain compliance within any extension
period granted by Nasdaq. If the Company fails to timely regain
compliance with the Nasdaq Listing Rules, the securities of the
Company may be subject to delisting from Nasdaq.
As previously disclosed, the Company determined
that it is a foreign private issuer that is not currently eligible
to utilize the multi-jurisdictional disclosure system and,
therefore, is for the first time required to file an Annual Report
on Form 20-F for Fiscal Year 2022 with financial statements that
are audited in accordance with the standards of the Public Company
Accounting Oversight Board (“PCAOB”). In light of
the complexities associated with the transition from being
MJDS-eligible to being a foreign private issuer that is not
MJDS-eligible, the Company was unable to file its Form 20-F for
Fiscal Year 2022 prior to the deadline therefor without
unreasonable effort or expense because the Company’s independent
registered public accounting firm (the “Auditor”)
is continuing its work on a PCAOB audit of the Company’s financial
statements to be included in the Form 20-F following the Company’s
request therefor. The Company expects to file the Form 20-F as
promptly as practicable following the completion of the Auditor’s
PCAOB audit of the Company’s financial statements for inclusion in
the Form 20-F and delivery of the Auditor’s report with respect
thereto.
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 joint venture partners with 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 StatementTrading 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, the Company’s expectations concerning
the Notice and timing for filing the Form 20-F for Fiscal Year 2022
to regain compliance with the Nasdaq Listing Rules, 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; delays in the completion of the PCAOB audit of the
Company’s financial statements and delivery of the Auditor’s report
with respect thereto for inclusion in the Form 20-F for Fiscal Year
2022; the Company’s ability to submit a plan to regain compliance
with the Nasdaq Listing Rules; whether Nasdaq will accept the
Company’s plan to regain compliance with the Nasdaq Listing Rules;
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. 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.
The table below provides a reconciliation of
income to Adjusted EBITDA for the three months ended March 31, 2023
and 2022.
|
Three months ended |
|
|
2023 |
|
2022 |
|
|
$ (thousands) |
|
$(thousands) |
|
Income (loss) before other items |
(9,093 |
) |
12,015 |
|
Taxes and Interest |
159 |
|
453 |
|
Depreciation |
3,223 |
|
1,532 |
|
Revaluation of warrant liabilities |
5,617 |
|
(11,955 |
) |
FV Changes |
438 |
|
391 |
|
Gain on sale of equipment |
- |
|
(2,341 |
) |
Share based compensation |
401 |
|
764 |
|
Adjusted EBITDA |
745 |
|
859 |
|
|
|
|
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