Hut 8, a leading, vertically integrated operator of large-scale energy infrastructure and one of North America’s largest Bitcoin miners, announced that it has entered into a definitive agreement with a fund managed by Coatue Management, L.L.C. pursuant to which Coatue has agreed to invest $150 million into the Company through a convertible note.
Hut 8 Corp. (Nasdaq | TSX: HUT) is an energy infrastructure operator and Bitcoin miner with self-mining, hosting, managed services, and traditional data center operations across North America. Headquartered in Miami, Florida, Hut 8 Corp. has a portfolio comprising nineteen sites: ten Bitcoin mining, hosting, and Managed Services sites in Alberta, New York, and Texas, five high performance computing data centers in British Columbia and Ontario, and four power generation assets in Ontario.
Many traditional data center operators are failing to meet the surging demand for AI compute capacity due to power shortages, long lead times to bring new capacity online, and the extensive upgrades required for existing data centers to support the latest generation of high-density compute. Hut 8 believes it can leverage its proven ability to develop and operate complex energy infrastructure to address unmet demand and emerge as a leader in the AI infrastructure market.
Asher Genoot, CEO of Hut 8
“We are thrilled to be partnering with Coatue, given the firm’s deep expertise and long track record of investments in the AI ecosystem,” said Asher Genoot, Chief Executive Officer of Hut 8. “We believe this partnership will allow us to unlock significant opportunities and connectivity to the broader space as we enter this next phase of growth.”
Asher Genoot has served as President and Director of Hut 8 since November 2023 and then earlier this year on Febriuary 7th, 2024, Hut 8 announced the appointment of Asher into the CEO role. Before joining Hut 8, he was Co-Founder and President of U.S. Data Mining Group, Inc. dba US Bitcoin Corp, a venture-backed private bitcoin mining company with a 730 MW portfolio across data centers in Texas, Nebraska, and New York as of December 2022. Mr. Genoot is a member of Young Presidents Organization and the 2024 Forbes 30 Under 30 – Energy.
Headquarted in New York, Coatue is a lifecycle investment platform focused on turning big ideas into world-shaping technology companies. Coatue is a founder-led firm dedicated to helping fellow founders build. At every stage, they champion the insights, connections, and experience that create world-shaping companies.
Hut 8 and Coatue have entered into a Note Purchase Agreement pursuant to which Coatue has agreed to purchase the Note. When issued, the Note will have a principal amount of $150 million and bear interest at a rate of 8.00% per year (compounded quarterly). The Note will have an initial term of five years, subject to extension for up to three one-year extension periods at the option of the Company. Interest on the Note will be payable in cash or in-kind, at the Company’s option. The Note will be a senior unsecured obligation of the Company and guaranteed by Hut 8 Mining Corp., a direct wholly-owned subsidiary of the Company.
“We are committed to supporting innovators advancing AI and believe that compute capacity is crucial to unlocking significant growth across the ecosystem,” said Philippe Laffont, Founder and Portfolio Manager of Coatue. “We believe that Hut 8 is well-positioned to accelerate new compute capacity and can capitalize on the opportunity it will bring.”
“The broader market is beginning to appreciate the scarcity of high-quality power assets, and Hut 8 has built a deep pipeline of highly attractive expansion assets,” said Robert Yin, Partner at Coatue. “We believe their differentiated energy strategy and track record of fast, cost-efficient development will continue to drive competitive advantage as they execute on these opportunities.”
Coatue will have the option to convert the Note into shares of the Company’s common stock, subject to certain limitations. The initial conversion price of the Note is $16.395 per share of common stock, subject to certain anti-dilution adjustments (the “Conversion Price”), which is an approximately 45% premium to the 10-Day VWAP through June 20, 2024, the day prior to the signing of the Note Purchase Agreement.
The closing of the issuance of the Note is expected to be completed on or prior to July 11, 2024, subject to customary closing conditions.
To learn more about Hut 8, visit www.hut8.com