The collapse of cryptocurrency exchange FTX and the general turmoil in the cryptocurrency market were not major factors in the decision to merge crypto-mining company Hut 8 with US company Bitcoin Corp, according to Hut 8 CEO Jamie Leverton.
On 8 February, Leverton said the merger was primarily intended to provide diversified revenue and help expand the scope of the combined business, saying:
I think this deal would have happened regardless. We believe our ability to bring these businesses together is incredibly complementary.”
The all-share merger was announced on February 7, with the combined company—now called Hut 8 Corp. or “New Hut” – to be primarily based in the United States rather than Canada.
Regarding the November crash of FTXin, Leverton said that fears are “starting to subside a bit,” and interest has returned to the cryptocurrency industry.
She added, “I think we’re seeing a lot of interest coming back into this space, we’ve seen great appreciation across space so far in 2023.”
The combination of the two mining companies would “create an incredible amount of scale,” she continued, adding that there would be “diversified revenue programs,” which is a good strategy for both companies independently.
New Hut will reportedly have access to about 825 megawatts across six facilities in New York, Texas and the province of Alberta in Canada. Its total extractive capacity will be 5.6 hushas per second.
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Commenting on the choice of site, Leverton said it was in the company’s interest to have “diverse geographies”, adding:
“One of the advantages here [that merger] gives us this geographic diversity. There is uncertainty in the regulatory environments on both sides of the border,” he said.
Hut 8 has a mining facility in North Bay, Ontario, but operations have been suspended due to an ongoing court battle with its energy supplier.
The Niagara US Bitcoin facility has issues of its own with an ongoing dispute with the city of Niagara Falls over residents’ complaints about noise levels.
The company provided more details about the merger in a presentation on February 8. The transaction is expected to close in the second quarter of 2023, subject to shareholder, regulatory and stock exchange approvals.
Earlier this week, Leverton said that during the interim period, the company plans to cover operating costs through a combination of selling Bitcoin it mines, and exploring various debt options.
Related: Bitcoin Hut 8 miner takes power supplier lot in Ontario to court
Hut 8 stock fell 8% the day the merger was announced. Moreover, according to MarketWatch, shares of Hut fell 1.2% on the day to $2.12 in after-hours trading. The stock is currently trading down 86% from its November 2021 high of $15.28.