Toronto-founded, Miami, Fla.-based bitcoin mining and data center provider firm Hut 8 has entered a definitive agreement that will see it receive a $150-million strategic investment from New York City-based investment management firm Coatue.
“We believe that Hut 8 is well-positioned to accelerate new compute capacity and can capitalize on the opportunity it will bring.”
– Philippe Laffont, Coatue founder and portfolio manager
The funding will come in the form of a convertible note, which will have an interest rate of eight percent per year with an initial term of five years, which can be extended at the company’s option. Coatue will have the option to convert the note into shares of Hut 8’s common stock, subject to certain limitations, at a price of $16.395 USD per share. The converted price is a little more than a $4 premium on Hut 8’s NASDAQ closing price of $12.31 on Monday.
Hut 8 says the strategic funding will accelerate the growth of its data-centre portfolio and indicates that it is using its experience to become a leading provider of computing power for artificial intelligence (AI) applications. Hut 8 believes that Coatue’s investment will help it unlock opportunities and connections as it enters this next phase, CEO Asher Genoot said in a statement.
“We are committed to supporting innovators advancing AI and believe that compute capacity is crucial to unlocking significant growth across the ecosystem,” Coatue founder and portfolio manager Philippe Laffont said in a statement. “We believe that Hut 8 is well-positioned to accelerate new compute capacity and can capitalize on the opportunity it will bring.”
Subject to closing conditions, the closing of the note’s issuance is expected to be completed by July 11.
UPDATE (07/02/2024): Hut 8 announced it had closed the $150 million convertible note investment on July 1, 2024.
RELATED: Federal government commits $2.4 billion to AI compute, startups, and safety through Budget 2024
On the international stage, Canada has invested relatively little in computing infrastructure for AI applications, according to The Globe and Mail. The federal government has dedicated $2.4-billion CAD to boost Canada’s AI footprint in Budget 2024 and signed a memorandum of understanding with the United Kingdom to support researchers and the private sector with more affordable access to computing capacity for AI systems.
On the other hand, the amount of electricity used by data centers has been steadily growing, with data-centre power consumption alone expected to reach the amount of energy used by all of India by 2034, according to Bloomberg. Concerns about its environmental impact have been growing.
Founded in 2017 as a cryptocurrency mining and blockchain infrastructure company headquartered in Toronto, Hut 8 became the first blockchain or cryptocurrency company to be listed on the Toronto Stock Exchange in October 2019.
In February 2023, Hut 8 announced it would be merging with Miami-based US Bitcoin Corp, which was a builder and operator of four Bitcoin mining centres across the United States, in an all-stock merger of equals. The transaction officially closed in November 2023 and saw Hut 8 become a Miami-based company while operating computing data centers in Vancouver, Kelowna, and the Greater Toronto Area.
Feature image courtesy Hut 8.