Falling crypto prices have forced many crypto miners to cut costs or consolidate in order to survive the crypto winter.
Crypto exchange FTX’s collapse and overall crypto market turmoil were not key factors in the decision to merge crypto mining firm Hut 8 with US Bitcoin Corp., according to Hut 8 CEO Jamie Leverton.
On Feb. 8, Leverton said that the merger was mainly about providing diversified revenue and helping scale the combined businesses, stating:
“I think this deal would have happened regardless. The ability for us to bring these businesses together we think is so incredibly complementary.”
The all-stock merger was announced on Feb. 7, with the combined company — now called Hut 8 Corp. or “New Hut” — to be based primarily in the United States rather than Canada.
Regarding the collapse of FTXin November, Leverton said that fears were “starting to subside a little bit,” and interest was returning to the crypto industry.
She added, “I think we're seeing a lot of interest come back into this space, we've seen significant appreciation across the space so far in 2023.”
Merging the two mining firms is “going to provide an incredible amount of scale,” she continued, adding that there will be “diversified revenue programs,” which is a good strategy for both companies independently.
New Hut will reportedly have access to around 825 megawatts across six facilities in New York, Texas, and Alberta province in Canada. Its total combined mining capacity will be 5.6 exahashes per second (EH/s).
Commenting on the choice of location, Leverton said that it was in the best interest of the business to have “diversified geographies,” adding:
“One of the advantages here is [that the merger is] giving us that geographic diversification. There's uncertainty in regulatory environments on both sides of the border,”
Hut 8 has a mining facility in North Bay, Ontario, however operations have been suspended due to an ongoing court battle with its energy supplier.
US Bitcoin’s Niagara facility has issues of its own with an ongoing dispute with the City of Niagara Falls over complaints by residents regarding noise levels.
The firm provided more details on the merger in a presentation on Feb. 8. The transaction is expected to close in Q2, 2023, subject to shareholder, regulatory and stock exchange approvals.
For more information on our proposed strategic merger with USBTC, please see our presentation, here: https://t.co/Wg1shII9ei pic.twitter.com/1TjHAYTTiw
— Hut 8 (@Hut8Mining) February 8, 2023
Earlier this week, Leverton said that during the interim period, the firm plans to cover its operating costs through a combination of selling the Bitcoin it mines, and exploring various debt options.
Related: Bitcoin miner Hut 8 takes stoush with Ontario power supplier to court
Hut 8 stock slumped 8% on the day the merger was announced. Furthermore, according to MarketWatch, Hut shares had fallen 1.2% on the day to $2.12 in after-hours trading. The stock is currently trading 86% down from its November 2021 all-time high of $15.28.
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