Bitcoin miner Hut 8 is first to gain listing on TSX through Sandbox program

The company operates data centres in Alberta that earn bitcoin by crunching complex equations. It’s through those equations that bitcoin transactions are verified and the system secured. (Pixabay photo)

TORONTO — Canadian bitcoin miner Hut 8 Mining Corp. says it will be the first cryptocurrency-focused company listed on the Toronto Stock Exchange thanks to an initiative launched by the exchange.

The TSX Sandbox program, announced in April, allows for some exemptions to listing requirements so that more novel or exceptional companies may gain access to the exchange.

Hut 8 chief executive Andrew Kiguel said the company will be the first through the program when it graduates from the TSX Venture and begins trading on the Toronto Stock Exchange on Oct.

8.

“We’re extremely proud to the first company in this space to be, number one, approved for the Sandbox project, and number two, to be the first cypto-blockchain company to be listed on the Toronto Stock Exchange,” he said.

Hut 8 already meets the key requirements of a main board listing, except raising money through a public prospectus, said Kiguel, though he noted that the company has raised $140 million through private placements and debt.

The company operates data centres in Alberta that earn bitcoin by crunching complex equations. It’s through those equations that bitcoin transactions are verified and the system secured.

Andrew said the listing on the senior exchange will allow the company to attract a wider investor base including institutional investors.

“It just broadens the audience of potential investors for us, because there’s a whole bunch of intuitions and maybe family audiences that maybe don’t feel comfortable investing in the TSX Venture Exchange,” he said.

The value of the company has fluctuated along with the price of bitcoin.

Hut 8 listed at $5 in March last year when bitcoin was trading at over US$10,000 and saw its shares dip to as low as 76 cents a year later when bitcoin was trading at about US$3,700.

The drop in the value of bitcoin from the nearly ,000 peak in late 2017 led to what the company called a “crypto winter” last year.

The price drop meant its equipment was worth far less so it took an $85 million writedown, while the drop in the bitcoin on hand led to a depreciation of $47 million, which left it with a net loss of $137 million for the year.

The company responded by renegotiating all of its contracts, cutting staff numbers in half, and other cost cuts.

The restructuring, along with a significant rebound in bitcoin prices after Facebook announced a cryptocurrency initiative, led to a profit of $34.3 million for the quarter ending June 30.

Hut 8 currently trades at about $2 a share.

Bitcoin continues to struggle as an everyday currency, and has come under criticism for being energy-intensive, but Kiguel said acceptance is growing that it is a viable asset class with major institutions like Goldman Sachs, Fidelity Investments, and Intercontinental Exchange moving into the space.

“I do see that the evolution if bitcoin is leading, not just to institutional traditional business, but the established financial firms that are seeing this as a real asset class, and something that you can’t ignore any longer, despite the volatility.”

This report by The Canadian Press was first published Oct. 3, 2019.