Hut 8 Announces $150Million Partnership with Coatue for AI Infrastructure Development

Funding will accelerate growth in Hut 8’s data center portfolio

Reinforces Hut 8’s position as a market leader in sourcing, developing, and operating energy infrastructure

Hut 8 Corp.(“Hut 8” or the “Company”), 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. (“Coatue”) pursuant to which Coatue has agreed to invest $150 million into the Company through a convertible note (the “Note”).

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“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.”

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.

“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.”

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Key Financing Terms

The Company and Coatue have entered into a Note Purchase Agreement (the “Note Purchase Agreement”) pursuant to which Coatue has agreed to purchase the Note (the “Transaction”). 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.

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.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of any securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

Additional Transaction Information

The Company has made available on its website a presentation with additional information concerning the transaction. Additional information, including the Note Purchase Agreement, is available in the Form 8-K that the Company will file with the Securities and Exchange Commission.

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