Hut 8 Mining Corp is looking to acquire several gas power plants and plans to use them to mine cryptocurrency.
The company announced this week has received court approval for its bid to acquire some of Validus Power Corp's assets.
Hut 8, a digital asset mining and high-performance computing company, is currently undergoing a stalking horse bid to acquire four natural gas plants in Ontario: 40MW in Kapuskasing, 110MW in Kingston, 120MW in Iroquois Falls, and a 40MW plant and bitcoin mine in North Bay.
The Ontario Superior Court of Justice has approved the bid and the implementation of a sale and investment solicitation process which will be carried out by KSV Restructuring Inc.
Hut 8 is bidding with the support of Macquarie Equipment Finance Ltd, a Macquarie Group Limited subsidiary. Macquarie will receive a 20 percent minority equity interest if the bid is successful, while Hut 8 will receive the remaining 80 percent.
"If our bid to acquire four natural gas facilities in Ontario totaling 310MW from Validus is successful, we anticipate that the strategic addition of these assets would position Hut 8 as a vertically integrated mining operation, allow us to utilize idle infrastructure and machinery, and provide access to energy pricing certainty," said Hut 8 CEO Jaime Leverton.
"The facilities are also expected to give us the optionality to pursue revenue-generating activity including selling energy to the market, mining Bitcoin, and powering high-demand HPC applications like AI, which is not only in keeping with our infrastructure-first strategy, but also affords us very compelling flexibility ahead of the halving."
Completion of the deal is still subject to approval. If successful, it is expected to close in Q4 of 2023.
The bid to acquire these sites comes after a long and tumultuous relationship between Hut 8 and Validus.
The Validus Ontario North Bay Power Plant site was set to see a new cryptomining data center developed in partnership with Hut 8 in Q3 2022. Validus broke ground on the site in October 2021, and Hut 8 had signed a 100MW PPA with the company with an initial 35MW due online in Q4 2021.
However, in November 2022 Hut 8 sent a notice of an event of default to Validus Power Corp for failing to achieve "certain key milestones" by the dates specified. Hut 8 also accused Validus of demanding higher payments than those originally negotiated.
This was followed by Validus delivering a notice of event of default to Hut 8, claiming the company failed to meet payments and Validus has therefore stopped supplying power.
Hut 8 then filed a lawsuit in January 2023. By August 2023, Validus was forced into interim receivership, owing Macquarie Equipment Finance, which had provided the turbines, plant, and equipment for Validus to operate, more than $40 million. The lease agreement between Macquarie and Validus noted that if the latter defaulted, it could be forced into bankruptcy.
Todd Shortt, Validus Power CEO, attempted to secure financing to stave off the insolvency. Shortt claimed in an August 9 affidavit that he had been successful in obtaining financing for $55m over a five-year term from Dominion Lending Centres.
Beyond this, former Validus employees have alleged misappropriation of funds by company management and other claims, from a "suspicious" $550,000 wire transfer between Validus subsidiary Kingston power plant and the parent company, and $109,727 in unpaid taxes. All of this led to Macquarie stating a lack of confidence in Validus, arguing that the company has no viable plan to pay back its loans, no plan to fund the business in the short term, and no plan to meet payroll or pay insurance.
The assets, properties, funds, and business affairs of Validus Power are currently under the control of KSV Restructuring of Toronto.
It is this bankruptcy that enabled Hut 8 to begin the "stalking horse" bid process.
In addition to the acquisition of gas plants, Hut 8 is progressing with its planned merger with US Bitcoin Corp (USBTC).
The merger, announced in February 2023, will combine in an all-stock merger of equals, and the resulting company will be named Hut 8 Corp (New Hut). The transaction is intended to position New Hut as a Bitcoin miner focused on 'economical mining, diversified revenue streams, and environmental, social, and governance (ESG) practices'.
The merger remains subject to regulatory and stockholder approvals, and other customary closing conditions.
In other crypto news
- Crypto Caverns is planning a new US-based data center, the location of which is yet to be confirmed. The facility will offer 25MW of IT capacity and will be run by Distributed Global Computing, Crypto Caverns parent company. Crypto Caverns will be allotted 10MW of the capacity. The data center will be powered by an on-site plant using natural gas.
- Applied Digital Corporation has broken ground on its 100MW high-performance computing facility in Ellendale, North Dakota. Designed for AI, the 342,000 sq ft (31,773 sqm) facility will be able to house close to 50,000 Nvidia H100 GPUs.
- Applied Digital has also announced the successful energization of its 200MW facility in Garden City, Texas. This will be the company's third data center for blockchain hosting operations, and will bring Applied Digital's total planned capacity to 480MW.
- The first phase of Chronos Energy's off-grid Bitcoin mining site is now live. The facility is located in east Texas, and once fully developed will consist of four 40-foot data centers with a capacity of 5MW.
- Marathon Digital Holdings and Nodal Power have launched a partnership for a Bitcoin mine powered solely with energy derived from landfill methane. The 280kW mine is located in Utah, and is already operational.
- Soluna Holdings has signed a one-year contract with Big Digital for 4.4MW of hosting at the Soluna data center in Kentucky, Project Sophie. Bit Digital will take over capacity at the data center from November 2023, when the current customer's contract runs out.