Falling cryptocurrency prices have forced many cryptocurrency miners to cut costs or consolidate to survive the crypto winter.
According to the CEO of Hut 8, Jamie Leverton, the collapse of the crypto exchange FTX and the general crisis in the crypto market were not key factors in the decision to merge the crypto mining company Hut 8 with the American corporation Bitcoin Corp .
Leverton said on February 8 that the merger is primarily intended to provide diversified revenue and facilitate the scale of the combined business, noting:
“I think this deal would have happened anyway. We believe our ability to bring these businesses together is incredibly complementary.”
The all-stock merger was announced on February 7, with the combined company now called Hut 8 Corp. or “New Hut” – will be based primarily in the US, not Canada.
Regarding FTX’s fall in November, Leverton said that fears are “starting to subside a little bit” and interest in the crypto industry is returning.
She added: “I think we’re going to see a lot of interest coming back into that space, we’re going to see a lot of growth in that space in 2023.”
The merger of the two mining companies “will provide incredible scale,” he continued, adding that there will be “diversified revenue programs,” which is a good strategy for both companies independently.
New Hut had access to approximately 825 megawatts at six sites in New York, Texas and the Canadian province of Alberta. Its total aggregate mining power will be 5.6 exahashes per second (EH/s).
Commenting on the choice of location, Leverton said it was in the best interests of the business to have “diversified geographies”, adding:
“One of the advantages here is [that the merger] gives us such a geographical diversification. There is uncertainty in the regulatory environment on both sides of the border.”
Hut 8 has a mining complex in North Bay, Ontario, but operations are suspended due to ongoing litigation with an energy supplier.
The US Bitcoin Niagara facility has its own issues with an ongoing dispute with the City of Niagara Falls over noise complaints from residents.
The company provided more details about the merger in a presentation on February 8. The deal is expected to close in the second quarter of 2023, subject to shareholder, regulatory and stock market approvals.
Leverton said earlier this week that in the interim, the firm plans to cover its operating costs through a combination of selling the bitcoins it mines and exploring various debt options.
Related: Bitcoin miner Hut 8 files lawsuit against Ontario electricity supplier
Hut 8 shares fell 8% the day the merger was announced. Additionally, Hut shares fell 1.2% on the day to $2.12 in after-hours trading, according to MarketWatch. The stock is currently trading 86% below its November 2021 high of $15.28.