Executive Summary / Key Takeaways

• Hut 8 Corp. has strategically transformed into a vertically integrated energy infrastructure platform, uniquely positioned at the intersection of energy and technology to capitalize on surging demand from AI and high-performance computing (HPC).
• The company's "power-first, innovation-driven" strategy, exemplified by its proprietary liquid-cooling technology at Vega and a robust development pipeline, provides a significant competitive advantage in delivering capital-efficient, high-density compute infrastructure.
• The strategic carve-out of American Bitcoin Corp. as a majority-owned subsidiary clarifies Hut 8's mandate, streamlines capital allocation, and establishes ABTC as a dedicated anchor tenant, while preserving Hut 8's exposure to Bitcoin upside.
• Hut 8 reported strong Q3 2025 financial results, with revenue of $83.5 million, net income of $50.6 million, and Adjusted EBITDA of $109 million, driven by the acceleration of its development flywheel and American Bitcoin's mining revenue.
• A fortress balance sheet, including a $1.6 billion strategic Bitcoin reserve, and disciplined capital allocation through various financing mechanisms, underpins Hut 8's ambitious growth trajectory and long-term value creation potential.

The Integrated Platform: A Foundation for Future Compute

Hut 8 Corp. has strategically evolved into a vertically integrated energy infrastructure platform, meticulously designed to meet the escalating demands of energy-intensive technologies like artificial intelligence (AI) and high-performance computing (HPC). The company's foundational "power-first, innovation-driven approach" recognizes energy not merely as an input, but as a structural source of value creation and competitive advantage in a market increasingly constrained by power access. This conviction has guided Hut 8's transformation, positioning it to develop, commercialize, and operate critical infrastructure for the breakthrough technologies of today and tomorrow.

The company's journey began with a focus on Bitcoin mining, which served as an initial application to arbitrage electrons and capture load, laying the groundwork for a platform intended to transcend any single technology. A comprehensive transformation in 2024 optimized operations, fortified capital strategy, and developed a high-velocity power origination pipeline. This included the strategic shutdown of the underperforming Drumheller mining site in March 2024 due to elevated energy costs and voltage issues, alongside the energization of the new Salt Creek site. By Q4 2024, these initiatives contributed to a 30% reduction in average energy cost per megawatt hour and an approximately 8-point increase in gross margin per Bitcoin mined.

Hut 8's technological differentiation is a cornerstone of its competitive strategy. At its Vega data center, the company has deployed a proprietary rack-based direct-to-chip liquid cooling system for ASIC compute. This in-house designed system, encompassing pump skids, fluid distribution networks, server racks, switchboards, and smart power distribution units, is engineered to optimize thermal efficiency, miner stability, and operational reliability. The tangible benefits are significant: it enables materially higher compute density, greater thermal control, and improved uptime, particularly in high ambient environments like Texas where air-cooled ASICs are prone to thermal throttling and failure. Management believes this innovation allows for the construction of high-density infrastructure at a fraction of the cost of traditional data centers, with the Vega facility being built for approximately $400,000 per megawatt, compared to the $10 million to $13 million per megawatt typical for conventional data centers. This cost efficiency and advanced cooling capability are critical differentiators, allowing Hut 8 to offer superior performance and value to prospective AI/HPC customers.

In the competitive landscape, Hut 8's vertically integrated model and power expertise provide a distinct advantage. While competitors like Riot Blockchain (RIOT) and Marathon Digital Holdings (MARA) have strong Bitcoin mining operations, Hut 8's broader ecosystem for compute-intensive applications, coupled with its in-house energy infrastructure management, positions it for greater operational stability and potentially lower operating costs in diversified segments. The company's ability to develop energy assets faster and more effectively, whether front-of-the-meter, behind-the-meter, or through generation, creates a significant moat against rivals. This integrated approach allows Hut 8 to adapt strategically to emerging trends like AI-driven data centers, potentially capturing market opportunities more effectively than competitors with a heavier specialization in pure Bitcoin mining.

Strategic Evolution: American Bitcoin and the Development Flywheel

The first quarter of 2025 marked a pivotal phase of investment, culminating in the launch of American Bitcoin Corp. (ABTC) on March 31, 2025, as a majority-owned subsidiary. This strategic carve-out was designed to decouple investments in ASIC compute from Hut 8's core capital allocation, maintain long-term Bitcoin exposure for shareholders, and establish ABTC as a dedicated anchor tenant for Hut 8's power and digital infrastructure services. On September 3, 2025, ABTC began trading on NASDAQ following its merger with Gryphon Digital Mining, Inc., with Hut 8 retaining a majority beneficial ownership of approximately 64% and maintaining voting control.

This separation clarifies Hut 8's mandate, streamlining its capital allocation framework to focus on scaling lower-cost-of-capital businesses such as colocation and HPC. ABTC's business model is straightforward: to accumulate Bitcoin at scale with exceptional speed, capital efficiency, and operational leverage. In its first quarter of operation, American Bitcoin generated $64 million in revenue at approximately $28 million in cost, achieving a 56% margin. Hut 8 serves as ABTC's exclusive infrastructure and operations partner through long-term commercial agreements, generating stable, contracted revenue streams in its Power and Digital Infrastructure segments. These intercompany revenues, however, are eliminated in consolidation, meaning Hut 8's reported Compute segment revenue reflects ABTC's self-mining operations, adjusted for non-controlling interests.

Hut 8's "development flywheel" — comprising origination, investment, monetization, and optimization — defines its scaling strategy. The third quarter of 2025 marked a clear inflection point in the velocity of this flywheel, evident in both financial results and the extension of its near-term growth runway. By Q2 2025, nearly 90% of Hut 8's energy capacity under management was commercialized under executed agreements with terms of one year or longer, a significant increase from less than 30% in Q2 2024. This structural shift from merchant exposure to long-term contracted revenue enhances earnings visibility and predictability for Hut 8.

Financial Performance and Operational Excellence

Hut 8 delivered robust financial performance in Q3 2025, reflecting the acceleration of its strategic initiatives. Total revenue reached $83.5 million, a 91% increase year-over-year from $43.7 million in Q3 2024. Net income attributable to Hut 8 Corp. was $50.1 million, a substantial improvement from $0.6 million in the prior year period. Adjusted EBITDA also saw a significant jump to $109 million, compared to $5.6 million in Q3 2024.

The Compute segment was the primary driver of this growth, with revenue surging to $70 million in Q3 2025 from $13.7 million in Q3 2024. This $56.3 million increase was largely attributed to a $54.3 million rise in Bitcoin Mining revenue, primarily from American Bitcoin. This was bolstered by increased mining efficiencies at the Medicine Hat and Salt Creek sites due to fleet upgrades, the addition of 14.86 Exahash (EH/s) from Bitmain Miners at the Vega site, and a higher average revenue per Bitcoin mined, which climbed from $61,100 in Q3 2024 to $114,121 in Q3 2025. Bitcoin mined in Q3 2025 totaled 578, with 563 mined by American Bitcoin, compared to 190 in Q3 2024. The Compute segment also benefited from a $2.6 million increase in GPU-as-a-Service revenue from Highrise AI. Gross margin for the Compute segment expanded significantly by 33.5 percentage points to 68.6%, with gross profit growing tenfold from $4.8 million to $48 million year-over-year.

The Power segment's revenue declined to $8.4 million in Q3 2025 from $26.2 million in Q3 2024, primarily due to a $17.8 million decrease in Managed Services revenue following the termination of the Ionic Digital agreement in December 2024. This was partially offset by a $1.9 million increase in electricity sales through the Far North JV. The Digital Infrastructure segment saw revenue increase to $5.1 million in Q3 2025 from $3.9 million in Q3 2024, driven by a $1.2 million increase in ASIC Colocation revenue from the energization of the Vega site.

Operational costs also reflected the company's growth and strategic investments. Compute cost of revenue increased by $13.1 million in Q3 2025, driven by higher consumption from additional miners, increased uptime, and a rise in power cost per megawatt hour from $28.40 in Q3 2024 to $39.89 in Q3 2025. Depreciation and amortization increased by $17.3 million, primarily due to Bitcoin miners owned by American Bitcoin ($10.8 million), mining infrastructure at Vega ($3.7 million), and AI GPUs for Highrise AI ($2.2 million). General and administrative (G&A) expenses rose by $9.7 million, influenced by American Bitcoin-related costs, ABTC Merger transaction costs, professional fees, share-based payments, and headcount expansion.

Bitcoin price fluctuations significantly impacted reported results. In Q3 2025, Hut 8 recorded $76.6 million in gains on digital assets due to the Bitcoin price increasing from approximately $107,173 on June 30, 2025, to $114,068 on September 30, 2025. Conversely, Q1 2025 saw a $112.4 million non-cash loss on digital assets as Bitcoin's price declined from $93,000 to $82,500. This highlights the impact of FASB's fair value accounting rules on reported profitability. Despite these fluctuations, the company's Q1 2025 fleet upgrade, which increased hash rate to 9.3 EH/s at an efficiency of approximately 20 joules per terahash, is expected to drive a step-change improvement in mining economics for American Bitcoin starting in Q2 2025.

Capital Strategy and Liquidity

Hut 8 maintains a fortress balance sheet, crucial for disciplined and agile capital allocation across market cycles. Its primary sources of liquidity include cash, debt facilities, equity sales, and a strategic Bitcoin reserve. As of September 30, 2025, Hut 8 held 13,696 Bitcoin in reserve, valued at approximately $1.6 billion, with 10,278 Bitcoin held by Hut 8 and 3,418 by American Bitcoin. This reserve has generated nearly $1 billion in incremental value and liquidity since February 2024, including $689 million from price appreciation, $265 million from Bitcoin-backed credit facilities, and $32 million from covered call options. Management views Bitcoin not as a speculative asset, but as a high-value treasury reserve offering flexibility and upside optionality.

The company has expanded its Coinbase (COIN) credit facility to $130 million at a fixed interest rate of 9%, maturing in June 2026, with $130 million outstanding as of Q3 2025. Additionally, Hut 8 entered into a $200 million revolving credit facility with Two Prime Lending Limited in August 2025, bearing a fixed interest rate of 7.99% and requiring Bitcoin collateral. No amounts were outstanding under this facility as of Q3 2025. These facilities, coupled with disciplined at-the-market (ATM) equity programs (including a $1 billion 2025 ATM), provide robust capital formation tools. The Bitcoin on Hut 8's balance sheet is considered available for deployment into high-growth projects, particularly as ABTC focuses on Bitcoin accumulation.

Growth Trajectory and Outlook

Hut 8's growth trajectory is underpinned by its expanding development pipeline. As of September 30, 2025, the company managed 1,020 megawatts (MW) of energy capacity across 15 sites, with an additional 1,530 MW under development across four sites (Louisiana, Texas, Illinois), 1,255 MW under exclusivity, and 5,865 MW under diligence. This substantial pipeline positions Hut 8 to meet the escalating demand for energy-intensive use cases.

A cornerstone of this growth is the River Bend campus in Louisiana, a 592-acre site acquired in February 2025 for $18.1 million. This 300 MW utility-scale power asset is being developed for HPC data centers, with an expected ready-for-service date by the end of 2026 for its initial IT capacity of roughly 216 to 224 MW. Initial civil work and substation construction are underway, and management is in discussions to scale the campus to over 1 gigawatt, driven by customer demand for larger sites. The estimated CapEx for a data center at River Bend is around $10 million per megawatt, though this can vary based on tenant demands and lease structures. Hut 8 is also advancing two additional AI data center projects that could add over 230 MW of IT load capacity, with near-term power availability within the next 18 months.

The Vega site, a 205 MW facility in Texas, is on track for energization in Q2 2025, with an all-in cost of approximately $400,000 per megawatt. This site, designed for next-generation rack-based ASIC compute with direct-to-chip liquid cooling, is expected to support up to 15 EH/s of Bitcoin mining capacity and serve as a replicable blueprint for future capital-efficient infrastructure. American Bitcoin, leveraging Hut 8's infrastructure, has a near-term opportunity to scale to over 25 EH/s and potentially 50 EH/s in subsequent phases, aiming for a fleet efficiency of around 14 joules per terahash. The Far North JV's 310 MW of power generation assets in Ontario secured five-year capacity contracts with the IESO, commencing May 1, 2026, which are expected to provide greater revenue visibility.

Management emphasizes a disciplined approach, preferring to announce only definitive agreements rather than Letters of Intent (LOIs) to maintain negotiating leverage and ensure market excitement is based on firm commitments. They acknowledge that the market seeks execution and will value the power pipeline more once projects are delivered.

Risks and Challenges

Despite its strong positioning, Hut 8 faces several inherent risks. The business remains exposed to the significant volatility of Bitcoin prices, which can materially impact financial results, as demonstrated by the non-cash gains and losses on digital assets. Bitcoin network difficulty and halving events also directly affect mining proceeds and profitability, necessitating continuous fleet upgrades.

The expansion into AI infrastructure services, while promising, carries execution and market risks, including increased operating and capital costs. Competition for power is intensifying, and Hut 8's performance depends on its ability to originate, commercialize, and optimize energy capacity at scale. Management is cautious about overpriced land and development risks, prioritizing thoughtful deal structures over growth at all costs. Reliance on third-party custodians for Bitcoin holdings introduces custodian risk, and credit risk exists with counterparties in pledged Bitcoin transactions. Interest rate fluctuations could affect financing costs, and tariffs on imported equipment pose a risk to cost-effectiveness. Furthermore, the company is involved in securities litigation, with outcomes remaining uncertain. The implied valuation of Hut 8's stake in American Bitcoin is substantial, but ABTC's share price may experience volatility as shares become available in the market.

Conclusion

Hut 8 Corp. stands at a pivotal juncture, having successfully transformed into a diversified energy infrastructure platform with a clear strategic vision to capitalize on the burgeoning demand for high-performance compute. Its "power-first, innovation-driven" approach, coupled with proprietary technological advancements like the liquid-cooled Vega data center, provides a distinct competitive edge in delivering efficient and scalable infrastructure. The strategic carve-out of American Bitcoin Corp. further refines Hut 8's focus, creating a symbiotic relationship that drives predictable revenue streams for the parent company while offering shareholders exposure to Bitcoin accumulation.

With a robust development pipeline, strong Q3 2025 financial performance, and a fortified balance sheet anchored by a significant Bitcoin reserve, Hut 8 is well-positioned for sustained growth. While market volatility and execution challenges persist, the company's disciplined capital allocation, long-term contractual agreements, and commitment to innovation underscore a compelling investment thesis. Investors should monitor the successful commercialization of its development pipeline, particularly the River Bend campus, and the continued operational and financial performance of American Bitcoin as key indicators of Hut 8's trajectory towards becoming a category-defining business in the evolving energy and technology landscape.