Here’s What You Missed in Crypto This Week

As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. Catch up on this week’s top stories highlighting the intersection of these old guard and new school areas of finance with this recap compiled by The Fly.

HUT 8 TO PROVIDE MANAGED SERVICES TO IONIC DIGITAL: Hut 8 (HUT) announced Thursday it has signed a four-year agreement with Ionic Digital to provide end-to-end managed services across its bitcoin mining operations. The agreement includes Ionic’s four existing sites in Midland, Texas and the development and operation of its Cedarvale site located in Ward County, Texas, which is designed to reach approximately 240 MW. Hut 8 will also continue to host approximately 8,500 Ionic Digital miners at its Alpha site in Niagara Falls, New York. Hut 8 is providing end-to-end managed services for Ionic Digital’s operations at its Cedarvale site. It is expected that when construction is complete, Hut 8 will oversee approximately 127,000 miners with nameplate hashrate of approximately 12 EH/s and more than 300 MW of energy infrastructure in year one of the agreement. Hut 8 is expected to earn an aggregate of $81.5M in cash payments in addition to reimbursement for direct passthrough operating expenses. The four-year agreement includes a milestone to extend to a five-year agreement if key targets are met. If the term extension is triggered, Hut 8 is expected to earn $101.9M in addition to reimbursement for direct passthrough operating expenses.

In addition, Hut 8 expects to receive the following equity interests as compensation: up to 1.59405% in restricted Ionic Digital common stock, with 0.31881% of Ionic Digital stock vesting annually; provided that the last tranche of 0.31881% of stock will not vest if the agreement is not extended for the fifth year; and warrants to purchase up to 1.59405% of Ionic Digital common stock, with each tranche of 0.31881% Ionic Digital stock granted at the end of each year of the agreement; provided that the last tranche of 0.31881% of Ionic Digital stock will not be granted if the agreement is not extended for the fifth year. Hut 8 has also entered into a contribution agreement with Ionic Digital pursuant to which Hut 8 has acquired 374,261 shares of Ionic Digital common stock in exchange for a cash payment of $6.4M. Pursuant to the agreement, Hut 8 will be required to acquire a further 374,261 shares of Ionic Digital common stock for a cash payment of $6.4M on the earlier of: May 31, 2024, and the date on which Ionic Digital’s Registration Statement of Form 10 is declared effective by the SEC. Hut 8 has also been provided with certain customary investor rights, including, for so long as the agreement is in effect, the right to appoint two directors to the board of Ionic Digital, one of which will be assumed by Asher Genoot, President of Hut 8. Under the Celsius chapter 11 plan, Ionic Digital was valued at approximately $740M on a net asset basis and will be vested with substantially all of the Celsius mining assets. Additionally, under the Celsius plan, Ionic will receive $225M in cash and have no debt. (read more)

Additionally on Thursday, Marathon Digital (MARA) announced it entered into an agreement with affiliates of Hut 8 to remove Hut 8 as the operator of two bitcoin mining sites recently acquired by Marathon in Granbury, Texas and Kearney, Nebraska. Marathon intends to replace Hut 8 as the operator of these sites by April 30. On January 16, Marathon closed its previously announced acquisition of two bitcoin mining sites, totaling 390 megawatts of operational capacity. While Marathon assumed ownership of both sites, Hut 8 continued to function as the operator. On January 30, subsidiaries of Marathon and Hut 8 entered into an agreement to terminate Hu t8 as the operator of these sites and transition the operational responsibilities to Marathon. By removing Hut 8 as the third-party operator and assuming direct operational control of both sites, Marathon expects to reduce its operating fees, thereby improving its cost to produce bitcoin, to more effectively participate in energy hedging and other energy management services, and to streamline the implementation of its proprietary technology to improve operational efficiency. (read more)

BIT DIGITAL EXPANDS MINING FLEET: On Wednesday, Bit Digital (BTBT) announced that it has finalized an agreement for 6 megawatts of incremental hosting capacity to power its miners. The hosting facility, located in Massena, New York, is operated by a subsidiary of Coinmint. This new agreement brings the company’s total contracted hosting capacity with Coinmint to approximately 46 MW. The agreement features an initial one-year term with automatic three-month renewals. Bit Digital will fill the capacity with approximately 2,340 S19k Pro mining units that were recently purchased for approximately $3.4M, or approximately $13/TH. These mining units represent approximately 260PH/s with an average efficiency of 23 J/TH. The company expects the miners to be delivered to the facility and hashing by the end of February 2024. (read more)

GREENIDGE REPORTS PRELIMINARY Q4 RESULTS: On Thursday, Greenidge Generation (GREE) reported preliminary fourth quarter earnings per share of 18c-32c on revenue of $19.7M. The company’s cryptocurrency datacenter operations produced approximately 710 bitcoin during Q4, of which 506 bitcoin were produced for colocation and 203 bitcoin were produced for self-mining. The average closing price of bitcoin during Q4 was $36,276.79. As of December 31, Greenidge datacenter operations consisted of approximately 29,700 miners with approximately 3.1 EH/s of combined capacity for both datacenter hosting and cryptocurrency mining. Greenidge CEO Jordan Kovler commented, “We had a strong year on many fronts, including significantly reducing our debt load and making the necessary changes to alter the trajectory of the business, culminating in our first profitable quarter in two years. We continue to work diligently on paths to increasing profitable revenue and reducing debt.” (read more)

CORE SCIENTIFIC UPGRADE: Compass Point upgraded Core Scientific (CORZ) on Wednesday to Buy from Neutral with a price target of $8.50, up from $1. The analyst updated the company’s model after it emerged from Chapter 11 bankruptcy. The firm believes Core Scientific is on more solid footing post-emergence, with less debt, lower mandatory debt service, and sufficient capital to finish expansion projects put on hold due to bankruptcy. Despite this, the shares have declined 40% since they started trading, the analyst said. Compass believes the selloff presents a good buying opportunity, especially for investors who have a longer time horizon. (read more)

GENESIS SETTLES SEC SUIT: Genesis, the bankrupt cryptocurrency lending division of Digital Currency Group, has settled its civil suit with the Securities and Exchange Commission. The company filed a motion Wednesday requesting the bankruptcy court approve the deal, with a hearing scheduled for February 14. Under the terms of the agreement, the SEC will have a general unsecured claim against Genesis for $21M. The move comes after the agency sued both Gemini Trust Company and Genesis last January alleging the businesses engaged in an unregistered securities offering through a Gemini crypto lending program. “The Settlement Agreement is the product of extensive negotiations between the SEC and GGC,” according to the filing. “The proposed settlement will, among other benefits to the Debtors’ estates, resolve the Civil Action Claim filed by the SEC in these Chapter 11 Cases and eliminate the risks, expenses, and uncertainty associated with protracted litigation against the SEC.” (read more)

CRYPTO STOCK PLAYS: Publicly traded companies in the space include Bit Digital, Coinbase (COIN), Core Scientific, Greenidge Generation, Marathon Digital, MicroStrategy (MSTR), Riot Platforms (RIOT), Stronghold Digital Mining (SDIG) and TeraWulf (WULF).

PRICE ACTION: As of time of writing, bitcoin rose roughly 2% this week to $42,708 in U.S. dollars, according to CoinDesk.