Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with our Unaudited Condensed Consolidated Financial Statements and the related notes and the other financial information included elsewhere in this Quarterly Report and with our Audited Consolidated Financial Statements included in our Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual business, financial condition, and results of operations could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report and in the Annual Report, particularly under "Item 1A. Risk Factors." See also "Cautionary Statement Regarding Forward-Looking Statements." Our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Business Overview
Hut 8 is an energy infrastructure platform integrating power, digital infrastructure, and compute at scale to fuel next-generation, energy-intensive technologies. The Company develops, commercializes, and operates industrial-scale energy and data center infrastructure through a power-first, innovation-driven approach.
Q3 2026 Highlights
•$1.07 Billion Senior Secured Revolving Credit Facility. In September 2026, we entered into a four-year, $1.07 billion senior secured revolving credit facility (the "Revolving Credit Facility") with a syndicate of lenders, including JPMorgan Chase Bank, N.A., which is serving as administrative agent and collateral agent. The Revolving Credit Facility provides committed financing capacity at the parent level to fund development and interim working capital needs. Within the total commitment, the facility includes a $1.07 billion letter of credit sublimit to support site development collateral requirements, including interconnection deposits and utility and vendor obligations, reducing the need to post cash collateral. Borrowings bear interest, at our option, at Adjusted Term Secured Overnight Financing Rate ("SOFR") (subject to a 0.00% floor) or an alternate base rate plus an applicable margin based on our consolidated total debt-to-market-capitalization ratio. As of September 30, 2026, no borrowings were outstanding under the facility. Subsequent to September 30, 2026, a letter of credit totaling $3.9 million was issued under the facility.
•Poolin Asset Acquisition. In September 2026, we entered into agreements to acquire two data center sites in West Texas from affiliates of Poolin Technology Pte. Ltd. through a Chapter 11 sale process. The sites have up to 230 MW in energy capacity subject to final power approvals and infrastructure development, to support AI and HPC workloads. Consideration is up to $180.0 million, consisting of $100.0 million payable at closing and up to $80.0 million contingent on entering into a qualifying data center lease or transfer for AI or HPC use. On October 2, 2026, the U.S. Bankruptcy Court for the District of New Jersey approved the sale. Closing is scheduled for December 2026, subject to seller extension rights and remaining closing conditions.
•Bitcoin Sales and Share Repurchases. During the three months ended September 30, 2026, we sold approximately 954 Bitcoin for aggregate net proceeds of $74.8 million and repurchased 953,802 shares of our common stock for $74.7 million, at an average price of $78.32 per share, under our $250.0 million stock repurchase program. In October 2026, we sold approximately 2,148 Bitcoin for aggregate net proceeds of $175.4 million and repurchased an additional 2,384,677 shares of our common stock for $175.3 million, at an average price of $73.49 per share. In November 2026, our board of directors approved an additional $750.0 million under our stock repurchase program, increasing the total authorization from $250.0 million to $1.0 billion.
•Other Capital Transactions. In September 2026, following the closing of our Revolving Credit Facility, we terminated the undrawn $200.0 million Two Prime credit facility. On October 5, 2026, we repaid the TZRC Secured Promissory Note in full for $26.5 million, comprising $26.4 million of principal and paid-in-kind interest outstanding as of September 30, 2026, plus interest accrued through the repayment date.
Key Factors Affecting Our Performance
Power constraints
Access to energy is a key factor affecting our ability to meet growing demand for next-generation, energy-intensive technologies. Power is the foundation of our operations. We acquire, develop, and manage critical energy assets such as interconnects, powered land, and other electrical infrastructure to address the load demands of energy-intensive applications. As competition for power intensifies, our performance depends on originating, commercializing, and optimizing energy capacity at scale. We believe our experience in power origination, infrastructure design, and load optimization positions us to manage these constraints and support continued growth. Our portfolio currently provides access to competitively priced electrical power in the regions where we operate; however, there is no guarantee that we will be able to procure additional power on similar terms, or at all. Market prices for power, capacity, and ancillary services are unpredictable and tend to fluctuate substantially. See "Risk Factors—Risks Related to Our Business and Operations—We are subject to risks associated with our need for significant electrical power" in the Annual Report.
Expansion into AI infrastructure services and other energy-intensive use cases
A key factor affecting our performance is our ongoing expansion into AI infrastructure services and other energy-intensive use cases. We are leveraging our existing development and operational expertise to develop data centers that support specialized workloads for enterprise and hyperscale customers and other next-generation, energy-intensive use cases. Success in this area depends on various factors, including our ability to develop future sites, manage construction and delivery schedules, secure and retain customers, manage capital efficiently, and compete effectively in emerging technology markets. While this expansion may increase operating and capital costs and expose us to execution and market risks, management believes our experience in power origination, development, and management in large-scale digital infrastructure development positions us to capture long-term growth opportunities in the evolving AI sector and other next-generation, energy-intensive use cases.
Price of Bitcoin
While we are migrating towards less volatile, lower cost-of-capital businesses, such as data centers, our current financials remain heavily dependent on the price of Bitcoin, which has historically experienced significant volatility. Our exposure is driven primarily by the Bitcoin held on our consolidated balance sheet, including Bitcoin held directly by us and American Bitcoin in our respective strategic reserves. In addition, our consolidated results reflect American Bitcoin's activities as a Bitcoin accumulation platform and its strategy of purchasing and holding Bitcoin. Lastly, we generate revenue from Bitcoin rewards that are earned through mining operations at our facilities, the majority of which are conducted through American Bitcoin.
Under ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets ("ASU 2023-08"), Bitcoin is revalued at fair value at the end of each reporting period, with changes in fair value recognized in net income. As a result, fluctuations in Bitcoin prices may impact our consolidated financial performance, including mark-to-market adjustments on Bitcoin, but do not reflect changes in our core operating performance.
Bitcoin network difficulty and hashrate
Our consolidated business is not only impacted by the volatility in Bitcoin prices, but American Bitcoin is also affected by increases in the competition for Bitcoin production, specifically for ASIC compute. This increased competition is described as the network hashrate resulting from the growth in the overall quantity and quality of miners working to solve blocks on the Bitcoin blockchain, and the difficulty index associated with the secure hashing algorithm employed in solving the blocks. Increased difficulty reduces the mining proceeds of the equipment proportionally and eventually requires Bitcoin miners like American Bitcoin, to upgrade their equipment to remain profitable and compete effectively with other miners. Conversely, a decline in network hashrate results in a decrease in difficulty, increasing mining proceeds and profitability.
Block reward and halving
The current Bitcoin reward for solving a block is 3.125 Bitcoin. The Bitcoin network is programmed such that the Bitcoin block reward is halved every 210,000 blocks mined, or approximately every four years. This reduction in reward spreads out the release of Bitcoin over a long period of time as fewer Bitcoin are mined with each halving event. Bitcoin halving events impact the number of Bitcoin that we mine, including through American Bitcoin which, in turn, may have a potential impact on our results of operations. The last halving event occurred in April 2024, and the next halving event is expected to occur in 2028.
Key Performance Indicators
In addition to our financial results and generally accepted accounting principles in the United States of America ("GAAP") financial measures, we use certain key performance indicators to evaluate our business, identify trends, and make strategic decisions.
The following table presents our key performance indicators, which are rounded, as of September 30, 2026 and 2025. Prior-year amounts have been recast to conform to the updated definitions of our key performance indicators.
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
September 30, |
|
|
|
2026 |
|
|
2025 |
|
Energy Capacity Under Diligence |
|
|
3,300 |
MW |
|
|
1,300 |
MW |
Energy Capacity Under Exclusivity |
|
|
3,180 |
MW |
|
|
1,255 |
MW |
Energy Capacity Under Development |
|
|
49 |
MW |
|
|
1,529 |
MW |
Energy Capacity Under Construction |
|
|
1,330 |
MW |
|
|
– |
MW |
Energy Capacity Under Management |
|
|
710 |
MW |
|
|
1,020 |
MW |
Total Energy Capacity Pipeline |
|
|
8,569 |
MW |
|
|
5,104 |
MW |
Energy Capacity Under Diligence
Energy Capacity Under Diligence represents greenfield opportunities identified for next-generation, energy-intensive technologies. At this stage, we generally invest limited development capital, representing an immaterial portion of the project's anticipated total development cost, to assess a site's potential by engaging with utilities, landowners, power generators, local, state and regulatory bodies, and other stakeholders to evaluate critical factors, including power availability, infrastructure readiness, fiber connectivity, and overall commercial viability. We monitor Energy Capacity Under Diligence to assess the breadth of our pipeline of potential development sites and to prioritize the allocation of development resources among them. Energy Capacity Under Diligence as of September 30, 2026, was 3,300 MW compared to 1,300 MW as of September 30, 2025. The net increase primarily reflects the addition of newly identified sites, partially offset by sites advancing to subsequent development categories and the removal of sites that no longer met our strategic, commercial, infrastructure, or regulatory criteria.
Energy Capacity Under Exclusivity
Energy Capacity Under Exclusivity represents sites where we have secured site control and completed a suitable power study indicating a viable path to the power and infrastructure required for deployment. We monitor Energy Capacity Under Exclusivity to assess the inventory of sites available for near-term advancement into development as commercial demand and capital availability warrant. Energy Capacity Under Exclusivity was 3,180 MW as of September 30, 2026, compared with approximately 1,255 MW as of September 30, 2025. The net increase primarily reflects the addition of newly identified sites and sites advancing from prior development categories, partially offset by the removal of sites that no longer met our strategic, commercial, infrastructure, or regulatory criteria.
Energy Capacity Under Development
Energy Capacity Under Development represents sites where we are actively investing in development and commercialization by executing definitive land and/or power agreements, advancing site design and infrastructure buildout, and engaging with prospective customers. We monitor Energy Capacity Under Development to assess the capital we have committed to sites in advance of commercialization and to plan the financing, construction, and other resources required as projects approach commercialization. Energy Capacity Under Development as of September 30, 2026 was approximately 49 MW compared to 1,529 MW as of September 30, 2025. The net decrease primarily reflects sites advancing to subsequent development categories.
Energy Capacity Under Construction
Energy Capacity Under Construction represents sites where we have executed definitive commercial agreements and commenced construction activities. This stage includes oversight of contractors, equipment delivery, and commissioning schedules to ensure projects are completed safely, on time, and within budget. We monitor Energy Capacity Under Construction to manage the pace of capital deployment and to track project delivery against contractual customer timelines. Energy Capacity Under Construction as of September 30, 2026 was 1,330 MW, comprised of the 330 MW River Bend site, 500 MW Beacon Point Phase 1 site, and the 500 MW Beacon Point Phase 2 site, compared to zero MW as of September 30, 2025.
Energy Capacity Under Management
Energy Capacity Under Management comprises all power-related assets, including power generation, managed services, ASIC and Central Processing Unit ("CPU") infrastructure, ASIC compute, and non-operational sites. We monitor Energy Capacity Under Management to assess the utilization of our operating assets and to identify capacity that may be redeployed toward higher-value applications or divested. Energy Capacity Under Management was 710 MW as of September 30, 2026, compared to 1,020 MW as of September 30, 2025. The decrease was driven by the divestiture of our formerly consolidated subsidiary, Far North Power Corp. (the "Far North JV") in February 2026, which consisted of four power generation assets in Ontario totaling approximately 310 MW.
Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP, we rely on Adjusted EBITDA, inclusive of digital assets mark-to-market, and Adjusted EBITDA, which are non-GAAP financial measures, to evaluate our business, measure our performance, and make strategic decisions.
Adjusted EBITDA, inclusive of digital assets mark-to-market
We define Adjusted EBITDA, inclusive of digital assets mark-to-market, as net income or loss adjusted for interest expense, interest income, income tax provision or benefit, depreciation and amortization, our share of unconsolidated joint venture depreciation and amortization, foreign exchange gain or loss, gain or loss on the sale of property, equipment, and other assets, loss or gain on derivatives and other financial liabilities, gain on the sale of the Far North JV, net of transaction costs, gain on other investments, non-recurring transactions, asset contribution costs, income or loss attributable to non-controlling interest, and stock-based compensation expense.
Adjusted EBITDA
We define Adjusted EBITDA as Adjusted EBITDA, inclusive of digital assets mark-to-market, further adjusted to exclude gain or loss on digital assets attributable to Hut 8 Corp., which removes the effect of mark-to-market fluctuations of digital assets held on our balance sheet. Periodic appreciation or depreciation in the fair value of such digital assets is primarily driven by changes in market prices and does not reflect the results from our core operations.
How we use these measures
Our board of directors and management team use Adjusted EBITDA, inclusive of digital assets mark-to-market, and Adjusted EBITDA to assess our financial performance as these measures allow for the comparison of operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense and income), asset base (such as depreciation and amortization), and other items (such as non-recurring transactions mentioned above). For these measures, we exclude gains or losses on the sale of assets and gains or losses on other investments because these items arise from transactions or valuation changes outside our core operating activities and, in management's view, excluding them facilitates comparisons of our operating performance across periods. Adjusted EBITDA further excludes the impact of changes in the fair value of our digital asset holdings, which may otherwise affect the comparability of our financial results across periods. Investors are encouraged to evaluate each adjustment and the reasons our board of directors and management believe these measures provide useful supplemental information.
Limitations
Net income (loss) is the GAAP measure most directly comparable to Adjusted EBITDA, inclusive of digital assets mark-to-market, and Adjusted EBITDA. In evaluating these measures, you should be aware that we may incur expenses in the future that are the same as, or similar to, certain adjustments reflected in the calculation of these measures. Accordingly, the presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
We may modify the calculation or presentation of these measures in the future, and any such modification could be material. These measures have important limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of our results reported in accordance with GAAP. Because other companies, including companies in our industry, may calculate similarly titled measures differently, our non-GAAP measures may not be comparable to those reported by other companies, which limits their usefulness for comparative purposes. For a reconciliation to our most directly comparable financial measure calculated and presented in accordance with GAAP, please see "—Results of Operations" below.
Business Segments
We have four reportable business segments: Power, Digital Infrastructure, Compute, and Other.
Power
The Power business segment consists of Power Generation and Managed Services.
Power Generation
In February 2026, we completed the divestiture of the Far North JV, and accordingly no longer generate revenue from these assets. We previously generated revenue from our interest in the Far North JV, which acquired four natural gas power plants in Ontario, Canada in February 2024. Our ownership interest was initially 80.1% and decreased to 72.8% upon the non-controlling interest holder's exercise of warrants simultaneously with the sale of the Far North JV. The power generation facilities are connected to the Independent Electricity System Operator, which operates Ontario's power grid, and primarily generated revenue from capacity and electricity sales. Revenue generated from capacity and electricity sales was variable and depended on several factors, including generation capacity in the market, the supply and demand for electricity, and the prevailing price of natural gas.
Managed Services
Our Managed Services business provides institutional partners with an end-to-end partnership model for energy infrastructure development, including:
•Project inception: site design, procurement, and construction management;
•Project operationalization: software automation, process design, personnel hiring, and team training;
•Revenue management: utility contracts, hosting operations, and customer management;
•Project optimization: energy portfolio optimization and strategic initiatives; and/or
•Compliance and reporting: finance, accounting, and safety.
Cash flows in our Managed Services business are generated through a fee structure that is typically fixed based on power capacity under management, with reimbursement of passthrough costs. In addition to the fixed fee, under certain agreements, further cash flows may be driven from incentive bonuses and certain energy management services.
As of September 30, 2026, we managed 280 MW of energy capacity under this program at one site in the United States owned by the King Mountain JV.
Starting April 1, 2025, we began operating as the exclusive provider of managed services to American Bitcoin via the execution of a Master Managed Services Agreement ("MSA"). Under the MSA, we provide American Bitcoin with management, oversight, strategy, compliance, operational, and other services for American Bitcoin's mining operations. These operations are colocated at our facilities. The fee structure typically consists of (i) a fixed fee of $1.250/kW-month based on the power capacity of each facility, as well as (ii) designated site-level reimbursements. As American Bitcoin is a consolidated subsidiary, all fees under the MSA are eliminated in consolidation.
Digital Infrastructure
The Digital Infrastructure segment consists of ASIC Infrastructure, CPU Infrastructure, and AI Infrastructure.
ASIC Infrastructure
Under our ASIC infrastructure business, we enter into contracts to host and operate mining equipment on behalf of third parties within our facilities. These services include the provision, if applicable, and hosting of mining equipment as well as the monitoring, troubleshooting, repair, and maintenance of such equipment. Revenues from ASIC infrastructure services are generated through fees that may be fixed or based on profit-sharing arrangements, often with reimbursement for certain pass-through costs, such as electricity.
Starting April 1, 2025, we began operating as the exclusive provider of ASIC infrastructure services to American Bitcoin via the execution of a Master Colocation Services Agreement ("CSA"). Under the CSA, we provide ASIC infrastructure services for American Bitcoin's miners at our facilities. The fee structure typically includes (i) a fixed monthly fee that targets a 25% yield on cost of each facility as of the start of the specific service order under the CSA, subject to an annual increase, as well as (ii) infrastructure-related site level reimbursements. As American Bitcoin is a consolidated subsidiary, all fees under the CSA are eliminated in consolidation.
CPU Infrastructure
Through our Hut 8 Canada business, we provide data center colocation solutions, supported by approximately 3 MW of energy capacity and more than 36,000 square feet of geo-diverse data center space across five locations in Canada. These services support customers operating compute, storage, and network workloads across traditional enterprise, B2B, machine learning, visual effects, and AI. Our CPU infrastructure offering is delivered in Mississauga, Ontario; Vaughan, Ontario; Kelowna, British Columbia; and two locations in Vancouver, British Columbia. The facilities are powered predominantly by emission-free energy sources. This business serves computing needs unrelated to ASIC Compute. These data centers are carrier neutral with network diversity and redundancy from multiple telecommunications providers.
Our CPU infrastructure business is based on a fixed-fee model. Customers pay a fixed recurring monthly fee based on a set amount of resources assigned.
AI Infrastructure
We are expanding our Digital Infrastructure platform to support AI and other high-performance computing workloads through purpose-built data centers, beginning with the development of our River Bend campus in Louisiana and our fully contracted Beacon Point campus in Texas.
Compute
Our Compute segment comprises operating businesses that deploy and monetize compute assets across next-generation energy-intensive technology end markets. We generate revenue through the operation of owned compute infrastructure and the provision of compute-based services, with economics driven by hardware utilization, operating efficiency, and market demand. For the periods presented, the Compute business segment consisted of ASIC Compute, Traditional Cloud, and AI Cloud.
ASIC Compute
The ASIC Compute business reflects revenue generated primarily by American Bitcoin.
Our ASIC Compute business spanned six sites as of September 30, 2026, which are primarily occupied by American Bitcoin miners and hosted at facilities supported by our ASIC Infrastructure:
•five sites with facilities we own and/or lease, and operate: (1) Alpha (Niagara Falls, New York), (2) Medicine Hat (Medicine Hat, Alberta), (3) Salt Creek (Orla, Texas), (4) Vega (Amarillo, Texas), and (5) Drumheller (Drumheller, Alberta); and
•one site that we own through a 50% joint venture, King Mountain (McCamey, Texas).
Bitcoin rewards are received from mining activity through third-party mining pool operators, which allow miners to combine their processing power, increasing their chances of solving a block and getting paid by the network. We provide computing power to mining pools, which use this computing power to operate nodes and validate blocks on the blockchain. The pools then distribute our pro-rata share of Bitcoin mined to us based on the computing power we contribute.
On March 31, 2025, we launched American Bitcoin. Beginning April 1, 2025, ASIC Compute operations previously reported under our Compute segment remain under this business but operate generally through our majority-owned subsidiary, American Bitcoin.
On August 5, 2025, American Bitcoin entered into an On-Rack Sales and Purchase Agreement (the "2025 ABTC Bitmain Purchase Agreement") with Bitmain Technologies Georgia Limited (together with its affiliates, "Bitmain") to purchase up to approximately 17,280 Bitmain Antminer U3S21EXPH ASIC miners (collectively, the "Bitmain Miners"), representing a total of approximately 14.86 EH/s. Concurrently with the execution of the 2025 ABTC Bitmain Purchase Agreement, American Bitcoin purchased 16,299 of the Bitmain Miners, representing a total of approximately 14.02 EH/s, for a total purchase price of approximately $314 million, paid through the pledge of Bitcoin at a mutually agreed upon fixed price. In September 2025, American Bitcoin purchased the remaining 981 Bitmain Miners for a total purchase price of $18.9 million, also paid through the pledge of Bitcoin at a mutually agreed upon fixed price. The Bitcoin pledged under the 2025 ABTC Bitmain Purchase Agreement has a redemption period of approximately 24 months from each pledge date.
In March 2026, our site in Drumheller, Alberta was re-energized in anticipation of the delivery and deployment of approximately 11,298 Bitcoin miners purchased by American Bitcoin from Bitmain, representing approximately 3.05 EH/s at approximately 13.5 J/TH, for a total purchase price of $49.4 million, paid through the pledge of Bitcoin at a mutually agreed upon fixed price. The delivery and deployment of these Bitcoin miners was completed in April 2026, increasing American Bitcoin's total owned fleet capacity from approximately 25.1 to approximately 28.1 EH/s while improving overall portfolio efficiency from approximately 16.3 to approximately 16.0 J/TH. The Bitcoin pledged for this purchase has a redemption period of approximately 24 months from the applicable pledge date. American Bitcoin may elect to extend the pledge period for an additional 12 months.
Traditional Cloud
Our Traditional Cloud business reflected revenue generated by Hut 8 Canada. Traditional Cloud services supported both public and private cloud deployments, managed backup, business continuity and disaster recovery services, and high-performance, high-capacity storage solutions, under a consumption-based fee structure in which customers committed to a baseline level of compute, storage, network, or power usage, with usage beyond the baseline typically billed incrementally. During August 2026, we sold the Traditional Cloud business.
AI Cloud
Our AI Cloud assets are deployed under our wholly owned subsidiary, Highrise AI, Inc., at a third-party colocation site near Chicago, Illinois. This business generates recurring revenue through contracts where customers pay for access to graphics processing units ("GPU") compute resources under on-demand or committed-use arrangements.
Other
Our Other reporting segment included activities that fall outside the scope of our Power, Digital Infrastructure, and Compute layers. There was no activity in our Other segment during the periods presented.
Equipment Sales and Repairs
We may sell mining equipment when profitable opportunities arise (e.g., if market prices exceed our procurement cost). We may also repair miners for third parties in exchange for fees, as we have a fully equipped, MicroBT-certified repair center space at our Medicine Hat site.
Results of Operations
Three Months Ended September 30, 2026 and 2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
September 30, |
|
|
|
Increase |
|
(in USD thousands) |
|
2026 |
|
|
2025 |
|
|
|
(Decrease) |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Power |
|
$ |
|
1,259 |
|
|
$ |
|
8,367 |
|
|
$ |
|
(7,108 |
) |
Digital Infrastructure |
|
|
|
1,384 |
|
|
|
|
5,107 |
|
|
|
|
(3,723 |
) |
Compute |
|
|
|
68,428 |
|
|
|
|
70,036 |
|
|
|
|
(1,608 |
) |
Total revenue |
|
|
|
71,071 |
|
|
|
|
83,510 |
|
|
|
|
(12,439 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue (exclusive of depreciation and amortization shown below): |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue – Power |
|
|
|
757 |
|
|
|
|
6,494 |
|
|
|
|
(5,737 |
) |
Cost of revenue – Digital Infrastructure |
|
|
|
1,437 |
|
|
|
|
3,804 |
|
|
|
|
(2,367 |
) |
Cost of revenue – Compute |
|
|
|
28,031 |
|
|
|
|
22,032 |
|
|
|
|
5,999 |
|
Total cost of revenue |
|
|
|
30,225 |
|
|
|
|
32,330 |
|
|
|
|
(2,105 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (income): |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
40,146 |
|
|
|
|
27,795 |
|
|
|
|
12,351 |
|
General and administrative expenses |
|
|
|
99,555 |
|
|
|
|
25,858 |
|
|
|
|
73,697 |
|
Gain on digital assets |
|
|
|
(413,789 |
) |
|
|
|
(76,595 |
) |
|
|
|
(337,194 |
) |
(Gain) loss on sale of property, equipment, and other assets |
|
|
|
(3,273 |
) |
|
|
|
1,467 |
|
|
|
|
(4,740 |
) |
Total operating income |
|
|
|
(277,361 |
) |
|
|
|
(21,475 |
) |
|
|
|
(255,886 |
) |
Operating income |
|
|
|
318,207 |
|
|
|
|
72,655 |
|
|
|
|
245,552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expenses) income: |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange gain (loss) |
|
|
|
392 |
|
|
|
|
(1,530 |
) |
|
|
|
1,922 |
|
Interest expense |
|
|
|
(105,512 |
) |
|
|
|
(8,616 |
) |
|
|
|
(96,896 |
) |
Interest income |
|
|
|
61,769 |
|
|
|
|
— |
|
|
|
|
61,769 |
|
(Loss) gain on derivatives and other financial liabilities |
|
|
|
(62,750 |
) |
|
|
|
4,930 |
|
|
|
|
(67,680 |
) |
Gain on other investments |
|
|
|
23,686 |
|
|
|
|
— |
|
|
|
|
23,686 |
|
Equity in earnings of unconsolidated joint venture |
|
|
|
5,365 |
|
|
|
|
2,192 |
|
|
|
|
3,173 |
|
Total other expenses |
|
|
|
(77,050 |
) |
|
|
|
(3,024 |
) |
|
|
|
(74,026 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income before income taxes |
|
|
|
241,157 |
|
|
|
|
69,631 |
|
|
|
|
171,526 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision |
|
|
|
(51,663 |
) |
|
|
|
(19,019 |
) |
|
|
|
(32,644 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
|
189,494 |
|
|
$ |
|
50,612 |
|
|
$ |
|
138,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net income attributable to non-controlling interests |
|
|
|
(58,423 |
) |
|
|
|
(503 |
) |
|
|
|
(57,920 |
) |
Net income attributable to Hut 8 Corp. |
|
$ |
|
131,071 |
|
|
$ |
|
50,109 |
|
|
$ |
|
80,962 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
|
189,494 |
|
|
$ |
|
50,612 |
|
|
$ |
|
138,882 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
|
|
(2,480 |
) |
|
|
|
(16,442 |
) |
|
|
|
13,962 |
|
Unrealized loss on restricted short-term investments, net of tax |
|
|
|
(1,841 |
) |
|
|
|
— |
|
|
|
|
(1,841 |
) |
Total comprehensive income |
|
|
|
185,173 |
|
|
|
|
34,170 |
|
|
|
|
151,003 |
|
Less: Comprehensive income attributable to non-controlling interest |
|
|
|
(58,423 |
) |
|
|
|
(494 |
) |
|
|
|
(57,929 |
) |
Comprehensive income attributable to Hut 8 Corp. |
|
$ |
|
126,750 |
|
|
$ |
|
33,676 |
|
|
$ |
|
93,074 |
|
Adjusted EBITDA reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
September 30, |
|
|
Increase |
|
(in USD thousands) |
|
2026 |
|
|
2025 |
|
|
(Decrease) |
|
Net income |
|
$ |
|
189,494 |
|
|
$ |
|
50,612 |
|
|
$ |
|
138,882 |
|
Interest expense |
|
|
|
105,512 |
|
|
|
|
8,616 |
|
|
|
|
96,896 |
|
Interest income |
|
|
|
(61,769 |
) |
|
|
|
— |
|
|
|
|
(61,769 |
) |
Income tax provision |
|
|
|
51,663 |
|
|
|
|
19,019 |
|
|
|
|
32,644 |
|
Depreciation and amortization |
|
|
|
40,146 |
|
|
|
|
27,795 |
|
|
|
|
12,351 |
|
Share of unconsolidated joint venture depreciation and amortization (1) |
|
|
|
2,159 |
|
|
|
|
4,454 |
|
|
|
|
(2,295 |
) |
Foreign exchange (gain) loss |
|
|
|
(392 |
) |
|
|
|
1,530 |
|
|
|
|
(1,922 |
) |
(Gain) loss on sale of property, equipment, and other assets |
|
|
|
(3,273 |
) |
|
|
|
1,467 |
|
|
|
|
(4,740 |
) |
Loss (gain) on derivatives and other financial liabilities |
|
|
|
62,750 |
|
|
|
|
(4,930 |
) |
|
|
|
67,680 |
|
Gain on other investments |
|
|
|
(23,686 |
) |
|
|
|
— |
|
|
|
|
(23,686 |
) |
Non-recurring transactions (2) |
|
|
|
— |
|
|
|
|
2,896 |
|
|
|
|
(2,896 |
) |
Income attributable to non-controlling interests |
|
|
|
(77,073 |
) |
|
|
|
(8,793 |
) |
|
|
|
(68,280 |
) |
Stock-based compensation expense |
|
|
|
64,737 |
|
|
|
|
6,318 |
|
|
|
|
58,419 |
|
Adjusted EBITDA, inclusive of digital assets mark-to-market |
|
$ |
|
350,268 |
|
|
$ |
|
108,984 |
|
|
$ |
|
241,284 |
|
Gain on digital assets attributable to Hut 8 Corp. |
|
|
|
(317,242 |
) |
|
|
|
(78,503 |
) |
|
|
|
(238,739 |
) |
Adjusted EBITDA |
|
$ |
|
33,026 |
|
|
$ |
|
30,481 |
|
|
$ |
|
2,545 |
|
(1)Net of the accretion of fair value differences of depreciable and amortizable assets included in equity in earnings of unconsolidated joint venture in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) in accordance with ASC 323. See Note 9. Investment in unconsolidated joint venture of our Unaudited Condensed Consolidated Financial Statements for further detail.
(2)There were no non-recurring transactions for the three months ended September 30, 2026. Non-recurring transactions for the three months ended September 30, 2025 primarily represent approximately $2.9 million of American Bitcoin related transaction costs.
Revenue
Total revenue was $71.1 million and $83.5 million for the three months ended September 30, 2026 and 2025, respectively, and consisted of Power, Digital Infrastructure, and Compute.
Power
Power revenue was $1.3 million and $8.4 million for the three months ended September 30, 2026 and 2025, respectively. This $7.1 million decrease was primarily driven by a $7.3 million decrease in electricity sales resulting from the sale of the Far North JV in February 2026, compared to a full quarter of the Far North JV activity in 2025.
Digital Infrastructure
Digital Infrastructure revenue was $1.4 million and $5.1 million for the three months ended September 30, 2026 and 2025, respectively. This $3.7 million decrease was primarily attributable to a $3.6 million decrease in ASIC colocation revenue following the termination of the Vega colocation agreement when American Bitcoin exercised its option to purchase the miners at the site in August 2025, and a $0.1 million decrease in CPU Infrastructure revenue resulting from customer churn.
Compute
Compute revenue was $68.4 million and $70.0 million for the three months ended September 30, 2026 and 2025, respectively, representing a decrease of $1.6 million. The decrease was primarily driven by a $2.6 million decrease in ASIC Compute revenue, reflecting a decrease in average revenue per Bitcoin mined from approximately $114,121 to approximately $71,087, partially offset by an increase in Bitcoin mined from approximately 578 to approximately 891. The increase in Bitcoin mined was primarily attributable to additional operating capacity following the commencement of ASIC Compute operations at the Vega site in August 2025 and the re-energization of the Drumheller site in March 2026. Traditional Cloud revenue also decreased by $0.7 million, primarily as a result of the sale of that business in August 2026. These decreases were partially offset by a $1.7 million increase in AI Cloud revenue driven by new customer contracts entered into since the third quarter of 2025.
Cost of Revenue
Total cost of revenue was $30.2 million and $32.3 million for the three months ended September 30, 2026 and 2025, respectively, and consisted of Power, Digital Infrastructure, and Compute.
Power
Power cost of revenue was $0.8 million and $6.5 million for the three months ended September 30, 2026 and 2025, respectively. The $5.7 million decrease was primarily attributable to lower costs associated with electricity sales following the divestiture of the Far North JV in February 2026.
Digital Infrastructure
Digital Infrastructure cost of revenue was $1.4 million and $3.8 million for the three months ended September 30, 2026 and 2025, respectively. The $2.4 million decrease was primarily attributable to lower pass-through costs under the ASIC colocation agreement with Bitmain at the Vega site as the agreement was terminated in August 2025.
Compute
Compute cost of revenue was $28.0 million and $22.0 million for the three months ended September 30, 2026 and 2025, respectively. This $6.0 million increase was primarily driven by a $6.4 million increase in ASIC Compute costs, reflecting $3.8 million of higher electricity costs from additional operating capacity following the commencement of ASIC Compute operations at the Vega site in August 2025 and the re-energization of the Drumheller site in March 2026. The increase was partially offset by a $0.4 million decrease in Traditional Cloud costs following the sale of that business in August 2026.
Depreciation and Amortization
Depreciation and amortization expense was $40.1 million and $27.8 million for the three months ended September 30, 2026 and 2025, respectively. This $12.4 million increase was primarily driven by (i) $13.1 million of higher depreciation on American Bitcoin's ASIC miners due to a full quarter of depreciation on miners at the Vega site, where ASIC Compute operations commenced in August 2025, additional miners placed in service in October 2025, and the re-energization of the Drumheller site in March 2026, and (ii) $1.9 million of higher depreciation on mining infrastructure associated with the Vega site. These increases were partially offset by a $1.6 million decrease in depreciation of power plant assets following the Far North JV sale in February 2026 and a $1.0 million decrease in depreciation and amortization of other assets, primarily computer and network equipment.
General and Administrative Expenses
General and administrative expenses were $99.6 million and $25.9 million for the three months ended September 30, 2026 and 2025, respectively. The $73.7 million increase was primarily attributable to (i) a $58.4 million increase in stock-based compensation expense primarily due to one-time awards granted in 2025 under our long-term incentive plan, as well as ordinary course awards to attract and retain top talent, (ii) a $7.7 million increase in professional fees primarily due to legal expenses incurred to support the execution of our growth plan, (iii) a $6.2 million increase in salaries and benefits resulting from additional headcount to support our growth initiatives, primarily within our Energy Origination and other growth functions, (iv) a $3.9 million increase in general, marketing and administrative expenses, including higher conference and events costs and rent expense for our new, larger corporate headquarters, and (v) a $0.6 million increase in insurance expense resulting primarily from growth in our asset base. These increases were partially offset by a $2.9 million decrease in transaction costs primarily associated with the merger between Gryphon Digital Mining, Inc. and American Bitcoin (the "ABTC Merger"), which closed in September 2025, and a $0.2 million decrease in other general and administrative expenses.
Gain on Digital Assets
Gain on digital assets was $413.8 million and $76.6 million for the three months ended September 30, 2026 and 2025, respectively. The favorable variance was primarily driven by a greater increase in the price of Bitcoin during the three months ended September 30, 2026 compared to the three months ended September 30, 2025. During the three months ended September 30, 2026, the price of Bitcoin increased from approximately $59,847 to approximately $83,415. During the three months ended September 30, 2025, the price of Bitcoin increased from approximately $107,173 to approximately $114,068.
Other Expense
Other expenses were $77.1 million and $3.0 million for the three months ended September 30, 2026 and 2025, respectively. The $74.0 million increase was primarily attributable to (i) a $96.9 million increase in interest expense resulting from higher average outstanding debt following the issuance of construction and development financings for River Bend Phase 1 and Beacon Point Phase 1, and (ii) a $67.7 million unfavorable change in gains and losses on derivatives and other financial liabilities, primarily due to the fair value remeasurement of Bitcoin redemption rights associated with American Bitcoin's ASIC miner purchases, driven by the increase in the price of Bitcoin and a higher amount of Bitcoin pledged by American Bitcoin. These unfavorable changes were partially offset by (i) a $61.8 million increase in interest income, primarily from investing unused proceeds from the River Bend Phase 1 and Beacon Point Phase 1 construction and development financings in restricted short-term investments to partially offset the interest costs incurred on the related notes, (ii) a $23.7 million gain from the fair value remeasurement of our investment in Ionic Digital Inc. ("Ionic") following its public listing on Nasdaq in July 2026, (iii) a $3.2 million increase in equity in earnings of an unconsolidated joint venture, and (iv) a $1.9 million favorable change in foreign exchange gains and losses.
Income Tax Provision
Our income tax provision was $51.7 million for the three months ended September 30, 2026, compared to our income tax provision of $19.0 million for the three months ended September 30, 2025. This $32.6 million change was primarily driven by deferred taxes related to the gains on digital assets.
Results of Operations
Nine Months Ended September 30, 2026 and 2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
|
September 30, |
|
|
|
Increase |
|
(in USD thousands) |
|
2026 |
|
|
2025 |
|
|
|
(Decrease) |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Power |
|
$ |
|
6,175 |
|
|
$ |
|
18,239 |
|
|
$ |
|
(12,064 |
) |
Digital Infrastructure |
|
|
|
3,972 |
|
|
|
|
7,936 |
|
|
|
|
(3,964 |
) |
Compute |
|
|
|
206,873 |
|
|
|
|
120,449 |
|
|
|
|
86,424 |
|
Total revenue |
|
|
|
217,020 |
|
|
|
|
146,624 |
|
|
|
|
70,396 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue (exclusive of depreciation and amortization shown below): |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue – Power |
|
|
|
3,690 |
|
|
|
|
15,122 |
|
|
|
|
(11,432 |
) |
Cost of revenue – Digital Infrastructure |
|
|
|
4,357 |
|
|
|
|
7,483 |
|
|
|
|
(3,126 |
) |
Cost of revenue – Compute |
|
|
|
74,617 |
|
|
|
|
50,160 |
|
|
|
|
24,457 |
|
Total cost of revenue |
|
|
|
82,664 |
|
|
|
|
72,765 |
|
|
|
|
9,899 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (income): |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
118,315 |
|
|
|
|
62,152 |
|
|
|
|
56,163 |
|
General and administrative expenses |
|
|
|
257,375 |
|
|
|
|
77,075 |
|
|
|
|
180,300 |
|
Loss (gain) on digital assets |
|
|
|
20,465 |
|
|
|
|
(181,841 |
) |
|
|
|
202,306 |
|
(Gain) loss on sale of property, equipment, and other assets |
|
|
|
(3,306 |
) |
|
|
|
3,609 |
|
|
|
|
(6,915 |
) |
Total operating expenses (income) |
|
|
|
392,849 |
|
|
|
|
(39,005 |
) |
|
|
|
431,854 |
|
Operating (loss) income |
|
|
|
(258,493 |
) |
|
|
|
112,864 |
|
|
|
|
(371,357 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expenses) income: |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange (loss) gain |
|
|
|
(5,547 |
) |
|
|
|
1,593 |
|
|
|
|
(7,140 |
) |
Interest expense |
|
|
|
(165,915 |
) |
|
|
|
(24,481 |
) |
|
|
|
(141,434 |
) |
Interest income |
|
|
|
88,854 |
|
|
|
|
— |
|
|
|
|
88,854 |
|
Asset contribution costs |
|
|
|
— |
|
|
|
|
(22,780 |
) |
|
|
|
22,780 |
|
(Loss) gain on derivatives and other financial liabilities |
|
|
|
(4,286 |
) |
|
|
|
8,347 |
|
|
|
|
(12,633 |
) |
Gain on sale of Far North JV, net of transaction costs |
|
|
|
34,711 |
|
|
|
|
— |
|
|
|
|
34,711 |
|
Gain on other investments |
|
|
|
23,686 |
|
|
|
|
— |
|
|
|
|
23,686 |
|
Equity in earnings of unconsolidated joint venture |
|
|
|
17,466 |
|
|
|
|
4,621 |
|
|
|
|
12,845 |
|
Total other expenses |
|
|
|
(11,031 |
) |
|
|
|
(32,700 |
) |
|
|
|
21,669 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income before income taxes |
|
|
|
(269,524 |
) |
|
|
|
80,164 |
|
|
|
|
(349,688 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit (provision) |
|
|
|
28,741 |
|
|
|
|
(26,388 |
) |
|
|
|
55,129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
|
(240,783 |
) |
|
$ |
|
53,776 |
|
|
$ |
|
(294,559 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net loss (income) attributable to non-controlling interests |
|
|
|
1,814 |
|
|
|
|
(244 |
) |
|
|
|
2,058 |
|
Net (loss) income attributable to Hut 8 Corp. |
|
$ |
|
(238,969 |
) |
|
$ |
|
53,532 |
|
|
$ |
|
(292,501 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
|
(240,783 |
) |
|
$ |
|
53,776 |
|
|
$ |
|
(294,559 |
) |
Other comprehensive (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
|
|
(24,491 |
) |
|
|
|
24,637 |
|
|
|
|
(49,128 |
) |
Unrealized loss on restricted short-term investments, net of tax |
|
|
|
(1,841 |
) |
|
|
|
— |
|
|
|
|
(1,841 |
) |
Total comprehensive (loss) income |
|
|
|
(267,115 |
) |
|
|
|
78,413 |
|
|
|
|
(345,528 |
) |
Less: Comprehensive loss (income) attributable to non-controlling interest |
|
|
|
1,809 |
|
|
|
|
(290 |
) |
|
|
|
2,099 |
|
Comprehensive (loss) income attributable to Hut 8 Corp. |
|
$ |
|
(265,306 |
) |
|
$ |
|
78,123 |
|
|
$ |
|
(343,429 |
) |
Adjusted EBITDA reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
|
September 30, |
|
|
Increase |
|
(in USD thousands) |
|
2026 |
|
|
2025 |
|
|
(Decrease) |
|
Net (loss) income |
|
$ |
|
(240,783 |
) |
|
$ |
|
53,776 |
|
|
$ |
|
(294,559 |
) |
Interest expense |
|
|
|
165,915 |
|
|
|
|
24,481 |
|
|
|
|
141,434 |
|
Interest income |
|
|
|
(88,854 |
) |
|
|
|
— |
|
|
|
|
(88,854 |
) |
Income tax (benefit) provision |
|
|
|
(28,741 |
) |
|
|
|
26,388 |
|
|
|
|
(55,129 |
) |
Depreciation and amortization |
|
|
|
118,315 |
|
|
|
|
62,152 |
|
|
|
|
56,163 |
|
Share of unconsolidated joint venture depreciation and amortization (1) |
|
|
|
6,477 |
|
|
|
|
15,482 |
|
|
|
|
(9,005 |
) |
Foreign exchange loss (gain) |
|
|
|
5,547 |
|
|
|
|
(1,593 |
) |
|
|
|
7,140 |
|
(Gain) loss on sale of property, equipment, and other assets |
|
|
|
(3,306 |
) |
|
|
|
3,609 |
|
|
|
|
(6,915 |
) |
Loss (gain) on derivatives and other financial liabilities |
|
|
|
4,286 |
|
|
|
|
(8,347 |
) |
|
|
|
12,633 |
|
Gain on sale of Far North JV, net of transaction costs |
|
|
|
(34,711 |
) |
|
|
|
— |
|
|
|
|
(34,711 |
) |
Gain on other investments |
|
|
|
(23,686 |
) |
|
|
|
— |
|
|
|
|
(23,686 |
) |
Non-recurring transactions (2) |
|
|
|
— |
|
|
|
|
8,120 |
|
|
|
|
(8,120 |
) |
Asset contribution costs |
|
|
|
— |
|
|
|
|
22,780 |
|
|
|
|
(22,780 |
) |
Income attributable to non-controlling interests |
|
|
|
(42,148 |
) |
|
|
|
(12,106 |
) |
|
|
|
(30,042 |
) |
Stock-based compensation expense |
|
|
|
166,850 |
|
|
|
|
17,751 |
|
|
|
|
149,099 |
|
Adjusted EBITDA, inclusive of digital assets mark-to-market |
|
$ |
|
5,161 |
|
|
$ |
|
212,493 |
|
|
$ |
|
(207,332 |
) |
Loss (gain) on digital assets attributable to Hut 8 Corp. |
|
|
|
35,555 |
|
|
|
|
(183,123 |
) |
|
|
|
218,678 |
|
Adjusted EBITDA |
|
$ |
|
40,716 |
|
|
$ |
|
29,370 |
|
|
$ |
|
11,346 |
|
(1)Net of the accretion of fair value differences of depreciable and amortizable assets included in equity in earnings of unconsolidated joint venture in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) in accordance with ASC 323. See Note 9. Investment in unconsolidated joint venture of our Unaudited Condensed Consolidated Financial Statements for further detail.
(2)There were no non-recurring transactions for the nine months ended September 30, 2026. Non-recurring transactions for the nine months ended September 30, 2025 represent approximately $7.6 million of American Bitcoin-related transaction costs, and $0.5 million of restructuring costs.
Revenue
Total revenue was $217.0 million and $146.6 million for the nine months ended September 30, 2026 and 2025, respectively, and consisted of Power, Digital Infrastructure, and Compute.
Power
Power revenue was $6.2 million and $18.2 million for the nine months ended September 30, 2026 and 2025, respectively. This $12.1 million decrease was primarily driven by a $12.4 million decrease in electricity sales resulting from the sale of the Far North JV in February 2026, compared to a full period of the Far North JV activity in 2025.
Digital Infrastructure
Digital Infrastructure revenue was $4.0 million and $7.9 million for the nine months ended September 30, 2026 and 2025, respectively. The $4.0 million decrease was primarily attributable to a $3.8 million decrease in ASIC colocation revenue following the termination of the Vega colocation agreement with Bitmain when American Bitcoin exercised its option to purchase the miners at the site in August 2025.
Compute
Compute revenue was $206.9 million and $120.4 million for the nine months ended September 30, 2026 and 2025, respectively, representing an increase of $86.4 million. The increase was primarily driven by higher ASIC Compute revenue, reflecting an increase in Bitcoin mined from approximately 1,021 to approximately 2,643, partially offset by a decrease in average revenue per Bitcoin mined from approximately $106,399 to approximately $72,918. The increase in Bitcoin mined was primarily attributable to improved uptime following the fleet upgrade completed in April 2025 at the Salt Creek and Medicine Hat locations, as well as the commencement of ASIC Compute operations at the Vega site in August 2025 and Drumheller in March 2026. The increase also reflected a $3.2 million increase in AI Cloud revenue, driven by new customer contracts entered into since the third quarter of 2025. These increases were partially offset by a $0.9 million decrease in Traditional Cloud revenue due to the sale of that business in August 2026.
Cost of Revenue
Total cost of revenue was $82.7 million and $72.8 million for the nine months ended September 30, 2026 and 2025, respectively, and consisted of Power, Digital Infrastructure, and Compute.
Power
Power cost of revenue was $3.7 million and $15.1 million for the nine months ended September 30, 2026 and 2025, respectively. The $11.4 million decrease was primarily attributable to lower costs associated with electricity sales following the sale of the Far North JV in February 2026, which contributed approximately one month of activity in 2026 compared to a full nine months in 2025.
Digital Infrastructure
Digital Infrastructure cost of revenue was $4.4 million and $7.5 million for the nine months ended September 30, 2026 and 2025, respectively. The $3.1 million decrease was primarily attributable to lower pass-through costs under the ASIC colocation agreement with Bitmain at the Vega site following the termination of the agreement in August 2025.
Compute
Compute cost of revenue was $74.6 million and $50.2 million for the nine months ended September 30, 2026 and 2025, respectively. This $24.5 million increase was primarily driven by a $25.0 million increase in ASIC Compute costs, reflecting higher electricity costs from improved uptime following the fleet upgrades completed at the Salt Creek and Medicine Hat sites in April 2025 and additional operating capacity following the commencement of ASIC Compute operations at the Vega site in August 2025 and the re-energization of the Drumheller site in March 2026. The increase was partially offset by a $0.5 million decrease in Traditional Cloud costs following the sale of that business in August 2026.
Depreciation and Amortization
Depreciation and amortization expense was $118.3 million and $62.2 million for the nine months ended September 30, 2026 and 2025, respectively. This $56.2 million increase was primarily driven by $50.6 million of higher depreciation on American Bitcoin's ASIC miners, primarily due to the fleet upgrades completed at the Salt Creek and Medicine Hat sites in April 2025, the commencement of ASIC Compute operations at the Vega site in August 2025, and the re-energization of the Drumheller site in March 2026. The increase also included $13.4 million of higher depreciation on mining infrastructure and related machinery and equipment associated with the construction and energization of the Vega site in June 2025. These increases were partially offset by a $4.9 million decrease in depreciation of power plant assets following the sale of the Far North JV in February 2026, and a $2.9 million decrease in depreciation and amortization of other assets, primarily computer and network equipment.
General and Administrative Expenses
General and administrative expenses were $257.4 million and $77.1 million for the nine months ended September 30, 2026 and 2025, respectively. This $180.3 million increase was primarily attributable to (i) a $149.1 million increase in stock-based compensation expense primarily due to one-time awards granted in 2025 under our long-term incentive plan, as well as ordinary course awards to attract and retain top talent, (ii) a $17.3 million increase in salaries and benefits resulting from additional headcount to support our growth initiatives, primarily within our Energy Origination and other growth functions, (iii) an $11.8 million increase in professional fees, primarily due to higher legal expenses incurred to support the execution of our growth plan, (iv) a $7.7 million increase in general, marketing and administrative expenses, including higher conference and events costs and rent expense for our new, larger corporate headquarters, and (v) a $3.2 million increase in insurance expense resulting primarily from growth in our asset base. These increases were partially offset by a $7.6 million decrease in transaction costs, primarily associated with the merger between Gryphon Digital Mining, Inc. and American Bitcoin, which closed in September 2025, and a $1.2 million decrease in sales tax expense.
Loss (Gain) on Digital Assets
Loss on digital assets was $20.5 million for the nine months ended September 30, 2026, compared to a gain on digital assets of $181.8 million for the nine months ended September 30, 2025. The $202.3 million unfavorable variance was primarily driven by a decrease in the price of Bitcoin during the nine months ended September 30, 2026, compared to an increase during the corresponding period in 2025. During the nine months ended September 30, 2026, the price of Bitcoin declined from approximately $87,498 to approximately $83,415. During the nine months ended September 30, 2025, the price of Bitcoin increased from approximately $93,354 to approximately $114,068.
Other Expense
Other expenses were $11.0 million and $32.7 million for the nine months ended September 30, 2026 and 2025, respectively. This $21.7 million decrease was primarily driven by (i) an $88.8 million increase in interest income from investing unused proceeds from the River Bend Phase 1 and Beacon Point Phase 1 construction and development financings in restricted short-term investments, in order to partially offset the interest costs incurred on the related notes, (ii) a $34.7 million gain on the sale of the Far North JV, net of transaction costs, (iii) a $23.7 million gain from the fair value remeasurement of our investment in Ionic following its public listing on Nasdaq in July 2026, (iv) a $22.8 million decrease in asset contribution costs related to the non-controlling interest portion of our March 31, 2025 contribution of substantially all of our ASIC miners in exchange for 80% of American Data Centers Inc., as part of the launch of American Bitcoin, and (v) a $12.8 million increase in equity in earnings of an unconsolidated joint venture. These favorable changes were partially offset by (i) a $141.4 million increase in interest expense due to higher average outstanding debt following the issuance of construction and development financings for River Bend Phase 1 and Beacon Point Phase 1, (ii) a $12.6 million unfavorable change in gains and losses on derivatives and other financial liabilities, primarily driven by lower gains on Bitcoin call options, partially offset by lower losses from the fair value remeasurement of Bitcoin redemption rights associated with American Bitcoin's ASIC miner purchases, and (iii) a $7.1 million unfavorable change in foreign exchange gains and losses.
Income Tax Benefit (Provision)
Our income tax benefit was $28.7 million for the nine months ended September 30, 2026, compared to our income tax provision of $26.4 million for the nine months ended September 30, 2025. This $55.1 million change was primarily driven by the tax benefit on our pre-tax loss of $269.5 million for the nine months ended September 30, 2026, compared to the tax provision on pre-tax income of $80.2 million for the nine months ended September 30, 2025.
King Mountain JV
The King Mountain JV is a 50/50 joint venture with one of the world's largest renewable energy producers. The King Mountain JV has 280 MW of self-mining and hosting operations located behind-the-meter at a wind farm in McCamey, Texas.
As of September 30, 2026, the King Mountain JV owned approximately 18,000 miners for self-mining (about 1.8EH/s) and hosted approximately 51,589 miners (about 9.9 EH/s) for a single hosting customer at its King Mountain site, which has a total capacity of 280 MW.
We account for the King Mountain JV using the equity method of accounting, resulting in reporting the King Mountain JV as an unconsolidated joint venture. Additionally, our 50% portion of any distributions from the King Mountain JV was used to pay down the TZRC Secured Promissory Note. In October 2026, we repaid the outstanding balance of the TZRC Secured Promissory Note in full. See Note 9. Investment in unconsolidated joint venture and Note 11. Loans, notes payable, and other financial liabilities to the Unaudited Condensed Consolidated Financial Statements found elsewhere in this Quarterly Report for additional information on the King Mountain JV and TZRC Secured Promissory Note.
Below are the condensed consolidated income statements for the King Mountain JV for the three and nine months ended September 30, 2026 and 2025.
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Condensed Consolidated Income Statement |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
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|
|
September 30, |
|
|
September 30, |
|
(in USD thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Total revenue, net |
|
$ |
|
28,724 |
|
|
$ |
|
37,026 |
|
|
$ |
|
86,741 |
|
|
$ |
|
101,471 |
|
Gross profit |
|
|
|
12,146 |
|
|
|
|
14,666 |
|
|
|
|
38,938 |
|
|
|
|
43,971 |
|
Net income (loss) |
|
|
|
7,244 |
|
|
|
|
899 |
|
|
|
|
24,474 |
|
|
|
|
(1,215 |
) |
Net income (loss) attributable to investee |
|
|
|
3,622 |
|
|
|
|
450 |
|
|
|
|
12,237 |
|
|
|
|
(608 |
) |
Our board of directors and management team also evaluate Adjusted EBITDA for the King Mountain JV, which is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) before depreciation and amortization and interest income. We use Adjusted EBITDA to assess the King Mountain JV's financial performance because it allows us to compare the operating performance on a consistent basis across periods by removing the effects of the King Mountain JV's capital structure.
Net income (loss) is the GAAP measure most directly comparable to Adjusted EBITDA. This non-GAAP financial measure should not be considered as an alternative to the most directly comparable GAAP financial measure. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in such presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of Adjusted EBITDA in the future, and any such modification may be material. Adjusted EBITDA has important limitations as an analytical tool, and you should not consider Adjusted EBITDA in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA may be defined differently by other companies in our industry, our definition of this non-GAAP financial measure may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.
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|
Three Months Ended |
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Nine Months Ended |
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|
|
September 30, |
|
|
September 30, |
|
(in USD thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Net income (loss) |
|
$ |
|
7,244 |
|
|
$ |
|
899 |
|
|
$ |
|
24,474 |
|
|
$ |
|
(1,215 |
) |
Depreciation and amortization |
|
|
|
4,318 |
|
|
|
|
13,644 |
|
|
|
|
12,954 |
|
|
|
|
45,173 |
|
Interest income |
|
|
|
(278 |
) |
|
|
|
(602 |
) |
|
|
|
(1,020 |
) |
|
|
|
(2,679 |
) |
Adjusted EBITDA |
|
$ |
|
11,284 |
|
|
$ |
|
13,941 |
|
|
$ |
|
36,408 |
|
|
$ |
|
41,279 |
|
Liquidity and Capital Resources
Our primary sources of liquidity include restricted and unrestricted cash and cash equivalents, restricted short-term investments, debt facilities, Bitcoin held on our balance sheet, equity issuances, senior secured notes, our Revolving Credit Facility, and cash flows from operations. We have secured significant project-level financing, including the $3.25 billion and $4.25 billion of senior secured notes issued by wholly owned subsidiaries of ours in April and June 2026 to fund development at our River Bend and Beacon Point campuses, respectively. In September 2026, we also entered into a $1.07 billion senior secured revolving credit facility at the parent level to support general corporate purposes and working capital needs. We maintain relationships with established capital providers to support our development initiatives and infrastructure buildouts.
Historically, our primary cash needs have been for working capital to support growth initiatives, including infrastructure purchases and development, acquisitions, and equipment financing, including the purchase of additional Bitcoin miners. Going forward, we will continue to prioritize infrastructure development while our ASIC compute operations will mainly be conducted through American Bitcoin, our consolidated subsidiary. In addition to equipment financing for the purchase of additional Bitcoin miners, American Bitcoin's primary cash needs are to support its Bitcoin accumulation efforts, including at-market purchases of Bitcoin. Our infrastructure development needs include the development of our River Bend and fully contracted Beacon Point facilities, each of which is expected to require a multi-billion-dollar capital investment.
Subsequent to September 30, 2026, in October 2026, we repaid the TZRC Secured Promissory Note in full for $26.5 million, comprising $26.4 million of principal and paid-in-kind interest outstanding as of September 30, 2026, plus interest accrued through the repayment date.
In September 2026, we entered into a $1.07 billion senior secured revolving credit facility with a syndicate of lenders, maturing in September 2030. The facility includes a letter of credit sublimit equal to full commitment and provides additional liquidity to support general corporate purposes and working capital needs, including collateral requirements associated with infrastructure development. The facility contains a minimum liquidity covenant that will first be tested for the quarter ending March 31, 2027. See Note 11. Loans, notes payable, and other financial liabilities. As of September 30, 2026, there were no borrowings or letters of credit outstanding under the facility. Subsequent to September 30, 2026, we issued a letter of credit totaling $3.9 million under the Revolving Credit Facility, which reduced available capacity by that amount.
In September 2026, we terminated the Two Prime Credit Agreement, under which $200.0 million of undrawn capacity had been available. We did not draw on the facility at any time prior to its termination.
On December 4, 2024, our board of directors authorized the repurchase of up to $250.0 million of our common stock (the "Repurchase Program"). Repurchases may be made from time to time in open market or privately negotiated transactions, subject to market conditions and other factors, and the program may be suspended or discontinued at any time. During the three months ended September 30, 2026, we repurchased 953,802 shares of our common stock under the Repurchase Program for an aggregate purchase price of $74.7 million, inclusive of immaterial commissions. We funded these repurchases with net proceeds of $74.8 million from the sale of approximately 954 Bitcoin held in our strategic reserve. In October 2026, we repurchased an additional 2,384,677 shares for $175.3 million funded with net proceeds of $175.4 million from the sale of approximately 2,148 Bitcoin. In November 2026, our board of directors authorized an additional $750.0 million under our stock repurchase program, increasing the total authorization from $250.0 million to $1.0 billion. See Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds for additional information.
In June 2026, we completed a private offering of $4.25 billion aggregate principal amount of 6.129% senior secured notes due November 30, 2042 through our wholly owned subsidiary, Beacon Point DC. Net proceeds from the offering are being used to fund the development of our Beacon Point campus, including a turnkey data center with 352 megawatts of critical IT capacity supported by 500 megawatts of utility capacity and an associated substation, and fund debt service reserves and transaction costs. The Beacon Point Notes are secured by first-priority liens on substantially all assets of Beacon Point DC, other than certain excluded property, as well as a pledge of the equity interests in Beacon Point DC held by Beacon Point Holding LLC, the direct parent company of Beacon Point DC. Cash flows generated under the campus's long-term triple-net lease are expected to serve as the primary source of debt service on the Beacon Point Notes. Following the execution of a long-term triple-net lease for the second phase in July 2026, the Beacon Point campus became fully contracted. We are actively pursuing financing for the development and construction of Beacon Point Phase 2.
In May 2026, we entered into a $200.0 million Bitcoin-collateralized term loan with FalconX (the "FalconX Term Loan"), maturing in April 2027 and bearing a fixed interest rate of 7.00%. The facility is structured with an initial collateral ratio of 143%, with margin call and liquidation thresholds at 130% and 105%, respectively. The loan includes a prepayment option after six months without penalty, while early repayment prior to that period is subject to a 0.125%–0.25% fee depending on the circumstances. Proceeds from the facility were used to pay off our loan with Coinbase, which bore a 9.00% interest rate and has since been terminated. We currently intend to repay the FalconX Term Loan prior to maturity.
In May 2026, at the election of Coatue Tactical Solutions Lending Holdings AIV 3 LP ("Coatue"), the $159.3 million outstanding principal balance of the Coatue Note was converted into 9,715,476 shares of our common stock. The conversion reduced outstanding debt by $159.3 million and increased stockholders' equity. We also paid $1.3 million in cash for interest accrued from March 31, 2026 through the conversion date.
In April 2026, we completed a private offering of $3.25 billion aggregate principal amount of 6.192% senior secured notes due November 15, 2042 (the "River Bend Notes") through our wholly owned subsidiary, Hut 8 DC LLC. Net proceeds from the offering are being used to fund the development of our River Bend campus, including a turnkey data center with 245 megawatts of critical IT capacity supported by 330 megawatts of utility capacity and an associated substation, reimburse prior equity contributions, and fund debt service reserves and transaction costs. The River Bend Notes are secured by the River Bend project assets and are non-recourse to the parent company, providing long-term project-level financing to support the development of the River Bend campus. Cash flows generated under the campus's long-term triple-net lease are expected to serve as the primary source of debt service on the River Bend Notes.
Unused proceeds from the River Bend and Beacon Point senior secured notes are held in restricted project accounts, including in restricted cash and cash equivalents and restricted short-term investments, pending deployment toward the development and construction of the respective campuses. These balances generate interest income that partially offsets the interest costs incurred on the related notes. The proceeds remain subject to the applicable restrictions under the respective financing arrangements.
On August 22, 2025, we established our $1.0 billion 2025 ATM, which replaced our prior $500.0 million 2024 ATM program that launched on December 4, 2024. As of August 22, 2025, prior to its termination, we had issued and sold shares under the 2024 ATM for gross proceeds of $299.4 million at a weighted average price of $27.83 per share. As of September 30, 2026, we issued and sold 6,121,993 shares under the 2025 ATM for gross proceeds of $304.3 million at a weighted average issuance price of $49.71 per share. We did not sell any shares under the 2025 ATM during the three months ended September 30, 2026.
On September 3, 2025, American Bitcoin established a $2.1 billion at-the-market equity program (the "American Bitcoin 2025 ATM"). As of September 30, 2026, American Bitcoin issued and sold 12,121,321 shares of Class A common stock under the American Bitcoin 2025 ATM for gross proceeds of $385.2 million. American Bitcoin did not sell any shares under the American Bitcoin 2025 ATM during the three months ended September 30, 2026.
Our ability to meet our anticipated cash requirements will depend on various factors including our ability to maintain our existing business, enter into new lines of business, provide new offerings, compete with existing and new competitors in existing and new markets and offerings, acquire new businesses or pursue strategic transactions, access public and private capital markets, and respond to global and domestic economic, geopolitical, social conditions and their impact on demand for our offerings.
We believe that cash flows generated from operations, Bitcoin held on our consolidated balance sheet, and other financing sources, including our available revolving credit facility, will be sufficient to meet our anticipated short-term liquidity requirements. For the construction of our River Bend and Beacon Point data center facilities, we expect to fund capital expenditures through a combination of cash and Bitcoin on hand, as well as project-level financing (including the recently completed bond issuances). Over the long term, we expect to rely on access to public and private capital markets to fund growth initiatives not supported by operating cash flows, cash on hand, Bitcoin holdings, or available debt and project-level financing.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
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|
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Nine Months Ended |
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|
|
September 30, |
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(in USD thousands) |
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2026 |
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|
2025 |
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Cash flows used in operating activities |
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$ |
|
(5,031 |
) |
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$ |
|
(81,866 |
) |
Cash flows used in investing activities |
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|
|
(3,871,260 |
) |
|
|
|
(451,840 |
) |
Cash flows provided by financing activities |
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|
|
7,541,515 |
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|
|
|
487,616 |
|
Operating Activities
Net cash used in operating activities was $5.0 million for the nine months ended September 30, 2026, resulting from a net loss of $240.8 million, partially offset by net non-cash adjustments of $76.8 million and favorable changes in assets and liabilities of $159.0 million, mainly due to interest payable accrued related to financing for River Bend Phase 1 and Beacon Point Phase 1. Net cash used in operating activities was $81.9 million for the nine months ended September 30, 2025, resulting from net income of $53.8 million, offset by non-cash adjustments of $115.9 million and unfavorable changes in assets and liabilities of $19.8 million.
Investing Activities
Net cash used in investing activities was $3.9 billion for the nine months ended September 30, 2026, primarily driven by (i) $2.8 billion of purchases of restricted short-term investments, (ii) $1.1 billion of purchases of property and equipment primarily related to the development of the River Bend and Beacon Point campuses, (iii) $65.3 million of Bitcoin purchases by American Bitcoin, and (iv) $26.0 million of deposits for future sites, partially offset by (i) $74.8 million of proceeds from the sale of digital assets and (ii) $64.8 million of net proceeds from the sale of the Far North JV. Net cash used in investing activities was $451.8 million for the nine months ended September 30, 2025, primarily consisting of (i) $287.8 million in Bitcoin purchased by American Bitcoin, (ii) $147.9 million in property and equipment purchases primarily related to the Vega build out, (iii) $25.0 million in other digital assets purchased, and (iv) $1.0 million related to other intangibles purchases. These outflows were partially offset by (i) $5.2 million in proceeds from the sale of property and equipment, (ii) $3.7 million in proceeds from Bitcoin sales, and (iii) $0.9 million in cash acquired in the ABTC Merger.
Financing Activities
Net cash provided by financing activities was $7.5 billion for the nine months ended September 30, 2026, primarily consisting of (i) $7.7 billion in gross proceeds from the issuance of senior secured notes and a term loan, including $4.25 billion from the Beacon Point Notes, $3.25 billion from the River Bend Notes, and $200.0 million from the FalconX Term Loan, (ii) $144.1 million in net proceeds from the issuance of American Bitcoin's Class A common stock through the American Bitcoin 2025 ATM, (iii) $120.1 million in net proceeds from the issuance of common stock through our 2025 ATM, and (iv) $10.4 million in net proceeds from the issuance of common stock through stock option exercises. These inflows were partially offset by (i) $227.6 million in repayments of loans and notes payable, primarily consisting of the $200.0 million repayment of the Coinbase Credit Agreement, with the remainder primarily related to repayments under the TZRC Secured Promissory Note, (ii) $99.1 million in debt issuance costs paid, (iii) $74.7 million in repurchases and retirements of common stock, (iv) $20.8 million in repayment of a finance lease related to the settlement of a finance lease obligation in connection with the sale of the Far North JV, (v) $10.0 million in cash paid to buy out the non-controlling interest in the Far North JV, and (vi) $1.0 million in principal payments on finance leases. Net cash provided by financing activities was $487.6 million for the nine months ended September 30, 2025, primarily consisting of (i) $65.0 million in proceeds under the Coinbase Credit Agreement, (ii) $9.5 million in net proceeds from covered call options premiums, (iii) $3.5 million in proceeds from funding in relation to our AI Cloud business, (iv) $205.3 million in net cash proceeds from the issuance and sale of American Bitcoin's Class A common stock through a Common Stock Purchase Agreement for a private placement with certain accredited investors, (v) $88.0 million in proceeds from the issuance of American Bitcoin's Class A common stock through the American Bitcoin 2025 ATM, and (vi) $154.8 million in net proceeds from the issuance of our common stock through our 2024 ATM and 2025 ATM. These inflows were partially offset by (i) $36.5 million of repayments of loans payable and (ii) $2.2 million used in principal payments on finance leases.
Critical Accounting Policies and Estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our Unaudited Condensed Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these Unaudited Condensed Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, as well as related disclosures. We evaluate our estimates and assumptions on an ongoing basis and base them on historical experience and other factors we believe to be reasonable under the circumstances. Because these estimates involve judgments about future events and are inherently uncertain, actual results may differ materially from those estimates. Changes in these estimates or assumptions could have a material impact on our results of operations, financial position, and statement of cash flows.
While our significant accounting policies are described in more detail in Note 2. Basis of presentation, summary of significant accounting policies and recent accounting pronouncements, included elsewhere in this Quarterly Report, we believe the following accounting policies and estimates are most critical to understanding and evaluating this management discussion and analysis:
Digital Assets
Accounting for digital assets requires significant judgment, including classification, measurement, presentation, and the determination of fair value. Digital assets pledged as collateral, including under arrangements with Bitmain, require additional judgment in evaluating the appropriate accounting treatment, including whether such assets remain recognized on our Unaudited Condensed Consolidated Balance Sheets. Pledged digital assets remain recognized because we retain ownership and continue to be exposed to changes in market value.
Stock-Based Compensation
We recognize compensation expense for all stock-based payment awards made to employees, directors, consultants, and service providers, if any, including incentive stock options, non-qualified stock options, stock awards, and stock units based upon the estimated grant-date fair value of the awards. For more complex performance awards, including awards with market-based performance conditions, we employ a Monte Carlo simulation valuation method to calculate the fair value of the awards based on the most likely outcome. Under the Monte Carlo simulation, a number of variables and assumptions are used including, but not limited to, the expected stock price volatility over the term of the award, the risk-free rate, and dividend yield, if any.
Finite-Lived Intangible Assets
We evaluate the useful lives of our intangible assets to determine if they are finite or indefinite-lived. Reaching a determination on useful life requires significant judgments and assumptions regarding the future effects of obsolescence, demand, competition, and other economic factors. Finite-lived intangible assets are amortized over their estimated useful lives and evaluated for impairment at least annually, or when events or changes in circumstances indicate that their carrying amounts may not be recoverable. Determining useful lives and assessing recoverability require management judgment and the use of estimates, including assumptions regarding future cash flows and economic conditions. Changes in these assumptions could materially affect amortization expense or result in impairment charges in future periods.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Tariff Risk
Changes in government and economic policies, incentives, trade regulations, or tariffs may have a material impact on equipment that we import. While the final scope, timing, and application of recently announced or proposed changes in U.S. trade policy remain uncertain, increases in tariffs on imported equipment, as well as the potential imposition of retaliatory tariffs by foreign jurisdictions, could materially increase our equipment and infrastructure costs or limit the availability of certain components. Such developments could adversely affect our ability to procure equipment on a timely basis or at cost-effective levels, which in turn may impact project timelines, capital expenditures, and operating margins. We continuously monitor developments in trade policy and may adjust our procurement strategies, sourcing arrangements, or deployment plans in response to such changes; however, there can be no assurance that such actions will fully mitigate the impact of adverse tariff or trade policy developments.
Foreign Exchange Risk
Foreign exchange risk arises from fluctuations in currency exchange rates that impact our results of operations, financial position, and cash flows. A portion of our operations is conducted through Hut 8 Canada, and we incur operating expenses, capital expenditures, and other costs denominated primarily in Canadian dollars, while our reporting currency is the U.S. dollar. In addition, a significant portion of our Bitcoin holdings are held by our Canadian subsidiary.
Changes in the U.S. dollar and Canadian dollar exchange rate may affect the U.S. dollar value of our operating costs, capital expenditures, intercompany balances, and the translation of the financial results and Bitcoin holdings of Hut 8 Canada into U.S. dollars for financial reporting purposes. Adverse movements in foreign exchange rates could increase our costs or reduce reported revenues, asset values, and earnings. While we may seek to manage foreign exchange exposure through operational strategies from time to time, we do not currently engage in foreign currency hedging activities and therefore remain exposed to fluctuations in exchange rates.
Market Price Risk of Bitcoin
We hold a significant amount of Bitcoin; therefore, we are exposed to the impact of market price changes in Bitcoin.
As of September 30, 2026, we held approximately 16,787 Bitcoin, comprising approximately 8,360 Bitcoin held by Hut 8 and approximately 8,427 Bitcoin held by American Bitcoin. Based on a fair value of approximately $83,415 per Bitcoin, the aggregate fair value of these holdings as of September 30, 2026 was approximately $1.4 billion. Declines in the fair market value of Bitcoin will impact the cash value that would be realized if we were to sell our Bitcoin for cash, therefore having a negative impact on our liquidity.
Market Price Risk of Bitcoin-Linked Derivative Instruments
Our Bitcoin-linked derivative instruments consist of the Bitcoin redemption and put options under American Bitcoin's purchase agreements with Bitmain and our call options sold on Bitcoin. As of September 30, 2026, the fair value of these derivative assets and liabilities was a net asset of $114.7 million. We estimate fair value using the Black model, and the principal inputs are the forward price of Bitcoin, its implied volatility, the risk-free interest rate, and the expected term of the options. Because the options are not valued linearly to the price of Bitcoin, increases and decreases of the same magnitude will not have symmetrical effects. A 10% decrease in the price of Bitcoin, holding all other variables constant, would result in an approximate $20.8 million net increase in the fair value of the derivative assets and liabilities, and a 10% increase in the price of Bitcoin, holding all other variables constant, would result in an approximate $21.9 million net decrease in the fair value of the derivative assets and liabilities, in each case with a corresponding offset to net income (loss) before income taxes.
Custodian Risk
Our Bitcoin is held with third-party custodians, Coinbase Custody, Anchorage, and BitGo, which we select based on various factors, including their financial strength and industry reputation. Custodian risk refers to the potential loss, theft, or misappropriation of our Bitcoin assets due to operational failures, cybersecurity breaches, or financial difficulties experienced by these third parties. Although we periodically monitor the financial health, insurance coverage, and security measures of our custodians, reliance on such third parties inherently exposes us to risks that we cannot fully mitigate.
Credit Risk
Credit risk arises from our practice of pledging Bitcoin as collateral in transactions with counterparties. We mitigate this risk by engaging with counterparties that we believe possess strong creditworthiness based on their size, credit quality, and reputation, among other factors. During the nine months ended September 30, 2026, we have not incurred any material loss from such transactions. However, there remains a risk that a counterparty could default on its obligations to us, which might result in a material loss. We continually assess the credit risk associated with our counterparties and, if necessary, recognize a loss provision or write-down. Credit risk also arises from our cash and demand deposits held at financial institutions and our holdings of money market funds, commercial paper, and corporate debt securities. Although we strive to limit our exposure by placing cash and demand deposits with financial institutions with a high credit standing, there can be no assurances that we are able to mitigate our credit risk. In addition, we are exposed to credit risk associated with the creditworthiness of our customers and other counterparties, including tenants under long-term data center lease arrangements, as non-performance, failure to make required payments, or financial deterioration of these parties could adversely impact our cash flows, liquidity, and ability to satisfy obligations associated with the related infrastructure.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
Our Revolving Credit Facility bears interest at variable rates based on Adjusted Term SOFR or an alternate base rate. As of September 30, 2026, there were no borrowings outstanding under the facility; however, future borrowings would expose us to changes in market interest rates.
As of September 30, 2026, the TZRC Secured Promissory Note was outstanding and maintained a variable interest rate, subject to a maximum interest rate of 15.25%. In October 2026, we repaid the outstanding balance of the TZRC Secured Promissory Note in full, eliminating our exposure to future changes in interest rates under the note. For more information regarding the TZRC Secured Promissory Note, see Note 11. Loans, notes payable, and other financial liabilities to the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.
We also earn interest income on cash balances and restricted short-term investments, including unused proceeds from the River Bend Notes and Beacon Point Notes. Our restricted short-term investments include available-for-sale debt securities that are carried at fair value, with unrealized gains and losses recorded in other comprehensive income. Accordingly, changes in market interest rates may affect both the interest income we earn on these balances and the fair value of our restricted short-term investments. The River Bend Notes and Beacon Point Notes bear interest at fixed rates and therefore do not expose us to variability in interest expense from changes in market interest rates.
We may enter into additional project-level or corporate financing arrangements to fund our development activities. Changes in benchmark interest rates, credit spreads, or broader credit market conditions could increase the cost or reduce the availability of future financing, including financing issued at fixed rates. To the extent that we enter into financing arrangements with floating-rate components, including rates based on a Secured Overnight Financing Rate benchmark, our exposure to interest rate variability could also increase. We may seek to manage a portion of this exposure through the use of financial hedging instruments and long-term fixed-rate financing; however, such financing or hedging instruments may not be available on acceptable terms, may not be effective in mitigating interest rate risk, or may introduce additional risks.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(e) under the Exchange Act, as of the end of the period covered by this report.
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2026, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the specified time periods, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the three months ended September 30, 2026 that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.