The Bitcoin mining business is one of the sectors that was heavily impacted by the prolonged bear market, which caused a significant decline in the prices of crypto assets such as bitcoin.
After experiencing a wave of financial crunches for most of 2022, Bitcoin mining companies are gradually recovering by seeking ways to revive their finances. The latest of such efforts is the announcement of an all-stock merger between bitcoin mining firms Hut 8 Mining Corp and US Bitcoin Mining Corp.
An all-stock merger is a type of acquisition that uses stocks as payment currency instead of cash.
Combined Company Called Hut 8 Corp
After the merger, the combined company will be called Hut 8 Corp. The company will be based in the United States, with a market capitalization of about $990 million. The new firm will also gain access to 825 megawatts (MW) of electrical energy across six sites.
Regarding its new leadership, Jaime Leverton, who used to be the CEO of Hut 8, will continue as CEO of the new company. Michael Ho, the CEO of US Bitcoin Corp, will now be the Chief Strategy Officer of the Hut 8 Corp.
Other top executives of the combined company include Bill Tai as the chairman of the board, Asher Genoot as president, and Shenif Visram as the firm’s Chief Financial Officer.
Leverton commented on the mission of the new company, where she said:
“During the interim period, we plan to cover our operating costs through a combination of selling the Bitcoin we mine, selling from our stack and/or exploring various debt options, as agreed under the terms of the Business Combination Agreement. Upon a successful close of the Transaction, we will take the opportunity to carefully review and determine our go-forward treasury strategy.”
The deal is expected to close in the second quarter of 2023.
How Will the Shares be Distributed to Stakeholders?
Hut 8 will utilize a five-to-one reverse stock split. Shareholders of Hut 8 will receive 0.2 of the new stock for the new company. US Bitcoin shareholders will receive 0.6716 of the Hut 8 Corp’s shares for each share they hold. The report adds that shareholders of both companies will receive 50% of the new firm.
Meanwhile, the stock for Hut 8, dubbed $HUT, saw a mild 4.6% increase, bringing its price to $2.49. At the time of writing, $HUT traded at $2.18.
