Welcome to the year-end 2019 financial results earnings call. My name is John, I'll be your operator for today's call. At this time, all participants are in listen only mode. Please note the conference is being recorded. Now I'll turn the call over to Andrew Kiguel, the CEO of Hut 8 Mining. Mr. Kiguel, you may begin.
Great. Thank you very much. Thank you everyone for joining. I hope everyone is staying healthy here in what is a very strange time. I'll jump right into the numbers. For 2019, the highlights are revenue of CAD 82 million from mining 8,618 Bitcoin and a mining profit margin of 45%. We had an adjusted EBITDA of CAD 33.5 million, with a margin of 41%. Through the year, via acquisitions and expanding our existing capacity, we increased our petahash, which is the amount of mining we're able to do, by 19.6%, almost 20%. Through the year, we were opportunistic in selling Bitcoin and repaid CAD 5.3 million of outstanding debt. Of significance, we refinanced a $15 million debt facility, from paying what was over 12% to paying under 10%. That results in significant savings.
We spent a lot of time and work through working with the TSX Sandbox program, we were able to graduate from the TSX Venture Exchange to the senior board, which was quite significant, and us being the first crypto company to be able to do that. Finally, with respect to 2019, we were able to achieve bottom-line profit net income of CAD 2.1 million. With that, I'm going to turn it over to Jimmy Vaiopoulos, our CFO, to walk through the financials in a little more detail. Jimmy?
Thank you, Andrew. Before continuing, I'd like to remind everyone that all amounts in the financial statements and discussed on this call are in Canadian dollars, unless otherwise stated. For 2019, Hut 8 mined approximately 8,600 Bitcoin, resulting in revenue of CAD 82 million, compared with the prior year of approximately 5,600 Bitcoin mined with revenue of CAD 49.4 million. This increase was because Hut 8's flagship site in Medicine Hat came online halfway through 2018, because of the purchase of 12 additional BlockBox at the end of 2018, also due to the increase in Bitcoin price during the year. Our cost per Bitcoin for 2019, which includes all site costs, including electricity, was $3,978. This cost per Bitcoin remained lower than the average Bitcoin price of $7,395. This allowed for a mining profit margin for 2019 of 45%.
The Bitcoin price and network difficulty rate have been quite volatile during 2019, and especially at the start of 2020. While the price started the year at $3,747 and ended the year at $7,194, we saw Bitcoin hit a low of approximately $3,400 and a high of $13,800. The network difficulty rate saw a large increase as well of 130% for 2019. When compared to the 92% increase in Bitcoin price, the mining margins across the industry compressed in 2019, which we believe was due to more efficient equipment entering the market. Despite this, Hut 8 achieved an adjusted EBITDA margin of 41% for 2019, an increase from the prior year of 39%. Our team has been focused on becoming one of the lowest cost Bitcoin miners in the industry, which has helped us achieve bottom-line profitability in 2019 of CAD 2.1 million.
Hut 8 had CAD 33.5 million of adjusted EBITDA in 2019, which we used partially towards increasing our petahash capacity by nearly 20% and repaying CAD 5.3 million of debt, which together with the increase in Bitcoin price, has allowed Hut 8 to finish the year with a much stronger balance sheet. I'll now pass the call back over to Andrew.
Thanks, Jimmy. With that, I think despite there being some volatility, the company has managed to continue to produce well and will continue to try and do that. Maybe with that, I'll turn it back to the operator and open it up for questions.
If you do have a question, press star then one on your touch-tone phone. Once again, that's star then one on your touch-tone phone. A moment as we poll for questions. Your line is open for your question. Please go ahead.
Hello?
Yes, your line is open.
Oh, hey, Andrew, this is Deepak from Stifel GMP. I hope you guys are well.
Thank you.
I've got a handful of questions. I think it was March 15th you guys press released the reduction in capacity of 35%. Are you guys back up to full rates now or are we at a semi-permanent reduction capacity? Maybe you can walk us through that.
Sure. I think what we press-released is the ability to do that and optimize them. I think you have to think about it as a car, where a car has different fuel efficiency levels if you're running it at different amounts. As the price of gas goes up and down, you're going to try and run it in its most efficient levels if the price is too high or costing you more. The concept is similar. What we do is we look at the price, and we have the ability to scale full throttle and produce as much as we can. However, that results in less efficient use of electricity.
What we try to do is we have that matrix, and we've been actually doing this for a while, and we've been talking about it for a while, but we have a matrix where we look at the price of electricity, we look at the price of Bitcoin, and it's an algorithm we have where we examine at all different prices of electricity and prices of Bitcoin, how much should we be mining, and should we be scaling back to be mining at more efficient levels and decreasing our capacity. Deepak, it's real time. We monitor it 24 hours a day, seven days a week.
I can't tell you exactly where we are now, but given where the price of Bitcoin is over the last 24 hours, I would imagine that we've probably, again, pushed down on the throttle and are closer to our maximum capacity than we would be to pulling back.
Got it. You have been talking about it for a while, and I believe through the power price spikes, you guys were actively running this optimization. The press release is really nothing different from what you've already been doing. It's just kind of putting in writing what you've been doing already.
Yeah.
Have you increased the ability to do more in a real-time basis? Just trying to understand the difference here.
No. It's the same thing. I think part of it was just to let people know we were getting some inbound calls. This is in the midst of when the price hit, I think around $4,000. We're getting some inbounds from people who are concerned, investors and stakeholders, and asking, "Hey, what are you guys doing?" We thought it was a good time to sort of reiterate that. There's a couple of advantages that Hut 8 has. Number one is we're not obligated to take 100% of the power that we have as capacity. Other miners are signed up for 50 MW. They have to consume 50 MW regardless of what's happening in the Bitcoin price. We have the ability to scale back without having penalties, not to zero, but we can scale back significantly. That's one advantage.
The second advantage in doing that is that we have these optimization modes, which I think other people don't have, which is, again, like a car, certain levels, you'll utilize the efficiency of your fuel consumption more than others, and it's the same thing for us. It's nothing new that we were doing. I think it was just a function of letting the market know, "Hey, there are some things under our control here that will prevent us from losing our shirts here and having to continue to mine when it's not necessarily profitable to do so at certain levels.
Got it. Then the 50% cost reduction, is that a permanent cost reduction, or is that part of this flex that your costs kind of come down as you reduce capacity and then go back up when you increase it?
The latter. Again, it's just an efficiency mode. Again, think about it almost like a car. It's like you can go all out, you can go real fast. You're not going to get your best fuel efficiency when you're going 180 kilometers an hour or however fast your car goes, but you're going to be going real fast. You can pull it back down to 70 or 80 highway driving. You're going to be consuming far less fuel, but you're not going as fast. It's kind of that trigger that we're trying to play with when we're doing this to say, again, we're looking at the price of electricity, we're looking at the price of Bitcoin and say, "Where is the place where we can maximize your profits at these levels?
Got it. Then you mentioned this last crash to CAD 4,000, and in light of the covenant that you have with Genesis, I'm just wondering if you can give us some more color on those. Given Bitcoin's volatility, you could be kind of in and out of this covenant or onside or offside in very short periods of time. How long does the insolvency kind of have to persist before they can call your debt? Is there kind of an understanding or a written agreement that it's got to be below a certain level for a certain number of months or quarters or days? How does that work?
What would happen is that they would have to issue us, it's almost like a margin call. They would issue us a call to say, "Hey, can you guys add some additional Bitcoin margin to the account?" We have 24 hours to do that. If for whatever reason, I'm giving you a worst-case scenario, we say, "Hey, we can't do that for whatever reason, and we don't have the inventory." They would then have another 24 hours to issue us another request to sort of increase the margin that we have, so to send them more Bitcoin. If again, we are unable to do that in two of these notices, there is a 10-day business day process whereby we can look to remedy the situation with them.
If at the end of that period, another 10 business days, we are still unable to do that and they wish to sort of proceed, they could declare an event of default against the company. That would be a worst-case scenario.
Okay. They're not unfamiliar with the volatility of cryptocurrencies. I guess, can you offer kind of some sense of their thinking around this environment? Clearly, we're in an unprecedented time here, and everyone's kind of watching Bitcoin's response to its first kind of macroeconomic crisis worldwide.
Yeah.
It bounced back quite strong. What are they thinking? What are your debt holders telling you guys?
We haven't received any notices. We are obviously in contact with them. I don't want to speak on their behalf, but I think as a group, and that is a big lender in the space, they're probably keeping a very close eye on it and being very cautious. I can't speak to what they're saying or doing. We obviously engage in conversations with them and monitor the status of Bitcoin and our collateral all the time.
Okay, I get that. Let's maybe ask it a different way or shift the gears a bit. Clearly, the industry's looking at the halving event in May, and this year is kind of a major litmus test for Bitcoin. Do your debt holders share that view? How do you guys look at that? Then I'm going to follow up on halving after that.
Look, I think everybody's keeping an eye on everything. Nobody knows how things are going to play out. Again, I'd be hesitant to speak on their behalf. I think as natural economic players are keeping an eye on everything and wanting to make sure. From the perspective of the loan, right now, I think we're over-collateralized on it. I don't believe that the halving is going to happen without a big increase in the price of Bitcoin. I think that's more personal, but I'm happy to answer questions related to the halving.
Okay. Related to the halving, I guess what are the kind of key indicators or data points you guys are watching as leading indicators to kind of help you plan what you're going to do? Maybe if you can walk us through, do you have any kind of scenarios that you're planning for? If Bitcoin does X or Bitcoin does Y, we plan to do this or that? Anything you can share there?
Yeah, for sure. There's a lot of different scenario planning that we've done, and we have different plans under different scenarios. I think the view is, I think shared by everyone, the hash rate is probably the thing we monitor most closely, more so even than the Bitcoin price. If there's a couple of assumptions that I think everybody in the industry believes is that the hash rate is going to drop significantly post the halving, which is probably, I don't know, 45 days away or so. A, we know that the hash rate's going to drop, and that is a good thing for Hut 8 because that means that the competition decreases, and we will have a larger market share.
We also believe that leading into the halving or more significantly post the halving, as we've seen in the past, there will be less selling into the market, less Bitcoin being mined, unless if the demand stays the same or even goes up in light of fiscal policy in North America and Canada and the United States and the rest of the world, you could see a real pop in the price of Bitcoin. It's really going to be the interplay of those two factors, which are completely out of our control, that will determine how we respond. We've looked at a whole bunch of different scenarios. We've been exploring and in conversations with different groups with respect to upgrading some of the facilities to get additional efficiencies. We've done an analysis to see what happens under different amounts of price drops.
The COVID-19 makes things even that much more difficult because supply chains and logistics, travel logistics for delivering things have been broken. How is that going to impact what ends up happening here? It's hard to say. There's a lot of changes in the world here in the last three weeks that I don't think anybody thought would be this harsh, at least not in North America. We're trying to plan around that and see what can be done.
Okay. Just on that from an operational perspective, are you guys able to fully operate remotely, or are there any kind of on-site things that are restricted that are kind of happening right now?
We started looking into this early March. Yes, the majority of stuff can be done remotely. We've made sure that key employees and people that need to do that have the proper systems available to them at home. Yes, we completely have been ahead of that, of the curve on that. In terms of the operations and equipment, it's not really an issue. These are not You've been to the sites at Drumheller, so you know what it's like there. It's not like these are big, crowded places. I think if people were working remotely and there was an issue with one of the boxes, we could send an engineer down there. I think that there needs to be, by law, two people.
If they're wearing face masks and proper protective gear, you could have one person stand there, two people going in, affix or repair anything, and that would be more engineering. The rest of the stuff is mostly software, which is just monitoring the temperatures, the heat of what's happening in the boxes, making sure they're producing the right hash rate, temperatures inside the boxes are being consistent. It's that type of operational, and yes, that can be done remotely.
Okay. My last question, thank you again for letting me dominate so far the call. There's announcements for succession plan. Obviously, we're into April now. Any updates on the timeline for that or the thinking around that or any changes there? That's it. Thank you.
Yeah. I think the board continues to work around that. Again, I think the COVID stuff has delayed things. I expect that there should be some type of an announcement or something this month. My view is I think this is probably my last month at the company. The board is continuing to work towards a solution, and I would expect that there would be some type of announcement in the next couple of weeks.
Okay. Thank you again for taking my questions, and stay safe, guys.
Thank you. Likewise.
We'll go with our next question. Your line is now open.
Hello, can you guys hear me?
Yes.
Oh, okay. Hey, this is Matt Yamamoto from CoinDesk. I just want to ask you about possible upgrades that you guys had mentioned just moments ago. We're seeing new equipment come out from Bitmain and places like MicroBT. I'm just curious if you guys do plan on upgrading the short term, which manufacturer were you hoping to get it from? Also, how would you plan on financing those purchases?
What I would say is we're in conversations with several manufacturers, specifically the ones that you mentioned having, I think, the best equipment available at scale. We've been testing out different equipment on our sites. The new offerings from both Bitmain and MicroBT are very strong. I guess we've been testing those out and getting some good results with the test batches we've received. With respect to financing, how we would do that. There's several different plans in place. As a public company, there's nothing complete yet, so there's nothing that we can officially disclose. Certainly, these are things that we have been looking at and discussing internally now for months. I think part of the issue right now that we're trying to explore is delivery schedules. With the COVID-19, how does this impact manufacturing for companies like Bitmain and MicroBT?
How have supply and delivery chains across the world been impacted? Whereas, in February, you thought maybe you'd be able to get things delivered in four to eight weeks, those timelines have certainly changed today. That is the type of things we are exploring and trying to figure out in real time, because I guess three, four weeks ago, nobody thought these things would be an issue, and the world is grappling right now with different supply chain issues like getting ventilators and masks around the world as opposed to Bitcoin mining machines.
Got you. Just a follow-up to that, I know you guys use BlockBoxes for your equipment. If you guys bought equipment from other manufacturers like MicroBT or Bitmain, how would those machines fit into the BlockBoxes, and would you guys have the expertise for maintenance on those machines?
Yeah. We've been testing out other equipment, and it fits in fine. The Bitfury equipment that comprises the majority of what's there is essentially similar machine stuff. The offerings from MicroBT and Bitmain, if you take their latest stuff, I think the Bitmain is the T or the S19, and then M30S from MicroBT. We've been testing the stuff. It fits. You just have to rearrange some of the shelving. We've tested it out on some of the BlockBoxes. There's not an issue, and yep, it does seem like we would have the expertise to do that. Frankly, the companies are very supportive to provide what I would call customer support for large customers if there's any issues.
Got you. I guess, if I could, switching gears, I wanted to ask a question on the impairment change that happened in fourth quarter. You guys shifted some of the impairment costs from 2018 from, I believe it was servers to infrastructure, which caused depreciation expenses to be much larger in fourth quarter. Can you give some more color on why you guys made that decision?
I'll ship that question to Jimmy. Yeah.
In 2018, we focused on the servers. In 2019, at a high level there, because in crypto, it's a new industry that the accounting firms are still trying to wrap their heads around. There is new guidance and information that comes out on how they would like things accounted for. Based on some new guidance, we thought it was best to allocate on a pro rata basis instead the impairment from 2018. That is what we did. Just a reallocation. The impairment amount did not change. It was the reallocation between all of the servers and infrastructure, which of course, did change the depreciation amount at some level in 2019. Overall, didn't have an effect actually on impairment.
Got you. I guess one last question, if I could, a modeling question. With a halving approaching, assuming Bitcoin price stays the same, how much would hash rate need to drop for you guys to be positive on the bottom line? Then, I guess also from a cash basis perspective.
That's a good question. I don't have the specifics to go through our models here right in front of me, but I think based on our modeling, we would like to see the price of Bitcoin be a little bit higher here. We're sort of thinking that the hash rate would be dropping here somewhere between 20% and 30%.
Got you. Thanks for the color.
Okay.
We'll go to our next question. Your line is now open.
Hi, it's BJ. Can you guys hear me?
Yes.
Yep. Hey, Andrew. Good to see that you guys are doing well. My question revolves around the recent release around Slush Pool. Looking at that particular partnership, it says that you have a minimum requirement of 600 petahash with a requirement within a year to attain two exahash. Is it fair to say you guys have planned that out over the next year, that you have the cap spend strategy in place to meet a two exahash? Based on my numbers, that would mean you're pretty much upgrading most of your network, 80% of your network, to attain that level, if that's the goal. I think in the agreement, it also said once you attain one exahash with Slush Pool, you would also start maintaining a mining pool for them.
Can you give me more color around that kind of partnership with those hashing commitments, and then what your strategy is to get to the two exahash goal, if that's the case? Thanks. I'll have follow-up questions after that.
Yeah. I'll let Jimmy answer part of this, but what I would say is, obviously, the hope for any miner approaching the halving is that you're going to be able to upgrade your equipment, especially with the rapid pace of equipment improvements that have come out. We've been planning for it. Once we have things in place, we will press release that, those material items as they come out. Certainly, capital is scarce in this business and we've been talking to a lot of different providers, and once there's material news there to release, we will do that. Jimmy, I don't know if you want to speak specifically to the contract related to Slush Pool.
Yeah, happy to. On the first point, when we reach one exahash, we'll actually get a node set up by Slush Pool. This is just going to make our connection stronger, right? It's like you're having a node on site. With an upgrade, that would be very possible. It's not too far to reach. In terms of the two exahash, this is at some level a placeholder. If you take our electrical capacity and look at the latest miners our site has the ability to go above two exahash. Like Andrew said, until we have more details, there'll be press release at the time.
Yeah. It's the contracts with Slush Pool. They have built-in mechanisms there for you to increase and decrease, and when we were negotiating it, we said, "Hey, if we were to increase to these levels, can we get further reductions?" Part of it is just to build in some future relevancy for that contract.
Great. I guess understanding that, and again, would you guys potentially, because you have an awesome amount of power capacity, would you even consider, because me reading that Slush Pool agreement where you would consider co-location or would the labor costs of supporting that with technicians and stuff not be worth it and you're just more focused on mining in-house like you've always been, would that even be something you'd be considering for the next 12 months?
Do you mean that we would host for other people at our location?
Yeah.
Yeah. Look, everything is always under consideration, and we've been approached with that. Probably, what I would say is the Medicine Hat facility specifically is probably, and this has been verified by lots of people in the industry who have visited the site, it's probably the best site in North America. What I mean by best site is not just the electricity price component, but just the location, the temperature, the relationship with the government. There's a whole bunch of other factors that people don't take into account when they're looking at this stuff, such as property taxes, lease rate, availability of skilled labor force. When you take all of that into account, it really is a phenomenal site, and that's a huge advantage.
To your question, yeah, we have been approached by people who say, "Will you host equipment for us?" All that stuff always gets evaluated and discussed, and if there was a way there for us to create value and profits for shareholders, then that would certainly be something that would be looked at more closely. We haven't seen somebody approach us with something meaningful thus far.
Okay. Fair. I guess my next question revolves around revenues for-- I know you reported full year, but the way I do my modeling, I look at quarter-over-quarter. My modeling is an estimate, but I kind of ballparked for Q4 that you did about 1,694 Bitcoin mined, I think. Correct me if I'm wrong. You did mine over 1,600 Bitcoin. Is that right for the quarter of Q4?
Jimmy, is that information not in the MD&A, how much we mined per quarter? Could be.
I want to say it should be Yeah. I'm trying to get that actually, that specific number. Yeah, it is. I'm just looking at it right here. It's in the MD&A, 1,648.
48.
For the full quarter.
Yeah. Okay, 1,648. Okay, it's close to my modeling on mine. With that number, like was, and I don't think we had the exchange rate variance. I think you reported just shy of CAD 15 million for the quarter, right?
Yep.
Was there trading challenges? Were pricing volatility to when you sold? There is a variance that I see, at least in the sales number, of a few million bucks, based on what I can tell. I could be wrong, but was there just challenges in Q4 selling some of the mined Bitcoin where you got lower prices than expected by holding it back a bit? My modeling works that you're basically selling on a daily basis, so that is one reason why I say my modeling might not be accurate. Based on what you mined in Bitcoin, I would expect that you would've been closer to CAD 17 million in revenue. I don't know if you can speak to that or not. I was just curious.
One thing I'll quickly mention on revenue, then Andrew may have a comment is, revenue is done based on as we receive the Bitcoin, we take the price that day. My question to you, are you saying, are you looking at just as revenue and calculating it day by day? Is that?
Yeah. I take the exchange rate, USD, change it to Canadian, and then look at what Because I estimate your mine production on a daily basis on an average 24-hour window. That 1,694 that I modeled, I'm basically looking at if you were selling it into market every day as an average, you would probably be closer to almost CAD 17 million revenue. You guys reported about CAD 2 million less than that, with 1,638 in mined revenue. I'm just trying to understand what the potential variance is, that's all.
I'd have to look at your model. Feel free to send it to me, and I'm happy to take that offline.
But-
Yes, Andrew.
I think part of it has to understand, we don't sell the Bitcoin daily. The thesis between the company from day one has always been that we think Hut 8 is an alternative to going and buying the Bitcoin, thus, we want to hold as much as we can. Our view is also that over the course of time, although the volatility has been insane, that over the longer term, the price of Bitcoin will continue to appreciate. What might have happened there is sometimes we try and hold it. We generally always time it pretty well. It could be that there's Bitcoin that we didn't sell, or we sold more Bitcoin or less Bitcoin within a certain quarter. A lot depends on our financing needs, how much we can.
We're always trying to minimize the amount of Bitcoin we sell in order to keep it. I don't know if the difference in your numbers might be if our fiat costs were less, maybe we just sold less Bitcoin, and that has to be taken into account with what is our balance of Bitcoin at the time.
The other thing is too, I think the retained Bitcoin in the management discussion was a little bit less, I think, for closing out the year. I think it was like 3,029 and it went down to 29 and change. I know that went down too for the Q4 numbers. I'm just trying to understand it, if I'm missing something in. I would just account for that it could be how you HODL and then potentially selling Bitcoin, and there was some volatility in Q4 that it may have impacted pricing you might have gotten. That's all, relative to what you mined.
That's totally possible because sometimes you get these situations where we know we have a fiat cost that's due. We always try and plan and have enough working capital available. Could've been a situation where it was a week or two-week period where the price was lower, and we ended up having to sell more than we thought. It's entirely possible.
Yeah. All in all, the year for 2019, you guys executed really well. I'm really pleased with what you've been able to do with the equipment. Then going into 2020, same thing with the power capacity you guys have and the site you have. I think it's a very valuable asset. I'll just close out my comments, I guess with regard to, earlier comments in the call. I'm assuming you would use a linear programming model to do optimization, right? For the questions around how you budget the 50% savings in power to 35% reduction in the hash rate. It's your own model, it's probably a linear programming model, I would assume, right?
Yeah.
How it's done.
Yeah. It's essentially, if you just think about it's an X and a Y axis that goes on for a very long time where we program lots of different price points for electricity and Bitcoin, and then we just look at it in real time. We provide that information to the people operating the site, and then they just follow that, and we reevaluate that program several times a day just to make sure we're operating as efficiently as we can be. Covering, one of the most important things we're always trying to do is cover our costs, right? We want to make sure at the very least, that the price that we're mining at covers our electricity and our labor costs. That's always the main thing.
Yeah. Electricity generally is cheaper in the summer than the winter because it's nat gas predominantly that powers the mines out there, right? Is my understanding.
That's correct.
Does that make sense to you? Yeah. Okay. Yeah. I'm good, guys. I appreciate it. Again, Andrew, all the best. You've been a really big part of the team there, so I appreciate all the help that you've provided me over time with understanding your business better. Appreciate it.
My pleasure. Thank you.
We'll go to our next question. Your line is open. Go ahead with your question.
Have you guys identified who will be taking over as the CEO? Although I'm very happy to hear that you are leaving, Andrew.
Thanks. That's really more of a board question. I don't know, just because of rules. I think they need to finalize their determination. They need to negotiate with the people or the candidates, once it's ready to be disclosed, it would come out. I would anticipate that this would be my last month at Hut 8.
Okay. One other quick question related to Slush Pool. How big of an impact is it going to be having on our margins and revenues in getting returned as opposed to the current situation?
In the short term, it's hard to say. What happened was, is we switched over to the Bitfury Pool. Slush Pool was expensive relative to the deal we got at the Bitfury Pool. The thing, though, is that if you're aware of how it works, there's a luck factor that's involved. Essentially, every time you're sending your hash rate, it's like you're trying to guess numbers to solve a combination on a lock. The larger your pool is, the more consistent that will be on a pro rata basis. What happened was is that the Bitfury Pool got smaller towards the end of last year and the beginning of this year, I think as people maybe were just taking their miners offline or moving their hash rate. What happened is that the pool we were on, while cheaper, became a lot more volatile.
We were seeing some days where we were having exceptionally great luck and we were out-producing, and then we were seeing some days where it was less luck. Over the long term, you would expect that you would end up producing the exact same amount as you would if you were part of a larger pool. We made the choice and we talked to Slush Pool, and we were able to, I think, negotiate a deal with them, a contract with them that made sense. Being part of a larger pool just means that our Bitcoin mined becomes more consistent. We don't have to go through the swings of good or bad luck. It's such a large pool that we see much more consistent production on that.
Okay. Thank you. Also, are there any plans to increase the production capacity? Like the new equipment, just getting bigger.
I think that the opportunity for the company going forward is we have access to about 109 MW, which is a lot. I think the real opportunity for the company here is if you're going to look to expand some of the new equipment that's come out in the last few months, really it's more like weeks, from places like Bitmain and MicroBT, provide a lot of opportunity if you're able to upgrade to that equipment. It just gives you the ability to grow from within. Rather than going out and finding a new site's real complicated. You've got to go through regulatory approvals. You've got to build the site. You've got property taxes, land taxes. You've got to hire labor. The opportunity for Hut 8 is actually within.
It's the organic growth here with the new equipment that I think could be a real game changer for the company go forward.
Okay, thank you.
You're welcome.
We have no further questions at this time.
Great. Well, thank you, everybody, for coming on. I was unsure if anybody was actually going to sign on, just given all the things happening in the world right now. Thank you, everybody. This is likely my last call, but I want to thank everybody for their support over the last couple of years, and I will be around for anybody who wants to reach out. Thank you very much, and everybody stay healthy and safe.
Thank you.
Thanks, everyone.
That concludes today's conference. Thank you for participating, and you may now disconnect.