Welcome to the Year End 2019 Financial Results Earnings Call. My name is John, and I'll be your operator for today's call. At this time, all participants are in a listen only mode. Please note the conference is being recorded. And I will now turn the call over to Andrew Kegel, the CEO of Hunt 8 Mining.
Mr. Kegel, 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, but I'll jump right into the numbers. For 2019, the highlights are revenue of $82,000,000 from mining 8,618 Bitcoin and a mining profit margin of 45%.
We had an adjusted EBITDA of $33,500,000 with a margin of 41%. Through the year, the 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 $5,300,000 of outstanding debt. Of significance, we refinanced a US15 $1,000,000 debt facility from paying what was over 12% to paying under 10% resulting significant savings. As well, spent a lot of time in the work and 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 must be the 1st crypto company to be able to do that.
And finally, with respect to 2019, we're able to achieve bottom line profit net income of $2,100,000 So with that, I'm going to turn it over to Jimmy Pyotoulis, 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 $82,000,000 compared with the prior year of approximately 5,600 bitcoin mined with revenue of 49,400,000 dollars This increase was because Huttig's flagship site in Medicine Hat came online halfway through 2018 and because of the purchase of 12 additional block boxes at the end of 2018 and also due to the increase in bitcoin price during the year. Our cost per bitcoin for 2019, which includes all site costs, costs including electricity, was US3978 dollars This cost per bitcoin remained lower than the average bitcoin price of US7000 US7335 dollars 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 US3747 dollars and ended the year at US7194 dollars we saw bitcoin hit a low of approximately US34 $100 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 $2,100,000 Hutting had $33,500,000 of adjusted EBITDA in 2019, which we use partially towards increasing our pet hatch capacity by nearly 20% and repaying $5,300,000 of debt, which together with the increase in Bitcoin price has allowed Hutit to finish the year with a much stronger balance sheet. I will now pass the call back over to Andrew.
Thanks, Jimmy. So with that, I think despite there being some volatility, the company has managed to continue to produce well and we'll continue to try and do that. So maybe with that, I'll turn it back to the operator and open it up for questions.
And your line is open for your question. Please go ahead.
Hello?
Yes, your line is open.
Hey, Andrew. This is Deepak from Stifel GMP. I hope you guys are well.
Thank you.
I've got a handful of questions. Just I think it was March 15, you guys press released the reduction in capacity of 35%. Are you guys back up to full rates now? Or we've got kind of a semi permanent reduction capacity? Maybe you can walk us through that.
Sure. So I think what we've touched, Elyse, is the ability to do that and optimize. And so I think you have to think about it as a car, where a car has different fuel efficiency levels if you're running it different amounts. And so 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 more. So the concept is similar.
So 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. So what we try to do is we have that matrix. And we've talked 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, whether we examine it 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. So Deepak, it's real time.
We monitor it 24 hours a day, 7 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 or closer to our maximum capacity than we would be to pulling back.
Got it. So you have been talking about it for a while and I believe like through the power price spikes you guys were actively running this optimization. So 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? Or 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 when the in the midst of when the price hit, I think around $4,000 and we're getting some inbounds, but we're concerned investors and stakeholders and asking, hey, what are you guys doing? So we thought it was a good time to sort of reiterate that.
One advantage there's a couple of advantages that Hut 8 has. Number 1 is we're not obligated to take 100% of the power that we have as capacity. So other miners are signed up for 50 megawatts. They have to consume 50 megawatts regardless of what's happening in the Bitcoin price. We have the ability to scale back without having penalties, not to 0, but we can scale back significantly.
So that's one advantage. And 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 our certain levels, you'll utilize the efficiency of your fuel consumption more than others, and it's the same thing for us. So 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. And then the 50% cost reduction, is that a permanent cost reduction? Or is that part of this flex that you can costs kind of come down as you raise capacity and then go back up when you increase it?
The latter. So again, we can again, it's just an efficiency mode. So again, to think about the parts of your car, it's like you can go all out and go real fast. You're not going to get your best fuel efficiency when you're going 180 kilometers an hour or 100 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.
So 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, what is the place where we can maximize our profits at these levels?
Got it. And then you mentioned the flash crash to 4,000 and in light of the covenants that you have with Genesis, I'm just wondering if you can give us some more color on those. Given that 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?
So what would happen is that they would have to issue us a it's almost like a margin call. So 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 to send them more Bitcoin.
If again, we are unable to do that and enforce 2 of these notices, then there is a 10 day business day process whereby we can look to remedy the situation with them. And if at the end of that period, another 10 business days, we are still unable to do that and may wish to sort of proceed, they could declare an event of default against your company. So that would be a worst case scenario.
Okay. And they're not unfamiliar with the volatility of cryptocurrencies. So I guess, can you offer kind of some sense of their thinking around this environment? I mean, clearly, we're in an unprecedented time here. And this is everyone's kind of watching Bitcoin's response to the first its first kind of macroeconomic crisis worldwide.
And it bounced out quite strong. So what are they thinking? What are your debt holders telling you guys?
So we haven't received any notices. We are obviously in contact with them, I think. I don't want to speak on their behalf, but I think is a group that is a big lender in the space. They're probably keeping a very close eye on it and being very cautious. But I can't speak to what they're saying or doing.
We obviously engage in conversations with them and monitor the status of their coin and their collateral all the time.
Okay. I get that. So let's maybe ask it a different way or shift the gears a bit. So I mean, clearly, the industry is looking at the having 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? And then I've got a follow-up on having after that.
Look, I think everybody is keeping an eye on everything. Nobody knows how things are going to play out. But 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. And so then 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 on what you're going to do? And 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?
Yes, 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 in the Bitcoin price. So 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 habit, which is probably, 45 days away or so. So, A, we know that the Hash rate is 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 having or more significantly post the having 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.
So 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. And 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 analysis to see what happens in your different amounts of price drops. But the COVID-nineteen makes things even that much more difficult because supply chains and logistics, travel logistics for delivering things have been broken.
And so 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 3 weeks that I don't think anybody thought would be this harsh, at least not in North America. And so we're trying to plan around that and see what can be done.
Okay. And then 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?
So we started looking into this early March. And 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. So yes, we completely have been ahead of that, of the curve on that. In terms of the operations in equipment, it's not really an issue.
So these are not you've been to the sites, detoxing, you know what it's like there. It's not like these are big crowded places. So 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 lot 2 people. If they're wearing face masks, have proper protective gear, you could have 1 person standing like there, 2 people going in to fix or repair anything and that will be more engineering.
The rest of the stuff is mostly software, which is just monitoring the temperature, 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't be done remotely.
Okay. And then my last question, and thank you again for letting me dominate so far in the call. There's announcements for succession plan. Obviously, we're in April now. Any updates on the time line for that or the things around that or any changes there?
And that's it. Yes.
I think the Board Yes. 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. But 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.
And we'll go with our next question. Your line is now open.
Hello. Can you guys hear me?
Yes.
Okay. This is Matt Yamamoto from Coindesk. I just want to ask you about upgrades, 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 upgrading the short term, which manufacturer were you hoping to get it from?
And also, how would you plan on financing those purchases?
Yes. So 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. So 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, I think we have there's several different plans in place. As a public company, there's nothing complete yet. There's nothing that we can officially disclose. But 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 schedule.
So with the COVID-nineteen, how does this impact manufacturing for companies like Bitmain and MicroBT? How have supply and delivery changed across the world been impacted? So whereas in February, you thought maybe you'd be able to get things delivered in 48 weeks, those timelines have certainly changed today. And so that is the type of things we are exploring and trying to figure out in real time because it's 3, 4 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. And just a follow-up to that. Can you talk about kind of because I know you guys use block boxes for your equipment. How if you guys bought equipment from other manufacturers like MicroBT or Bitmain, how would those machines fit into the block boxes? And would you guys have the expertise for maintenance on those machines?
Yes. So we've been testing out other equipment and it fits and finds. So the Bitfury equipment that complements 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 that fits.
You just have to rearrange some of the shelving. So we've tested it out on some of the block boxes. There's not an issue. And yes, it does seem like we would have the expertise to do that. And frankly, the companies are very supportive to provide, what I would call, customer support for large customers, if there's any issues.
Got you. And I guess, if I could, switching gears, I want to ask a question on the impairment change that happened in Q4. You guys shifted some of the impairment costs in 2018 from, I believe it was servers to infrastructure, which caused depreciation expenses to be much larger in Q4. Can you give some more color on why you guys made that decision?
I'll shift that question to Jimmy.
Yes. Yes. So in 2018, we focused on the servers. But in 2019, at the high level, there because in crypto, it's a new industry that the accounting firms are still trying to wrap their heads around. There's new guidance and information that comes out on how they would like things accounted for.
And based on the new guidance, we thought it was best to allocate on a pro rata basis instead the impairment from 2018. So that's what we did. So just the 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, but overall, didn't have an effect actually on impairment.
Got you. I guess one last question, if I could, modeling question. Assuming with that having approaching, assuming Bitcoin price stays the same, How much would Hashrate need to drop for you guys to be positive on the bottom line? And then I guess from also from a cash basis perspective?
That's a good question. I don't have the specifics of our to go through our models here 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. But we're sort of thinking that the Hash rate would be dropping here somewhere between 20% 30%.
Got you. Thanks for the color.
Okay. And we'll go to our next question. Your line is now open. Hi, it's Vijay. Can you guys hear me?
Yes. Yes. Hey, Andrew. Good to see that you guys are doing well. My question evolves around the recent release around Slashpool.
Looking at that particular partnership, it says that you have a minimum requirement of 600 petahash with the requirement within a year to attain 2 Ekahash. So 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 the 2 Ekahash? 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. And then I think in the agreement, you'd also said once you obtain one act of Hashwood slash pool, you would also start maintaining a mining pool for them. So 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 2 like a hash goal, if that's the case? Thanks. And I'll have follow-up questions after that.
Yes. So I'll let Jimmy answer part of this. But what I would say is, obviously, the hope for any miner approaching the having is that you're going to be able to upgrade your equipment, especially with the rapid pace of equipment improvements that have come out. So we've been planning for it. Things are we will once we have things in place, we will press release that, those material items as they come out.
But certainly, capital is scarce in this business. And we've been talking to a lot of different providers. And once there is material news to release, we will do that. But Jimmy, I don't know if you want to speak specifically to the contract related to slush pool.
Yes, happy to. On the first point, when we reach 1x a hash, get a we'll actually get a node set up by Slushpool. This is just going to make our connection stronger, right? It's actually having a node on-site. And so with an upgrade, that would be very possible.
It's not too far to reach. In terms of the 2 exahash, this is at some level a placeholder. But if you take our site if you take our electrical capacity and look at the latest miners, our site has the ability to go above to exit house. But like Andrew said, until we have more details, that will be press release at the time.
Yes. It's the contracts with slush pool. They have a 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? So part of it is just to build in some future relevancy for that contract.
Great. And 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 slash 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?
Yes.
Yes. 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 visited the site. It's probably the best site in North America. And 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 rates, availability of skilled labor force. And take all of that into account, it really is a phenomenal site and that's a huge advantage. So to your question, yes, we have been approached by people who say, we would like, will you host equipment for us? And all that stuff always gets evaluated and discussed. And if there was a way there for us to create value and profits for shareholders, and that would certainly be something that would be looked at more closely.
We haven't seen somebody approach us as something meaningful thus far.
Okay. Fair. And then I guess my next question revolves around revenues for I know you reported fully here, but and the way I do my modeling, I look at quarter over quarter. So my modeling is an estimate, but I kind of ballpark for Q4 that you did about 16.94 Bitcoin mined, I think, correct me if I'm wrong, you did mine over 1600 Bitcoin, is that right, for the quarter
of Q4? Jimmy, is that information not in the MD and A, how much we mine per quarter? That should be
I want to say it should be yes, I'm trying to get that actually, that specific number. Yes, it is. I'm just looking at it right here. It's in the MD and A, dollars 1,648
$48,000,000 For the full year.
Yes. So if you okay, so $1648,000,000 Okay. So it's close to my modeling online. So with that number, like was and I don't think we have the exchange rate variance. I think you reported just shy of CAD 15,000,000 for the quarter, right?
Yes.
Was there trading challenges or pricing volatility to when you sold? Because there is a variance that I see at least in the sales number of a few $1,000,000 based on what I can tell. I mean, 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.
But based on what you mined in Bitcoin, I would expect you would have been closer to like $17,000,000 in revenue. But I don't know if you can speak to that or not. I was just curious.
So one thing I'll quickly mention on revenues, and you may have commented. Yes, so revenue is done based on as we receive the bitcoin, we take the price that day. Now that question is, are you saying are you looking at just as revenue and calculating it day by day? Is that Yes.
So 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. So that's $16.94 that I modeled and basically looking at if you're selling it into market every day as an average, you would probably be closer to almost $17,000,000 revenue, but you guys reported about $2,000,000 less than that with $16.38 in mined revenue. So I'm just trying to understand what the potential variance is at that level.
I'd have to look at your model to and then feel free to send it to me, and I'm happy to take that offline. Yes, Andrew. Yes.
I mean, I think under part of it has to understand. So we don't sell with the Bitcoin daily. The thesis between the company from day 1 has always been that we think Hut 8 is an alternative to going and buying the Bitcoin, unless we want to hold as much as we can. And 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. So what might have happened there is sometimes we try and hold it.
We generally always try and time it pretty well. It could be that there's Bitcoin that we didn't sell or we sold more or less Bitcoin within a certain quarter. It a lot depends on our financing needs and how much we can. But we're always trying to sort of minimize the amount of bitcoin we sell in order to keep it. And so 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.
Yes. 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 $3,029,000 and it went down to $29,000,000 and change. So I know that went down too for the Q4 numbers. But yes, I mean, I'm just trying to understand it like if I'm missing something and how you were I would just account for that it could be how you huddle and then potentially selling Bitcoin and there was some volatility in Q4 that it may have impacted like pricing you might have gotten that's all relative to what you might?
Totally possible because sometimes you get these situations where we know we have a fee at cost that's due. We always try and plan and have enough working capital available, but could have been a situation where it was a week or 2 week period where the price was lower and we ended up having to sell more than we thought. It's entirely possible.
Yes. All in all, like the year 2019, you guys executed really well. I'm really pleased with what you've been able to do with the equipment and then going into 2020, same thing with the power capacity you guys have in the site you have. I think it's a very valuable asset. I'll just close out my comments.
I guess with regard to, I guess earlier comments in the call, I'm assuming you'd use a linear programming model to do optimization, right? For the questions around like how you budget the 50% savings in power to 35% reduction in the hashing rate, like you'd use your own model, but it's probably a linear programming model, I would assume, right? Yes.
It's essentially, if you just think about it, it's an X and a Y access 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 real time. We provide that information to the people operating the site. And then they just follow that and we evaluate that program several times a day just to make sure we're operating as efficiently as we can be and covering the number one of the most important things we're always trying to do is cover our costs, right? And we want to make sure at the very least that we are the price that we're mining at covers our electricity and our labor costs.
That's always the main thing.
And 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.
Is that
the sense that you yes, okay. Yes, I'm good guys. I appreciate it. Again, Andrew, all the best. You've been a really big, 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.
And 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 of the 1 very unhappy to hear that you are leaving, Andrew? Thanks.
So that's really more of a Board question. I don't know just because of rules. I think the day AD to finalize their determination, they need to negotiate with the people or the candidates. And then once it's ready to be disclosed, it would come out. But I would anticipate that this would be my last month at Hut 8.
Okay. One other question related to flush pool. How big of an impact is it going to be having on our margins and revenues in getting return as opposed to the current situation?
In the short term, it's hard to say. So what happened was as we switched over to the Bitfury pool. So slush pool was expensive relative to the deal we got at the Bitfury pool. The thing always is that if you're aware of how it works, there's a luck factor that's involved. Essentially, every time you're sending you half rate, it's like you're trying to numbers to solve a combination on a lock.
And the larger your pool is, the more consistent that will be on a pro lata basis. And 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. So we were seeing some days where we were having exceptionally great luck and we were producing and then we were seeing some days where it was less luck. So 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.
However, we made the choice and we talked to Slush Pool and we were able to, think, to get negotiate a deal with them, a contract with them that made sense. But 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. And also, are we are there any plans to increase production capacity, like in new equipment, just getting bigger?
So I think that the opportunity for the company going forward is we have access to about 109 megawatts, which is a lot. And 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 like really it's more like leaks 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 blow from within. So rather than going out and having finding a new site is 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 a higher labor. The opportunity for Hut 8 is actually within the organic growth here with new equipment that I think could be a real game changer for the company go forward.
Okay. Thank you.
You're welcome.
And 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. But 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 if anybody wants to reach out. So 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.