0001213900-22-015327
SEC filingDigihost turned profitable in FY2021, with revenue surging 602% to $24.95M, driven by expanded mining operations and higher bitcoin prices, marking a pivotal year of growth.
Digihost Technology Inc. reported a transformative fiscal year 2021, reversing a net loss of $5.19 million in 2020 to a net income of $0.29 million. Revenue surged 602% to $24.95 million, driven primarily by a 55% increase in bitcoins mined (520.63 vs 335) and a 4.4x rise in the average bitcoin price to approximately $47,430. Gross profit turned positive at $11.13 million (44.6% margin) compared to a gross loss of $3.99 million in 2020. Operating income was $2.92 million, a significant improvement from an operating loss of $5.57 million in the prior year.
Earnings per share improved to $0.01 basic and diluted from a loss of $0.44 per share in 2020. The company's profitability was aided by a $1.55 million gain on the sale of property, plant and equipment and a $0.53 million gain from changes in fair value of the Miner Lease Agreement liability, though these were partially offset by a $0.39 million loss on debt settlement. Share-based compensation expense increased dramatically to $7.80 million from $1.25 million, reflecting new option grants.
Total assets ballooned to $80.03 million from $16.52 million, driven largely by a $33.92 million investment in property, plant and equipment (new miners and infrastructure) and a $33.49 million digital currency inventory (up from $4.51 million). Cash increased to $0.92 million from $0.03 million. Liabilities increased to $9.82 million from $6.08 million, including $2.51 million in deferred tax liabilities. Shareholders' equity soared to $70.20 million from $10.44 million, primarily due to $50.22 million in net proceeds from private placements. Working capital (current assets minus current liabilities) improved to $30.70 million from $1.65 million.
Cash used in operating activities was $8.86 million (vs $2.25 million used in 2020), largely because the company retained most of its mined bitcoins rather than selling them — digital currencies held increased by $28.98 million. Investing activities consumed $34.72 million, mostly for miner purchases. Financing activities provided $44.47 million, mainly from equity raises ($50.22 million) partially offset by loan repayments ($3.98 million) and lease payments ($2.65 million). Free cash flow was negative given heavy capex, but the company maintains a strong liquidity position with $33.49 million in digital assets that could be liquidated.
Management attributed the strong revenue growth to increased hashrate (from 143 PH to 415 PH) and the Miner Lease Agreement with Northern Data. The company repaid all outstanding debt ($3.98 million) during the year. Looking ahead, Digihost plans to complete the acquisition of a 60MW power plant (pending regulatory approval), deploy the remainder of 9,900 miners from Northern Data, and execute co-mining agreements with Bit Digital that could add up to 2.4 EH of hashrate. The company also launched an at-the-market equity program (up to $250 million) and secured a $10 million revolving credit facility. Key risks include bitcoin price volatility, network difficulty, regulatory changes, and the need for additional financing to achieve growth objectives.
Digihost operates a single segment: cryptocurrency mining in upstate New York. The company mined 520.63 bitcoins in 2021 and held 632 BTC and 1,001 ETH at year-end. Custody is managed via Gemini Trust Company (hot wallet) and cold storage at US Bank. The company's energy mix is 90% zero-carbon sources. Goodwill of $1.35 million remained unimpaired. Share-based compensation totaled $7.80 million, and the company issued extensive stock options and warrants during the year. Key subsequent events include a $13.3 million private placement in March 2022, the $10 million revolving credit facility, and the purchase of 100 additional bitcoins.