Two prominent Bitcoin mining companies, Hut 8 and US Bitcoin, have announced a merger as detailed in a press release published on Feb. 7.

The combined company will have six sites

The merger will combine two of Hut 8’s sites in Canada with the four US Bitcoin sites in the US. The combined firm will use 825 megawatts of gross power across all six sites. The new company will be able to harness an estimated 5.6 exhashes per second (EH/s) of self-mining energy across five sites.

The variation in the number of sites included in those estimates is due to ongoing conflicts. Hut 8 has a third site in Ontario, Canada, which has apparently been halted due to a power dispute. Additionally, a US Bitcoin site in Niagara Falls, New York, is blocked in a dispute with the city, but remains operational.

Although today’s deal is described as a merger of equals in the press release, the new company will operate as “New Hut” or “Hut 8 Corp.” The merger will apparently remove all US Bitcoin related branding.

Although an agreement has been reached between executives and shareholders, a special meeting has yet to close the deal in the second quarter of this year.

Hut 8 will also provide US Bitcoin with guaranteed bridge financing of up to $6.5 million, but not until final loan documentation is complete.

The mining industry faces challenges

Hut 8 stock value is down 8.78% today. It is not clear if this is due to a negative response to the merger or to broader market challenges.

The mining industry is currently facing difficult circumstances due to the high cost of energy and the relatively low market value of Bitcoin. Hut 8 is known to be one of the companies affected by those challenges: Earlier this year, the company reported a drop in Bitcoin production in December as it sold power to its energy provider.

Nonetheless, Hut 8 held around 20% of Bitcoin reserved by publicly traded miners as of late 2022. It also managed to survive while competitor Core Scientific flopped, suggesting it is in a relatively strong position.

The merger is expected to enhance the value of the company. The deal is anticipated to roughly double Hut 8’s current market capitalization to $990 million, and its shares will be listed on both the Toronto Stock Exchange and Nasdaq.

Hut 8 shares will vest at a ratio of five to one, meaning the shares will be reduced in number but will also receive an increase in value.

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