Digihost(DGHI) - 2024 Q3 - Quarterly Report

Condensed Interim Consolidated Financial Statements Condensed Interim Consolidated Statements of Financial Position As of September 30, 2024, total assets decreased to $38.6 million and liabilities to $11.5 million, while digital currency holdings significantly increased to $4.9 million Consolidated Statement of Financial Position (Unaudited) | | As at Sep 30, 2024 ($) | As at Dec 31, 2023 ($) | | :--- | :--- | :--- | | Total current assets | $6,665,398 | $2,199,751 | | Total assets | $38,615,766 | $42,147,347 | | Total current liabilities | $6,133,800 | $5,264,102 | | Total liabilities | $11,521,213 | $12,900,608 | | Total shareholders' equity | $27,094,553 | $29,246,739 | - Digital currency holdings increased substantially from $822,884 at the end of 2023 to $4,899,670 as of September 30, 2024[2] - Property, plant and equipment, a major asset category, decreased from $33,386,684 to $24,932,714 during the nine-month period[2] Condensed Interim Consolidated Statements of Comprehensive Income (Loss) Total revenue more than doubled to $31.4 million for the nine months ended September 30, 2024, resulting in a net loss of $6.3 million, an improvement from 2023 Revenue for the Nine Months Ended September 30 | Revenue Source | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Digital currency mining | $10,317,937 | $13,552,443 | | Colocation services | $10,713,695 | - | | Sale of electricity | $6,283,028 | - | | Sale of energy | $4,050,063 | $1,779,131 | | Total revenue | $31,364,723 | $15,331,574 | Profitability for the Nine Months Ended September 30 | Metric | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Gross loss | $(5,936,139) | $(5,706,572) | | Net loss | $(6,333,643) | $(12,200,349) | | Basic and diluted loss per share | $(0.21) | $(0.43) | Condensed Interim Consolidated Statements of Cash Flows Net cash from operations sharply declined to $0.47 million for the nine months ended September 30, 2024, with investing activities using $3.2 million and financing providing $2.98 million Cash Flow Summary for the Nine Months Ended September 30 | Activity | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Net cash from operating activities | $471,574 | $5,787,224 | | Net cash used in investing activities | $(3,200,000) | $(7,045,134) | | Net cash from financing activities | $2,975,763 | $272,909 | | Net change in cash | $247,337 | $(985,001) | Condensed Interim Consolidated Statement of Changes in Shareholders' Equity Shareholders' equity decreased to $27.1 million as of September 30, 2024, driven by a $6.3 million net loss, partially offset by new share issuance - The company's deficit increased from $(26,497,297) to $(32,830,940) due to the net loss of $6,333,643 during the nine-month period[7] - The company issued 3,639,963 shares for cash, raising $4,005,457[7] Notes to Condensed Interim Consolidated Financial Statements Note 1: Nature of operations and going concern Digihost operates in cryptocurrency mining and energy supply, facing significant going concern doubts due to insufficient working capital of $531,598 - The company's business includes cryptocurrency mining and supplying energy from its power plant[9] - As of September 30, 2024, the company has working capital of $531,598, which is not sufficient to meet its requirements and business growth initiatives[12] - Material uncertainties exist that cast significant doubt on the Company's ability to continue as a going concern[13] Note 3: Digital currencies Digital currency holdings, solely Bitcoin, grew significantly to $4.9 million (77 BTC) as of September 30, 2024, driven by mining and service payments Digital Currency Holdings (Bitcoin) | | As at Sep 30, 2024 ($) | As at Dec 31, 2023 ($) | | :--- | :--- | :--- | | Bitcoin Value | $4,899,670 | $822,884 | Bitcoin Continuity (Nine Months Ended Sep 30, 2024) | Description | Number of Bitcoin | | :--- | :--- | | Balance, Dec 31, 2023 | 19 | | Mined for Digihost | 183 | | Received from colocation services | 68 | | Received for electricity sales | 33 | | Paid for services/loans/traded for cash | (232) | | Balance, Sep 30, 2024 | 77 | Note 4: Business combination In February 2023, the company acquired a 60 MW power plant in North Tonawanda, New York, for $4.75 million, expanding its infrastructure and computing power - On February 7, 2023, the Company completed the acquisition of a 60 MW power plant in North Tonawanda, New York for $4,749,666[31] Note 6: Property, plant and equipment Net property, plant, and equipment decreased from $33.4 million to $24.9 million due to $11.7 million in depreciation, outpacing $3.2 million in additions Net Carrying Value of PP&E | Asset Category | As at Sep 30, 2024 ($) | As at Dec 31, 2023 ($) | | :--- | :--- | :--- | | Data miners | $2,378,928 | $9,132,747 | | Equipment and other | $13,142,128 | $14,243,884 | | Power plant in use | $4,048,441 | $4,316,353 | | Total Net Carrying Value | $24,932,714 | $33,386,684 | Note 11: Loans payable Total loans payable significantly reduced to $148,290, including the full repayment of a 30 Bitcoin loan from Doge Capital LLC, a related party - A loan from Doge Capital LLC, a company controlled by the CEO, was fully repaid as of March 31, 2024. The loan was for the value of 30 Bitcoins ($691,500) and was repaid with 36 Bitcoins[42] Note 12: Mortgage payable The company fully repaid its mortgage of $389,064 during the period, reducing the balance to zero by September 30, 2024, upon maturity - The mortgage payable, with a beginning balance of $389,064, was fully repaid during the nine months ended September 30, 2024[45] Note 13: Warrant liabilities Warrant liabilities decreased from $5.46 million to $2.95 million due to expirations and a $2.38 million revaluation, partially offset by new issuances Changes in Warrant Liabilities | | Number of warrants | Amount ($) | | :--- | :--- | :--- | | Balance, Dec 31, 2023 | 9,098,514 | $5,456,749 | | Warrants expired | (3,955,993) | - | | Warrants issued | 3,636,363 | - | | Revaluation of warrant liabilities | - | $(2,380,351) | | Balance, Sep 30, 2024 | 8,778,884 | $2,947,441 | Note 14: Share capital On August 15, 2024, the company raised $4 million through a private placement, issuing 3,636,363 units at $1.10 each, comprising shares and warrants - On August 15, 2024, the Company completed a private placement of 3,636,363 units at $1.10 per unit for gross proceeds of $4 million[51] - Each unit comprises one subordinate voting share and one warrant, with each warrant entitling the holder to purchase one additional share at an exercise price of $2.00 for three years[51] Note 16: Stock options and restricted share units The company granted 1,186,000 RSUs with a three-year vesting period, leading to $1,266,772 in share-based compensation expense for the period - During the nine months ended September 30, 2024, the Company granted 1,186,000 RSUs to officers, directors, employees and advisors with a grant date fair value of $2,414,767[60] - For the nine months ended September 30, 2024, the Company recorded share-based compensation for RSUs of $1,266,772[60] Note 18: Related party transactions Key management personnel remuneration slightly increased to $1.90 million for the nine months ended September 30, 2024, mainly from salaries and share-based compensation Key Management Personnel Remuneration (Nine Months Ended Sep 30) | Category | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Professional fees | $92,982 | $154,705 | | Salaries | $647,089 | $611,621 | | Share based compensation | $1,162,394 | $1,079,249 | | Total | $1,902,465 | $1,845,575 | Note 21: Segmented reporting The company operates three US-based segments: cryptocurrency mining, energy sales, and colocation services, with colocation profitable at $10.7 million, offsetting losses in other segments Segment Performance (Nine Months Ended Sep 30, 2024) | Segment | Revenue ($) | Net Profit (Loss) ($) | | :--- | :--- | :--- | | Cryptocurrency mining | $10,317,937 | $(13,925,307) | | Sales of energy | $10,333,091 | $(3,122,031) | | Colocation services | $10,713,695 | $10,713,695 | | Total | $31,364,723 | $(6,333,643) | - All of the company's assets are geographically located in the United States as of September 30, 2024[70] Note 23: Financial instruments and risk management The company faces credit, liquidity, foreign currency, and digital currency risks, with liquidity being a major concern and Bitcoin price volatility impacting holdings by $489,967 - The company's primary financial risks are credit risk, liquidity risk, foreign currency risk, and digital currency risk[73][74][77][79] - A 10% increase or decrease in the market price of Bitcoin would result in a corresponding asset value change of $489,967 as of September 30, 2024[81]