Fidelity holds over 10% stake in bitcoin mining firm Hut 8

Asset management giant Fidelity holds about 10.6% stake in Canada-based publicly traded bitcoin mining firm Hut 8, according to a regulatory filing.

Hut 8 filed an alternative monthly reporting (AMR) with the Ontario Securities Commission on Friday, stating that Fidelity holds a mix of its common shares and common share purchase warrants, representing approximately 10.6% stake.

"Fidelity holds 8,396,138 Common Shares and 2,054,956 common share purchase warrants, as a result of which Fidelity is deemed to hold 10,451,094 Common Shares representing approximately 10.58% of the outstanding shares of that class," per the AMR filing. An AMR is filed by Canadian public companies to disclose their "eligible institutional investor" — in Hut 8's case, it is Fidelity.

The event that triggered Hut 8 to file the AMR is its recent underwritten public offering, which closed on June 25. Hut 8 issued 5,750,456 "units" (each unit consisted of one common share and one common share purchase warrant) at a price of $1.45 per unit for raising around $8.34 million. The firm raised funds to purchase a mix of MicroBT's Whatsminer M30S, M31S, and M31S+ to improve its bitcoin hash rate.

Fidelity's investment in Hut 8 is significant since the asset management giant is known to be mining bitcoin since 2014. Earlier this year, Fidelity was also hiring a bitcoin mining engineer to scale its operations.

A Fidelity spokesperson told The Block at the time: "Over the past couple of years, we have expanded our mining efforts to ramp up our knowledge of the space. We have explored optimal locations, hardware procurement, mining farm setups, and the economics of the mining industry as a whole."

Hut 8 began its operations in 2017 and is still a loss-making company. It suffered "a loss of $0.6 million in Adjusted EBITDA [earnings before interest, taxes, depreciation, and amortization], compared to Q1-2019 loss of $1.3 million." The firm also underwent a management change recently.

Hut 8 is listed on the Toronto Stock Exchange since March 2018, and its share price is down by over 65% since listing. It is currently trading at about $0.82 apiece and has a market capitalization of over $80 million, according to TradingView.