Hut 8 Mining (HUT.V) will be the first cryptocurrency company to begin trading on the TSX on Tuesday, October 8.
This is an unusual milestone for cryptocurrency companies, which don’t normally meet all the requirements set forth by the TSX. The reason Hut does, of course, is because of the exemption clause set forth by the TSX, which they’ve dubbed the TSX Sandbox.
“Our move to the TSX, the senior public market of the TMX Group, is another significant step in our evolution to provide improved liquidity and enhanced public disclosure to investors,” said Andrew Kiguel, chief executive officer of Hut 8.
At first glance, it almost looks like this exemption was tailor made for cryptocurrency companies, which typically fail under three or more categories required to list on the big boards. Some of these include, for example, market capitalization, an experienced management team and adherence to accepted governance practices.
Hut 8 was required to disclose the following two risk factors to get provisional acceptance:
- The value of the Hut 8 shares relates directly to the value of the bitcoins held directly or indirectly by the company, and fluctuations in the price of bitcoins could materially and adversely affect an investment in the Hut 8 shares.
- The company has a limited history of operations and is in the early stage of development.
In reality, the sandbox is a probationary period. Hut 8 will get their first opportunity to leave the sandbox and play with the big kids after they deliver their prospectus (which includes a non-offering prospectus) and have no significant compliance issues for a year. If they have any issues, then they’re back in the sandbox for another twelve months.
The TSX may apply some extra conditions to facilitate the listing on an exception, discretionary basis. Some of these conditions may include:
- Enhanced disclosure requirements (see “Disclosure” below).
- Minimum public raise.
- Minimum market capitalization.
- Enhanced sponsorship or alternatively expertised support in the form of a report to TSX.
- Enhanced escrow requirements.
- Time limitation for listing or applicable waiver.
- Enhanced reporting requirements to TSX and/or the public.
What is Hut 8?
Hut 8 is a Canadian bitcoin mining company with two sites in Alberta. They have a North American partnership with the Bitfury Group, one of the world’s leading full-service hardware and software blockchain technology companies.
The company’s business model involves exposing investors to bitcoin without the hassle of actually buying the cryptocurrency. You don’t need a wallet, there’s no expensive computers to buy, and there’s no need to worry about your own security constraints. Buy shares and benefit from the company’s store of bitcoin
The company uses Blackbox Data Center AC, manufactured by Bitfury, for their mining.
Here’s what the Bitfury site has to say about the product:
“Bitfury BlockBox AC includes 176 air-cooled mining servers that deliver a total hashrate of 14 PH/s. The solution has a form-factor of a standard 40 feet High Cube freight container for ease of transportation and installation. Installation is simple and straightforward on any site that has sufficient power and internet available.”
If you’ve got some more time, here’s an eight-minute documentary on what Hut 8 is doing.
This is definitely a story to watch, because it could be the standard-setter for other emerging cryptocurrency mining companies looking to make the big jump.