Cryptocurrency mining firm Hut 8 Mining Corp. has acquired the data center business of Canadian IT & network company TeraGo for C$30 million (US$24m).
The company this week said it had entered into a definitive agreement to purchase the cloud and colocation data center business from TeraGo Inc. totaling five data centers across Canada. Hut 8 said it is acquiring customers, employees, and product offerings as part of the acquisition.
“Once complete, the acquisition will establish Hut 8 as a leading high-performance computing platform, providing unique positioning for the company within the digital asset ecosystem,” the company said.
The acquired data center business spans from Toronto to Vancouver with over 36,000 square feet (3,350 sq m) of data center space. Hut 8 said existing power capacity totals 4.1MW, with a further 1.5MW of expansion capacity available within the Kelowna location. The deal is expected to close in the first quarter of 2022 and be funded via existing cash on the company's balance sheet.
"As a team of Bitcoin and blockchain bulls, we are thrilled with the transformative growth opportunity this investment provides Hut 8," said Jaime Leverton, Hut 8 CEO. "The acquisition of this complementary business diversifies Hut 8's operations with a discrete, steady cash flow, that is uncorrelated to digital asset mining. This acquisition also puts us at the forefront of the accelerated digitization of industry, establishing us as the bridge between traditional and nascent iterations of high-performance computing. Our unconventional approach to revolutionizing conventional assets serves to drive Hut 8's growth, innovation and market share in the high-performance computing, blockchain, and Web 3.0 industries."
Founded in 1999, Ontario-based TeraGo provides managed IT, network, and technology services including SD-WAN. It also a large holder of spectrum licenses in the country. Prior to today’s acquisition news, the company provided colocation and managed services from five data centers:
- A 29,000 sq ft, 3.5MW facility in Mississauga, Ontario with 6,420 sq ft of white space; the data center resides on the 2nd floor of a complex constructed by Blackberry and opened in 2015.
- A 30,000 sq ft, 6MW data center in Kelowna, British Columbia, with 15,000 sq ft of white space; it was taken over in 2015 as part of TeraGo’s acquisition of RackForce.
- Two facilities in Vancouver, British Columbia, totaling 1.6MW and 7,500 sq ft of white space
- A 15,340 sq ft data center in Vaughan, Ontario, offering 1MW and 7,500 sq ft of white space; the company took it over in 2013 as part of its acquisition of Data Centers Canada.
TeraGo senior executives and employees that are part of TeraGo's fixed wireless access and 5G business line will remain with TeraGo.
"TeraGo is uniquely positioned in Canada with our broad customer base for wireless services and our extensive millimeter wave spectrum licenses; this transaction will enable us to focus on leveraging these assets in our move to become Canada's leading provider of mmWave 5G private networks for businesses," said TeraGo's CEO Matthew Gerber. "We also believe that we found a great partner in Hut 8 as it has the capabilities to support our cloud and colocation customers for the long term, and provides opportunities for our two companies to deliver services to each other's customers going forward."
Stifel GMP acted as financial advisor to Hut 8 and Fasken Martineau DuMoulin LLP acted as its legal advisors. DH Capital is serving as financial advisor to TeraGo and InHaus Legal LLP & Norton Rose Fulbright Canada LLP are acting as its legal counsel.
Named after the building at Bletchley Park where Alan Turing created the Bombe, Toronto Stock Exchange-listed Hut 8 currently has two data mining centers located in Alberta, Canada, which it says total more than 100MW of capacity: a 67MW facility at Medicine Hat, and a 42MW facility in Drumheller. The company has bought 94 Open Air BlockBoxes from BitFury with 1.2-2 MW of power each
As with many crypto-mining companies, Hut 8 is chasing cheap energy to power its operations and is re-activating a mothballed gas power plant in Canada alongside Validus Power Corp. The companies broke ground on a new cryptomining data center at the North Bay Power Plant site last year; Hut 8 has a power purchase agreement with Validus for up to 100MW of power, with an initial 35MW due to come online in Q4, 2021.
Despite mining cryptocurency – an inherently wasteful practice – the company has pledged to achieve carbon neutrality for scope 1 & 2 GHG emissions by 2025.
