−
|
We assigned professionals with specialized skills in distributed ledger technology, digital assets and cryptography;
|
−
|
We tested the design and effectiveness of internal controls related to the digital asset transactions and mining servers;
|
−
|
We obtained and evaluated the report attesting
that controls at the service organization (custodian) are operating effectively and tested the operating effectiveness of the complementary controls implemented by the Company;
|
−
|
We performed physical observation of the miners and tested their performance;
|
−
|
We conducted substantive analytical
procedures, with high degree of precision, which include tests of the accuracy and completeness of the underlying data, such as confirmation of certain data with third parties;
|
−
|
We traced digital assets received and recognized as revenue directly to the blockchain using our own node and obtained confirmations from
custodian;
|
−
|
We tested the value of digital assets received and recognized as revenue using the daily quoted price from a reputable source;
|
−
|
We assessed the adequacy of the Company’s disclosures in the consolidated financial statements about revenue from digital
assets mined.
|
−
|
We assigned professionals with specialized skills in blockchain, digital assets and cryptography;
|
−
|
We tested the design and effectiveness of
internal controls related to the digital assets;
|
−
|
We obtained and evaluated the report attesting
that controls at the service organization (custodian) are operating effectively and tested the operating effectiveness of the complementary controls implemented by the Company;
|
−
|
We obtained confirmation on digital assets with third parties;
|
−
|
We traced digital assets directly to the blockchain using our own node.
|
− |
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
|
− |
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control;
|
− |
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
|
− |
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern;
|
− |
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the
consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation;
|
− |
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express
an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
|
As at
|
Note
|
December 31, 2021
|
December 31, 2020
|
|||||||||
Assets
|
||||||||||||
Current assets
|
||||||||||||
Cash
|
$
|
|
$
|
|
||||||||
Accounts receivable and other
|
|
|
||||||||||
Digital assets
|
6
|
|
|
|||||||||
Deposits and prepaid expenses
|
5
|
|
|
|||||||||
|
|
|||||||||||
Non-current assets
|
||||||||||||
Plant and equipment
|
7
|
|
|
|||||||||
Deposits
|
5
|
|
|
|||||||||
Total assets
|
$
|
|
$
|
|
||||||||
Liabilities and shareholders’ equity
|
||||||||||||
Current liabilities
|
||||||||||||
Accounts payable and accrued liabilities
|
8
|
$
|
|
$
|
|
|||||||
Loans payable and other liabilities
|
9
|
|
|
|||||||||
|
|
|||||||||||
Non-current liabilities
|
||||||||||||
Loans payable and other liabilities
|
9
|
|
|
|||||||||
Warrant liability
|
11
|
|
|
|||||||||
Deferred tax liability
|
21
|
|
|
|||||||||
Total liabilities
|
|
|
||||||||||
Shareholders’ equity
|
||||||||||||
Share capital
|
12
|
|
|
|||||||||
Shares to be issued
|
12
|
|
|
|||||||||
Warrants
|
12
|
|
|
|||||||||
Contributed surplus
|
12
|
|
|
|||||||||
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||||||
AOCI - Unrealized gain on digital asset revaluation
|
|
|
||||||||||
Total shareholder’s equity
|
|
|
||||||||||
Total liabilities and shareholders’ equity
|
$
|
|
$
|
|
“Jaime Leverton”
|
“Joseph Flinn”
|
Director & Chief Executive Officer
|
Director
|
For the years ended December 31
|
Note
|
2021
|
2020
|
|||||||||
Revenue
|
17
|
$
|
|
$
|
|
|||||||
Cost of revenue
|
18
|
(
|
)
|
(
|
)
|
|||||||
Gross profit (loss)
|
|
(
|
)
|
|||||||||
General and administrative expenses
|
19
|
(
|
)
|
(
|
)
|
|||||||
Gain on disposition of digital assets
|
6
|
|
|
|||||||||
Revaluation of digital assets
|
|
|
||||||||||
Operating income (loss)
|
|
(
|
)
|
|||||||||
Foreign exchange gain (loss)
|
(
|
)
|
|
|||||||||
Finance expense
|
(
|
)
|
(
|
)
|
||||||||
Finance income
|
|
|
||||||||||
Loss on revaluation of warrant liability
|
(
|
)
|
|
|||||||||
Reversal of impairment
|
7
|
|
|
|||||||||
Other gain
|
|
|
||||||||||
Net (loss) income before tax
|
(
|
)
|
|
|||||||||
Deferred income tax (expense) recovery
|
21
|
(
|
)
|
|
||||||||
Net (loss) income
|
$
|
(
|
)
|
$
|
|
|||||||
Other comprehensive income
|
||||||||||||
Revaluation gain on digital assets, net of taxes
|
6
|
|
|
|||||||||
Total comprehensive income (loss)
|
$
|
(
|
)
|
$
|
|
|||||||
Earnings (loss) per share:
|
||||||||||||
Basic
|
10
|
$
|
(
|
)
|
$
|
|
||||||
Diluted
|
10
|
$
|
(
|
)
|
$
|
|
For the years ended December 31
|
2021
|
2020
|
||||||
Cash provided by (used in):
|
||||||||
Operating activities:
|
||||||||
Net income
|
$
|
(
|
)
|
$
|
|
|||
Change in non-cash operating items:
|
||||||||
Digital assets mined
|
(
|
)
|
(
|
)
|
||||
Digital assets traded for cash
|
|
|
||||||
Depreciation
|
|
|
||||||
Gain on disposition of digital assets
|
(
|
)
|
(
|
)
|
||||
Revaluation of digital assets
|
|
(
|
)
|
|||||
Share based payments
|
|
(
|
)
|
|||||
Loss on revaluation of warrant liability
|
|
|
||||||
Income tax (recovery) expense
|
|
(
|
)
|
|||||
Net finance (income) expense and other
|
(
|
)
|
|
|||||
Foreign exchange (loss) gain
|
|
(
|
)
|
|||||
Reversal of impairment
|
|
(
|
)
|
|||||
(
|
)
|
(
|
)
|
|||||
Net change in working capital (note 20)
|
|
|
||||||
Net cash (used in) provided by operating activities
|
(
|
)
|
|
|||||
Investing activities
|
||||||||
Purchase of mining servers and infrastructure
|
(
|
)
|
(
|
)
|
||||
Deposits
|
(
|
)
|
(
|
)
|
||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
Financing activities
|
||||||||
Repayment of loan payable
|
(
|
)
|
(
|
)
|
||||
Finance draws from equipment financing
|
|
|
||||||
Debt issuance cost
|
(
|
)
|
|
|||||
Repayment of equipment financing
|
(
|
)
|
|
|||||
Proceeds from issuance of common shares, net of issuance cost
|
|
|
||||||
Exercise of warrants and options
|
|
|
||||||
Finance income received
|
|
|
||||||
Finance expense paid
|
(
|
)
|
(
|
)
|
||||
Payment of lease obligations
|
(
|
)
|
(
|
)
|
||||
Net cash provided by financing activities
|
|
|
||||||
Increase (decrease) in cash
|
|
(
|
)
|
|||||
Cash, beginning of year
|
|
|
||||||
Effect of movement in exchange rates on cash held in foreign currencies
|
(
|
)
|
(
|
)
|
||||
Cash, end of year
|
$
|
|
$
|
|
• |
Derecognition of broker warrants upon expiry of $
|
• |
Settlement of accounts payable in common shares valued at $
|
For the year ended
|
Number of
shares
|
Share capital
|
Shares to
be issued
|
Warrants
|
Contributed
surplus
|
Accumulated
deficit
|
Accumulated
other
comprehensive
income
|
Total
|
||||||||||||||||||||||||
Balance, December 31, 2020
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
||||||||||||||||
Net loss
|
-
|
|
-
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||||||||
Other comprehensive income
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
Shares issued for equity raises
|
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
Shares issued on vesting of RSU
|
|
|
-
|
|
(
|
)
|
|
|
|
|||||||||||||||||||||||
Shares issued on vesting of DSU
|
|
|
-
|
|
(
|
)
|
|
|
|
|||||||||||||||||||||||
Shares issued on exercise of options
|
|
|
-
|
|
(
|
)
|
|
|
|
|||||||||||||||||||||||
Shares issued on exercise of warrants
|
|
|
-
|
(
|
)
|
|
|
|
|
|||||||||||||||||||||||
Shares issued on exercise of warrant liability
|
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
Shares issued on settlement of accounts payable
|
|
|
(
|
)
|
|
|
|
|
|
|||||||||||||||||||||||
Expiry of broker warrants
|
-
|
|
-
|
(
|
)
|
|
|
|
|
|||||||||||||||||||||||
Share based payments
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
Share based payments tax withholding
|
-
|
|
-
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||||||||
Balance, December 31, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
For the year ended
|
Number of
shares
|
Share capital
|
Shares to
be issued
|
Warrants
|
Contributed
surplus
|
Accumulated
deficit
|
Accumulated
other
comprehensive
income
|
Total
|
||||||||||||||||||||||||
Balance, December 31, 2019
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
||||||||||||||||
Net income
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
Other comprehensive income
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
Shares issued for equity raises
|
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
Shares issued on exercise of RSU
|
|
|
-
|
|
(
|
)
|
|
|
|
|||||||||||||||||||||||
Shares issued on exercise of warrants
|
|
|
-
|
(
|
)
|
|
|
|
|
|||||||||||||||||||||||
Shares issued on exercise of options
|
|
|
-
|
|
(
|
)
|
|
|
|
|||||||||||||||||||||||
Shares to be issued
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Share based payments
|
-
|
|
-
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||||||||
Share based payments withholding
|
-
|
|
-
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||||||||
Expiry of broker warrants
|
-
|
|
-
|
(
|
)
|
|
|
|
|
|||||||||||||||||||||||
Loss on retirement of Bitfury debt
|
-
|
|
-
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||||||||
Balance, December 31, 2020
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
1.
|
Nature of presentation:
|
2. |
Basis of presentation:
|
(a) |
Statement of compliance
|
(b) |
Application of IFRS
|
(c) |
Basis of presentation
|
(d) |
Consolidation
|
% Ownership
|
|
Hut 8 Holdings Inc.
|
|
(e) |
Functional and presentation currency
|
(f) |
Use of estimates and judgements
|
(a)
|
Taxes
|
|
(b) |
Impairment of non-financial assets
|
(c) |
Revenue recognition and value of digital assets
|
(d) |
Warrant liability
|
(e) |
Plant and equipment
|
(f) |
Functional and presentation currency
|
3. |
Significant accounting policies:
|
(i) |
Transactions in foreign currency
|
(ii) |
Cash
|
(iii) |
Revenue recognition
|
- |
Identify the contract with a customer;
|
- |
Identify the performance obligations in the contract;
|
- |
Determine the transaction price, which is the total consideration provided by the customer;
|
- |
Allocate the transaction price among the performance obligations in the contract based on their relative fair values; and
|
- |
Recognize revenue when (or as) the Company satisfies a performance obligation.
|
a.
|
Revenues from digital asset mining
|
b. |
Revenues from hosting
|
(iv) |
Plant and equipment
|
Infrastructure assets
|
|
Mining servers
|
|
(v) |
Digital assets
|
(vi) |
Financial Instruments
|
(a) |
Recognition and initial measurement of financial assets:
|
(b) |
Classification and subsequent measurement of financial assets:
|
(c) |
Financial liabilities: Classification, subsequent measurement, and gains and losses:
|
(d) |
Derecognition:
|
(e) |
Impairment
|
(f) |
Fair value of financial instruments:
|
◾ |
Level 1 ‐ quoted prices (unadjusted) in active markets for identical assets or liabilities;
|
◾ |
Level 2 ‐ inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; and
|
◾ |
Level 3 ‐ inputs for the asset or liability that are not based on observable market data.
|
(vii) |
Impairment of non-financial asset
|
(viii) |
Leases
|
(ix) |
Non-monetary transactions
|
(x) |
Earnings per share
|
(xi) |
Share capital
|
(xii) |
Warrants
|
(xiii) |
Contributed Surplus
|
(xiv) |
Share based transactions
|
(xv) |
Share based compensation plan
|
(xvi) |
Income taxes
|
(xvii) |
Provisions
|
(xviii) |
Segment reporting
|
(xix) |
Standards that are not yet effective and have not been adopted early by the Company
|
4.
|
Change in estimate
|
(in thousands)
|
2021
|
2022
|
2023
|
2024
|
2025
|
2026
|
2027
|
2028
|
2029
|
|||||||||||||||||||||||||||
(Decrease) increase in depreciation expense
|
(
|
)
|
(
|
)
|
|
|
|
|
|
|
|
5.
|
Deposits and prepaid expenses
|
December 31, 2021
|
December 31, 2020
|
|||||||
Current
|
||||||||
Prepaid insurance
|
$
|
|
$
|
|
||||
Prepaid electricity
|
|
|
||||||
Miscellaneous deposits
|
|
|
||||||
Total current deposits and prepaid expenses
|
$
|
|
$
|
|
||||
Non-current
|
||||||||
Deposits for plant and equipment purchase
|
$
|
|
$
|
|
||||
Deposits related to power purchase agreement
|
|
|
||||||
Deposits related to operating site development
|
|
|
||||||
Deposits related to electricity supply under electricity supply agreement(v)
|
|
|
||||||
Other
|
|
|
||||||
Total non-current deposits
|
$
|
|
$
|
|
6.
|
Digital Assets
|
Amount
|
Number of digital assets
|
|||||||||||||||
As at
|
December 31,
2021
|
December 31,
2020
|
December 31,
2021
|
December 31,
2020
|
||||||||||||
Digital assets - held in custody
|
$
|
|
$
|
|
|
|
||||||||||
Digital assets loaned or pledged
|
||||||||||||||||
Lending arrangements(i)
|
|
|
|
|
||||||||||||
Pledged as collateral(ii)
|
|
|
|
|
||||||||||||
Total digital assets
|
$
|
|
$
|
|
|
|
(i) |
|
(ii) |
|
Amount
|
Number of Bitcoin
|
|||||||
Total digital assets, December 31, 2019
|
$
|
|
|
|||||
Bitcoin mined
|
|
|
||||||
Bitcoin traded for cash
|
(
|
)
|
(
|
)
|
||||
Bitcoin paid for services
|
(
|
)
|
(
|
)
|
||||
Gain on disposition of digital assets
|
|
-
|
||||||
Revaluation of digital assets
|
|
-
|
||||||
Total digital assets, December 31, 2020
|
$
|
|
|
|||||
Bitcoin mined
|
|
|
||||||
Bitcoin traded for cash
|
(
|
)
|
(
|
)
|
||||
Gain on disposition of digital assets
|
|
-
|
||||||
Revaluation of digital assets
|
|
-
|
||||||
Total digital assets, December 31, 2021
|
$
|
|
|
7.
|
Plant and equipment
|
Infrastructure
|
Mining servers
|
Right-of-use
assets
|
Total
|
|||||||||||||
Cost
|
||||||||||||||||
Balance, January 1, 2020
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Additions
|
|
|
|
|
||||||||||||
Expiration of lease
|
|
|
(
|
)
|
(
|
)
|
||||||||||
Reversal of prior-year impairment
|
|
|
|
|
||||||||||||
Balance, December 31, 2020
|
|
|
|
|
||||||||||||
Additions
|
|
|
|
|
||||||||||||
Balance, December 31, 2021
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Accumulated Depreciation
|
||||||||||||||||
Balance, January 1, 2020
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Depreciation
|
|
|
|
|
||||||||||||
Expiration of lease
|
|
|
(
|
)
|
(
|
)
|
||||||||||
Accretion expense
|
|
|
|
|
||||||||||||
Balance, December 31, 2020
|
|
|
|
|
||||||||||||
Depreciation
|
|
|
|
|
||||||||||||
Balance, December 31, 2021
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Net book value as of
|
||||||||||||||||
December 31, 2020
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
December 31, 2021
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2021
|
December 31, 2020
|
|||||||
Starting Bitcoin price
|
$
|
|
$
|
|
||||
Starting network difficulty
|
|
|
||||||
Discount rate
|
|
%
|
|
%
|
||||
Monthly Bitcoin price growth
|
|
%
|
|
%
|
||||
Difficulty growth rate
|
|
%
|
|
%
|
8.
|
Accounts payable and accrued liabilities
|
December 31, 2021
|
December 31, 2020
|
|||||||
Accounts payable
|
$
|
|
$
|
|
||||
Other accrued liabilities
|
|
|
||||||
Total accounts payable and accrued liabilities
|
$
|
|
$
|
|
9.
|
Loans payable and other liabilities
|
December 31, 2021
|
December 31, 2020
|
|||||||
Loans payable(i)
|
$
|
|
$
|
|
||||
Lease liabilities(ii)
|
|
|
||||||
Total loans payable and other liabilities
|
$
|
|
$
|
|
||||
Current portion
|
$
|
|
$
|
|
||||
Non-current portion
|
|
|
||||||
Total loans payable and other liabilities
|
$
|
|
$
|
|
(i) |
Loans Payable
|
(ii) |
Lease liabilities
|
December 31, 2021
|
December 31, 2020
|
|||||||
<1 year
|
$
|
|
$
|
|
||||
1-2 year
|
|
|
||||||
3-5 year
|
|
|
||||||
>5 year
|
|
|
||||||
Total
|
|
|
||||||
Discounting
|
(
|
)
|
(
|
)
|
||||
Lease Liabilities
|
$
|
|
$
|
|
December 31, 2021
|
December 31, 2020
|
|||||||
Opening balance
|
$
|
|
$
|
|
||||
Payment of lease obligations
|
(
|
)
|
(
|
)
|
||||
Interest expense
|
|
|
||||||
Addition
|
|
|
||||||
Modification of lease
|
|
(
|
)
|
|||||
Ending balance
|
$
|
|
$
|
|
10.
|
Earnings per share
|
For the year ended December 31
|
2021
|
2020
|
||||||
Net (loss) income attributable to common shareholders
|
$
|
(
|
)
|
$
|
|
|||
Weighted average number of common shares:
|
||||||||
January 1
|
|
|
||||||
Weighted average number of common shares issued
|
|
|
||||||
Basic number of common shares
|
|
|
||||||
Dilutive effect of unvested LTIP awards(i)
|
|
|
||||||
Diluted number of common shares issued
|
|
|
||||||
Earnings per share:
|
||||||||
Basic
|
$
|
(
|
)
|
$
|
|
|||
Diluted
|
$
|
(
|
)
|
$
|
|
(i) |
|
11.
|
Warrant liability
|
Private Placement
|
Public Bought Deal
|
|||||||
Closing date
|
|
|
||||||
Warrants issued
|
|
|
||||||
Warrants strike price
|
$
|
|
$
|
|
||||
Fair value of warrants issued
|
$
|
|
$
|
|
||||
Warrants term
|
|
|
||||||
Warrant valuation assumptions
|
||||||||
Valuation model
|
|
|
||||||
Expected life
|
|
|
||||||
Risk-free rate
|
|
%
|
|
%
|
||||
Volatility
|
|
%
|
|
%
|
||||
Dividend yield
|
|
%
|
|
%
|
Number of warrants
|
Weighted average
exercise price
|
|||||||
Balance, December 31, 2020
|
|
$
|
|
|||||
Issued
|
|
|
||||||
Exercised
|
(
|
)
|
|
|||||
Balance, December 31, 2021
|
|
$
|
|
Private Placement
|
Public Bought Deal
|
|||||||
Fair value of warrants exercised
|
$
|
|
$
|
|
||||
Warrant valuation assumptions
|
||||||||
Expected life
|
|
|
||||||
Risk-free rate
|
|
%
|
|
%
|
||||
Volatility
|
|
%
|
|
%
|
||||
Dividend yield
|
|
%
|
|
%
|
12.
|
Equity
|
(a) |
Share Capital
|
Number of shares
|
Amount
|
|||||||
Balance, January 1, 2020
|
|
$
|
|
|||||
Shares issued for RSUs(i)
|
|
|
||||||
Shares issued for exercise of options
|
|
|
||||||
Shares issued for equity raises, net of issuance cost(ii)
|
|
|
||||||
Shares issued for exercise of warrants
|
|
|
||||||
Balance, December 31, 2020
|
|
$
|
|
|||||
Shares issued for services(iii)
|
|
|
||||||
Shares issued for RSUs and DSUs(iv)
|
|
|
||||||
Shares issued for exercise of options
|
|
|
||||||
Shares issued for equity raises, net of issuance cost ($
|
|
|
||||||
Shares issued on exercise of warrant liability
|
|
|
||||||
Shares issued for exercise of warrants
|
|
|
||||||
Balance, December 31, 2021
|
|
$
|
|
(i) |
|
(ii) |
|
(iii) |
|
(iv) |
|
Private Placement
|
Public Bought Deal
|
Public Offering
|
||||||||||
Closing date
|
|
|
|
|||||||||
Gross proceeds
|
$
|
$
|
$
US$
|
|||||||||
Common shares issued
|
|
|
|
|||||||||
Fair value of the shares issued
|
$
|
|
$
|
|
$
|
|
||||||
Broker warrants issued
|
|
|
|
|||||||||
Fair value of broker warrants issued
|
$
|
|
$
|
|
$
|
|
||||||
Broker warrants strike price
|
$
|
|
$
|
|
$
|
|
||||||
Broker warrants term
|
|
|
|
|||||||||
Warrant valuation assumptions
|
||||||||||||
Valuation model
|
|
|
|
|||||||||
Expected life
|
|
|
|
|||||||||
Risk-free rate
|
|
%
|
|
%
|
|
%
|
||||||
Volatility
|
|
%
|
|
%
|
|
%
|
||||||
Dividend yield
|
|
%
|
|
%
|
|
%
|
||||||
Commissions and fees incurred
|
$
|
|
$
|
|
$
|
|
||||||
Commissions and fees unpaid – as at December 31, 2021
|
$
|
$
|
$
|
(b)
|
Warrants
|
Number of
warrants
|
Weighted average
exercise price
|
|||||||
Balance, January 1, 2020
|
|
$
|
|
|||||
Issued
|
|
|
||||||
Exercised
|
(
|
)
|
|
|||||
Expired
|
(
|
)
|
|
|||||
Balance, December 31, 2020
|
|
$
|
|
|||||
Issued(i)
|
|
|
||||||
Expired(ii)
|
(
|
)
|
|
|||||
Exercised(iii)
|
(
|
)
|
|
|||||
Balance, December 31, 2021
|
|
$
|
|
(i) |
|
(ii) |
|
(iii) |
|
Strike price
|
Number
|
Weighted average
remaining contractual
life (month)
|
Expiry date
|
||||||||||
Public offering warrants
|
$
|
|
|
|
|
||||||||
Bought deal warrants
|
$
|
|
|
|
|
||||||||
Private placement warrants
|
$
|
|
|
|
|
||||||||
Broker warrants
|
$
|
|
|
|
|
||||||||
|
|
|
|
Strike price
|
Number
|
Weighted average remaining
contractual life (month)
|
Expiry date
|
|||||||
$
|
|
|
|
|||||||
$
|
|
|
|
|||||||
$
|
|
|
|
|||||||
$
|
|
|
(c) |
Incentive plan
|
Number of
options
|
Weighted average
exercise price
|
|||||||
Balance, January 1, 2020
|
|
$
|
|
|||||
Forfeiture
|
(
|
)
|
|
|||||
Exercised
|
(
|
)
|
|
|||||
Balance, December 31, 2020
|
|
|
||||||
Granted
|
|
|
||||||
Forfeiture
|
(
|
)
|
|
|||||
Exercised
|
(
|
)
|
|
|||||
Options outstanding, December 31, 2021
|
|
$
|
|
|||||
Options exercisable, December 31, 2021
|
|
$
|
|
Exercise price –
outstanding
|
Number of options
outstanding
|
Number of
options
exercisable
|
Weighted average
exercise price
|
Weighted average
remaining life (months)
|
||||||||||||||
$
|
|
|
|
$
|
|
|
||||||||||||
|
|
|
|
|
||||||||||||||
|
|
|
|
|
||||||||||||||
|
|
$
|
|
|
Exercise price –
outstanding
|
Number of options
outstanding
|
Number of
options
exercisable
|
Weighted average
exercise price
|
Weighted average
remaining life (months)
|
||||||||||||||
$
|
|
|
|
$
|
|
|
||||||||||||
|
|
|
|
|
||||||||||||||
|
|
|
|
|
||||||||||||||
|
|
|
|
|
||||||||||||||
|
|
$
|
|
|
RSUs
|
DSUs
|
|||||||
Balance, January 1, 2020
|
|
|
||||||
Granted
|
|
|
||||||
Issued
|
(
|
)
|
|
|||||
Forfeited
|
(
|
)
|
|
|||||
Balance, December 31, 2020
|
|
|
||||||
Granted
|
|
|
||||||
Issued
|
(
|
)
|
(
|
)
|
||||
Forfeited
|
(
|
)
|
|
|||||
Balance, December 31, 2021
|
|
|
13.
|
Related party transactions
|
For the year ended December 31
|
2021
|
2020
|
||||||
Salary, fees, and other short-term benefits (i)
|
$
|
|
$
|
|
||||
Share based payments
|
|
|
||||||
$
|
|
$
|
|
(i) |
|
14.
|
Capital Management
|
15.
|
Financial instruments and risk management
|
Level 1:
|
Unadjusted quoted prices in active markets for identical assets and liabilities;
|
Level 2:
|
Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly from observable market data; and
|
Level 3:
|
Inputs that are not based on observable market data.
|
December 31, 2021
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Fair value carried through profit and loss
|
||||||||||||||||
Warrant Liability
|
|
|
|
|
||||||||||||
Deposits
|
|
|
|
|
||||||||||||
December 31, 2020
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Fair value through profit and loss
|
||||||||||||||||
Deposits
|
|
|
|
|
16.
|
Digital assets and risk management
|
(a) |
Digital assets
|
(b) |
Financial risk management:
|
Contractual cash
flows
|
Within 1 year
|
1 to 2 years
|
2 to 5 years
|
5+ years |
||||||||||||||||
Accounts payable and accrued liabilities excluding salaries payable
|
$
|
|
$
|
|
$
|
|
$
|
|
$ | |||||||||||
Loans payable and interest
|
|
|
|
|
||||||||||||||||
Lease commitments |
$
|
|
$
|
|
$
|
|
$
|
|
As at
|
December 31, 2021
|
December 31, 2020
|
||||||
Cash
|
$
|
|
$
|
|
||||
Accounts receivable
|
|
|
||||||
Deposits (non-current)
|
|
|
||||||
Accounts payable
|
(
|
)
|
(
|
)
|
||||
Loans payable
|
(
|
)
|
(
|
)
|
17.
|
Revenue
|
For the years ended December 31
|
2021
|
2020
|
||||||
Digital assets mined
|
$
|
|
$
|
|
||||
Hosting fees
|
|
|
||||||
Total revenue
|
$
|
|
$
|
|
18.
|
Costs of revenue
|
For the years ended December 31
|
2021
|
2020
|
||||||
Site operating costs
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Depreciation
|
(
|
)
|
(
|
)
|
||||
Total cost of revenue
|
$
|
(
|
)
|
$
|
(
|
)
|
19.
|
General and administrative expenses
|
For the years ended December 31
|
2021
|
2020
|
||||||
Share based payments
|
$
|
(
|
)
|
$
|
|
|||
Professional fees
|
(
|
)
|
(
|
)
|
||||
Salary and benefits
|
(
|
)
|
(
|
)
|
||||
General, office and other
|
(
|
)
|
(
|
)
|
||||
Insurance expense
|
(
|
)
|
(
|
)
|
||||
Investor relations and regulatory
|
(
|
)
|
(
|
)
|
||||
Sales tax expense
|
(
|
)
|
(
|
)
|
||||
Total general and administrative expense
|
$
|
(
|
)
|
$
|
(
|
)
|
20.
|
Supplementary cash flow information
|
For the years ended December 31
|
2021
|
2020
|
||||||
Accounts receivable and other
|
$
|
|
$
|
(
|
)
|
|||
Prepaid expenses
|
(
|
)
|
|
|||||
Accounts payable and accrued liabilities
|
|
|
||||||
Net change in working capital
|
$
|
|
$
|
|
21.
|
Income taxes
|
For the years ended December 31
|
2021
|
2020
|
||||||
Current tax expense
|
$
|
|
$
|
|
||||
Deferred tax (recovery) expense
|
|
(
|
)
|
|||||
Total income tax expense (recovery)
|
$
|
|
$
|
(
|
)
|
For the 12 months ended December 31
|
2021
|
2020
|
||||||
Origination and reversal of temporary difference
|
$
|
|
$
|
|
||||
Change in unrecognized tax losses and tax benefits
|
(
|
)
|
(
|
)
|
||||
Change in prior year estimate and other
|
|
(
|
)
|
|||||
Total income tax expense (recovery)
|
$
|
|
$
|
(
|
)
|
For the years ended December 31
|
2021
|
2020
|
||||||
Net (loss) income before recovery of income taxes
|
$ | ( |
) | $ | ||||
Canadian statutory tax rate
|
% | % | ||||||
Expected income tax (recovery) expense
|
( |
) | ||||||
Different tax rate for subsidiary and other adjustments
|
( |
) | ||||||
Loss on revaluation on warrant liability
|
||||||||
Non-deductible expenses
|
||||||||
True up to filing adjustments
|
( |
) | ||||||
Utilization of losses not previously recognized
|
( |
) | ||||||
Change in tax benefits not recognized
|
( |
) | ( |
) | ||||
Income tax expense (recovery)
|
$ | $ | ( |
) |
For the years ended December 31
|
2021
|
2020
|
||||||
Revaluation gain on digital assets
|
$ | $ | ||||||
Tax recovery (expense)
|
( |
) | ||||||
Revaluation gain on digital assets, net of tax
|
$ | $ |
For the years ended December 31
|
2021
|
2020
|
||||||
Balance, beginning
|
$
|
|
$
|
|
||||
Deferred tax recovery (expense) recorded in profit
|
(
|
)
|
|
|||||
Movement recognized in other comprehensive income
|
|
(
|
)
|
|||||
Net deferred tax liability
|
$
|
(
|
)
|
$
|
|
As at
|
December 31, 2021
|
December 31, 2020
|
||||||
Non-capital losses
|
$
|
|
$
|
|
||||
Lease liabilities
|
|
|
||||||
Capital losses
|
|
|
||||||
Capital loan
|
(
|
)
|
(
|
)
|
||||
Plant and equipment
|
(
|
)
|
|
|||||
Digital assets
|
(
|
)
|
(
|
)
|
||||
Right-of-use asset
|
(
|
)
|
(
|
)
|
||||
Net deferred tax liability
|
$
|
(
|
)
|
$
|
|
22.
|
Contingencies
|
23.
|
Subsequent event
|