0001213900-23-067434.txt : 20230815 0001213900-23-067434.hdr.sgml : 20230815 20230815070029 ACCESSION NUMBER: 0001213900-23-067434 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20230815 FILED AS OF DATE: 20230815 DATE AS OF CHANGE: 20230815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Digihost Technology Inc. CENTRAL INDEX KEY: 0001854368 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE SERVICES [6199] IRS NUMBER: 000000000 STATE OF INCORPORATION: A1 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-40527 FILM NUMBER: 231173189 BUSINESS ADDRESS: STREET 1: 18 KING ST. E., STE. 902 CITY: TORONTO STATE: A6 ZIP: M5C1C4 BUSINESS PHONE: 9172426549 MAIL ADDRESS: STREET 1: 18 KING ST. E., STE. 902 CITY: TORONTO STATE: A6 ZIP: M5C1C4 6-K 1 ea183577-6k_digihost.htm REPORT OF FOREIGN PRIVATE ISSUER

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2023

Commission File Number: 001-40527

DIGIHOST TECHNOLOGY INC.

(Exact Name of Registrant as Specified in Its Charter)

18 King Street East, Suite 902, Toronto, Ontario, Canada M5C 1C4

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

On August 14, 2023, the Registrant filed with the Canadian Securities Regulatory Authorities on the System for Electronic Data Analysis and Retrieval (SEDAR) condensed interim consolidated financial statements for the three and six months ended June 30, 2023, management’s discussion and analysis for the three and six months ended June 30, 2023 and certifications of each of its CEO and CFO, copies of which are attached hereto as Exhibits 99.1, 99.2, 99.3 and 99.4, respectively, and are each hereby incorporated by reference as exhibits to the Registrant Statement on Form F-10 of Digihost Technology Inc. (File No. 333-263255).

On August 15, 2023, the Registrant filed with the Canadian Securities Regulatory Authorities on SEDAR a material change report that includes a copy of a press release, a copy of which is attached hereto as Exhibit 99.5, and which is incorporated by reference as an exhibit to the Registrant Statement on Form F-10 of Digihost Technology Inc. (File No. 333-263255).

Exhibits

Exhibit No.		Description
99.1		Condensed Interim Consolidated Financial Statements for the three and six months ended June 30, 2023
99.2		Management’s Discussion & Analysis for the three and six months ended June 30, 2023
99.3		CEO Certification of Interim Filings - Interim Certificate dated August 14, 2023
99.4		CFO Certification of Interim Filings - Interim Certificate dated August 14, 2023
99.5		Material Change Report dated August 15, 2023

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

DIGIHOST TECHNOLOGY INC.

By:	/s/ Michel Amar
	Name:	Michel Amar
	Title:	Chief Executive Officer

Date: August 15, 2023

EX-99.1 2 ea183577ex99-1_digihost.htm CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023

Exhibit 99.1

DIGIHOST TECHNOLOGY INC.

CONDENSED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED

JUNE 30, 2023 AND 2022

(EXPRESSED IN UNITED STATES DOLLARS)

(UNAUDITED)

Digihost Technology Inc.

Condensed Interim Consolidated Statements of Financial Position

(Expressed in United States Dollars) (Unaudited)

	As at June 30, 2023			As at December 31, 2022
ASSETS
Current assets
Cash	$	292,100		$	1,850,622
Digital currencies (note 3)		357,432			2,800,657
Amounts receivable and other assets (note 5)		2,581,344			1,234,175
Income tax receivable		168,337			244,399
Total current assets		3,399,213			6,129,853
Property, plant and equipment (note 6)		40,302,073			41,811,233
Right-of-use assets (note 7)		2,452,281			2,538,447
Intangible asset (note 8)		1,368,868			1,314,028
Goodwill (note 9)		2,496,612			-
Promissory note receivable (note 10)		800,000			806,000
Total assets	$	50,819,047		$	52,599,561
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	3,953,348		$	2,345,175
Amount owing to Northern Data, NY LLC (note 3 and 6)		-			322,099
Lease liabilities (note 11)		106,921			99,957
Loan payable (note 12)		761,448			-
Mortgage payable (note 13)		505,396			488,062
Total current liabilities		5,327,113			3,255,293
Deposits payable		1,227,178			511,000
Lease liabilities (note 11)		392,294			447,514
Mortgage payable (note 13)		131,957			389,065
Loan payable (note 12)		475,366			-
Warrant liabilities (note 14)		5,950,773			821,697
Total liabilities		13,504,681			5,424,569
Shareholders’ equity
Share capital (note 15)		41,876,359			39,602,634
Contributed surplus		14,731,209			15,675,828
Cumulative translation adjustment		(2,279,340	)		(3,491,583	)
Deficit		(17,013,862	)		(4,611,887	)
Total shareholders’ equity		37,314,366			47,174,992
Total liabilities and shareholders’ equity	$	50,819,047		$	52,599,561

Nature of operations and going concern (note 1)

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

- 1 -

Digihost Technology Inc.

Condensed Interim Consolidated Statements of Comprehensive Income

(Expressed in United States Dollars) (Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Revenue from digital currency mining (note 3)	$	5,356,235		$	7,460,595		$	9,165,301		$	14,772,937
Revenue from sale of energy		513,929			-			809,210			-
Total revenue		5,870,164			7,460,595			9,974,511			14,772,937
Cost of digital currency mining
Cost of power		(2,664,872	)		(1,185,376	)		(4,898,118	)		(2,811,692	)
Other production costs		(357,878	)		(594,014	)		(541,395	)		(1,111,025	)
Depreciation and amortization		(3,065,888	)		(2,672,621	)		(6,288,568	)		(4,204,219	)
Miner lease and hosting agreement (note 3)		-			(2,148,291	)		(638,689	)		(5,204,416	)
Cost of power plant operations		(513,438	)		-			(783,400	)		-
Gross profit (loss)		(731,912	)		860,293			(3,175,659	)		1,441,585

Expenses
Office and administrative expenses		(814,061	)		(994,536	)		(1,281,433	)		(1,599,598	)
Professional fees		(434,684	)		(448,538	)		(808,418	)		(1,037,087	)
Regulatory fees		(6,525	)		(65,605	)		(89,789	)		(209,986	)
Gain on sale of property, plant and equipment		-			-			-			2,340,658
Foreign exchange gain (loss)		(1,275,019	)		1,813,076			(1,322,382	)		1,042,880
Gain (loss) on sale of digital currencies (note 3)		(58,707	)		(12,174,435	)		814,564			(12,174,435	)
Change in fair value of loan payable		(55,661	)		-			(220,457	)		-
Other income		83,480			72,472			90,313			156,679
Change in fair value of amount owing for Miner Lease Agreement		(42,449	)		(1,274,038	)		(267,551	)		(894,973	)
Share based compensation (note 17)		(481,667	)		(873,193	)		(883,163	)		(1,637,583	)
Loss on revaluation of digital currencies (note 3)		(64,109	)		(2,948,364	)		(53,666	)		(2,948,364	)
Operating loss		(3,881,314	)		(16,032,868	)		(7,197,641	)		(15,520,224	)
Revaluation of warrant liabilities (note 14)		596,960			16,448,338			(5,020,344	)		33,734,693
Net financial expenses (note 20)		(24,582	)		(153,829	)		(183,990	)		(238,204	)
Net income (loss) before income taxes		(3,308,936	)		261,641			(12,401,975	)		17,976,265
Deferred tax recovery (expense)		-			3,315,613			-			2,946,842
Net income (loss) for the period		(3,308,936	)		3,577,254			(12,401,975	)		20,923,107

Other comprehensive income (loss)
Items that will be reclassified to net income Foreign currency translation adjustment		1,162,760			(1,818,950	)		1,212,243			(871,751	)
Items that will not be reclassified to net income Revaluation of digital currencies, net of tax		-			(3,085,863	)		-			(3,706,624	)
Total comprehensive loss for the period	$	(2,146,176	)	$	(1,327,559	)	$	(11,189,732	)	$	16,344,732
Basic income (loss) per share (note 18)	$	(0.12	)	$	0.13		$	(0.44	)	$	0.79
Diluted income (loss) per share (note 18)	$	(0.12	)	$	0.13		$	(0.44	)	$	0.79

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

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Digihost Technology Inc.

Condensed Interim Consolidated Statements of Cash Flows

(Expressed in United States Dollars) (Unaudited)

	Six Months Ended June 30,
	2023			2022
Operating activities
Net income (loss) for the period	$	(12,401,975	)	$	20,923,107
Adjustments for:
Digital currencies items (note 21)		1,853,576			21,936,700
Gain on sale of property, plant and equipment		-			(2,340,658	)
Depreciation of right-of-use assets		86,166			56,102
Depreciation and amortization		6,330,630			4,178,237
Interest on lease liabilities		51,690			14,193
Change in fair value of amount owing for Miner Lease Agreement		267,551			894,973
Share based compensation		883,163			1,637,583
Change in warrant liability		5,020,344			(33,734,693	)
Interest accrued on loan payable		138,300			(12,000	)
Change in fair value of loan payable		220,457			-
Deferred tax (recovery) expense		-			(2,946,842	)
Foreign exchange gain		1,320,974			(1,007,584	)
Working capital items (note 21)		1,140,511			(7,136,514	)
Net cash used in operating activities		4,911,387			2,462,604
Investing activities
Purchase of property, plant and equipment		(2,841,387	)		(8,880,264	)
Proceeds from sale of property, plant and equipment		499,950			1,995,000
Acquisition of digital currency		-			(1,950,000	)
Business combination (note 4)		(4,599,666	)		-
Net cash used in investing activities		(6,941,103	)		(8,835,264	)

Financing activities
Proceeds from private placement, net of costs		-			8,287,555
Proceeds from pre-funded warrants		-			1,056,314
Repurchase of shares		-			(248,483	)
Proceeds from mortgage		-			1,250,000
Repayment of mortgage		(267,000	)		-
Proceeds of shares issued for cash		445,944			-
Proceeds from loans payable		691,500			10,000,000
Repayment of loans payable		(326,530	)		(10,000,000	)
Lease payments		(72,720	)		(24,000	)
Net cash provided by financing activities		471,194			10,321,386

Net change in cash		(1,558,522	)		3,948,726
Cash, beginning of period		1,850,622			915,715

Cash, end of period	$	292,100		$	4,864,441
Supplemental information
Interest paid	$	-		$	238,204

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

- 3 -

Digihost Technology Inc.

Condensed Interim Consolidated Statement of Changes in Shareholders’ Equity

(Expressed in United States Dollars) (Unaudited)

	Number of shares (note 15)														Digital
	Subordinate voting shares			Proportionate voting shares		Share capital			Contributed surplus			Cumulative Translation Adjustment			currency revaluation reserve			Deficit			Total
Balance, December 31, 2021		24,956,165			3,333	$	31,423,095		$	11,844,581		$	167,068		$	3,706,624		$	(8,879,964	)	$	38,261,404
Private placements (note 15(b)(ii))		2,729,748			-		15,255,979			-			-			-			-			15,255,979
Cost of issue - cash (note 15(b)(ii))		-			-		(547,307	)		-			-			-			-			(547,307	)
Cost of issue - broker warrants (note 15(b)(ii))		-			-		(270,978	)		535,009			-			-			-			264,031
Warrant liabilities		-			-		(7,007,643	)		-			-			-			-			(7,007,643	)
Shares cancelled (note 15(b)(i))		(159,200	)		-		(351,521	)		-			-			-			103,038			(248,483	)
Share based compensation		-			-		-			1,637,583			-			-			-			1,637,583
Transaction with owners		27,526,713			3,333		38,501,625			14,017,173			167,068			3,706,624			(8,776,926	)		47,615,564
Foreign currency translation adjustment		-			-		-			-			(871,751	)		-			-			(871,751	)
Revaluation of digital currencies, net of tax		-			-		-			-			-			(3,706,624	)		-			(3,706,624	)
Net income for the period		-			-		-			-			-			-			20,923,107			20,923,107
Total comprehensive income for the period		-			-		-			-			(871,751	)		(3,706,624	)		20,923,107			16,344,732
Balance, June 30, 2022		27,526,713			3,333	$	38,501,625		$	14,017,173		$	(704,683	)	$	-		$	12,146,181		$	63,960,296

Balance, December 31, 2022		27,842,204			3,333	$	39,602,634		$	15,675,828		$	(3,491,583	)	$	-		$	(4,611,887	)	$	47,174,992
Shares issued for cash (note 15(b)(i))		279,045			-		445,943			-			-			-			-			445,943
Restricted share units converted to common shares		479,582			-		1,827,782			(1,827,782	)		-			-			-			-
Share based compensation		-			-		-			883,163			-			-			-			883,163
Transaction with owners		28,600,831			3,333		41,876,359			14,731,209			(3,491,583	)		-			(4,611,887	)		48,504,098
Foreign currency translation adjustment		-			-		-			-			1,212,243			-			-			1,212,243
Net loss for the period		-			-		-			-			-			-			(12,401,975	)		(12,401,975	)
Total comprehensive loss for the period		-			-		-			-			1,212,243			-			(12,401,975	)		(11,189,732	)
Balance, June 30, 2023		28,600,831			3,333	$	41,876,359		$	14,731,209		$	(2,279,340	)	$	-		$	(17,013,862	)	$	37,314,366

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

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Digihost Technology Inc.

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2023

(Expressed in United States Dollars) (Unaudited)

1. Nature of operations and going concern

Digihost Technology Inc. (the “Company” or “Digihost”) was incorporated in British Columbia, Canada, on February 18, 2017 as Chortle Capital Corp and subsequently changed its name to HashChain Technology Inc. on September 18, 2017, and again to Digihost Technology Inc. on February 14, 2020. Digihost and its subsidiaries, Digihost International, Inc., DGX Holding, LLC, and World Generation X, LLC (together the “Company”) is a blockchain technology company with operations in cryptocurrency mining and also a supplier of energy through its recent acquisition of a power plant. The head office of the Company is located at 2830 Produce Row, Houston, TX, 77023.

These unaudited condensed interim consolidated financial statements of the Company were reviewed, approved and authorized for issue by the Board of Directors on August 14, 2023.

Going Concern

These unaudited condensed interim consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assume that the Company will continue in operation and will be able to realize its assets and discharge its liabilities in the normal course of operations. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but not limited to twelve months from the end of the reporting period. The use of these principles may not be appropriate.

As at June 30, 2023, the Company has a working capital deficiency of $1,927,900 (2022 - working capital of

$2,874,560) and did not generate positive cashflows from its operations since its incorporation. The current working capital is not sufficient to meet the Company’s requirements and business growth initiatives. The Company’s ability to continue as a going concern depends upon its ability generate positive cashflows from its operations and to raise additional financing. Even if the Company has been successful in the past in raising financings, there is no assurance that it will manage to obtain additional financing in the future.

These material uncertainties may cast significant doubt regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments or disclosures that may be necessary should the Company not be able to continue as a going concern. If this were the case, these adjustments could be material.

2. Significant accounting policies

(a)	Statement of compliance

The Company applies IFRS as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the IFRS Interpretations Committee. These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34 - Interim Financial Reporting. Accordingly, they do not include all of the information required for full annual financial statements.

The policies applied in these unaudited condensed interim consolidated financial statements are based on IFRS issued and outstanding as of August 14, 2023, the date the Board of Directors approved the statements. The same accounting policies and methods of computation are followed in these unaudited condensed interim consolidated financial statements as compared with the most recent annual financial statements as at and for the year ended December 31, 2022. Any subsequent changes to IFRS that are given effect in the Company’s annual financial statements for the year ending December 31, 2023 could result in restatement of these unaudited condensed interim consolidated financial statements.

- 5 -

Digihost Technology Inc.

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2023

(Expressed in United States Dollars) (Unaudited)

2. Significant accounting policies (continued)

(b) Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Company.

At the date of authorization of these unaudited condensed interim consolidated financial statements, several new, but not yet effective, standards and amendments to existing standards, and interpretations have been published by the IASB. None of these standards or amendments to existing standards have been adopted early by the Company. Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the pronouncement. New standards, amendments and interpretations not adopted in the current year have not been disclosed as they are not expected to have a material impact on the Company’s unaudited condensed interim consolidated financial statements.

The preparation of these financial statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. These financial statements include estimates that, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the year in which the estimate is revised and future years if the revision affects both current and future years. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Significant assumptions about the future that management has made that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made are the same as the most recent annual financial statements as at and for the year ended December 31, 2022. New significant judgments in the quarter are as follows:

Business combination

Judgement is required to determine if the Company’s acquisition represent a business combination or an asset purchase. For an acquisition to qualify as a business combination, the assets acquired are required to be an integrated set of activities with inputs, processes and outputs. For acquisitions that represent the purchase of assets, no goodwill is recognized on the transactions and acquisition costs are capitalized to the assets purchased rather than expensed. As the Company concluded that the acquisition of the power plant (note 4) was a business combination, an allocation of the purchase price to the individual identifiable assets acquired and liabilities assumed based on their fair values at the date of purchase is required. The fair values of the net assets acquired are calculated using significant estimates and judgments. If estimates or judgments differed, this could result in a materially different allocation of net assets on the consolidated statement of financial position.

In a business combination, substantially all identifiable assets and liabilities acquired are recorded at the date of acquisition at their respective fair values. One of the most significant areas of judgment and estimation relates to the determination of the fair value of these assets and liabilities. If any intangible assets are identified, depending on the type of intangible asset and the complexity of determining its fair value, an independent external valuation expert may develop the fair value, using appropriate valuation techniques, which are generally based on a forecast of the total expected future net cash flows. These valuations are linked closely to the assumptions made by management regarding the future performance of the assets concerned and any changes in the discount rate applied. In certain circumstances where estimates have been made, the Company may obtain third-party valuations of certain assets, which could result in further refinement of the fair-value allocation of certain purchase prices and accounting adjustments.

- 6 -

Digihost Technology Inc.

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2023

(Expressed in United States Dollars) (Unaudited)

3. Digital currencies

The Company’s holdings of digital currencies consist of the following:

	As at June 30, 2023		As at December 31, 2022
Bitcoin	$	357,432	$	1,842,177
Ethereum		-		958,480
	$	357,432	$	2,800,657

The continuity of digital currencies was as follows:

	Number of Bitcoin			Amount			Number of Ethereum			Amount			Total Amount
Balance, December 31, 2021		632			29,770,994			1,001			3,720,992			33,491,986
Bitcoin mined for Digihost⁽²⁾		832			24,190,059			-			-			24,190,059
Bitcoin remitted to Northern Data⁽²⁾		(380	)		(10,836,179	)		-			-			(10,836,179	)
Received from sale of property, plant and equipment		9			345,658			-			-			345,658
Acquisition of digital currencies		100			3,932,000			-			-			3,932,000
Digital currencies paid for services		(27	)		(739,024	)		-			-			(739,024	)
Digital currencies traded for cash		(640	)		(15,747,279	)		(200	)		(269,001	)		(16,016,280	)
Digital currencies for loan repayment		(415	)		(11,982,320	)		-			-			(11,982,320	)
Loss on sale of digital currencies		-			(11,574,330	)		-			-			(11,574,330	)
Revaluation adjustment⁽¹⁾		-			(5,517,402	)		-			(2,493,511	)		(8,010,913	)
Balance, December 31, 2022		111		$	1,842,177			801		$	958,480		$	2,800,657
Bitcoin mined⁽²⁾		359			9,165,301			-			-			9,165,301
Bitcoin remitted to Northern Data⁽²⁾		(51	)		(1,214,911	)		-			-			(1,214,911	)
Digital currencies paid for services		(19	)		(390,990	)		-			-			(390,990	)
Digital currencies traded for cash		(377	)		(9,264,287	)		(801	)		(1,245,993	)		(10,510,280	)
Digital currencies for loan repayment		(12	)		(318,809	)		-			-			(318,809	)
Gain on sale of digital currencies		-			527,051			-			287,513			814,564
Revaluation adjustment⁽¹⁾		-			11,900			-			-			11,900
Balance, June 30, 2023		11		$	357,432			-		$	-		$	357,432

⁽¹⁾

Digital assets held are revalued each reporting period based on the fair market value of the price of Bitcoin and Ethereum on the reporting date. As at June 30, 2023, the prices of Bitcoin and Ethereum were $30,444 (December 31, 2022 - $16,548) and $1,933 (December 31, 2022 - $1,197), respectively resulting in total revaluation loss of $11,900.

⁽²⁾

During the year ended December 31, 2021, the Company entered into a Miner Lease Agreement and a hosting services agreement with Northern Data, NY LLC, pursuant to which the parties have agreed to split a portion of the mining rewards received and energy costs incurred for the miners put in service pursuant to these agreements. As at June 30, 2023, the Company must remit nil Bitcoin (December 31, 2022 - 19 Bitcoin) with a value of $nil (December 31, 2022 - $322,099) which is presented in the current liabilities. The Miner Lease Agreement was terminated on February 15, 2023.

- 7 -

Digihost Technology Inc.

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2023

(Expressed in United States Dollars) (Unaudited)

4. Business combination

On February 8, 2023, the Company completed the acquisition of a 60 MW power plant in North Tonawanda, New York for a total consideration of $5,949,666 of which $1,350,000 was paid in previous years. The transaction was accounted for as a business combination under IFRS 3, Business Combinations. At the date of acquisition, the Company determined the preliminary fair value of the net identified net assets as follows:

Total consideration	$	5,949,666

Identified fair value of net assets acquired:

Prepaids and deposits		435,526
Property plant and equipment		3,547,375
Intangible asset		187,500
Accounts payable		(204,260	)
Loan payable		(513,087	)

		3,453,054
Goodwill acquired		2,496,612

		5,949,666
Deposit paid in prior year		(150,000	)
Property, plant and equipment disbursed in prior year		(1,200,000	)
Net cash disbursed in acquisition	$	4,599,666

5. Amounts receivable and other assets

	As at June 30, 2023		As at December 31, 2022
Prepaid expenses	$	282,816	$	741,350
Receivable from Northern Data		526,158		492,825
Deposits		1,772,370		-
	$	2,581,344	$	1,234,175

- 8 -

Digihost Technology Inc.

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2023

(Expressed in United States Dollars) (Unaudited)

6. Property, plant and equipment

	Land		Data miners			Equipment and other			Leasehold improvement		Power plant in progress			Power plant in use		Total
Cost
December 31, 2021	$	-	$	31,658,103		$	3,363,324		$	1,040,000	$	7,148,920		$	-	$	43,210,347
Additions		1,007,010		-			7,669,386			39,542		7,037,100			-		15,753,038
Disposal		-		(1,253,992	)		-			-		-			-		(1,253,992	)
Transfer asset in use		-		-			(439,381	)		-		(3,218,685	)		3,658,066		-
December 31, 2022		1,007,010		30,404,111			10,593,329			1,079,542		10,967,335			3,658,066		57,709,393
Additions		125,489		1,429,320			1,266,125			-		20,453			-		2,841,387
Disposal		-		-			-			-		(499,950	)		-		(499,950	)
Acquired in business combination (note 4)		-		-			-					(1,200,000	)		3,547,375		2,347,375
June 30, 2023	$	1,132,499	$	31,833,431		$	11,859,454		$	1079,542	$	9,287,838		$	7,205,441	$	62,398,205

Accumulated depreciation
December 31, 2021	$	-	$	3,820,296		$	1,056,888		$	191,056	$	-		$	-	$	5,068,240
Depreciation		-		8,815,246			591,329			105,208		-			1,016,129		10,527,912
Impairment		-		1,556,000			-			-		-			-		1,556,000
Disposal		-		(1,253,992	)		-			-		-			-		(1,253,992	)
December 31, 2022		-		12,937,550			1,648,217			296,264		-			1,016,129		15,898,160
Depreciation		-		4,918,849			616,786			52,659		-			609,678		6,197,972
June 30, 2023	$	-	$	17,856,399		$	2,265,003		$	348,923	$	-		$	1,625,807	$	22,096,132
Net carrying value
As at December 31, 2022	$	1,007,010	$	17,466,561		$	8,945,112		$	783,278	$	10,967,335		$	2,641,937	$	41,811,233
As at June 30, 2023	$	1,132,499	$	13,977,032		$	9,594,451		$	730,619	$	9,287,838		$	5,579,634	$	40,302,073

⁽¹⁾	Included in this total are 10,000 high performance Bitcoin miners sourced from Northern Data AG per a definitive purchase agreement entered into on May 12, 2021.

7. Right-of-use assets

	As at June 30, 2023			As at December 31, 2022
Balance, beginning of period	$	2,538,447		$	2,078,599
Additions⁽¹⁾		-			602,172
Depreciation		(86,166	)		(142,324	)
Balance, end of period	$	2,452,281		$	2,538,447

⁽¹⁾	In April 2022, the Company entered into a lease for its head office for a term of 5 years.

- 9 -

Digihost Technology Inc.

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2023

(Expressed in United States Dollars) (Unaudited)

8. Intangible asset

Intangible asset relates to the right-of-use of an electric power facility.

	As at June 30, 2023			As at December 31, 2022
Balance, beginning of period	$	1,314,028		$	1,443,260
Business combination (note 4)		187,500			-
Amortization		(132,660	)		(129,232	)
Balance, end of period	$	1,368,868		$	1,314,028

9. Goodwill

	As at June 30, 2023		As at December 31, 2022
Balance, beginning of period	$	-	$	1,346,904
Impairment		-		(1,260,783	)
Foreign currency translation		-		(86,121	)
Business combination (note 4)		2,496,612		-
Balance, end of period	$	2,496,612	$	-

10. Promissory note receivable

In December 2021, the Company entered into an agreement for a Secured Convertible Promissory Note (“Note”) with principal of $800,000. The Note accrues interest at a rate of 6% per annum, with interest payments every calendar quarter. The Note is convertible at the Company’s option into Series C Preferred Stock of the issuer. If the Note is not converted into shares by the Company, all unpaid and accrued interest are due on Maturity Date of December 21, 2026. The Notes are secured by the assets of the issuer.

11. Lease liabilities

The continuity of the lease liabilities are presented in the table below:

	As at June 30, 2023			As at December 31, 2022
Balance, beginning of period	$	547,471		$	-
Additions⁽¹⁾		-			602,172
Interest		24,464			41,299
Lease payments		(72,720	)		(96,000	)
Balance, end of period	$	499,215		$	547,471
Current portion	$	106,921		$	99,957
Non-current portion		392,294			447,514
Total lease liabilities	$	499,215		$	547,471

⁽¹⁾	In April 2022, the Company entered into a lease for its head office for a term of 5 years. When measuring lease liability, the Company’s incremental borrowing rate applied was estimated to be 10% per annum.

- 10 -

Digihost Technology Inc.

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2023

(Expressed in United States Dollars) (Unaudited)

11. Lease liabilities (continued)

Maturity analysis - contractual undiscounted cash flows

As at June 30, 2023
Less than one year	$	149,062
One to five years		446,734
Total undiscounted lease obligations	$	595,796

12. Loans payable

As at
June 30,
2023 As at
December 31,
2022

Balance, beginning of the period $ - $ -

New loans^(1)(2)(3) 1,204,587 10,000,000

Repayment of loans (326,530 ) (10,000,000 )

Interest 138,300 -

Fair value adjustment 220,457 -

Balance, end of the period $ 1,236,814 $ -

⁽¹⁾

On March 2, 2022, the Company announced the closing of a $10,000,000 committed, collateralized revolving credit facility with Securitize, Inc. (the “Loan Facility”). The Loan Facility had a one-year committed term and an interest rate of 7.5% per annum.

⁽²⁾

The Company entered into a loan agreement with Doge Capital LLC (“Doge”), a company controlled by the chief executive officer, dated February 6, 2023, whereby Doge lent the Company the equivalent value of 30 Bitcoins, being $691,500 and the Company agreed to repay Doge 36 Bitcoins as full repayment of the loan. The Company shall repay Doge 3 Bitcoins per month for 12 consecutive months with the first payment due on March 1, 2023 and the remaining 11 payments due on the first day of each successive month.

⁽³⁾

Upon the closing of the Power Plant transaction (note 4), the Company assumed an interest free loan agreement with Niagara Mohawk Power Corporation dated September 1, 2020. The Company is required to make minimum payments of $2,500 per month, with the outstanding balance of $513,087 to be paid in full by September 6, 2023. In the event that the outstanding principal balance is not paid in full by September 6, 2023, interest shall accrue on the outstanding balance as of that date and each subsequent month thereafter at the rate for overdue payments described as in National Grid’s Electricity Tariff for Service Classification No 6.

- 11 -

Digihost Technology Inc.

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2023

(Expressed in United States Dollars) (Unaudited)

13. Mortgage payable

In June 2022, the Company’s incremental borrowing rate applied was estimated to be 7% per annum. The mortgage does not bear interest, is repayable by monthly instalments of $44,500 and matures in September 2024. The mortgage is secured by the powerplant in progress with a net book value of $2,651,500.

	As at June 30, 2023			As at December 31, 2022
Balance, beginning of period	$	877,127		$	-
Additions		-			993,912
Interest		27,226			16,715
Payments		(267,000	)		(133,500	)
Balance, end of period	$	637,353		$	877,127
Current portion	$	505,396		$	488,062
Non-current portion		131,957			389,065
Total mortgage payable	$	637,353		$	877,127

Maturity analysis - contractual undiscounted cash flows

As at June 30, 2023
Less than one year	$	534,000
One to five years		133,500
Total undiscounted mortgage obligations	$	667,500

14. Warrant liabilities

Due to the characteristics of certain warrants, the fixed-for-fixed condition is not met. Therefore the Company records these warrants as financial liabilities measured at fair value upon initial recognition. At each subsequent reporting date, the warrants are re-measured at fair value and the change in fair value is recognized through profit or loss. Upon warrant exercise, the fair value previously recognized in warrant liabilities is transferred from warrant liabilities to share capital.

The following table summarizes the changes in the warrant liabilities for the Company’s warrants for the period ending June 30, 2023 and December 31, 2022:

	Number of
	warrants			Amount
Balance, December, 2021		9,098,514		$	31,943,365
Warrants issued		3,029,748			7,007,643
Warrants cancelled (note 15(b)(ii))		(3,029,748	)		(5,887,840	)
Pre-funded warrants issued (note 15(b)(ii))		300,000			927,463
Pre-funded warrants exercised (note 15(b)(ii))		(300,000	)		(927,463	)
Revaluation of warrant liabilities		-			(32,010,637	)
Foreign currency translation		-			(230,834	)
Balance, December, 2022		9,098,514			821,697
Revaluation of warrant liabilities		-			5,020,344
Foreign currency translation		-			108,732
Balance, June 30, 2023		9,098,514		$	5,950,773

- 12 -

Digihost Technology Inc.

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2023

(Expressed in United States Dollars) (Unaudited)

14. Warrant liabilities (Continued)

The fair value of the Company’s warrants has been determined using the Black-Scholes pricing model and the following weighted average assumptions:

	As at June 30, 2023			Issued in 2022			As at December 31, 2022
Spot price (in CAD$)	$	2.36		$	3.78		$	0.47
Risk-free interest rate		4.54	%		1.62	%		4.07	%
Expected annual volatility		140	%		145	%		143	%
Expected life (years)		1.50			3.50			2.01
Dividend		nil			nil			nil

The following table reflects the Company’s warrants outstanding and exercisable as at June 30, 2023 and December 31, 2022:

Expiry date	Warrants outstanding and exercisable		Weighted average exercise price (CAD$)
March 16, 2024		1,872,659		9.42
June 18, 2024		2,083,334		5.97
April 9, 2025		2,112,773		7.11
September 9, 2025		3,029,748		6.25
		9,098,514		7.04

15. Share capital

Authorized share capital

Unlimited subordinate voting shares without par value and conferring 1 vote per share.

Unlimited proportionate voting shares without par value, conferring 200 votes per share, convertible at the holder’s option into subordinate voting shares on a basis of 200 subordinate voting shares for 1 proportionate voting shares.

Subordinate voting shares and proportionate voting shares issued

Six months ended June 30, 2023

(i)

During the six months ended June 30, 2023, the Company issued 279,045 subordinate voting shares at an average share price of $1.5981 pursuant to the at-the-market equity program.

Six months ended June 30, 2022

(ii)

On March 9, 2022, the Company closed a private placement with a single institutional investor, for (a) 2,729,748 subordinate voting shares at a purchase price of CAD$4.40 per subordinate voting share and associated warrant, (b) 300,000 pre-funded warrants (Pre-funded Warrants) at an exercise price of $0.0001 per subordinate voting shares, at an offering price of CAD$4.3999 per Pre-Funded Warrant and associated warrant and (iii) 3,029,748 common share purchase warrants (the “Warrants”) for aggregate gross cash proceeds of $10,424,453 (CAD$13,330,861) and the cancellation of warrants. The Warrants have an exercise price of CAD$6.25 per share and exercise period of three and one-half years from the issuance date. A fair value of $7,007,643 was assigned to the warrants. The Pre-Funded Warrants were assigned a fair value of $1,022,915 based on the cash received and are accounted for as financial liabilities at amortized cost. The Pre-Funded Warrants were exercised in September 2022, the financial liability together with the cash received of $30 and initial issuance costs was then accounted as an increase in share capital of $927,463.

- 13 -

Digihost Technology Inc.

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2023

(Expressed in United States Dollars) (Unaudited)

15. Share capital (continued)

In connection with the private placement, the investor has agreed to cancel existing warrants to purchase 1,248,440 common subordinate voting shares of the Company at an exercise price of CAD$9.42 per share issued in March 16, 2021 expiring on March 16, 2024 and the existing warrants to purchase 1,781,308 common subordinate voting shares of the Company at an exercise price of CAD$7.11 issued in April 9, 2021 expiring on April 9, 2025. The cancellation was considered as part of the proceeds of the above mentioned private placement and was accounted for as an increase in share capital of $5,887,616 for total proceeds from the private placement of $15,255,979.

H.C. Wainwright & Co. acted as the exclusive placement agent and received cash commission and expenses totalling $1,080,584 and 242,380 non-transferable broker warrants. Each broker warrant entitles the holder to purchase one subordinate voting share at an exercise price of CAD$6.25 at any time for a period of three and one-half years from the issuance date. The broker warrants were assigned a fair value of $535,009 for total issuance costs of $1,615,593 of which $695,170 is recorded in net income as the cost of issuance of the warrants classified as liabilities and $102,138 in reduction of the Pre-Funded Warrants.

The grant date fair value of $535,009 for the 242,380 broker warrants was determined using the Black-Scholes pricing model and the following assumptions and inputs: share price of CAD$3.78; exercise price of CAD$6.25; expected dividend yield of 0%; expected volatility of 136% which is based on comparable companies; risk-free interest rate of 1.62%; and an expected average life of three and one-half years.

(iii)

During May 2022, the Company received approval to undertake, at the Company’s discretion, a normal course issuer bid program to purchase up to 1,219,762 of its subordinate voting shares for cancellation. As at June 30, 2023, the Company repurchased 165,200 subordinate voting shares for a total repurchase price of $255,525.

16. Warrants

	Number of Warrants		Weighted Average Exercise Price (CAD$)
Balance, December 31, 2021		783,436		8.30
Issued (note 15(b)(ii))		242,380		6.25
Balance, December 31, 2022		1,025,816		7.81
Balance, June 30, 2023		1,025,816		7.81

The following table reflects the warrants issued and outstanding as of June 30, 2023:

Number of Warrants		Exercise		Weighted Average
Outstanding		Price (CAD$)		Contractual Life (years)		Expiry Date
	249,688		10.01		0.71	March 16, 2024⁽¹⁾
	222,222		6.75		0.97	June 18, 2024⁽¹⁾
	311,526		8.025		1.78	April 9, 2025⁽¹⁾
	242,380		6.25		2.20	September 9, 2025⁽¹⁾
	1,025,816		7.81		1.44

- 14 -

Digihost Technology Inc.

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2023

(Expressed in United States Dollars) (Unaudited)

16. Warrants (continued)

The following table reflects the warrants issued and outstanding as of December 31, 2022:

Number of Warrants Outstanding		Exercise Price (CAD$)		Weighted Average Contractual Life (years)		Expiry Date
	249,688		10.01		1.21	March 16, 2024⁽¹⁾
	222,222		6.75		1.47	June 18, 2024⁽¹⁾
	311,526		8.025		2.27	April 9, 2025⁽¹⁾
	242,380		6.25		2.69	September 9, 2025⁽¹⁾
	1,025,816		7.81		1.94

⁽¹⁾

Broker warrants.

17. Stock options and restricted share units

(a)

Stock options

The Company has a stock option plan whereby the maximum number of shares subject to the plan, in the aggregate, shall not exceed 10% of the Company’s issued and outstanding shares. The exercise price shall be no less than the discount market price as determined in accordance with TSXV policies.

The following table reflects the continuity of stock options for the periods presented below:

	Number of Stock Options		Weighted Average Exercise Price (CAD$)
Balance, December 31, 2021 and June 30, 2022		2,345,165		5.28
Balance, December 31, 2022 and June 30, 2023		2,345,165		5.28

The following table reflects the stock options issued and outstanding as of June 30, 2023:

Expiry Date	Exercise Price (CAD$)		Weighted Average Remaining Contractual Life (years)		Number of Options Outstanding		Number of Options Vested (exercisable)		Number of Options Unvested
February 14, 2025		2.88		1.63		408,334		408,334		-
January 5, 2026		3.75		2.52		258,498		258,498		-
February 24, 2026		13.92		2.66		50,000		50,000		-
March 25, 2026		7.47		2.74		233,334		233,334		-
May 17, 2026		7.35		2.88		155,000		155,000		-
June 22, 2026		4.20		2.98		86,668		86,668		-
		5.11		2.34		1,191,834		1,191,834		-

- 15 -

Digihost Technology Inc.

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2023

(Expressed in United States Dollars) (Unaudited)

17. Stock options and restricted share units (continued)

The following table reflects the stock options issued and outstanding as of December 31, 2022:

Expiry Date	Exercise Price (CAD$)		Weighted Average Remaining Contractual Life (years)		Number of Options Outstanding		Number of Options Vested (exercisable)		Number of Options Unvested
February 14, 2025		2.88		2.13		408,334		408,334		-
January 5, 2026		3.75		3.02		258,498		258,498		-
February 24, 2026		13.92		3.16		50,000		50,000		-
March 25, 2026		7.47		3.23		233,334		233,334		-
May 17, 2026		7.35		3.38		155,000		155,000		-
June 22, 2026		4.20		3.48		86,668		86,668		-
		5.11		2.84		1,191,834		1,191,834		-

The Company has an RSU plan whereby the there is a fixed cap of shares that can be granted under the plan. The exercise price shall be no less than the discount market price as determined in accordance with TSXV policies.

(b)

Restricted share units

The following table reflects the continuity of RSUs for the periods ended June 30, 2023 and 2022:

	Number of RSUs
Balance, December 31, 2021		-
Granted (i)		1,449,250
Balance, June 30, 2022		1,449,250
Balance, December 31, 2022		1,439,250
Granted		77,232
Converted		(479,582	)
Balance, June 30, 2023		1,036,900

During the six months ended June 30, 2023, the Company granted 77,232 RSUs to advisors. These RSUs vest one year from the date of grant. The grant date fair value of the RSUs was $120,386.

For the three and six months ended June 30, 2023, the Company recorded share based compensation for these RSU’s of $481,667 and $883,163, respectively (three and six months ended June 30, 2022 - $873,193 and $1,637,583, respectively).

- 16 -

Digihost Technology Inc.

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2023

(Expressed in United States Dollars) (Unaudited)

18. Income (loss) per share

	Three Months Ended June 30,					Six Months Ended June 30,
	2023			2022		2023			2022
Net income (loss) for the period	$	(3,308,936	)	$	3,577,254	$	(12,401,975	)	$	20,923,107
Net income (loss) per share - basic and diluted	$	(0.12	)	$	0.13	$	(0.44	)	$	0.79
Weighted average number of shares outstanding - basic and diluted		28,560,992			27,660,104		28,438,731			26,647,397

⁽ⁱ⁾ Diluted income per share does not include the effect of warrants and stock options as they are anti-dilutive.

19. Related party transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control. Related parties include key management personnel and may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Related party transactions are recorded at the exchange amount, being the amount agreed to between the related parties.

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. Key management personnel include the Company’s executive officers and members of the Board of Directors.

Remuneration of key management personnel of the Company was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Professional fees⁽¹⁾	$	56,298	$	86,521	$	131,628	$	159,438
Salaries⁽¹⁾		178,224		211,269		390,124		430,644
Share based compensation⁽²⁾		423,297		819,416		795,039		1,536,732
	$	657,819	$	1,117,206	$	1,316,791	$	2,126,814

⁽¹⁾

Represents the professional fees and salaries paid to officers and directors.

⁽²⁾

Represents the share based compensation for officers and directors.

- 17 -

Digihost Technology Inc.

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2023

(Expressed in United States Dollars) (Unaudited)

20. Additional information on the nature of comprehensive income (loss) components

	Three Months Ended June 30				Six Months Ended June 30,
	2023		2022		2023		2022
Expenses for employee benefits
Operating and maintenance costs	$	357,878	$	74,351	$	541,395	$	193,610
Professional fees		56,298		86,521		131,628		159,438
Share based compensation		481,667		873,193		883,163		1,637,583
	$	895,843	$	1,034,065	$	1,556,186	$	1,990,631
Net financial expenses
Interest on loans	$	-	$	153,829	$	132,300	$	238,204
Interest on lease liabilities		24,582		14,193		51,690		14,193
	$	24,582	$	168,022	$	183,990	$	252,397

21. Cash flow supplemental information

	Six Months Ended June 30,
	2023			2022
Digital currencies items
Digital currencies mined	$	(9,165,301	)	$	(14,772,937	)
Acquisition of digital currencies		-			(3,932,000	)
Miner lease and hosting		625,261			5,204,416
Digital currencies received		-			(345,658	)
Services paid in digital currencies		390,990			407,567
Loss (gain) on sale of digital currencies		(814,564	)		12,174,435
Digital currencies for loan repayment		318,809			11,982,320
Digital currencies traded for cash		10,510,280			8,270,193
Loss (gain) on revaluation of digital currencies		(11,899	)		2,948,364
	$	1,853,576		$	21,936,700
Working capital items
Amounts receivable and prepaid expenses	$	(1,055,643	)	$	(3,138,520	)
Accounts payable and accrued liabilities		1,403,914			(1,798,035	)
Income tax receivable		76,062			(550,000	)
Deposit payable		716,178			(1,649,959	)
	$	1,140,511		$	(7,136,514	)

- 18 -

Digihost Technology Inc.

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2023

(Expressed in United States Dollars) (Unaudited)

22. Segmented reporting

The Company has two operating segments being cryptocurrency mining and power plant operation located in the United States.

Three Months ended June 30, 2023	Cryptocurrency mining			Power plant operations			Total
Gross profit (loss)	$	(732,403	)	$	491		$	(731,912	)
Net loss		(2,978,107	)		(330,829	)		(3,308,936	)

Six Months ended June 30, 2023	Cryptocurrency mining			Power plant operations			Total
Gross profit (loss)	$	(3,201,469	)	$	25,810		$	(3,175,659	)
Net income (loss)		(12,096,465	)		(305,510	)		(12,401,975	)

Three Months ended June 30, 2022	Cryptocurrency mining		Power plant operations		Total
Gross profit	$	860,293	$	-	$	860,293
Net income		3,577,254		-		3,577,254

Six Months ended June 30, 2022	Cryptocurrency mining		Power plant operations		Total
Gross profit	$	1,441,585	$	-	$	1,441,585
Net income		20,923,107		-		20,923,107

The operations of the Company are located in two geographic locations, Canada and the United States. Geographic segmentation is as follows:

As at June 30, 2023	Canada		United States		Total
Current assets	$	30,046	$	3,369,167	$	3,399,213
Non-current assets		-		47,419,834		47,419,834
Total assets	$	30,046	$	50,789,001	$	50,819,047

As at December 31, 2022	Canada		United States		Total
Current assets	$	29,372	$	6,100,481	$	6,129,853
Non-current assets		-		46,469,708		46,469,708
Total assets	$	29,372	$	52,570,189	$	52,599,561

23. Capital management

The Company manages its capital to maintain its ability to continue as a going concern and to provide returns to shareholders and benefits to other stakeholders. The capital structure of the Company consists of equity comprised of issued share capital, reserves and loans payable. The Company manages its capital structure and makes adjustments to it in light of economic conditions. The Company, upon approval from its Board of Directors, will balance its overall capital structure through new share issuances or by undertaking other activities as deemed appropriate under the specific circumstances. The Company is not subject to externally imposed capital requirements and the Company’s overall strategy with respect to capital risk management remains unchanged from the year ended December 31, 2022.

- 19 -

Digihost Technology Inc.

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2023

(Expressed in United States Dollars) (Unaudited)

24. Financial instruments and risk management

Fair value

The fair value of the Company’s financial instruments, including cash, amounts receivable, accounts payable and accrued liabilities, mortgage payable and deposit payable approximates their carrying value due to their short-term nature. Mortgage payable and deposit payable are due to arm’s length third parties, the fair values of these payables are measured using relevant market input (Level 3). The fair values of mortgage payable and deposit payable was calculated using actualized cash flows using market rates in effect at the balance sheet date. Reasonable changes to key assumptions would not have a significant impact. Promissory note receivable is due from an arm’s length third party, the fair value of this note are measured using relevant market input (Level 3). Digital currencies, amount owing to Northern Data and loan payable are measured at fair value using the quoted price on CoinMarketCap (Level 2). Warrant liabilities are measured at fair value using the Black-Scholes pricing model (Level 2) (see note 14).

Risks

Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company’s primary exposure to credit risk is on its cash, amounts receivable and promissory note receivable. The cash is deposited in a bank account held with one major bank in the United States so there is a concentration of credit risk. This risk is managed by using a major bank that is a high credit quality financial institution as determined by rating agencies. The Company believes no impairment is necessary in respect of amounts receivable and promissory note receivable as balances are monitored on a regular basis with the result that exposure to bad debt is insignificant.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk by maintaining cash balances to ensure that it is able to meet its short term and long- term obligations as and when they fall due. The Company manages cash projections and regularly updates projections for changes in business and fluctuations cause in digital currency prices and exchange rates.

The following table summarizes the expected maturity of the Company’s significant financial liabilities and other liabilities based on the remaining period from the balance sheet date to the contractual maturity date:

	Payments by period
As at June 30, 2023	Less than 1 year		1-3 years		4-5 years		More than 5 years		Total		Carrying Value
Accounts payable and accrued liabilities	$	3,953,348	$	-	$	-	$	-	$	3,953,348	$	3,953,348
Deposit payable		-		1,227,178		-		-		1,227,178		1,227,178
Lease liabilities		149,062		311,673		135,061		-		595,796		595,796
Mortgage payable		534,000		133,500		-		-		667,500		667,500
Loan payable		761,448		475,366		-		-		1,236,814		1,236,814
	$	5,397,858	$	2,147,717	$	135,061	$	-	$	7,680,636	$	7,680,636

- 20 -

Digihost Technology Inc.

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2023

(Expressed in United States Dollars) (Unaudited)

24. Financial instruments and risk management (continued)

	Payments by period
As at December 31, 2022	Less than 1 year		1-3 years		4-5 years		More than 5 years		Total		Carrying Value
Accounts payable and accrued liabilities	$	2,345,175	$	-	$	-	$	-	$	2,345,175	$	2,345,175
Amount owing to Northern Data		322,099		-		-		-		322,099		322,099
Deposit payable		-		511,000		-		-		511,000		511,000
Lease liabilities		146,880		307,111		214,524		-		668,515		668,515
Mortgage payable		534,000		400,500		-		-		934,500		934,500
	$	3,348,154	$	1,218,611	$	214,524	$	-	$	4,781,289	$	4,781,289

Foreign currency risk

Currency risk relates to the risk that the fair values or future cash flows of the Company’s financial instruments will fluctuate because of changes in foreign exchange rates. Exchange rate fluctuations affect the costs that the Company incurs in its operations.

The Company’s functional and presentation currency is the US dollar. As the Company operates in an international environment, some of the Company’s financial instruments and transactions are denominated in currencies other than an entity’s functional currency. The fluctuation of the Canadian dollar in relation to the US dollar will consequently impact the profitability of the Company and may also affect the value of the Company’s assets and liabilities and the amount of shareholders’ equity. As at June 30, 2023 and December 31, 2022, the foreign currency risk was considered minimal.

Digital currency risk

Digital currency prices are affected by various forces including global supply and demand, interest rates, exchange rates, inflation or deflation and the global political and economic conditions. The profitability of the Company is directly related to the current and future market price of digital currencies; in addition, the Company may not be able liquidate its holdings of digital currencies at its desired price if required. A decline in the market prices for digital currencies could negatively impact the Company’s future operations. The Company has not hedged the conversion of any of its sales of digital currencies.

Digital currencies have a limited history and the fair value historically has been very volatile. Historical performance of digital currencies is not indicative of their future price performance. The Company’s digital currencies currently consist of Bitcoin and Ethereum.

At June 30, 2023, had the market price of the Company’s holdings of Bitcoin and Ethereum increased or decreased by 10% with all other variables held constant, the corresponding asset value increase or decrease respectively would amount to $35,743 (December 31, 2022 - $280,066).

- 21 -

EX-99.2 3 ea183577ex99-2_digihost.htm MANAGEMENT'S DISCUSSION & ANALYSIS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023

Exhibit 99.2

DIGIHOST TECHNOLOGY INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023

DIGIHOST TECHNOLOGY INC.

Management’s Discussion & Analysis

For the three and six months ended June 30, 2023

Introduction

The following management’s discussion & analysis (“MD&A”) of the financial condition and results of the operations of Digihost Technology Inc. (the “Company” or “Digihost”) constitutes management’s review of the factors that affected the Company’s financial and operating performance for the three and six-month periods ended June 30, 2023. This MD&A was written to comply with the requirements of National Instrument 51-102 – Continuous Disclosure Obligations. This MD&A should be read in conjunction with the audited consolidated financial statements of the Company for the years ended December 31, 2022 and 2021, together with the notes thereto. Results are reported in United States dollars, unless otherwise noted. The Company’s unaudited condensed consolidated interim financial statements and the financial information contained in this MD&A, unless otherwise indicated, are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations of the IFRS Interpretations Committee. All financial information contained herein is expressed in United States dollars, unless otherwise stated.

The effective date of this MD&A is August 14, 2023.

For the purposes of preparing this MD&A, management, in conjunction with the Board of Directors (the “Board”), considers the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of Company’s common shares; (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) it would significantly alter the total mix of information available to investors. Management, in conjunction with the Board, evaluates materiality with reference to all relevant circumstances, including potential market sensitivity.

Information about the Company and its operations can be obtained from the offices of the Company or on the System for Electronic Documents Analysis and Retrieval (“SEDAR”) and is available for review under the Company's profile on the SEDAR website (www.sedar.com).

Description of Business

Digihost, through its US operating subsidiaries, operates primarily as a blockchain technology company currently focused on Bitcoin mining. Digihost’s growth-oriented strategy is to exploit opportunities to increase mining hashrate and reduce energy costs for Company-owned and third party-hosted miners. The Company’s operations are focused on validation through mining, hosting solutions and blockchain software solutions. Digihost operates its wholly owned facilities in upstate New York and Alabama.

The current output from Digihost’s company-owned miners is approximately 1EH. The Company also provides rental of land and sale of energy to third parties. Digihost plans to have its recently acquired 60MW power plant fully operational by the end of Q3. The power plant infrastructure includes both Company-owned miners as well as third-party hosting.

In addition to output capacity used directly by Digihost, hosting arrangements will provide third parties with approximately 770 PH of operating capacity. Additionally, Digihost acquired 25 acres of land in North Carolina to accommodate a 200MW power infrastructure project to be developed on a joint venture basis. Phase 1 of this project is scheduled for 2024 and will provide the Company with further electrical power of approximately 75 MW.

Digihost remains focused on procuring power from renewable energy sources and those that create zero carbon emissions.

The head office of the Company is located at 2830 Produce Row, Houston, TX 77023.

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DIGIHOST TECHNOLOGY INC.

Management’s Discussion & Analysis

For the three and six months ended June 30, 2023

Mining operation and network overview

Revenue from the Company’s Bitcoin mining operation is recognized based upon the average Bitcoin price in effect on the day the Bitcoins are mined. Bitcoins are received within in a 24-hour period from the actual time they are mined. The Bitcoin price is volatile and can change markedly from day to day. This volatility in price can result in material changes in revenue recorded from period to period.

Network mining difficulty is one of the most significant competitive conditions the Company faces in its Bitcoin mining operation. Network difficulty is a unitless measure of how difficult it is to find a hash below a given target. Network difficulty is impacted directly by the price of Bitcoin. As the price of Bitcoin increases network mining difficulty may increase if more competitors begin to mine Bitcoin, which would result in a decrease in the number of Bitcoins mined by the Company based upon its existing computing power. As network difficulty rises the costs to the Company to mine Bitcoin also rises.

The Bitcoin network protocol automatically adjusts network difficulty by changing the target every 2,016 blocks hashed based on the time it took for the total computing power used in Bitcoin mining to solve the previous 2,016 blocks such that the average time to solve each block is maintained as close to ten minutes as possible. Price and network difficulty are positively correlated such that as the price of Bitcoin rises, there is an added incentive for miners to enter the market, and such increase in miners typically has a proportional increase in network difficulty.

With respect to the conversion of the Company’s Bitcoin to cash, the Company relies on a third-party service provider to broker sales of its mined Bitcoin. In 2022 the Company began to monetize a portion of Bitcoin mined to fund the Company’s operating costs and SG&A expenses, thereby mitigating the need to access equity markets to fund these costs. This strategy has continued during the second quarter of 2023.

Mining Operations

Bitcoin

As of June 30, 2023, the Company held a total of 11 Bitcoins with an inventory value of $357,432 based on the Bitcoin price as of that date. For the six-month period ended June 30, 2023, Digihost mined a total of 359 Bitcoins compared to 439 for the six-month period ended June 30, 2022, a decrease of 18%.

For the three-month period ended June 30, 2023, Digihost mined a total of 191 Bitcoins compared to 252 for the three-month period ended June 30, 2022, a decrease of 24%.

The market value of the miners in the Company’s inventory as of this MD&A is approximately 15M.

Ethereum

As of June 30, 2023, the Company held a total of nil Ethereum as inventory was converted to cash during Q1 2023. As of June 30, 2022, the Company held a total of 1,001 Ethereum with an inventory value of $1,068,250 based upon the ETH price on June 30, 2022.

Updates and Expansion

On February 7, 2023, the Company announced that it had completed the acquisition of a 60 MW power plant in North Tonawanda, NY. Further to the Company’s initial news release on March 24, 2021, the terms of the Acquisition were amended to reflect an all-cash purchase price. No shares of the Company were issued in connection with the Acquisition.

This successful transaction represents a significant milestone in the Company’s ongoing infrastructure expansion strategy. As a result of the Acquisition, its current operating capacity is close to 100MW representing approximately 2 EH of computing power. The generator capacity will continue flexible operation to ensure that 24/7 dispatchable supply is made available to area residents, businesses and industry to mitigate impacts of power interruptions in concert with directives of the New York Independent System Operator (NYISO).

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DIGIHOST TECHNOLOGY INC.

Management’s Discussion & Analysis

For the three and six months ended June 30, 2023

Green Initiative

Currently, 90% of the energy consumed by Digihost’s two locations in New York State is received from generating sources that create zero-carbon emissions, with more than 50% of the energy consumed being generated from renewable sources. As Digihost brings online its own power generation facility, the Company will focus on powering this facility using “bridge” power sources for low-carbon or renewable sources of energy where available. Additionally, the Company will also explore CO2 emission capture technology available in the market.

Current Carbon-Neutrality Efforts & Initiatives include:

●

100% Carbon Neutral: Digihost plans for 100% of its operations to achieve carbon neutrality with a net-zero footprint by the end of 2025, and 100% renewable by 2030.

●

Digigreen Initiative: A Digihost initiative focused on immediate steps to create sustainable, environmentally, and economically sound in-house practices, distinguishing the Company as an industry leader in lowering/eliminating its carbon footprint while maintaining profitability.

●

Crypto Climate Accord: Digihost has joined a private sector-led initiative for the entire crypto community focused on decarbonizing the cryptocurrency industry in record time.

●

Proof of Green: Digihost has begun initial research into developing proprietary standards for measuring the Company’s carbon impact. Using these standards as an environmental audit tool for the various operations, we will be able to generate accountability reports and to advise Directors and Shareholders on efforts to minimize the Company’s carbon footprint.

At-the-Market Offering

On March 4, 2022, the Company entered into an offering agreement with H.C. Wainwright & Co., LLC as agent (the “Agent”), pursuant to which the Company established an at-the-market equity program (the “ATM Program”). From the commencement of the ATM Program through March 31, 2023, the Company issued 235,566 subordinate voting shares in exchange for gross proceeds of $383,059, at an average share price of $1.66, and received net proceeds of $367,601 after paying commissions of $11,492 to the Agent and incurring $3,965 of other transaction fees.

During the quarter ended June 30, 2023, the Company issued 45,579 subordinate voting shares in exchange for gross proceeds of $80,481, at an average share price of $1.77, and received net proceeds of $76,679 after paying commissions of $2,414 to the Agent and incurring $1,388 of other transaction fees.

NCIB

During May 2022, Digihost announced that it had received approval to undertake, at the Company’s discretion, a normal course issuer bid program (“NCIB”) in Canada to purchase up to 1,219,762 of its subordinate voting shares for cancellation. The NCIB was commenced due to the fact that, from time to time, the Company may consider that the market price of its subordinate voting shares do not accurately reflect the underlying value of the Company’s business.

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DIGIHOST TECHNOLOGY INC.

Management’s Discussion & Analysis

For the three and six months ended June 30, 2023

Custodial services for digital currencies

The Company has a digital custody account with Gemini Trust Company, LLC (Gemini). Gemini is a digital currency exchange and custodian that allows customers to buy, sell, and store its digital assets. Gemini holds 100% of the Company’s cryptocurrency assets in hot storage. Gemini is not a related party of the Company. The Company is not aware of anything with regards to Gemini’s operations that would adversely affect the Company’s ability to obtain an unqualified audit opinion on its audited financial statements.

The Company has chosen to hold its full inventory of Company’s cryptocurrency assets with Gemini due to its track record in the industry. Gemini is a New York trust company regulated by the New York State Department of Financial Services and is the foreign equivalent of a Canadian financial institution (as that term is defined in National Instrument 45-106 – Prospectus Exemption). Gemini is a qualified custodian under New York Banking Law and is licensed by the State of New York to custody digital assets. Gemini has not appointed a sub-custodian to hold any of the Company’s cryptocurrencies. Gemini has US$200 million in cold storage insurance coverage backing its digital asset custody, one of the highest levels of regulatory certifications in the market and US$90 million in hot storage insurance. Although the Company has historically utilized both cold and hot storage for its digital crypto assets with Gemini, the Company currently holds all its cryptocurrencies custodied with Gemini in hot storage.

The Company has conducted due diligence on Gemini and has not identified any material concerns. It routinely reviews and verifies its asset balances on public blockchain explorers. Management of the Company is not aware of any security breaches or other similar incidents involving Gemini that resulted in lost or stolen cryptocurrency assets. In the event of an insolvency or bankruptcy of Gemini, the Company would write off as losses any unrecoverable cryptocurrency assets.

In order to monitor Gemini, the Company relies on system and organization controls provided by a SOC 2 Type II report, which was undertaken by Deloitte & Touche LLP, an independent audit firm. A SOC 2 Type II certification and report are viewed as instrumental in providing verification to third parties that appropriate controls have been put in place to safeguard the Company’s cryptocurrency assets, specifically as it relates to having strict security and data protection processes and protocols.

In general, a SOC 2 Type II certification is issued by an outside auditor that evaluates the extent to which a vendor complies with five trust principles based on the systems and processes in place. These five principles include the following:

●

“Security”, which addresses the safeguarding of system resources and assets against unauthorized access;

●

“Availability”, which addresses the accessibility of the system as stipulated by the applicable service agreement between vendor and customer;

●

“Processing Integrity”, which addresses whether or not a system achieves its purpose;

●

“Confidentiality”, which addresses whether access and disclosure of data is restricted to a specified set of persons or organizations; and

●

“Privacy”, which addresses the system’s collection, use, retention, disclosure and disposal of personal information in conformity with an organization’s privacy notice.

The Company has elected to use Gemini as its sole custodian as Gemini compiles documented controls that can be provided to the Company, such as the SOC 2 Type II certification. The Company reviews the SOC 2 Type II report to ensure it maintains a secure technology infrastructure and the security systems designed to safeguard cryptocurrency assets are operating effectively. To date, the Company has not identified any material concerns based on its review of the SOC 2 Type II report.

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DIGIHOST TECHNOLOGY INC.

Management’s Discussion & Analysis

For the three and six months ended June 30, 2023

Gemini maintains insurance coverage for the cryptocurrency held on behalf of the Company in its online hot wallet. The Company is in the process of looking to insure the remainder of its mined digital currency. Given the novelty of digital currency mining and associated businesses, insurance of this nature is generally not available, or is uneconomical for the Company to obtain, which leads to the risk of inadequate insurance cover.

On occasion, to mitigate third-party risk, the Company will hold a portion of its digital currencies in cold storage solutions which are not connected to the internet. The Company’s digital assets that are held in cold storage are stored in safety deposit boxes at a bank branch. The wallets on which the Company stores its cryptocurrency assets are not multi-signature wallets, however, the Company secures the 24-word seed phrase, which facilitates recovery of the wallets should the wallets become lost, stolen or damaged, by partitioning the seed phrase in multiple parts, and securing each part in a separate location. Each part of the seed phrase is stored in either a safe or safety deposit box, The Company replicates this security protocol by taking the same 24-word seed phrase, partitioning this into several parts and storing each part in a secure location in a separate safe or safety deposit box than was used for the first copy of the seed-phrase. This duplication ensures that the digital currencies held via cold storage solutions will be recoverable by the Company, should the Company’s cold-wallets become lost, stolen or damaged. During the quarter-ended June 30, 2023 and as of the date of this MD&A, all of the Company’s cryptocurrency assets are currently it its Gemini wallets.

ADJUSTED EBITDA – NON-GAAP MEASURE

“Adjusted EBITDA” is a metric used by management which is income (loss) from operations, as reported, before interest, tax, and adjusted for removing other non-cash items, including, depreciation, and further adjusted to remove acquisition related costs, share based compensation costs, and unusual/non-recurring expenses. Management believes “Adjusted EBITDA” is a useful financial metric to assess its operating performance on a cash basis before the impact of non-cash items and acquisition related activities.

	Six months ended
	2023			2022
	$			$
Income (loss) before other items		(12,401,975	)		20,923,107
Taxes and Interest		183,990			(2,708,638	)
Depreciation		6,288,568			4,204,219
Revaluation of warrant liabilities		5,020,344			(33,734,693	)
FV Changes		541,674			16,557,772
Gain on sale of equipment		-			(2,340,658	)
Share based compensation		883,163			1,637,583
Adjusted EBITDA		515,764			4,538,692

P a g e | 5

DIGIHOST TECHNOLOGY INC.

Management’s Discussion & Analysis

For the three and six months ended June 30, 2023

Selected Financial Information

	Period ended June 30, 2023 ($)			Year ended December 31, 2022 ($)		Year ended December 31, 2021 ($)
Revenue		9,974,511			24,190,060		24,952,344
Net income (loss)		(12,401,975	)		4,329,342		(3,132,693	)
Net income (loss) per share – basic and diluted		(0.44	)		0.16		(0.14	)

Period ended

June 30,
2023

($)

Year ended
December 31,
2022

($)

As at

December 31,
2021

($)

Total assets

50,819,047

52,599,561

80,026,875

Total long-term liabilities

8,177,568

2,169,276

36,246,608

Selected Quarterly Information

A summary of selected information for each of the eight most recent quarters prepared in accordance with IFRS is as follows:

Three Months Ended			Net Income or (Loss)
	Revenues ($)		Total ($)			Per Share - Basic ($)			Per Share - Diluted ($)
2023-June 30		5,870,164		(3,308,936	)		(0.12	)		(0.12	)
2023-March 31		4,104,347		(9,093,039	)		(0.32	)		(0.32	)
2022-December 31		5,682,019		(9,741,906	)		(0.36	)		(0.36	)
2022-September 30		3,735,014		(1,676,808	)		(0.06	)		(0.06	)
2022-June 30		7,460,595		3,577,254			0.13			0.13
2022-March 31		7,312,342		12,170,802			0.45			0.45
2021-December 31		9,586,962		(8,149,439	)		(0.21	)		(0.21	)
2021-September 30		5,485,754		(5,065,936	)		(0.20	)		(0.20	)

The Company is generally not subject to seasonality. Factors that may impact revenues and profitability include Bitcoin price, network difficulty, foreign currency fluctuations and the Company’s hashrate.

P a g e | 6

DIGIHOST TECHNOLOGY INC.

Management’s Discussion & Analysis

For the three and six months ended June 30, 2023

Results of Operations

For the three months ended June 30, 2023, compared to the three months ended June 30, 2022:

For the three months ended June 30, 2023, the Company’s net loss was $3,308,936 compared to net income of $3,577,254 for the three months ended June 30, 2022. Highlights of the quarter include:

Revenue

Revenue from Bitcoin mining was $5,356,235 for the three months ended June 30, 2023, compared to $7,460,595 for the three months ended June 30, 2022. The Company also recognized revenue from the sale of energy of $513,929 in Q2, 2023 compared to nil in Q2, 2022.

During the three-month period ended June 30, 2023, the Company mined approximately 191 Bitcoins at an average Bitcoin price of US$28,021 (from CoinMarketCap) compared to the three-month period ended June 30, 2022, where the Company mined approximately 252 Bitcoins at an average price of Bitcoin of US$33,032 (from CoinMarketCap).

The most significant factors impacting the decrease in the Company’s revenues in Q2 2023 versus Q2 2022 was the decline in average Bitcoin price mentioned above along with the temporary uptick in coins mined in the prior year due to the electrical testing phase of the infrastructure buildout at North Tonawanda (which briefly allowed Digihost to mine at hashing rate of approximately 1 EH/s).

Cost of Sales

The Company’s cost of sales was $6,602,076 for the three-month period ended June 30, 2023, compared to $6,600,302 for the three-month period ended June 30, 2022.

Cost of sales remained relatively consistent on a year over year basis, as a decrease in expense related to the Company’s miner lease and hosting agreement was partly offset by an increase in the cost of power and depreciation and amortization expense. Miner and lease hosting agreement expense decreased by $2,148,291 as the Company’s prior agreements expired during Q1 2023. Depreciation and amortization expense increased by $393,267 in Q2 2023 as compared to Q2 2022 as the remaining balance of the Company’s new miners and electrical infrastructure were placed into service during Q1 2022. Energy and infrastructure expenses associated with the cost of power increased by $1,479,496 due primarily to the energy costs associated with the facility in Alabama that weren’t present in Q2 2022.

General, Administrative & Other Expenses

The Company’s general and administrative expenses were $3,149,402 for the three-month period ended June 30, 2023, compared to $16,893,161 in the same period of 2022.

The primary drivers in the current period versus the quarter ended June 30, 2022, were due to:

●

Loss of sale of digital currencies in the prior period of $12,174,435 (2023: loss of $58,707).

●

Change in fair value of amount owing for Miner Lease Agreement in the prior period of $1,274,038 (2023: loss of $42,449).

●

Loss on revaluation of digital currencies in the prior period of $2,948,364 (2023: loss of $64,109).

For the six months ended June 30, 2023, compared to the six months ended June 30, 2022:

For the six months ended June 30, 2023, the Company’s net loss was $12,401,975 compared to net income of $20,923,107 for the six months ended June 30, 2022. Highlights of the period include:

Revenue

Revenue from Bitcoin mining was $9,165,301 for the period ended June 30, 2023, compared to $14,772,937 for the period ended June 30, 2022.

P a g e | 7

DIGIHOST TECHNOLOGY INC.

Management’s Discussion & Analysis

For the three and six months ended June 30, 2023

During the six-month period ended June 30, 2022, the Company mined 359 Bitcoins at an average Bitcoin price of US$25,480 (from CoinMarketCap) compared to the period ended June 30, 2022, where the Company mined 439 Bitcoins at an average price of Bitcoin of US$36,906 (from CoinMarketCap).

The most significant factors impacting the decrease in the Company’s revenues year to date 2023 versus the corresponding period in 2022 was the decline in average Bitcoin price mentioned above along with the temporary uptick in coins mined in the prior year due to the electrical testing phase of the infrastructure buildout at North Tonawanda (which briefly allowed Digihost to mine at hashing rate of approximately 1 EH/s).

Cost of Sales

The Company’s cost of sales was $13,150,170 for the six-month period ended June 30, 2023, compared to $13,331,352 for the six month-period ended June 30, 2022.

Cost of sales remained relatively consistent on a year over year basis, as a decrease in expense related to the Company’s miner lease and hosting agreement was partly offset by an increase in the cost of power and depreciation and amortization expense. Miner and lease hosting agreement expense decreased by $4,565,727 as the Company’s prior agreements expired during Q1 2023. Depreciation and amortization expense increased by $2,084,349 in Q2 2023 as compared to Q2 2022 as the remaining balance of the Company’s new miners and electrical infrastructure were placed into service during Q1 2022 along with additional infrastructure buildout and mining equipment during the first six months of 2023. Energy and infrastructure expenses associated with the cost of power increased by approximately $2,086,426 due primarily to the energy costs associated with the facility in Alabama that weren’t present in the prior year.

General, Administrative & Other Expenses

The Company’s general and administrative expenses were $4,021,982 for the six-month period ended June 30, 2023, compared to $16,961,809 in the same period of 2022.

The primary drivers in the current period versus June 30, 2022, were due to:

●

Loss of sale of digital currencies in the prior period of $12,174,435 (2023: gain of $814,564).

●

Gain on sale of equipment in the prior period of $2,340,658 (2023: $nil).

●

Loss on revaluation of digital currencies in the prior period of $2,948,364 (2023: loss of $53,666).

Cash flows

Operating Activities

Cash used in operating activities for the six-month period ended June 30, 2023, was $5,053,774 as compared to cash used of $2,462,604 for the same period ended June 30, 2022. The difference is primarily attributed to the increase in depreciation and amortization expense on a comparative basis ($6,473,017 versus $4,178,237), digital currency items ($1,853,576 versus -$21,936,700), and due to that in 2022 there was a gain on sale of equipment of $2,340,658 ($nil in 2023).

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DIGIHOST TECHNOLOGY INC.

Management’s Discussion & Analysis

For the three and six months ended June 30, 2023

Investing Activities

Cash used in investing activities for the six-month period ended June 30, 2023, was $6,941,103 as compared to $8,835,264 for the same period ended June 30, 2022. In the current year, cash of $4,599,666 was used for the purchase of the power plant, 2,841,387 was used for the purchase of equipment, with $499,950 received from the sale of equipment. In the prior year, there were proceeds from the sale of old miners of $1,995,000 partially offsetting the purchase of equipment of $8,880,264. In Q1 2022, the Company also acquired digital currency of $1,950,000.

Financing Activities

Cash provided by financing activities for the reporting period ended June 30, 2023, was $471,194 as compared to $10,321,386 for the period ended June 30, 2022. The drivers of the balance in the current period were proceeds of a loan payable of $691,500 and proceeds of shares issued for cash of $445,944, partly offset by repayment of loans of $593,530 and lease payments of $72,720. In the prior year, the Company received proceeds from a private placement of $8,287,555, received proceeds from pre-funded warrants of $1,056,314, and received proceeds from a mortgage of $1,250,000, partly offset by repurchase of shares of $248,483 and lease payments of $24,000.

Liquidity and Financial Position

As of June 30, 2023, the Company had a negative working capital balance of $1,927,900, including digital currencies of $357,432. The Company commenced earning revenue from digital currency mining in mid-February 2020; however, it has limited operating history, and there can be no assurance that the Company’s historical performance will be indicative of its future performance.

The Company’s ability to continue as a going concern is dependent on the Company’s ability to efficiently mine and liquidate digital currencies, manage operational expenses, and raise additional funds through debt or equity financing.

Capital Resources

The Company’s capital management objective is to provide the financial resources that will enable Digihost to maximize the return to its shareholders while also enhancing its cost of capital. In order to achieve this goal, the Company monitors its capital structure and adjusts as required in response to an ever-changing economic environment and the various risks to which the Company is exposed. The Company’s approach for attaining this objective is to preserve a flexible capital structure that optimizes the cost of capital at a satisfactory level of risk, to maintain its ability to meet financial obligations as they come due, and to ensure the Company has appropriate financial resources to fund its organic and acquisitive growth.

The Company anticipates that its existing financial resources will be sufficient to put into operation all previously announced acquisitions of mining hardware along with the infrastructure needed to support the power plant acquisition. In order to achieve its future business objectives, the Company may need to liquidate or borrow against the Bitcoin that have been accumulated as of the date hereof as well as Bitcoin generated from ongoing operations, which may or may not be possible on commercially attractive terms. The Company presently anticipates that additional financing may be required to acquire additional power generation facilities in the future in order to meet the Company’s objective of obtaining access to an additional 100MW of power by the end of 2023. The Company also anticipates that additional financing will be required to purchase the miners required to utilize its maximum capacity.

Digihost may manage its capital structure by issuing equity, seeking financing through loan products, adjusting capital spending, or disposing of assets.

Notes Receivable and Related Party Transactions

Promissory Notes Receivable

In December 2021, the Company entered into an agreement for a Secured Convertible Promissory Note (“Note”) with principal of $800,000. The Note accrues interest at a rate of 6% per annum, with interest payments every calendar quarter commencing March 31, 2022. The Note is convertible at the Company's option into Series C Preferred Stock of the issuer. If the Note is not converted into shares by the Company, all unpaid and accrued interest is due on December 21, 2026. The Note is secured by the assets of the issuer.

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DIGIHOST TECHNOLOGY INC.

Management’s Discussion & Analysis

For the three and six months ended June 30, 2023

Loan Payable

The Company entered into a loan agreement with Doge Capital LLC ("Doge"), a company controlled by the Chief Executive Officer, dated February 6, 2023, whereby Doge lent the Company the equivalent value of 30 Bitcoins, being $691,500 and the Company agreed to repay Doge 36 Bitcoins as full repayment of the loan. The Company shall repay Doge 3 Bitcoins per month for 12 consecutive months with the first payment due on March 1, 2023, and the remaining 11 payments due on the first day of each successive month.

Related Party Transactions

Key management personnel are those persons having authority and responsibility for planning, directing, and controlling the activities of the Company, directly or indirectly. Key management personnel include the Company’s executive officers and members of the Board of Directors.

Remuneration of key management personnel of the Company was as follows:

	Period ended June 30, 2023		Period ended June 30, 2022
Professional fees⁽¹⁾		131,628		159,438
Salaries⁽¹⁾		390,124		430,644
Share based compensation⁽²⁾		795,039		1,536,732
Total	$	1,316,791	$	2,126,814

⁽¹⁾

Represents the professional fees and salaries paid to officers and directors.

⁽²⁾

Represents the share-based compensation for officers and directors.

Share Capital

As at June 30, 2023, the Company has 28,600,831 common shares outstanding.

As at June 30, 2023, the Company had issued 2,345,165 stock options, 1,036,900 restricted share units and 10,124,330 warrants.

Off-Balance Sheet Arrangements

As at the date of this MD&A, the Company did not have any off-balance sheet arrangements.

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DIGIHOST TECHNOLOGY INC.

Management’s Discussion & Analysis

For the three and six months ended June 30, 2023

Adoption of new accounting policies

(a)

Basis of consolidation

These consolidated financial statements include the accounts of Digihost and its wholly owned subsidiary: Digihost International, Inc. Subsidiaries are consolidated from the date of acquisition, being the date on which the Company obtains control, and continues to be consolidated until the date that such control ceases. Control is achieved when an investor has power over an investee to direct its activities, exposure to variable returns from an investee, and the ability to use the power to affect the investor's returns. All inter-company transactions and balances have been eliminated upon consolidation.

(b)

Functional and presentation currency

These financial statements are presented in United States Dollars. The functional currency of Digihost is the Canadian dollar and the functional currency of Digihost International, Inc. is the United States Dollars. All financial information is expressed in United States Dollars, unless otherwise stated.

(c)

Foreign currency translation

Monetary assets and liabilities denominated in foreign currencies are translated to United States dollars at exchange rates in effect at the reporting date. Non-monetary assets and liabilities are translated at historical exchange rates at the respective transaction dates. Revenue and expenses are translated at the rate of exchange at each transaction date. Gains or losses on translation are included in foreign exchange expense.

The results and financial position of an entity whose functional currency are translated into a different presentation currency are treated as follows:

●

assets and liabilities are translated at the closing rate at the reporting date;

●

income and expenses for each income statement are translated at average exchange rates at the dates of the period; and

●

all resulting exchange differences are recognized in other comprehensive income as cumulative translation adjustments.

(d)

Revenue recognition

The Company recognizes revenue from the provision of transaction verification services within digital currency networks, commonly termed “cryptocurrency mining”. As consideration for these services, the Company receives digital currency from each specific cryptocurrency mining pool in which it participates. Revenue is measured based on the fair value of the digital currencies received. The fair value is determined using the spot price of the digital currencies on the date of receipt. Digital currencies are considered earned on the completion and addition of a block to the blockchain, at which time the economic benefit is received and can be reliably measured.

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DIGIHOST TECHNOLOGY INC.

Management’s Discussion & Analysis

For the three and six months ended June 30, 2023

(e)

Digital currencies

Digital currencies consist of Bitcoin and Ethereum. Digital currencies meet the definition of intangible assets in IAS 38 Intangible Assets as they are identifiable non-monetary assets without physical substance. They are initially recorded at cost and the revaluation method is used to measure the digital currencies subsequently. Where digital assets are recognized as revenue, the fair value of the Bitcoin received is considered to be the cost of the digital assets. Under the revaluation method, increases in fair value are recorded in other comprehensive income, while decreases are recorded in profit or loss. The Company revalues its digital currencies at the end of each quarter. There is no recycling of gains from other comprehensive income to profit or loss. However, to the extent that an increase in fair value reverses a previous decrease in fair value that has been recorded in profit or loss, that increase is recorded in profit or loss. Decreases in fair value that reverse gains previously recorded in other comprehensive income are recorded in other comprehensive income. Gains and losses on digital currencies sold between revaluation dates are included in profit or loss.

Digital currencies are measured at fair value using the quoted price on CoinMarketCap. CoinMarketCap is a pricing aggregator, as the principal market or most advantageous market is not always known. The Company believes any price difference amongst the principal market and an aggregated price to be immaterial. Management considers this fair value to be a Level 2 input under IFRS 13 Fair Value Measurement fair value hierarchy as the price on this source represents an average of quoted prices on multiple digital currency exchanges.

(f)

Property, plant, and equipment

Details as to the Company’s policies for property, plant and equipment are as follows:

Asset	Measurement Basis	Amortization Method	Amortization Rate
Data miners	Cost	Straight-line	12 - 36 months
Equipment	Cost	Straight-line	36 - 120 months
Leasehold improvement	Cost	Straight-line	120 months

Property, plant, and equipment are recorded at cost less accumulated depreciation. Cost includes all expenditures incurred to bring assets to the location and condition necessary for them to be operated in the manner intended by management.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any replaced parts is derecognized. All other repairs and maintenance are charged to profit or loss during the fiscal period in which they are incurred.

Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognized in profit or loss.

(g)

Intangible assets

intangible assets that qualify for separate recognition are recognized as intangible assets at their fair values. Right of use of an electric power facility is depreciated over 13 years.

(h)

Impairment of non-financial assets

The Company reviews the carrying amounts of its non-financial assets, including property, plant, and equipment, when events or changes in circumstances indicate the assets may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. Assets carried at fair value, such as digital currencies, are excluded from impairment analysis.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows to be derived from continuing use of the asset or cash generating unit are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Fair value less costs of disposal is the amount obtainable from the sale of an asset or cash generating unit in an arm’s length transaction between knowledgeable, willing parties, less the cost of disposal. When a binding sale agreement is not available, fair value less costs of disposal is estimated using a discounted cash flow approach with inputs and assumptions consistent with those of a market participant. If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash generating unit is reduced to its recoverable amount. An impairment loss is recognized immediately in net income. Where an impairment loss subsequently reverses, the carrying amount of the asset or cash generating unit is increased to the revised estimate of its recoverable amount, such that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized.

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DIGIHOST TECHNOLOGY INC.

Management’s Discussion & Analysis

For the three and six months ended June 30, 2023

(i)

Leases and right-of-use assets

All leases are accounted for by recognizing a right-of-use asset and a lease liability except for:

●

Leases of low value assets; and

●

Leases with a duration of twelve months or less.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by the incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.

On initial recognition, the carrying value of the lease liability also includes:

●

Amounts expected to be payable under any residual value guarantee;

●

The exercise price of any purchase option granted if it is reasonably certain to assess that option;

●

Any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.

Right-of-use assets are initially measured at cost, which includes the initial amount of the lease liability, reduced for any lease incentives received, and increased for:

●

Lease payments made at or before commencement of the lease;

●

Initial direct costs incurred; and

●

The amount of any provision recognised where the Company is contractually required to dismantle, remove, or restore the leased asset.

Lease liabilities, on initial measurement, increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made.

Right-of-use assets are amortized on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if this is judged to be shorter than the lease term.

When the Company revises its estimate of the term of any lease, it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted at the same discount rate that applied on lease commencement. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term or recorded in profit or loss if the right-of-use asset is reduced to zero.

(j)

Goodwill

The Company measures goodwill as the fair value of the cost of the acquisition less the fair value of the identifiable net assets acquired, all measured as of the acquisition date. Goodwill is carried at cost less accumulated impairment losses.

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DIGIHOST TECHNOLOGY INC.

Management’s Discussion & Analysis

For the three and six months ended June 30, 2023

(k)

Share capital and equity

Share capital represents the amount received on the issue of shares, less issuance costs, net of any underlying income tax benefit from these issuance costs. When warrants are issued in connection with shares, the Company uses the residual method for allocating fair value to the shares and then to warrants.

Contributed surplus include the value of outstanding warrants and stock options. When warrants and stock options are exercised, the related compensation cost and value are transferred to share capital.

Deficits include all current and prior year losses.

Digital currency revaluation reserve includes gains and losses from the revaluation of digital currencies, net of tax.

Cumulative translation reserve includes foreign currency translation differences arising from the translation of financial statements of foreign entities into United States dollars.

(l)

Share-based compensation

The granting of stock options to employees, officers, directors, or consultants of the Company requires the recognition of share-based compensation expense with a corresponding increase in contributed surplus in shareholders’ equity. The fair value of stock options that vest immediately are recorded as share-based compensation expense at the date of the grant. The expense for stock options that vest over time is recorded over the vesting period using the graded method, which incorporates management’s estimate of the stock options that are not expected to vest. For stock options where vesting is subject to the completion of performance milestones, the estimate for completion of the milestone is reviewed at each reporting date for any change in the estimated vesting date, and to the extent there is a material change in the vesting date estimate, the amortization to be recognized is recalculated for the new timeline estimate and adjusted on a prospective basis in the current period. The effect of a change in the number of stock options expected to vest is a change in an estimate and the cumulative effect of the change is recognized in the period when the change occurs. On exercise of a stock option, the consideration received, and the estimated fair value previously recorded in contributed surplus is recorded as an increase in share capital.

Stock options awarded to consultants are measured based on the fair value of the goods and services received unless that fair value cannot be estimated reliably. If the fair value of the goods and services cannot be reliably measured, then the fair value of the equity instruments granted is used to recognize the expense.

Critical accounting judgements, estimates and assumption.

The preparation of these financial statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. These financial statements include estimates that, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions, and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

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DIGIHOST TECHNOLOGY INC.

Management’s Discussion & Analysis

For the three and six months ended June 30, 2023

Significant assumptions about the future that management has made that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

Significant judgements

(i)

Income from digital currency mining

The Company recognizes income from digital currency mining from the provision of transaction verification services within digital currency networks, commonly termed “cryptocurrency mining”. As consideration for these services, the Company receives digital currency from each specific network in which it participates (“coins”). Income from digital currency mining is measured based on the fair value of the coins received. The fair value is determined using the spot price of the coin on the date of receipt. The coins are recorded on the statement of financial position, as digital currencies, at their fair value less costs to sell and re- measured at each reporting date. Revaluation gains or losses, as well as gains or losses on the sale of coins for traditional (fiat) currencies are included in profit or loss in accordance with the Company’s treatment of its digital currencies as a traded commodity.

There is currently no specific definitive guidance in IFRS or alternative accounting frameworks for the accounting for the mining and strategic selling of digital currencies and management has exercised significant judgement in determining appropriate accounting treatment for the recognition of income from digital currency mining for mining of digital currencies. Management has examined various factors surrounding the substance of the Company’s operations, including the stage of completion being the completion and addition of a block to a blockchain and the reliability of the measurement of the digital currency received.

(ii)

Going concern

The assessment of the Company's ability to continue as a going concern involves judgment regarding future funding available for its operations and working capital requirements as discussed in note 1.

(iii)

Leases – incremental borrowing rate

Judgment is applied when determining the incremental borrowing rate used to measure the lease liability of each lease contract, including an estimate of the asset-specific security impact. The incremental borrowing rate should reflect the interest rate the Company would pay to borrow at a similar term and with similar security.

(iv)

Income, value added, withholding and other taxes

The Company is subject to income, value added, withholding and other taxes. Significant judgment is required in determining the Company's provisions for taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The determination of the Company's income, value added, withholding and other tax liabilities requires interpretation of complex laws and regulations. The Company's interpretation of taxation law as applied to transactions and activities may not coincide with the interpretation of the tax authorities. All tax related filings are subject to government audit and potential reassessment subsequent to the financial statement reporting period. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the tax related accruals and deferred income tax provisions in the period in which such determination is made.

Significant estimates

(i)

Determination of asset and liability fair values and allocation of purchase consideration

Significant business combinations require judgements and estimates to be made at the date of acquisition in relation to determining the relative fair value of the allocation of the purchase consideration over the fair value of the assets. The information necessary to measure the fair values as at the acquisition date of assets acquired requires management to make certain judgements and estimates about future events, including but not limited to availability of hardware and expertise, future production opportunities, future digital currency prices and future operating costs.

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DIGIHOST TECHNOLOGY INC.

Management’s Discussion & Analysis

For the three and six months ended June 30, 2023

(ii)

Useful lives of property, plant, and equipment

Depreciation of data miners and equipment are an estimate of its expected life. In order to determine the useful life of computing equipment, assumptions are required about a range of computing industry market and economic factors, including required hashrates, technological changes, availability of hardware and other inputs, and production costs.

(iii)

Digital currency valuation

Digital currencies consist of cryptocurrency denominated assets (note 4) and are included in current assets. Digital currencies are carried at their fair value determined by the spot rate less costs to sell. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position.

(iv)

Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the recoverable amount of the CGU. Such recoverable amount corresponds, for the purpose of impairment assessment, to the higher of the value in use or the fair value less costs of disposal of the CGU to which goodwill has been allocated. The value in use calculation requires management to estimate future cash flows expected to arise from the CGU and a suitable discount rate in order to calculate present value. The key assumptions required for the value in use estimation are described in note 8 of the year-end financial statements.

For the value in use approach, the values assigned to key assumptions reflect past experience and external sources of information that are deemed accurate and reliable. The value in use is categorized as Level 3 in the fair value hierarchy described under IFRS 13, Fair Value Measurement, as one or more key assumption used is based on unobservable data requiring the use of judgement.

Disclosure of Internal Controls

Management has established processes to provide it with sufficient knowledge to support representations that it has exercised reasonable diligence to ensure that (i) the consolidated financial statements do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of and for the periods presented by the financial statements, and (ii) the consolidated financial statements fairly present in all material respects the financial condition, results of operations and cash flow of the Company, as of the date of and for the periods presented.

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 - Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”), the Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (“DC&P”) and internal control over financial reporting (“ICFR”), as defined in NI 52-109. In particular, the certifying officers filing such certificate are not making any representations relating to the establishment and maintenance of:

(i)

controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized, and reported within the time periods specified in securities legislation; and

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DIGIHOST TECHNOLOGY INC.

Management’s Discussion & Analysis

For the three and six months ended June 30, 2023

(ii)

a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with the issuer’s GAAP (IFRS).

The Company’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in the certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost-effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

Risk Factors

An investment in the securities of the Company is highly speculative and involves numerous and significant risks. Such investment should be undertaken only by investors whose financial resources are sufficient to enable them to assume these risks and who have no need for immediate liquidity in their investment. Prospective investors should carefully consider the risk factors that have affected, and which in the future are reasonably expected to affect, the Company and its financial position. Please refer to the section entitled "Risk Factors" in the Company’s Annual Information Form for the fiscal year ended December 31, 2022, dated March 31, 2023 available on SEDAR at www.sedar.com and the Risk Factors contained the Company’s various filings on SEDAR.

Cautionary Note Regarding Forward-Looking Information

This MD&A contains certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as “forward-looking statements”). These statements relate to future events or the Company’s future performance. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “continues”, “forecasts”, “projects”, “predicts”, “intends”, “anticipates” or “believes”, or variations of, or the negatives of, such words and phrases, or statements that certain actions, events or results “may”, “could”, “would”, “should”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those anticipated in such forward-looking statements. The forward-looking statements in this MD&A speak only as of the date of this MD&A or as of the date specified in such statement. The following table outlines certain significant forward-looking statements contained in this MD&A and provides the material assumptions used to develop such forward-looking statements and material risk factors that could cause actual results to differ materially from the forward-looking statements. In particular, this MD&A contains forward-looking statements pertaining to the following:

●

the impact of the Bitcoin Halving in May 2024 on the price of Bitcoin and the normalization after the Bitcoin Halving to pre-Bitcoin Halving profitability levels;

●

future debt levels, financial capacity, liquidity, and capital resources;

●

anticipated future sources of funds to meet working capital requirements;

●

future capital expenditures and contractual commitments;

●

expectations respecting future financial results;

●

expectations regarding benefits of certain transactions and capital investments;

●

the Company’s objectives, strategies, and competitive strengths and growth strategy, including the ability to develop and build out the infrastructure in North Carolina;

●

expectations with respect to future opportunities;

●

expectations with respect to the Company’s financial position;

●

the Company’s capital expenditure programs and future capital requirements;

●

capital resources and the Company’s ability to raise capital; and

●

industry conditions pertaining to the cryptocurrency industry;

●

the other factors discussed under “Risk Factors”.

This list of factors should not be construed as exhaustive.

Additional Information

Additional information concerning the Company is available on SEDAR at www.sedar.com.

P a g e | 18

EX-99.3 4 ea183577ex99-3_digihost.htm CEO CERTIFICATION OF INTERIM FILINGS - INTERIM CERTIFICATE DATED AUGUST 14, 2023

Exhibit 99.3

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Michel Amar, Chief Executive Officer of Digihost Technology Inc., certify the following:

Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Digihost Technology Inc. (the “issuer”) for the interim period ended June 30, 2023.

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii)

information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b)

designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1

Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2

ICFR – material weakness relating to design: N/A

5.3

Limitation on scope of design: N/A

Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2023 and ended on June 30, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: August 14, 2023

“Michel Amar”
Michel Amar
Chief Executive Officer

EX-99.4 5 ea183577ex99-4_digihost.htm CFO CERTIFICATION OF INTERIM FILINGS - INTERIM CERTIFICATE DATED AUGUST 14, 2023

Exhibit 99.4

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Paul Ciullo, Chief Financial Officer of Digihost Technology Inc., certify the following:

Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii)

(b)

5.1

5.2

ICFR – material weakness relating to design: N/A

5.3

Limitation on scope of design: N/A

Date: August 14, 2023

“Paul Ciullo”
Paul Ciullo
Chief Financial Officer

EX-99.5 6 ea183577ex99-5_digihost.htm MATERIAL CHANGE REPORT DATED AUGUST 15, 2023

Exhibit 99.5

FORM 51-102F3

MATERIAL CHANGE REPORT

Item 1

Name and Address of Company

Digihost Technology Inc. (formerly HashChain Technology Inc.)

18 King Street East, Suite 902

Toronto, ON M5C 1C4

Item 2

Date of Material Change

August 15, 2023

Item 3

News Release

The press release attached as Schedule “A” was released on August 15, 2023 through an approved Canadian newswire service.

Item 4

Summary of Material Change

The material change is described in the press release attached as Schedule “A”.

Item 5

Full Description of Material Change

The material change is described in the press release attached as Schedule “A”.

Item 6

Reliance of subsection 7.1(2) of National Instrument 51-102

Not applicable.

Item 7

Omitted Information

Not applicable.

Item 8

Executive Officer

Inquires in respect of the material change referred to herein may be made to:

Michel Amar, Chief Executive Officer

T: 1-818-280-9758

E: michel@digihostblockchain.com

Item 9

Date of Report

August 15, 2023

SCHEDULE “A”

DIGIHOST REPORTS POSITIVE ADJUSTED EBITDA FOR Q2 2023

This news release constitutes a “designated news release” for the purposes of the Company’s prospectus supplement dated March 4, 2022 to its short form base shelf prospectus dated February 23, 2022.

Toronto, ON – August 15, 2023 – Digihost Technology Inc. (“Digihost” or the “Company”) (Nasdaq: DGHI; TSXV: DGHI), an innovative U.S. based blockchain technology and computer infrastructure company, is pleased to provide a summary of the Company’s unaudited financial results for the second quarter ended June 30, 2023. All amounts reported herein are presented in U.S. dollars, unless otherwise indicated. The Company’s unaudited consolidated financial statements and management’s discussion and analysis (“MD&A”) for the three and six month period ended June 30, 2023 have been filed and made accessible under the Company’s continuous disclosure profile on SEDAR at www.sedar.com and are also accessible on the U.S. Securities and Exchange Commission’s EDGAR website at www.sec.gov/EDGAR.

Comparative Financial Highlights for the Three-Month Period Ended June 30, 2023

●

Revenue from digital currency mining and sale of energy of $5.9 million reported for the three-month period ended June 30, 2023, compared to $7.5 million for the three-month period ended June 30, 2022. The decrease in revenue is primarily driven by the period-over-period decline in the price of Bitcoin (“BTC”);

●

The Company mined approximately 191 BTC for the three-month period ended June 30, 2023, at an average BTC price of approximately US$28,021 (calculated from BTC prices per CoinMarketCap), compared to the three-month period ended June 30, 2022 in which the Company mined approximately 252 BTC at an average price of Bitcoin of approximately US$33,032 (calculated from BTC prices per CoinMarketCap);

●

Adjusted EBITDA* for the three-month period ended June 30, 2023 of $1.43 million, an increase of approximately 92% from the Company’s reported Adjusted EBITDA* for the three-month period ended March 31, 2023;

●

Total assets of $50.8 million as at June 30, 2023 (Q1 2023: $51.9 million);

●

Cash and cash equivalents of $3.4 million as at June 30, 2023 (Q1 2023: $3.4 million);

●

Property, plant, and equipment consisting primarily of the Company’s BTC miners and mining infrastructure of $40.3 million (Q1 2023: $41.3 million);

●

During the quarter, the Company spent approximately $1.5 million on capital expenditure and mining infrastructure support equipment. Digihost continues to monitor its capital expenditures closely with self-funding to avoid equity dilution for its shareholders.

(U.S.$ in thousands except per share data)	Six Months Ended
	June 30, 2023			June 30, 2022
Revenue from digital currency mining		9,165			14,773
Revenue from sale of energy		809			-
Cost of sales		(6,078	)		(9,127	)
Cost of power plant operations		(783	)		-
Depreciation and amortization		(6,289	)		(4,204	)
Gross profit (loss)		(3,176	)		1,442
General and administrative and other expenses		(2,180	)		(2,848	)
Gain on sale of property, plant, and equipment		-			2,341
Foreign exchange		(1,322	)		1,043
Gain on disposition of cryptocurrencies		815			(12,174	)
Change in FV of loan payable		(220	)		-
Other Income		90			157
Change in fair value - Miner Lease Agreement		(268	)		(895	)
Loss on revaluation of digital currencies		(54	)		(2,948	)
Share based compensation		(883	)		(1,638	)
Operating (loss)		(7,198	)		(15,520	)
Revaluation of warrant liabilities		(5,020	)		33,734
Net financial expenses		(184	)		(238	)
Net income (loss) before income taxes		(12,402	)		17,976
Deferred tax recovery		-			2,947
Net income (loss) for the year		(12,402	)		20,923
Foreign currency translation adjustment		1,212			(872	)
Revaluation of digital currency, net of tax		-			(3,707	)
Total comprehensive income (loss) for the year		(11,190	)		16,344
Basic and diluted income (loss) per share		(0.44	)		0.79
Weighted average number of subordinate voting shares outstanding – diluted		28,438,731			26,647,397

Adjusted EBITDA is a non-IFRS financial measure and should be read in conjunction with and should not be viewed as alternatives to or replacements of measures of operating results and liquidity presented in accordance with IFRS. Readers are referred to the reconciliations of non-IFRS measures included in the Company’s MD&A and at the end of this press release.

The Company achieved significant milestones year-to-date 2023:

●

The Company mined approximately 359 BTC;

●

Digihost has acquired approximately 2,000 high performance BTC miners;

●

The Company completed an all-cash acquisition of a 60 MW power plant in North Tonawanda, NY;

●

The Company is currently mining at a rate of approximately 1 EH;

●

Consistent with management’s ongoing commitment to avoid equity dilution for its shareholders, the Company has continued to monetize a portion of its BTC production to fully fund its energy costs.

At-the-Market Financing Update

On March 4, 2022, the Company entered into an offering agreement with H.C. Wainwright & Co., LLC as agent (the “Agent”), pursuant to which the Company established an at-the-market equity program (the “ATM Program”). From the commencement of the ATM Program through March 31, 2023, the Company issued 235,566 subordinate voting shares in exchange for gross proceeds of $383,059, at an average share price of $1.66, and received net proceeds of $367,601 after paying commissions of $11,492 to the Agent and incurring $3,965 of other transaction fees.

About Digihost

Digihost is a growth-oriented technology company focused on the blockchain industry. The Company operates from three sites in the U.S. and in addition to managing its own operations provides joint venture partners with hosting arrangements at its facilities.

For further information, please contact:

Digihost Technology Inc.

www.digihost.ca

Michel Amar, Chief Executive Officer

T: 1-818-280-9758

Email: michel@digihost.ca

Cautionary Statement

Trading in the securities of the Company should be considered highly speculative. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements

Except for the statements of historical fact, this news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking information”) that are based on expectations, estimates and projections as at the date of this news release and are covered by safe harbors under Canadian and United States securities laws. Forward-looking information in this news release includes information about potential further improvements to profitability and efficiency across mining operations including, as a result of the Company’s expansion efforts, potential for the Company’s long-term growth, , and the business goals and objectives of the Company. Factors that could cause actual results to differ materially from those described in such forward-looking information include, but are not limited to: future capital needs and uncertainty of additional financing, including the Company’s ability to utilize the Company’s at-the-market offering program (the “ATM Program”) and the prices at which the Company may sell securities in the ATM Program, as well as capital market conditions in general; share dilution resulting from the ATM Program and from other equity issuances; risks relating to the strategy of maintaining Bitcoin holdings and the impact of depreciating Bitcoin prices on working capital; regulatory and other unanticipated issues that prohibit us from declaring or paying dividends to our shareholders that are payable in Bitcoin; development of additional facilities to expand operations may not be completed on the timelines anticipated by the Company; ability to access additional power from the local power grid; an increase in natural gas prices may negatively affect the profitability of the Company’s power plant; a decrease in cryptocurrency pricing, volume of transaction activity or generally, the profitability of cryptocurrency mining; further improvements to profitability and efficiency may not be realized; the digital currency market; the Company’s ability to successfully mine digital currency on the cloud; the Company may not be able to profitably liquidate its current digital currency inventory, or at all; a decline in digital currency prices may have a significant negative impact on the Company’s operations; the volatility of digital currency prices; and other related risks as more fully set out in the Annual Information Form of the Company and other documents disclosed under the Company’s filings at www.sedar.com. The forward-looking information in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available to the Company. In connection with the forward-looking information contained in this news release, the Company has made assumptions about: the current profitability in mining cryptocurrency (including pricing and volume of current transaction activity); profitable use of the Company’s assets going forward; the Company’s ability to profitably liquidate its digital currency inventory as required; historical prices of digital currencies and the ability of the Company to mine digital currencies on the cloud will be consistent with historical prices; the ability to maintain reliable and economical sources of power to run its cryptocurrency mining assets; the negative impact of regulatory changes in the energy regimes in the jurisdictions in which the Company operates; the ability to adhere to Digihost’s dividend policy and the timing and quantum of dividends based on, among other things, the Company’s operating results, cash flow and financial condition, Digihost’s current and anticipated capital requirements, and general business conditions; and there will be no regulation or law that will prevent the Company from operating its business. The Company has also assumed that no significant events occur outside of the Company’s normal course of business. Although the Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainties therein.

The following table provides a reconciliation of income to Adjusted EBITDA for the three months ended June 30, 2023 and 2022:

	Three months ended
	2023			2022
	$ (thousands)			$ (thousands)
Income (loss) before other items		(3,039	)		3,577
Taxes and Interest		25			(3,162	)
Depreciation		3,066			2,673
Revaluation of warrant liabilities		(597	)		(16,448	)
FV Changes		1,496			14,583
Share based compensation		482			873
Adjusted EBITDA		1,433			2,096

	As at June 30, 2023			As at December 31, 2022
Balance, beginning of the period	$	-		$	-
New loans^(1)(2)(3)		1,204,587			10,000,000
Repayment of loans		(326,530	)		(10,000,000	)
Interest		138,300			-
Fair value adjustment		220,457			-
Balance, end of the period	$	1,236,814		$	-