Fidelity Purchases Stake in Canadian Mining Outfit Hut8

Fidelity Investment, one of the crypto industry’s foremost asset management and investment firms, has expanded its services to cover another vital sub-industry; mining. Earlier this month, Hut8, a Canadian mining firm, filed an alternative monthly reporting (ARM) with the Ontario Securities Commission as part of its requirement after an underwritten public offering. Part of the reasons for an AMR is for public companies in Canada to disclose their eligible investors. As it would appear, Hut8’s investor is Fidelity.

Full Steam Ahead with Crypto Mining

In the filing, the company confirmed that Fidelity had acquired a tenth of its available shares. Hut8’s AMR revealed that Fidelity holds a combination of common share purchase warrants and common shares, with the Boston, Massachusetts-based investment company owning about 10.6 percent of the company.

“Fidelity holds 8,396,138 Common Shares and 2,054,956 common share purchase warrants, as a result of which Fidelity is deemed to hold 10,451,094 Common Shares representing approximately 10.58% of the outstanding shares of that class,” the AMR filing clarifies.

Hut8’s underwritten public offering closed on June 25. It was mostly successful, with the Canadian firm issuing 5,750,456 units, each consisting of one common share and a common share purchase warrant. Hut8 priced its units at $1.45 each, bringing its capital cume to about $8.34 million.

As the firm explained in an official announcement, the funds would be used to purchase a mix of MicroBT’s Whatsminer M30S, M31S, and M31S+ mining rigs to improve its Bitcoin hash rate.

Fidelity Expands Its Business

The investment in Hut8 marks continued expansion for Fidelity, as the firm tries to diversify and benefit optimally from the growth of the crypto market. In February, the company made a splash when it acquired 17 million shares in Hong Kong-based digital asset platform operator BC Group.

According to a disclosure form filed with the Hong Kong Stock Exchange (HKEx), Fidelity purchased the shares on February 12, with the company spending HK$110.5 million ($14.2 million) worth of BC Group shares at HK$6.50 ($0.83) each. The purchase gave Fidelity a 5.6 percent ownership stake in the Hong Kong company.

Like it did with Hut8, the purchase made Fidelity a direct investor in BC Group. Amongst other things, BC Group operates two services — OSL, a digital asset platform focused on institutional investors, and Branding China, a PR and marketing agency.

While Fidelity is making a splash with Hut8, it’s also worth noting that it isn’t new to the mining sub-industry. A report in Fortune Magazine from 2017 shows that the company has been mining Bitcoin and Ether since 2014, with workers mining the assets with their computers. However, there is a likelihood that they had to take a step back — both to focus on their core business and because mining has become more complicated since then.

Fidelity also posted a job opening in January, claiming that it was searching for a Bitcoin Mining Engineer. “Over the past couple of years, we have expanded our mining efforts to ramp up our knowledge of the space. We have explored optimal locations, hardware procurement, mining farm setups, and the economics of the mining industry as a whole.” 

As the job posting explained, the professional would help “design, build, and maintain” its mining infrastructure, while the company worked to scale. Currently, the opening appears to have been filled.