Ionic Ends Hut 8’s Management of 302 MW Bitcoin Mines
Ionic Digital, the Bitcoin mining firm spun off from the now-defunct crypto lender Celsius, has ended its management services agreement with Hut 8 (NASDAQ: HUT) for overseeing 302 megawatts (MW) of mining operations.
In a statement released Wednesday, Ionic noted the termination notice was provided on Nov. 26, which is set to take effect on Dec. 10 and will not incur a $22.5 million termination fee.
Ionic stated that it is working “constructively” with Hut 8 to ensure a smooth transition as it moves to take direct control of its mining fleet following a revived plan for an initial public offering.
However, in its November production update, Hut 8 alleged that “Ionic’s claims supporting the termination of the managed services agreement are meritless,” and said it will “vigorously enforce its rights and the rights of the Manager.”
Hut 8’s third-quarter earnings report highlighted its revenue diversification, which includes proprietary Bitcoin mining, high-performance computing hosting, and managed services. The company managed 582 MW of energy capacity across six U.S. sites, comprising 302 MW owned by Ionic and 280 MW owned by a joint venture Hut 8 established with a third party.
The managed services segment contributed $20.8 million to Hut 8’s total revenue in Q3, accounting for 47% of overall earnings. However, $13.5 million of that revenue came from a termination fee paid by MARA, while another $4.1 million was derived from management fees.
In June, Hut 8 and Ionic amended their original four-year management services agreement. Under the revised terms, Hut 8 was to provide “end-to-end managed services” for Ionic’s Bitcoin mining operations, as well as explore opportunities to build and manage new sites.
At the time, Hut 8 projected annual earnings of $15 million in management fees from Ionic, compared to $20.4 million under the previous agreement.
Earlier this year, MARA terminated Hut 8’s managed services after acquiring two Bitcoin mines from Generate Capital, where Hut 8 had been overseeing infrastructure operations.
