Digihost Technology Inc

Digihost Technology Inc. (NASDAQ: DGHI) is a Canada-based blockchain technology and computer infrastructure company. The Company is engaged in cryptocurrency mining. The operations of the Company are located in two geographic locations: Canada and the United States.

Recent Business and Financial Updates

• Monthly Production Highlights for November 2024:
  • Digihost reported a cash balance, including Bitcoin (BTC) and cash deposits, of approximately USD 10.0 million as of November 30, 2024, reflecting an 11% month-over-month increase from October 2024. This calculation is based on BTC prices of USD 97,200 as of November 30, 2024, and USD 71,000 as of October 31, 2024, according to CoinMarketCap.
  • The Company’s facilities produced approximately 37 BTC during November through a combination of self-mining and hosting agreements. Additionally, Digihost invested USD 0.4 million during the month in capital expenditures (CAPEX), including mining infrastructure support equipment and deposits. Year-to-date CAPEX deployment reached nearly USD 5 million, emphasizing the Company’s commitment to sustainable growth while adhering to a disciplined approach to capital allocation, minimizing equity dilution wherever possible.
• Operations Update:
  • Digihost currently operates with an available power capacity of approximately 100MW across its three sites, with access to an additional 300MW allocated for future expansion. One of the Company’s flagship plants was taken offline earlier in the quarter for scheduled multi-year maintenance, with operations expected to resume by the end of December 2024. Full utilization of the available power capacity is anticipated to drive substantial revenue growth beginning in the first quarter of 2025.
  • In Alabama, the Company is progressing with the pilot phase of its Tier 3 data center expansion, leveraging up to 20MW of capacity. Partnering with a leading multi-billion-dollar global engineering and consulting firm, Digihost expects to complete this project by late 2025 or early 2026.
• ESG Efforts and Update: Digihost announced the successful deployment of a 5MW community solar project in Angola, New York, where the Company serves as the anchor subscriber. Located 30 miles from Digihost’s East Delevan facility, this project generates renewable electricity sufficient to power over 2,500 homes annually. Presently, more than 50% of the energy utilized in the Company’s operations is derived from zero-emission resources. This milestone reflects Digihost’s commitment to sustainability by supporting renewable energy development, adding clean energy to the grid, and reducing electricity costs.
• Auditor Update: On November 27, 2024, Digihost appointed Davidson & Company LLP as its auditor, replacing Raymond Chabot Grant Thornton LLP. The transition involved no reservations in Grant Thornton’s reports on the Company’s financial statements for the periods from December 31, 2021, to December 31, 2023. Furthermore, there are no reportable events as defined in Section 7(e) of National Instrument 51-102 associated with this change. Digihost expressed its gratitude to Raymond Chabot Grant Thornton LLP for their exemplary service over the past three years.
• Comparative Financial Highlights:
• Three-Month Period Ended September 30, 2024:
  • Revenue increased by 71%, reaching USD 9.2 million, compared to USD 5.4 million for the same period in 2023. This growth was driven by diversified revenue verticals, including colocation agreements and energy sales.
  • Digital currencies were valued at USD 4.9 million, with total current assets amounting to USD 6.7 million.
  • The Company concluded the quarter with a positive net working cash flow of approximately USD 1 million.
• Nine-Month Period Ended September 30, 2024
  • Revenue rose by 104% to USD 31.4 million, compared to USD 15.3 million during the same period in 2023. This increase was bolstered by a 128% growth in energy sales revenue.
  • EBITDA* surged by nearly 350% to USD 5.5 million for the nine months ended September 30, 2024, compared to the prior year.
• Strategic Outlook:
  • Digihost continues to expand its power portfolio and optimize energy resource utilization. The Company has shifted its revenue model, with colocation services now generating more revenue year-over-year than digital mining. This strategic shift allows access to the latest generation of miners while minimizing the financial and operational risks associated with outright mining, such as high capital expenditure and asset depreciation.
  • By focusing on power development and production, Digihost aims to significantly increase its MW footprint in 2025, targeting a hash rate of 6-7 EH by 2026. Concurrently, the Company plans to convert portions of its existing asset base into Tier 3 data center infrastructure, leveraging its established electrical infrastructure and regulatory expertise. This conversion is expected to reduce costs and timelines relative to industry standards, thereby providing a competitive advantage.
    

Technical Observation (on the daily chart):

The Relative Strength Index (RSI) over a 14-day period stands at a value of 47.54, currently recovering from overbought zone, with expectations of a consolidation or an upward momentum if the price sustains above an important support of USD1.40-USD 1.60. Additionally, the stock's current positioning is above both the 50-period SMA and 200-period SMA, which may serve as dynamic short to medium-term support levels.  

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘WATCH’ rating has been given for Digihost Technology Inc. (NASDAQ: DGHI) at the closing market price of USD 1.75 as of December 09, 2024. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is December 09, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.