Business of blockchain: Managing IR in the mining leagues
Hut 8 is a Canada-based, TSX/Nasdaq-listed mining company. But it doesn’t mine gold or minerals – it mines Bitcoin and was the first mining company to qualify for a listing on a major exchange in October 2019, under the Innovative Companies Exemption through the TSX Sandbox.
Finding an auditor or even a banking relationship was a big challenge for cryptoassets and blockchain companies back then. Being a pioneer in a brand new sector with little institutional research or traction was one of the many initial IR challenges faced, along with investor outreach and education, and developing a deep and diverse set of shareholders.
Sue Ennis joined the company as vice president of corporate development near the end of 2020; she has seen a lot happen in 18 months. Her CEO, Jaime Leverton, joined around the same time and together they form a female IR leadership duo in a very male-dominated industry.
Earlier this year, Hut 8 added cloud and data center services to its offerings, aiming to help gaming and metaverse companies build a future Web3 world. Bitcoin price volatility drove Hut 8’s market cap to north of C$3 billion ($2.34 billion) in late 2021, but by early July 2022 — in “Crypto Winter” — it was down to C$370 million. The pandemic then saw retail investors grow from 20 percent to 35 percent of all trading, according to one estimate, and Hut 8 benefited from this trend.
“WallStreetBets and GameStop turned IR on its head,” says Ennis. “It was the power of private investor volume that helped us reach the S&P/TSX Composite Index of top companies, the first blockchain company to do so.”
How small can be oversized
Along with retail investors, the internet and social media are crucial to Hut 8’s IR strategy, according to Ennis. “The Internet is the new decentralized hedge fund,” she says. With a lack of bank and traditional analyst coverage, buy-side and sell-side investors turn to the Internet and various community forums for information. Retail makes up about 65 percent of Hut 8’s investor base, and Ennis points out that you can’t ignore small retail investors because many have a lot of influence when you consider how freely and quickly information is shared online.
She remembers being new to the job and trying to learn about her investors. “I searched Hut 8 on YouTube and noticed a lot of mentions and activity,” she says. “So I left comments in the channels where I introduced myself, and soon many community organizers started contacting me.”
YouTube communities talking about Hut 8 are usually started by regular people as a side gig, like Paul Barron, Talkin’ Investing or Zac Hartley, with communities ranging from a few hundred to 300,000 followers. Today, Ennis does regular interviews, Ask Me Anythings and calls after earnings with several social media, including on Twitter Spaces and Facebook. “Recently, we did a YouTube community interview that got about 75,000 views,” she recalls. Shortly afterwards, our inboxes were full of inquiries and questions. It was a huge hit!’
According to Ennis, these community members seek more than just information; there is a cult of people built around their support for Hut 8 and often other blockchain or new economy companies, with a very strong emotional attachment. “With more people living their lives online and virtually now, they’re getting to know each other, following each other’s achievements and even doing business with each other,” she explains.
Hut 8’s StockTwits community has 63,000 followers, and according to Ennis, a large percentage of them are online every day chatting about the company. “As an IRO, you need to know where your end customers are and talk to them directly to get the highest return,” she says.
‘Media Misinformation’
One of her biggest challenges is ESG: “There is still an extraordinary amount of misinformation in the media about the environmental impact of Bitcoin mining, so education and lobbying are key priorities for us.”
Hut 8 has chosen ESG calculations that are relevant to it in line with SASB and GRI. In 2021, the company set specific goals to reduce its environmental footprint and achieve carbon neutrality by 2025, and outlined a full set of social, governance and other goals in its first sustainability report.
Ennis is also ready for more change. “These aren’t just crypto-savvy 18-year-olds in their mom’s basement — we also have value investors,” she says, adding that many people don’t realize how quickly this adaptation is happening: you can now buy Bitcoin in your retirement account through traditional institutions like Fidelity.
Linda Montgomery is a Toronto-based fintech and digital asset marketing executive and IR professional
This article originally appeared in the Fall 2022 issue of The IR magazine.
