Blockchain Business: Managing Investor Relations in Miners Alliance

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 eligible to list on a major exchange in October 2019, with exemptions for innovative companies through the TSX sandbox.

Finding auditors and even banking relationships was a major challenge facing crypto asset and blockchain companies at the time. Being a pioneer in an emerging field that lacked institutional research or traction was one of the many investor relations issues initially faced, along with investor outreach and education, and developing a deep and diverse set of shareholders.

Suenis, Cabin 8

Sue Ennis joined the company in late 2020 as Vice President of Corporate Development; in 18 months, she has seen a lot. Her CEO, Jaime Leverton, joined around the same time, and they formed a female IR leadership duo in a highly male-dominated industry.

Earlier this year, Hut 8 added cloud and data center services to its offerings aimed at helping gaming and Metaverse companies build the Web3 world of the future. Bitcoin price volatility pushed Hut 8’s market cap above C$3 billion ($2.34 billion) by the end of 2021, but by early July 2022 — in “crypto winter” — it had fallen to C$370 million. Hut 8 is a beneficiary of a trend that has seen retail investors grow from 20% to 35% of all trades in the wake of the pandemic, according to one estimate.

“WallStreetBets and GameStop revolutionized IR,” Ennis said. “It was the power of the number of retail investors that helped us reach the S&P/TSX Composite Index of top companies, the first blockchain company to do so.”

How small can be large
As with retail investors, the internet and social media communities are critical to Hut 8’s investor relations strategy, Ennis said. “The internet is the new decentralized hedge fund,” she said. In the absence of coverage from banks and traditional analysts, both buy-side and sell-side investors seek information through the Internet and various community forums. Retail investors make up about 65% of Hut 8’s investor base, and Ennis points out that you can’t ignore small retail investors because many have outsized influence when you consider how freely and quickly information can be shared online.

She recalls being new to the job and trying to get to know her investors. “I searched for Hut 8 on YouTube and found a lot of mentions and activity,” she said. “So I left a message on the channel introducing myself, and soon a lot of community organizers started reaching out to me.”

The YouTube community talking about Hut 8 is usually started by ordinary people as a side business, such as Paul Barron, Talkin’ Investing or Zac Hartley, and the community has between a few hundred and 300,000 followers. Today, Ennis conducts regular interviews, Ask Me Anything, and post-earnings conference calls with multiple social media communities, including Twitter Spaces and Facebook. “We recently did a YouTube community interview that got about 75,000 views,” she recalls. “It wasn’t long before our inboxes were filled with inquiries and questions. It was a huge hit!”

According to Ennis, these community members are looking for more than just information; it’s a cult of people built around support for Hut 8 and other blockchain or new economy companies, with a very strong emotional connection. “As more and more people now live their lives online and virtually, they get to know each other, follow each other’s achievements, and even do business with each other,” she explained.

Hut 8’s StockTwits community has 63,000 followers, and according to Ennis, a large percentage of them talk about the company online every day. “As an IRO, you have to know where your end customers are and talk to them directly to get the highest ROI,” she said.

“Media Misinformation”

One of her biggest challenges is ESG: “There is still a lot of misinformation in the media about the environmental impact of Bitcoin mining, so education and lobbying are our main priorities.”

Hut 8 has selected ESG metrics relevant to it and aligned with SASB and GRI. In 2021, the company set specific targets to reduce its environmental footprint and achieve carbon neutrality by 2025, and outlined a comprehensive set of social, governance and other goals in its first sustainability report.

Ennis is also willing to make more changes. “These aren’t just crypto-savvy 18-year-olds in their mom’s basement — we’re also value investors,” she said, adding that many don’t realize how quickly this adaptation can happen: You can now Buy Bitcoin into your retirement account through a traditional institution 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 Investor Relations Magazine.

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