Amid the chill of a crypto winter, TSX- and Nasdaq-listed Bitcoin miner Hut 8 is joining forces with US Bitcoin, a privately owned Miami-based competitor. The combined company will have an implied market capitalization of US$990 million. Here’s what you need to know:

The deal: Hut 8 CEO Jaime Leverton will lead the combined company—which will also be called Hut 8, though the companies are referring to it as “New Hut” to avoid confusion. US Bitcoin co-founder CEO Michael Ho will become chief strategy officer and his fellow co-founder Asher Genoot will become president. While Hut 8 is based in Toronto, New Hut will be headquartered somewhere in the U.S., though the company hasn’t announced where.

The companies are proposing an all-stock combination, in which Hut 8 and US Bitcoin will become wholly owned subsidiaries of a newly created company. Shareholders of the two companies will receive stock in New Hut such that each will own a combined total of about 50 per cent. 

The companies are billing it as a “merger of equals.” Erin Dermer, a spokesperson for Hut 8, told The Logic that information on which company will acquire the other for accounting purposes will be made available in a filing in the coming weeks.

How it came together: In an interview with The Logic Tuesday, Leverton said she was familiar with US Bitcoin after seeing its team at industry conferences over the years. Executives from the two companies met up in the spring of 2022, Leverton said, when the crypto market was down from the highs of the previous year but hadn’t yet hit the summer’s dramatic crash—and they “really, really liked each other.” On a call with analysts Tuesday morning, Ho said he and Leverton “immediately clicked on our shared commitment to doing things right.”

The context: It’s tough out there for Bitcoin miners. High energy prices and massive crashes in the price of the crypto asset battered the sector throughout 2022, leading to bankruptcies and loan defaults. In Canada, the federal government and five provinces have announced measures that make it harder for miners to operate in the country. Hut 8 has a relatively strong balance sheet compared to its peers, but the company said it will still have to consider selling Bitcoin or taking on debt to make it through the interim period before the deal closes.

New Hut will have six digital asset mining sites across Canada and the U.S. Both Hut 8 and US Bitcoin have diversified their revenue streams, a strategy that has proven useful during the crypto downturn. Hut 8 has a high-performance computing data centre business in addition to its Bitcoin mining operations, while US Bitcoin also sells software that helps miners manage their sites and energy use. 

What’s next: The deal needs approval by the courts and shareholders, and New Hut’s common stock needs approval for listing on the Toronto Stock Exchange and The Nasdaq Capital Market. Leverton, meanwhile, said she isn’t browsing real estate listings on the beach in Miami just yet. ”I’m entirely focused on getting this transaction closed,” she said.