Exhibit 4.5


 








 


HUT
8 MINING CORP.


 


Unaudited
Condensed Consolidated Interim Financial Statements 


Amended
and Restated 


(In
Canadian dollars)


 


Three
and nine months ended September 30, 2020 and 2019




     1


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Unaudited
Condensed Consolidated Interim Statements of Financial Position 


Amended
and Restated


 


	 	 	September 30,	 	 	December 31,	 
	 	 	2020	 	 	2019	 
	Assets	 	 	 	 	 	 	 	 
	Current assets	 	 	 	 	 	 	 	 
	Cash	 	$	2,259,951	 	 	$	2,946,017	 
	Digital assets (Note 5)	 	 	14,119,230	 	 	 	10,484,106	 
	Digital assets collateral (Note 5)	 	 	26,843,667	 	 	 	-	 
	Digital assets receivable (Note 5)	 	 	66,608	 	 	 	943,438	 
	Deposits and prepaid expenses (Note 4)	 	 	3,214,703	 	 	 	321,189	 
	 	 	 	46,504,159	 	 	 	14,694,750	 
	Non-current assets	 	 	 	 	 	 	 	 
	Plant and equipment (Note 6)	 	 	21,132,230	 	 	 	34,883,085	 
	Digital assets collateral (Note 5)	 	 	-	 	 	 	15,883,182	 
	Deposits and prepaid expenses (Note 4)	 	 	4,573,405	 	 	 	5,776,227	 
	Total assets	 	$	72,209,794	 	 	$	71,237,244	 
	Liabilities and shareholders’ equity	 	 	 	 	 	 	 	 
	Current liabilities	 	 	 	 	 	 	 	 
	Accounts payable and accrued liabilities (Note 7)	 	$	4,090,633	 	 	$	2,496,864	 
	Loans payable (Note 8)	 	 	27,006,311	 	 	 	6,231,548	 
	 	 	 	31,096,944	 	 	 	8,728,412	 
	Non-current liabilities	 	 	 	 	 	 	 	 
	Loans payable (Note 8)	 	 	-	 	 	 	19,807,075	 
	 	 	 	31,096,944	 	 	 	28,535,487	 
	Shareholders’ equity	 	 	 	 	 	 	 	 
	Share capital (Note 9)	 	 	177,158,850	 	 	 	170,622,599	 
	Contributed surplus (Note 9)	 	 	4,069,867	 	 	 	5,300,480	 
	Warrants (Note 9)	 	 	2,763,301	 	 	 	1,367,901	 
	Accumulated deficit	 	 	(142,879,169	)	 	 	(134,589,223	)
	 	 	 	41,112,850	 	 	 	42,701,757	 
	Total liabilities and shareholders’ equity	 	$	72,209,794	 	 	$	71,237,244	 



 


Reporting
entity and going concern (Note 1) 


Subsequent
event (Note 13)


 


Approved
on behalf of the Board:


 





	“Bill Tai”	“Joseph Flinn”
	Director	Director







     2


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Unaudited
Condensed Consolidated Interim Statements of Income (Loss) and Comprehensive Income (Loss) 


Amended
and Restated 


For
the three and nine months ended September 30, 2020 and September 30, 2019


 


	 	 	Three
    months ended September 30,	 	 	Nine
    months ended September 30,	 
	 	 	2020	 	 	2019	 	 	2020	 	 	2019	 
	 	 	 	 	 	(Restated
    - Note 14)	 	 	 	 	 	(Restated
    - Note 14)	 
	Revenue	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Digital
    assets mined (Note 5)	 	$	5,264,369	 	 	$	26,749,874	 	 	$	27,233,929	 	 	$	67,132,276	 
	Hosting
    fees	 	 	490,363	 	 	 	-	 	 	 	490,363	 	 	 	-	 
	Cost
    of revenue	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Site
    operating costs	 	 	(7,871,231	)	 	 	(11,353,029	)	 	 	(29,120,406	)	 	 	(34,372,623	)
	Depreciation
    (Note 6, 14)	 	 	(3,545,173	)	 	 	(8,178,269	)	 	 	(17,512,599	)	 	 	(24,534,807	)
	Gross
    profit	 	 	(5,661,672	)	 	 	7,218,576	 	 	 	(18,908,713	)	 	 	8,224,846	 
	Gain
    on use of digital assets (Note 5)	 	 	198,369	 	 	 	514,135	 	 	 	1,800,984	 	 	 	5,433,530	 
	Revaluation
    of digital assets (Note 5)	 	 	5,577,854	 	 	 	(10,050,642	)	 	 	13,713,962	 	 	 	8,243,089	 
	 	 	 	5,776,223	 	 	 	(9,536,507	)	 	 	15,514,946	 	 	 	13,676,619	 
	Expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Share
    based payments (Note 9)	 	 	(167,743	)	 	 	(670,136	)	 	 	479,892	 	 	 	(2,427,144	)
	Professional	 	 	(379,510	)	 	 	(77,259	)	 	 	(1,320,720	)	 	 	(376,717	)
	General
    and office	 	 	(250,428	)	 	 	(159,114	)	 	 	(748,587	)	 	 	(611,889	)
	Salary
    and benefits	 	 	(149,542	)	 	 	(454,223	)	 	 	(521,329	)	 	 	(970,795	)
	Investor
    and public relations	 	 	-	 	 	 	(2,909	)	 	 	(5,000	)	 	 	(35,577	)
	Regulatory	 	 	(8,485	)	 	 	(13,765	)	 	 	(98,366	)	 	 	(95,596	)
	 	 	 	(955,708	)	 	 	(1,377,406	)	 	 	(2,214,110	)	 	 	(4,517,718	)
	Operating
    income (loss)	 	 	(841,157	)	 	 	(3,695,337	)	 	 	(5,607,877	)	 	 	17,383,747	 
	Foreign
    exchange gain (loss)	 	 	508,606	 	 	 	(370,374	)	 	 	(772,714	)	 	 	703,347	 
	Finance
    expense	 	 	(569,620	)	 	 	(1,146,630	)	 	 	(1,916,313	)	 	 	(3,544,978	)
	Finance
    income	 	 	1,833	 	 	 	23,700	 	 	 	6,959	 	 	 	32,812	 
	Other
    gain	 	 	-	 	 	 	-	 	 	 	-	 	 	 	951,059	 
	Net
    income (loss)	 	$	(900,338	)	 	$	(5,188,641	)	 	$	(8,289,945	)	 	$	15,525,987	 
	Basic
    earning (loss) per share	 	 	(0.01	)	 	 	(0.07	)	 	 	(0.09	)	 	 	0.20	 
	Diluted
    earning (loss) per share	 	 	(0.01	)	 	 	(0.07	)	 	 	(0.09	)	 	 	0.20	 
	Weighted-average
    shares used in	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	computation
    of earningd per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Basic	 	 	96,732,232	 	 	 	78,024,609	 	 	 	92,243,948	 	 	 	76,649,808	 
	Diluted	 	 	97,048,899	 	 	 	78,024,609	 	 	 	92,560,615	 	 	 	77,919,908	 








     3


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Unaudited
Condensed Consolidated Interim Statement of Cash Flows 


Amended
and Restated 


For
the nine months ended September 30, 2020 and September 30, 2019


 


	 	 	2020	 	 	2019	 
	 	 	 	 	 	(Restated - Note 14)	 
	Cash provided by (used in):	 	 	 	 	 	 	 	 
	Operating activities:	 	 	 	 	 	 	 	 
	Net income (loss)	 	$	(8,289,945	)	 	$	15,525,987	 
	Change in non-cash operating items:	 	 	 	 	 	 	 	 
	Digital assets mined	 	 	(27,233,929	)	 	 	(67,132,276	)
	Digital assets converted to fiat currency	 	 	29,030,097	 	 	 	47,527,631	 
	Depreciation	 	 	17,512,599	 	 	 	24,534,807	 
	Gain on use of digital assets	 	 	(1,800,984	)	 	 	(5,433,530	)
	Revaluation of digital assets	 	 	(13,713,962	)	 	 	(8,243,089	)
	Share based payments	 	 	(479,890	)	 	 	2,427,144	 
	Gain on shares issued to settle accounts payable	 	 	-	 	 	 	(951,059	)
	Net finance expense and other	 	 	(620,002	)	 	 	3,309,214	 
	Foreign exchange	 	 	772,714	 	 	 	(703,344	)
	Accretion expense on lease obligations	 	 	19,556	 	 	 	-	 
	 	 	 	(4,803,746	)	 	 	10,861,485	 
	Change in non-cash working capital:	 	 	 	 	 	 	 	 
	Accounts payable and accrued liabilities	 	 	1,882,550	 	 	 	(2,044,104	)
	Total change in non-cash operating working capital	 	 	1,882,550	 	 	 	(2,044,104	)
	Net cash used in operating activities	 	 	(2,921,196	)	 	 	8,817,381	 
	Investing activities	 	 	 	 	 	 	 	 
	Purchase of mining equipment	 	 	(3,779,746	)	 	 	-	 
	Deposits and prepaid expenses	 	 	(1,672,691	)	 	 	(4,884,383	)
	Net cash used in investing activities	 	 	(5,452,437	)	 	 	(4,884,383	)
	Financing activities	 	 	 	 	 	 	 	 
	Repayment of loan payable	 	 	(6,622,303	)	 	 	(4,306,586	)
	Finance draw from loan payable	 	 	6,615,500	 	 	 	-	 
	Repayment of lease obligations	 	 	(26,150	)	 	 	-	 
	Proceeds from issuance of common shares, net of
    issue costs	 	 	7,719,620	 	 	 	-	 
	Proceeds from exercise of warrants	 	 	900	 	 	 	-	 
	Net cash provided by (used in) financing activities	 	 	7,687,567	 	 	 	(4,306,586	)
	Increase in cash	 	 	(686,066	)	 	 	(373,588	)
	Cash, beginning of year	 	 	2,946,017	 	 	 	3,556,560	 
	Cash, end of period	 	$	2,259,951	 	 	$	3,182,972	 



 


Significant
non-cash transactions included: 


		☐	Expiration
                                         of broker warrants of $1,367,901 (2019 - $Nil);






		☐	Issuance
                                         of broker warrants as share issuance costs valued at $127,986 (2019 - $Nil);





		☐	Payment
                                         in bitcoin of loans payable interest and principle totaling $Nil (2019 - $2,470,746);





		☐	Payment
                                         in bitcoin of accounts payable totaling $Nil (2019 - $7,736,330); and





		☐	Settlement
                                         of accounts payable in common shares valued at $Nil (2019 - $5,855,486).






     4


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Unaudited
Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity 


Amended
and Restated





 


	 	 	Share Capital	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Number of	 	 	 	 	 	Shares to be	 	 	 	 	 	Contributed	 	 	Accumulated	 	 	 	 
	 	 	shares	 	 	Dollar amount	 	 	issued	 	 	Warrants	 	 	surplus	 	 	deficit	 	 	Total	 
	Balance,
    December 31, 2018	 	 	85,227,858	 	 	$	162,733,360	 	 	$	1,167,386	 	 	$	1,367,901	 	 	$	4,061,740	 	 	$	(136,671,025	)	 	$	32,659,362	 
	Shares issued for mining equipment	 	 	838,511	 	 	 	1,167,386	 	 	 	(1,167,386	)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	Shares issued in settlement of accounts payable	 	 	3,717,433	 	 	 	4,609,617	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	4,609,617	 
	Shares issued for services	 	 	419,507	 	 	 	667,256	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	667,256	 
	Share based payments	 	 	234,700	 	 	 	192,454	 	 	 	-	 	 	 	-	 	 	 	2,013,002	 	 	 	-	 	 	 	2,205,456	 
	Net loss and comprehensive loss	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	15,525,987	 	 	 	15,525,987	 
	Balance,
    September 30, 2019	 	 	90,438,009	 	 	$	169,370,073	 	 	$	-	 	 	$	1,367,901	 	 	$	6,074,742	 	 	$	(121,145,038	)	 	$	55,667,678	 







 


	 	 	Share Capital	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Number of	 	 	 	 	 	Shares to be	 	 	 	 	 	Contributed	 	 	Accumulated	 	 	 	 
	 	 	shares	 	 	Dollar amount	 	 	issued	 	 	Warrants	 	 	surplus	 	 	deficit	 	 	Total	 
	Balance, December 31, 2019	 	 	90,438,009	 	 	$	170,622,599	 	 	$	-	 	 	$	1,367,901	 	 	$	5,300,480	 	 	$	(134,589,223	)	 	$	42,701,757	 
	Shares issued for public offering	 	 	5,750,456	 	 	 	5,702,617	 	 	 	-	 	 	 	2,635,544	 	 	 	-	 	 	 	-	 	 	 	8,338,161	 
	Share issuance costs	 	 	-	 	 	 	(971,527	)	 	 	-	 	 	 	127,986	 	 	 	-	 	 	 	-	 	 	 	(843,541	)
	Shares issued on exercise of RSU	 	 	543,359	 	 	 	1,804,260	 	 	 	-	 	 	 	-	 	 	 	(1,804,260	)	 	 	-	 	 	 	0	 
	Shares issued for exercise of warrants	 	 	500	 	 	 	900	 	 	 	-	 	 	 	(229	)	 	 	229	 	 	 	-	 	 	 	900	 
	Share based payments	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(479,892	)	 	 	-	 	 	 	(479,892	)
	Share based payments withholding	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(68,668	)	 	 	-	 	 	 	(68,668	)
	Expiry of broker warrants	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(1,367,901	)	 	 	1,367,901	 	 	 	-	 	 	 	-	 
	Loss on retirement of Bitfury debt	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(245,922	)	 	 	-	 	 	 	(245,922	)
	Net loss and comprehensive loss	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(8,289,945	)	 	 	(8,289,945	)
	Balance, September 30, 2020	 	 	96,732,324	 	 	$	177,158,850	 	 	$	-	 	 	$	2,763,301	 	 	$	4,069,867	 	 	$	(142,879,169	)	 	$	41,112,850	 






     5


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Notes
to Unaudited Condensed Consolidated Interim Financial Statements


Amended and Restated 


For
the three and nine months ended September 30, 2020 and 2019


 












 


	1.	Reporting
entity and going concern



 


(a)
Reporting entity


 


Hut
8 Mining Corp. (the “Company” or “Hut 8”) was incorporated under the laws of the Province of British Columbia
on June 9, 2011. The registered office of the Company is located at Suite 1700 Park Place, 666 Burrard St, Vancouver BC, Canada,
V6C 2X8 and the headquarter is located at 130 King St. W, Suite 1800, Toronto, ON, Canada, M5X 2A2. The Company’s common
shares are listed under the symbol “HUT” on the Toronto Stock Exchange (“TSX”) and as “HUTMF”
on the OTCQX Exchange. As at September 30, 2020, Bitfury Holding BV (“Bitfury”) owned 40% of the Company’s common
shares and is a controlling shareholder and related party of Hut 8. The Company is in the business of utilizing specialized equipment
to solve complex computational problems to validate transactions on the bitcoin blockchain. The Company receives bitcoin in return
for successful service.


 


(b)
Going concern


 


These
unaudited condensed interim consolidated financial statements have been prepared assuming the Company will continue as a going
concern, notwithstanding that the Company has an accumulated deficit. As at September 30, 2020, the Company has a working capital
surplus of $15,407,215 and shareholders’ equity of $41,112,850.


 


The
Company’s ability to continue as a going concern and realize its assets and discharge its liabilities in the normal course
of business is dependent upon maintaining sustained profitability and maintaining the Company’s loans in good standing.
There are various risks and uncertainties affecting the Company’s operations including, but not limited to, the viability
of the economics of bitcoin mining, the liquidity of bitcoin, the Company’s ability to maintain its security of its digital
assets and execute its business plan. As discussed in Note 8, the Genesis loan requires bitcoin collateral. If the bitcoin price
reaches a price where Hut 8 does not have the bitcoin to sufficiently collateralize the loan, then after a cure period of 10 days,
Genesis may be able to liquidate a significant portion of Hut 8’s bitcoin, demand immediate repayment of the loan, or terminate
the loan agreement. The Company’s strategy to mitigate these risks and uncertainties is to execute a business plan aimed
at continued security, operational efficiency, revenue growth, improving overall mining profit, managing operating expenses and
working capital requirements, and securing additional financing, as needed, through one or more of loans and equity investments.
Given the volatility in the financial markets, it may be difficult to raise financing when needed. Failure to implement the Company’s
business plan could have a material adverse effect on the Company’s financial condition and/or financial performance, see
also Note 12. Accordingly, there are material risks and uncertainties that cast significant doubt about the Company’s ability
to continue as a going concern.


 


These
unaudited condensed interim consolidated financial statements do not include any adjustments or disclosures that would be required
if assets are not realized and liabilities and commitments are not settled in the normal course of operations. If the Company
is unable to continue as a going concern, then the carrying value of certain assets and liabilities would require revaluation
to a liquidation basis, which could differ materially from the values presented in the consolidated financial statements





     6


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Notes
to Unaudited Condensed Consolidated Interim Financial Statements


Amended and Restated 


For
the three and nine months ended September 30, 2020 and 2019


 









 


		2.	Statement
of compliance and basis of presentation



 


(a)
Statement of compliance


 


These
unaudited condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard
34, Interim Financial Reporting. Certain information and note disclosures normally included in the audited annual consolidated
financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by
the International Accounting Standards Board (“IASB”), have been omitted or condensed. These condensed interim consolidated
financial statements should be read in conjunction with the Company’s December 31, 2019 audited annual consolidated financial
statements.


 


The
Company is in the business of digital currencies, many aspects of which are not specifically addressed by current IFRS guidance.
The Company is required to make judgments as to the application of IFRS and the selection of its accounting policies. The Company
has disclosed its presentation, recognition and derecognition, and measurement of digital currencies, and the recognition of revenue
as well as significant assumptions and judgments, however, if specific guidance is enacted by the IASB in the future, the impact
may result in changes to the Company’s earnings and financial position as presented.


 


These
unaudited condensed consolidated interim financial statements were approved and authorized for issuance by the Board of Directors
for November 12, 2020.


 


(b)
Basis of presentation


 


The
unaudited condensed consolidated interim financial statements have been prepared on a historical cost basis except for some financial
instruments that have been measured at fair value.


 


(c)
Functional and presentation currency


 


Items
included in the unaudited condensed consolidated interim financial statements of the Company and its wholly owned subsidiaries
are measured using the currency of the primary economic environment in which the entity operates. These unaudited condensed consolidated
interim financial statements have been prepared in Canadian dollars, which is the Company’s functional and presentation
currency.


 


(d)
Consolidation


 


These
unaudited condensed consolidated interim financial statements include the financial statements of the Company and its wholly-owned
subsidiaries. All significant intercompany transactions, balances, income and expenses are eliminated on consolidation.


 


The
Company has three wholly owned subsidiaries: Hut 8 Holdings Inc., Hut 8 Asset Management Inc., and Hut 8 Finance Ltd.


 


The
Company incorporated Hut 8 Asset Management Inc. on November 1, 2018 for the Company’s digital currency trading operations
in Bridgetown, Barbados. No transactions have occurred to date. The Company incorporated Hut 8 Finance Ltd. on January 30, 2019
in Ontario, Canada, which is also related to the digital currency trading operations. 




     7


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Notes
to Unaudited Condensed Consolidated Interim Financial Statements


Amended and Restated 


For
the three and nine months ended September 30, 2020 and 2019 


 



 


		3.	Significant
accounting policies, judgements, and estimates



 


The
preparation of the Company’s unaudited condensed consolidated interim financial statements requires management to make judgments,
estimates and assumptions that affect the reported amounts; however, uncertainty about these assumptions and estimates could result
in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods. The
key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fiscal year are described
below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing
circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond
the control of the Company.


 


The
following are the estimates and assumptions that have been made in applying the Company’s accounting policies that have
the most significant effect on the amounts in the unaudited condensed consolidated interim financial statements:


 


		(i)	Functional
currency



 


The
functional currency of the Company has been assessed by management based on consideration of the currency and economic factors
that mainly influence the Company’s digital currencies, production and operating costs, financing and related transactions.
Specifically, the Company considers the currencies in which digital currencies are most commonly denominated and the currencies
in which expenses are settled, by each entity, as well as the currency in which each entity receives or raises financing. Changes
to these factors may have an impact on the judgment applied in the determination of the Company’s functional currency.





     8


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Notes
to Unaudited Condensed Consolidated Interim Financial Statements


Amended and Restated 


For
the three and nine months ended September 30, 2020 and 2019


 












 


	3.	Significant
accounting policies, judgements, and estimates (continued)



 


		(ii)	Taxes



 


Uncertainties
exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future
taxable income. The Company has not recognized the value of any deferred tax assets in its statements of financial position.


 


The
Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will
be sustained based on its technical merits. The Company measures and records the tax benefits from such a position based on the
largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company’s estimated
liabilities related to these matters are adjusted in the period in which the uncertain tax position is effectively settled, the
statute of limitations for examination expires or when additional information becomes available. The Company’s liability
for unrecognized tax benefits requires the use of assumptions and significant judgment to estimate the exposures associated with
our various filing positions. Although the Company believes that the judgments and estimates made are reasonable, actual results
could differ and resulting adjustments could materially affect our effective income tax rate and income tax provision.


 


The
Company has earned bitcoin from the commercial activity of bitcoin mining. The Company has followed the published Canada Revenue
Agency (“CRA”) view that bitcoin is a commodity and inventory of the business, the value of which is included in the
calculation of taxable income from the business. Bitcoin is valued in accordance with Section 10 of the Income Tax Act. Revenue
from bitcoin mining is included in taxable income when the bitcoin earned is sold or exchanged for cash or another asset. There
is uncertainty regarding the taxation of cryptocurrency and the CRA may assess the Company differently from the position adopted.
This could result in additional current taxes payable with equal offset to deferred tax expense.


 


		(iii)	Impairment
of non-financial assets



 


Impairment
exists when the carrying value of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to
sell and its value in use. These calculations are based on available data, other observable inputs and projections of cash flows,
all of which are subject to estimates and assumptions. Recoverable amounts are also sensitive to assumptions about the future
usefulness of in- process development and the related marketing rights.


 


		(iv)	Foreign
currency translation



 


Within
each entity, transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing on
dates of transactions. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies
are translated to the functional currency at the exchange rate at that date. Foreign exchange differences arising on translation
are recognized in the statement of operations. Non-monetary assets and liabilities that are measured at historical cost are translated
using the exchange rate at the date of the transaction.





     9


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Notes
to Unaudited Condensed Consolidated Interim Financial Statements


Amended and Restated 


For
the three and nine months ended September 30, 2020 and 2019


 



 


		3.	Significant
accounting policies, judgements, and estimates (continued)



 


		(v)	Fair
value measurement of stock options and broker warrants



 


The
Company measures the cost of equity-settled transaction by reference to the fair value of the equity instruments at the date on
which they are granted. Estimating fair value requires determining the most appropriate valuation model, which is dependent on
the terms and conditions of the grant. This estimate also requires the determination of the most appropriate inputs to the valuation
model including the expected life of the broker warrants, volatility and dividend yield and making assumptions about them. The
assumptions and models used for estimating fair value for stock options and broker warrants are disclosed in Note 9.


 


		(vi)	Revenue
recognition



 


The
Company recognizes revenue from the provision of transaction verification services within the bitcoin blockchain, and as consideration
for these services, the Company receives bitcoin. Revenue is measured based on the fair value of the bitcoin received. The fair
value is determined using the closing bitcoin price per www.coinmarketcap.com (“Coinmarketcap”).
The Company is relying on the data available at Coinmarketcap to be an accurate representation of the closing price for the digital
assets.


 


There
is currently no specific definitive guidance in IFRS or alternative accounting frameworks for the accounting for the production
and mining of bitcoin and management has exercised significant judgment in determining appropriate accounting treatment for the
recognition of revenue. In the event authoritative guidance is enacted by the IASB, the Company may be required to change its
policies which could result in a change in the Company’s financial position and earnings.


 


		(vii)	Digital
assets



 


Digital
assets consist of Bitcoin. Digital assets meet the definition of intangible assets in IAS 38 Intangible Assets as they are identifiable
non-monetary assets without physical substance. They are initially recorded at cost and the revaluation method is used to measure
the digital assets subsequently. Where digital assets are recognized as revenue, the fair value of the bitcoin received is considered
to be the cost of the digital assets. Under the revaluation method, increases in fair value are recorded in other comprehensive
income, while decreases are recorded in profit or loss. The Company revalues its digital asset at the end of each of its three
interim financial reporting periods and at its annual financial reporting period end date. There is no recycling of gains from
other comprehensive income to profit or loss. However, to the extent that an increase in fair value reverses a previous decrease
in fair value that has been recorded in profit or loss, that increase is recorded in profit or loss. Decreases in fair value that
reverse gains previously recorded in other comprehensive income are recorded in other comprehensive income.


 


Digital
assets are measured at fair value using the quoted price on Coinmarketcap. Management considers this fair value to be a Level
2 input under IFRS 13 Fair Value Measurement fair value hierarchy as the price on this source represents an average of
quoted prices on multiple digital currency exchanges


 


The
Company’s determination to classify its holding of bitcoin as current assets is based on management’s assessment that
its bitcoin held can be considered to be a commodity, the availability of liquid markets to which the Company may sell a portion
of its holdings and that the Company is actively selling its digital currencies in the near future to generate a profit from price
fluctuations. 




     10


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Notes
to Unaudited Condensed Consolidated Interim Financial Statements


Amended and Restated 


For
the three and nine months ended September 30, 2020 and 2019


 









 


		3.	Significant
accounting policies, judgements, and estimates (continued)



 


		(viii)	Non-monetary
transactions



 


Where
the Company is settling a liability for the purchase of goods and services where the price was established in a fiat currency,
the difference between the liability settled and the fair value of the digital assets transferred is recognized as a gain or loss
on settlement. Otherwise, the transaction is measured based on the fair value of the digital assets exchanged. Any difference
between the fair value of the digital assets exchanged and the carrying amount of the digital assets is recognized in profit and
loss.


 


		(ix)	Earnings
per share



 


The
calculation of earnings per common share is based on the reported net income divided by the weighted average number of shares
outstanding during the period. Diluted earnings per share is calculated on the treasury stock basis. Where potentially dilutive
equity instruments are anti-dilutive, basic and diluted earnings per share are the same.


 


		(x)	Share
issue costs



 


Costs
incurred for the issue of common shares are deducted from share capital.


 


		(xi)	Share
based transactions



 


Equity-settled
share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received,
except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments
granted, measured at the date the entity obtains the goods or the counterparty renders the service.


 


The
Company issued broker warrants as part of brokered private placement offering for common shares. Broker warrants are measured
at fair value at the date of the offering and accounted for as a separate component of shareholders’ equity. When the broker
warrants are exercised, the proceeds received together with the related amount allocated as a separate component of shareholders’
equity are allocated to capital stock. If the broker warrants expire unexercised, the related amount separately allocated to shareholders’
equity is allocated to contributed surplus. 




     11


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Notes
to Unaudited Condensed Consolidated Interim Financial Statements


Amended
and Restated 


For
the three and nine months ended September 30, 2020 and 2019


 






 


		3.	Significant
accounting policies, judgements, and estimates (continued)



 


		(xii)	Useful
life of mining equipment



 


Management
is depreciating mining equipment using a straight-line basis, with a useful life of:


 





	Seacan containers and supporting
    infrastructure	4 years
	Mining servers	2 years



 


The
mining equipment is used to generate bitcoin. The rate at which the Company generates digital assets and, therefore, consumes
the economic benefits of its mining equipment are influenced by several factors including, but not limited to, the following:


 


		Ÿ	The
                                         complexity of the mining process which is driven by the algorithms contained within the
                                         digital assets open source software; and



 


		Ÿ	Technological
                                         obsolescence reflecting rapid development in the mining machines such that more recently
                                         developed hardware is more economically efficient to run in terms of digital assets mined
                                         as a function of operating costs, primarily power costs (ie., the speed of mining machines
                                         evolution in the industry) is such that later mining machine models generally have faster
                                         processing capacity combined with lower operating costs and a lower cost of purchase.



 


Based
on the Company and the industry’s limited history to date, management is limited by the market data available. Furthermore,
the data available also includes data derived from the use of economic modelling to forecast future digital assets and the assumptions
included in such forecasts, including digital asset’s price and network difficulty, and derived from management’s
assumptions. Based on current data available, management has determined that the straight-line method of amortization best reflects
the current expected useful life of mining equipment. Management will review their estimates at each reporting date and will revise
such estimates as and when data become available. Management will review the appropriateness of its assumption related to residual
value at each reporting date. 




     12


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Notes
to Unaudited Condensed Consolidated Interim Financial Statements


Amended
and Restated 


For
the three and nine months ended September 30, 2020 and 2019


 









 


		4.	Deposits
and prepaid expenses





 


	 	 	September 30, 2020	 	 	December 31, 2019	 
	Current	 	 	 	 	 	 	 	 
	Deposit on equipment order(i)	 	$	2,127,167	 	 	$	-	 
	Prepaid electricity(ii)	 	 	974,558	 	 	 	158,391	 
	Prepaid insurance	 	 	108,455	 	 	 	82,225	 
	Miscelaneous deposits	 	 	4,523	 	 	 	80,573	 
	Total current deposits and prepaids expenses	 	$	3,214,703	 	 	$	321,189	 
	 	 	 	 	 	 	 	 	 
	Non-current	 	 	 	 	 	 	 	 
	Deposits related to electricity supply
    under Electricity Supply
    Agreement(iii)	 	$	4,431,417	 	 	$	5,652,240	 
	Land lease deposit	 	 	141,988	 	 	 	123,987	 
	Total non-current deposits and prepaids expenses	 	$	4,573,405	 	 	$	5,776,227	 



 


		(i)	Payments
                                         for mining equipment to ship from China in November 2020.



 


		(ii)	Electricity
                                         deposits for facility in Drumheller, Alberta.



 


		(iii)	Electricity
                                         deposits for facility in Medicine Hat, Alberta.







     13


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Notes
to Unaudited Condensed Consolidated Interim Financial Statements


Amended
and Restated 


For
the three and nine months ended September 30, 2020 and 2019


 









 


		5.	Digital
                                         assets 



 


Digital
assets solely consist of bitcoin. Below summarizes the bitcoin mined and transacted.








 


	 	 	 	 	 	Bitcoin	 
	Balance, December 31, 2018	 	$	15,408,189	 	 	 	3,035	 
	Bitcoin mined	 	 	81,990,119	 	 	 	8,618	 
	Bitcoin traded for cash	 	 	(68,181,784	)	 	 	(6,883	)
	Bitcoin used for debt and interest payments	 	 	(2,808,396	)	 	 	(449	)
	Bitcoin paid for services	 	 	(7,514,399	)	 	 	(1,397	)
	Gain on use of digital assets	 	 	4,143,311	 	 	 	-	 
	Revaluation of digital assets	 	 	4,273,686	 	 	 	-	 
	Balance, December
    31, 2019	 	$	27,310,725	 	 	 	2,923	 
	Bitcoin mined	 	 	27,233,929	 	 	 	2,282	 
	Bitcoin traded for cash(i)	 	 	(28,986,610	)	 	 	(2,350	)
	Bitcoin paid for services(i)	 	 	(43,485	)	 	 	(4	)
	Gain on use of digital assets(i)	 	 	1,800,983	 	 	 	-	 
	Revaluation of digital assets(ii)	 	 	13,713,962	 	 	 	-	 
	Balance, September
    30, 2020	 	$	41,029,505	 	 	 	2,851	 
	Current portion	 	 	 	 	 	 	 	 
	Digital assets, current(iii)	 	$	14,119,230	 	 	 	981	 
	Bitcoin used as collateral(iv)	 	$	26,843,667	 	 	 	1,865	 
	Digital assets, receivable(v)	 	$	66,608	 	 	 	5	 



 


		(i)	During
                                         the nine months ended September 30, 2020, the Company used its bitcoin for cash, payments
                                         of debts, interest, and other services totaling $29,030,095 with a cost of $27,229,112,
                                         which resulted in a realized gain on use of $1,800,983.



 


		(ii)	Digital
                                         assets held are revalued each reporting period based on the fair market value of the
                                         price of bitcoin on the reporting date. As at September 30, 2020, the price of bitcoin
                                         was $14,390 (US$10,788) which for the nine months ended September 30, 2020 resulted in
                                         a revaluation gain of $13,713,962.



 


		(iii)	Bitcoin
                                         that is held by Hut 8, is available for use, and not subject to any restrictions or covenants
                                         as at September 30, 2020.



 


		(iv)	Digital
                                         assets held by Genesis as collateral for the loan (Note 8).



 


		(v)	Bitcoin
                                         receivable refers to the amount of bitcoin mined that has not been transferred from the
                                         mining pool to the Company. The Company mined approximately 5 bitcoins during September
                                         2020 that were received shortly after the quarter end.







     14


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Notes
to Unaudited Condensed Consolidated Interim Financial Statements


Amended and Restated 


For
the three and nine months ended September 30, 2020 and 2019


 









 


		6.	Plant
and equipment



 





	 	 	Infrastructure	 	 	Mining servers	 	 	Right-of-use 
 assets(i) 
	 	 	Total	 
	Cost	 	 	 	 	 	 	 	 	 	 	 	 
	As at January 1, 2019	 	$	30,006,954	 	 	$	75,292,993	 	 	$	-	 	 	$	105,299,947	 
	Additions	 	 	2,123,912	 	 	 	7,110,488	 	 	 	575,274	 	 	 	9,809,674	 
	As at December 31, 2019	 	 	32,130,866	 	 	 	82,403,481	 	 	 	575,274	 	 	 	115,109,621	 
	Additions	 	 	869,342	 	 	 	2,910,405	 	 	 	-	 	 	 	3,779,747	 
	As at September 30, 2020	 	 	33,000,208	 	 	 	85,313,886	 	 	 	575,274	 	 	 	118,889,368	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Accumulated Depreciation	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	As at January 1, 2019	 	$	8,743,809	 	 	$	38,429,130	 	 	$	-	 	 	$	47,172,939	 
	Depreciation	 	 	6,314,949	 	 	 	26,664,389	 	 	 	74,259	 	 	 	33,053,597	 
	As at December 31, 2019	 	 	15,058,758	 	 	 	65,093,519	 	 	 	74,259	 	 	 	80,226,536	 
	Depreciation	 	 	5,109,866	 	 	 	12,370,514	 	 	 	32,219	 	 	 	17,512,599	 
	Accretion expense	 	 	-	 	 	 	-	 	 	 	18,003	 	 	 	18,003	 
	As at September 30, 2020	 	 	20,168,624	 	 	 	77,464,033	 	 	 	124,481	 	 	 	97,757,138	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net Book Value December 31, 2019	 	 	17,072,108	 	 	 	17,309,962	 	 	 	501,015	 	 	 	34,883,085	 
	Net Book Value September 30, 2020	 	 	12,831,584	 	 	 	7,849,853	 	 	 	450,793	 	 	 	21,132,230	 








 


		(i)	The
                                         right-of-use assets (“ROU”) comprise of a 10-year land lease with the City
                                         of Medicine Hat, dated June 1, 2018, and a three-year sublease with a landlord in Drumheller
                                         with an optional 3-year extension dated May 8, 2017. See Note 8 for the related lease
                                         liability.



 


		☐	The
                                         City of Medicine Hat lease is $1,395 monthly in lease payment. A ROU asset and a related
                                         lease liability had been recognized as such.



 


		☐	The
                                         Drumheller sublease is $1,500 monthly in lease payment. A ROU asset and a related lease
                                         liability had been recognized as such.



 


		7.	Accounts
                                         payable and accrued liabilities 



 


	 	 	September 30, 2020	 	 	December 31, 2019	 
	Accounts payable	 	$	3,575,187	 	 	$	563,868	 
	Other accrued liabilities	 	 	515,446	 	 	 	657,564	 
	Accrued interest	 	 	-	 	 	 	1,275,432	 
	Total	 	$	4,090,633	 	 	$	2,496,864	 






     15


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Notes
to Unaudited Condensed Consolidated Interim Financial Statements


Amended and Restated 


For
the three and nine months ended September 30, 2020 and 2019


 









 


		8.	Loans
payable





 


	 	 	September 30, 2020	 	 	December 31, 2019	 
	Genesis	 	$	26,678,000	 	 	$	19,482,000	 
	Lease liabilities	 	 	328,311	 	 	 	325,075	 
	Bitfury	 	 	-	 	 	 	6,231,548	 
	 	 	 	27,006,311	 	 	 	26,038,623	 
	Current portion	 	$	27,006,311	 	 	$	4,070,004	 
	Non-current portion	 	$	-	 	 	$	21,968,619	 




 


		(i)	Genesis
loan







 


As
at September 30, 2020, the Company has a loan payable of $26,678,000 (US$20,000,000) to Genesis Global Capital, LLC (“Genesis”).
The loan has an open term where Genesis can call the loan principal, or any part thereof, with a five-month notice to the Company,
and Hut 8 can repay the loan, or any part thereof, to Genesis with one month notice. The loan bears interest at 8% per annum,
which is payable monthly. The loan has a covenant requiring 95% of the loan principal to be collateralized by bitcoin. The bitcoin
for collateral related to the loan are held by Genesis. If the collateralized value of the bitcoin drops below 85% of loan, Genesis
may request additional bitcoin to bring the collateral back to the required levels. Conversely, if the collateralized bitcoin
value goes over 105% of the loan, the Company may request the return of the surplus bitcoin. Additionally, if the price of bitcoin
drops below US$6,500, the collateral requirement will automatically change to 80% of the loan value and the interest rate adjusts
to 10% per annum until the bitcoin price increases above US$6,500 again. Interest expense for the three and nine months ended
September 30, 2020, respectively, was $556,384 (US$417,479) (2019 - $Nil), and $1,810,045 (US$1,333,664) (2019 - $Nil). A foreign
exchange gain of $ 578,000 and loss of $106,500 was recognized for the three and nine months ended September 30, 2020 (2019 -
$Nil).


 


		(ii)	Lease
liability



 


A
lease liability for each ROUs was recognized in 2018 amortized cost using the effective interest method. 




     16


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Notes
to Unaudited Condensed Consolidated Interim Financial Statements


Amended
and Restated 


For
the three and nine months ended September 30, 2020 and 2019


 









 


		9.	Equity



 


		(a)	Common
shares



 


The
Company has authorized share capital of an unlimited number of common shares.


 


	 	 	Number of shares	 	 	Amount	 
	Balance, December 31, 2018	 	 	85,227,858	 	 	$	162,733,360	 
	Shares issued for mining equipment	 	 	838,511	 	 	 	1,167,386	 
	Shares issued in settlement of accounts payable	 	 	3,717,433	 	 	 	4,609,617	 
	Shares issued for services	 	 	419,507	 	 	 	667,256	 
	Shares issued for RSUs	 	 	234,700	 	 	 	1,444,980	 
	Balance, December 31, 2019	 	 	90,438,009	 	 	$	170,622,599	 
	Shares issued for RSUs(i)	 	 	543,359	 	 	 	1,804,260	 
	Shares issued for public offering(ii)	 	 	5,750,456	 	 	 	5,702,617	 
	Cost of issuance attributed to public offering(ii)	 	 	-	 	 	 	(971,527	)
	Shares issued for exercise of warrants	 	 	500	 	 	 	900	 
	Balance, September 30, 2020	 	 	96,732,324	 	 	$	177,158,850	 



 


		(i)	During
                                         the nine months ended September 30, 2020, the Company issued 543,359 shares related to
                                         exercise of restricted share units (“RSU”) and reallocated $1,804,260, the
                                         relative fair value of RSU’s net of employment withholdings, from contributed surplus
                                         to share capital.



 


		(ii)	On
                                         June 25, 2020, the Company completed its public offering (the “Offering”),
                                         and, with the underwriters exercising their over-allotment option, issued 5,750,456 units
                                         (“Unit”) at a price of $1.45 per Unit for gross proceeds of $8,338,161. Each
                                         unit comprises of one common share (each a “Common Share”) and one Common
                                         Share purchase warrant of the Company (each a “Warrant”). Each Warrant entitles
                                         the holder thereof to acquire one additional common share of the Company at an exercise
                                         price of $1.80 per share at any time for a period of 18 months. The Warrants are valued
                                         at $2,635,544 under the related fair value approach using the Black-Scholes Option Pricing
                                         model based on the following assumptions: expected life of 1.5 years, risk-free rate
                                         of 0.30%, volatility of 128% and dividend yield of 0%. The Company paid commissions and
                                         fees totaling $843,541 and issued 345,027 broker warrants with a fair value of $127,986.
                                         The broker warrants are determined using the Black-Scholes Option Pricing model based
                                         on the following assumptions: expected life of 2 years, interest rate of 0.30%, volatility
                                         of 118% and dividend yield of 0%.






     17


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Notes
to Unaudited Condensed Consolidated Interim Financial Statements


Amended and Restated 


For
the three and nine months ended September 30, 2020 and 2019


 









 


		9.	Equity
(continued)



 


		(b)	Warrants



 


The
warrant activity is as follows:




 


	 	 	Grant date	 	Number of warrants	 	 	Value	 
	Balance, January 1, 2019	 	 	 	 	2,882,222	 	 	$	1,367,901	 
	Balance, December 31, 2019	 	 	 	 	2,882,222	 	 	$	1,367,901	 
	 	 	 	 	 	 	 	 	 	 	 
	Broker warrants expired	 	2/7/2020	 	 	(660,000	)	 	 	(1,367,901	)
	Public offering warrants	 	6/25/2020	 	 	5,750,456	 	 	 	2,635,544	 
	Public offering - broker warrants	 	6/25/2020	 	 	345,027	 	 	 	127,986	 
	Warrants exercised	 	7/17/2020	 	 	(500	)	 	 	(229	)
	Balance, September 30, 2020	 	 	 	 	8,317,205	 	 	$	2,763,301	 



 


The
warrants issued and outstanding as at September 30, 2020 are as follows:


 


	 	 	 	 	 	 	Weighted average	 	 	 	 
	 	 	 	 	 	 	remaining contractual	 	 	 	 
	Exercise price	 	 	Number	 	 	life (months)	 	 	Expiry date	 
	$	4.50	 	 	 	2,222,222	 	 	 	36	 	 	9/10/2023	 
	$	1.80	 	 	 	5,749,956	 	 	 	15	 	 	12/25/2021	 
	$	1.45	 	 	 	345,027	 	 	 	21	 	 	6/25/2022	 
	$	2.51	 	 	 	8,317,205	 	 	 	21	 	 	 	 



 


		(c)	Incentive
plan



 


On
March 5, 2018, the Company adopted a Long-Term Incentive Plan (“LTIP”) under which it is authorized to grant stock
options, restricted share units and deferred share units (“Awards”) to officers, directors, employees, and consultants
enabling them to acquire common shares of the Company. The maximum number of common shares reserved for issuance of Awards that
may be granted under the plan is 10% of the issued and outstanding common shares of the Company.





     18


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Notes
to Unaudited Condensed Consolidated Interim Financial Statements


Amended
and Restated 


For
the three and nine months ended September 30, 2020 and 2019


 









 


	9.	Equity
(continued)



 


		(c)	Incentive
plan (continued)



 


Stock
options


 


The
stock option activity is as follows:




 


	 	 	 	Number of	 	 	Weighted average	 
	 	 	 	options	 	 	exercise price	 
	Balance, January 1, 2019	 	 	 	965,000	 	 	$	4.63	 
	Granted	 	 	 	110,000	 	 	 	1.20	 
	Forfeiture	 	 	 	(165,000	)	 	 	 	 
	Balance, December 31, 2019	 	 	 	910,000	 	 	 	4.34	 
	Forfeiture	 	 	 	(115,000	)	 	 	5.00	 
	Options outstanding, September 30, 2020	 	 	 	795,000	 	 	$	4.25	 
	Options exercisable, September 30, 2020	 	 	 	536,668	 	 	$	4.78	 



 


As
at September 30, 2020 the Company had the following stock options outstanding:


 


	 	 	 	Number of	 	 	Number of	 	 	Weighted	 	 	Weighted average	 
	Exercise price	 	 	options	 	 	options	 	 	average	 	 	remaining life	 
	 	 	 	outstanding	 	 	exercisable	 	 	exercise price	 	 	(months)	 
	$	1.14	 	 	 	100,000	 	 		-	 	 	$	1.14	 	 	 	51	 
	 	1.80	 	 	 	10,000	 	 	 	-	 	 	 	1.80	 	 	 	49	 
	 	3.00	 	 	 	90,000	 	 	 	60,000	 	 	 	3.00	 	 	 	36	 
	 	5.00	 	 	 	595,000	 	 	 	476,668	 	 	 	5.00	 	 	 	30	 
	$	4.25	 	 	 	795,000	 	 		536,668	 	 	$	4.78	 	 	 	34	 




 


During
the three and nine months ended September 30, 2020, the Company recorded a total of $76,548 and $289,475 (2019 – $195,286
and $798,639), respectively, as share based payments related to stock options. During the three and nine months, the Company also
recorded a reversal of share-based payments totaling $90,691 due to the forfeiture of 115,000 options. The compensation expense
was based on the fair value of each stock option on the date of the grant using the Black-Scholes option pricing model with the
following weighted average assumptions.


 


	 	 	2020	 	 	2019	 
	Expected life (years)	 	 	n/a	 	 	 	4.96	 
	Expected volatility	 	 	n/a	 	 	 	109.36	%
	Dividend rate	 	 	n/a	 	 	 	0.00	%
	Risk-free interest rate	 	 	n/a	 	 	 	2.00	%
	Weighted average fair value per option granted	 	 	n/a	 	 	$	3.08	 







     19


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Notes
to Unaudited Condensed Consolidated Interim Financial Statements


Amended and Restated 


For
the three and nine months ended September 30, 2020 and 2019


 









 


		9.	Equity
(continued)



 


Restricted
Share Units (“RSUs”)


 


The
Company has a restricted share unit plan that provides for the granting of restricted share units to directors, officers, employees,
and consultants of up to 3,000,000 shares of the Company. Upon vesting, the Company will issue shares from treasury to the employees
for no additional consideration.


 


As
at September 30, 2020, rights to receive 406,667 shares have been granted of which none vests in the remainder of 2020, 348,333
vests in 2021, and 58,334 vests in 2022.


 


During
the three and nine months ended September 30, 2020, the Company recognized a total of $91,195 (2019 - $474,849) and $199,841 (2019
 – $1,628,503) as share-based payments related to RSUs. The Company also recorded a reversal of share-based payments totaling
$1,111,110 previously due to the forfeiture of 505,050 RSUs.


 


		10.	Related
                                         party agreements and transactions 



 


Related
party transactions


 


Key
management includes members of the Board of Directors and its corporate officers. The aggregate value of transactions relating
to key management personnel and entities over which they have control or significant influence were as follows:


 


	 	 	Nine months ended	 	 	Nine months ended	 
	 	 	September 30, 2020	 	 	September 30, 2019	 
	Salary, fees, and other short-term benefits	 	$	664,112	 	 	$	942,625	 
	Share based payments	 	 	577,171	 	 	 	1,972,472	 
	 	 	$	1,241,283	 	 	$	2,915,097	 



 


During
the three and nine months ended September 30, 2020, the Company was charged $325,884 (2019 - $5,419,253) and $2,259,087 (2019
- $15,475,339), respectively, in site operating costs by Bitfury. The reduction in cost is the result of the Company taking over
the site management from Bitfury. As at September 30, 2020, $658,868 (September 30, 2019 - $166,814) was owed to Bitfury, which
has been included in accounts payable.


 


The
Company also made payment to Andrew Kiguel, the previous CEO, through his numbered corporation 1138029 B.C. Ltd, a one-time $500,000
consulting fee to assist with the transition to the Interim CEO. 




     20


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Notes
to Unaudited Condensed Consolidated Interim Financial Statements


Amended
and Restated 


For
the three and nine months ended September 30, 2020 and 2019


 












 


		11.	Capital
management



 


The
Company manages its capital to maintain its ability to continue as a going concern and to provide returns to shareholders and
benefits to other stakeholders. The capital structure of the Company consists of equity comprised of issued share capital and
reserves. The Company manages its capital structure and makes adjustments to it in light of economic conditions. The Company,
upon approval from its Board of Directors, will balance its overall capital structure through new share issuances or by undertaking
other activities as deemed appropriate under the specific circumstances. The Company is not subject to externally imposed capital
requirements and the Company’s overall strategy with respect to capital risk management remains unchanged from the period
ended September 30, 2019.


 


		12.	Financial
Instruments



 


The
Company’s risk exposures and the impact on the Company’s financial instruments are summarized below.


 


		(a)	Credit
risk



 


Financial
instruments that are potentially subject the Company to a concentration of credit risk consist primarily of cash, digital assets,
and prepaid expenses. The Company limits its exposure to credit loss by placing its cash with high credit quality financial institutions.


 


Hut
8 uses the services of BitGo Trust Company Inc. (“BitGo”). BitGo is considered one of the top custodians for cryptocurrency
and has US$100 million of insurance backing its digital asset custody. Hut 8 does not self-custody its bitcoin.


 


		(b)	Interest
rate risk



 


Interest
rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in
market interest rates. The Company’s exposure to interest rate risk is limited and only relates to its ability to earn interest
income on cash balances nominated in foreign currency at variable rates. Changes in short term interest rates will not have a
significant effect on the fair value of the Company’s cash account.


 


		(c)	Liquidity
risk



 


Liquidity
risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company currently settles
its financial obligations out of cash and cash equivalents and digital assets. The Company has a planning and budgeting process
to help determine the funds required to support the Company’s normal spending requirements on an ongoing basis and its expansionary
plans.





     21


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Notes
to Unaudited Condensed Consolidated Interim Financial Statements


Amended
and Restated 


For
the three and nine months ended September 30, 2020 and 2019


 



 


		12.	Financial
                                         Instruments (continued) 



 


		(d)	Foreign
                                         currency risk



 


Currency
risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Currency risk
arises from financial instruments (including cash and cash equivalents) that are denominated in a currency other than Canadian
dollars, which represents the functional currency of the Company. The Company’s functional currency is the Canadian dollar and
most purchases are transacted in Canadian dollars. The Company has also transacted in US Dollars to purchase mining equipment
from Bitfury and with loans payable denominated in US Dollars. Management currently does not hedge its foreign exchange risk.


 


The
table below indicates the foreign currencies to which the Company has significant exposure as at September 30, 2020 in Canadian
dollar terms:


 


	 	 	2020	 
	Cash	 	$	1,364,460	 
	Accounts payable	 	 	174,592	 
	Loans payable	 	 	26,678,000	 



 


The
effect on earnings before tax of a 10% strengthening or weakening of the CAD exchange rate at the balance sheet date for financial
instruments denominated in USD, with all other variables held constant, is $2,821,705.


 


		(e)	Fair
                                         value measurements:



 


		(i)	Financial
                                         hierarchy:



 


Financial
instruments recorded at fair value are classified using a fair value hierarchy that reflects the significance of inputs used in
making the measurements. The hierarchy is summarized as follows:


 


Level
1: Unadjusted quoted prices in active markets for identical assets and liabilities;


 


Level
2: Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly from observable
market data; and


 


Level
3: Inputs that are not based on observable market data.


 


The
Company’s financial instruments have been classified as follows:


 


	December 31, 2019	 	Level 1	 	 	Level 2	 	 	Level 3	 	 	Total	 
	Fair value through profit and loss	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash	 	$	2,946,017	 	 	$	-	 	 	$	-	 	 	$	2,946,017	 
	Digital assets	 	$	-	 	 	$	27,310,725	 	 	$	-	 	 	$	27,310,725	 




 


	September 30, 2020	 	Level 1	 	 	Level 2	 	 	Level 3	 	 	Total	 
	Fair value through profit and loss	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash	 	$	2,259,951	 	 	$	-	 	 	$	-	 	 	$	2,259,951	 
	Digital assets	 	$	-	 	 	$	41,029,505	 	 	$	-	 	 	$	41,029,505	 






     22


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Notes
to Unaudited Condensed Consolidated Interim Financial Statements


Amended
and Restated 


For
the three and nine months ended September 30, 2020 and 2019


 









 


		12.	Financial
                                         Instruments (continued) 



 


		(f)	Digital
                                         assets and risk management



 


Digital
assets are measured using level two fair values, determined by taking the rate from Coinmarketcap.


 


Digital
asset prices are affected by various forces including global supply and demand, interest rates, exchange rates, inflation or deflation
and the global political and economic conditions. The profitability of the Company is directly related to the current and future
market price of digital assets; in addition, the Company may not be able liquidate its inventory of digital assets at its desired
price if required. A decline in the market prices for digital assets could negatively impact the Company’s future operations.
The Company has not hedged the conversion of any of its sales of digital assets.


 


Digital
assets have a limited history and the fair value historically has been very volatile. Historical performance of digital assets
is not indicative of their future price performance. The Company’s digital assets currently solely consist of bitcoin.


 


As
at September 30, 2020, had the market price of the Company’s holdings of Bitcoin increased or decreased by 10% with all
other variables held constant, the corresponding asset value increase or decrease respectively would amount to $4,102,951.


 


		13.	Subsequent
events



 


On
November 2, 2020, Hut 8 announced the appointment of Jaime Leverton as its new permanent CEO, effective December 1, 2020. The
current Interim CEO, Jimmy Vaiopoulos, will return to his previous position of CFO, while the current Interim CFO will step down
from his position effective November 30, 2020. Viktoriya Griffin will become Hut 8’s full-time Corporate Secretary beginning
December 1, 2020.


 


The
continuing outbreak of the coronavirus, also known as “COVID-19”, is still impacting worldwide economic activity.
Conditions surrounding the coronavirus continue to rapidly evolve and government authorities have implemented emergency measures
to mitigate the spread of the virus. The outbreak and the related mitigation measures may have an adverse impact on global economic
conditions as well as on the Company’s business activities. The extent to which the coronavirus may impact the Company’s
business activities will depend on future developments, such as the ultimate geographic spread of the disease, the duration of
the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in Canada and other countries
to contain and treat the disease. The effect that these events will have on the price of bitcoin, the ability for the Company
to raise capital and the supply of upgraded equipment remain uncertain and as such, the Company cannot determine their financial
impact at this time. 




     23


     

    

HUT
8 MINING CORP.


 


(In
Canadian dollars) 


Notes
to Unaudited Condensed Consolidated Interim Financial Statements


Amended
and Restated 


For
the three and nine months ended September 30, 2020 and 2019


 









 


		14.	Restatement
of the financial statements



 


The
unaudited condensed consolidated interim financial statements of the Company as at September 30, 2019 and for the period then
ended have been restated to correct material errors and omissions in its prior filing. The Company discovered the deficiencies
in the accounting information subsequent to the filing and issuance of the financial statements. The unaudited condensed consolidated
interim financial statements for the period ended September 30, 2019 have been prepared using the most complete information currently
available. Below are the restated:


 


Period
ended September 30, 2019


 


Unaudited
Condensed Consolidated Interim Statement of Loss and Comprehensive Loss


 


The
net and comprehensive loss for the three months ended September 30, 2019 was increased by $3,445,964 to $5,188,641 from $1,742,677
due to a change in depreciation expense on plant and equipment, which was adjusted to $8,178,269 from $4,732,305.


 


The
net and comprehensive income for the nine months ended September 30, 2019 was decreased by $ 10,337,892 to $15,525,987 from $
25,863,879 due to a change in depreciation expense on plant and equipment, which was adjusted to $24,534,807 from $14,196,915.


 


Unaudited
Condensed Consolidated Interim Statement of Cash flows


 


The
net income for the nine months ended September 30, 2019 was decreased by $10,337,892 which was offset by non-cash depreciation
expense of $10,337,892 resulting in no changes to cash used in operating activities.





     24