# EDGAR Filing Document

**Accession Number:** 0001854368
**File Stem:** 0001213900-23-025631
**Filing Date:** 2023-3
**Character Count:** 353795
**Document Hash:** 80c0f109a440ca329b4edc67d571fbcc
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-23-025631.hdr.sgml**: 20230331

**ACCESSION NUMBER**: 0001213900-23-025631

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 12

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230331

**DATE AS OF CHANGE**: 20230331

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Digihost Technology Inc.
- **CENTRAL INDEX KEY:** 0001854368
- **STANDARD INDUSTRIAL CLASSIFICATION:** FINANCE SERVICES [6199]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** A1
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-40527
- **FILM NUMBER:** 23789197

**BUSINESS ADDRESS:**
- **STREET 1:** 18 KING ST. E., STE. 902
- **CITY:** TORONTO
- **STATE:** A6
- **ZIP:** M5C1C4
- **BUSINESS PHONE:** 9172426549

**MAIL ADDRESS:**
- **STREET 1:** 18 KING ST. E., STE. 902
- **CITY:** TORONTO
- **STATE:** A6
- **ZIP:** M5C1C4

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 6-K**

**REPORT OF FOREIGN PRIVATE ISSUER**

**PURSUANT TO RULE 13a-16 OR 15d-16**

**UNDER THE SECURITIES EXCHANGE ACT OF 1934**

**For the month of March, 2023**

**Commission File Number: 001-40527**

**DIGIHOST TECHNOLOGY INC.**

(Exact Name of Registrant as Specified in Its Charter)

**18 King Street East, Suite 902, Toronto, Ontario, Canada M5C 1C4**

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

**INCORPORATION BY REFERENCE**

Exhibits 99.1, 99.2, 99.3 and 99.6 to this Form 6-K are each hereby incorporated by reference as exhibits to the Registrant Statement on [Form F-10](http://www.sec.gov/Archives/edgar/data/1854368/000121390022010517/ea156225-f10_digihosttech.htm) of Digihost Technology Inc. (File No 333-263255).

**Exhibits**

---

| | |
|:---|:---|
| Exhibit No. | Description |
| 99.1 | [Annual Information Form for the year ended December 31, 2022](ea175781ex99-1_digihost.htm) |
| 99.2 | [Audited Consolidated Financial Statements for the years ended December 31, 2022 and 2021](ea175781ex99-2_digihost.htm) |
| 99.3 | [Management's Discussion and Analysis for the year ended December 31, 2022](ea175781ex99-3_digihost.htm) |
| 99.4 | [Certification of Annual Filings - CEO](ea175781ex99-4_digihost.htm) |
| 99.5 | [Certification of Annual Filings - CFO](ea175781ex99-5_digihost.htm) |
| 99.6 | [Consent of Raymond Chabot Grant Thornton LLP](ea175781ex99-6_digihost.htm) |

---

**SIGNATURE**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | |
|:---|:---|:---|
| **DIGIHOST TECHNOLOGY INC.** | **DIGIHOST TECHNOLOGY INC.** | **DIGIHOST TECHNOLOGY INC.** |
| By: | /s/ Michel Amar | /s/ Michel Amar |
|  | Name: | Michel Amar |
|  | Title: | Chief Executive Officer |

---

Date: March 31, 2023

## Exhibit 99.1

**Exhibit 99.1**

**ANNUAL INFORMATION FORM**

**FOR THE FINANCIAL YEAR ENDED December 31, 2022**

**Digihost Technology inc.**

**March 31, 2023**

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| GLOSSARY | 1 |
| CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION AND RISKS | 3 |
| CORPORATE STRUCTURE | 5 |
| &nbsp;&nbsp;&nbsp;Name, Address, Incorporation, and Corporate Organizational Chart | 5 |
| GENERAL DEVELOPMENT OF THE BUSINESS | 5 |
| &nbsp;&nbsp;&nbsp;Three Year History | 5 |
| &nbsp;&nbsp;&nbsp;Anticipated Changes in the Corporation's Business | 10 |
| &nbsp;&nbsp;&nbsp;Significant Acquisitions | 11 |
| BUSINESS OF THE CORPORATION | 11 |
| &nbsp;&nbsp;&nbsp;Risk Factors | 13 |
| DIVIDENDS OR DISTRIBUTIONS | 25 |
| CAPITAL STRUCTURE | 25 |
| MARKET FOR SECURITIES | 26 |
| &nbsp;&nbsp;&nbsp;Trading Price and Volume | 26 |
| &nbsp;&nbsp;&nbsp;Prior Sales | 27 |
| DIRECTORS AND OFFICERS | 28 |
| &nbsp;&nbsp;&nbsp;Cease Trade Orders, Bankruptcies, Penalties or Sanctions | 29 |
| &nbsp;&nbsp;&nbsp;Conflicts of Interest | 30 |
| AUDIT COMMITTEE INFORMATION | 30 |
| &nbsp;&nbsp;&nbsp;Audit Committee Charter | 30 |
| &nbsp;&nbsp;&nbsp;Composition of the Audit Committee | 30 |
| PROMOTERS | 31 |
| LEGAL PROCEEDINGS AND REGULATORY ACTIONS | 31 |
| INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS | 32 |
| TRANSFER AGENT AND REGISTRAR | 32 |
| MATERIAL CONTRACTS | 32 |
| INTERESTS OF EXPERTS | 32 |
| ADDITIONAL INFORMATION | 32 |
| Audit Committee Charter | A-1 |

---

-i-

**GLOSSARY**

"**AIF**" means this annual information form for the financial year ended December 31, 2022;

"**BCBCA**" means the *Business Corporations Act* (British Columbia), or its successor legislation and the regulations made thereunder;

"**Bit Digital**" means Bit Digital USA, Inc.;

"**Bitcoin Transfer Memo**" has the meaning given to it under the heading "*General Development of the Business – Three Year History – 2019*";

"**Blockchain**" means a distributed ledger comprised of blocks that serves as a historical transaction record of all past transactions and can be accessed by anyone with appropriate permissions. Blocks are chained together using cryptographic signatures;

"**Board**" means the board of directors of the Corporation;

"**Buffalo Facility Lease Agreement**" means the lease agreement dated June 4, 2018 entered into by East Delavan and Bit Management, LLC and assigned to by Bit Management, LLC to Digihost;

"**Buffalo Mining Facility**" means the 1001 East Delavan facility in Buffalo, NY subject to the Buffalo Facility Lease Agreement;

"**Buyer**" means the buyer under the Energy Contract;

"**CEO**" means Chief Executive Officer;

"**CFO**" means Chief Financial Officer;

"**Colocation Agreements**" means the Colocation Facilities Agreements no. 51 and 62, each dated May 20, 2018 between HashChain and Bit.Management, LLC, as amended from time to time including by the Bitcoin Transfer Memo dated July 1, 2019 between HashChain and Bit.Management, LLC;

"**Co-Mining Agreement**" means the Co-Mining Agreement entered into with Bit Digital as announced on June 10, 2021;

"**Consolidation**" means the Consolidation of the SV Shares and PV Shares on the basis of three (3) pre-consolidation SV Shares or PV Shares for every one (1) post-consolidation SV Share or PV Share, respectively, effective as of October 28, 2021;

"**Corporation**" means Digihost Technology Inc. (TSXV: DGHI; Nasdaq: DGHI);

"**Digifactory1**" means the 60 MW power plant located in the State of New York;

"**Digihost**" means Digihost International Inc., a corporation incorporated under the laws of the State of Delaware on October 9, 2018;

"**Digihost Shareholder**" means a holder of Digihost common shares, from time to time, including holders of Digihost common shares acquired through asset purchases or private placements;

"**East Delavan**" means East Delavan Property, LLC;

"**EH**" means Exahash per second;

"**Energy Contract**" means the energy contract dated February 6, 2018 entered into by EnergyMark and Bit Management, LLC, and assigned to by Bit Management, LLC to Digihost;

"**EnergyMark**" means EnergyMark LLC;

"**Exchange**" or "**TSXV**" means the TSX Venture Exchange;

"**Exchange Policies**" means the policies of the TSXV;

"**Exclusionary Offer**" has the meaning given to it under the heading "*Capital Structure – PV Shares*";

"**HashChain**" means HashChain Technology Inc., a corporation incorporated pursuant to the laws of British Columbia on February 18, 2017;

"**Insider**" if used in relation to an issuer, means: a director or senior office of the issuer; a director or senior officer of a company that is an Insider or subsidiary of the issuer; a Person that beneficially owns or controls, directly or indirectly, voting shares carrying more than 10% of the voting rights attached to all outstanding voting shares of the issuer; or, the issuer itself if it holds any of its own securities;

"**KVA**" means kilovolt-ampere;

"**Landlord**" means the landlord under the Buffalo Facility Lease Agreement;

"**MW**" means Megawatts;

"**Northern Data**" means Northern Data AG;

"**Northern Data Purchase Agreement"** means the agreement between Northern Data and the Corporation for the purchase of Bitcoin miners.

"**Option**" means an option to purchase SV Shares;

"**OSC**" means the Ontario Securities Commission;

"**Permitted Transfer**" has the meaning given to it under the heading "*Capital Structure – PV Shares*";

"**Person**" means a company or individual;

"**PH**" means Petahash per second;

"**PSC**" means the New York Public Service Commission;

"**PV Share**" means a proportionate voting share of the Corporation;

"**RSU**" means a restricted share unit of the Corporation;

"**RTO**" means the reverse take-over whereby the business and assets of HashChain and Digihost were combined by way of a share exchange between HashChain and shareholders of Digihost;

"**SEC**" means the U.S. Securities and Exchange Commission;

"**Second Extension Agreement**" has the meaning given to it under the heading "*General Development of the Business – Three Year History – 2019*";

"**SEDAR**" means System for Electronic Document Analysis and Retrieval and located on the Internet at www.sedar.com;

"**Share Exchange Agreement**" means the share exchange agreement between HashChain and Digihost Shareholders;

"**Shareholder**" means a holder of SV Shares;

"**SV Share**" means a subordinate voting share of the Corporation;

"**Tenant**" means the tenant under the Buffalo Facility Lease Agreement;

"**Transactions**" has the meaning given to it under the heading "*General Development of the Business – Three Year History – 2019*".

**CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION AND RISKS**

This annual information form (the "**AIF**") of Digihost Technology Inc. (the "**Corporation**") contains or refers to certain forward-looking information or statements (collectively, "**forward-looking information**") that are covered by safe harbors under applicable securities laws. Forward-looking information can often be identified by forward-looking words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "may", "potential" and "will" or similar words suggesting future outcomes, or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. All information, other than information regarding historical fact that addresses activities, events or developments that the Corporation believes, expects or anticipates will or may occur in the future is forward-looking information. Forward-looking information does not constitute historical fact but reflects the current expectations the Corporation regarding future results or events based on information that is currently available. By their nature, forward-looking information involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking information will not occur.

Forward-looking information in this AIF include, but are not limited to, information with respect to:

● the expectations concerning performance of the Corporation's business and operations;

● the intention to grow Corporation's business and operations;

● growth strategy and opportunities;

● the treatment of the Corporation under government regulatory and taxation regimes; and

● the Corporation's ability to monitor, assess and manage the impact of any future large-scale outbreaks of infectious diseases, such as the recent COVID-19 pandemic.

Forward-looking information involve known and unknown risks, estimates, assumptions, uncertainties and other factors that may cause the actual results, performance or achievements of the Corporation to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information, including the following:

● The Corporation's cryptocurrency inventory may be exposed to cybersecurity threats and hacks;

● Regulatory changes or actions may alter the nature of an investment in the Corporation or restrict the use of cryptocurrencies in a manner that adversely affects the Corporation's operations;

● The value of cryptocurrencies may be subject to momentum pricing risk;

● Cryptocurrency exchanges and other trading venues are relatively new and, in most cases, largely unregulated and may therefore be more exposed to fraud and failure;

● Banks may not provide banking services, or may cut off banking services, to businesses that provide cryptocurrency-related services or that accept cryptocurrencies as payment;

● The impact of geopolitical events on the supply and demand for cryptocurrencies is uncertain;

● The further development and acceptance of the cryptographic and algorithmic protocols governing the issuance of and transactions in cryptocurrencies is subject to a variety of factors that are difficult to evaluate;

● Acceptance and/or widespread use of cryptocurrency is uncertain;

● The Corporation is subject to risks associated with the Corporation's need for significant electrical power. The Corporation's mining operations require electrical power to be available at commercially feasible rates. Government regulators may potentially restrict the ability of electricity suppliers to provide electricity to mining operations;

● The Corporation may be required to sell its cryptocurrency portfolio to pay for expenses;

● The Bitcoin block reward halves approximately every four years, which reduces the number of Bitcoin the Corporation would receive from solving blocks;

● The Corporation is exposed to hashrate and network difficulty, which could reduce the ability of the Corporation to remain competitive with its peers;

● The risks posed by the large-scale infectious disease outbreaks, such as the recent COVID-19 pandemic, cannot be predicted with certainty and the Corporation remains exposed to government -imposed restrictions on operations;

● The Corporation's operations, investment strategies, and profitability may be adversely affected by competition from other methods of investing in cryptocurrencies;

● The Corporation's coins may be subject to loss, theft or restriction on access;

● Incorrect or fraudulent coin transactions may be irreversible;

● If the award of coins for solving blocks and transaction fees are not sufficiently high, miners (other than of the Corporation) may not have an adequate incentive to continue mining and may cease their mining operations, which could adversely impact the Corporation's mining operations;

● The price of coins may be affected by the sale of coins by other vehicles investing in coins or tracking cryptocurrency markets;

● Technological obsolescence and difficulty obtaining hardware may adversely impact the Corporation's operating results and financial condition;

● Delays in the development of existing and planned cryptocurrency mining facilities may result in different outcomes than those intended;

● Exposure to environmental liabilities and hazards may result in the imposition of fines, penalties and restrictions;

● The Corporation's success is largely dependent on the performance of the Corporation's management and executive officers;

● The Corporation may be unable to attract, develop and retain its key personal and establish adequate succession planning;

● The Corporation may be unable to obtain additional financing on acceptable terms or at all;

● The Corporation faces competition from other cryptocurrency companies;

● Uninsured or uninsurable risks could result in significant financial liabilities;

● The Corporation does not currently pay cash dividends, and, therefore, the Corporation's shareholders will not be able to receive a return on their SV Shares unless they sell them;

● The SV Shares are subject to volatility risk and there is no guarantee that an active or liquid market will be sustained for the SV Shares;

● There are significant legal, accounting, and financial costs of being a publicly traded company which may reduce the resources available for the Corporation to deploy on its cryptocurrency mining operations;

● Directors and officers may have a conflict of interest between their duties owed to the Corporation and their interest in other personal or business ventures;

● The Corporation may be subject to litigation;

● The Corporation could lose its foreign private issuer status in the future, which could result in significant additional costs and expenses to the Corporation;

● The Corporation has a limited history of operations and is in the early stage of development;

● Ineffective management of growth could result in a failure to sustain the Corporation's progress;

● The Corporation may be subject to tax consequences which could reduce the Corporation's profitability;

● The Corporation may be exposed to risks from exchanging currencies, including currency exchange fees; and

● The other factors discussed under the heading, "*Risk Factors*" in this AIF.

New factors emerge from time to time, and it is not possible for management to predict all such factors and to assess in advance the impact of each such factor on the business of the Corporation or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking information. Further, the forward-looking information in this AIF speaks only as of the date of this AIF, and, except as required by applicable law, the Corporation undertakes no obligation to update any forward-looking information to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.

**CORPORATE STRUCTURE**

**Name, Address, Incorporation, and Corporate Organizational Chart**

Digihost Technology Inc. (formerly HashChain Technology Inc.) is a corporation incorporated under the *Business Corporations Act* (British Columbia). Its head office is located at 2830 Produce Row, Houston, TX 77023 and its registered office is located at 595 Howe Street – 10<sup>th</sup> Floor, Vancouver, BC V6C 2T5.

The following organization chart outlines the corporate structure of the Corporation and its material subsidiaries:

![](ex99-1_001.jpg)

**Material Amendments to the Corporation's Articles**

The Corporation was originally incorporated under the BCBCA on February 18, 2017 under the name Chortle Capital Corp. and later changed its name to HashChain Technology Inc. ("**HashChain**") on September 18, 2017. HashChain was subject to a reverse takeover by Digihost International Inc., which closed on February 14, 2020 (the "**RTO**"). Prior to the closing date of the reverse takeover, the Corporation passed a special resolution authorizing an unlimited number of proportionate voting shares of the Corporation (the "**PV Shares**") and an unlimited number of subordinate voting shares of the Corporation (the "**SV Shares**") without par value. Upon closing of the RTO, HashChain filed articles of amendment to rename itself to Digihost Technology Inc.

**GENERAL DEVELOPMENT OF THE BUSINESS**

**Three Year History**

The following is a summary of the general development of the Corporation's business over the three most recently completed financial years:

<u>Fiscal 2020</u>

On February 14, 2020, in connection with the RTO, Digihost entered into an agreement with Bit.Management, LLC, NYAM, LLC and BIT Mining International, LLC for the sale, transfer and assignment of a 100% right, title and interest in the leasehold improvements and equipment, the transfer of the lease of the 1001 East Delavan facility in Buffalo, NY (the "**Buffalo Mining Facility**") and transfer of a power contract for the supply of electricity at the facility. As consideration and immediately prior to the closing of the reverse takeover transaction, Digihost issued 104,000 Digihost common shares for an aggregate value of C$2,704,000. On February 14, 2020, Digihost also entered into an agreement with BIT Mining International, LLC for the sale, transfer and assignment of a 100% right, title and interest in the leasehold improvements and equipment located at the Buffalo Mining Facility. As consideration and immediately prior to the closing of the reverse takeover, Digihost issued 60,000 Digihost common shares for an aggregate value of C$1,560,000.

On February 14, 2020, immediately prior to the completion of the RTO, Digihost closed its non-brokered private placement for aggregate gross proceeds of C$5,395,325 from the sale of 5,418,912 Digihost common share subscription receipts at a price of C$0.96 per Digihost common share subscription receipt and 110,575 Digihost unit subscription receipts at a price of C$1.20 per Digihost unit subscription receipt.

On February 14, 2020, the RTO was completed and HashChain changed its name to Digihost Technology Inc. In connection with the RTO, all the issued and outstanding 6,530,560 HashChain common shares were exchanged for 6,530,560 SV Shares. In addition, all 5,693,487 Digihost common shares were exchanged for 33,412,490 SV Shares and 10,000 PV Shares of the Corporation. In addition, 130,911 common shares of the Corporation were issued to creditors of HashChain in settlement of outstanding debt. As a result of the RTO completion, the Colocation Agreements were terminated, and the Corporation was released from accrued liabilities owing under the Colocation Agreements.

On March 20, 2020, the Corporation temporarily ceased operations at its Buffalo Mining Facility until the end of the month due to the COVID-19 pandemic. On April 7, 2020 the Corporation resumed operations at a 75% operating level pursuant to safe practices as they pertained to social distancing.

On October 20, 2020, the Corporation acquired 180 Whatsminer M30S cryptocurrency miners adding 16.2 petahash per second ("**PH**") of hashing power to the Corporation's aggregate cryptocurrency mining output.

On December 7, 2020, the Corporation received TSXV approval to undertake, at the Corporation's discretion, a Normal Course Issuer Bid program to purchase up to 2,003,683 SV Shares for cancellation. The issuer bid program is scheduled to run until December 10, 2021.

On December 31, 2020, the Corporation announced the acquisition of Antminer S19 Pro 110TH miners, adding an additional 15.4 PH to the Corporation's aggregate cryptocurrency mining output.

<u>Fiscal 2021</u>

On January 8, 2021, the Corporation closed a fully subscribed non-brokered private placement of SV Shares for C$0.81 per SV Share, capitalizing the company in the amount of C$283,400.00.

On February 8, 2021, the Corporation announced that its listing on the OTC Markets was upgraded from a listing on the Pink Sheets to the OTCQB.

On February 19, 2021, the Corporation announced the closing of a non-brokered private placement of 4,938,271 SV Shares at a price of C$0.81 per PV Share for aggregate gross proceeds of C$4,000,000. In connection with the private placement, the Corporation paid a commission of 148,148 PV Shares to third party advisors.

On March 4, 2021, the Corporation announced that it had increased its hashrate from 184 PH to 189 PH.

On March 17, 2021, the Corporation announced the closing of a private placement for gross proceeds C$25,000,000. The private placement consisted of the sale of 9,363,296 SV Shares and warrants to purchase up to 9,363,296 SV Shares at a price of C$2.67 per PV Share and associated warrant. Each warrant entitles the holder thereof to purchase PV Shares at an exercise price of C$3.14 per PV Share for a period of three (3) years from the date of issuance. 749,064 broker warrants were issued in connection with the private placement, exercisable at a price of C$3.3375 for a period of three (3) years from the date of issuance.

On March 24, 2021, the Corporation announced it has entered an agreement for the purchase of a 60MW power plant ("**Digifactory 1**") located in Upstate New York, which, as of the date thereof, is expected to bring the Corporation's total power capacity to approximately 102 MW. The Corporation expects that internal power generation capabilities will significantly reduce electricity costs, which is the Corporation's largest operating expense for its cryptocurrency mining operations. Digifactory1 will have the capacity to operate an additional 18,000 top tier Bitcoin miners. The increased power capacity would also allow a potential increase to the hashrate existing as of the date thereof from 190 PH to 3 exahash per second ("**EH**"). Under the terms of the agreement, the Corporation will pay to the vendor cash consideration of $3,500,000 and issue to the vendor 437,318 SV Shares with a deemed value of $750,000 ($1.71 per share. The transaction is subject to New York regulatory approval as well as the approval of the TSXV. The securities issuable in connection therewith will be subject to a statutory four month and a day hold period.

On March 29, 2021, the Corporation announced the acquisition of 700 Bitmain S17+ 76<sup>TH</sup> miners for a total price of US$4.025 million, comprised of cash consideration of US$2,975 million and the issuance to the vendor of $533,781 SV Shares, The acquisition has the potential to increase the Corporation's hashrate by approximately 50 PH.

On April 6, 2021, the Corporation announced that it had repaid all of its debt in the aggregate amount of US$3,975,000.

On April 13, 2021, the Corporation announced the closing of a private placement for gross proceeds of C$25,000,000. The private placement consisted of the sale of 11,682,243 SV Shares and warrants to purchase up to 11,682,243 SV Shares at a purchase price of C$2.14 per SV Share and associated warrant. Each warrant entitles the holder thereof to purchase SV Shares at an exercise price of C$2.37 per SV Share for a period of four (4) years from the date of issuance.

On April 14, 2021, the Corporation announced the appointment of Raymond Chabot Grant Thornton LLP as auditors of the Corporation, replacing the Corporation's former auditors, Clearhouse LLP.

On April 29, 2021, the Corporation announced the resignation of Cindy Davis as Chief Financial Officer of the Corporation and the subsequent appointment of Paul Ciullo as Chief Financial Officer of the Corporation.

On May 10, 2021, the Corporation announced that it had commenced the application process for listing of its securities on the Nasdaq Capital Market ("**Nasdaq**").

On May 13 and May 14, 2021, the Corporation announced it had entered into a purchase agreement (the "**Northern Data Purchase Agreement**") with Northern Data AG ("**Northern Data**") for the purchase of 9,900 Bitcoin miners. This acquisition is expected to increase the Corporation's hashrate by between 925 PH to 1.145 EH once the miners are installed at the Corporation's facilities, which is expected to be completed by January 2022. Northern Data and the Corporation concurrently entered into an associated hosting arrangement in connection with purchase of the miners, whereby Northern Data will provide hosting services to the Corporation including the installation and hosting of the miners in proprietary pre-manufactured performance optimized mobile data centres. The Corporation and Northern Data will split the net revenue generated from Bitcoin mining operations according to a fixed distribution formula. As of the date hereof, the Corporation has received approximately 4050 miners and expects to receive the remaining miners and have them installed and operational by the end of Q1 2022.

On June 10, 2021, the Corporation announced it had entered into a co-mining agreement (the "**Co-Mining Agreement**") with Bit Digital USA, Inc. ("**Bit Digital**"). Pursuant to the Co-Mining Agreement, the Corporation agreed to provide its premises and power to Bit Digital for the operation of a 20 MW Bitcoin mining system. This collaboration is expected to increase the combined hashrate between the two companies by an aggregate of approximately 400 PH. It is expected that the miners will begin to be delivered and installed during Q1 2022.

On June 21, 2021, the Corporation closed a private placement for gross proceeds of C$15 million. The private placement was comprised of 8,333,336 SV Shares, as well as warrants to purchase up to 6,250,002 SV Shares, at a price of C$1.80 per SV Share and associated warrant. Each warrant entitles the holder thereof to purchase SV Shares at an exercise price of C$1.99 per SV Share for a period of three (3) years from the date of issuance.

On June 22, 2021, the Corporation announced it filed a registration statement on Form 40-F with the U.S. Securities and Exchange Commission (the "**SEC**").

On July 6, 2021, the Corporation announced that it was including Ether, the native token of the Ethereum network, as part of its cryptocurrency holdings so as to diversity its portfolio holdings. To further the same goal, the Corporation exchanged a portion of its Bitcoin held in its inventory to purchase Ether.

On July 26, 2021, the Corporation announced the expansion of its strategic collaboration with Bit Digital, pursuant to which the Corporation and Bit Digital entered into a second strategic co-mining agreement to provide its premises and power to Bit Digital for the operation of a 100 MW Bitcoin mining system. The collaboration is expected to increase the combined hashrate between the two companies by an aggregate of approximately 2 EH, for a total increase in hashrate of approximately 2.4 EH when combined with the Co-Mining Agreement announced on June 10, 2021.

On October 5, 2021, the Corporation announced that, to facilitate a proposed listing of the SV Shares on Nasdaq and to satisfy the minimum share price requirements thereof, the Corporation underwent a consolidation (the "**Consolidation**") of the SV Shares and PV Shares on the basis of three (3) pre-consolidation SV Shares or PV Shares for every one (1) post-consolidation SV Share or PV Share, respectively. The exercise price and number of SV Shares issuable upon the exercise of the Corporation's outstanding options and warrants was also proportionately adjusted upon completion of the Consolidation. The Corporation did not issue any fractional post-Consolidation SV Shares or PV Shares as a result of the Consolidation. Instead, each fractional share remaining after conversion was rounded down to the nearest whole post-Consolidation SV Share or PV Share, as applicable. The Consolidation became effective on October 28, 2021.

On October 13, 2021 the Corporation announced that it had received 1,952 M30 Bitcoin miners pursuant to the Northern Data Purchase Agreement.

On November 12, 2021, the Corporation announced that it was approved to list its SV Shares on Nasdaq and that trading was expected to begin on November 15, 2021 under the symbol "DGHI".

On November 15, 2021, the Corporation's SV Shares began trading on Nasdaq.

<u>Fiscal 2022</u>

On January 13, 2022, the Corporation filed a preliminary base shelf short form prospectus.

On February 23, 2022, the Corporation filed a final base shelf short form prospectus.

On March 2, 2022, the Corporation closed a $10,000,000 committed, collateralized revolving credit facility (the "**Loan Facility**") with Securitize, Inc. The Loan Facility was collateralized against the Corporation's Bitcoin inventory, had a one-year committed term and an interest rate of 7.5% per annum and was fully drawn by the Corporation.

On March 4, 2022, the Corporation entered into an at the market offering agreement (the "**Equity Distribution Agreement**") with H.C. Wainwright & Co., pursuant to which the Corporation may, from time to time, sell up to $250 million of SV Shares (the "**ATM Equity Program**"). The ATM Equity Program can be terminated by either party at any time upon delivery of written notice.

On March 6, 2022, the Corporation announced it had entered into a private placement with a single institutional investor, for gross proceeds of approximately C$13.3 million, comprised of 3,029,748 subordinate voting shares of the Corporation (or subordinate voting share equivalents) and warrants to purchase up to 3,029,748 subordinate voting shares, at a purchase price of C$4.40 per subordinate voting share and associated warrant. The Warrants have an exercise price of C$6.25 per subordinate voting share and exercise period of three and one-half years from the issuance date. H.C. Wainwright & Co. acted as the exclusive placement agent and received cash commission and expenses totaling $1,066,471 and 242,380 non-transferable broker warrants. Each broker warrant entitles the holder to purchase one subordinate voting share at an exercise price of C$6.25 at any time for a period of three years from the issuance date. In connection with the private placement, to the Corporation cancelled existing warrants to purchase up to 1,248,440 subordinate voting shares of the Corporation at an exercise price of C$9.42 per share issued in March 2021 and existing warrants to purchase up to 1,781,308 subordinate voting shares of the Corporation at an exercise price of C$7.11 issued in April 2021.

On April 4, 2022, the Corporation announced it achieved a milestone of operating at 1 EH, more than doubling its hashrate from 415 PH at year-end 2021. The Corporation also announced that it completed substantial infrastructure installation work at Digifactory1.

On May 4, 2022, the Corporation announced that it successfully completed electrical testing phases at its infrastructure buildout at Digifactory1 and was awaiting approval from the PSC to complete the acquisition of Digifactory1. The Corporation also announced that it acquired, in escrow, 25 acres of land in North Carolina in conjunction with ongoing negotiations to access a 200MW power infrastructure program that would be expected to be completed and ready for operation by the end of the third fiscal quarter of 2023.

On May 19, 2022, the Corporation announced that it received TSXV approval to undertake, at the Corporation's discretion, a normal course issuer bid program in Canada to purchase up to 1,219,762 of its SV Shares for cancellation (the "**Bid**"). In connection with the launch of the Bid, the Corporation announced that it would not issue any securities pursuant to the ATM Equity Program while the Corporation purchases shares pursuant to the Bid.

On June 1, 2022, the Corporation announced that it paid back approximately $4,000,000 of the fully drawn down Loan Facility.

On June 6, 2022, the Corporation announced that entered into a long-term deal to purchase community solar credits from a nearby community solar farm to its Buffalo Mining Facility. The community solar project is 5MW in size and will produce roughly 9,500,000 kWh's of clean electricity annually. The Buffalo Mining Facility will be the anchor subscriber to the project.

On June 14, 2022, the Corporation announced that it entered into an agreement to acquire property in the state of Alabama in order to expand the Corporation's operational capacity. The site consists of approximately 160,000 square feet of office and industrial warehouse space with initial access to 28 MW of power with a total capacity of 55 MW (the "**Alabama Property**"). The terms of the agreement include a total purchase price of $2,750,000, $1,500,000 of which was due on or before June 17, 2022 and the remaining $1,250,000 to be paid in 25 equal monthly installments of $50,000 per month.

On June 14, 2022, the Corporation also announced the repayment in full of the fully drawn down Loan Facility.

On June 22, 2022, the Corporation announced the completion of the previously announced acquisition of the Alabama Property. The Corporation immediately commenced construction and the development of the facilities in Alabama.

On July 5, 2022, the Corporation announced that planning was underway at the Alabama Property with mining operations projected to commence in fourth quarter of 2022. The Corporation also announced that it does not intend to open any new mining facilities in New York State.

On August 2, 2022, the Corporation announced that it commenced construction and the development of the facilities build-out of the Alabama Property. In support of its infrastructure expansion, the Corporation transferred a portion of its existing mining fleet from New York State to the site in Alabama to allow the Corporation to benefit from the lower direct energy costs it has negotiated with Alabama Power.

On August 16, 2022, the Corporation announced that it acquired 25 acres of land in North Carolina with a request for allocation of up to 200 MW of power (the "**North Carolina Property**"). The Corporation is seeking potential joint venture partners.

On August 16, 2022, the Corporation also announced that it suspended the use of the Bid until further notice. Following suspension of the Bid, the Corporation will resume the use of the ATM Equity Program and may issue securities pursuant to the ATM Equity Program from time to time, if the Corporation determines that such issuances would be beneficial.

On September 7, 2022, the Corporation announced that it received PSC approval for an economic rider rate discount for its facilities in New York State. The Corporation continued the development of the facilities build-out and construction work on the Alabama Property on schedule and on budget.

On October 4, 2022, the Corporation announced the continued development of the facilities Phase 1 build-out and construction work on the Alabama Property on schedule and on budget. Completion of the Phase 1 build will provide the Corporation with approximately 550 PH of additional operating capacity. The Corporation also announced that it intends to develop the North Carolina Property for use in 2024, with a request for allocation of up to 200 MW of power.

On October 14, 2022, the Corporation announced that it received a written notification (the "**Notification Letter**") from Nasdaq indicating that, for the prior thirty consecutive business days, the bid price for the Corporation's SV Shares had been below the minimum $1.00 per share requirement for continued listing on Nasdaq under Nasdaq Listing Rule 5550(a)(2). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Corporation was provided an initial period of 180 calendar days, or until April 10, 2023, to regain compliance. The letter stated that Nasdaq staff will provide written notification that the Corporation has achieved compliance with Rule 5550(a)(2) if, at any time before April 10, 2023, the bid price of the SV Shares closes at $1.00 per share or more for a minimum of ten consecutive business days.

On November 1, 2022, the Corporation announced that it continues to move forward with closing documentation and approval requirements related to the acquisition of Digifactory1. The Alabama Property Phase 1 build-out also continued on schedule and on budget. The Corporation also announced that it secured a $1.3 million surety bond with Alabama Power Company for electric service.

On December 2, 2022, the Corporation announced that, as a result of the potential contagion from the recent collapse of FTX, the Corporation made the decision to move a majority of its digital currencies to an offline cold storage wallet in order to better safeguard its assets. This change in custodial practices is consistent with the Corporation's risk management strategy in the current market environment.

On December 2, 2022, the Corporation also announced that the Alabama Property Phase 1 build-out also continued on schedule and on budget, with testing of mining equipment beginning in December 2022 and completion of Phase 1 scheduled for first quarter of 2023.

<u>Subsequent to Fiscal 2022</u>

On January 3, 2023, the Corporation announced that initial mining capacity of 100 PH came online at the Alabama Property during the month of December 2022. The Corporation is currently working on the design of Phase 2 for the Alabama Property.

On January 20, 2023, the Corporation announced that it was made aware that a legal proceeding was filed by the Sierra Club and the Clean Air Coalition of Western New York against the PSC, challenging the PSC's decision to approve the sale of Digifactory1 to the Corporation. The Corporation is of the view that the proceeding is not material to the closing of the acquisition and the Corporation believes that the PSC acted within its legislative authority and took all appropriate steps and measures in granting the approval.

On February 2, 2023, the Corporation announced that it received formal notice from Nasdaq stating that the Corporation has regained compliance with the minimum bid price requirement in Nasdaq Listing Rule 5550(a)(2) for continued listing on Nasdaq.

On February 8, 2023, the Corporation announced the completion of the acquisition of Digifactory1. Further to the Corporation's initial news release on March 24, 2021, the terms of the acquisition were amended to reflect an all-cash purchase price, and no securities of the Corporation were issued in connection with the acquisition.

**Anticipated Changes in the Corporation's Business**

Over the next 12 months, the Corporation intends to:

&nbsp;&nbsp;&nbsp;&nbsp;(a) expand its operations through the development of additional
operating sites and through the acquisition of additional Bitcoin mining rigs; and

&nbsp;&nbsp;&nbsp;&nbsp;(b) upon completion of the deployment of additional Bitcoin mining
rigs, continue generating positive operating margins with a view to increasing these operating margins from both an increase in the price
of Bitcoin and by pursuing opportunities to reduce power costs.

**Significant Acquisitions**

The Corporation has not engaged in any significant acquisitions of property, equipment or shares in the most recently completed financial year, ended December 31, 2022, for which disclosure is required under Part 8 of *National Instrument 51-102 – Continuous Disclosure Obligations.*

**BUSINESS OF THE CORPORATION**

The Corporation (formerly HashChain) was subject to the RTO, which closed on February 14, 2020, whereby the business and assets of HashChain and Digihost were combined by way of a share exchange between HashChain and shareholders of Digihost. In connection with the RTO, all the issued and outstanding 6,530,560 HashChain common shares were exchanged for 6,530,560 SV Shares, and all of Digihost's common shares were exchanged for 33,412,490 SV Shares and 10,000 PV Shares of the Corporation.

In connection with and immediately prior to the closing of the RTO, Digihost entered into an agreement with Bit.Management, LLC, NYAM, LLC and BIT Mining International, LLC for the sale, transfer and assignment of a 100% right, title and interest in the leasehold improvements and equipment, the transfer of the lease of the Buffalo Mining Facility and transfer of a power contract for the supply of electricity at the facility. As consideration and immediately prior to the closing of the reverse takeover transaction, Digihost issued 104,000 Digihost common shares for an aggregate value of C$2,704,000. Digihost also entered into an agreement with BIT Mining International, LLC for the sale, transfer and assignment of a 100% right, title and interest in the leasehold improvements and equipment located at the Buffalo Mining Facility. As consideration and immediately prior to the closing of the reverse takeover, Digihost issued 60,000 Digihost common shares for an aggregate value of C$1,560,000

The Corporation is an innovative U.S. based blockchain technology and computer infrastructure company, primarily focused on digital currency mining, which is the Corporation's only operating segment that is a reportable segment. The Corporation acquired a 60 MW natural gas fired power plant in February 2023. The power plant currently operates as a peaker plant providing the grid with electrical power in times of peak demand. The Corporation's operations provide its shareholders with exposure to the operating margins of digital currency mining which the Corporation believes is the most profitable application of the Corporation's computing power, as well exposure to the power industry. As of the date of this AIF, the Corporation has 20 employees.

The Corporation produces digital currencies by "mining". "Mining" is a process whereby "miners", which are specialized computers with high amounts of computational processing power, compete to solve "blocks", which are digital files where digital currency transactions are recorded on the blockchain. A miner that verifies and solves a new block is awarded newly-generated quantity of coins, an amount which is usually proportional to the miner's contributed hashrate or work, (plus a small transaction fee) as an incentive to invest their computer power, as mining is critical to the continuing functioning and security of the networks on which digital currencies operate on.

The Corporation has three mining facilities located in Buffalo and North Tonawanda in upper New York State as well as a facility in Columbiana, Alabama, which the Corporation acquired in June 2022. The Corporation's power plant is also located in North Tonawanda.

Miners require significant amounts of electrical power, and these energy requirements represent the Corporation's largest operating expense. The Corporation's operating and maintenance expenses are therefor principally composed of electricity to power its computing equipment as well as cooling and lighting, etc. Other site expenses include leasing costs for the facilities, internet access, equipment maintenance and software optimization, and facility security, maintenance and management. Ultimately, the central production line of the Corporation is converting electrical power into digital currencies through 'mining'. Natural gas represents the largest operating cost associated with the generation of electricity at the Corporation's power plant.

The Corporation has experienced volatility in electricity prices over the last 12 to 18 months as a result of the rapid rise in natural gas prices that are passed through from the grid operators to their customers. There has been a significant decline in natural gas prices over the last 6 months, which is expected to result in lower operating costs for the Corporation's mining and power businesses.

The Corporation's operation in the digital currency mining industry requires extensive knowledge of cryptocurrency mining, cryptocurrency economics, and blockchain technology. Further, the Corporation's focus on vertical integration with energy production and its focus on environmentally conscious development requires specialized knowledge of the energy procurement industry, with a particular focus on green energy.

All key components of the Corporation's facilities are monitored including the intake air temperature, hash board temperature, voltage, hashrate, air temperature, exhaust air temperature and humidity. All parameters are monitored and changed remotely, as required. Parallel monitoring is performed by local on-site staff who are responsible for implementing any necessary repairs to mining infrastructure. In the event that the Corporation's remote monitoring or any parallel monitoring identifies any malfunction or technical issue, personnel are dispatched to physically inspect and, if necessary, repair defective components. The Company intends to maintain an inventory of all necessary components for repair, which are kept at the same facility as such operations.

During April 2021, the Corporation was approved for an account with Gemini Trust Company, LLC ("**Gemini**"). Gemini is a digital currency exchange and custodian that allows customers to buy, sell, and store digital assets. Gemini was the first crypto exchange and custodian in the world to complete a SOC 2 Type 1 and a SOC 2 Type 2 examination. While a SOC 2 Type 1 evaluates the design and implementation of system controls at a point in time, a SOC 2 Type 2 evaluates whether these system controls have been operating effectively over a period of time. A SOC 2 Type 2 examination is the highest level of security compliance an organization can demonstrate, and Gemini completes this examination on an annual basis. As of the date of this AIF, the Corporation has holdings of 15.56 BTC coins in its Gemini account.

The Corporation performs credit due diligence in the normal course of business when beginning a relationship with counterparties, as well as during on-going business activities. Gemini maintains insurance coverage for the cryptocurrency held on behalf of the Corporation in its online hot wallet. The Corporation has not been able to independently insure its mined digital currency. Given the novelty of digital currency mining and associated businesses, insurance of this nature is generally not available, or uneconomical for the Corporation to obtain which leads to the risk of inadequate insurance coverage.

To mitigate third-party risk, the Corporation will hold a portion of its digital currencies in cold storage solutions which are not connected to the internet. The Corporation's digital assets that are held in cold storage are stored in safety deposit boxes at a bank branch. The wallets on which the Corporation stores its cryptocurrency assets are not multi-signature wallets, however, the Corporation secures the 24-word seed phrase, which facilitates recovery of the wallets should the wallets become lost, stolen or damaged, by partitioning the seed phrase in multiple parts, and securing each part in a separate location. Each part of the seed phrase is stored in either a safe or safety deposit box. The Corporation replicates this security protocol by taking the same 24-word seed phrase, partitioning this into several parts and storing each part in a secure location in a separate safe or safety deposit box than was used for the first copy of the seed-phrase. This duplication ensures that the digital currencies held via cold storage solutions will be recoverable by the Corporation, should the Corporation's cold-wallets become lost, stolen or damaged.

The digital currency mining industry is highly competitive. In addition, there exist many online companies that offer digital currency cloud mining services, as well as companies, individuals and groups that run their own mining farms. Miners can range from individual enthusiasts to professional mining operations with dedicated data centres, including those of the kind operated by the Corporation's principal publicly-listed competitors. The largest competitor operating in the same space as the Corporation in North America is Hut 8 Mining Corp. (TSX: HUT; NASDAQ: HUT), a public company trading on the TSX. There are several other companies competing in the Corporation's industry, including Riot Blockchain, Inc.(NASDAQ: RIOT), MGT Capital Investments Inc. (OTCQB: MGTI), Marathon Digital Holdings Inc. (NASDAQ: MARA), Bitfarms Ltd. (TSX: BITF; NASDAQ: BITF), Argo Blockchain Plc (LSE: ARB; NASDAQ: ARBK), CryptoStar Corp. (TSXV: CSTR), HIVE Blockchain Technologies Ltd. (TSXV: HIVE; NASDAQ: HIVE), Skychain Technologies Inc. (TSXV: SCT), DMG Blockchain Solutions Inc. (TSXV: DMGI) and Link Global Technologies Inc. (CSE: LNK).

The vast majority of mining is now undertaken by mining pools, whereby miners organize themselves and pool their processing power over a network and mine transactions together. Rewards are then distributed proportionately to each miner based on the work/hashpower contributed. Mining pools became popular when mining difficulty and block time increased. While the rewards for successfully solving a block become considerably lower in the case of pooling, rewards are earned on a far more consistent basis, reducing the risk to miners with smaller computational power. Consequently, the Corporation may decide to participate in a mining pool in order to smooth the receipt of rewards.

Mining pools generally exist for each well-known cryptocurrency.

**Risk Factors**

An investment in SV Shares should be considered highly speculative due to the nature of the Corporation's business and its present stage of development. Where applicable, references in this section to the Corporation include Digihost and vice versa. An investment in SV Shares should only be made by knowledgeable and sophisticated investors who are willing to risk and can afford the potential loss of their entire investment. Investors and potential investors should consult with their professional advisors to assess an investment in the Corporation. In evaluating the Corporation and its business, investors should carefully consider, in addition to other information contained in this AIF, the risk factors below. The following is a summary only of certain risk factors and is qualified in its entirety by reference to, and must be read in conjunction with, the detailed information appearing elsewhere in this AIF. These risks and uncertainties are not the only ones the Corporation is facing. Additional risks and uncertainties not presently known to the Corporation, or that the Corporation currently deems immaterial, may also impair its operations. If any such risks actually occur, the Corporation's business, financial condition, liquidity and results of operations could be materially adversely affected.

**Risks Related to the Corporation's Business**

***The Corporation's cryptocurrency inventory may be exposed to cybersecurity threats and hacks.***

Malicious actors may seek to exploit vulnerabilities within cryptocurrency programming codes. Several errors and defects have been found and corrected, including those that disabled some functionality for users and exposed users' information. Discovery of flaws in or exploitations of the source code that allow malicious actors to take or create virtual Bitcoin assets have been relatively rare, however attempts to discover flaws in or exploitations of the source code are not entirely uncommon. Hackers have been able to gain unauthorized access to digital wallets and cryptocurrency exchanges, thereby exposing the crypto-assets stored and traded on these platforms at risk.

If a malicious actor exposes a vulnerability on a platform or Blockchain on which the Corporation stores, trades or mines cryptocurrency, as may be applicable, that could interfere with and introduce defects to the mining operation and could put the Corporation's cryptocurrency holdings at risk of being hacked or stolen. Private keys which enable holders to transfer funds may also be lost or stolen, resulting in irreversible losses of cryptocurrencies. Hackers may discover novel tactics not currently contemplated herein which jeopardize the Corporation's assets and operations. The actions of one or more malicious actors could have a material adverse effect on the Corporation's business, financial condition, liquidity and results of operation.

 **

***Regulatory changes or actions may alter the nature of an investment in the Corporation or restrict the use of cryptocurrencies in a manner that adversely affects the Corporation's operations.***

 **

As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies with certain governments deeming cryptocurrency mining illegal while others have allowed their use and trade. Ongoing and future regulatory actions may alter, perhaps to a materially adverse extent, the ability of the Corporation to continue to operate. The effect of any future regulatory change on the Corporation or any cryptocurrency that the Corporation may mine is impossible to predict, but any such change could be substantial and have a material adverse effect on the Corporation. Governments may in the future curtail or outlaw the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase the cost of mining cryptocurrency and/or subject cryptocurrency mining companies to additional regulation. Governments may in the future take regulatory actions that prohibit or severely restrict the right to acquire, own, hold, sell, use or trade cryptocurrencies or to exchange cryptocurrencies for fiat currency.

On March 9, 2022, the President of the United States issued an executive order that identified the following objectives for future regulation of digital assets in the United States: (1) protect consumers, investors, and businesses, (2) protect financial stability, (3) mitigate the illicit finance and national security risks posed by misuse of digital assets, (4) reinforce United States leadership in the global financial system and in technological and economic competitiveness, (5) promote access to safe and affordable financial services, and (6) support technological advances that promote responsible development and use of digital assets. Although the executive order was generally received positively by the digital asset industry, especially in the United States, the nature, scope and effect of any future regulations inspired by that executive order and their effect on the cryptocurrency mining industry, the use and adoption of cryptocurrency and, ultimately, the Corporation cannot be reasonably estimated at this time.

More recently, in March 2023, the U.S. Treasury Department proposed a 30% excise tax on the cost of powering mining facilities that, if enacted, would be based on the costs of electricity used in mining and would be phased in over the next three years, increasing 10% each year. The proposal, if enacted, would also require miners, like the Corporation to report how much electricity they use and what type of power was tapped. If the proposed excise tax is approved, it could adversely impact the Corporation's results of operations and financial condition.

By extension, similar actions by other governments may result in the restriction of the acquisition, ownership, holding, selling, use or trading in the SV Shares. Such a restriction could result in the Corporation liquidating its cryptocurrency inventory at unfavorable prices and may otherwise adversely affect the Corporation's shareholders.

***Increased scrutiny and changing expectations from stakeholders with respect to the Corporation's ESG practices and the impacts of Climate Change may result in additional costs or risks.***

Companies across many industries, including cryptocurrency mining, are facing increasing scrutiny related to their environmental, social, and governance ("**ESG**") practices. Investor advocacy groups, certain institutional investors, investment funds and other influential investors are also increasingly focused on ESG practices and in recent years have placed increasing importance on the non-financial impacts of their investments. Furthermore, increased public awareness and concern regarding environmental risks, including global climate change, may result in increased public scrutiny of the Corporation's business and its industry, and the management team may divert significant time and energy away from the Corporation's operations and towards responding to such scrutiny and enhancing the Corporation's ESG practices.

 ****

In addition, the impacts of climate change may affect the availability and cost of materials and natural resources, sources and supply of energy, demand for Bitcoin and other cryptocurrencies, and could increase the Corporation's insurance and other operating costs, including, potentially, to repair damage incurred as a result of extreme weather events or to renovate or retrofit facilities to better withstand extreme weather events. If environmental laws or regulations or industry standards are either changed or adopted and impose significant operational restrictions and compliance requirements on the Corporation's operations, or if its operations are disrupted due to physical impacts of climate change, the Corporation's business, capital expenditures, results of operations, financial condition and competitive position could be negatively impacted.

 **

***The value of cryptocurrencies may be subject to momentum pricing.***

 **

Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for anticipated future appreciation in value. Cryptocurrency market prices are determined primarily using data from various exchanges, over-the-counter markets, and derivative platforms. Momentum pricing may have resulted, and may continue to result, in speculation regarding future appreciation in the value of cryptocurrencies, inflating and making their market prices more volatile. As a result, they may be more likely to fluctuate in value due to changing investor confidence in future appreciation (or depreciation) in their market prices, which could adversely affect the value of the cryptocurrency the Corporation mines and holds and thereby negatively affect the Corporation's shareholders.

 **

***Cryptocurrency exchanges and other trading venues are relatively new and, in most cases, largely unregulated and may therefore be more exposed to fraud and failure.***

 **

To the extent that cryptocurrency exchanges or other trading venues are involved in fraud or experience security failures or other operational issues, this could result in a reduction in cryptocurrency prices. Cryptocurrency market prices depend, directly or indirectly, on the prices set on exchanges and other trading venues, which are new and, in most cases, largely unregulated as compared to established, regulated exchanges for securities, derivatives and other currencies. For example, during the past three years, a number of Bitcoin exchanges have been closed due to fraud, business failure or security breaches. In many of these instances, the customers of the closed Bitcoin exchanges were not compensated or made whole for the partial or complete losses of their account balances in such Bitcoin exchanges. These risks also apply to other cryptocurrency exchanges, including exchanges on which Ether is traded. While smaller exchanges are less likely to have the infrastructure and capitalization that provide larger exchanges with additional stability, larger exchanges may be more likely to be appealing targets for hackers and "malware" (i.e., software used or programmed by attackers to disrupt computer operation, gather sensitive information or gain access to private computer systems) and may be more likely to be targets of regulatory enforcement action. The Corporation's current strategy is to hold its mined cryptocurrencies; however, if the Corporation decides to sell its cryptocurrency in the future, it may rely on a cryptocurrency exchange to facilitate such a sale. Fraud or failure of cryptocurrency exchanges could decrease the number of platforms available to the Corporation to liquidate its holdings and could also decrease public confidence in trading on such exchanges, which may adversely affect the price of cryptocurrencies. Sustained lack of regulation and potential fraud or failure of cryptocurrency exchanges could have a material adverse effect of the Corporation's business, financial condition, liquidity and results of operation.

***Banks may not provide banking services, or may cut off banking services, to businesses that provide cryptocurrency-related services or that accept cryptocurrencies as payment.***

 ****

A number of companies that provide Bitcoin and/or other cryptocurrency-related services have been unable to find banks that are willing to provide them with bank accounts and banking services. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to Bitcoin and/or other cryptocurrency-related companies or companies that accept cryptocurrencies for a number of reasons, such as perceived compliance risks or costs. The difficulty that many businesses that provide Bitcoin and/or other cryptocurrency-related services have and may continue to have in finding banks willing to provide them with bank accounts and other banking services may be currently decreasing the usefulness of cryptocurrencies as a payment system and harming public perception of cryptocurrencies or could decrease its usefulness and harm its public perception in the future. Similarly, the usefulness of cryptocurrencies as a payment system and the public perception of cryptocurrencies could be damaged if banks were to close the accounts of many or of a few key businesses providing Bitcoin and/or other cryptocurrency-related services. This could decrease the market prices of cryptocurrencies and adversely affect the value of the Corporation's cryptocurrency inventory.

 **

***The impact of geopolitical events on the supply and demand for cryptocurrencies is uncertain.***

 **

Crises may motivate large-scale purchases of cryptocurrencies, which could increase the price of cryptocurrencies rapidly. This may increase the likelihood of a subsequent price decrease as crisis-driven purchasing behavior wanes, adversely affecting the value of the Corporation's cryptocurrency inventory.

As an alternative to fiat currencies that are backed by central governments, cryptocurrencies, which are relatively new, are subject to supply and demand forces based upon the desirability of an alternative, decentralised means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of Bitcoin either globally or locally. Large-scale sales of cryptocurrencies would result in a reduction in their market prices and adversely affect the Corporation's operations and profitability.

 **

***The further development and acceptance of the cryptographic and algorithmic protocols governing the issuance of and transactions in cryptocurrencies is subject to a variety of factors that are difficult to evaluate.***

 **

The use of cryptocurrencies to, among other things, buy and sell goods and services and complete other transactions, is part of a new and rapidly evolving industry that employs digital assets based upon a computer-generated mathematical and/or cryptographic protocol. The growth of this industry in general, and the use of cryptocurrencies in particular, is subject to a high degree of uncertainty, and the slowing, or stopping of the development or acceptance of developing protocols may adversely affect the Corporation's operations. The factors affecting the further development of the industry, include, but are not limited to:

● Continued worldwide growth in the adoption and use of cryptocurrencies;

● Governmental and quasi-governmental regulation of cryptocurrencies and their use, or restrictions on or regulation of access to and operation of the network or similar cryptocurrency systems;

● Changes in consumer demographics and public tastes and preferences;

● The maintenance and development of the open-source software protocol of the network;

● The availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;

● General economic conditions and the regulatory environment relating to digital assets; and

● Negative consumer sentiment and perception of Bitcoins specifically and cryptocurrencies generally

***Acceptance and/or widespread use of cryptocurrency is uncertain.***

 ****

Currently, there is relatively small use of Bitcoins and/or other cryptocurrencies in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect the Corporation's operations, investment strategies, and profitability.

As relatively new products and technologies, Bitcoin and other cryptocurrencies have not been widely adopted as a means of payment for goods and services by major retail and commercial outlets. Conversely, a significant portion of cryptocurrency demand is generated by blockchain technology enthusiasts, price speculators and investors seeking to profit from the short-term or long-term holding of cryptocurrencies.

The relative lack of acceptance of cryptocurrencies in the retail and commercial marketplace limits the ability of end-users to use them to pay for goods and services. A lack of expansion by cryptocurrencies into retail and commercial markets, or a contraction of such use, may result in increased volatility or a reduction in their market prices, either of which could adversely impact the Corporation's operations, investment strategies, and profitability.

 **

***The Corporation is subject to risks associated with the Corporation's need for significant electrical power and for such electrical power to be available at commercially feasible rates. Government regulators may potentially restrict the ability of electricity suppliers to provide electricity to mining operations.***

 **

Cryptocurrency mining operations require substantial amounts of electrical power, and the Corporation's operations can only be successful if the Corporation can obtain electrical power on a reliable and cost-effective basis. Shortages of natural gas, infrastructural damage to power plants or power carriage infrastructure, increases in demand for power, or any other factor that contributes to a rise in the price of electrical power may render the Corporation's mining operations unprofitable. Additionally, in times of electricity shortages, government regulators may restrict or prohibit the provision of electricity to cryptocurrency mining operations.

At the same time, the consumption by cryptocurrency mining companies, including the Corporation of significant amounts of electrical power may potentially have a deleterious effect on the environment, which may cause government regulators to restrict the ability of electricity suppliers to provide electricity to mining operations in order to curtail their energy consumption.

The Corporation currently conducts its cryptocurrency mining in the states of New York and Alabama. As a result of maintaining operations in limited geographic locations, the Corporation's current and future operations and anticipated growth, as well as the sustainability of electricity at economical prices for the purposes of cryptocurrency mining in the states of New York and Alabama poses certain risks. Any significant increase in the price the Corporation pays for the electrical power it consumes could adversely impact the Corporation's operations and profitability.

***The Corporation may be required to sell its cryptocurrency portfolio to pay for expenses.***

 ****

The Corporation has in the past, and may in the future, sell part of its cryptocurrency portfolio to pay for expenses incurred, irrespective of the price at that point in time. Consequently, the Corporation's cryptocurrencies may be sold at a time when the price is low, resulting in a negative effect on the Corporation's profitability.

 **

***The Bitcoin block reward halves approximately every four years, which reduces the number of Bitcoin the Corporation would receive from solving blocks.***

 **

The difficulty of Bitcoin mining, or the amount of computational resources required for a set amount of reward for recording a new block, directly affects the Corporation's results of operations. Bitcoin mining difficulty is a measure of how much computing power is required to record a new block, and it is affected by the total amount of computing power in the Bitcoin network. The Bitcoin algorithm is designed so that one block is generated, on average, every ten minutes, no matter how much computing power is in the network. Thus, as more computing power joins the Bitcoin network, and assuming the rate of block creation does not change (remaining at one block generated every ten minutes), the amount of computing power required to generate each block, and, hence, the mining difficulty, increases. In other words, based on the current design of the Bitcoin network, Bitcoin mining difficulty would increase together with the total computing power available in the Bitcoin network, which is in turn affected by the number of Bitcoin mining machines in operation.

In May 2020, the Bitcoin daily reward halved from 12.5 Bitcoin per block, or approximately 1,800 Bitcoin per day, to 6.25 Bitcoin per block, or approximately 900 Bitcoin per day. Bitcoin halving events are expected to occur approximately every four years, and each halving event may have a potential deleterious impact on the Corporation's profitability as the Corporation will be rewarded less Bitcoin for each new block it records. Based on the fundamentals of Bitcoin mining and historical data on Bitcoin prices and the network difficulty rate after a halving event, it is unlikely that the network difficulty rate and price would remain at the current level when the Bitcoin rewards per block are halved, which could offset some of the impact of a halving event. Nevertheless, there is a risk that a future halving event may render the Corporation unprofitable and unable to continue as a going concern.

***The Corporation's profitability depends upon the hashrate of its miners and of the network as well as network difficulty, any adverse changes in which could reduce the ability of the Corporation to remain competitive.***

 ****

The hashrate in cryptocurrency networks is expected to increase as a result of upgrades across the industry as Bitcoin and Ether miners use more efficient chips. As the hashrate increases, the mining difficulty will increase in response to the increase in computing power in the network. This may make it difficult for the Corporation to remain competitive as the Corporation may be required to deploy significant capital to acquire additional miners in order to increase their total mining power and offset the rise in hashrate. The effect of increased computing power in the network combined with fluctuations in the price of Bitcoin and Ether could have a material adverse effect on the Corporation's results of operations and financial condition.

***There is a possibility of cryptocurrency mining algorithms transitioning to proof of stake validation and other mining related risks, which could make the Corporation less competitive and ultimately adversely affect the Corporation's business and the value of its shares.***

Proof of stake is an alternative method in validating cryptocurrency transactions that is less dependent on the consumption of electricity. Should the algorithm for validating Bitcoin or Ether transactions, or transactions involving any cryptocurrency the Corporation mines in the future, shift from the current proof of work validation method to a proof of stake method, mining would likely require less energy, which may render any company that maintains advantages in the current climate (for example, from lower priced electricity, processing, real estate, or hosting) less competitive. The Corporation, as a result of its efforts to optimize and improve the efficiency of its mining operations by seeking to acquire low cost, long-term electricity may be exposed to the risk in the future of losing the relative competitive advantage it may have over some of its competitors as a result and may be negatively impacted if a switch to proof of stake validation were to occur. Such events could have a material adverse effect on our ability to continue as a going concern, which could have a material adverse effect on our business, prospects or results of operations, the value of Bitcoin, Ether and any other cryptocurrencies the Corporation mines in the future and your investment in the SV Shares.

 ****

***The risks to the Corporation posed by the COVID-19 pandemic and any future infectious diseases cannot be predicted with certainty.***

Pandemic risk is the risk of large-scale outbreaks of infectious diseases that can greatly increase morbidity and mortality over a wide geographic area and cause significant social and economic disruption. Pandemics, epidemics or outbreaks of an infectious disease in Canada or worldwide could have an adverse impact on the Corporation's business, including changes to the way the Corporation and its counterparties operate, and on the Corporation's financial results and condition. In March 2020, the World Health Organization declared COVID-19 a pandemic. The global response to the pandemic is constantly evolving, including various measures implemented at the global, national, state, provincial and local levels.

Although many health and safety restrictions have been lifted, certain adverse consequences of the pandemic continue to impact the macroeconomic environment and may continue to persist. The growth in economic activity and demand for goods and services, alongside labor shortages and supply chain complications and/or disruptions, has also contributed to rising inflationary pressures. The final outcome and/or potential duration of the economic disruption that resulted from the onset and subsequent recovery from COVID-19 remains uncertain at this time, and the financial markets continue to be impacted. Despite the decreased severity of the pandemic in recent months and the decreased global travel restrictions, the Corporation cannot accurately predict the impact that COVID-19 will have on its future revenue and business undertakings, due to uncertainties relating to future outbreaks and potential new variants of COVID-19, and their duration. Although the Corporation temporarily ceased operations at its Buffalo Mining Facility during March 2020 due to the COVID-19 pandemic, the Corporation resumed operations at a 75% operating level in April 2020 and, since then, has been at a 100% operating level; however, exposure to potential future government-imposed restrictions that may restrict the number of employees permitted to work in the mining facilities or that might otherwise limit the Corporation's operations in the wake of an infectious disease outbreak remains uncertain. As a result, it is not possible to reliably estimate the length or severity of any such developments or their impact on the financial results and condition of the Corporation and its operating subsidiaries in future periods.

Although the impact of COVID-19 appears to be less severe and government interventions appears to be minimal compared to the beginning of the pandemic, it is not possible to reliably estimate the length and severity of these developments as well as the impact on the financial results and condition of the Corporation and its operating subsidiaries in future periods. The extent to which the Corporation's business and financial condition will continue to be affected by the COVID-19 pandemic or any future infectious disease outbreaks will depend on future developments including the spread of variants, efficacy of vaccines against new variants, the vaccination progress and the impact of related controls and restrictions imposed by government authorities.

 ****

 **

***The Corporation's operations, investment strategies, and profitability may be adversely affected by competition from other methods of investing in cryptocurrencies.***

 **

The Corporation competes with other users and/or companies that are mining cryptocurrencies and other potential financial vehicles, possibly including securities backed by or linked to cryptocurrencies through entities similar to the Corporation. Market and financial conditions, and other conditions beyond the Corporation's control, may make it more attractive to invest in other financial vehicles, or to invest in cryptocurrencies directly which could limit the market for the Corporation's shares and reduce their liquidity.

 **

***The Corporation's coins may be subject to loss, theft or restriction on access.***

 **

There is a risk that some or all of the Corporation's coins could be lost or stolen. Access to the Corporation's coins could also be restricted by cybercrime (such as a denial of service attack) against a service at which the Corporation maintains a hosted online wallet. Any of these events may adversely affect the operations of the Corporation and, consequently, its investments and profitability.

The loss or destruction of a digital private key required to access the Corporation's digital wallets may be irreversible. The Corporation's loss of access to its private keys or its experience of a data loss relating to the Corporation's digital wallets could adversely affect its investments.

Cryptocurrencies are controllable only by the possessor of both the unique public and private keys relating to the local or online digital wallet in which they are held, which wallet's public key or address is reflected in the network's public Blockchain. The Corporation will publish the public key relating to digital wallets in use when it verifies the receipt of cryptocurrency transfers and disseminates such information into the network, but it will need to safeguard the private keys relating to such digital wallets. To the extent such private keys are lost, destroyed or otherwise compromised, the Corporation will be unable to access its coins, and such private keys will not be capable of being restored by network. Any loss of private keys relating to digital wallets used to store the Corporation's cryptocurrency could adversely affect its investments and profitability.

 **

***Incorrect or fraudulent coin transactions may be irreversible.***

 **

Cryptocurrency transactions are irrevocable and stolen or incorrectly transferred coins may be irretrievable. As a result, any incorrectly executed or fraudulent coin transactions could adversely affect the Corporation's investments.

Coin transactions are not, from an administrative perspective, reversible without the consent and active participation of the recipient of the transaction. In theory, cryptocurrency transactions may be reversible with the control or consent of a majority of processing power on the network. Once a transaction has been verified and recorded in a block that is added to the Blockchain, an incorrect transfer of a coin or a theft of coin generally will not be reversible and the Corporation may not be capable of seeking compensation for any such transfer or theft. Although the Corporation's transfers of coins will regularly be made by experienced members of the management team, it is possible that, through computer or human error, or through theft or criminal action, the Corporation's coins could be transferred in incorrect amounts or to unauthorized third parties, or to uncontrolled accounts.

 **

***If the award of coins for solving blocks and transaction fees are not sufficiently high, miners (other than of the Corporation) may not have an adequate incentive to continue mining and may cease their mining operations, which could adversely impact the Corporation's mining operations.***

 **

As the number of coins awarded for solving a block in the Blockchain decreases, the incentive for miners to continue to contribute processing power to the network may transition from a set reward to transaction fees. Either the requirement from miners of higher transaction fees in exchange for recording transactions in the Blockchain or a software upgrade that automatically charges fees for all transactions may decrease demand for the relevant coins and prevent the expansion of the network to retail merchants and commercial businesses, resulting in a reduction in the market price of the relevant cryptocurrency that could adversely impact the Corporation's cryptocurrency inventory and investments.

In order to incentivize miners to continue to contribute processing power to the network, the network may either formally or informally transition from a set reward to transaction fees earned upon solving for a block. It is possible this transition could be accomplished either by miners independently electing to record on the blocks they solve only those transactions that include payment of a transaction fee or by the network adopting software upgrades that require the payment of a minimum transaction fee for all transactions. If transaction fees paid for recording transactions in a certain Blockchain become too high, the marketplace may be reluctant to use that Blockchain to transact and existing users may be motivated to switch between Blockchains, cryptocurrencies or back to fiat currency. Decreased use and demand for coins may adversely affect their value and result in a reduction in the market price of coins.

If the award of coins for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners, miners may cease expending processing power to solve blocks and confirmations of transactions on the Blockchain could be slowed temporarily or for an extended period of time if miners cease operations entirely. A reduction in the processing power expended by miners, including due to miners ceasing their operations, could increase the likelihood of a malicious actor or botnet obtaining control in excess of 50 percent of the processing power active on the Blockchain, potentially permitting such actor or botnet to manipulate the Blockchain in a manner that adversely affects the Corporation's mining activities. Any reduction in confidence in the confirmation process or processing power of the network may adversely impact the Corporation's mining activities, inventory of coins, and future investment strategies.

 **

***The price of coins may be affected by the sale of coins by other vehicles investing in coins or tracking cryptocurrency markets.***

 **

To the extent that other vehicles investing in coins or tracking cryptocurrency markets form and come to represent a significant proportion of the demand for coins, large redemptions of the securities of those vehicles and the subsequent sale of coins by such vehicles could negatively affect cryptocurrency prices and, therefore, affect the value of the inventory held by the Corporation.

 **

***The Corporation's business may be adversely impacted by technological obsolescence and difficulty in obtaining hardware.***

 **

To remain competitive, the Corporation will continue to invest in hardware and equipment required for maintaining the Corporation's mining activities. Should competitors introduce new services/software embodying new technologies, the Corporation's hardware and equipment and its underlying technology may become obsolete and require substantial capital to replace such equipment.

The increase in interest and demand for cryptocurrencies has led to a shortage of mining hardware as individuals purchase equipment for mining at home. In addition, ramifications from the COVID-19 pandemic, which included semiconductor and microchip shortages and logistical complications in terms of sourcing and obtaining goods, could cause delays or negatively impact the Corporation's ability to source new hardware and equipment.

Equipment may require repair and replacement from time to time. Risks of shortages, including, but not limited to, shortages of graphics processing units may lead to downtime as the Corporation searches for replacement equipment, which may decrease the cryptocurrency the Corporation is able to mine.

***Delays in the development of existing and planned cryptocurrency mining facilities may result in different outcomes than those intended.***

 ****

The continued development of existing and planned facilities is subject to various factors and may be delayed or adversely affected by such factors beyond the Corporation's control, including delays in the delivery or installation of equipment by suppliers, difficulties in integrating new equipment into existing infrastructure, shortages in materials or labour, defects in design or construction, diversion of management resources, insufficient funding, or other resource constraints. Actual costs for development may exceed the Corporation's planned budget. Delays, cost overruns, changes in market circumstances and other factors may result in different outcomes than those intended.

 ****

 ****

***Exposure to environmental liabilities and hazards may result in the imposition of fines, penalties and restrictions on the Corporation.***

The Corporation may be subject to potential risks and liabilities associated with pollution of the environment through its use of electricity to mine cryptocurrencies. In addition, environmental hazards may exist on a property in which the Corporation directly or indirectly holds an interest that are unknown to the Corporation at present and have been caused by previous or existing owners or operators of the property, which hazards may result in environmental pollution. Any such occurrences that constitute a breach of environmental legislation, laws, rules or regulations may result in the imposition of fines and penalties.

To the extent the Corporation is subject to environmental liabilities, the payment of such liabilities or the costs that it may incur to remedy environmental pollution would reduce funds otherwise available to it and could have a material adverse effect on the Corporation. If the Corporation is unable to fully remedy an environmental problem, it might be required to suspend operations or enter into interim compliance measures pending completion of the required remedy. Environmental hazards and other occurrences, including allegations of the same, involving or otherwise relating to the Corporation may have an undesirable reputational impact on the Corporation and may be an impetus for potential restrictions to be imposed on the Corporation by regulators. The Corporation's potential exposure for any such occurrences may be significant and could have a material adverse effect on the Corporation.

**General Business Risks Related to the Corporation**

 ****

***The Corporation's success is largely dependent on the performance of the Corporation's management and executive officers.***

The success of the Corporation is dependent upon the ability, expertise, judgment, discretion, performance and good faith of a limited number of people constituting its senior management. While the Corporation has employment or consulting agreements with most of its senior management team, those agreements cannot ensure the Corporation of the continued services of such persons. Any loss of the services of one or more of such individuals could have a material adverse effect on the Corporation's business, operating results or financial condition.

Certain members of the Corporation's management team have experience in the cryptocurrency industry, while others have experience in areas including financial management, corporate finance and sales and marketing. The experience of these individuals is a factor that will contribute to the Corporation's continued success and growth. The Corporation will initially be relying on the Corporation's officers and board members, as well as independent consultants, for certain aspects of the Corporation's business. The amount of time and expertise expended on the Corporation's affairs by each of the Corporation's management team and the Corporation's directors will vary according to the Corporation's needs. The success of the Corporation may be affected by conflicts of interest the management team or directors may have or may develop in the future. Conflict of interest concerns are further addressed hereinbelow under the heading "*Directors and officers may have a conflict of interest between their duties owed to the Corporation and their interest in other personal or business ventures.*" The Corporation does not intend to acquire any key man insurance policies, and there is, therefore, a risk that the death or departure of any member of management, the Corporation's board, or any key employee or consultant could have a material adverse effect on the Corporation's future.

***The Corporation may be unable to attract, develop and retain its key personnel and ensure adequate succession planning.***

The Corporation's operations and continued growth are dependent on its ability to attract, hire, retain and develop leaders and other key personnel. Any failure to effectively attract talented and experienced employees and other personnel or to engage in adequate succession planning and retention strategies could cause the Corporation to have insufficient industry or other relevant knowledge, skills and experience, which could erode the Corporation's competitive position or result in increased costs, competition for or high turnover. Any of the foregoing could negatively affect the Corporation's ability to operate its business, which, in turn, could adversely affect the Corporation's reputation, operations or financial performance.

 ****

 **

***The Corporation may be unable to obtain additional financing on acceptable terms or at all.***

 **

Further acquisitions of additional cryptocurrency mining rigs will require additional capital, and the Corporation will require funds to continue to operate as a public company. To the extent it becomes necessary to raise additional cash in the future, the Corporation may seek to raise it through the public or private sale of assets, debt or equity securities, the procurement of advances on contracts or licenses, funding from joint-venture or strategic partners, debt financing or short-term loans, or a combination of the foregoing. The Corporation may also seek to satisfy indebtedness without any cash outlay through the private issuance of debt or equity securities. We currently do not have any binding commitments for, or readily available sources of, additional financing.: however, any future financing(s) may also be dilutive to the Corporation's existing shareholders at that time.

There is no assurance that the Corporation will be successful in obtaining any required financing(s) or that such financing(s) will be available on terms acceptable to the Corporation. Failure to obtain such additional financing could cause the Corporation to reduce or terminate its operations. The failure to raise or procure such additional funds or the failure to achieve positive cash flow could result in the delay or indefinite postponement of the Corporation's business objectives, including the acquisition of additional equipment, the expansion of the Corporation's management team, the pursuit of strategic acquisitions and other aspects of the Corporation's strategic plan. If the Corporation undergoes a debt financing, the Corporation may be required to secure the financing with part or all of the Corporation's assets, which could be sold or retained by the creditor should there be a default in the Corporation's payment obligations. As a condition to a debt financing, restrictive covenants may be imposed on the Corporation that could limit the ability of the Corporation to freely operate its business, which could result in the failure to capitalize on otherwise available opportunities. Furthermore, if the Corporation raises capital through a convertible debt offering, any conversion of the debt into equity would be dilutive to the Corporation's existing shareholders.

***The Corporation faces competition from other cryptocurrency companies.***

 ****

The Corporation competes, and, in the future, will compete, with other cryptocurrency and distributed ledger technology businesses, including other businesses focused on developing substantial cryptocurrency mining operations, many of which have greater resources and experience. A fundamental property of mining associated with many cryptocurrencies is that the computational complexity of the mining algorithm increases over time, which, when combined with the effect of new industry entrants and cryptocurrency price volatility, may make certain cryptocurrencies relatively unprofitable to mine compared to others. If the Corporation does not increase its hashrate to maintain competitive as the computational complexity of mining algorithms increase, this Corporation may be unable to effectively compete, it may be unprofitable and ultimately unable to continue as a going concern.

***Uninsured or uninsurable risks could result in significant financial liabilities.***

 ****

The Corporation intends to insure its operations in general accordance with technology industry practice. However, given the novelty of cryptocurrency mining and associated businesses, such insurance may not be available, uneconomical for the Corporation, or the nature or level may be insufficient to provide adequate insurance cover. The Corporation may become subject to liability for hazards against which the Corporation cannot insure or against which the Corporation may elect not to insure because of high premium costs or for other reasons. The payment of any such liabilities would reduce or eliminate the funds available for operations. Payments of liabilities for which the Corporation does not carry insurance may have a material adverse effect on the Corporation's financial position.

 **

***The Corporation does not currently pay cash dividends and therefore the Corporation's shareholders will not be able to receive a return on their SV Shares unless they sell them.***

 **

The Corporation does not anticipate paying dividends in the near future. The Corporation expects to retain earnings to finance further growth and, where appropriate, retire debt. Unless the Corporation pays dividends, the Corporation's shareholders will not be able to receive a return on their shares unless they sell them. There is no assurance that shareholders will be able to sell SV Shares when desired.

 ****

 **

***The market price for SV Shares may be volatile, and there is no guarantee that an active or liquid market will be sustained for the SV Shares.***

 **

The Corporation's SV Shares are listed on the TSXV and Nasdaq. External factors outside of the Corporation's control, such as announcements of quarterly variations in operating results, revenues and costs, and sentiments toward stocks, may have a significant impact on the market price of the SV Shares. The market price for the SV Shares could be subject to extreme fluctuations. Factors such as government regulation, interest rates, share price movements of the Corporation's peer companies and competitors, as well as overall market movements and the market price for the cryptocurrencies that the Corporation mines, may have a significant impact on the market price of the SV Shares. Global stock markets, including the TSXV and Nasdaq, have experienced extreme price and volume fluctuations from time to time. There can be no assurance that an active or liquid market will develop or be sustained for the SV Shares.

 **

***There are significant legal, accounting, and financial costs of being a publicly traded company, which costs may reduce the resources available for the Corporation to deploy on its cryptocurrency mining operations.***

 **

For so long as the Corporation has publicly traded securities, it will continue to incur significant legal, accounting and filing fees. As a reporting issuer, the Corporation is subject to reporting requirements under applicable laws, rules and policies of the TSXV, Nasdaq, and the Canadian and US securities regulatory authorities, including the SEC. Compliance with those requirements increases legal and financial compliance costs, makes some activities more difficult, time consuming or costly, and increases demand on existing systems and resources. Among other things, the Corporation is required to file annual, quarterly, and current reports with respect to its business and results of operations and maintain effective disclosure controls and procedures and internal controls over financial reporting. To maintain and, if required, improve disclosure controls and procedures and internal controls over financial reporting to meet applicable requirements, significant resources and management oversight may be required. Under the US Sarbanes-Oxley Act of 2002 ("**SOX**"), the Corporation is required to adhere to strict financial reporting requirements, and documentation proving compliance therewith must be regularly updated and maintained. The Corporation may be required to incur significant costs to satisfy internal and external reporting requirements under SOX and other applicable laws, rules and regulations. Securities legislation and the rules and policies of the TSXV and Nasdaq require publicly listed companies to, among other things, adopt corporate governance policies and related practices and to continuously prepare and disclose material information, all of which carry significant legal, financial and securities regulatory compliance costs.

As a result of the Corporation ensuring reporting requirements are met, management's attention may be diverted from other business concerns, which could harm the Corporation's business and result of operations. The Corporation may need to hire additional employees to comply with these requirements in the future, which would increase its costs and expenses. Continuing as a reporting issuer may make it more expensive to maintain director and officer liability insurance, which, in turn, could also make it more difficult for the Corporation to retain qualified directors and executive officers.

 **

***Directors and officers may have a conflict of interest between their duties owed to the Corporation and their interest in other personal or business ventures.***

 **

Certain of the Corporation's directors and officers are, and may continue to be, involved in the cryptocurrency industry through their direct and indirect participation in corporations, partnerships or joint ventures that are potential competitors of the Corporation. Situations may arise in connection with potential acquisitions or opportunities where the other interests of these directors and officers may conflict with the Corporation's interests. Directors and officers of the Corporation with conflicts of interest will be subject to and must follow the procedures set out in applicable corporate and securities legislation, regulations, rules and policies; however, there may be corporate opportunities that the Corporation is not able to pursue due to a conflict of interest of one or more of the Corporation's directors or officers.

***The Corporation may be subject to litigation arising out of its operations.***

The Corporation may be subject to litigation from time to time arising from the ordinary course of its business or otherwise. Damages claimed in any such litigation against the Corporation may be material, and the outcome of such litigation may materially impact the Corporation's operations and the value of the SV Shares. While the Corporation will assess the merits of any lawsuits and defend against such lawsuits accordingly, the Corporation may be required to incur significant expense and devote significant financial resources to such defenses. In addition, any adverse publicity surrounding such litigation and claims may have a material adverse effect on the Corporation's reputation, which, in turn, may have a negative impact on the value of the SV shares.

***The Corporation could lose its foreign private issuer status in the future, which could result in significant additional costs and expenses to the Corporation.***

In order to maintain its current status as a foreign private issuer, (a) 50% or more of the Corporation's voting securities must be directly or indirectly owned of record by holders residing outside of the United States, (b) the majority of the Corporation's executive officers and the majority of its directors must not be U.S. citizens or U.S. residents; (c) 50% or more of the Corporation's assets must be located outside of the United States or (d) the issuer's business is administered principally outside of the United States. The Corporation may in the future lose its foreign private issuer status if a majority of the Corporation's voting securities are owned of record in the United States and the Corporation fails to meet any of the other qualifications to avoid loss of foreign private issuer status. The regulatory and compliance costs to the Corporation under U.S. federal securities laws as a U.S. domestic issuer may be significantly more than the costs the Corporation incurs as a foreign private issuer. If the Corporation ceases to be a foreign private issuer, it would be required to file periodic and current reports and registration statements on U.S. domestic issuer forms with the SEC that require more detailed and extensive disclosure than the forms available to a foreign private issuer.

 ****

***The Corporation has a limited history of operations and is in the early stage of development.***

The limited operating history of the Corporation is subject to many risks common to such enterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial and other resources and lack of revenues. The Corporation may not be successful in achieving a return on shareholders' investment, and the likelihood of its success must be considered in light of the early stage of its operations. There can be no assurance that the Corporation will be able to develop any of its projects profitably or that any of its activities will generate positive cash flow.

***Ineffective management of growth could result in a failure to sustain the Corporation's progress.***

The Corporation has recently experienced, and may continue to experience, growth in the scope of its operations pursuant to the acquisition of additional miners and the acquisition and development of new operational facilities. This growth has resulted in increased responsibilities for the Corporation's existing personnel, and, in general, higher levels of operating expenses. In order to manage its current operations and any future growth effectively, the Corporation will need to continue to implement and improve its operational, internal controls, financial, and management information systems, as well as hire, manage and retain employees and maintain its corporate culture. There can be no assurance that the Corporation will be able to manage such growth effectively or that its management, personnel or systems will be adequate to support the Corporation's operations.

 **

***The Corporation may be subject to tax liabilities and consequences that could reduce the Corporation's profitability.***

 **

The Corporation is subject to various taxes including, but not limited to the following: Canadian income tax; goods and services tax; provincial sales tax; land transfer tax; and payroll tax. The Corporation's tax filings will be subject to audit by various taxation authorities. Due to its relative novelty, the cryptocurrency industry in particular is subject to a rapidly evolving set of rules as governments begin to regulate this industry, including in the domain of taxation. While the Corporation intends to base its tax filings and compliance on the advice of its tax advisors, there can be no assurance that its tax filing positions will never be challenged by a relevant taxation authority resulting in a greater than anticipated tax liability.

Due to the new and evolving nature of digital assets and the absence of comprehensive legal guidance with respect to digital assets and related transactions, many significant aspects of the U.S. federal income and applicable state, local and non-U.S. tax treatment of transactions involving digital assets, such as the purchase and sale of Bitcoin and the receipt of staking rewards and other digital asset incentives and rewards products, are uncertain, and it is unclear what guidance may be issued in the future with respect to the tax treatment of digital assets and related transactions.

Current IRS guidance indicates that for U.S. federal income tax purposes, digital assets such as Bitcoin, should be treated and taxed as property, and that transactions involving the payment of Bitcoin for goods and services should be treated in effect as barter transactions. The IRS has also released guidance to the effect that, under certain circumstances, hard forks of digital currencies are taxable events giving rise to taxable income and guidance with respect to the determination of the tax basis of digital currency. However, current IRS guidance does not address other significant aspects of the U.S. federal income tax treatment of digital assets and related transactions. Moreover, although current IRS guidance addresses the treatment of certain forks, there continues to be uncertainty with respect to the timing and amount of income inclusions for various crypto asset transactions, including, but not limited to, staking rewards and other crypto asset incentives and rewards products. While current IRS guidance creates a potential tax reporting requirement for any circumstance where the ownership of a Bitcoin passes from one person to another, it preserves the right to apply capital gains treatment to those transactions, which is generally favorable for investors in Bitcoin.

There can be no assurance that the IRS will not alter its existing position with respect to digital assets in the future or that other state, local and non-U.S. taxing authorities or courts will follow the approach of the IRS with respect to the treatment of digital assets, such as Bitcoin, for income tax and sales tax purposes. Any such alteration of existing guidance or issuance of new or different guidance may have negative consequences including the imposition of a greater tax burden on investors in Bitcoin or imposing a greater cost on the acquisition and disposition of Bitcoin, generally; in either case potentially having a negative effect on the trading price of Bitcoin or otherwise negatively impacting our business. In addition, future technological and operational developments that may arise with respect to digital currencies may increase the uncertainty with respect to the treatment of digital currencies for U.S. federal income and applicable state, local and non-U.S. tax purposes.

***The Corporation may be characterized as a passive foreign investment company.***

 ****

Generally, if for any taxable year 75% or more of the Corporation's gross income is passive income, or at least 50% of the average quarterly value of the Corporation's assets are held for the production of, or produce, passive income, the Corporation would be characterized as a passive foreign investment company ("PFIC") for U.S. federal income tax purposes. Whether the Corporation is a PFIC for 2022 or any future taxable year is uncertain. Further, the Corporation does not express any opinion with respect to its PFIC status or its expectations regarding its PFIC status. Given this uncertainty, United States persons contemplating an investment in SV Shares may want to assume that the Corporation is a PFIC and are urged to consult their own tax advisors regarding the Corporation's PFIC status and the resulting U.S. federal income tax consequences in light of their own particular circumstances. If the Corporation is characterized as a PFIC, United States holders of SV Shares may suffer adverse tax consequences, including the treatment of gains realized on the sale of SV Shares as ordinary income, rather than as capital gain, the loss of the preferential income tax rate applicable to dividends received on SV Shares by individuals who are United States holders, and the addition of interest charges to the tax on such gains and certain distributions. A United States shareholder of a PFIC generally may mitigate these adverse U.S. federal income tax consequences by making a Qualified Electing Fund ("QEF") election, or, to a lesser extent, a mark-to-market election. However, the Corporation does not intend to provide the information necessary for United States shareholders to make QEF elections if the Corporation is classified as a PFIC for any year.

***The Corporation may be exposed to risks from exchanging currencies, including currency exchange fees.***

The Corporation may have financial risk exposure to varying degrees relating to the currency risk and volatility. The Corporation may raise funds and subsequently exchange such funds to another currency, which could result in costly currency exchange fees.

Currently, the Corporation does not engage in foreign currency hedging transactions to protect against fluctuations in future exchange rates, in particular, between the U.S. dollar and the Canadian dollar, and the Corporation may be more adversely affected by any such currency fluctuations than its competitors that engage in hedging transactions. If the Corporation engages in hedging transactions in the future, it may become exposed to risks associated with such transactions, which may not eliminate any adverse impact of future currency fluctuations on its business, financial condition, results of operations, cash flow and prospects.

**DIVIDENDS OR DISTRIBUTIONS**

It is not expected that the Corporation will declare any dividends for the foreseeable future. The Corporation will have no restrictions on paying dividends, but, if the Corporation generates earnings in the foreseeable future, it is expected that they will be retained to finance growth, if any. The Board will determine if and when dividends should be declared and paid in the future based upon the Corporation's financial position at the relevant time. Holders of SV Shares and PV Shares (on an as-converted basis) are entitled to an equal share in any dividends declared and paid on the SV Shares and PV Shares (on an as-converted basis). See "*Capital Structure – PV Shares*".

**CAPITAL STRUCTURE**

*Overview* 

 

The authorized capital of the Corporation consists of an unlimited number of SV Shares without par value and an unlimited number of PV Shares without par value. As of the date hereof, there are 28,555,252 SV Shares and 3,333 PV Shares issued and outstanding. PV Shares are not available for distribution to the public. PV Shares may be converted into SV Shares at a ratio of 200 SV Shares for every 1 PV Share, as described in further detail below.

In addition, as of the date of this AIF, there were: (i) 1,191,834 SV Shares issuable upon the exercise of outstanding stock options of the Corporation ("**Options**") at a weighted average exercise price of C$5.11; (ii) 10,124,329 SV Shares reserved for issuance on exercise of 10,124,329 issued and outstanding SV Share purchase warrants of the Corporation with a weighted average exercise price of C$7.12; and (iii) 959,500 SV Shares reserved for issuance upon the vesting of 959,500 restricted share units of the Corporation ("**RSUs**"), for a total of 40,830,915 SV Shares on a fully-diluted basis.

 

As of the date of this AIF, the current capital structure of the Corporation is as follows:

---

| | | |
|:---|:---|:---|
| **Designation of Security** | **Number Authorized** | **Number outstanding** |
| Subordinate Voting Shares | Unlimited | 28555252 |
| Proportionate Voting Shares<sup>(1)</sup> | Unlimited | 3333 |

---

*SV Shares* 

Each holder of SV Shares is entitled to receive notice of and to attend all meeting of shareholders of the Corporation. Holders of SV Shares are entitled to one (1) vote per SV Share on all matters subject to shareholder vote, voting together as a single class with holders of PV Shares, except as otherwise prohibited by law.

In the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or in the event of any other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs, the holders of SV shares will be entitled to participate ratably along with all other holders of SV Shares and PV Shares (on an as-converted to SV Share basis)

The holders of the SV Shares have the right to receive dividends, out of any cash or other assets legally available therefor, *pari passu* as to dividends and any declaration or payment of any dividend on the SV Shares

Except as otherwise provided in this prospectus, the SV Shares and PV Shares are equal in all respects and are treated as shares of a single class for all purposes under the BCBCA.

The Corporation's SV Shares are not subject to any pre-emptive rights, conversion or exchange rights, redemption, retraction, purchase for cancellation or surrender provisions, sinking or purchase fund provisions, provisions permitting or restricting the issuance of additional securities or provisions requiring a shareholder to contribute additional capital.

*PV Shares* 

 

Holders of PV Shares are entitled to receive notice of and to attend all meeting of shareholders of the Corporation. Holders of PV Shares are entitled to one vote in respect of each SV Share into which such PV Share could ultimately then be converted, which for greater certainty, shall be equal to two-hundred (200) votes per PV Share, on all matters subject to a shareholder vote, voting together as a single class with holders of SV Shares, except as otherwise prohibited by law.

Holders of PV Shares have the right to receive dividends, out of any cash or other assets legally available therefor, *pari passu* (on an as converted basis, assuming conversion of all PV Shares into SV Shares at the conversion ratio of 200:1) as to dividends and any declaration or payment of any dividend on the SV Shares. No dividend will be declared or paid on the PV Shares unless the Corporation simultaneously declares or pays, as applicable, equivalent dividends (on an as-converted basis) on the SV Shares.

In the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or in the event of any other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs, the holders of PV Shares will be entitled to participate ratably along with all other holders of PV Shares (on an as-converted to Resulting Issuer Subordinate Voting Share basis) and SV Shares

Each PV Share is convertible, at the option of the holder thereof at any time after the date of issuance of such share, into fully paid and non-assessable SV Shares as is determined by multiplying the number of PV Shares by the Conversion Ratio. The "**Conversion Ratio**" for shares of PV Shares shall be two-hundred (200) SV Shares.

PV Shares are not available for distribution to the public.

Except as otherwise provided in this AIF, the PV Shares and SV Shares are equal in all respects and are treated as shares of a single class for all purposes under the BCBCA.

**MARKET FOR SECURITIES**

**Trading Price and Volume**

The Corporation's SV Shares trade on the TSXV, under the ticker symbol "DGHI", and on Nasdaq, under the symbol "DGHI".

The following table represents the price range and trading volume for the SV Shares for each month of trading on the TSXV from January 2022 until the date hereof.

---

| | | | |
|:---|:---|:---|:---|
| | **Price Range** | **Price Range** | |
| <br>**Month** | **High (C$)** | **Low (C$)** |<br>**Volume** |
| March 1, 2023 – March 30, 2023 | 2.29 | 1.39 | 691004 |
| February, 2023 | 2.74 | 1.68 | 875600 |
| January, 2023 | 2.95 | 0.455 | 1355300 |
| December, 2022 | 0.83 | 0.42 | 210100 |
| November, 2022 | 1.09 | 0.73 | 270700 |
| October, 2022 | 1.10 | 0.58 | 606400 |
| September, 2022 | 1.25 | 0.79 | 408800 |
| August, 2022 | 1.94 | 1.12 | 404800 |
| July, 2022 | 1.85 | 1.13 | 157100 |
| June, 2022 | 2.82 | 1.23 | 532900 |
| May, 2022 | 3.40 | 1.60 | 791100 |
| April, 2022 | 4.86 | 3.20 | 452400 |
| March, 2022 | 4.94 | 3.12 | 1011000 |
| February, 2022 | 5.90 | 3.20 | 1273900 |
| January, 2022 | 6.20 | 3.07 | 1033900 |

---

The following table represents the price range and trading volume for the SV Shares for each month of trading on Nasdaq from January 2022 until the date hereof.

---

| | | | |
|:---|:---|:---|:---|
| | **Price Range** | **Price Range** | |
| <br>**Month** | **High ($)** | **Low ($)** |<br>**Volume** |
| March 1, 2023 – March 30, 2023 | 1.69 | 1.01 | 1910064 |
| February, 2023 | 2.06 | 1.22 | 2639600 |
| January, 2023 | 2.234 | 0.352 | 5858900 |
| December, 2022 | 0.62 | 0.31 | 1039500 |
| November, 2022 | 0.84 | 0.55 | 2271100 |
| October, 2022 | 0.828 | 0.399 | 1148400 |
| September, 2022 | 0.932 | 0.61 | 1294300 |
| August, 2022 | 1.37 | 0.855 | 1422000 |
| July, 2022 | 1.499 | 0.907 | 1139900 |
| June, 2022 | 2.27 | 0.956 | 1188200 |
| May, 2022 | 2.63 | 1.23 | 1603800 |
| April, 2022 | 3.92 | 2.46 | 1453000 |
| March, 2022 | 3.99 | 2.42 | 2955200 |
| February, 2022 | 4.443 | 2.53 | 2251800 |
| January, 2022 | 4.95 | 2.438 | 2871800 |

---

**Prior Sales**

***SV Shares***

 ****

The following table sets out details of an aggregate of 3,031,848 SV Shares issued by the Corporation during the most recently completed financial year.

---

| | | |
|:---|:---|:---|
| **Date of Issuance** | **Price per <br> SV Share** | **Number of SV Shares** |
| March 9, 2022 | 4.40 | 2729748 |
| July 19, 2022 | 4.40 | 300000 |
| August 22, 2022 | $1.1757 | 2100<sup>(1)</sup> |

---

<u>Note</u>:

(1) Issued pursuant to the ATM Equity Program.

***Options***

The Corporation did not issue any stock options during the most recently completed financial year.

***Warrants***

The Corporation did not issue any warrants during the most recently completed financial year.

**DIRECTORS AND OFFICERS**

The following table sets out, for each of the Corporation's directors and executive officers, the person's name, province and country of residence, positions with the Corporation, principal occupation within the last five years and the number and percentage of securities each director and executive officer holds as of the date of this AIF. Each director will hold office until the next annual meeting of the Corporation unless his or her office is earlier vacated:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Name and Municipality of Residence** | **Principal Occupations for Last Five Years** | **Position** | **Director/ Officer Since** | **Number and percentage of Shares** | **Number and percentage of Shares** | **Number and percentage of Shares** |
| &nbsp;&nbsp; Michel Amar<br> *Los Angeles, California* | CEO and Chairman, Digihost Technology Inc., (2020 – present); President, NYAM LLC (2016 to present) | CEO, Chairman, Director and Promoter | February 14, 2020 | SV Shares | &nbsp;&nbsp;5232147<sup>(2)</sup> | 18.32% |
| &nbsp;&nbsp; Michel Amar<br> *Los Angeles, California* | CEO and Chairman, Digihost Technology Inc., (2020 – present); President, NYAM LLC (2016 to present) | CEO, Chairman, Director and Promoter | February 14, 2020 | PV Shares | &nbsp;&nbsp;3333<sup>(3)</sup> | 100% |
| &nbsp;&nbsp; Michel Amar<br> *Los Angeles, California* | CEO and Chairman, Digihost Technology Inc., (2020 – present); President, NYAM LLC (2016 to present) | CEO, Chairman, Director and Promoter | February 14, 2020 | RSUs | &nbsp;&nbsp;400000 | N/A |
| &nbsp;&nbsp; Alec Amar<br> *Los Angeles, California* | &nbsp;&nbsp; President and Director, Digihost Technology Inc., (2020 – present);<br> President, Bit.Management, LLC (2018 to present) | President and Director | February 14, 2020 | SV Shares | &nbsp;&nbsp;294700 | 1.03% |
| &nbsp;&nbsp; Alec Amar<br> *Los Angeles, California* | &nbsp;&nbsp; President and Director, Digihost Technology Inc., (2020 – present);<br> President, Bit.Management, LLC (2018 to present) | President and Director | February 14, 2020 | RSUs | &nbsp;&nbsp;400000 | N/A |
| &nbsp;&nbsp; Paul Ciullo<br> *Albany, New York*  | &nbsp;&nbsp; CFO, Digihost Technology Inc.<br> (2021 to present; 2018 to 2020);<br> Finance Manager, Conduent Inc. (2015-2018) | &nbsp;&nbsp; CFO | April 29, 2021 | SV Shares | &nbsp;&nbsp;30885 | 0.11% |
| &nbsp;&nbsp; Paul Ciullo<br> *Albany, New York*  | &nbsp;&nbsp; CFO, Digihost Technology Inc.<br> (2021 to present; 2018 to 2020);<br> Finance Manager, Conduent Inc. (2015-2018) | &nbsp;&nbsp; CFO | April 29, 2021 | Options | &nbsp;&nbsp;27999 | N/A |
| &nbsp;&nbsp; Paul Ciullo<br> *Albany, New York*  | &nbsp;&nbsp; CFO, Digihost Technology Inc.<br> (2021 to present; 2018 to 2020);<br> Finance Manager, Conduent Inc. (2015-2018) | &nbsp;&nbsp; CFO | April 29, 2021 | RSUs | &nbsp;&nbsp;10000 | N/A |
| &nbsp;&nbsp; Donald Christie<br> *Toronto, Ontario* | COO, Digihost Technology Inc. (2020 to present); CFO, and Director, Nevada Zinc Corporation (2011 to present) | COO | February 1, 2022 | SV Shares | &nbsp;&nbsp;108333 | 0.38% |
| &nbsp;&nbsp; Donald Christie<br> *Toronto, Ontario* | COO, Digihost Technology Inc. (2020 to present); CFO, and Director, Nevada Zinc Corporation (2011 to present) | COO | February 1, 2022 | Options | &nbsp;&nbsp;208333 | N/A |
| &nbsp;&nbsp; Donald Christie<br> *Toronto, Ontario* | COO, Digihost Technology Inc. (2020 to present); CFO, and Director, Nevada Zinc Corporation (2011 to present) | COO | February 1, 2022 | RSUs | &nbsp;&nbsp;50000 | N/A |
| &nbsp;&nbsp; Gerard Rotonda<sup>(4)</sup><br>*New York, New York* | Co-Founder and Partner, MMR Development (2018 to present) | Director | July 28, 2022 | Options | &nbsp;&nbsp;99999 | N/A |
| &nbsp;&nbsp; Adam Rossman<sup>(4)</sup><br> *Los Angeles, California* | &nbsp;&nbsp; <br> Business and Real Estate Attorney | Director | February 14, 2020 | SV Shares | &nbsp;&nbsp;21413 | 0.07% |
| &nbsp;&nbsp; Adam Rossman<sup>(4)</sup><br> *Los Angeles, California* | &nbsp;&nbsp; <br> Business and Real Estate Attorney | Director | February 14, 2020 | Options | &nbsp;&nbsp;107999 | N/A |
| &nbsp;&nbsp; Adam Rossman<sup>(4)</sup><br> *Los Angeles, California* | &nbsp;&nbsp; <br> Business and Real Estate Attorney | Director | February 14, 2020 | RSUs | &nbsp;&nbsp;13333 | N/A |
| &nbsp;&nbsp; Zhichao Li<sup>(4)</sup><br>*New York, New York* | Co-Founder of Bitsource (April 2021 – Present); Vice President of Blockchain Dynamics (March 2020 – Present); Co-Founder and CEO of Fix Technology (January 2018 – March 2020) | Director | July 28, 2022 | N/A | &nbsp;&nbsp;N/A | N/A |

---

<u>Notes:</u>

(1) On a non-diluted basis, as a group the directors and officers
of the Corporation will own 5,687,478 SV Shares for 19.92% of the total issued and outstanding SV Shares and 3,333 PV Shares for 100%
of the total issued and outstanding PV Shares.

(2) 946,552 SV Shares are held by Michel Amar, 626,544 SV Shares
are held by Bit Mining International LLC, 2,165,889 SV Shares are held by Bit Management, LLC and 1,493,162 SV Shares are held by NYAM,
LLC. Bit.Management, LLC, BIT Mining International, LLC and NYAM, LLC are each controlled by Michel Amar, CEO of Digihost. Mr. Amar is
also the CEO of Bit.Management, LLC, BIT Mining International, LLC and NYAM, LLC.

(3) 3,333 PV Shares are held by NYAM, LLC. NYAM, LLC is controlled
by Michel Amar.

(4) Member of the Audit Committee. Gerard Rotonda is Chair of the
Audit Committee.

**Cease Trade Orders, Bankruptcies, Penalties or Sanctions**

*Cease Trade Orders*

To the knowledge of the Corporation as at the date of this AIF and within the ten years before the date of this AIF, no director or officer or proposed director of the Corporation is or has been a director or officer of any company (including the Corporation), that while that person was acting in that capacity:

&nbsp;&nbsp;&nbsp;&nbsp;a) was the subject of a cease trade order or similar order or
an order that denied the relevant company access to any exemptions under securities legislation, for a period of more than 30 consecutive
days;

&nbsp;&nbsp;&nbsp;&nbsp;b) was subject to an event that resulted, after the director
or executive officer ceased to be a director or executive officer, in the company being the subject of a cease trade or similar order
or an order that denied the relevant company access to any exemptions under securities legislation, for a period of more than 30 consecutive
days; or

&nbsp;&nbsp;&nbsp;&nbsp;c) became bankrupt, made a proposal under any legislation relating
to bankruptcy or insolvency or was subject to or instituted and proceedings, arrangement or compromise with creditors or had a receiver,
receiver manager or trustee appointed to hold its assets.

*Personal Bankruptcies*

To the knowledge of the Corporation, no director or officer of the Corporation, or a personal holding company of any of them, has, within the ten years prior to the date of this AIF, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or been subject to or instituted any proceedings, arrangement, or compromise with creditors or had a receiver manager or trustee appointed to hold the assets of that individual.

*Penalties or Sanctions*

To the knowledge of the Corporation, no proposed director or officer of the Corporation has:

&nbsp;&nbsp;&nbsp;&nbsp;a) been subject to any penalties or sanctions imposed by a court
relating to securities legislation by a securities regulatory authority or has entered into a settlement agreement with a securities
regulatory authority; or

&nbsp;&nbsp;&nbsp;&nbsp;b) been subject to any other penalties or sanctions imposed
by a court or regulatory body, including a self-regulatory body, that would be likely to be considered important to a reasonable security
holder.

**Conflicts of Interest**

To the knowledge of the Corporation, no proposed director, officer or promoter of the Corporation or its subsidiaries has any existing or potential material conflicts of interests as a result of their outside business interests. Conflicts of interest, if any, will be subject to and will be resolved in accordance with, the procedures and remedies under the BCBCA.

**AUDIT COMMITTEE INFORMATION**

The Audit Committee oversees the accounting and financial reporting practices and procedures of the Corporation and the audits of the Corporation's financial statements. The principal responsibilities of the Audit Committee include: (i) overseeing the quality and integrity of the internal controls and accounting procedures of the Corporation, including review the Corporation's procedures for internal control with the Corporation's auditor and chief financial officer; (ii) reviewing and assessing the quality and integrity of the Corporation's annual and quarterly financial statements and related management discussion and analysis, as well as all other material continuous; (iii) monitoring compliance with legal and regulatory requirements related to financial reporting; (iv) reviewing and approving the engagement of the auditor of the Corporation and independent audit fees; (v) reviewing the qualifications, performance and independence of the auditor of the Corporation, considering the auditor's recommendations and managing the relationship with the auditor, including meeting with the auditor as required in connection with the audit services provided to the Corporation; (vi) assessing the Corporation's financial and accounting personnel; (vii) reviewing the Corporation's risk management procedures; (viii) reviewing any significant transactions outside the Corporation's ordinary course of business and any pending litigation involving the Corporation; and (ix) examining improprieties or suspected improprieties with respect to accounting and other matters that affect financial reporting.

**Audit Committee Charter**

The full text of the charter of the Audit Committee is attached as Schedule "A" to this AIF.

**Composition of the Audit Committee**

The Audit Committee of the Corporation is comprised of Gerard Rotonda (Chair), Adam Rossman and Zhichao Li. Each Audit Committee member is "independent" within the meaning of National Instrument 52-110 – *Audit Committees* and is "financially literate", within the meaning of National Instrument 52-110 – *Audit Committees* and possess education or experience that is relevant for the performance of their responsibilities as Audit Committee members.

The following table summarizes the relevant education and experience of the members of the Audit Committee:

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**Name of Member** | &nbsp;&nbsp;**Education** | &nbsp;&nbsp;**Experience** |
| &nbsp;&nbsp;Gerard Rotonda (Chair) | &nbsp;&nbsp; BSBA, *Boston University*<br>MBA, *Boston University*<br>| &nbsp;&nbsp; Mr. Rotonda was the Chief Financial Officer and Executive Committee Member for Deutsche Bank Wealth, Management Americas from 2011 through 2018. Mr. Rotonda has over 30 years of experience in business development and financial analysis, most recently as Co-Founder and Partner at MMR Development, a real estate company which develops or repositions office, residential and hotel properties. Mr. Rotonda has also been Senior Business Leader and Director Strategy and Planning at MasterCard Incorporated, Director Strategic Planning at Credit Suisse Group, and Vice President Investment Finance and Structured Lending at Citigroup. Mr. Rotonda holds a BSBA in Accounting and MBA from Boston University.<br>|
| &nbsp;&nbsp;Adam Rossman | &nbsp;&nbsp; B.A, *University of California at Berkley*<br>JD, *Loyola Law School*<br>M.A, *University of California at Berkley*<br>| &nbsp;&nbsp; Mr. Rossman is a business and real estate attorney. He is a member of the California Bar since 1995. Mr. Rossman has handled transactions throughout the United States relating to commercial real estate and trademark licensing.<br>|
| &nbsp;&nbsp;Zhichao Li | &nbsp;&nbsp; M.A, *University of St. Andrews*<br>MBA, *Tsinghua University*<br>| &nbsp;&nbsp; Ms. Li served as the senior Vice President of Blockchain Dynamics upon joining and oversaw the blockchain business from financials to operations. As an early adopter of blockchain technology, Ms. Li, has successfully invested and managed infrastructure, manufacturing, and supply chains for public companies and start-ups. Ms. Li holds a Master's degree in Business Administration from Tsinghua University in 2019 and Master of Art in the University of St. Andrews in 2010. |

---

**Audit Committee Oversight**

At no time since the commencement of the Corporation's financial year ended December 31, 2022 was a recommendation of the Audit Committee to nominate or compensate an external auditor (currently, Raymond Chabot Grant Thornton LLP) not adopted by the Board.

**Pre-Approval Policies and Procedures**

Formal policies and procedures for the engagement of non-audit services have yet to be formulated and adopted. Subject to the requirements of NI 52-110, the engagement of non-audit services is considered by the Board, and where applicable by the Audit Committee, on a case by case basis.

**External Auditor Service Fees**

---

| | | |
|:---|:---|:---|
|  | **Year Ended<br> December 31,<br> 2022** | **Year Ended<br> December 31,<br> 2021** |
| Audit fees<sup>(1)</sup> | $237382 | $240000 |
| Audit related fees | $120014 | nil |
| Tax fees | $40336 | $20000 |
| All other fees | nil | $23602 |
| Total fees: | $397732 | $283602 |

---

<u>Notes</u>:

(1) Audit fees consist of fees billed
for professional services rendered for the audit of the Corporation's year-end financial statements, quarterly review and services
that are normally provided by Raymond Chabot Grant Thornton LLP in connection with statutory and regulatory filings.

**PROMOTERS**

Michel Amar is considered a promoter of the Corporation through his initiative in founding and organizing Digihost. Michel Amar holds in the aggregate 5,232,147 SV Shares and 3,333 PV Shares representing 18.32% of the issued and outstanding SV Shares on a non-diluted basis and 100% of the issued and outstanding PV Shares on a non-diluted basis. In addition, Michel Amar holds in the aggregate 400,000 RSUs.

**LEGAL PROCEEDINGS AND REGULATORY ACTIONS**

The Corporation is not currently a party to any actual or pending legal proceedings or regulatory actions which would materially affect the Corporation, nor is the Corporation currently contemplating any legal proceedings, which are material to its business or of which any of its assets are likely to be subject. Furthermore, the Corporation is not aware of any such proceeding known to be contemplated or threatened which would materially affect the Corporation.

**INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS**

Other than as described in this AIF, no director, executive officer, person or corporation that beneficially owns, or controls, or directs, directly or indirectly, more than 10% of the Common Shares or any associate or affiliate of any such person or corporation, has or had any material interest, direct or indirect, in any transaction either within the three most recently completed financial years or during the current financial year that has materially affected or is reasonably expected to materially affect the Corporation.

**TRANSFER AGENT AND REGISTRAR**

The transfer agent and registrar for the Corporation is Marrelli Trust Company Limited, 620 – 1111 Melville St., Vancouver, British Columbia, V6E 3V6.

**MATERIAL CONTRACTS**

The following material contracts of the Corporation were either entered into during the last financial year or entered into prior to the last financial year and still in effect:

1. Lease agreement dated June 4, 2018 (the "**Buffalo Facility Lease Agreement**") between East Delavan Property, LLC ()"**East Delavan**") as "**Landlord**" and
Bit.Management, LLC (the "**Tenant**" under the Lease Agreement, as the context requires) was assigned by Bit.Management,
LLC to Digihost prior to completion of the RTO. The agreement is comprised of the warehouse lease agreement for the Buffalo Mining Facility
and the substation lease addendum, used for cryptocurrency mining operations located in Buffalo, NY. Buffalo Facility Lease Agreement
has a term of five years at an annual rental cost of US$350,000 and annual maintenance of US$105,000 (with an annual increase in rent
and maintenance of 1%), commencing on June 4, 2018 and expiring on July 1, 2023, at which point the Tenant has the option to renew the
lease for an additional five years. Pursuant to the Buffalo Facility Lease Agreement, the Tenant shall have the option commencing after
the third year of the lease, and continuing up until the expiration, to purchase an approximately 240,000 square foot portion of the
Buffalo warehouse for the price of US$3,272,000. The substation lease addendum is for an 115,000 KVA outdoor substation at the Buffalo
Mining Facility, used to provide power for cryptocurrency mining operations. The cost of the substation lease is US$100 per month, triple-net.
Pursuant to the substation lease addendum, if the Tenant exercises the purchase option under the Buffalo Facility Lease Agreement, the
substation lease addendum will automatically convert to a forty-nine (49) year term with three additional ten (10) year extensions at
the option of the Tenant.

2. The energy contract dated February 6, 2018 between EnergyMark
and Bit.Management, LLC (the "**Energy Contract**") was assigned by Bit.Management, LLC to Digihost (the "**Buyer** "
under the Energy Contract, as the context requires) prior to completion of the RTO. EnergyMark is the provider of power under the contract.
There is no cap to the amount of power that the Buyer can purchase under the contract. For all quantities of power used by the Buyer,
the price that the Buyer shall pay EnergyMark per kWh shall be a price which is updated every hour, the "NYISO Zone-A Real-Time
Price", plus US$0.001/kWh. Pursuant to the terms of the Energy Contract, the Buyer has the option to request a "forward price"
for all or any portion of the power that the Buyer will purchase under the contract for the upcoming month and for any subsequent months,
and the Buyer's request shall designate the fixed quantity of power that the Buyer shall purchase at a fixed price agreed to by
the Buyer and EnergyMark. The Corporation has not requested a 'forward price' at this time and the price paid is a variable
rate based off the above noted "NYISO Zone-A Real-Time Price".

**INTERESTS OF EXPERTS**

***Names of Experts***

Raymond Chabot Grant Thornton LLP, Suite 200, National Bank Tower, 600 De La Gauchetiere Street West, Montreal, Quebec H3B 4L8, prepared the auditor's report for the audited financial statements of the Corporation for the years ended December 31, 2022 and December 31, 2021.

***Interest of Experts***

No person or company who is named as having prepared or certified a part of this AIF or prepared or certified a report or valuation described or included in this AIF has any direct or indirect interest in the Corporation.

**ADDITIONAL INFORMATION**

Additional financial information is provided in the Corporation's audited annual financial statements and the management's discussion and analysis for its most recently completed financial year. Other additional information, including directors' and officers' remuneration and indebtedness, principal holders of securities of the Corporation and securities authorized for issuance under equity compensation plans, may be found in the management information circular of the Corporation for its most recent meeting of shareholders. These documents and other additional information relating to the Corporation may be found on SEDAR at www.sedar.com and on EDGAR at https://www.sec.gov/edgar.

**SCHEDULE "A"**

**DIGIHOST Technology, INC.**

**(the "Corporation")**

**Audit Committee Charter**

**MANDATE**

The Audit Committee (hereinafter referred to as the "**Audit Committee**") shall i) assist the Board of Directors in its oversight role with respect to the quality and integrity of the financial information; ii) assess the effectiveness of the Corporation's risk management and compliance practices; iii) assess the independent auditor's performance, qualifications and independence; iv) assess the performance of the Corporation's internal audit function; v) ensure the Corporation's compliance with legal and regulatory requirements, and vi) prepare such reports of the Committee required to be included in any Management Information Circular in accordance with applicable laws or the rules of applicable securities regulatory authorities.

**STRUCTURE AND OPERATIONS**

The committee shall be composed of not less than three Directors. All members shall satisfy the applicable independence and experience requirements of the laws governing the Corporation, the applicable stock exchanges on which the Corporation's securities are listed and applicable securities regulatory authorities.

Each member of the Committee shall be financially literate as such qualification is interpreted by the Board of Directors in its business judgment.

Members of the Committee shall be appointed or reappointed at the annual meeting of the Corporation and in the normal course of business will serve a minimum of three years. Each member shall continue to be a member of the Committee until a successor is appointed, unless the member resigns, is removed or ceases to be a Director. The Board of Directors may fill a vacancy that occurs in the Committee at any time.

The Board of Directors or, in the event of its failure to do so, the members of the Committee, shall appoint or reappoint, at the annual meeting of the Corporation a Chairman among their number. The Chairman shall not be a former Officer of the Corporation. Such Chairman shall serve as a liaison between members and senior management. The time and place of meetings of the Committee and the procedure at such meetings shall be determined from time to time by the members therefore provided that:

&nbsp;&nbsp;&nbsp;&nbsp;(a) a quorum for meetings shall be at least three members;

&nbsp;&nbsp;&nbsp;&nbsp;(b) the Committee shall meet at least quarterly;

&nbsp;&nbsp;&nbsp;&nbsp;(c) notice of the time and place of every meeting shall be given
in writing or by telephone, facsimile, email or other electronic communication to each member of the Committee at least 24 hours in advance
of such meeting;

&nbsp;&nbsp;&nbsp;&nbsp;(d) a resolution in writing signed by all directors entitled
to vote on that resolution at a meeting of the Committee is as valid as if it had been passed at a meeting of the Committee.

The Committee shall report to the Board of Directors on its activities after each of its meetings. The Committee shall review and assess the adequacy of this charter annually and, where necessary, will recommend changes to the Board of Directors for its approval. The Committee shall undertake and review with the Board of Directors an annual performance evaluation of the Committee, which shall compare the performance of the Committee with the requirements of this charter and set forth the goals and objectives of the Committee for the upcoming year. The performance evaluation by the Committee shall be conducted in such manner as the Committee deems appropriate. The report to the Board of Directors may take the form of an oral report by the chairperson of the Committee or any other designated member of the Committee.

-A-1-

**SPECIFIC DUTIES**

Oversight of the Independent Auditor

● Sole authority to appoint or replace the independent auditor (subject to shareholder ratification) and responsibility for the compensation and oversight of the work of the independent auditor (including resolution of disagreements between Management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. The independent auditor shall report directly to the Committee.

● Sole authority to pre-approve all audit services as well as non-audit services (including the fees, terms and conditions for the performance of such services) to be performed by the independent auditor.

● Evaluate the qualifications, performance and independence of the independent auditor, including (i) reviewing and evaluating the lead partner on the independent auditor's engagement with the Corporation, and (ii) considering whether the auditor's quality controls are adequate and the provision of permitted non-audit services is compatible with maintaining the auditor's independence.

● Obtain and review a report from the independent auditor at least annually regarding: the independent auditor's internal quality-control procedures; any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm; any steps taken to deal with any such issues; and all relationships between the independent auditor and the Corporation.

● Review and discuss with Management and the independent auditor prior to the annual audit the scope, planning and staffing of the annual audit.

● Ensure the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law.

● Review as necessary policies for the Corporation's hiring of employees or former employees of the independent auditor.

*Financial Reporting*

 

● Review and discuss with Management and the independent auditor the annual audited financial statements prior to the publication of earnings.

● Review and discuss with Management the Corporation's annual and quarterly disclosures made in Management's Discussion and Analysis. The Committee shall approve any reports for inclusion in the Corporation's Annual Report, as required by applicable legislation.

● Review and discuss with Management and the independent auditor management's report on its assessment of internal controls over financial reporting and the independent auditor's attestation report on management's assessment.

● Review and discuss with Management the Corporation's quarterly financial statements prior to the publication of earnings.

-A-2-

● Review and discuss with Management and the independent auditor at least annually significant financial reporting issues and judgments made in connection with the preparation of the Corporation's financial statements, including any significant changes in the Corporation's selection or application of accounting principles, any major issues as to the adequacy of the Corporation's internal controls and any special steps adopted in light of material control deficiencies. Review and discuss with Management and the independent auditor at least annually reports from the independent auditors on: critical accounting policies and practices to be used; significant financial reporting issues, estimates and judgments made in connection with the preparation of the financial statements; alternative treatments of financial information within generally accepted accounting principles that have been discussed with Management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor; and other material written communications between the independent auditor and Management, such as any management letter or schedule of unadjusted differences.

● Discuss with the independent auditor at least annually any "Management" or "internal control" letters issued or proposed to be issued by the independent auditor to the Corporation.

● Review and discuss with Management and the independent auditor at least annually any significant changes to the Corporation's accounting principles and practices suggested by the independent auditor, internal audit personnel or Management.

● Discuss with Management the Corporation's earnings press releases, including the use of "pro forma" or "adjusted" non-GAAP information, as well as financial information and earnings guidance (if any) provided to analysts and rating agencies.

● Review and discuss with Management and the independent auditor at least annually the effect of regulatory and accounting initiatives as well as off-balance sheet structures on the Corporation's financial statements.

● Review and discuss with the Chief Executive Officer and the Chief Financial Officer the procedures undertaken in connection with the Chief Executive Officer and Chief Financial Officer certifications for the annual filings with applicable securities regulatory authorities.

● Review disclosures made by the Corporation's Chief Executive Officer and Chief Financial Officer during their certification process for the annual filing with applicable securities regulatory authorities about any significant deficiencies in the design or operation of internal controls which could adversely affect the Corporation's ability to record, process, summarize and report financial data or any material weaknesses in the internal controls, and any fraud involving Management or other employees who have a significant role in the Corporation's internal controls.

● Discuss with the Corporation's General Counsel at least annually any legal matters that may have a material impact on the financial statements, operations, assets or compliance policies and any material reports or inquiries received by the Corporation or any of its subsidiaries from regulators or governmental agencies.

*Oversight of Risk Management*

 

● Review and approve periodically Management's risk philosophy and risk management policies.

● Review with Management at least annually reports demonstrating compliance with risk management policies.

● Review with Management the quality and competence of Management appointed to administer risk management policies.

● Review reports from the independent auditor at least annually relating to the adequacy of the Corporation's risk management practices together with Management's responses.

● Discuss with Management at least annually the Corporation's major financial risk exposures and the steps Management has taken to monitor and control such exposures, including the Corporation's risk assessment and risk management policies.

 

-A-3-

 

*Oversight of Regulatory Compliance*

● Establish procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

● Discuss with Management and the independent auditor at least annually any correspondence with regulators or governmental agencies and any published reports which raise material issues regarding the Corporation's financial statements or accounting.

● Meet with the Corporation's regulators, according to applicable law.

● Exercise such other powers and perform such other duties and responsibilities as are incidental to the purposes, duties and responsibilities specified herein and as may from time to time be delegated to the Committee by the Board of Directors.

**FUNDING FOR THE INDE** **PENDENT AUDITOR AND RETENTION OF OTHER INDEPENDENT ADVISORS**

The Corporation shall provide for appropriate funding, as determined by the Committee, for payment of compensation to the independent auditor for the purpose of issuing an audit report and to any advisors retained by the Committee. The Committee shall also have the authority to retain such other independent advisors as it may from time to time deem necessary or advisable for its purposes and the payment of compensation therefore shall also be funded by the Corporation.

**Procedures for Receipt of Complaints and Submissions Relating to Accounting Matters**

1. The Corporation shall inform employees on the Corporation's
intranet, if there is one, or via a newsletter or e-mail that is disseminated to all employees at least annually, of the officer (the
"Complaints Officer") designated from time to time by the Committee to whom complaints and submissions can be made regarding
accounting, internal accounting controls or auditing matters or issues of concern regarding questionable accounting or auditing matters.

2. The Complaints Officer shall be informed that any complaints
or submissions so received must be kept confidential and that the identity of employees making complaints or submissions shall be kept
confidential and shall only be communicated to the Committee or the Chair of the Committee.

3. The Complaints Officer shall be informed that he or she must
report to the Committee as frequently as such Complaints Officer deems appropriate, but in any event no less frequently than on a quarterly
basis prior to the quarterly meeting of the Committee called to approve interim and annual financial statements of the Corporation.

4. Upon receipt of a report from the Complaints Officer, the Committee
shall discuss the report and take such steps as the Committee may deem appropriate.

5. The Complaints Officer shall retain a record of a complaint
or submission received for a period of six years following resolution of the complaint or submission.

-A-4-

**Procedures for Approval of Non-Audit Services**

1. The Corporation's external auditors shall be prohibited
from performing for the Corporation the following categories of non-audit services:

&nbsp;&nbsp;&nbsp;&nbsp;(a) bookkeeping or other services related to the Corporation's
accounting records or financial statements;

&nbsp;&nbsp;&nbsp;&nbsp;(b) financial information systems design and implementation;

&nbsp;&nbsp;&nbsp;&nbsp;(c) appraisal or valuation services, fairness opinion or contributions-in-kind
reports;

&nbsp;&nbsp;&nbsp;&nbsp;(d) actuarial services;

&nbsp;&nbsp;&nbsp;&nbsp;(e) internal audit outsourcing services;

&nbsp;&nbsp;&nbsp;&nbsp;(f) management functions;

&nbsp;&nbsp;&nbsp;&nbsp;(g) human resources;

&nbsp;&nbsp;&nbsp;&nbsp;(h) broker or dealer, investment adviser or investment banking
services;

&nbsp;&nbsp;&nbsp;&nbsp;(i) legal services;

&nbsp;&nbsp;&nbsp;&nbsp;(j) expert services unrelated to the audit; and

&nbsp;&nbsp;&nbsp;&nbsp;(k) any other service that the Canadian Public Accountability
Board determines is impermissible.

2. In the event that the Corporation wishes to retain the services
of the Corporation's external auditors for tax compliance, tax advice or tax planning, the Chief Financial Officer of the Corporation
shall consult with the Chair of the Committee, who shall have the authority to approve or disapprove on behalf of the Committee, such
non-audit services. All other non-audit services shall be approved or disapproved by the Committee as a whole.

3. The Chief Financial Officer of the Corporation shall maintain
a record of non-audit services approved by the Chair of the Committee or the Committee for each fiscal year and provide a report to the
Committee no less frequently than on a quarterly basis.

**-A-5-**

## Exhibit 99.2

**Exhibit 99.2**

------

**DIGIHOST TECHNOLOGY INC.**

**CONSOLIDATED FINANCIAL STATEMENTS**

**FOR THE YEARS ENDED**

**DECEMBER 31, 2022 AND 2021**

**(EXPRESSED IN UNITED STATES DOLLARS)**

------

![](ex99-2_001.jpg)

---

| | |
|:---|:---|
| <br>**Independent Auditor's Report** | **Raymond Chabot<br> Grant Thornton LLP** <br> Suite 2000 |
|  | National Bank Tower |
|  | 600 De La Gauchetière Street<br> West Montréal, Quebec |
|  | H3B 4L8 |
| To the Shareholders of |  |
| Digihost Technology Inc. | **T** 514-878-2691 |

---

**Opinion**

We have audited the consolidated financial statements of Digihost Technology Inc. (hereafter "the Company"), which comprise the consolidated statements of Financial Position as at December 31, 2022 and 2021, and the consolidated statement of comprehensive income, the consolidated statements of changes in shareholders' equity and the consolidated statements of cash flows for the years then ended, and notes to consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2022 and 2021, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRS).

**Basis for opinion**

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the "Auditor's responsibilities for the audit of the consolidated financial statements" section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

**Material uncertainty related to going concern**

We draw attention to Note 1 to the consolidated financial statements, which indicates the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

**Key audit matters**

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon and we do not provide a separate opinion on these matters.

---

| | |
|:---|:---|
| Member of Grant Thornton International Ltd | **rcgt.com** |

---

In addition to the matter described in the "Material uncertainty related to going concern" section of our report, we have determined that the matters described below are the key audit matters to be communicated in our auditor's report.

**Revenue from digital currency mining**

As described in Note 2 to the consolidated financial statements, the Company generates revenue from digital currency mining. We identified the occurrence, completeness and accuracy of the Company's revenue from digital currency mining as a key audit matter.

*Why the matter was determined to be a key audit matter*

Revenue from digital currency mining is significant to our audit because mining of digital currencies is an emerging industry with unique technological aspects that raise a number of auditing challenges. Given the nature of this source of revenue, significant audit efforts are required. The revenue from digital currency mining during the year ended December 31, 2022 totals $24,190,060.

*How the matter was addressed in the audit*

Our audit procedures related to the occurrence, completeness and accuracy of revenue from digital currency mining included, among others, the following:

– We assigned professionals with specialized skills in distributed ledger technology, digital assets and cryptography;

– We performed physical observation of the miners and tested their performance;

– We conducted substantive analytical procedures with a high degree of precision, which include tests of the accuracy and completeness of the underlying data, such as confirmation of certain data from third parties;

– We traced digital currencies received and recognized as revenue directly to the blockchain using our own node and obtained confirmations from custodian;

– We tested the value of digital currencies received and recognized as revenue using the daily quoted price from a reputable source;

– We assessed the adequacy of the Company's disclosures in the consolidated financial statements about revenue from digital assets mined.

**Digital currencies**

As described in Note 2 to the consolidated financial statements, the Company holds digital currencies that consist of Bitcoin and Ethereum which are identifiable non- monetary assets without physical substance. We identified the existence and ownership (rights and obligations) of the Company's digital currencies held as a key audit matter.

*Why the matter was determined to be a key audit matter*

Digital currencies are significant to our audit because they are identifiable non- monetary assets without physical substance. Given the nature of these assets, significant audit efforts are required. Digital currencies total $2,800,657 as at December 31, 2022.

*How the matter was addressed in the audit*

Our audit procedures related to the Company's existence and ownership of digital currencies held included, among others, the following:

– We assigned professionals with specialized skills in blockchain, digital currencies and cryptography;

– For digital assets safeguarded by a custodian:

● We obtained confirmations of quantities;

● We tested the design and operating effectiveness of internal controls related to the existence and ownership of digital currencies including customer key management by obtaining and evaluating the report attesting that those controls at the service organization are operating effectively;

– For digital assets safeguarded by the Company:

● We tested the design and operating effectiveness of internal controls related to the existence and ownership of digital currencies including customer key management;

● We analyzed transactions subsequent to year-end;

● We traced digital currencies directly to the blockchain using our own node;

– We assessed the adequacy of the Company's disclosures in the consolidated financial statements about digital currencies.

**Impairment assessment of goodwill and data miners**

As described in Note 2 to the consolidated financial statements, the Company performs an annual impairment test on cash generating units to which goodwill has been allocated. For non-financial assets, which include data miners, impairment test are performed when events or changes in circumstances indicate that they may not be recoverable. We identified the impairment assessment of goodwill and data miners as a key audit matter.

*Why the matter was determined to be a key audit matter*

The impairment assessment of goodwill and data miners is significant to our audit because management's determination of the recoverable amount involves significant judgment and a high degree of subjectivity and efforts, including the need to involve valuation experts.

In addition, the Company's impairment test resulted in significant impairment expenses on goodwill and data miners of $1,260,783 and $1,556,000, respectively, which are disclosed in Notes 8 and 5.

*How the matter was addressed in the audit*

Our audit procedures related to the Company's determination of the recoverable amount included, among others, the following:

For the goodwill:

– We evaluated the reasonableness of the Company's cash flows by comparing projections to, among others, historical expenses and operations and current business plans;

– We used our valuation experts to assist us in evaluating the assumptions, methodologies and data used by the Company, in particular those relating to monthly Bitcoin price average growths, difficulty monthly growth rates, terminal annual growth rates and discount rates;

– We tested the completeness and accuracy of the underlying data used in the Company's valuation model;

– We performed a sensitivity analysis on significant management assumptions used in the valuation model. The Company's assumptions are detailed in Note 8 to the consolidated financial statements.

For the data miners:

– We assessed the appropriateness of the Company's methodology for determining the impairment by reviewing the processes and criteria applied in the assessment of the equipment's performance in relation to prevailing replacement costs;

– We evaluated the reasonableness of the assumptions and data used by management in the impairment assessment by comparing the replacement costs considered with independent market data and industry benchmarks, where available;

– We tested the accuracy and completeness of the underlying data used to calculate the impairment.

**Information other than the consolidated financial statements and the auditor's report thereon**

Management is responsible for the other information. The other information comprises the information included in Management's Discussion and Analysis.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor's report. We have nothing to report in this regard.

**Responsibilities of management and those charged with governance for the consolidated financial statements**

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS), and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

**Auditor's responsibilities for the audit of the consolidated financial statements**

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

– Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control;

– Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern;

– Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation;

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are, therefore, the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is Louis Roy.

![](ex99-2_002.jpg)

Montréal

March 31, 2023

<sup>1</sup> CPA auditor, public accountancy permit no. A125741

**Digihost Technology Inc.**

**Consolidated Statements of Financial Position**

**(Expressed in United States Dollars)**

---

| | | |
|:---|:---|:---|
|  | **As at<br> December 31,**<br>**2022** | **As at <br> December 31,**<br>**2021** |
|  | | (Restated) <br> (Note 25) |
| **ASSETS** |  |  |
| **Current assets** |  |  |
| &nbsp;&nbsp;&nbsp;Cash | $**1850622** | $915715 |
| &nbsp;&nbsp;&nbsp;Digital currencies (note 3) | **2800657** | 33491986 |
| &nbsp;&nbsp;&nbsp;Amounts receivable and prepaid expenses (note 4) | **1234175** | 1808304 |
| &nbsp;&nbsp;&nbsp;Income tax receivable | **244399** | - |
| **Total current assets** | **6129853** | 36216005 |
| Property, plant and equipment (note 5) | **41811233** | 38142107 |
| Right-of-use assets (note 6) | **2538447** | 2078599 |
| Intangible asset (note 7) | **1314028** | 1443260 |
| Goodwill (note 8) |  | 1346904 |
| Promissory note receivable (note 9) | **806000** | 800000 |
| **Total assets** | $**52599561** | $80026875 |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| **Current liabilities** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | $**2345175** | $2272850 |
| &nbsp;&nbsp;&nbsp;Amount owing to Northern Data, NY LLC (note 3 and 5) | **322099** | 2940412 |
| &nbsp;&nbsp;&nbsp;Lease liabilities (note 10) | **99957** |  |
| &nbsp;&nbsp;&nbsp;Income tax payable | **-** | 305601 |
| &nbsp;&nbsp;&nbsp;Mortgage payable (note 12) | **488062** | - |
| **Total current liabilities** | **3255293** | 5518863 |
| Deposits payable | **511000** | 1788500 |
| Lease liabilities (note 10) | **447514** |  |
| Mortgage payable (note 12) | **389065** |  |
| Deferred tax liability | **-** | 2514743 |
| Warrant liabilities (note 13) | **821697** | 31943365 |
| **Total liabilities** | **5424569** | 41765471 |
| **Shareholders' equity** |  |  |
| Share capital (note 14) | **39602634** | 31423095 |
| Contributed surplus | **15675828** | 11844581 |
| Cumulative translation adjustment | **(3491583**) | 167068 |
| Digital currency revaluation reserve | **-** | 3706624 |
| Deficit | **(4611887**) | (8879964) |
| **Total shareholders' equity** | **47174992** | 38261404 |
| **Total liabilities and shareholders' equity** | $**52599561** | $80026875 |

---

Nature of operations (note 1)

**Approved on behalf of the Board:**

*<u>"Michel Amar"</u>* <u>,Director</u> *<u>"Adam Rossman"</u>* <u>,Director</u>

The accompanying notes are an integral part of these consolidated financial statements.

**Digihost Technology Inc.**

**Consolidated Statements of Comprehensive Income**

**(Expressed in United States Dollars)**

---

| | | |
|:---|:---|:---|
|  | **Year Ended <br> December 31,** | **Year Ended <br> December 31,** |
|  | **2022** | **2021** |
|  | | (Restated) |
|  | | (Note 25) |
| **Revenue from digital currency mining** (note 3) | $**24190060** | $24952344 |
| **Cost of digital currency mining** |  |  |
| &nbsp;&nbsp;&nbsp;Cost of power | **(14537261)** | (5835227) |
| &nbsp;&nbsp;&nbsp;Other production costs | **(3223525)** | (1237537) |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | **(10709108)** | (3281143) |
| &nbsp;&nbsp;&nbsp;Miner lease and hosting agreement (note 3) | **(2517503)** | (3469287) |
| **Gross profit (loss)** | **(6797337)** | 11129150 |
| **Expenses** |  |  |
| &nbsp;&nbsp;&nbsp;Office and administrative expenses | **(3074423)** | (1182258) |
| &nbsp;&nbsp;&nbsp;Professional fees | **(1745613)** | (1496418) |
| &nbsp;&nbsp;&nbsp;Regulatory fees | **(235445)** | (162681) |
| &nbsp;&nbsp;&nbsp;Gain on sale of property, plant and equipment | **1140658** | 1552295 |
| &nbsp;&nbsp;&nbsp;Loss on settlement of debt | **(294306)** | (390290) |
| &nbsp;&nbsp;&nbsp;Foreign exchange gain | **3972705** | 358985 |
| &nbsp;&nbsp;&nbsp;Loss on sale of digital currencies (note 3) | **(11574330)** | 290948 |
| &nbsp;&nbsp;&nbsp;Loss on digital currency option calls | **(1950000)** |  |
| &nbsp;&nbsp;&nbsp;Other (expense) income | **(50834)** | 98443 |
| &nbsp;&nbsp;&nbsp;Change in fair value of amount owing for Miner Lease Agreement | **1693088** | 528875 |
| &nbsp;&nbsp;&nbsp;Share based compensation (note 16) | **(3296238)** | (7804271) |
| &nbsp;&nbsp;&nbsp;Loss on revaluation of digital currencies (note 3) | **(3256530)** |  |
| Impairment of goodwill (note 8) | **(1260783)** |  |
| Impairment of data miners (note 5) | **(1556000)** |  |
| Operating (loss) income | **(28285388)** | 2922778 |
| Revaluation of warrant liabilities (note 13) | **32010637** | 1551013 |
| Net financial expenses (note 20) | **(238204)** | (332814) |
| Private placements issuance costs | **(695170)** | (4973051) |
| **Net income (loss) before income taxes** | **2791875** | (832074) |
| &nbsp;&nbsp;&nbsp;Income tax expense | **-** | (127340) |
| &nbsp;&nbsp;&nbsp;Deferred tax recovery (expense) | **1537467** | (2173279) |
| **Net income (loss) for the year** | **4329342** | (3132693) |
| **Other comprehensive income (loss)** |  |  |
| **Items that will be reclassified to net income** |  |  |
| &nbsp;&nbsp;&nbsp; Foreign currency translation adjustment | **(3658651)** | 48906 |
| Items that will not be reclassified to net income |  |  |
| &nbsp;&nbsp;&nbsp; Revaluation of digital currencies, net of tax | **(3706624)** | 1724123 |
| **Total comprehensive loss for the year** | $**(3035933)** | $(1359664) |
| **Basic income (loss) per share (note 17)** | $**0.16** | $(0.14) |
| **Diluted income (loss) per share** (note 17) | $**0.16** | $(0.14) |

---

The accompanying notes are an integral part of these consolidated financial statements.

**Digihost Technology Inc.**

**Consolidated Statements of Cash Flows**

**(Expressed in United States Dollars)**

---

| | | |
|:---|:---|:---|
|  | **Year Ended <br> December 31,** | **Year Ended <br> December 31,** |
|  | **2022** | **2021** |
|  | | (Restated) |
| **Operating activities** |  |  |
| Net income (loss) for the year | $**4329342** | $(3132693) |
| Adjustments for: |  |  |
| &nbsp;&nbsp;&nbsp;Digital currencies items (note 19) | **15528972** | (21774005) |
| &nbsp;&nbsp;&nbsp;Gain on sale of property, plant and equipment | **(1140658)** | (1552295) |
| &nbsp;&nbsp;&nbsp;Depreciation of right-of-use assets | **142324** | 198291 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | **10657144** | 3082852 |
| &nbsp;&nbsp;&nbsp;Interest on lease liabilities | **58014** | 236680 |
| &nbsp;&nbsp;&nbsp;Change in fair value of amount owing to Northern Data | **(1693088)** | (528875) |
| &nbsp;&nbsp;&nbsp;Share based compensation | **3296238** | 7804271 |
| &nbsp;&nbsp;&nbsp;Change in warrant liability | **(32010637)** | (1551013) |
| &nbsp;&nbsp;&nbsp;Share issuance cost | **695170** | 4973051 |
| &nbsp;&nbsp;&nbsp;Loss on settlement of debt | **294306** | 390290 |
| &nbsp;&nbsp;&nbsp;Change in fair value of promissory note receivable | **(6000)** |  |
| &nbsp;&nbsp;&nbsp;Impairment of goodwill | 1260783 |  |
| &nbsp;&nbsp;&nbsp;Impairment of data miners | 1556000 |  |
| &nbsp;&nbsp;&nbsp;Income tax expense | **-** | 127340 |
| &nbsp;&nbsp;&nbsp;Deferred tax (recovery) expense | **(1537467)** | 2173279 |
| &nbsp;&nbsp;&nbsp;Foreign exchange gain | **(3660296)** | (333148) |
| &nbsp;&nbsp;&nbsp;Working capital items (note 19) | **(1181046)** | 1026381 |
| **Net cash used in operating activities** | **(3410899)** | (8859594) |
| **Investing activities** |  |  |
| Purchase of property, plant and equipment | **(14685038**) | (33924780) |
| Proceeds from sale of property, plant and equipment | **795000** |  |
| Acquisition of digital currency option calls | **(623000)** |  |
| Promissory note receivable | **-** | (800000) |
| **Net cash used in investing activities** | **(14513038)** | (34724780) |
| **Financing activities** |  |  |
| Proceeds from private placement, net of costs | **8314269** | 50218093 |
| Proceeds from pre-funded warrants | **1029600** |  |
| Repayment of mortgage | **(133500)** |  |
| Repurchase of shares | **(255525)** | (599997) |
| Proceeds from loans payable | **10000000** | 1473495 |
| Repayment of loans payable | **-** | (3975083) |
| Lease payments | **(96000)** | (2647669) |
| **Net cash provided by financing activities** | **18858844** | 44468839 |
| **Net change in cash** | **934907** | 884465 |
| **Cash, beginning of year** | **915715** | 31250 |
| **Cash, end of year** | $**1850622** | $915715 |
| **<u>Supplemental information</u>** |  |  |
| **Interest paid**  | $**238204** | $117697 |

---

The accompanying notes are an integral part of these consolidated financial statements.

---

| |
|:---|
| **Digihost Technology Inc.** |
| **Consolidated Statement of Changes in Shareholders' Equity** |
| **(Expressed in United States Dollars)** |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Number of shares (note 14)** | **Number of shares (note 14)** | | | | | | |
|  | **Subordinate**<br>**voting shares** | **Proportionate**<br>**voting shares** |<br>**Share**<br>**capital** |<br>**Contributed**<br>**surplus** | **Cumulative**<br>**Translation**<br>**Adjustment** | **Digital currency**<br>**revaluation**<br>**reserve** |<br>**Deficit** |<br>**Total** |
| **Balance, December 31, 2020** | **13357838** | **3333** | $**12541038** | $**1267551** | $**118162** | $**1982501** | $**(5465446)** | $**10443806** |
| Private placements (note 14(b)(iii)(iv)(v)(vi)(vii)) | 11555674 |  | 21175816 |  |  |  |  | 21175816 |
| Cost of issue - cash (note 14(b)(v)(vi)(vii)) |  |  | (1729158) |  |  |  |  | (1729158) |
| Cost of issue - broken warrants (note 14(b)(iv)(v)(vi)(vii)) |  |  | (963548) | 2827528 |  |  |  | 1863980 |
| Shares issued as payment for accounts payable (note 14(b)(ii)(viii)) | 82803 |  | 345055 |  |  |  |  | 345055 |
| Shares cancelled (note 14(b)(i)) | (164533) |  | (319040) |  |  |  | (281825) | (600865) |
| Shares issued as commission (note 14(b)(vii)) | 49383 |  |  |  |  |  |  |  |
| Shares issued for exercise of stock options | 75000 |  | 372932 | (181953) |  |  |  | 190979 |
| Share based compensation |  |  |  | 7804271 |  |  |  | 7804271 |
| Excess tax benefit on exercised stock options |  |  |  | 56702 |  |  |  | 56702 |
| Excess tax benefit on outstanding stock options | - | - | - | 70482 | - | - | - | 70482 |
| Transaction with owners | 24956165 | 3333 | 31423095 | 11844581 | 118162 | 1982501 | (5747271) | 39621068 |
| Foreign currency translation adjustment |  |  |  |  | 48906 |  |  | 48906 |
| Revaluation of digital currencies, net of tax |  |  |  |  |  | 1724123 |  | 1724123 |
| Net loss for the year | - | - | - | - | - | - | (3132693) | (3132693) |
| Total comprehensive loss for the year | - | - | - | - | 48906 | 1724123 | (3132693) | (1359664) |
| **Balance, December 31, 2021 (restated)** | **24956165** | **3333** | $**31423095** | $**11844581** | $**167068** | $**3706624** | $**(8879964)** | $**38261404** |
| Private placements (note 14(b)(ix)) | 2729748 |  | 15255979 |  |  |  |  | 15255979 |
| Cost of issue - cash |  |  | (547307) |  |  |  |  | (547307) |
| Cost of issue - broker warrants |  |  | (270978) | 535009 |  |  |  | 264031 |
| Warrant liabilities |  |  | (7007643) |  |  |  |  | (7007643) |
| Shares repurchased (note 14(b)(x)) | (165200) |  | (194260) |  |  |  | (61265) | (255525) |
| Shares issued for cash | 2100 |  | 2469 |  |  |  |  | 2469 |
| Shares issued for exercise of pre-funded warrants | 300000 |  | 927463 |  |  |  |  | 927463 |
| Share based compensation |  |  |  | 3296238 |  |  |  | 3296238 |
| Shares issued to settle payable (note 14(b)(xi)) | 19391 | - | 13816 | - | - | - | - | 13816 |
| Transaction with owners | 27842204 | 3333 | 39602634 | 15675828 | 167068 | 3706624 | (8941229) | 50210925 |
| Foreign currency translation adjustment |  |  |  |  | (3658651) |  |  | (3658651) |
| Revaluation of digital currencies, net of tax |  |  |  |  |  | (3706624) |  | (3706624) |
| Net income for the year | - | - | - | - | - | - | 4329342 | 4329342 |
| Total comprehensive loss for the year | - | - | - | - | (3658651) | (3706624) | 4329342 | (3035933) |
| **Balance, December 31, 2022** | **27842204** | **3333** | $**39602634** | $**15675828** | $**(3491583)** | $**-** | $**(4611887)** | $**47174992** |

---

The accompanying notes are an integral part of these consolidated financial statements.

---

| |
|:---|
| **Digihost Technology Inc.** |
| **Notes to Consolidated Financial Statements** |
| **Years Ended December 31, 2022 and 2021** |
| **(Expressed in United States Dollars)** |

---

1. Nature of operations and going concern

Digihost Technology Inc. (the "Company" or "Digihost") was incorporated in British Columbia, Canada, on February 18, 2017 as Chortle Capital Corp and subsequently changed its name to HashChain Technology Inc. on September 18, 2017, and again to Digihost Technology Inc. on February 14, 2020. Digihost and its subsidiaries, Digihost International, Inc., and DGX Holding, LLC (together the "Company") is a blockchain technology company with operations in cryptocurrency mining. The head office of the Company is located at 2830 Produce Row, Houston, TX, 77023.

These consolidated financial statements of the Company were reviewed, approved and authorized for issue by the Board of Directors on March 31, 2023.

<u>Going Concern</u>

These consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assume that the Company will continue in operation and will be able to realize its assets and discharge its liabilities in the normal course of operations. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but not limited to twelve months from the end of the reporting period. The use of these principles may not be appropriate.

As at December 31, 2022, the Company has a working capital of $2,874,560 (2021 - $30,697,142) and did not generate positive cashflows from its operations since its incorporation. The current working capital is not sufficient to meet the Company's requirements and business growth initiatives. The Company's ability to continue as a going concern depends upon its ability generate positive cashflows from its operations and to raise additional financing. Even if the Company has been successful in the past in raising financings, there is no assurance that it will manage to obtain additional financing in the future.

These material uncertainties may cast significant doubt regarding the Company's ability to continue as a going concern. These consolidated financial statements do not include any adjustments or disclosures that may be necessary should the Company not be able to continue as a going concern. If this were the case, these adjustments could be material.

**2. Significant accounting policies**

(a) Statement of compliance

The consolidated financial statements have been prepared in accordance with IFRS issued effective for the Company's reporting for the year ended December 31, 2022.

(b) Statement of presentation

The Company's consolidated financial statements have been prepared on an accrual basis and under the historical cost basis.

(c) Basis of consolidation

These consolidated financial statements include the accounts of Digihost and its wholly owned subsidiaries: Digihost International, Inc. and DGX Holdings, LLC. Subsidiaries are consolidated from the date of acquisition, being the date on which the Company obtains control, and continues to be consolidated until the date that such control ceases. Control is achieved when an investor has power over an investee to direct its activities, exposure to variable returns from an investee, and the ability to use the power to affect the investor's returns. All intercompany transactions and balances have been eliminated upon consolidation.

(d) Functional and presentation currency

These financial statements are presented in United States Dollars. The functional currency of Digihost is the Canadian dollar and the functional currency of Digihost International, Inc. and DGX Holding, LLC is the United States Dollars. All financial information is expressed in United States Dollars, unless otherwise stated.

(e) Foreign currency translation

Monetary assets and liabilities denominated in foreign currencies are translated to the respective functional currency at exchange rates in effect at the reporting date. Non-monetary assets and liabilities are translated at historical exchange rates at the respective transaction dates. Revenue and expenses are translated at the rate of exchange at each transaction date. Gains or losses on translation are included in foreign exchange expense.

---

| |
|:---|
| **Digihost Technology Inc.** |
| **Notes to Consolidated Financial Statements** |
| **Years Ended December 31, 2022 and 2021** |
| **(Expressed in United States Dollars)** |

---

**2. Significant accounting policies (continued)**

(e) Foreign currency translation (continued)

The results and financial position of an entity whose functional currency are translated into a different presentation currency are treated as follows:

● assets and liabilities are translated at the closing rate at the reporting date;

● income and expenses for each income statement are translated at average exchange rates at the dates of the period; and

● all resulting exchange differences are recognized in other comprehensive income as cumulative translation adjustments.

(f) Revenue recognition

The Company recognizes revenue from the provision of transaction verification services within digital currency networks, commonly termed "cryptocurrency mining". As consideration for these services, the Company receives digital currency from each specific cryptocurrency mining pool in which it participates. Revenue is measured based on the fair value of the digital currencies received. The fair value is determined using the spot price of the digital currencies on the date of receipt. Digital currencies are considered earned on the completion and addition of a block to the blockchain, at which time the economic benefit is received and can be reliably measured.

(g) Digital currencies

Digital currencies consist of Bitcoin and Ethereum. Digital currencies 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 currencies 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 currencies at the end of each quarter. 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. Gains and losses on digital currencies sold between revaluation dates are included in profit or loss.

Digital currencies are measured at fair value using the quoted price on CoinMarketCap. CoinMarketCap is a pricing aggregator, as the principal market or most advantageous market is not always known. The Company believes any price difference amongst the principal market and an aggregated price to be immaterial. 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.

(h) Property, plant and equipment

Details as to the Company's policies for property, plant and equipment are as follows:

---

| | | |
|:---|:---|:---|
| **Asset** | **Amortization method** | **Amortization period** |
| Data miners | Straight-line | 12 - 36 months |
| Equipment | Straight-line | 36 and 120 months |
| Leasehold improvement | Straight-line | 120 months |
| Powerplant in use | Straight-line | 480 months |

---

Property, plant and equipment are recorded at cost less accumulated depreciation. Cost includes all expenditures incurred to bring assets to the location and condition necessary for them to be operated in the manner intended by management. Material residual value estimates and estimates of useful life are updated as required, but at least annually.

Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any replaced parts is derecognized. All other repairs and maintenance are charged to profit or loss during the fiscal year in which they are incurred.

Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognized in profit or loss.

---

| |
|:---|
| **Digihost Technology Inc.** |
| **Notes to Consolidated Financial Statements** |
| **Years Ended December 31, 2022 and 2021** |
| **(Expressed in United States Dollars)** |

---

**2. Significant accounting policies (continued)**

(i) Intangible assets

Intangible assets are accounted for using the cost model whereby capitalized costs are amortized on a straight-line basis over their estimated useful lives. Residual values and useful lives are reviewed at each reporting date. The right of use of an electric power facility is depreciated over 13 years.

When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference between the proceeds and the carrying amount of the asset, and is recognized in profit or loss.

Amortization of intangible assets has been included in depreciation and amortization in the consolidated statement of comprehensive loss.

(j) Impairment of non-financial assets

The Company reviews the carrying amounts of its non-financial assets, including property, plant and equipment, right of use assets and intangible assets when events or changes in circumstances indicate the assets may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. Assets carried at fair value, such as digital currencies, are excluded from impairment analysis. Cash generating units to which goodwill has been allocated are tested for impairment annually.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows to be derived from continuing use of the asset or cash generating unit are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Fair value less costs of disposal is the amount obtainable from the sale of an asset or cash generating unit in an arm's length transaction between knowledgeable, willing parties, less the cost of disposal. When a binding sale agreement is not available, fair value less costs of disposal is estimated using a discounted cash flow approach with inputs and assumptions consistent with those of a market participant. If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash generating unit is reduced to its recoverable amount. An impairment loss is recognized immediately in net income. With the exception of goodwill, where an impairment loss subsequently reverses, the carrying amount of the asset or cash generating unit is increased to the revised estimate of its recoverable amount, such that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized.

(k) Leases and right-of-use assets

All leases are accounted for by recognizing a right-of-use asset and a lease liability except for:

° Leases of low value assets; and

° Leases with a duration of twelve months or less.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by the incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.

---

| |
|:---|
| **Digihost Technology Inc.** |
| **Notes to Consolidated Financial Statements** |
| **Years Ended December 31, 2022 and 2021** |
| **(Expressed in United States Dollars)** |

---

**2. Significant accounting policies (continued)**

(k) Leases and right-of-use assets (continued)

On initial recognition, the carrying value of the lease liability also includes:

---

| | |
|:---|:---|
| ° | Amounts expected to be payable under any residual value guarantee; |

---

° The exercise price of any purchase option granted if it is reasonable certain to assess that option;

° Any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.

Right-of-use assets are initially measured at cost, which includes the initial amount of the lease liability, reduced for any lease incentives received, and increased for:

° Lease payments made at or before commencement of the lease;

° Initial direct costs incurred; and

---

| | |
|:---|:---|
| ° | The amount of any provision recognised where the Company is contractually required to dismantle, remove or restore the leased asset. |

---

Lease liabilities, on initial measurement, increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made.

Right-of-use assets are amortized on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if this is judged to be shorter than the lease term.

When the Company revises its estimate of the term of any lease, it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted at the same discount rate that applied on lease commencement. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term or recorded in profit or loss if the right-of-use asset is reduced to zero.

(l) Goodwill

The Company measures goodwill as the fair value of the cost of the acquisition less the fair value of the identifiable net assets acquired, all measured as of the acquisition date. Goodwill is carried at cost less accumulated impairment losses.

(m) Financial instruments

Financial assets are classified and measured based on the business model in which they are held and the characteristics of their contractual cash flows. The primary measurement categories for financial assets are measured at amortized cost, fair value through other comprehensive income ("FVTOCI") and fair value through profit and loss ("FVTPL").

---

| |
|:---|
| **Digihost Technology Inc.** |
| **Notes to Consolidated Financial Statements** |
| **Years Ended December 31, 2022 and 2021** |
| **(Expressed in United States Dollars)** |

---

**2. Significant accounting policies (continued)**

(m) Financial instruments (continued)

**Financial assets**

Financial assets are classified as either financial assets at FVTPL, amortized cost, or FVTOCI. The Company determines the classification of its financial assets at initial recognition. The Company does not have any financial assets categorised as FVTOCI.

● Amortized cost

Financial assets are classified as measured at amortized cost if both of the following criteria are met: 1) the object of the Company's business model for these financial assets is to collect their contractual cash flows; and 2) the asset's contractual cash flows represent "solely payments of principal and interest". After initial recognition, these are measured at amortized cost using the effective interest rate method. Discounting is omitted where the effect of discounting is immaterial. The Company's cash and amounts receivables are classified as financial assets and measured at amortized cost.

Revenues from these financial assets are recognized in financial revenues, if any.

● FVTPL

Financial assets carried at FVTPL are initially recorded at fair value and transactions costs expensed in the consolidated statements of net loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets held at FVTPL are recorded in the consolidated statements of comprehensive income in the period in which they arise. The Company's promissory note receivable is classified as a financial asset and measured at FVTPL.

**Financial liabilities**

Financial liabilities are subsequently measured at amortized cost using the effective interest rate method.

The Company's accounts payable and accrued liabilities (excluding salaries payable), mortgage payable and deposit payable are classified as measured at amortized cost.

The Company's amount owing to Northern Data and warrant liabilities are classified as measured at FVTPL with gains and losses recognized in profit and loss.

**Derecognition**

The Company derecognizes financial liabilities only when its obligations under the financial liabilities are discharged, cancelled, or expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss. Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred.

**Expected Credit Loss Impairment Model**

The Company uses the single expected credit loss impairment model, which is based on changes in credit quality since initial application.

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. The Company considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Company in full or when the financial asset is more than 90 days past due.

---

| |
|:---|
| **Digihost Technology Inc.** |
| **Notes to Consolidated Financial Statements** |
| **Years Ended December 31, 2022 and 2021** |
| **(Expressed in United States Dollars)** |

---

**2. Significant accounting policies (continued)**

(m) Financial instruments (continued)

The carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off.

**Fair Value**

Financial instruments recorded at fair value on the statements of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

● Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;

● Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from prices); and

● Level 3 – inputs for the assets or liability that are not based on observable market data (unobservable inputs).

(n) Share capital and equity

Share capital represents the amount received on the issue of shares, less issuance costs, net of any underlying income tax benefit from these issuance costs. When warrants are issued in connection with shares, the Company uses the residual method for allocating fair value to the shares and then to warrants.

Contributed surplus include the value of warrants classified as equity and stock options. When warrants and stock options are exercised, the related compensation cost and value are transferred to share capital.

Deficit includes all current and prior year losses.

Digital currency revaluation reserve includes gains and losses from the revaluation of digital currencies, net of tax.

Cumulative translation reserve includes foreign currency translation differences arising from the translation of financial statements of foreign entities into United States dollars.

(o) Share-based compensation

The granting of stock options and restricted share units ("RSUs") to employees, officers, directors or consultants of the Company requires the recognition of share-based compensation expense with a corresponding increase in contributed surplus in shareholders' equity. The fair value of stock options that vest immediately are recorded as share-based compensation expense at the date of the grant. The fair values of the RSUs are determined by the quoted market price of the Company's common shares at date of grant. The expense for stock options and RSUs that vest over time is recorded over the vesting period using the graded method, which incorporates management's estimate of the stock options that are not expected to vest. For stock options where vesting is subject to the completion of performance milestones, the estimate for completion of the milestone is reviewed at each reporting date for any change in the estimated vesting date, and to the extent there is a material change in the vesting date estimate, the amortization to be recognized is recalculated for the new timeline estimate and adjusted on a prospective basis in the current period. The effect of a change in the number of stock options expected to vest is a change in an estimate and the cumulative effect of the change is recognized in the period when the change occurs. On exercise of an stock option, the consideration received and the estimated fair value previously recorded in contributed surplus is recorded as an increase in share capital.

Stock options awarded to consultants are measured based on the fair value of the goods and services received unless that fair value cannot be estimated reliably. If the fair value of the goods and services cannot be reliably measured, then the fair value of the equity instruments granted is used to recognize the expense.

---

| |
|:---|
| **Digihost Technology Inc.** |
| **Notes to Consolidated Financial Statements** |
| **Years Ended December 31, 2022 and 2021** |
| **(Expressed in United States Dollars)** |

---

**2. Significant accounting policies (continued)**

(p) Loss per share

The Company presents basic and diluted loss per share data for its subordinate voting shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of subordinate voting shares and proportionate voting shares outstanding during the period. Diluted loss per share is determined by adjusting the weighted average number of subordinate voting shares and proportionate voting shares outstanding to assume conversion of all dilutive potential subordinate voting shares. Diluted loss per share equals basic loss per share given the anti-dilutive options and warrants for 2021.

(q) Provisions

Provisions are recognized when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result, and that outflow can be reliably measured.

The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the end of the reporting period.

(r) Business combinations

The Company applies the acquisition method in accounting for business combinations. The consideration transferred by the Company to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Company, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred. Assets acquired and liabilities assumed are measured at their acquisition-date fair values.

(s) Income taxes

Income tax on the profit or loss for the years presented comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year end, adjusted for amendments to tax payable with regards to previous years.

Deferred tax is provided using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes and the initial recognition of assets or liabilities that affect neither accounting nor taxable profit. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the financial position reporting date.

A deferred tax asset is recognized only to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilized against future taxable income. Deferred tax liabilities are always provided for in full.

Changes in deferred tax assets or deferred tax liabilities are recognized as revenues or expense in profit and loss, unless they relate to items that were recognized directly in equity, in which case the related deferred taxes are also recognized in equity.

---

| |
|:---|
| **Digihost Technology Inc.** |
| **Notes to Consolidated Financial Statements** |
| **Years Ended December 31, 2022 and 2021** |
| **(Expressed in United States Dollars)** |

---

**2. Significant accounting policies (continued)**

(t) Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Company.

At the date of authorization of these consolidated financial statements, several new, but not yet effective, standards and amendments to existing standards, and interpretations have been published by the IASB. None of these standards or amendments to existing standards have been adopted early by the Company. Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the pronouncement. New standards, amendments and interpretations not adopted in the current year have not been disclosed as they are not expected to have a material impact on the Company's consolidated financial statements.

(u) Critical accounting judgements, estimates and assumptions

The preparation of these financial statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. These financial statements include estimates that, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the year in which the estimate is revised and future years if the revision affects both current and future years. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Significant assumptions about the future that management has made that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

**<u>Significant judgements</u>**

*(v) Income from digital currency mining*

 

The Company recognizes income from digital currency mining from the provision of transaction verification services within digital currency networks, commonly termed "cryptocurrency mining". As consideration for these services, the Company receives digital currency from each specific network in which it participates ("coins"). Income from digital currency mining is measured based on the fair value of the coins received. The fair value is determined using the spot price of the coin on the date of receipt. The coins are recorded on the statement of financial position, as digital currencies, at their fair value less costs to sell and re- measured at each reporting date. Revaluation gains or losses, as well as gains or losses on the sale of coins for traditional (fiat) currencies are included in profit or loss in accordance with the Company's treatment of its digital currencies as a traded commodity.

There is currently no specific definitive guidance in IFRS or alternative accounting frameworks for the accounting for the mining and strategic selling of digital currencies and management has exercised significant judgement in determining appropriate accounting treatment for the recognition of income from digital currency mining for mining of digital currencies. Management has examined various factors surrounding the substance of the Company's operations, including the stage of completion being the completion and addition of a block to a blockchain and the reliability of the measurement of the digital currency received.

---

| |
|:---|
| **Digihost Technology Inc.** |
| **Notes to Consolidated Financial Statements** |
| **Years Ended December 31, 2022 and 2021** |
| **(Expressed in United States Dollars)** |

---

**2. Significant accounting policies (continued)**

*(ii) Leases – incremental borrowing rate*

 

Judgment is applied when determining the incremental borrowing rate used to measure the lease liability of each lease contract, including an estimate of the asset-specific security impact. The incremental borrowing rate should reflect the interest rate the Company would pay to borrow at a similar term and with similar security.

*(iii) Income, value added, withholding and other taxes*

 

The Company is subject to income, value added, withholding and other taxes. Significant judgment is required in determining the Company's provisions for taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The determination of the Company's income, value added, withholding and other tax liabilities requires interpretation of complex laws and regulations. The Company's interpretation of taxation law as applied to transactions and activities may not coincide with the interpretation of the tax authorities. All tax related filings are subject to government audit and potential reassessment subsequent to the financial statement reporting period. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the tax related accruals and deferred income tax provisions in the year in which such determination is made.

**<u>Significant estimates</u>**

*(i) Useful lives of property, plant and equipment*

 

Depreciation of data miners and equipment are an estimate of its expected life. In order to determine the useful life of computing equipment, assumptions are required about a range of computing industry market and economic factors, including required hashrates, technological changes, availability of hardware and other inputs, and production costs.

*(ii) Digital currency valuation*

 

Digital currencies consist of cryptocurrency denominated assets (note 3) and are included in current assets. Digital currencies are carried at their fair value determined by the spot rate less costs to sell. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company's earnings and financial position.

*(iii) Impairment of goodwill*

 

Determining whether goodwill is impaired requires an estimation of the recoverable amount of the CGU. Such recoverable amount corresponds, for the purpose of impairment assessment, to the higher of the value in use or the fair value less costs of disposal of the CGU to which goodwill has been allocated. The value in use calculation requires management to estimate future cash flows expected to arise from the CGU and a suitable discount rate in order to calculate present value. The key assumptions required for the value in use estimation are described in note 8.

 

For the value in use approach, the values assigned to key assumptions reflect past experience and external sources of information that are deemed accurate and reliable. The value in use is categorized as Level 3 in the fair value hierarchy described under IFRS 13, Fair Value Measurement, as one or more key assumption used is based on unobservable data requiring the use of judgement.

 

*iv) Data miners valuation*

 

Impairment of data miners was estimated based on the recoverable amount of mining equipment based on current market prices and hash rate power per miner type. The recoverable amount represents the higher value between an asset's fair value less costs to sell and its value in use. Hash rate power refers to the computational power of the mining equipment, which directly affects the mining efficiency and potential revenue generation. As the market prices for mining equipment and hash rate power can vary significantly over time, these factors are considered in estimating the recoverable amount of the assets. The current market prices for mining equipment are obtained from various sources, including manufacturers, distributors, and marketplaces for used equipment. Management reviews and compares these prices regularly to ensure the accuracy and relevance of the data.

**Digihost Technology Inc.**

**Notes to Consolidated Financial Statements<br> Years Ended December 31, 2022 and 2021<br> (Expressed in United States Dollars)**

3. Digital currencies

The Company's holdings of digital currencies consist of the following:

---

| | | |
|:---|:---|:---|
|  | **As at<br> December 31,<br> 2022** | **As at<br> December 31,<br> 2021** |
| Bitcoin | $**1842177** | $29770994 |
| Ethereum | **958480** | 3720992 |
|  | $**2800657** | $33491986 |

---

The continuity of digital currencies was as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Number of<br> Bitcoin** | **Amount** | **Number of<br> Ethereum** | **Amount** | **Total<br> Amount** |
| Balance, December 31, 2020 | **154** | $**4508042** | **-** | $**-** | $**4508042** |
| Bitcoin mined<sup>(2)</sup> | **519** | **24952344** | **-** | **-** | **24952344** |
| Received from sale of property, plant and equipment | **24** | **1347977** | **63** | **204318** | **1552295** |
| Received from private placement | **1** | **47671** | **-** | **-** | **47671** |
| Acquisition (disposal) of digital currencies | **(66)** | **(3347790)** | **974** | **3347034** | **(756)** |
| Acquisition of property,plant and equipment | **-** | **-** | **(36)** | **(163942)** | **(163942)** |
| Gain on sale of digital currencies | **-** | **235067** | **-** | **55881** | **290948** |
| Revaluation adjustment<sup>(1)</sup> | **-** | **2027683** | **-** | **277701** | **2305384** |
| Balance, December 31, 2021 | **632** | **29770994** | **1001** | **3720992** | **33491986** |
| Bitcoin mined for Digihost<sup>(2)</sup> | **832** | **24190059** | **-** | **-** | **24190059** |
| Bitcoin remitted to Northern Data<sup>(2)</sup> | **(380)** | **(10836179)** | **-** | **-** | **(10836179)** |
| Received from sale of property, plant and equipment | **9** | **345658** | **-** | **-** | **345658** |
| Acquisition of digital currencies | **100** | **3932000** | **-** | **-** | **3932000** |
| Digital currencies paid for services | **(27)** | **(739024)** | **-** | **-** | **(739024)** |
| Digital currencies traded for cash | **(640)** | **(15747279)** | **(200)** | **(269001)** | **(16016280)** |
| Digital currencies for loan repayment | **(415)** | **(11982320)** | **-** | **-** | **(11982320)** |
| Loss on sale of digital currencies | **-** | **(11574330)** | **-** | **-** | **(11574330)** |
| Revaluation adjustment<sup>(1)</sup> | **-** | **(5517402)** | **-** | **(2493511)** | **(8010913)** |
| Balance, December 31, 2022 | **111** | $**1842177** | **801** | $**958480** | $**2800657** |

---

<sup>(1)</sup> Digital assets held are revalued each reporting period based on the fair market value of the price of Bitcoin and Ethereum on the reporting date. As at December 31, 2022, the prices of Bitcoin and Ethereum were $16,548 (2021 - $47,117) and $1,197 (2021 - $3,718), respectively resulting in total revaluation loss of $8,010,913. The Company recorded $3,706,624 of the loss in other comprehensive loss, net of taxes of $1,047,759, and the remaining loss of $3,256,530 was recorded on the statement of comprehensive income.

<sup>(2)</sup> During the year ended December 31, 2021, the Company entered into a Miner Lease Agreement and a hosting services agreement with Northern Data, NY LLC, pursuant to which the parties have agreed to split a portion of the mining rewards received and energy costs incurred for the miners put in service pursuant to these agreements. As at December 31, 2022, the Company must remit 19 Bitcoin (2021 - 62 Bitcoin) with a value of $322,099 (2021 - $2,940,412) which is presented in the current liabilities.

**Digihost Technology Inc.**

**Notes to Consolidated Financial Statements**

**Years Ended December 31, 2022 and 2021**

**(Expressed in United States Dollars)**

4. Amounts receivable and prepaid expenses

---

| | | |
|:---|:---|:---|
|  | **As at<br> December 31,<br> 2022** | **As at<br> December 31,<br> 2021** |
| Prepaid insurance and deposits | $**741350** | $709575 |
| Receivable from Northern Data | **492825** | 911200 |
| Other receivable | **-** | 187529 |
|  | $**1234175** | $1808304 |

---

 **5. Property, plant and equipment**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Land** | **Data<br> miners** | **Equipment<br> and other** | **Leasehold<br> improvement** | **Power<br> plant in<br> progress** | **Powerplant in<br> use** | **Total** |
| **<u>Cost</u>** | | | | | | | |
| December 31, 2020 | $- | $5802789 | $2760000 | $1040000 | $- | $- | $9602789 |
| Additions |  | 26845831<sup>(1)</sup> | 603324 |  | 7148920 |  | 34598075 |
| Disposal | - | (990517) | - | - | - | - | (990517) |
| **December 31, 2021** | **-** | **31658103** | **3363324** | **1040000** | **7148920** | **-** | **43210347** |
| Additions | 1007010 |  | 7669386 | 39542 | 7037100 |  | 15753038 |
| Disposal |  | (1253992) |  |  |  |  | (1253992) |
| Transfer asset in use | - | - | (439381) | - | (3218685) | 3658066 | - |
| **December 31, 2022** | $**1007010** | $**30404111** | $**10593329** | $**1079542** | $**10967335** | $**3658066** | $**57709393** |
| **<u>Accumulated depreciation</u>** |  |  |  |  |  |  |  |
| December 31, 2020 | $- | $2538211 | $479888 | $87056 | $- | $- | $3105155 |
| Depreciation |  | 2272602 | 577000 | 104000 |  |  | 2953602 |
| Disposal | - | (990517) | - | - | - | - | (990517) |
| **December 31, 2021** | **-** | **3820296** | **1056888** | **191056** | **-** | **-** | **5068240** |
| Depreciation |  | 8815246 | 591329 | 105208 |  | 1016129 | 10527912 |
| Impairment |  | 1556000 |  |  |  |  | 1556000 |
| Disposal | - | (1253992) | - | - | - | - | (1253992) |
| **December 31, 2022** | $**-** | $**12937550** | $**1648217** | $**296264** | $**-** | $**1016129** | $**15898160** |
| **<u>Net carrying value</u>** |  |  |  |  |  |  |  |
| **As at December 31, 2021** | $- | $27837807 | $2306436 | $848944 | $7148920 | $- | $38142107 |
| **As at December 31, 2022** | $**1007010** | $**17466561** | $**8945112** | $**783278** | $**10967335** | $**2641937** | $**41811233** |

---

<sup>(1)</sup> Included in this total are 10,000 high performance Bitcoin miners sourced from Northern Data AG per a definitive purchase agreement entered into on May 12, 2021.

The Company tested its data miners as at December 31, 2022. The recoverable amount of the data miners was determined based on the higher of the value in use and fair value less costs of disposal calculation, based on specific judgment and assumptions. The fair value less costs to sell determined the recoverable amount. As a result, the Company recorded an impairment charge over its data miners of $1,556,000. The impairment was based on an assessment of the performance of the data miners in relation to prevailing replacement costs and the downturn of the prices of the Company's digital currencies.

**Digihost Technology Inc.**

**Notes to Consolidated Financial Statements**

**Years Ended December 31, 2022 and 2021**

**(Expressed in United States Dollars)**

6. Right-of-use assets

---

| | | |
|:---|:---|:---|
|  | **As at<br> December 31,**<br>**2022** | **As at<br> December 31,**<br>**2021** |
| Balance, beginning of period | $**2078599** | $2413720 |
| Additions<sup>(2)</sup> | **602172** |  |
| Depreciation | **(142324)** | (198291) |
| Modification of lease<sup>(1)</sup> | **-** | (136830) |
| Balance, end of period | $**2538447** | $2078599 |

---

<sup>(1)</sup> On December 31, 2021, the Company entered into a 99 year lease for the 1001 East Delavan facility in exchange for a one time prepayment of $2.3 million. This long-term lease is treated as a lease modification of the current lease. This right-of-use asset is depreciated over 40 years. The lease for this right-of-use assets has been modified because of the prepayment as the Company has acquired the premises under a long-term lease.

<sup>(2)</sup> In April 2022, the Company entered into a lease for its head office for a term of 5 years.

7. Intangible asset

Intangible asset relates to the right-of-use of an electric power facility.

---

| | | |
|:---|:---|:---|
|  | **As at**<br>**December 31,**<br>**2022** | **As at**<br>**December 31,**<br>**2021** |
| Balance, beginning of period | $**1443260** | $1572500 |
| Amortization | **(129232)** | (129240) |
| Balance, end of period | $**1314028** | $1443260 |

---

 **8. Goodwill**

---

| | | |
|:---|:---|:---|
|  | **As at**<br>**December 31,**<br>**2022** | **As at**<br>**December 31,**<br>**2021** |
| Balance, beginning of period | $**1346904** | $1342281 |
| Impairment | **(1260783)** |  |
| Foreign currency translation | **(86121)** | 4623 |
| Balance, end of period | $**-** | $1346904 |

---

For the realization of its annual impairment test for 2022, management determined the recoverable amount as the value in use. The significant assumptions used in determining value in use are:

---

| | |
|:---|:---|
| ° | Monthly Bitcoin price average growth rate of 2.2%. |

---

---

| | |
|:---|:---|
| ° | Difficulty monthly growth rate of 2.8%. |

---

---

| | |
|:---|:---|
| ° | Terminal annual growth rate of 2.5%. |

---

---

| | |
|:---|:---|
| ° | Discount rate 20% - 22%. |

---

An impairment of $1,260,783 was taken on goodwill. The assumptions used were based on the Company,s internal forecasts. The Company projected revenue, working capital, capital expenditures and expenses for a period of five years. The Company has also performed a sensitivity analysis on key assumptions which indicated that reasonable changes will not have a material impact.

In 2021, management has determined the recoverable amount as the fair value less costs to sell. The fair value is derived from the market capitalization of the Company as December 31, 2021 and management determined that the fair value less cost of sales, was higher than the carrying value of the CGU. Following this analysis, management has determined that no impairment was necessary. For these tests, the Company allocates all of its goodwill to a single CGU, the Company as a whole, since this is the lowest level at which goodwill is monitored for internal purposes.

**Digihost Technology Inc.**

**Notes to Consolidated Financial Statements**

**Years Ended December 31, 2022 and 2021**

**(Expressed in United States Dollars)**

9. Promissory note receivable

In December 2021, the Company entered into an agreement for a Secured Convertible Promissory Note ("Note") with principal of $800,000. The Note accrues interest at a rate of 6% per annum, with interest payments every calendar quarter. The Note is convertible at the Company's option into Series C Preferred Stock of the issuer. If the Note is not converted into shares by the Company, all unpaid and accrued interest are due on Maturity Date of December 21, 2026. The Notes are secured by the assets of the issuer.

10. Lease liabilities

The continuity of the lease liabilities are presented in the table below:

---

| | | |
|:---|:---|:---|
|  | **As at<br> December 31,<br> 2022** | **As at <br> December 31,<br> 2021** |
| Balance, beginning of period | $**-** | $2546160 |
| Additions<sup>(2)</sup> | **602172** |  |
| Interest | **41299** | 236680 |
| Lease payments | **(96000)** | (2647669) |
| Modification of lease<sup>(1)</sup> | **-** | (135171) |
| Balance, end of period | $**547471** | $- |
| Current portion | $**99957** | $- |
| Non-current portion | **447514** | - |
| **Total lease liabilities** | $**547471** | $- |

---

<sup>(1)</sup> On December 31, 2021, the Company entered into a 99 year lease for the 1001 East Delavan facility in exchange for a one time prepayment of $2.3 million. This long-term lease is treated as a lease modification of the current lease. Refer to note 6.

<sup>(2)</sup> In April 2022, the Company entered into a lease for its head office for a term of 5 years. When measuring lease liability, the Company's incremental borrowing rate applied was estimated to be 10% per annum.

**Maturity analysis - contractual undiscounted cash flows**

---

| | |
|:---|:---|
| **As at December 31, 2022** |  |
| Less than one year | $**146880** |
| One to five years | **521635** |
| Total undiscounted lease obligations | $**668515** |

---

11. Loans payable

---

| | | |
|:---|:---|:---|
|  | **As at**<br>**December 31,**<br>**2022** | **As at**<br>**December 31,**<br>**2021** |
| Balance, beginning of the period | $**-** | $**2543083** |
| New loans<sup>(1)</sup> | **10000000** | **1432000** |
| Repayment of loans | **(10000000)** | **(3975083)** |
| Balance, end of the period | $**-** | $**-** |

---

<sup>(1)</sup> On March 2, 2022, the Company announced the closing of a $10,000,000 committed, collateralized revolving credit facility with Securitize, Inc. (the "Loan Facility"). The Loan Facility had a one-year committed term and an interest rate of 7.5% per annum.

**Digihost Technology Inc.**

**Notes to Consolidated Financial Statements**

**Years Ended December 31, 2022 and 2021**

**(Expressed in United States Dollars)**

12. Mortgage payable

In June 2022, the Company's incremental borrowing rate applied was estimated to be 7% per annum. The mortgage does not bear interest, is repayable by monthly instalments of $44,500 and matures in September 2024. The mortgage is secured by the powerplant in progress with a net book value of $2,651,500.

---

| | | |
|:---|:---|:---|
|  | **As at<br> December 31,**<br>**2022** | **As at<br> December 31,**<br>**2021** |
| Balance, beginning of period | $**-** | $&nbsp;&nbsp;&nbsp;&nbsp;- |
| Additions | **993912** |  |
| Interest | **16715** |  |
| Payments | **(133500)** | - |
| Balance, end of period | $**877127** | $- |
| Current portion | $**488062** | $- |
| Non-current portion | **389065** | - |
| **Total mortgage payable** | $**877127** | $- |

---

---

| | |
|:---|:---|
| **Maturity analysis - contractual undiscounted cash flows**<br> **As at December 31, 2022** |  |
| Less than one year | $**534000** |
| One to five years | **400500** |
| Total undiscounted mortgage obligations | $**934500** |

---

**Digihost Technology Inc.**

**Notes to Consolidated Financial Statements**

**Years Ended December 31, 2022 and 2021**

**(Expressed in United States Dollars)**

13. Warrant liabilities

Due to the characteristics of certain warrants, the fixed-for-fixed condition is not met. Therefore the Company records these warrants as financial liabilities measured at fair value upon initial recognition. At each subsequent reporting date, the warrants are re-measured at fair value and the change in fair value is recognized through profit or loss. Upon warrant exercise, the fair value previously recognized in warrant liabilities is transferred from warrant liabilities to share capital.

The following table summarizes the changes in the warrant liabilities for the Company's warrants for the period ending December 31, 2022 and 2021:

---

| | | |
|:---|:---|:---|
|  | **Number of<br> warrants** | **Amount** |
| Balance, December, 2020 | **-** | $- |
| Warrants issued | 9098514 | 33989639 |
| Revaluation of warrant liabilities |  | (1551013) |
| Foreign currency translation | - | (495261) |
| **Balance, December, 2021** | **9098514** | 31943365 |
| Warrants issued | 3029748 | 7007643 |
| Warrants cancelled (note 14(b)(ix)) | (3029748) | (5887840) |
| Pre-funded warrants issued (note 14(b)(ix)) | 300000 | 927463 |
| Pre-funded warrants exercised (note 14(b)(ix)) | (300000) | (927463) |
| Revaluation of warrant liabilities |  | (32010637) |
| Foreign currency translation | - | (230834) |
| **Balance, December 31, 2022** | **9098514** | $**821697** |

---

The fair value of the Company's warrants has been determined using the Black-Scholes pricing model and the following weighted average assumptions:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Issued <br> in 2022** | **As at<br> December 31, <br> 2022** | **Issued<br> in 2021** | **As at<br> December 31,<br> 2021** |
| Spot price (in CAD$) | $3.78 | $0.47 | $6.04 | $5.97 |
| Risk-free interest rate | 1.62% | 4.07% | 0.66% | 1.03% |
| Expected annual volatility | 145% | 143% | 139% | 147% |
| Expected life (years) | 3.50 | 2.01 | 3.43 | 2.72 |
| Dividend | nil | nil | nil | nil |

---

The following table reflects the Company's warrants outstanding and exercisable as at December 31, 2022:

---

| | | |
|:---|:---|:---|
| **Expiry date** | **Warrants<br> outstanding and<br> exercisable** | **Weighted<br> average<br> exercise price<br> (CAD$)** |
| March 16, 2024 | 1872659 | 9.42 |
| June 18, 2024 | 2083334 | 5.97 |
| April 9, 2025 | 2112773 | 7.11 |
| September 9, 2025 | 3029748 | 6.25 |
|  | 9098514 | 7.04 |

---

**Digihost Technology Inc.**

**Notes to Consolidated Financial Statements**

**Years Ended December 31, 2022 and 2021**

**(Expressed in United States Dollars)**

13. Warrant liabilities (continued)

The following table reflects the Company's warrants outstanding and exercisable as at December 31, 2021:

---

| | | |
|:---|:---|:---|
| **Expiry date** | **Warrants<br> outstanding and<br> exercisable** | **Weighted<br> average<br> exercise price<br> (CAD$)** |
| March 16, 2024 | 3121099 | 9.42 |
| June 18, 2024 | 2083334 | 5.97 |
| April 9, 2025 | 3894081 | 7.11 |
|  | 9098514 | 7.64 |

---

14. Share capital

a) Authorized share capital

Unlimited subordinate voting shares without par value and conferring 1 vote per share.

Unlimited proportionate voting shares without par value, conferring 200 votes per share, convertible at the holder's option into subordinate voting shares on a basis of 200 subordinate voting shares for 1 proportionate voting shares.

b) Subordinate voting shares and proportionate voting shares issued

**<u>Year ended December 31, 2021</u>**

(i) On December 7, 2020, the Company announced that it has received approval to undertake, at the Company's discretion, a normal course issuer bid program to purchase up to 667,894 of its subordinate voting shares for cancellation (the "Bid"). The Company received acceptance from the TSXV to commence the Bid on December 10, 2020. The Bid was terminated on December 10, 2021. As at December 31, 2021, the Company repurchased and cancelled 164,533 subordinate voting shares for a total repurchase price of $600,865.

(ii) On February 9, 2021, the Company issued 66,667 subordinate voting shares to settle a debt of $40,000 with two third-party creditors.

(iii) On January 8, 2021, the Company closed a non-brokered private placement for 116,625 subordinate voting shares for CAD$2.43 for gross proceeds of $220,551 (CAD$283,400).

(iv) On February 18, 2021, the Company closed a non-brokered private placement financing for 1,646,090 subordinate voting shares for CAD$2.43 for gross proceeds of $3,124,018 (CAD$4,000,000). In connection with the private placement, the Company will pay a commission of 49,383 shares to third party advisors.

(v) On March 16, 2021, the Company closed a non-brokered private placement financing for 3,121,099 units for CAD$8.01 per unit for gross proceeds of $19,985,611 (CAD$25 million). 3,121,099 subordinate voting shares of the Company and warrants to purchase 3,121,099 subordinate voting shares were issued. The warrants have an exercise price of CAD$9.42 per per subordinate voting share and exercise period of three years from the issuance date. A fair value of $14,214,397 was assigned to the warrants.

H.C. Wainwright & Co. acted as the exclusive placement agent and received cash commission and expenses totalling $1,978,303 and 249,688 non-transferable broker warrants. Each broker warrant entitles the holder to purchase one subordinate voting share at an exercise price of CAD$10.01 at any time for a period of three years from the issuance date. The broker warrants were assigned a fair value of $1,124,704 for total issuance costs of $3,103,007 of which $2,197,403 is recorded in net loss as the cost of issuance of the warrants classified as liabilities.

The grant date fair value of $1,124,704 for the 249,688 broker warrants was determined using the Black-Scholes pricing model and the following assumptions and inputs: share price of CAD$7.71; exercise price of CAD$10.01; expected dividend yield of 0%; expected volatility of 235% which is based on comparable companies; risk-free interest rate of 0.53%; and an expected average life of three years.

**Digihost Technology Inc.**

**Notes to Consolidated Financial Statements**

**Years Ended December 31, 2022 and 2021**

**(Expressed in United States Dollars)**

**14. Share capital (continued)**

**<u>Year ended December 31, 2021 (continued)</u>**

(vi) On April 9, 2021, the Company closed a non-brokered private placement financing for 3,894,081 units for CAD$6.42 per unit for gross proceeds of $19,748,795 (CAD$25 million). 3,894,081 subordinate voting shares of the Company and warrants to purchase 3,894,081 subordinate voting shares were issued. The warrants have an exercise price of CAD$7.11 per subordinate voting share and exercise period of four years from the issuance date. A fair value of $14,205,769 was assigned to the warrants.

H.C. Wainwright & Co. acted as the exclusive placement agent and received cash commission and expenses totalling $1,695,460 and 311,526 non-transferable broker warrants. Each broker warrant entitles the holder to purchase one subordinate voting share at an exercise price of CAD$8.025 at any time for a period of four years from the issuance date. The broker warrants were assigned a fair value of $1,121,763 for total issuance costs of $2,817,223 of which $2,008,069 is recorded in net loss as the cost of issuance of the warrants classified as liabilities.

The fair value of $1,121,763 was estimated using the following assumptions and inputs: share price of CAD$5.49; exercise price of CAD$8.025; expected dividend yield of 0%; expected volatility of 143% which is based on comparable companies; risk-free interest rate of 0.77%; and an expected average life of four years.

(vii) On June 18, 2021, the Company closed a non-brokered private placement financing for 2,777,779 units for CAD$5.40 per unit for gross proceeds of $12,025,016 (CAD$15 million). 2,777,779 subordinate voting shares of the Company and warrants to purchase 2,083,334 subordinate voting shares were issued. The warrants have an exercise price of CAD$5.97 per subordinate voting share and exercise period of three years from the issuance date. A fair value of $5,569,473 was assigned to the warrants.

H.C. Wainwright & Co. acted as the exclusive placement agent and received cash commission and expenses totalling $1,164,466 and 222,222 non-transferable broker warrants. Each broker warrant entitles the holder to purchase one subordinate voting share at an exercise price of CAD$6.75 at any time for a period of three years from the issuance date. The broker warrants were assigned a fair value of $581,060 for total issuance costs of $1,664,562 of which $767,579 is recorded in net loss as the cost of issuance of the warrants classified as liabilities.

The fair value of $581,060 was estimated using the following assumptions and inputs: share price of CAD$4.56; exercise price of CAD$6.75; expected dividend yield of 0%; expected volatility of 136% which is based on comparable companies; risk-free interest rate of 0.63%; and an expected average life of three years.

(viii) On November 30, 2021, the Company issued 16,136 subordinate voting shares (valued at $40,000) to settle a debt of $40,000 with a third-party creditor.

**<u>Year ended December 31, 2022</u>**

(ix) On March 9, 2022, the Company closed a private placement with a single institutional investor, for (a) 2,729,748 subordinate voting shares at a purchase price of CAD$4.40 per subordinate voting share and associated warrant, (b) 300,000 pre-funded warrants (Pre-funded Warrants) at an exercise price of $0.0001 per subordinate voting shares, at an offering price of CAD$4.3999 per Pre-Funded Warrant and associated warrant and (iii) 3,029,748 common share purchase warrants (the "Warrants") for aggregate gross cash proceeds of $10,424,453 (CAD$13,330,861) and the cancellation of warrants. The Warrants have an exercise price of CAD$6.25 per share and exercise period of three and one-half years from the issuance date. A fair value of $7,007,643 was assigned to the warrants. The Pre-Funded Warrants were assigned a fair value of $1,022,915 based on the cash received and are accounted for as financial liabilities at amortized cost. The Pre-Funded Warrants were exercised in September 2022, the financial liability together with the cash received of $30 and initial issuance costs was then accounted as an increase in share capital of $927,463.

**Digihost Technology Inc.**

**Notes to Consolidated Financial Statements**

**Years Ended December 31, 2022 and 2021**

**(Expressed in United States Dollars)**

14. Share capital (continued)

**<u>Year ended December 31, 2022 (continued)</u>**

In connection with the private placement, the investor has agreed to cancel existing warrants to purchase 1,248,440 common subordinate voting shares of the Company at an exercise price of CAD$9.42 per share issued in March 16, 2021 expiring on March 16, 2024 and the existing warrants to purchase 1,781,308 common subordinate voting shares of the Company at an exercise price of CAD$7.11 issued in April 9, 2021 expiring on April 9, 2025. The cancellation was considered as part of the proceeds of the above mentioned private placement and was accounted for as an increase in share capital of $5,887,616 for total proceeds from the private placement of $15,255,979.

H.C. Wainwright & Co. acted as the exclusive placement agent and received cash commission and expenses totalling $1,080,584 and 242,380 non-transferable broker warrants. Each broker warrant entitles the holder to purchase one subordinate voting share at an exercise price of CAD$6.25 at any time for a period of three and one-half years from the issuance date. The broker warrants were assigned a fair value of $535,009 for total issuance costs of $1,615,593 of which $695,170 is recorded in net income as the cost of issuance of the warrants classified as liabilities and $102,138 in reduction of the Pre-Funded Warrants.

The grant date fair value of $535,009 for the 242,380 broker warrants was determined using the Black-Scholes pricing model and the following assumptions and inputs: share price of CAD$3.78; exercise price of CAD$6.25; expected dividend yield of 0%; expected volatility of 136% which is based on comparable companies; risk-free interest rate of 1.62%; and an expected average life of three and one-half years.

(x) During May 2022, the Company received approval to undertake, at the Company's discretion, a normal course issuer bid program to purchase up to 1,219,762 of its subordinate voting shares for cancellation. As at December 31, 2022, the Company repurchased 165,200 subordinate voting shares for a total repurchase price of $255,525.

(xi) On November 1, 2022, the Company issued 19,391 subordinate voting shares (valued at $13,816) to settle a debt of $92,825 with a creditor.

**15.** **Warrants**

---

| | | |
|:---|:---|:---|
|  | **Number of<br> Warrants** | **Weighted Average<br> Exercise Price<br> (CAD$)** |
| **Balance, December 31, 2020** | **36858** | **5.25** |
| Issued (note 14(b)(v)(vi)(vii)) | 783436 | 8.30 |
| Expired | (36858) | 5.25 |
| **Balance, December 31, 2021** | **783436** | **8.30** |
| Issued (note 14(b)(ix)) | 242380 | 6.25 |
| **Balance, December 31, 2022** | **1025816** | **7.81** |

---

**Digihost Technology Inc.**

**Notes to Consolidated Financial Statements**

**Years Ended December 31, 2022 and 2021**

**(Expressed in United States Dollars)**

**15. Warrants (continued)**

The following table reflects the warrants issued and outstanding as of December 31, 2022:

---

| | | |
|:---|:---|:---|
| **Number of Warrants Outstanding** | **Exercise<br> Price<br> (CAD$)** | **Weighted<br> Average<br> Contractual<br> Life (years)** |
| 249688 | 10.01 | 1.21 March 16, 2024<sup>(1)</sup> |
| 222222 | 6.75 | 1.47 June 18, 2024<sup>(1)</sup> |
| 311526 | 8.025 | 2.27 April 9, 2025<sup>(1)</sup> |
| 242380 | 6.25 | 2.69 September 9, 2025<sup>(1)</sup> |
| 1025816 | 7.81 | 1.94 |

---

The following table reflects the warrants issued and outstanding as of December 31, 2021:

---

| | | |
|:---|:---|:---|
| **Number of Warrants Outstanding** | **Exercise<br> Price<br> (CAD$)** | **Weighted <br> Average<br> Contractual<br> Life (years)** |
| 249688 | 10.01 | 2.21 March 16, 2024<sup>(1)</sup> |
| 222222 | 6.75 | 2.47 June 18, 2024<sup>(1)</sup> |
| 311526 | 8.025 | 3.27 April 9, 2025<sup>(1)</sup> |
| 783436 | 8.30 | 2.71 |

---

<sup>(1)</sup> Broker warrants.

16. Stock options and restricted share units

(a) Stock options

The Company has a stock option plan whereby the maximum number of shares subject to the plan, in the aggregate, shall not exceed 10% of the Company's issued and outstanding shares. The exercise price shall be no less than the discount market price as determined in accordance with TSXV policies.

The following table reflects the continuity of stock options for the periods presented below:

---

| | | |
|:---|:---|:---|
|  | **Number of<br> Stock Options** | **Weighted Average<br> Exercise Price<br> (CAD$)** |
| **Balance, December 31, 2020** | **625000** | **2.88** |
| Granted (i)(ii)(iii)(iv)(v) | 1823497 | 6.03 |
| Exercised<sup>(1)</sup> | (75000) | 3.17 |
| Expired / cancelled | (28332) | 6.09 |
| **Balance, December 31, 2021** | **2345165** | **5.28** |
| Expired / cancelled | (1153331) | 5.46 |
| **Balance, December 31, 2022** | **1191834** | **5.11** |

---

<sup>(1)</sup> The market price on the date of exercise was CAD$8.88.

**Digihost Technology Inc.<br> Notes to Consolidated Financial Statements <br> Years Ended December 31, 2022 and 2021 <br> (Expressed in United States Dollars)**

**16. Stock options and restricted share units (continued)**

(a) Stock options (continued)

(i) 5, 2021, the Company granted stock options to directors, officers, employees and consultants of the Company to acquire an aggregate of 550,164 subordinate voting shares. Each stock option is exercisable into a subordinate voting share at a price of CAD$3.75 and expire on January 5, 2026. The stock options vest fully on the six- month anniversary of the date of grant.

A value of CAD$2.76 per option was estimated for the 550,164 stock options on the date of grant with the following assumptions and inputs: share price of CAD$3.03; exercise price of CAD$3.75; expected dividend yield of 0%; expected volatility of 155% which is based on comparable companies; risk-free interest rate of 0.39%; and an expected average life of five years.

(ii) 24, 2021, the Company granted stock options to consultants of the Company to acquire an aggregate of 50,000 subordinate voting shares. Each stock option is exercisable into a subordinate voting share at a price of CAD$13.92 and expire on February 24, 2026. The stock options vested immediately.

A value of CAD$12.78 per option was estimated for the 50,000 stock options on the date of grant with the following assumptions and inputs: share price of CAD$13.92; exercise price of CAD$13.92; expected dividend yield of 0%; expected volatility of 155% which is based on comparable companies; risk-free interest rate of 0.73%; and an expected average life of five years.

(iii) 26, 2021, the Company granted stock options to directors, officers, employees and consultants of the Company to acquire an aggregate of 533,333 subordinate voting shares. Each stock option is exercisable into a subordinate voting share at a price of CAD$7.47 and expire on March 25, 2026. The stock options vest fully on the six- month anniversary of the date of grant.

A value of CAD$6.87 per option was estimated for the 533,333 stock options on the date of grant with the following assumptions and inputs: share price of CAD$7.47; exercise price of CAD$7.47; expected dividend yield of 0%; expected volatility of 155% which is based on comparable companies; risk-free interest rate of 0.90%; and an expected average life of five years.

(iv) y 17, 2021, the Company granted stock options to directors, officers, employees and consultants of the Company to acquire an aggregate of 430,000 subordinate voting shares. Each stock option is exercisable into a subordinate voting share at a price of CAD$7.35 and expire on May 17, 2026. The stock options vest fully on the six- month anniversary of the date of grant.

A value of CAD$6.09 per option was estimated for the 430,000 stock options on the date of grant with the following assumptions and inputs: share price of CAD$7.86; exercise price of CAD$7.35; expected dividend yield of 0%; expected volatility of 105% which is based on comparable companies; risk-free interest rate of 0.95%; and an expected average life of five years.

(v) 22, 2021, the Company granted stock options to directors, officers, employees and consultants of the Company to acquire an aggregate of 260,000 subordinate voting shares. Each stock option is exercisable into a subordinate voting share at a price of CAD$4.20 and expire on June 22, 2026. The stock options vest fully on the six- month anniversary of the date of grant.

A value of CAD$3.06 per option was estimated for the 260,000 stock options on the date of grant with the following assumptions and inputs: share price of CAD$4.02; exercise price of CAD$4.20; expected dividend yield of 0%; expected volatility of 105% which is based on comparable companies; risk-free interest rate of 0.95%; and an expected average life of five years.

The underlying expected volatility of all option grants was determined by reference to historical data of comparable companies share price over the expected stock option life.

**Digihost Technology Inc.<br> Notes to Consolidated Financial Statements <br> Years Ended December 31, 2022 and 2021 <br> (Expressed in United States Dollars)**

16. Stock options and restricted share units (continued)

(a) Stock options (continued)

For the year ended December 31, 2022, the Company recorded share based compensation expense for these stock options of $nil (year ended December 31, 2021 - $7,804,271).

The following table reflects the stock options issued and outstanding as of December 31, 2022:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Expiry Date** | **Exercise Price<br> (CAD$)** | **Weighted<br> Average<br> Remaining<br> Contractual<br> Life (years)** | **Number of<br> Options<br> Outstanding** | **Number of<br> Options<br> Vested**<br> **(exercisable)** | **Number of<br> Options<br> Unvested** |
| February 14, 2025 | 2.88 | 2.13 | 408334 | 408334 |  |
| January 5, 2026 | 3.75 | 3.02 | 258498 | 258498 |  |
| February 24, 2026 | 13.92 | 3.16 | 50000 | 50000 |  |
| March 25, 2026 | 7.47 | 3.23 | 233334 | 233334 |  |
| May 17, 2026 | 7.35 | 3.38 | 155000 | 155000 |  |
| June 22, 2026 | 4.20 | 3.48 | 86668 | 86668 |  |
|  | 5.11 | 2.84 | 1191834 | 1191834 |  |

---

The following table reflects the stock options issued and outstanding as of December 31, 2021:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Expiry Date** | **Exercise Price<br> (CAD$)** | **Weighted<br> Average<br> Remaining<br> Contractual<br> Life (years)** | **Number of<br> Options<br> Outstanding** | **Number of<br> Options<br> Vested<br> (exercisable)** | **Number of<br> Options<br> Unvested** |
| February 14, 2025 | 2.88 | 3.13 | 575000 | 575000 |  |
| January 5, 2026 | 3.75 | 4.02 | 525164 | 525164 |  |
| February 24, 2026 | 13.92 | 4.15 | 50000 | 50000 |  |
| March 25, 2026 | 7.47 | 4.23 | 525000 | 525000 |  |
| May 17, 2026 | 7.35 | 4.38 | 421667 | 421667 |  |
| June 22, 2026 | 4.20 | 4.48 | 248334 | 248334 |  |
|  | 5.28 | 4.96 | 2345165 | 2345165 |  |

---

The Company has an RSU plan whereby the there is a fixed cap of shares that can be granted under the plan. The exercise price shall be no less than the discount market price as determined in accordance with TSXV policies.

(b) share units

The following table reflects the continuity of RSUs for the periods ended December 31, 2022 and 2021:

---

| | |
|:---|:---|
|  | **Number of<br> RSUs** |
| **Balance, December 31, 2020 and December 31, 2021** | **-** |
| Granted | 1449250 |
| Cancelled | (10000) |
| **Balance, December 31, 2022** | **1439250** |

---

During the year ended December 31, 2022, the Company granted 1,449,250 RSUs to officers, directors, employees and advisors. These RSUs vest third on each of the first, second and third anniversaries of the date of grant. The grant date fair value of the RSUs was $5,725,262.

For the year ended December 31, 2022, the Company recorded share based compensation expense for these RSU's of $3,296,238 (year ended December 31, 2021 - $nil).

**Digihost Technology Inc.<br> Notes to Consolidated Financial Statements <br> Years Ended December 31, 2022 and 2021 <br> (Expressed in United States Dollars)**

17. Income (loss) per share

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** |
| Net income (loss) for the year | $**4329342** | $(3132693) |
| Net income (loss) per share - basic | $**0.16** | $(0.14) |
| Net income (loss) per share - diluted | $**0.16** | $(0.14) |
| Weighted average number of shares outstanding - basic | **27227284** | 21781806 |
| Weighted average number of shares outstanding - diluted | **27227284** | 21781806 |

---

(i) Diluted income per share does not include the effect of warrants
and stock options as they are anti-dilutive.

18. Related party transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control. Related parties include key management personnel and may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Related party transactions are recorded at the exchange amount, being the amount agreed to between the related parties.

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. Key management personnel include the Company's executive officers and members of the Board of Directors.

Remuneration of key management personnel of the Company was as follows:

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** |
| Professional fees <sup>(1)</sup> | $**307534** | $91249 |
| Salaries <sup>(1)</sup> | **833717** | 144231 |
| Share based compensation<sup>(2)</sup> | **3092012** | 6016173 |
|  | $**4233263** | $6251653 |

---

<sup>(1)</sup> Represents the professional fees and salaries paid to officers and directors. <br> <br> <sup>(2)</sup> Represents the share based compensation for officers and directors.

**Digihost Technology Inc.<br> Notes to Consolidated Financial Statements <br> Years Ended December 31, 2022 and 2021 <br> (Expressed in United States Dollars)**

**19. Cash flow supplemental information**

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** |
| **<u>Digital currencies items</u>** |  |  |
| &nbsp;&nbsp;&nbsp;Digital currencies mined | $**(24190060)** | $(24952344) |
| &nbsp;&nbsp;&nbsp;Acquisition of digital currencies | **(3932000)** |  |
| &nbsp;&nbsp;&nbsp;Miner lease and hosting | **9768179** | 3469287 |
| &nbsp;&nbsp;&nbsp;Loss on digital currency option calls | **1950000** |  |
| &nbsp;&nbsp;&nbsp;Services paid in digital currencies | **739024** |  |
| &nbsp;&nbsp;&nbsp;Loss (gain) on sale of digital currencies | **11574330** | (290948) |
| &nbsp;&nbsp;&nbsp;Interest paid in digital currencies | **216329** |  |
| &nbsp;&nbsp;&nbsp;Digital currencies traded for cash | **16016280** |  |
| &nbsp;&nbsp;&nbsp;Loss on revaluation of digital currencies | **3386890** | - |
|  | $**15528972** | $(21774005) |
| **<u>Working capital items</u>** |  |  |
| &nbsp;&nbsp;&nbsp;Amounts receivable and prepaid expenses | $**574129** | $(1604703) |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | **72325** | 842584 |
| &nbsp;&nbsp;&nbsp;Income tax payable | **(550000)** |  |
| &nbsp;&nbsp;&nbsp;Deposit payable | **(1277500)** | 1788500 |
|  | $**(1181046)** | $1026381 |

---

**20. Additional information on the nature of comprehensive income (loss) components**

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** |
| **<u>Expenses for employee benefits</u>** |  |  |
| Operating and maintenance costs | $444400 | $528658 |
| Professional fees | **307534** | 91249 |
| Share based compensation | **3296238** | 7804271 |
|  | $**4048172** | $8424178 |
| **<u>Net financial expenses</u>**<br> Interest on loans | $238204 | $96134 |
| Interest on lease liabilities | **16074** | 236680 |
|  | $**254278** | $332814 |

---

**Digihost Technology Inc.<br> Notes to Consolidated Financial Statements <br> Years Ended December 31, 2022 and 2021 <br> (Expressed in United States Dollars)**

 **21. Segmented reporting**

The Company has one operating segment being cryptocurrency mining located in the United States. The operations of the Company are located in two geographic locations, Canada and the United States. Geographic segmentation is as follows:

---

| | | | |
|:---|:---|:---|:---|
| **As at December 31, 2022** | **Canada** | **United States** | **Total** |
| Current assets | $29372 | $6100481 | $6129853 |
| Non-current assets | - | 46469708 | 46469708 |
| **Total assets** | $**29372** | $**52570189** | $**52599561** |

---

---

| | | | |
|:---|:---|:---|:---|
| **As at December 31, 2021** | **Canada** | **United States** | **Total** |
| Current assets | $179396 | $36036609 | $36216005 |
| Non-current assets | 1346904 | 42463966 | 43810870 |
| **Total assets** | $**1526300** | $**78500575** | $**80026875** |

---

**22. 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, reserves and loans payable. 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 year ended December 31, 2021.

23. Financial instruments and risk management<u> </u>

**<u>Fair value</u>**

**<u> </u>**

The fair value of the Company's financial instruments, including cash, amounts receivable, accounts payable and accrued liabilities, mortgage payable and deposit payable approximates their carrying value due to their short-term nature. Mortgage payable and deposit payable are due to arm's length third parties, the fair values of these payables are measured using relevant market input (Level 3).The fair values of mortgage payable and deposit payable was calculated using actualized cash flows using market rates in effect at the balance sheet date. Reasonable changes to key assumptions would not have a significant impact. Promissory note receivable is due from an arm's length third party, the fair value of this note are measured using relevant market input (Level 3). Digital currencies and amount owing to Northern Data are measured at fair value using the quoted price on CoinMarketCap (Level 2). Warrant liabilities are measured at fair value using the Black- Scholes pricing model (Level 2) (see note 13).

**<u>Risks</u>**

*<u>Credit risk</u>*

 

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company's primary exposure to credit risk is on its cash, amounts receivable and promissory note receivable. The cash is deposited in a bank account held with one major bank in the United States so there is a concentration of credit risk. This risk is managed by using a major bank that is a high credit quality financial institution as determined by rating agencies. The Company believes no impairment is necessary in respect of amounts receivable and promissory note receivable as balances are monitored on a regular basis with the result that exposure to bad debt is insignificant.

**Digihost Technology Inc.<br> Notes to Consolidated Financial Statements <br> Years Ended December 31, 2022 and 2021 <br> (Expressed in United States Dollars)**

23. Financial instruments and risk management (continued)

*<u>Liquidity risk</u>*

 

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk by maintaining cash balances to ensure that it is able to meet its short term and long- term obligations as and when they fall due. The Company manages cash projections and regularly updates projections for changes in business and fluctuations cause in digital currency prices and exchange rates.

The following table summarizes the expected maturity of the Corporation's significant financial liabilities and other liabilities based on the remaining period from the balance sheet date to the contractual maturity date:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Payments by period** | **Payments by period** | **Payments by period** | **Payments by period** | | |
| <br>**As at December 31, 2022** | **Less than 1 year** | **1-3 years** | **4-5 years** | **More than 5 years** | **Total** | **Carrying Value** |
| Accounts payable and accrued liabilities | $2345175 | $- | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $2345175 | $2345175 |
| Amount owing to Northern Data | 322099 |  |  |  | 322099 | 322099 |
| Deposit payable |  | 511000 |  |  | 511000 | 511000 |
| Lease liabilities | 146880 | 307111 | 214524 |  | 668515 | 668515 |
| Mortgage payable | 534000 | 400500 | - | - | 934500 | 934500 |
|  | $3348154 | $,218611 | $214524 | $- | $4781289 | $4781289 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Payments by period** | **Payments by period** | **Payments by period** | **Payments by period** | | |
| <br>**As at December 31, 2021** | **Less than 1 year** | <br>**1-3 years**  | **4-5 years** | **More than**<br> **5 years** | <br> <br>**Total**  | <br>**Carrying Value** |
| Accounts payable and accrued liabilities | $2272850 | $- | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $2272850 | $2272850 |
| Amount owing to Northern Data | 2940412 |  |  |  | 2940412 | 2940412 |
| Deposit payable | - | 1788500 | - | - | 1788500 | 1788500 |
|  | $5213262 | $1788500 | $- | $- | $7001762 | $7001762 |

---

*<u>Foreign currency risk</u>*

Currency risk relates to the risk that the fair values or future cash flows of the Company's financial instruments will fluctuate because of changes in foreign exchange rates. Exchange rate fluctuations affect the costs that the Company incurs in its operations.

The Company's functional and presentation currency is the US dollar. As the Company operates in an international environment, some of the Company's financial instruments and transactions are denominated in currencies other than an entity's functional currency. The fluctuation of the Canadian dollar in relation to the US dollar will consequently impact the profitability of the Company and may also affect the value of the Company's assets and liabilities and the amount of shareholders' equity. As at December 31, 2022 and 2021, the foreign currency risk was considered minimal.

**Digihost Technology Inc.<br> Notes to Consolidated Financial Statements <br> Years Ended December 31, 2022 and 2021 <br> (Expressed in United States Dollars)**

23. Financial instruments and risk management (continued)

*<u>Digital currency risk</u>*

 

Digital currency 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 currencies; in addition, the Company may not be able liquidate its holdings of digital currencies at its desired price if required. A decline in the market prices for digital currencies could negatively impact the Company's future operations. The Company has not hedged the conversion of any of its sales of digital currencies.

Digital currencies have a limited history and the fair value historically has been very volatile. Historical performance of digital currencies is not indicative of their future price performance. The Company's digital currencies currently consist of Bitcoin and Ethereum.

At December 31, 2022, had the market price of the Company's holdings of Bitcoin and Ethereum increased or decreased by 10% with all other variables held constant, the corresponding asset value increase or decrease respectively would amount to $280,066 (2021 - $3,055,157).

24. Income taxes

(a) Provision for income taxes

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** |
|  | | **(Restated)** |
| Income before income taxes | $**2791875**  | $(832074) |
| Combined statutory income tax rate | **26.14%** | 27.00% |
| Income tax benefit at the statutory tax rate | **729657** | (224660) |
| &nbsp;&nbsp;&nbsp;Non-deductible expenses | **15626** | 273784 |
| &nbsp;&nbsp;&nbsp;Revaluation of warrant liabilities | **(8365980)** | (418774) |
| &nbsp;&nbsp;&nbsp;Foreign exchange gain | **(593325)** |  |
| &nbsp;&nbsp;&nbsp;Share based compensation | **-** | 1304058 |
| &nbsp;&nbsp;&nbsp;Impairment of goodwill | **329506**  | - |
| &nbsp;&nbsp;&nbsp;Effect of lower tax rate of subsidiary | **-** | (103388) |
| &nbsp;&nbsp;&nbsp;Other | **59931** | 126874 |
| &nbsp;&nbsp;&nbsp;Change in unrecognized deferred tax asset | **6287118**  | 1342725 |
| Deferred Income tax (recovery) provision | $**(1537467)** | $2300619 |
| **Current income taxes in the income statement** | $**-** | $127340 |
| **Composition of deferred income taxes in the income statement** |  |  |
| &nbsp;&nbsp;&nbsp;Inception and reversal of temporary differences | $**(7824585)** | $2089839 |
| &nbsp;&nbsp;&nbsp;Prior period adjustment | **-**  | 83440 |
| &nbsp;&nbsp;&nbsp;Change in unrecognized deferred tax asset | **6287118**  | - |
| Deferred Income tax (recovery) provision | $**(1537467)** | $2173279 |
| **Total income tax expense (recovery) for the year** | $**(1537467)** | $2300619 |

---

**Digihost Technology Inc.<br> Notes to Consolidated Financial Statements <br> Years Ended December 31, 2022 and 2021 <br> (Expressed in United States Dollars)**

24. Income taxes (continued)

(b) Deferred income tax

Movement of deferred income tax in 2022

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **January 1,<br> 2022** | **Profit or loss** | **Other<br> Comprehensive<br> Income** | **Equity** | **December 31, 2022** |
| Property, plant and equipment | $(1781767) | $(3249116) | $- | $- | $**(5030883)** |
| Right of use assets | (543242) | (120181) |  |  | **(663423)** |
| Digital currencies | (1047759) | 1186091 | 1047758 |  | **1186090** |
| Lease liabilities |  | 143082 |  |  | **143082** |
| Stock based compensation | 709474 | (638992) |  | (70482) | **-** |
| Non-capital losses | 148551 | 4216583 |  |  | **4365134** |
| Non-capital losses - Canada |  | 593325 |  |  | **593325** |
| Unrealized foreign exchange gain - Canada | - | (593325) | - | - | **(593325)** |
| **Total** | $**(2514743)** | $**1537467** | $**1047758** | $**(70482)** | $**-** |

---

Movement of deferred income tax in 2021

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **January 1,<br> 2021** | **Profit or loss** | **Other <br> Comprehensive <br> Income** | **Equity** | **December 31,<br> 2021** |
| Property, plant and equipment | $(755431) | $(1026336) | $- | $- | $**(1781767)** |
| Right of use assets | (630826) | 87584 |  |  | **(543242)** |
| Digital currencies | (701451) |  | (346308) |  | **(1047759)** |
| Lease liabilities | 665439 | (665439) |  |  | **-** |
| Stock based compensation |  | 637673 |  | 71801 | **709474** |
| Non-capital losses | 1356631 | (1208080) | - | - | **148551** |
| **Total** | $**(65638)** | $**(2174598)** | $**(346308)** | $**71801** | $**(2514743)** |

---

As at December 31, 2022 and 2021, deductible timing differences available for which the Company has not recognized deferred tax asset are as follows:

---

| | | |
|:---|:---|:---|
|  | **As at<br> December 31,<br> 2022** | **As at<br> December 31,<br> 2021** |
| Share issue costs | $**6042213** | $529320 |
| Stock based compensation | **4307117**  |  |
| Non-capital losses - USA | **21425219**  |  |
| Non-capital losses - Canada | **1929162**  |  |
|  | $**33703711** | $2889264 |

---

The ability to realize the tax benefits is dependent upon a number of factors, including the future profitability of operations. Deferred tax assets are recognized only to the extent that it is probable that sufficient taxable profits will be available to allow the asset to be recovered.

The Canadian non-capital losses for which no deferred tax asset was recognized expire in 2041 and 2042. The non- capital losses available in the United States have no expiry date.

**Digihost Technology Inc.<br> Notes to Consolidated Financial Statements <br> Years Ended December 31, 2022 and 2021 <br> (Expressed in United States Dollars)**

25. Restatement

During the external audit of the Company's financial statements for the year ended December 31, 2022, the Company identified that due to the characteristics of certain warrants, the fixed-for-fixed condition was not met. Therefore, the Company has to record these warrants as financial liabilities measured at fair value upon initial recognition. At each subsequent reporting date, the warrants are re-measured at fair value and the change in fair value is recognized through profit or loss.

The impact of the restatement on the consolidated statement of financial position as at December 31, 2021 is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **As reported** | **Adjustment** | **Restated** |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | |
| Warrant liabilities | $- | $31943365 | $**31943365** |
| **Total liabilities** | - | 31943365 | **31943365** |
| **Shareholders' equity** |  |  |  |
| Share capital | 54863819 | (23440724) | **31423095** |
| Contributed surplus | 17358982 | (5514401) | **11844581** |
| Cumulative translation adjustment | (266730) | 433798 | **167068** |
| Digital currency revaluation reserve | 3706624 |  | **3706624** |
| Deficit | (5457926) | (3422038) | **(8879964)** |
| **Total shareholders' equity** | $70204769 | $(31943365) | $**38261404** |

---

The impact of the restatement on the consolidated statement of comprehensive income for the year December 31, 2021 is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **As reported** | **Adjustment** | **Restated** |
| Operating income | $2922778 | $- | $**2922778** |
| Revaluation of warrant liabilities |  | 1551013 | **1551013** |
| Share issuance costs | - | (4973051) | **(4973051)** |
| **Net income (loss) before income taxes** | 2589964 | (3422038) | **(832074)** |
| **Net income (loss) for the year** | 289345 | (3422038) | **(3132693)** |
| **Other comprehensive income (loss)** |  |  |  |
| Items that will be reclassified to net income |  |  |  |
| &nbsp;&nbsp;&nbsp; Foreign currency translation adjustment | (384892) | 433798 | **48906** |
| Items that will not be reclassified to net income |  |  |  |
| &nbsp;&nbsp;&nbsp; Revaluation of digital currencies, net of tax | 1724123 | - | **1724123** |
| **Total comprehensive income (loss) for the year** | $1628576 | $(2988240) | $**(1359664)** |

---

**Digihost Technology Inc.<br> Notes to Consolidated Financial Statements <br> Years Ended December 31, 2022 and 2021 <br> (Expressed in United States Dollars)**

26. Subsequent event

On February 8, 2023, the Company completed the acquisition of a 60 MW power plant in North Tonawanda, New York for $4,550,000. This transaction represented an all-cash transaction by the Company, as no shares were issued in connection with the acquisition.

Management has not determined the accounting impact of this acquisition.

## Exhibit 99.3

**Exhibit 99.3**

**DIGIHOST TECHNOLOGY INC.**

**MANAGEMENT'S DISCUSSION AND ANALYSIS**

**FOR THE YEAR ENDED DECEMBER 31, 2022**

**March 31, 2023**

**DIGIHOST TECHNOLOGY INC.** 

**Management's Discussion & Analysis** 

**For the year ended December 31, 2022**

**Introduction**

The following management's discussion & analysis ("**MD&A**") has been prepared as of March 31, 2023 and is related to the audited consolidated financial results of Digihost Technology Inc. ("**Digihost**" or the "**Company**") for the year ended December 31, 2022. This MD&A has been prepared in compliance with section 2.2.1 of Form 51-102F1, in accordance with National Instrument 51-102 – Continuous Disclosure Obligations. This MD&A should be read in conjunction with the Company's audited consolidated financial statements ("**Financial Statements**") for the years ended December 31, 2022 and 2021, together with the notes thereto. The Financial Statements are prepared in accordance with International Financial Reporting Standards ("**IFRS**") as issued by the International Accounting Standards Board and interpretations of the IFRS Interpretations Committee. All financial information contained in this MD&A is expressed in United States dollars unless otherwise stated.

For the purposes of preparing this MD&A, management, in conjunction with the Board of Directors (the "**Board**"), considers the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of Company's common shares; (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) it would significantly alter the total mix of information available to investors. Management, in conjunction with the Board, evaluates materiality with reference to all relevant circumstances, including potential market sensitivity.

Additional Information and corporate documents may be found on SEDAR at **www.sedar.com** and the Company's website at **www.digihost.ca.**

P a g e \| **2**

**DIGIHOST TECHNOLOGY INC.** 

**Management's Discussion & Analysis** 

**For the year ended December 31, 2022**

**Company Overview**

Digihost, through its US operating subsidiaries, is a blockchain technology company currently focused on Bitcoin mining. Digihost's growth-oriented strategy is to exploit opportunities to increase mining hash rate and reduce energy costs for Company-owned and third party-hosted miners. The Company's operations are focused on validation through mining, hosting solutions and blockchain software solutions. Digihost operates its wholly owned facilities in upstate New York and Alabama.

Current output from Digihost's company-owned miners is approximately 650 PH. The Company also provides hosting arrangements to third parties. Digihost is in the process of testing its installed infrastructure at the Company's recently acquired 50MW power plant and plans to commence operations in Q2. This infrastructure includes both Company-owned miners as well as third-party hosting.

Digihost's facilities, when running at full capacity, have the potential to provide the Company with an additional 570 PH of operational output resulting in output for Company-owned miners of approximately 1.2 EH. In addition to output capacity used directly by Digihost, hosting arrangements will provide third parties with approximately 700 PH of operating capacity. Additionally, Digihost acquired 25 acres of land in North Carolina to accommodate a 200MW power infrastructure project to be developed on a joint venture basis. Phase 1 of this project is scheduled for 2024 and will provide the Company with further electrical power of approximately 75 MW.

Digihost remains focused on procuring power from renewable energy sources and those that create zero carbon emissions.

The head office of the Company is located at 2830 Produce Row, Houston, TX 77023.

**Mining operation and network overview** 

Revenue from the Company's Bitcoin mining operation is recognized based upon the average Bitcoin price in effect on the day the Bitcoins are mined. Bitcoins are received within in a 24-hour period from the actual time they are mined. The Bitcoin price is volatile and can change markedly from day to day. This volatility in price can result in material changes in revenue recorded from period to period.

Network mining difficulty is one of the most significant competitive conditions the Company faces in its Bitcoin mining operation. Network difficulty is a unitless measure of how difficult it is to find a hash below a given target. Network difficulty is impacted directly by the price of Bitcoin. As the price of Bitcoin increases network mining difficulty may increase if more competitors begin to mine for Bitcoin, which would result in a decrease in the number of Bitcoins mined by the Company based upon its existing computing power. As network difficulty rises the costs to the Company to mine Bitcoin also rises.

The Bitcoin network protocol automatically adjusts network difficulty by changing the target every 2,016 blocks hashed based on the time it took for the total computing power used in Bitcoin mining to solve the previous 2,016 blocks such that the average time to solve each block is maintained as close to ten minutes as possible. Price and network difficulty are positively correlated such that as the price of Bitcoin rises, there is an added incentive for miners to enter the market, and such increase in miners typically has a proportional increase in network difficulty.

With respect to the conversion of the Company's Bitcoin to cash, the Company relies on a third-party service provider to broker sales of its mined Bitcoin. In Q1 of 2022 the Company began to monetize a portion of Bitcoin mined to fund the Company's operating costs and SG&A expenses, thereby mitigating the need to access equity markets to fund these costs.

P a g e \| **3**

**DIGIHOST TECHNOLOGY INC.** 

**Management's Discussion & Analysis** 

**For the year ended December 31, 2022**

**Highlights** 

**<u>Financings</u>**

● On March 6, 2022, the Company announced it had entered into a private placement with a single institutional investor, for gross proceeds of approximately CAD$13.3 million, comprised of 3,029,748 subordinate voting shares of the Company (or subordinate voting share equivalents) and warrants to purchase up to 3,029,748 subordinate voting shares, at a purchase price of CAD$4.40 per subordinate voting share and associated warrant. The Warrants have an exercise price of CAD$6.25 per Share and exercise period of three and one-half years from the issuance date.

H.C. Wainwright & Co. acted as the exclusive placement agent and received cash commissions and expense reimbursements totaling $1,066,471 and 242,380 non-transferable broker warrants. Each broker warrant entitles the holder to purchase one subordinate voting share at an exercise price of CAD$6.25 at any time for a period of three years from the issuance date.

In connection with the private placement, the Company cancelled warrants to purchase up to 1,248,440 common subordinate voting shares of the Company at an exercise price of CAD$9.42 per share issued in March 2021 and warrants to purchase up to 1,781,308 common subordinate voting shares of the Company at an exercise price of CAD$7.11 issued in April 2021.

**<u>Mining Operations</u>**

***Bitcoin***

As of December 31, 2022, the Company held a total of 111 Bitcoins with an approximate inventory value of $1.8 million based on the BTC price as of that date. For the twelve-month period ended December 31, 2022, Digihost mined a total of 832 Bitcoins compared to 519 for the twelve-month period ended December 31, 2021, an increase of 60%.

For the three-month period ended December 31, 2022, Digihost mined a total of 224 Bitcoins compared to 172 for the three-month period ended December 31, 2021, an increase of 30%.

The increase in coins mined throughout 2022 was driven by the expansion of miners that the Company put online during the year.

The market value of the BTC miners in the Company's inventory as of this MD&A is approximately $20M.

***Ethereum***

As of December 31, 2022, the Company held a total of 801 ETH with an approximate inventory value of $1.0M based upon the ETH price on December 31, 2022. The Company does not currently mine ETH.

**<u>Green Initiative</u>**

Currently, 90% of the energy consumed by Digihost's operations in New York State is received from generating sources that create zero-carbon emissions, with more than 50% of the energy consumed being generated from renewable sources. As Digihost intends to purchase and bring online its own power generation facilities, the Company will focus on powering its New York facilities using "bridge" power sources for low-carbon or renewable sources of energy where available. Additionally, the Company will also explore CO2 emission capture technology available in the market.

P a g e \| **4**

**DIGIHOST TECHNOLOGY INC.** 

**Management's Discussion & Analysis** 

**For the year ended December 31, 2022**

Current Carbon-Neutrality Efforts & Initiatives include:

● 100% Carbon Neutral: Digihost plans for 100% of its operations to achieve carbon neutrality with a net-zero footprint by the end of 2025, and 100% renewable by 2030.

● Digigreen Initiative: A Digihost initiative focused on immediate steps to create sustainable, environmentally, and economically sound in-house practices, distinguishing the Company as an industry leader in lowering/eliminating its carbon footprint while maintaining profitability.

● Crypto Climate Accord: Digihost has joined a private sector-led initiative for the entire crypto community focused on decarbonizing the cryptocurrency industry in record time.

● Proof of Green: Digihost has begun initial research into developing proprietary standards for measuring the Company's carbon impact. Using these standards as an environmental audit tool for the various locations of the Company's operations, the Company expects to be able to generate accountability reports and to advise Directors and Shareholders on efforts to minimize the Company's the carbon footprint.

**<u>At-the-Market Offering</u>**

On March 4, 2022, the Company entered into an offering agreement with H.C. Wainwright & Co., LLC as agent, pursuant to which the Company established an at-the-market equity program (the "ATM Program"). During the year ended December 31, 2022, the Company issued 2,100 subordinate voting shares at an average share price of $1.1757, being all of the securities issued pursuant to the ATM Program from the commencement of the ATM Program through the date hereof.

**<u>NCIB</u>**

During May 2022, Digihost announced that it had received approval to undertake, at the Company's discretion, a normal course issuer bid program ("NCIB") in Canada to purchase up to 1,219,762 of its subordinate voting shares for cancellation. The NCIB was commenced due to the fact that, from time to time, the Company may consider that the market price of its subordinate voting shares do not accurately reflect the underlying value of the Company's business.

**<u>Custodial services for digital currencies</u>**

The Company has a digital custody account with Gemini Trust Company, LLC (Gemini). Gemini is a digital currency exchange and custodian that allows customers to buy, sell, and store its digital assets. Gemini holds 100% of the Company's cryptocurrency assets in hot storage. Gemini is not a related party of the Company. The Company is not aware of anything with regards to Gemini's operations that would adversely affect the Company's ability to obtain an unqualified audit opinion on its audited financial statements.

The Company has chosen to hold the majority of the Company's cryptocurrency assets with Gemini due to its track record in the industry. Gemini is a New York trust company regulated by the New York State Department of Financial Services and is the foreign equivalent of a Canadian financial institution (as that term is defined in National Instrument 45-106 – *Prospectus Exemption*). Gemini is a qualified custodian under New York Banking Law and is licensed by the State of New York to custody digital assets. Gemini has not appointed a sub-custodian to hold any of the Company's cryptocurrencies. Gemini has US$200 million in cold storage insurance coverage backing its digital asset custody, one of the highest levels of regulatory certifications in the market and US$90 million in hot storage insurance. Although the Company has historically utilized both cold and hot storage for its digital crypto assets with Gemini, the Company currently holds all its cryptocurrencies custodied with Gemini in hot storage.

P a g e \| **5**

**DIGIHOST TECHNOLOGY INC.** 

**Management's Discussion & Analysis** 

**For the year ended December 31, 2022**

The Company has conducted due diligence on Gemini and has not identified any material concerns. It routinely reviews and verifies its asset balances on public blockchain explorers. Management of the Company is not aware of any security breaches or other similar incidents involving Gemini that resulted in lost or stolen cryptocurrency assets. In the event of an insolvency or bankruptcy of Gemini, the Company would write off as losses any unrecoverable cryptocurrency assets.

In order to monitor Gemini, the Company relies on system and organization controls provided by a SOC 2 Type II report, which was undertaken by Deloitte & Touche LLP, an independent audit firm. A SOC 2 Type II certification and report are viewed as instrumental in providing verification to third parties that appropriate controls have been put in place to safeguard the Company's cryptocurrency assets, specifically as it relates to having strict security and data protection processes and protocols.

In general, a SOC 2 Type II certification is issued by an outside auditor that evaluates the extent to which a vendor complies with five trust principles based on the systems and processes in place. These five principles include the following:

● "Security", which addresses the safeguarding of system resources and assets against unauthorized access;

● "Availability", which addresses the accessibility of the system as stipulated by the applicable service agreement between vendor and customer;

● "Processing Integrity", which addresses whether or not a system achieves its purpose;

● "Confidentiality", which addresses whether access and disclosure of data is restricted to a specified set of persons or organizations; and

● "Privacy", which addresses the system's collection, use, retention, disclosure and disposal of personal information in conformity with an organization's privacy notice.

The Company has elected to use Gemini as its sole custodian as Gemini compiles documented controls that can be provided to the Company, such as the SOC 2 Type II certification. The Company reviews the SOC 2 Type II report to ensure it maintains a secure technology infrastructure and the security systems designed to safeguard cryptocurrency assets are operating effectively. To date, the Company has not identified any material concerns based on its review of the SOC 2 Type II report.

Gemini maintains insurance coverage for the cryptocurrency held on behalf of the Company in its online hot wallet. The Company is in the process of looking to insure the remainder of its mined digital currency. Given the novelty of digital currency mining and associated businesses, insurance of this nature is generally not available, or is uneconomical for the Company to obtain, which leads to the risk of inadequate insurance cover.

To mitigate third-party risk, the Company will hold a portion of its digital currencies in cold storage solutions which are not connected to the internet. The Company's digital assets that are held in cold storage are stored in safety deposit boxes at a bank branch. The wallets on which the Company stores its cryptocurrency assets are not multi-signature wallets, however, the Company secures the 24-word seed phrase, which facilitates recovery of the wallets should the wallets become lost, stolen or damaged, by partitioning the seed phrase in multiple parts, and securing each part in a separate location. Each part of the seed phrase is stored in either a safe or safety deposit box. The Company replicates this security protocol by taking the same 24-word seed phrase, partitioning this into several parts and storing each part in a secure location in a separate safe or safety deposit box than was used for the first copy of the seed-phrase. This duplication ensures that the digital currencies held via cold storage solutions will be recoverable by the Company, should the Company's cold-wallets become lost, stolen or damaged.

P a g e \| **6**

**DIGIHOST TECHNOLOGY INC.** 

**Management's Discussion & Analysis** 

**For the year ended December 31, 2022**

**EBITDA – NON-GAAP MEASURE**

"EBITDA" is a metric used by management which is income (loss) from operations, as reported, before interest, tax, and adjusted for removing other non-cash items, including, depreciation, and further adjusted to remove acquisition related costs. Management believes "EBITDA" is a useful financial metric to assess its operating performance on a cash basis before the impact of non-cash items and acquisition related activities.

---

| |
|:---|
| Income (loss) before other items |
| Taxes and Interest |
| Depreciation |
| **EBITDA** |

---

**Selected Financial Information**

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended**<br> **December 31,<br> 2022**<br> **($)** | **Year ended**<br> **December 31, <br> 2021**<br> **($)** | **Year ended**<br> **December 31, <br> 2020**<br> **($)** |
| Revenue | 24190060 | 24952344 | 3553362 |
| Net income (loss) | 4329342 | (3132693) | (5190713) |
| Net income (loss) per share – basic and diluted | 0.16 | (0.14) | (0.15) |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended**<br> **December 31,<br> 2022**<br> **($)** | **Year ended**<br> **December 31,<br> 2021**<br> **($)** | **Year ended**<br>**December 31, <br> 2020**<br> **($)** |
| Total assets | 52599561 | 80026875 | 16519601 |
| Total long-term liabilities | 2169276 | 36246608 | 3003037 |

---

P a g e \| **7**

**DIGIHOST TECHNOLOGY INC.** 

**Management's Discussion & Analysis** 

**For the year ended December 31, 2022**

**Selected Quarterly Information** 

A summary of selected information for each of the eight most recent quarters prepared in accordance with IFRS is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | | **Net Income or (Loss)** | **Net Income or (Loss)** | **Net Income or (Loss)** |
| <br>**Three Months Ended** |<br>**Revenues <br> ($)** | **Total<br> ($)** | **Per Share -<br> Basic <br> ($)** | **Per Share -<br> Diluted<br> ($)** |
| 2022-December 31 | 5682019 | (9741906) | (0.36) | (0.36) |
| 2022-September 30 | 3735014 | (1676808) | (0.06) | (0.06) |
| 2022-June 30 | 7460595 | 3577254 | 0.13 | 0.13 |
| 2022-March 31 | 7312342 | 12170802 | 0.45 | 0.45 |
| 2021-December 31 | 9586962 | (8149439) | (0.21) | (0.21) |
| 2021-September 30 | 5485754 | (5065936) | (0.20) | (0.20) |
| 2021-June 30 | 5112553 | 9769010 | 0.44 | 0.44 |
| 2021-March 31 | 4767075 | 313672 | 0.11 | 0.11 |

---

The Company is generally not subject to seasonality. Factors that may impact revenues and profitability include Bitcoin price, network difficulty, foreign currency fluctuations and the Company's hashrate.

**Results of Operations**

**For the three months ended December 31, 2022, compared to the three months ended December 31, 2021:**

For the three months ended December 31, 2022, the Company's net loss was $9,741,906 compared to $8,149,439 for the three months ended December 31, 2021. Highlights of the quarter include:

***Revenue***

Revenue from Bitcoin mining was $5,682,019 for the period ended December 31, 2022, compared to $9,586,962 for the period ended December 31, 2021.

During the three-month period ended December 31, 2022, the Company mined 190.63 Bitcoins at an average Bitcoin price of US$18,072 (from CoinMarketCap) compared to the period ended December 31, 2021, where the Company mined 172.38 Bitcoins at an average price of Bitcoin of US$55,581 (from CoinMarketCap).

The most significant factor impacting the decrease in the Company's revenues in Q4 2022 versus Q4 2021 was the significant decline in average Bitcoin price mentioned above. Despite the growth of the Company's mining operation (expansion of inventory of miners online as hashrate went from approximately 400 PH/s as of December 31, 2021, to approximately 650 PH/s as of December 31, 2022) the suppression of Bitcoin market prices led to the year over year decline in the Company's revenue.

***Cost of Digital Currency Mining***

The Company's cost of sales was $10,160,023 for the three-month period ended December 31, 2022, compared to $6,225,994 for the period ended December 31, 2021.

P a g e \| **8**

**DIGIHOST TECHNOLOGY INC.** 

**Management's Discussion & Analysis** 

**For the year ended December 31, 2022**

The overall increase in cost of sales was due to the rise in energy and infrastructure expenses along with an increase in depreciation and amortization expense. Energy and infrastructure expenses increased by approximately $1.03 million year over year due to the recognition of expense associated with the Company's various hosting agreements. These agreements along with the Company adding new miners increased its hashrate from approximately 400 PH/s as of December 31, 2021 to approximately 650 PH/s as of December 31, 2022. Depreciation and amortization expense increased by $2.9 million in Q4 2022 as compared to Q4 2021 as a portion of the Company's new miners and electrical infrastructure were placed into service during the last few quarters of 2022.

***General, Administrative & Other Expenses***

The Company's general and administrative expenses were $6,350,238 for the three-month period ended December 31, 2022, compared to an expense of $1,232,879in the same period of 2021.

The primary drivers from the quarter ended December 31, 2021, were due to:

● The loss on the value of digital currency option calls of $1.95 million.

● Impairment losses recognized on Goodwill of $1.26 million and on the Company's data miners of $1.56 million.

**For the year ended December 31, 2022, compared to the year ended December 31, 2021:**

For the year ended December 31, 2022, the Company's net income was $4,329,342 compared to net loss of $3,132,693 for the year ended December 31, 2021. The year over year increase in net income and decrease in net loss of $7,462,035 is a result of the following:

***Revenue***

Revenue from Bitcoin mining was $24,190,060 for the year ended December 31, 2022, compared to $24,952,344 for the year ended December 31, 2021.

During the year ended December 31, 2022, the Company mined 832 Bitcoins at an average Bitcoin price of US$28,198 (from CoinMarketCap) compared to the year ended December 31, 2021, where the Company mined 519 Bitcoins at an average price of Bitcoin of US$47,430 (from CoinMarketCap).

Despite the significant drop in Bitcoin prices throughout 2022 from 2021 levels, the Company was able to maintain its revenue on a year over year basis due to the growth of the organization's mining operation (hashrate went from approximately 400 PH/s as of December 31, 2021, to approximately 650 PH/s as of December 31, 2022) and the commencement of revenues associated with various hosting agreements, which offset the decrease in average Bitcoin price mentioned above.

***Cost of Digital Currency Mining***

The Company's cost of sales was $30,987,397 for the year ended December 31, 2022, compared to $13,823,194 for the year ended December 31, 2021.

The overall growth in cost of sales was due to the increase in energy and infrastructure related expenses in both New York and Alabama along with an increase in depreciation and amortization expense. Energy and infrastructure expenses increased by $8.7 million year over year primarily due to the recognition of expense per the Company's hosting agreements of $7.2 million. The addition of incremental miners increased the Company's hashrate from approximately 400 PH/s as of December 31, 2021 to approximately 650 PH/s as of December 31, 2022. Depreciation and amortization expense increased by $7.4 million during the year ended December 31, 2022 as compared to the same period in 2021 as a significant portion of the Company's 10,000 miners purchased in 2021 were placed into service during 2022 along with the accompanying electrical infrastructure.

P a g e \| **9**

**DIGIHOST TECHNOLOGY INC.** 

**Management's Discussion & Analysis** 

**For the year ended December 31, 2022**

***General, Administrative & Other Expenses***

The Company's general and administrative expenses were $21,417,568 for the year ended December 31, 2022, compared to $8,206,372 for the year ended December 31, 2021.

The primary variances from the year ended December 31, 2021, were due to:

● A loss on sale of digital currencies of $11.57 million during 2022, which was incurred when the Company sold digital currency to fund operations and repay the Company's BTC backed loan.

● The loss on the value of digital currency option calls of $1.95 million.

● Impairment losses recognized on Goodwill of $1.26 million and on the Company's data miners of $1.56 million.

● The loss on revaluation of digital currencies of $3.26 million in 2022 ($nil in 2021).

Other income/expense items in the current year include the revaluation of the warrant liabilities which resulted in a gain of $32.01 million, causing an offset to the operating loss and leading to current year net income. In 2021, the Company had minimal sales of digital currency and recognized a revaluation of warrant liabilities gain of only $1.55 million.

**Cash flows**

*Operating Activities*

Cash used by operating activities for the year ended December 31, 2022, was $2,342,899 as compared to cash used by operating activities of $8,859,594 for the year ended December 31, 2021. The difference is primarily attributable to digital assets mined which were liquidated for cash, totaling $15.28 million in 2022, versus $nil in the prior year, which offset other operating activity adjustments in the current year.

*Investing Activities*

 

Cash used in investing activities for the year ended December 31, 2022, was $15,581,038 as compared to $34,724,780 for the year ended December 31, 2021. In the current year, cash of $14,685,038 was used for the purchase of equipment and cash of $623,000 was used for the acquisition of digital currency call options, which were slightly offset by proceeds from the sale of equipment of $795,000. In the prior year, $33,924,780 cash was used for the procurement of equipment.

 

*Financing Activities*

Cash provided by financing activities for the reporting year ended December 31, 2022, was $18,858,844 as compared to $44,468,839 for the year ended December 31, 2021. During 2022, the primary drivers were that the Company received proceeds from a private placement of $8,314,269 and proceeds from a loan payable of $10,000,000. The driver of the cash provided for the year ended December 31, 2021, was proceeds from private placements of $50,218,09 that was slightly offset by repayment of loans payable, lease payments, and repurchase of shares of $5,749,254.

**Liquidity and Financial Position**

As of December 31, 2022, the Company had working capital of $2,874,560, with digital currencies of $2,800,657. The Company commenced earning revenue from digital currency mining in mid-February 2020; however, it has limited operating history, and there can be no assurance that the Company's historical performance will be indicative of its future performance.

P a g e \| **10**

**DIGIHOST TECHNOLOGY INC.** 

**Management's Discussion & Analysis** 

**For the year ended December 31, 2022**

The Company's current working capital position is primarily due to the funds raised from private placements during 2022 and the accumulation of 111 Bitcoin with a fair value approximating $1.8 million as of December 31, 2022. Proceeds from prior placements were primarily used by the Company to acquire property, plant and equipment, make deposits to secure orders of Mining hardware and electrical distribution equipment, and to repay loans payable.

The Company's ability to continue as a going concern is dependent on the Company's ability to efficiently mine and liquidate digital currencies, manage operational expenses, and raise additional funds through debt or equity financing.

**Capital Resources**

The Company's capital management objective is to provide the financial resources that will enable Digihost to maximize the return to its shareholders while also enhancing its cost of capital. In order to achieve this goal, the Company monitors its capital structure and adjusts as required in response to an ever-changing economic environment and the various risks to which the Company is exposed. The Company's approach for attaining this objective is to preserve a flexible capital structure that optimizes the cost of capital at a satisfactory level of risk, to maintain its ability to meet financial obligations as they come due, and to ensure the Company has appropriate financial resources to fund its organic and acquisitive growth.

The Company anticipates that its existing financial resources will be sufficient to put into operation all previously announced acquisitions of Mining hardware. In order to achieve its long-term future business objectives, the Company may need to liquidate or borrow against the Bitcoin that have been accumulated as of the date hereof as well as Bitcoin generated from ongoing operations, which may or may not be possible on commercially attractive terms. The Company presently anticipates that additional financing maybe required to acquire additional power generation facilities in the future in order to meet the Company's objective of obtaining access to an additional 100MW of power by the end of 2024. The Company also anticipates that additional financing will be required to purchase the miners required to utilize its maximum capacity.

Digihost may manage its capital structure by issuing equity, seeking financing through loan products, adjusting capital spending, or disposing of assets.

**Notes Receivable and Related Party Transactions**

***<u>Promissory Notes Receivable</u>***

 ****

In December 2021, the Company entered into a Secured Convertible Promissory Note ("Note") with principal of $800,000. The Note accrues interest at a rate of 6% per annum, with interest payments every calendar quarter. The Note is convertible at the Company's option into Series C Preferred Stock of the issuer. If the Note is not converted into shares by the Company, all unpaid and accrued interest is due on December 21, 2026. The Note is secured by the assets of the issuer.

 ****

***<u>Related Party Transactions</u>***

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control. Related parties include key management personnel and may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Related party transactions are recorded at the exchange amount, being the amount agreed to between the related parties.

P a g e \| **11**

**DIGIHOST TECHNOLOGY INC.** 

**Management's Discussion & Analysis** 

**For the year ended December 31, 2022**

Key management personnel are those persons having authority and responsibility for planning, directing, and controlling the activities of the Company, directly or indirectly. Key management personnel include the Company's executive officers and members of the Board of Directors.

Remuneration of key management personnel of the Company was as follows:

---

| | | |
|:---|:---|:---|
|  | **Year ended**<br> **December 31,<br> 2022** | **Year ended**<br> **December 31, <br> 2021** |
| Professional fees <sup>(1)</sup> | 307534 | 91249 |
| Salaries <sup>(1)</sup> | 833717 | 144231 |
| Share based compensation <sup>(2)</sup> | 3092012 | 6016173 |
| **Total** | $**4233263** | $**6251653** |

---

<sup>(1)</sup> Represents the professional fees and salaries paid to officers and directors.

<sup>(2)</sup> Represents the share-based compensation for officers and directors.

**Share Capital**

On October 26, 2021, the Company announced it would effect the consolidation of its outstanding subordinate voting shares and proportionate voting shares of the Company on the basis of three (3) pre-consolidation shares for every one (1) post-consolidation share in order to facilitate a listing of its subordinate voting shares on the Nasdaq. The subordinate voting shares began trading on the TSX Venture Exchange ("TSXV") on a consolidated basis and with a new CUSIP number on October 28, 2021. As a result of the Consolidation, the outstanding subordinate voting shares of the Company were reduced to approximately 25,029,610 Shares.

As at December 31, 2022, the Company has 27,842,204 subordinate voting shares outstanding.

As at December 31, 2022, the Company had issued 1,191,834 stock options, 1,439,250 restricted share units and 1,025,816 warrants.

**Off-Balance Sheet Arrangements**

As at the date of this MD&A, the Company did not have any off-balance sheet arrangements.

**Adoption of accounting policies**

(a) Basis of consolidation

These consolidated financial statements include the accounts of Digihost and its wholly owned subsidiary: Digihost International, Inc. Subsidiaries are consolidated from the date of acquisition, being the date on which the Company obtains control, and continues to be consolidated until the date that such control ceases. Control is achieved when an investor has power over an investee to direct its activities, exposure to variable returns from an investee, and the ability to use the power to affect the investor's returns. All inter-company transactions and balances have been eliminated upon consolidation.

P a g e \| **12**

**DIGIHOST TECHNOLOGY INC.** 

**Management's Discussion & Analysis** 

**For the year ended December 31, 2022**

(b) Functional and presentation currency

These financial statements are presented in United States Dollars. The functional currency of Digihost is the Canadian dollar and the functional currency of Digihost International, Inc. is the United States Dollars. All financial information is expressed in United States Dollars, unless otherwise stated.

(c) Foreign currency translation

Monetary assets and liabilities denominated in foreign currencies are translated to United States dollars at exchange rates in effect at the reporting date. Non-monetary assets and liabilities are translated at historical exchange rates at the respective transaction dates. Revenue and expenses are translated at the rate of exchange at each transaction date. Gains or losses on translation are included in foreign exchange expense.

The results and financial position of an entity whose functional currency are translated into a different presentation currency are treated as follows:

● assets and liabilities are translated at the closing rate at the reporting date;

● income and expenses for each income statement are translated at average exchange rates at the dates of the period; and

● all resulting exchange differences are recognized in other comprehensive income as cumulative translation adjustments.

(d) Revenue recognition

The Company recognizes revenue from the provision of transaction verification services within digital currency networks, commonly termed "cryptocurrency mining". As consideration for these services, the Company receives digital currency from each specific cryptocurrency mining pool in which it participates. Revenue is measured based on the fair value of the digital currencies received. The fair value is determined using the spot price of the digital currencies on the date of receipt. Digital currencies are considered earned on the completion and addition of a block to the blockchain, at which time the economic benefit is received and can be reliably measured.

(e) Digital currencies

Digital currencies consist of Bitcoin and Ethereum. Digital currencies 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 currencies 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 currencies at the end of each quarter. 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. Gains and losses on digital currencies sold between revaluation dates are included in profit or loss.

P a g e \| **13**

**DIGIHOST TECHNOLOGY INC.** 

**Management's Discussion & Analysis** 

**For the year ended December 31, 2022**

Digital currencies are measured at fair value using the quoted price on CoinMarketCap. CoinMarketCap is a pricing aggregator, as the principal market or most advantageous market is not always known. The Company believes any price difference amongst the principal market and an aggregated price to be immaterial. 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.

(f) Property, plant, and equipment

Details as to the Company's policies for property, plant and equipment are as follows:

---

| | | | |
|:---|:---|:---|:---|
| <br>**Asset** | &nbsp;&nbsp;&nbsp;**Measurement**<br> **Basis** | &nbsp;&nbsp;&nbsp;&nbsp;**Amortization**<br> **Method** | **Amortization**<br> **Rate** |
| Data miners | Cost | Straight-line | 12 - 36 months |
| Equipment | Cost | Straight-line | 36 - 120 months |
| Leasehold improvement | Cost | Straight-line | 120 months |

---

Property, plant, and equipment are recorded at cost less accumulated depreciation. Cost includes all expenditures incurred to bring assets to the location and condition necessary for them to be operated in the manner intended by management.

Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any replaced parts is derecognized. All other repairs and maintenance are charged to profit or loss during the fiscal period in which they are incurred.

Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognized in profit or loss.

(g) Intangible assets

Intangible assets that qualify for separate recognition are recognized as intangible assets at their fair values. Right of use of an electric power facility is depreciated over 13 years.

(h) Impairment of non-financial assets

The Company reviews the carrying amounts of its non-financial assets, including property, plant, and equipment, when events or changes in circumstances indicate the assets may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. Assets carried at fair value, such as digital currencies, are excluded from impairment analysis.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows to be derived from continuing use of the asset or cash generating unit are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Fair value less costs of disposal is the amount obtainable from the sale of an asset or cash generating unit in an arm's length transaction between knowledgeable, willing parties, less the cost of disposal. When a binding sale agreement is not available, fair value less costs of disposal is estimated using a discounted cash flow approach with inputs and assumptions consistent with those of a market participant. If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash generating unit is reduced to its recoverable amount. An impairment loss is recognized immediately in net income. Where an impairment loss subsequently reverses, the carrying amount of the asset or cash generating unit is increased to the revised estimate of its recoverable amount, such that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized.

P a g e \| **14**

**DIGIHOST TECHNOLOGY INC.** 

**Management's Discussion & Analysis** 

**For the year ended December 31, 2022**

(i) Leases and right-of-use assets

All leases are accounted for by recognizing a right-of-use asset and a lease liability except for:

● Leases of low value assets; and

● Leases with a duration of twelve months or less.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by the incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.

On initial recognition, the carrying value of the lease liability also includes:

● Amounts expected to be payable under any residual value guarantee;

● The exercise price of any purchase option granted if it is reasonably certain to assess that option;

● Any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.

Right-of-use assets are initially measured at cost, which includes the initial amount of the lease liability, reduced for any lease incentives received, and increased for:

● Lease payments made at or before commencement of the lease;

● Initial direct costs incurred; and

● The amount of any provision recognised where the Company is contractually required to dismantle, remove, or restore the leased asset.

Lease liabilities, on initial measurement, increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made.

Right-of-use assets are amortized on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if this is judged to be shorter than the lease term.

When the Company revises its estimate of the term of any lease, it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted at the same discount rate that applied on lease commencement. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term or recorded in profit or loss if the right-of-use asset is reduced to zero.

(j) Goodwill

The Company measures goodwill as the fair value of the cost of the acquisition less the fair value of the identifiable net assets acquired, all measured as of the acquisition date. Goodwill is carried at cost less accumulated impairment losses.

(k) Share capital and equity

Share capital represents the amount received on the issue of shares, less issuance costs, net of any underlying income tax benefit from these issuance costs. When warrants are issued in connection with shares, the Company uses the residual method for allocating fair value to the shares and then to warrants.

Contributed surplus include the value of outstanding warrants and stock options. When warrants and stock options are exercised, the related compensation cost and value are transferred to share capital.

P a g e \| **15**

**DIGIHOST TECHNOLOGY INC.** 

**Management's Discussion & Analysis** 

**For the year ended December 31, 2022**

Deficits include all current and prior year losses.

Digital currency revaluation reserve includes gains and losses from the revaluation of digital currencies, net of tax.

Cumulative translation reserve includes foreign currency translation differences arising from the translation of financial statements of foreign entities into United States dollars.

(l) Share-based compensation

The granting of stock options to employees, officers, directors, or consultants of the Company requires the recognition of share-based compensation expense with a corresponding increase in contributed surplus in shareholders' equity. The fair value of stock options that vest immediately are recorded as share-based compensation expense at the date of the grant. The expense for stock options that vest over time is recorded over the vesting period using the graded method, which incorporates management's estimate of the stock options that are not expected to vest. For stock options where vesting is subject to the completion of performance milestones, the estimate for completion of the milestone is reviewed at each reporting date for any change in the estimated vesting date, and to the extent there is a material change in the vesting date estimate, the amortization to be recognized is recalculated for the new timeline estimate and adjusted on a prospective basis in the current period. The effect of a change in the number of stock options expected to vest is a change in an estimate and the cumulative effect of the change is recognized in the period when the change occurs. On exercise of a stock option, the consideration received, and the estimated fair value previously recorded in contributed surplus is recorded as an increase in share capital.

Stock options awarded to consultants are measured based on the fair value of the goods and services received unless that fair value cannot be estimated reliably. If the fair value of the goods and services cannot be reliably measured, then the fair value of the equity instruments granted is used to recognize the expense.

**Critical accounting judgements, estimates and assumptions**

The preparation of these financial statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. These financial statements include estimates that, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions, and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Significant assumptions about the future that management has made that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

**<u>Significant judgements</u>**

(i) Income from digital currency mining

The Company recognizes income from digital currency mining from the provision of transaction verification services within digital currency networks, commonly termed "cryptocurrency mining". As consideration for these services, the Company receives digital currency from each specific network in which it participates ("coins"). Income from digital currency mining is measured based on the fair value of the coins received. The fair value is determined using the spot price of the coin on the date of receipt. The coins are recorded on the statement of financial position, as digital currencies, at their fair value less costs to sell and re- measured at each reporting date. Revaluation gains or losses, as well as gains or losses on the sale of coins for traditional (fiat) currencies are included in profit or loss in accordance with the Company's treatment of its digital currencies as a traded commodity.

P a g e \| **16**

**DIGIHOST TECHNOLOGY INC.** 

**Management's Discussion & Analysis** 

**For the year ended December 31, 2022**

There is currently no specific definitive guidance in IFRS or alternative accounting frameworks for the accounting for the mining and strategic selling of digital currencies and management has exercised significant judgement in determining appropriate accounting treatment for the recognition of income from digital currency mining for mining of digital currencies. Management has examined various factors surrounding the substance of the Company's operations, including the stage of completion being the completion and addition of a block to a blockchain and the reliability of the measurement of the digital currency received.

(ii) Going concern

The assessment of the Company's ability to continue as a going concern involves judgment regarding future funding available for its operations and working capital requirements as discussed in note 1.

(iii) Leases – incremental borrowing rate

Judgment is applied when determining the incremental borrowing rate used to measure the lease liability of each lease contract, including an estimate of the asset-specific security impact. The incremental borrowing rate should reflect the interest rate the Company would pay to borrow at a similar term and with similar security.

(iv) Income, value added, withholding and other taxes

The Company is subject to income, value added, withholding and other taxes. Significant judgment is required in determining the Company's provisions for taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The determination of the Company's income, value added, withholding and other tax liabilities requires interpretation of complex laws and regulations. The Company's interpretation of taxation law as applied to transactions and activities may not coincide with the interpretation of the tax authorities. All tax related filings are subject to government audit and potential reassessment subsequent to the financial statement reporting period. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the tax related accruals and deferred income tax provisions in the period in which such determination is made.

**<u>Significant estimates</u>**

(i) Determination of asset and liability fair values and allocation
of purchase consideration

Significant business combinations require judgements and estimates to be made at the date of acquisition in relation to determining the relative fair value of the allocation of the purchase consideration over the fair value of the assets. The information necessary to measure the fair values as at the acquisition date of assets acquired requires management to make certain judgements and estimates about future events, including but not limited to availability of hardware and expertise, future production opportunities, future digital currency prices and future operating costs.

P a g e \| **17**

**DIGIHOST TECHNOLOGY INC.** 

**Management's Discussion & Analysis** 

**For the year ended December 31, 2022**

(ii) Useful lives of property, plant, and equipment

Depreciation of data miners and equipment are an estimate of its expected life. In order to determine the useful life of computing equipment, assumptions are required about a range of computing industry market and economic factors, including required hashrates, technological changes, availability of hardware and other inputs, and production costs.

(iii) Digital currency valuation

Digital currencies consist of cryptocurrency denominated assets (note 4) and are included in current assets. Digital currencies are carried at their fair value determined by the spot rate less costs to sell. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company's earnings and financial position.

(iv) Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the recoverable amount of the CGU. Such recoverable amount corresponds, for the purpose of impairment assessment, to the higher of the value in use or the fair value less costs of disposal of the CGU to which goodwill has been allocated. The value in use calculation requires management to estimate future cash flows expected to arise from the CGU and a suitable discount rate in order to calculate present value. The key assumptions required for the value in use estimation are described in note 8 of the year-end financial statements.

For the value in use approach, the values assigned to key assumptions reflect past experience and external sources of information that are deemed accurate and reliable. The value in use is categorized as Level 3 in the fair value hierarchy described under IFRS 13, Fair Value Measurement, as one or more key assumption used is based on unobservable data requiring the use of judgement.

**Disclosure of Internal Controls**

Management has established processes to provide it with sufficient knowledge to support representations that it has exercised reasonable diligence to ensure that (i) the consolidated financial statements do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of and for the periods presented by the financial statements, and (ii) the consolidated financial statements fairly present in all material respects the financial condition, results of operations and cash flow of the Company, as of the date of and for the periods presented.

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 - Certification of Disclosure in Issuers' Annual and Interim Filings ("NI 52-109"), the Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures ("DC&P") and internal control over financial reporting ("ICFR"), as defined in NI 52-109. In particular, the certifying officers filing such certificate are not making any representations relating to the establishment and maintenance of:

&nbsp;&nbsp;&nbsp;&nbsp;(i) controls and other procedures designed to provide reasonable
assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted
under securities legislation is recorded, processed, summarized, and reported within the time periods specified in securities legislation;
and

&nbsp;&nbsp;&nbsp;&nbsp;(ii) a process to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with the issuer's
GAAP (IFRS).

The Company's certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in the certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost-effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

P a g e \| **18**

**DIGIHOST TECHNOLOGY INC.** 

**Management's Discussion & Analysis** 

**For the year ended December 31, 2022**

**Risk Factors**

An investment in the securities of the Company is highly speculative and involves numerous and significant risks. Such investment should be undertaken only by investors whose financial resources are sufficient to enable them to assume these risks and who have no need for immediate liquidity in their investment. Prospective investors should carefully consider the risk factors that have affected, and which in the future are reasonably expected to affect, the Company and its financial position. Please refer to the section entitled "Risk Factors" in the Company's Annual Information Form for the fiscal year ended December 31, 2021, dated March 28, 2022 available on SEDAR at www.sedar.com and the Risk Factors contained the Company's various filings on SEDAR.

**Cautionary Note Regarding Forward-Looking Information**

This MD&A contains certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as "forward-looking statements"). These statements relate to future events or the Company's future performance. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates" or "believes", or variations of, or the negatives of, such words and phrases, or statements that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those anticipated in such forward-looking statements. The forward-looking statements in this MD&A speak only as of the date of this MD&A or as of the date specified in such statement. The following table outlines certain significant forward-looking statements contained in this MD&A and provides the material assumptions used to develop such forward-looking statements and material risk factors that could cause actual results to differ materially from the forward-looking statements. In particular, this MD&A contains forward-looking statements pertaining to the following:

● the impact of the Bitcoin Halving in May 2024 on the price of BTC and the normalization after the Bitcoin Halving to pre-Bitcoin Halving profitability levels;

● future debt levels, financial capacity, liquidity, and capital resources;

● anticipated future sources of funds to meet working capital requirements;

● future capital expenditures and contractual commitments;

● expectations respecting future financial results;

● expectations regarding benefits of certain transactions and capital investments;

● the Company's objectives, strategies, and competitive strengths and growth strategy, including the ability to develop and build out the infrastructure in North Carolina;

● expectations with respect to future opportunities;

● expectations with respect to the Company's financial position;

● the Company's capital expenditure programs and future capital requirements;

● capital resources and the Company's ability to raise capital; and

● industry conditions pertaining to the cryptocurrency industry;

● the other factors discussed under "*Risk Factors* ".

This list of factors should not be construed as exhaustive.

**Additional Information** 

Additional information concerning the Company is available on SEDAR at **www.sedar.com**.

P a g e \| **19**

## Exhibit 99.4

**Exhibit 99.4**

**FORM 52-109F1**

**CERTIFICATION OF ANNUAL FILINGS**

**FULL CERTIFICATE**

I, **Michel Amar, Chief Executive Officer** of **Digihost Technology Inc.,** certify the following:

1. **Review:** I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the "annual filings") of **Digihost Technology Inc.** (the "issuer") for the financial year ended **December 31, 2022.**

2. **No misrepresentations:** Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.

3. **Fair presentation:** Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

4. **Responsibility:** The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.

5. **Design:** Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the financial year end

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. designed DC&P, or caused it to be designed under our
supervision, to provide reasonable assurance that

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I. material information relating to the issuer is made known
to us by others, particularly during the period in which the annual filings are being prepared; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;II. information required to be disclosed by the issuer in its
annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized
and reported within the time periods specified in securities legislation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. designed ICFR, or caused it to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with the issuer's GAAP.

5.1 **Control framework:** The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is the **Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).**

5.2 **ICFR – material weakness relating to design:** N/A

5.3 **Limitation on scope of design:** N/A

6. **Evaluation:** The issuer's other certifying officer(s) and I have

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. evaluated, or caused to be evaluated under our supervision,
the effectiveness of the issuer's DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions
about the effectiveness of DC&P at the financial year end based on that evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. evaluated, or caused to be evaluated under our supervision,
the effectiveness of the issuer's ICFR at the financial year end and the issuer has disclosed in its annual MD&A

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I. our conclusions about the effectiveness of ICFR at the financial
year end based on that evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;II. for each material weakness relating to operation existing
at the financial year end

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. a description of the material weakness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. the impact of the material weakness on the issuer's
financial reporting and its ICFR; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. the issuer's current plans, if any, or any actions
already undertaken, for remediating the material weakness.

7. **Reporting changes in ICFR:** The issuer has disclosed in its annual MD&A any change in the issuer's ICFR that occurred during the period beginning on **October 1, 2022** and ended on **December 31, 2022** that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

8. **Reporting to the issuer's auditors and board of directors or audit committee:** The issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer's auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer's ICFR.

Date: March 31, 2023

---

| |
|:---|
| */s/ "Michel Amar"* |
| **Michel Amar** |
| **Chief Executive Officer** |

---

## Exhibit 99.5

**Exhibit 99.5**

**FORM 52-109F1**

**CERTIFICATION OF ANNUAL FILINGS**

**FULL CERTIFICATE**

I, **Paul Ciullo, Chief Financial Officer** of **Digihost Technology Inc.,** certify the following:

1. **Review:** I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the "annual filings") of **Digihost Technology Inc.** (the "issuer") for the financial year ended **December 31, 2022.**

2. **No misrepresentations:** Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.

3. **Fair presentation:** Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

4. **Responsibility:** The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.

5. **Design:** Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the financial year end

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I. material information relating to the issuer is made known
to us by others, particularly during the period in which the annual filings are being prepared; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;II. information required to be disclosed by the issuer in its
annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized
and reported within the time periods specified in securities legislation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

5.1 **Control framework:** The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is the **Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).**

5.2 **ICFR – material weakness relating to design:** N/A

5.3 **Limitation on scope of design:** N/A

6. **Evaluation:** The issuer's other certifying officer(s) and I have

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer's DC&P at the financial year
end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end
based on that evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer's ICFR at the financial year end
and the issuer has disclosed in its annual MD&A

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I. our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;II. for each material weakness relating to operation existing at the financial year end

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. a description of the material weakness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. the impact of the material weakness on the issuer's financial
reporting and its ICFR; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. the issuer's current plans, if any, or any actions already undertaken, for remediating the material weakness.

7. **Reporting changes in ICFR:** The issuer has disclosed in its annual MD&A any change in the issuer's ICFR that occurred during the period beginning on **October 1, 2022** and ended on **December 31, 2022** that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

8. **Reporting to the issuer's auditors and board of directors or audit committee:** The issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer's auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer's ICFR.

---

| |
|:---|
| Date: March 31, 2023 |
| *<u>/s/ "Paul Ciullo"</u>* |
| **Paul Ciullo** |
| **Chief Financial Officer** |

---

## Exhibit 99.6

**Exhibit 99.6**

![](ex99-6_001.jpg)

---

| | |
|:---|:---|
| <br>**Consent of Independent Auditor** | **Raymond Chabot <br> Grant Thornton L.L.P.**<br> Suite 2000<br> National Bank Tower<br> 600 De La Gauchetière Street West<br> Montréal, Quebec<br> H3B 4L8<br>**T** 514-878-2691 |

---

Digihost Technology Inc.

We hereby consent to the incorporation by reference in the Registration Statement on Form F-10 (No. 333-263255) of Digihost Technology Inc. (the "Form F-10") of our report dated March 31, 2023 relating to the consolidated financial statements of Digihost Technology Inc. for the year ended December 31, 2022, which appears in Exhibit 99.2 to Digihost Technology Inc.'s Current Report on Form 6-K (the "Form 6-K").

We also consent to the reference to our firm under the heading "Interests of Experts" in the Annual Information Form included as Exhibit 99.1 to the Form 6-K and incorporated by reference in the Form F-10.

![](ex99-6_002.jpg)

Chartered Professional Accountants

Montréal, Canada

March 31, 2023

---

| | |
|:---|:---|
| Member of Grant Thornton International Ltd | **rcgt.com** |

---