Ionic Digital, Inc. (“Ionic” or the “Company”), a digital infrastructure and cryptocurrency mining company, today announced that its Interim Chief Executive Officer, Anthony McKiernan issued the following letter to Ionic shareholders:
Ionic Digital Shareholders,
It’s been one month since I started as Chief Executive Officer of Ionic Digital Inc. (the “Company”) and I wanted to reach out to our shareholders for the first of what will be periodic communications from me updating you on important matters.
Since the start of my tenure with the Company, I have had an opportunity to strategize with the management team and Board members, as well as to review where the Company sits today, as part of a process to formulate a “day one” plan for progress on several fronts. Starting in December, the Company, with input from its advisors, has undertaken significant changes to certain prior practices and to overhaul its operations to compete more effectively in the Bitcoin mining industry and maximize long-term shareholder value. In addition to these serious and crucial changes, there are several key initiatives that we plan to continue to pursue over the next few months to further enhance long-term shareholder value.
First, the financial audit for FYE 2024 needs to be completed as quickly as possible. The key to any liquidity event(s) for the Company will require a clean audit opinion and market confidence in the Company’s financial position and results. We engaged BDO USA as our financial auditor in October. BDO and our in-house team are well underway in the audit process, which includes the establishment of an infrastructure that we believe would withstand the rigorous regulatory standards of a publicly listed company. This initiative is one of our highest priorities and we are aiming to complete the financial audit by the end of the second quarter 2025.
Second, I am pleased to report that construction on Building 3 at our Cedarvale facility is complete and it will be energized this week. Since mid-December 2024, we have taken steps to fortify our operations, working to ensure our sites are receiving high level supervision to maximize efficiency and miner performance, and focusing on reducing future expenses associated with site management. As previously disclosed, the Company terminated the prior mining management services agreement with Hut 8 Corp. More recently, the Company purchased 15,000 miners in the last two weeks at extremely advantageous rates. The Company anticipates those miners to turn cash flow positive in three months and that those miners will fill remaining shelf capacity and provide replacement support where needed. We are also reviewing all existing contracts and identifying ways to reduce expenses as we approach the one year anniversary of the Company’s emergence as part of the plan of reorganization approved in the Celsius Network bankruptcy process. Additionally, we have recently initiated the application process with ERCOT to increase energy capacity at our Cedarvale facility; the process will likely take up to 2 years.
Third, while the value of Bitcoin has increased and many analysts project positive trends, we are focused on strengthening the Company’s balance sheet. The Company’s goal today is to maximize Bitcoin holdings while also maintaining adequate cash assets to service dollar-based liabilities and hedge against potential fluctuations in Bitcoin prices. It is imperative that we maintain adequate liquidity, implement moderate spot trading, and minimize the risk of forced selling in the face of potential volatility. To that end, we plan to implement hedging strategies commensurate with the strategies utilized by our competitors that are designed to both protect against material downside movement in Bitcoin prices and provide the Company with income growth through additional cash flows. We are also planning for 2025 cash needs including more efficient ways to pay for energy costs and other known operating expenses.
Finally, in addition to our current intention to list publicly, while our primary focus remains on the core business, we are actively exploring future strategic opportunities intended to maximize shareholder value. For example, the Company, among other things, is actively assessing whether to invest in differentiated, complementary lines of business as we consider the many possibilities that are emerging for energy monetization.
Our shareholders expect and deserve up-to-date financial and operational information regarding the Company and its performance. Accordingly, I plan to provide updates on these matters when we have news to report to our shareholders along the way.
As a first step, beginning with month-end January results, we will publish monthly key operating metrics on our website for shareholders to review. As of today, we are holding approximately 2,461 of Bitcoin in treasury, the December average realized hash rate was 8.563 EH/s, and the December Bitcoin mined was 161.65. In 2024, the Company mined 1,851.14 Bitcoin. I look forward to progressing on these initiatives, with a focus on increasing shareholder value and liquidity in 2025.
Sincerely,
Anthony
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