Bitcoin miner Hut 8 doubles down on diversification, discipline around halving

Hut 8 looks to deploy its large stack of bitcoin holdings with “discipline” heading into the bitcoin halving while further diversifying its revenue streams, the company’s chief executive said.

The company, which completed a merger of equals with US Bitcoin Corp last year, tallied $60.6 million in revenue during the second half of 2023. Net income was $6.2 million over that span.

Nearly 70% of that revenue comes from crypto mining, CEO Asher Genoot said during the company’s earnings call Thursday.

But Hut 8 seeks to further diversify its revenue streams across its managed services business, the CEO noted — as well as boost its standing in the high-performance computing (HPC) and AI realms.

The company jumped into the HPC space by buying wireless connectivity company TerraGo in January 2022. It signed an agreement last year to offer colocation HPC services to Canadian health authority Interior Health.

Newsletter

Subscribe to Blockworks Daily

It is not the only one looking into the segment. Hive Digital Technologies rebranded last July as part of a pivot to HPC. Core Scientific said earlier this month it would lease up to 16 megawatts of capacity in its Austin data center to cloud provider CoreWeave.

Hut 8’s HPC business is “sub-scale today,” Genoot acknowledged. He added that the HPC business will need more investment to be equipped to handle AI machines.

“But we are excited about that business because we see it as a foundation to be able to grow, especially when you look at GPUs, AI and data centers and look at the different parts of the value chain in that ecosystem,” he said on the call.

Seeking out growth, with discipline

Hut 8 held 9,110 bitcoin (BTC), as of Feb. 29 — valued at roughly $650 million Thursday morning.

The miner is set to use its bitcoin reserves to take advantage of growth opportunities around the Bitcoin halving — expected on or around April 20. At that point per-block mining rewards are set to drop from 6.25 BTC to 3.125 BTC, putting financial pressure on the segment’s participants.

Hut 8 is considering various M&A opportunities like buying sites and properties, as well as machine purchases. But Genoot previously told Blockworks that Hut 8 would not seek out growth at all costs — adding that it would look to not overpay for sites, for example, when possible to develop its infrastructure for less.

Executives noted during the Thursday call that it would be closely monitoring the prices of mining machines, adding the company may choose to wait until after the halving, or when newer-generation machines are available.

Similarly, Core Scientific CEO Adam Sullivan recently told Blockworks his company would look to buy machines — at lower prices — from struggling miners unable to afford parts of their existing orders.

It is also set to continue nixing inefficiencies, like retiring old machines — as it did upon shuttering operations at its Drumheller facility in Alberta, Canada earlier this month.

“You’ll see us continuing to be creative in how we maximize the value of every machine, whether that is done at the end of life, finding a better home for them in terms of generating the most amount of profit or under-clocking a certain percentage of them to increase efficiency,” Genoot said.

Hut 8’s stock price was up about 21% on the day, as of 12 pm ET Thursday.

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.