Hut 8 endures Q2 challenges, but ‘bullish on a diversified strategy’

Canadian company to focus on growing its high-performance cloud computing business after signing five-year deal with Interior Health

article-image

rafapress/Shutterstock modified by Blockworks

share

Hut 8’s year-over-year revenue and bitcoin production plummeted during Q2 2023. Various challenges ahead of its merger with US Bitcoin Corp appear to have influenced the decline.

The Canadian-based company’s revenue was $19.1 million CAD ($14.2 million USD) during the second quarter, company executives said Monday — essentially flat from the first quarter and down from $43.8 million CAD ($32.5 million USD) in the second quarter of 2022. 

The number of bitcoin Hut 8 mined last quarter was also down significantly year over year, decreasing by 58% to 399 BTC. The company had mined 475 BTC during the first three months of 2023.

Electrical problems at its Drumheller facility contributed to the decrease, with the site currently operating at only 20% of its installed hash rate.

“The electrical issues at the Drumheller site have been compounded by high energy rates, which further increased curtailment at the site,” Hut 8 CEO Jaime Leverton said during the company’s earnings call Monday. 

Hut 8 is working on repairs, including by implementing firmware across all miner models designed to lower the power supply’s maximum output voltage, executives noted.

The company’s stock price was down about 7% on the day, as of 11 am ET.

Diversification key ahead of halving 

Hut 8’s installed hash rate stayed flat quarter over quarter at 2.6 exahash per second (EH/s), as of June 30. The company expects its self-mining capacity to hit 7.5 EH/s after the close of its merger with US Bitcoin Corp — a deal first revealed in February.

The transaction is expected to close by Sept. 30. 

But Leverton said in a statement that Hut 8 is “not here to simply chase exahash.” She added during the Monday earnings call that the company continues to diversify its business — a strategy she said is especially important before the next bitcoin halving slated for April

The CEO noted, for example, the company’s foray into the high-performance computing (HPC) space by buying wireless connectivity company TerraGo in January 2022. US Bitcoin Corp. offers fiat-based revenue streams like hosting and managed infrastructure operations, Leverton added.

“We’re very much bullish on a diversified strategy, but I think across our space you’re going to just continue to see miners evolve their businesses in different ways,” she said. 

Read more: Bitcoin miners seek revenue with AI, high-performance computing 

Hut 8’s HPC operations generated $4.2 million CAD ($3.1 million USD) of revenue during the second quarter — down from $4.5 million ($3.3 million USD) in the first quarter and from $4.7 million ($3.5 million USD) during the year-ago quarter.

The slight decline in revenue from this segment reflected the discontinuation of certain low-margin products, as well as “customer churn.” 

Revenue from Hut 8’s five-year agreement with Interior Health — signed in June — will start being seen in the fourth quarter, executives said. 

The company has roughly one megawatt of data center capacity and existing infrastructure available to meet customers’ artificial intelligence and other high-performance computing needs, according to Chief Financial Shenif Visram.  

Hut 8 still looking to HODL

While Hut 8 mined 399 BTC during the quarter, it sold 396 bitcoins. Its stack, thus, increased — albeit slightly — from 9,133 BTC to 9,136 BTC. 

Leverton noted that the company has not sold any BTC it mined before 2023. 

“This approach was very intentional,” she said on the call. We remain very bullish on bitcoin, are committed to our treasury strategy and continue to believe that this is a powerful differentiator for us.”   

Hut 8 secured a $50 million credit facility with lender Coinbase Credit in June — a deal designed to help it keep as much bitcoin ahead of the next halving.

“We have one of the largest self-mined bitcoin stacks of any publicly traded company, and this credit facility allows us to maintain our HODL strategy while giving us financial flexibility,” a Hut 8 spokesperson told Blockworks at the time.


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 On the Margin newsletter.

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

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

AERODROME TEMPLATE.png

Research

Aerodrome is a "MetaDEX" that combines elements of various DEX primitives such as Uniswap V2 and V3, Curve, Convex, and Votium. Since its launch on Base, it has become the largest protocol by TVL with more than $495M in value locked, doubling Uniswap's Base deployment.

article-image

Also, a look into how the highly-debated SAB 121 could end up shaking out for crypto custodians

article-image

Vance, an Ohio Republican, is largely seen as crypto-friendly

article-image

Plus, all the world is green as prices across the crypto space rally, with solana reaching a nearly two-week high

article-image

Investors add to crypto positions after “turnaround in sentiment due to lower-than-expected CPI,” CoinShares research head says

article-image

Plus, Ethereum is in the midst of a vibecession

article-image

Also, former Valkyrie CEO lands new leadership role at Canadian investment firm Cypherpunk Holdings