Hut 8’s Revenue Tumbles 46% amid Bitcoin’s Rising Challenges

15 November 2023

in Mining

Reading Time: 5 mins read

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The
publicly-listed crypto mining company Hut 8 Mining Corp. (TSX: HUT) has
reported a revenue decline for the third quarter of 2023. This resulted in
nearly doubling the net loss from Q3 2022 and a stock price fall of over 11% on
the Canadian stock exchange. The company attributes the weaker performance to
operational issues and the increasing difficulty of mining Bitcoins (BTC).

Hut 8
Mining Corp. reported a 46% decrease in quarterly revenue, totaling CAD 17.0
million, which includes CAD 4.5 million from its high-performance computing
business. The company holds 9,366 self-mined Bitcoin , either in custody or
pledged as collateral, as of 30 September.

The
company’s financial overview reveals a net loss of CAD 53.6 million for the
quarter, with mining profit sitting at CAD 3.8 million, a decrease from the
previous year’s and quarter’s figures.

During this
period, the firm faced operational challenges that significantly reduced
Bitcoin mining output, primarily due to increased network difficulties,
operational suspensions, and electrical issues at one of its facilities.

“Throughout
the third quarter, we weathered continued pressure on our mining business,”
Shenif Visram, the CFO of Hut 8, commented. “We have continued to focus on
prudently managing our costs, which partially offset our mining results, while
actively seeking ways to grow the business.”

Hut 8’s
report further detailed operational setbacks, including the suspension of GPU
mining activities due to changes in the Ethereum network’s consensus mechanism.

This week, another publicly listed miner, Argo Blockchain, also presented worser than expected Q3
results. The net loss for the reported period came in at $9.9 million.

Forward-Looking Strategy
and USBTC Merger

Despite
these challenges, the company has implemented remedial measures, such as custom
firmware across miners and increased repair staff, to mitigate the impact and
optimize operations. Moreover, Hut 8 is progressing on the proposed merger with
US Bitcoin Corp (USBTC) to create the New Hut.

“Now
that the SEC has declared New Hut’s Registration Statement effective, we are
working hard to close this transaction before the end of the month,” said
Jaime Leverton, the CEO of Hut 8.

The merger
with USBTC will enhance New Hut’s mining operations across various regions and
energy markets, leveraging specialized software for real-time efficiency. It
will also expand Hut 8’s revenue streams through USBTC’s hosting and managed
services.

Hut 8’s
strategy moving forward includes a focus on energy pricing certainty and
revenue-generating potential through its bid for natural gas facilities. The
company’s installed hash rate remains stable at 2.6 EH/s, excluding their North
Bay facility.

In August, Hut 8 was among five mining companies that collectively lost $2.8 billion in market valuation in response to sharp declines in BTC prices. The company’s market cap shrank to $770 million in August, compared to $1.21 billion in July.

Hut 8’s
report further detailed operational setbacks, including the suspension of GPU
mining activities due to changes in the Ethereum network’s consensus mechanism.

This week, another publicly listed miner, Argo Blockchain, also presented worser than expected Q3
results. The net loss for the reported period came in at $9.9 million.

Forward-Looking Strategy
and USBTC Merger

“Now
that the SEC has declared New Hut’s Registration Statement effective, we are
working hard to close this transaction before the end of the month,” said
Jaime Leverton, the CEO of Hut 8.