As a seasoned analyst with extensive experience in the cryptocurrency market, I find this move by Hut 8 to be strategically sound and potentially highly profitable. The hosting agreement with Bitmain presents a unique opportunity for Hut 8 to bolster its self-mining hash rate significantly while minimizing the impact of Bitcoin price volatility.
On September 19th, Hut 8 disclosed a significant hosting partnership with Bitmain, targeting an annual revenue of around $125 million.
According to H.C. Wainwright analysts, this move is seen as a positive one because the management is now taking aggressive actions and planning a significant transaction. Under the terms of the agreement, Hut 8 will install up to 15 exahashes per second of Bitmain’s U3S21EXPH ASIC miners by Q2 2025 at their new Texas facility, as reported in an H.C. Wainwright announcement distributed to crypto.news.
Mike Colonnese, an analyst specializing in cryptocurrency at H.C. Wainwright, predicts that this move could significantly boost Hut 8’s self-mined hash rate from approximately 4.7 EH/s to a strong 19.7 EH/s. This increase is expected to solidify the company’s standing within the market.
Colonnese emphasized that the upcoming generation of miners, equipped with direct liquid cooling, is projected to increase computational power threefold compared to current models, delivering a substantial improvement in efficiency.
Under the terms of the contract, Hut 8 has the chance to buy every activated mining rig within half a year at a fair market rate of $21 per terahash. This provision enables the corporation to expand its self-mining activities by acquiring more equipment.
Through this distinctive hosting agreement and miner acquisition setup, Hut enjoys three primary advantages:
H.C. Wainwright analysts
Stable revenues
This partnership provides Hut 8 with stable, recurring revenues from Bitmain while mitigating Bitcoin (BTC) price volatility.
Furthermore, the tailor-made data center architecture, specifically engineered for superior computing, can accommodate up to 180 kilowatts per rack. This setup promotes operational efficiencies and future financial benefits. With a projected gross margin of 57% from this agreement, Hut 8 is well-positioned to boost profitability, even amidst the volatile Bitcoin market prices.
After the announcement, Hut 8’s shares increased by 3.7%. Market analysts anticipate additional growth for the company once its expansion is finalized.
The analysts once again recommended buying this stock, setting a predicted price of $13.50. They emphasized that the company has sufficient resources – a cash reserve of $175.5 million and Bitcoin holdings worth around $558.2 million (9,105 BTC) – to finance its expansion independently.
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2024-09-20 16:38