Hut 8, the well-known Canadian Bitcoin mining firm, has received the green light from the Supreme Court of British Columbia to proceed with its eagerly anticipated merger with US Bitcoin (USBTC). According to a report by Cointegraph, this merger, first unveiled in February 2023, is set to give rise to a new publicly traded entity based in the United States, aptly named “New Hut.”
One of the pivotal aspects of this merger is its potential to unlock a staggering 825 megawatts of Bitcoin mining capacity. This capacity is spread across six distinct Bitcoin mining and data Centre facilities, highlighting the scope and ambition of the venture. However, it’s worth noting that the merger’s ultimate closure is contingent upon a few remaining prerequisites, including the crucial approval from USBTC’s shareholders.
Hut 8 is optimistic about finalizing the merger and establishing New Hut before the conclusion of 2023. Furthermore, New Hut has ambitious plans to list its shares on the Nasdaq and Toronto stock exchanges, where they will be traded under the ticker symbol $HUT.
The Pathway to ‘New Hut’
Adding to the excitement surrounding this development, Foundry Digital, a subsidiary of Digital Currency Group specializing in institutional mining and staking, announced a formal partnership with Hut 8 in August 2023. This collaborative effort will see Hut 8 providing essential support for various business initiatives carried out by Foundry through its data centre in Ontario. Remarkably, this partnership has been in effect since 2020, emphasizing the longevity of their mutual interests.
In terms of financial performance, Hut 8 encountered some challenges in the second quarter of 2023. The company’s revenue dipped from $25 million to $19 million, marking a year-over-year decline of 56%. This drop was in stark contrast to the same period the previous year when the company reported revenue totalling $44 million. Additionally, Hut 8 mined a total of only 399 Bitcoins during the quarter, marking a substantial decrease of 58% from the previous year.
Hut 8’s profit from mining operations also took a hit, plummeting to $3.2 million from $14.9 million in the second quarter of the preceding year. As of June 2023, the company’s installed hash rate stood at 2.6 exahashes per second (EH/s). A report by Finance Magnates attributed these challenges to the suspension of operations at the North Bay facility and electrical issues encountered at the Drumheller facility.
Hut 8’s CEO, Jaime Leverton, commented on the developments, stating, “We continued to build momentum toward closing our transaction with USBTC by progressing toward receiving regulatory approvals to proceed and improving our projected post-merger self-mining capacity to 7.5 EH/s.”
Notably, Hut 8 is experiencing a surging demand for artificial intelligence (AI) and high-performance computing (HPC). This demand coincides with the relocation of 6,400 mining rigs from its dormant North Bay site in Ontario, Canada. The decision to move these rigs follows a protracted legal dispute with third-party energy supplier Validus Power, resulting in the suspension of operations at the North Bay facility since November 2022.
In a move to fortify its financial position, Hut 8 recently secured a credit facility worth $50 million from Coinbase Credit, a subsidiary of the renowned U.S.-based cryptocurrency exchange Coinbase. This credit facility, obtained in June, is intended to bolster Hut 8’s general corporate activities, showcasing the company’s commitment to navigating the evolving cryptocurrency landscape.