A New Bitcoin Mining Giant Prepares to Enter the Fray

By Mat Di Salvo

Major Bitcoin miners Hut 8 Mining and U.S. Bitcoin Corp are set to merge to create a North American crypto mining giant. 

If all goes according to plan, the U.S.-domiciled company—named Hut 8 Corp.—will have a market capitalization of $990 million and shareholders will have equal ownership of the company’s stock. 

As first reported by TheMinerMag, its new hashrate of 7.5 EH/s will make it one of the biggest public Bitcoin miners in North America, according to a U.S. Securities and Exchange Commission filing. Marathon Digital (MARA) is still far and away the most dominant with 23 EH/s of installed capacity. But the post-merger company will be closer in size to Riot Blockchain (RIOT), which has 10.5 EH/s capacity.

“Hashrate” refers to the computational power of the network. Each hash represents a “guess” at a cryptographic code. The miner whose rig correctly guesses it wins the right to verify a block worth of transactions and add it to the blockchain, thereby collecting a block reward. So having a higher hashrate means more chances to collect those rewards. One exahash is equal to one quintillion hashes.

Bitcoin miners were recently hit hard by the crypto winter. A dramatic drop in the price of the largest digital asset from its $69,044 November 2021 all-time high meant some mining operations were struggling to make profit and had to flog their crypto reserves or shut down completely. 

At one point, publicly traded Bitcoin miners, Marathon Digital and Riot Blockchain, had to sell more Bitcoin than they produced. Other companies closed their doors completely. 

But things are on-the-up: The price of Bitcoin has surged this year, outpacing the increases in difficulty, meaning more mining companies could keep the lights on and make profit. Hut 8 Mining is one of those companies—it has a healthy supply of working capital and negative net debts, according to TheMinerMag stats. 

“The benefit is Hut 8 is financially healthier than many others with nearly 10,000 BTC on its balance sheet and very minimal debt,” MinerMag analyst Wolfie Zhao told Decrypt. 

Hut 8’s current holdings stand at 9,233 BTC, worth roughly $277 million at current prices, according to Bitcoin Treasuries. The only other publicly traded miner with a larger stash is Marathon Digital, which holds 12,232 BTC—worth today over $364.2 million. 

The miner can also boast of not having to sell large amounts of its BTC holdings when other public miners have had to during last year's market downturn. 

This merger will help it take advantage of its financial position and grow its revenue with a larger self-mining capacity and a more diversified business model, Zhao added. 

Hut 8 has told Decrypt about its model of diversification: the miner has five data centers, unrelated to Bitcoin mining, which provide an income stream that's detached from crypto market prices. The miner also earlier this month signed an agreement with Canadian public health company Interior Health to handle its data center needs. 

And just today, it announced an agreement to host approximately 6,400 ASIC miners to grow its capacity. It said that the new machines will increase its installed hashrate to approximately 3.2 EH/s. Hut 8 has also successfully pivoted to the world of high performance computing, or HPC. CEO Jaime Leverton previously told Decrypt that it wanted to “potentially leveraging our GPU machines to provide AI, machine learning, or VFX rendering services to customers.”

The U.S. is becoming an increasingly difficult place for the crypto industry to function: The SEC has hit high-profile crypto companies with lawsuit after lawsuit and its chair has even said that the States doesn’t “need more digital currency.” 

But Bitcoin miners don’t seem particularly fazed. Experts told Decrypt that regulators are more focused on what they see as unregistered securities being sold on exchanges and are unlikely to enact a nationwide ban on Bitcoin mining, like with what was seen in China.

Editor's Note: This article was updated to reflect that by the end of May, Hut 8's Bitcoin treasury was 9,233 BTC.

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