Canadian block reward miner Hut 8 reports 8% Q2 loss

Tech 20 August 2023

Hut 8 (NASDAQ: HUT) recorded a decrease by $24.6 million to $19.2 million in the second quarter, the Canadian BTC block reward miner revealed in its earnings report.

The miner generated $4.2 million in revenue in Q2, a 56% dip from a similar period last year. Its BTC production dipped 58% after mining 399 BTC, with the company blaming the drop on an increase in average BTC network difficulty.

Hut 8 was also dealt a blow with the suspension of operations at its North Bay mining facility. The miner shut down the site and laid off a handful of its local employees in March after a conflict with Validus Power, the energy supplier for its facility. In a dispute dating to last November, the miner sued the power firm for failing to meet its contractual obligations.

Hut 8 had been operating the North Bay facility for over two years. It has since then moved all its equipment to its other facility in Medicine Hat, Alberta.

Ethereum’s shift to a proof-of-stake (PoS) consensus algorithm also impacted the company’s revenue as it had to halt its graphic processing unit (GPU) mining activities.

Compounding the miner’s problems, its facility at Drumheller, Canada, has faced high energy input levels that have caused equipment failure. In May, the company announced that the site was operating at 15% capacity and pledged to fix the issues within 12 weeks. It now says the site runs at 20% of the installed hash rate, despite significant investment in new custom firmware and hardware.

CEO Jaime Leverton, however, remains confident that the company will turn its fortunes around. He says the company is now focused on other businesses besides block reward mining, with its acquisition of a high-performance computing business being the first step toward the pivot.

In February, Hut 8 merged with U.S. Bitcoin Corp in an all-stock deal to form a $1 billion entity named Hut 8 Corp. This merger will allow the two companies to weather the bear market, with the new entity expected to generate 7.5 EH/s in hash rate.

A week ago, BTC miner Riot Blockchain (NASDAQ: RIOT) reported a $28 million loss, with lower BTC prices to blame. However, unlike Hut 8, Riot recorded a 27% spike in BTC production.

Earlier this month, Marathon Digital (NASDAQ: MARA) also reported a net loss of $21.3 million for the second quarter.

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