Hut 8 Mining Corporation

Hut 8 Mining Corp. (NASDAQ: HUT) is a technology company. The Company and its subsidiaries are primarily in the business of the mining of digital assets. It focuses on utilizing specialized equipment to solve computational problems to validate transactions on different blockchains and receiving bitcoin in return for services. The Company operates cloud and colocation data centre facilities in Canada, targeting enterprise customers seeking computing services.

Recent Financial and Business Updates:

• Revenue for the quarter declined by USD 34.3 million to USD 19.0 million compared to the same period in 2022.
• The company's Bitcoin mining output decreased by approximately 50% in Q1 2023, mining 475 Bitcoin, primarily due to the rising difficulty of the Bitcoin network and ongoing electrical issues at the Drumheller facility that carried over from Q4 2022.
• The Drumheller site experienced operational challenges related to high energy input levels, resulting in miner failures and reduced operations, currently operating at around 15% of its installed hash rate. Remediation efforts began in March and gained momentum in April, including the implementation of new custom firmware to address power supply issues. Hut 8 is actively increasing repair staff, adding shifts, and procuring new hardware to expedite repairs and restore operations, with complete restoration expected in 10 to 12 weeks from the issue of last quarterly results.
• Additionally, the company's high-performance computing operations generated USD 4.5 million in revenue during Q1 2023, primarily from monthly recurring sources. The company's installed hash rate as of March 31, 2023, was 2.6 EH/s (excluding the North Bay facility) compared to 2.5 EH/s as of December 31, 2022.
• Furthermore, the company held a Bitcoin inventory of 9,133 with a market value of USD 352.0 million as of March 31, 2023. In the same period, 475 Bitcoin were mined, and 428 Bitcoin were sold, resulting in proceeds of USD 14.5 million.
• Net income for Q1 2023 was USD 108.5 million with a net income per share of USD 0.49, compared to net income of USD 55.7 million and net income per share of USD 0.33 in the corresponding period of 2022. Mining profit for Q1 2023 was USD 2.6 million, significantly lower than USD 32.9 million in Q1 2022, primarily due to a lower average Bitcoin price, increased network difficulty, fewer Bitcoin mined, and reduced digital asset mining revenue caused by the ongoing electrical issues at the Drumheller facility.
• On March 10, 2023, The Company made an announcement stating that it had received a no-action letter from the Canadian Commissioner of Competition. This letter confirmed that the Commissioner of Competition does not have any plans to challenge the Transaction before the Competition Tribunal.
• Additionally, on March 13, 2023, The Company announced that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, pertaining to the business combination, had expired. This fulfillment of the waiting period satisfied one of the conditions necessary for the completion of the Transaction.

Technical Observation (on the daily chart)

The price of HUT stock has shown a consistent upward trend since making its 52-week low on December 27, 2022, with a gain of approximately 169.23%. In the past one year, the stock has given a return of around 24.26%. Since the latest results announcement, the HUT share price has provided a return of around 25.69%. Currently, the stock is currently near an important resistance of USD 2.30-USD 2.50, from where price has taken correction three times already. A breakout in upward direction from this range would likely initiate a new short-term trend in the up direction. The RSI (14 period) momentum indicator is at a value of 57.48, with an expectation of some consolidation or a short-term correction before the continuation of the upward trends. Moreover, the price is currently positioned above both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term support levels.

As per the above-mentioned price action, momentum in the stock over the last month, and technical indicators analysis, a ‘Watch’ rating has been given Hut 8 Mining Corp. (NASDAQ: HUT) at the current price of USD 2.10 as of June 14, 2023, at 08:30 am PDT.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is June 14, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Disclaimer

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