Hut 8 Corp

Hut 8 Corp. (NASDAQ: HUT) is a data mining company. The Company is a vertically integrated operator of large-scale energy infrastructure and bitcoin miner. The Company acquires, designs, builds, manages, and operates data centers that power compute-intensive workloads, such as bitcoin mining, high performance computing, and artificial intelligence (AI). The Company operates through four business segments: Digital Assets Mining, Managed Services, High Performance Computing-Colocation and Cloud, and Other.

Recent Business and Financial Updates

• Hut 8 Announces Conference Call to Discuss Second Quarter 2024 Results: On July 24, 2024, Hut 8 Corp. announced it will host a conference call and webinar on August 13, 2024, to discuss the company's second quarter 2024 financial results. Analysts, media, and investors are invited to attend, with the call and webinar commencing at 8:30 a.m. ET, and results will be available on Hut 8's website and through a media release.
• First Quarter 2024 Financial and Operational Highlights: S. Data Mining Group, Inc., doing business as US Bitcoin Corp (“USBTC”), and Hut 8 Mining Corp. finalized an all-stock merger of equals on November 30, 2023. USBTC was designated as the accounting acquirer in this transaction. Consequently, the historical figures in the Company’s income statement for the three months ended March 31, 2023, reflect USBTC’s standalone performance. In contrast, the results for the three months ended March 31, 2024, represent the performance of the combined entity. For the balance sheet, the ending balance for Q1 2024 is compared to the year-end 2023, with both reflecting the combined company's performance. All financial results are reported in US dollars.
• Operational Metrics: As of March 31, 2024, Hut 8’s mining business managed an energy capacity totaling 884 megawatts (MW) across six sites in North America. Additionally, the Company operated more than 36,000 square feet across five cloud and colocation data centers in Canada, and four natural gas power generation facilities in Ontario, Canada, totaling 310 MW. The Company owned approximately 54,500 miners, achieving a total of 5.5 exahash per second (EH/s), including its net share of the King Mountain joint venture.
• Financial Performance:
  • Revenue for the three months ended March 31, 2024, increased by USD 36.1 million to USD 51.7 million, compared to USD 15.6 million for the same period in 2023. Net income attributable to Hut 8 rose by USD 233.5 million to USD 250.9 million, compared to USD 17.3 million for the three months ended March 31, 2023. Adjusted EBITDA surged by USD 285.8 million to USD 297.0 million, from USD 11.1 million in the prior year period.
  • During the first quarter of 2024, the Company mined 716 Bitcoin, up from 524 Bitcoin in the same period in 2023. As of March 31, 2024, the total self-mined Bitcoin balance was 9,102, with a market value of approximately USD 648.9 million. The cost to mine a Bitcoin at owned facilities, including the Company’s net share of the King Mountain JV, was USD 20,419, compared to USD 9,072 in the prior year period. Including hosted miners, the cost to mine was USD 24,594, versus USD 12,348 in Q1 2023.
• Key Performance Indicators:
  • Cost to Mine a Bitcoin (excluding hosted facilities): USD 20,419 (Q1 2024) vs. USD 9,072 (Q1 2023)
  • Cost to Mine a Bitcoin: USD 24,594 (Q1 2024) vs. USD 12,348 (Q1 2023)
  • Weighted Average Revenue per Bitcoin Mined: USD 51,769 (Q1 2024) vs. USD 23,106 (Q1 2023)
  • Bitcoin Mined: 716 (Q1 2024) vs. 524 (Q1 2023)
  • Energy Cost per MWh: USD 40.06 (Q1 2024) vs. USD 34.76 (Q1 2023)
  • Hosting Cost per MWh: USD 68.72 (Q1 2024) vs. USD 64.23 (Q1 2023)
  • Energy Capacity under Management: 884 MW (Q1 2024) vs. 772 MW (Q1 2023)
• Select First Quarter 2024 Financial Results:
  • Revenue for the three months ended March 31, 2024, increased by 231% to USD 51.7 million from USD 15.6 million in the prior year period. This revenue comprised USD 30.4 million from Digital Assets Mining, USD 9.2 million from Managed Services, USD 3.3 million from High Performance Computing – Colocation and Cloud, and USD 8.8 million from Other revenue.
  • Cost of revenue, excluding depreciation and amortization, for the three months ended March 31, 2024, was USD 28.1 million, compared to USD 8.5 million in the prior year period. This increase included USD 16.6 million for Digital Assets Mining, USD 2.8 million for Managed Services, USD 2.6 million for High Performance Computing – Colocation and Cloud, and USD 6.2 million for Other.
  • Depreciation and amortization expenses for Q1 2024 were USD 11.5 million, compared to USD 2.9 million in the prior year period. This increase was driven primarily by property and equipment acquisitions from the Business Combination and an increase in the number of miners at US sites. Additionally, an operational efficiency review of the mining fleet resulted in a USD 2.7 million increase in depreciation expense for Q1 2024.
  • General and administration expenses for Q1 2024 were USD 20.0 million, up from USD 6.4 million in the prior year period. This increase was driven by a USD 3.4 million rise in stock-based compensation, USD 2.9 million in restructuring costs, USD 1.4 million related to the acquisition of four power plants in Ontario, Canada, and USD 5.9 million for headcount and other general and administration expenses.
  • Net income attributable to Hut 8 for Q1 2024 increased to USD 250.9 million, compared to USD 17.3 million in the prior year period. This rise was largely due to a USD 274.6 million gain from the early adoption of ASU 2023-08, the new FASB fair value accounting rules. Adjusted EBITDA for Q1 2024 increased to USD 297.0 million from USD 11.1 million in the prior year period, driven by the fair value gain on digital assets, a higher average price per Bitcoin mined, and additional revenue from Managed Services.
  • As of March 31, 2024, the Company's Bitcoin holdings, marked at fair value, totaled USD 648.9 million. Of this total, 7,230 Bitcoin, valued at USD 515.4 million, remained unencumbered.

Technical Observation (on the daily chart):

The Relative Strength Index (RSI) over a 14-day period stands at a value of 38.46, downward trending with the expectations of price correcting to next important support zone of USD 9-USD 10. Additionally, the stock's current positioning is between both 50-Day SMA and 200-Day SMA, which can act as a short to medium term resistance and support levels respectively.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Watch’ rating has been given to Hut 8 Corp. (NASDAQ: HUT) at the closing market price of USD 12.40, as of August 02, 2024.

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. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is August 02, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.s

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.