Operational issues across its bitcoin mining sites are weighing on Hut 8 Mining (HUT) as it tries to complete what would be one of the largest deals in the sector – the company's merger with U.S. Bitcoin Corp.
In mid-November 2022, Hut 8 stopped mining with 7,000 rigs at a site in North Bay, Ontario, due to an ongoing dispute with its energy provider, Validus Power. Hut 8 has now removed all machines from the facility to a site in Medicine Hat, Alberta. Pressed about progress by analysts on the company's earnings call Thursday morning, Hut 8 CEO Jaime Leverton said the firm is assessing opportunities to energize the miners, but didn't give any concrete alternatives.
At its Drumheller site in Alberta, Hut 8 has been facing "electrical issues" that have hit operations. "We are in the early stages exploring supplementary options to mitigate the challenges and hope we have more definitive plan," said the firm's newly appointed chief financial officer, Shenif Visram, during the conference call.
Hut 8 shares are down 8% on Thursday, as are those of its mining peers, as bitcoin slides to its lowest level in a month at $21,450.
Hut 8 did receive a letter of no action from the Canadian competition authority for its proposed merger with U.S. Bitcoin Corp., meaning the authority doesn't plan to challenge the move, Leverton said on the call. The company's main focus is on completing the merger, she said, which will give it access to additional power for mining rigs.
Looking at Q4 results, mining profit plunged to CAD$3.33 million (US$2.4 million) from $39.2 million (US$28.4 million) during the same period a year earlier. For all of 2022, the company mined 3,568 bitcoin, up 28.1% from 2021. Hut 8 reported a net loss of CAD$242.8 million for 2022 compared to a loss of CAD$72.7 million for 2021.
The company earlier this week disclosed sales of bitcoin for the first time in 2021 as it looked to help fund both operating costs and its merger with U.S. Bitcoin Corp.
CORRECTION (March 9, 18:40 UTC): Clarifies that Hut 8 and Validus were in a dispute, not litigation, in November.
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