Bitcoin Miner Hut 8 Has Larger, More Diversified Business Model Following USBTC Merger: Canaccord

• Canaccord said Hut 8 is more diversified following its merger with US Bitcoin Corp.
• The broker reduced its price target to $14 from $17.50, while it maintained its buy rating.
• The company’s stash of over 9,000 bitcoin gives it significant flexibility, the report said.

Bitcoin BTC$101.875,03 miner Hut 8 (HUT) is a much more diversified company with multiple revenue streams following the completion of its merger with US Bitcoin Corp. (USBTC) at the end of last year, broker Canaccord Genuity said in a research report on Thursday.

“New Hut 8 has ~7 exahashes per second (EH/s) of self-mining capacity and revenue from self-mining accounts for ~68% of revenue today with the remaining coming from managed services, hosting and high-performance computing (HPC),” analysts led by Joseph Vafi wrote.

The broker lowered its price target on the stock to $14 from $17.50 while maintaining its buy rating. Hut 8 closed at $9.69 on Thursday.

After the business combination was completed, Hut 8 launched a restructuring program to lower costs and increase cash flow, Canaccord noted.

“To that end, the company has deployed USBTC’s proprietary technology across all the facilities,” the authors wrote. “By using an energy management software, the company now only mines BTC when it’s profitable.”

With the bitcoin halving event expected later this month, management is taking a more considered approach to buying new mining machines, which indicates it is “prioritizing efficiency over scale at least in the near term," the report said.

Canaccord said it was encouraged by the scale of the managed services business, noting that the partnership with Iconic Digital will generate more than $20 million in cash a year.

“Finally, a HODL of over 9,000 BTC also provides significant flexibility to the company,” the report added.

Hut 8’s former CEO Jamie Leverton left the company in February, just weeks after the firm was hit by a short-seller report. She was succeeded by the company’s president, Asher Genoot, who co-founded U.S. Bitcoin Corp., and became president and director of Hut 8 in November after the merger.

Read more: Bitcoin Miner Hut 8 Hits Out at Short-Selling Report