Bitcoin Miner Hut 8 Posts $71.9M Q2 Loss Despite 72% Revenue Growth

Hut 8, a leading Bitcoin mining company, has reported a significant loss of $71.9 million for the second quarter of 2024, despite achieving a remarkable 72% growth in revenue. The company’s revenue surged to $35.2 million, driven by its expansion in energy infrastructure and computing power business lines. However, the loss was primarily attributed to a $71.8 million fair value adjustment on its holdings, influenced by new Financial Accounting Standards Board rules and a decline in Bitcoin prices.

Revenue Growth Amidst Challenges

Hut 8’s revenue growth in Q2 2024 was fueled by a 21% reduction in the cost per kilowatt-hour for mining Bitcoin and an expansion in the company’s computing power business lines. The company’s energy capacity now stands at 1,075 megawatts, including Bitcoin mining, natural gas power generation, and cloud data centers. This expansion has supported revenue growth, even as challenges such as network halving and a drop in Bitcoin prices impacted profitability.

The company’s Digital Assets Mining segment’s gross margins rose to 46% from 34% year-over-year. The activation of the Salt Creek facility reduced energy costs per kilowatt-hour by 21%, from $0.040 in Q1 2024 to $0.032 in Q2 2024. Despite these positive financial returns, Hut 8 reported a net loss of $71.9 million, primarily due to a $71.8 million fair value adjustment on its holdings.

Hut 8 produced approximately 279 bitcoins in the past quarter, increasing its total holdings to 9,102 self-mined coins, valued at around $571 million as of July 31. However, this represents a decrease from the 740 bitcoins mined in the same quarter last year, with the cost to mine Bitcoin nearly doubling year-over-year to $26,232 per coin.

Strategic Investments and Partnerships

Hut 8’s strategic investments and partnerships have played a crucial role in its growth and expansion. The company recently closed a $150 million strategic investment from Coatue to partner in building a next-generation AI infrastructure platform. This investment will accelerate growth in Hut 8’s data center portfolio and provide access to Coatue’s extensive network of industry partners.

The company’s differentiated energy strategy continues to unlock access to expansion capacity at scale. Last month, Hut 8 announced a new site in the Texas Panhandle with 205 megawatts of immediately available, low-cost, long-term power. The company is in discussions for a large-scale commercial partnership for the site, which can power up to 205 megawatts of NVIDIA Blackwell GPUs or up to 16.5 exahash of next-generation ASICs.

Hut 8’s CEO, Asher Genoot, emphasized the importance of scaling the company’s power footprint to meet the growing demand for compute applications. The company’s partnership with Coatue has enhanced its ability to commercialize its energy sourcing and portfolio development advantages, driving incremental deal flow and interest in its platform and capabilities.

Future Outlook and Challenges

Despite the significant loss reported in Q2 2024, Hut 8 remains optimistic about its future prospects. The company’s restructuring and optimization initiatives, together with the energization of Salt Creek, have enabled a 21% reduction in energy costs per kilowatt-hour. With a strengthened operating foundation and recent advancements in ASIC efficiencies, Hut 8 believes that now is the right time to upgrade its fleet.

The company is also on track to commercialize its GPU-as-a-service vertical in the third quarter, further bolstering its compute-layer economics. Hut 8’s focus on high-quality power assets and its differentiated energy strategy continue to unlock access to expansion capacity at scale.

However, the company faces ongoing challenges, including the impact of network halving and fluctuations in Bitcoin prices. The cost to mine Bitcoin has nearly doubled year-over-year, and the company’s Bitcoin holdings have decreased. Despite these challenges, Hut 8 remains committed to its growth strategy and is confident in its ability to navigate the evolving landscape of the cryptocurrency industry.