Key Points
- Hut 8 announces a significant hosting agreement with Bitmain, projected to generate $125 million annually.
- The deal could potentially increase Hut 8’s self-mining hash rate from 4.7 EH/s to 19.7 EH/s.
On September 19, Hut 8 publicized a substantial hosting agreement with Bitmain.
The deal is expected to yield $125 million every year.
Analysts at H.C. Wainwright view this development positively, as Hut 8’s management moves to offense and executes a significant transaction.
As part of the agreement, Hut 8 plans to deploy up to 15 exahashes per second of Bitmain’s U3S21EXPH ASIC miners by the second quarter of 2025 at its new Texas-based facility.
Hut 8’s Market Position
Mike Colonnese, a crypto analyst at H.C. Wainwright, predicts that this option could increase Hut 8’s self-mining hash rate from 4.7 EH/s to 19.7 EH/s.
This could solidify the company’s position in the market.
Colonnese pointed out that the next-generation miners, which feature direct liquid cooling, are expected to triple computing power compared to existing models.
This would provide a significant boost in efficiency.
The agreement gives Hut 8 the option to purchase all deployed rigs within six months of activation at a competitive $21 per terahash.
This would allow the company to scale its self-mining operations.
Benefits of the Agreement
The unique hosting arrangement and miner purchase option structure provide Hut 8 with several key benefits.
These include stable, recurring hosting revenues from Bitmain that are not tied to Bitcoin (BTC) price fluctuations.
The custom-built data center design, optimized for high-performance computing, will support up to 180 kilowatts per rack.
This ensures operational synergies and future cost savings.
With a projected 57% gross margin from this deal, Hut 8 is well-positioned to enhance profitability despite recent Bitcoin price fluctuations.
Following the news, Hut 8’s stock rose by 3.7%, with market observers expecting further gains as the company completes its expansion.
Analysts reiterated a “Buy” rating, with a price target of $13.50, highlighting the company’s ability to self-fund the buildout using its $175.5 million cash reserve and 9,105 BTC holdings, valued at $558.2 million.