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Hut 8 Mining Corp.
HUT-T
RISKY
Jul 17, 2024
$27.020
Stock price when the opinion was issued
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Spread structure used to protect against sudden downward moves? Every year it will lose money because they are always buying “out of the money” put options. This company has some track record but it is worth while watching a little bit longer. The fees on this are incredible and there is also a performance fee.
E.T.F.'s
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Hut 8 is traditionally a bitcoin mining company which now has a few main operating segments; digital assets mining, managed services (infrastructure development), and high-performance computing (AI cloud computing). The majority of its revenue is from bitcoin mining (59%), 18% is from managed services, and 6% is from AI cloud computing.
HUT has 17.8 EH/s, a pretty good level of compute power for mining. A $150M investment from Coatue to support the buildout of next generation AI infrastructure, and it holds 9,105 BTC on its balance sheet (equivalent to $590M today). HUT is a $2.6B company, sales growth is good, it is unprofitable, but AI cloud computing revenues can help to offset the weaker margins from its bitcoin mining operations. Momentum has been strong amid the recent rally in Bitcoin and the potential for a favourable political environment for the crypto asset space. We would consider it to be highly volatile and not without its risks, but we would be OK with a position while acknowledging its volatility risks and small-cap risks.
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