Hut 8 and U.S. Bitcoin Announce Mining Merger

Hut 8 (HUT) and U.S. Bitcoin are the most recent crypto miners speeding to benefit from the January Bitcoin rally.

Two companies introduced their merger Wednesday, the most recent deal in a wave of consolidation and steadiness sheet shuffling from battered miners nonetheless battling losses from final yr. The brand new firm would mix the 2 companies’ assets and create a brand new crypto-mining big named Hut 8 Corp.

Additionally known as “New Hut,” the transaction will create an organization that’s listed on each the Toronto Inventory Trade and the Nasdaq. The businesses mentioned that the mixed agency may have a market capitalization of $990 million and can be owned by shareholders of each companies.

“New Hut may have entry to roughly 825 MW of gross power throughout all six websites with self-mining, internet hosting, and managed infrastructure operations,” the businesses mentioned in a press launch.

The deal is predicted to ascertain New Hut as a large-scale, publicly traded Bitcoin miner that may strengthen its steadiness sheet and acquire entry to capital-raising alternatives.

“This transaction has given us the chance to leverage the numerous, unencumbered Bitcoin stack we’ve got HODLed thus far,” mentioned Jaime Leverton, CEO of Hut 8. “Throughout the interim interval, we plan to cowl our working prices by a mixture of promoting the Bitcoin we mine, promoting from our stack, and/or exploring numerous debt choices.”

Hut 8 inventory fell 8.6% in Tuesday buying and selling after the merger announcement.

Crypto Miners Rush to Restructure Debt

Whereas some miners have been capable of purchase new mining rigs and websites at firesale costs throughout bitcoin’s downturn, others have been compelled to file for chapter or restructure.

Austin’s Core Scientific (CORZ) filed for chapter in late December. Greenridge Technology Holdings (GREE) introduced debt restructuring with its collectors in late January and on Wednesday Pennsylvania’s Stronghold Digital (SDIG) did the identical.

Hut 8 is simply the most recent in a wave of latest miners which have rushed to benefit from the January Bitcoin rally. Las Vegas, Nevada-based, Marathon Digital Holdings (MARA) introduced final week it will promote 1,500 BTC in a transfer the corporate mentioned would assist to fund working prices.

“Marathon might proceed to promote a portion of its Bitcoin holdings in future durations to assist month-to-month operations, handle its treasury, or for common company functions,” the corporate mentioned in a press release.

The Backside Line

The Bitcoin mining business has been on the ropes because the decline in crypto belongings began final yr. The latest rally has allowed some much-needed steadiness sheet restructuring.

Nonetheless, there’s a danger that the frenzy to promote holdings of the world’s largest cryptocurrency might impression its worth. Texas-based miners have already confronted one other headwind in late January with a latest winter storm within the state forcing miners within the space to cut back their manufacturing.