Hut 8 Closes Bitcoin Mining Facility
Good day everyone,
I hope you are all well and had an excellent week so far, welcome to CryptoGod-1’s blog on all things crypto. In this post I will be looking at the recent news of Hut 8 shutting their Bitcoin mining facilities in Canada.
Hut 8
The Bitcoin mining company known as Hut 8 have announced the closure of their mining site in Drumheller, Alberta, Canada. Their reasoning behind this decision comes down to significant factors such as power disruptions and rising energy costs. These issues have severely impacted the site’s profitability, with Drumheller only facilitating approximately 1.4% of Hut 8’s Bitcoin production, but is consuming around 11% of its hash rate. The such down will happen immediately.
The CEO of Hut 8, Asher Genoot, noted that after conducting a thorough analysis, it was determined that the profitability of the Drumheller site had been significantly impacted by factors such as elevated energy costs and underlying voltage issues. The news means that all of the company’s Bitcoin miners will be relocated to its Medicine Hat facility in Alberta, Canada. Genoot stated:
“We have determined that the profitability of Drumheller has been impacted significantly by various factors, including elevated energy costs and underlying voltage issues.”
The shutdown of the facility won't stop Hut 8 continuing their lease on the Drumheller site, leaving the door open for a potential reactivation if market conditions improve. The high energy costs, record mining difficulty, and the anticipated Bitcoin halving along with reduced mining rewards are some of the factors which have contributed to stagnation in the sector.
The electricity price per kilowatt-hour (kWh) has surged by 1,000% since 2017 with some concerns over power consumption in the area. This has led to the provincial government restricting new cryptocurrency mining projects.
Other firms such as Core Scientific and Riot Blockchain were forced to sell at least part of their mined Bitcoin holdings due to market headwinds but Hut 8 has managed to increase its self-mined Bitcoin holdings. In the last week Hut 8 also announced the beginning of a Bitcoin mining centre in Culberson, Texas, with an expected hash rate of 3.6 EH/s. This facility will have a power consumption of 63 MW and will cost approximately 40% less than the purchase price.
Back in September 2023 the team at Hut 8 received the final clearance from the Canadian Supreme Court to complete its merger with USBTC. After the merger the company boosted its Bitcoin reserves in October.
In February 2024 the company’s Bitcoin production decreased compared with January, with Hut 8 mining 292 Bitcoin in February compared with 339 Bitcoin in January. The holdings of Hut 8 stood at 9,110 Bitcoin at the end of the month. Similar dynamics were observed among other large miners, including Marathon Digital, Riot Platforms, and Bitfarms. The decline in the percentage of Bitcoin mined by these companies ranged from 16% to 23% from month to month.
December 2023 saw the company mine 453 Bitcoin, which at the time brought its reserves up to a total of 9,195 Bitcoin, or $618 million at current prices. On the 19th of January the shares of Hut 8 tanked after the short-selling firm JCapital Research made an allegation that Hut 8 investors should be prepared for an “upcoming pump and dump.” They claimed that the merger with fellow miner USBTC could place investors in harm’s way. Hut 8 refuted these claims, citing inaccuracies and speculative assertions in the report. While Hut 8 accounts for 1.3% of the Bitcoin network’s total processing power, things are not going smoothly as on the 8th of February the company’s former CEO, Jaime Leverton, resigned from her position.
