Hut 8 Mining 3Q19 review: Core operations come out ahead but face significant headwinds

Quick Take

  • In 3Q19, Hut 8 mined 1,966 bitcoin, a 30% decline from the previous quarter, which management attributed to a 61% increase in the bitcoin network’s difficulty rate
  • Despite this, however, the company’s mining revenue only declined by 5% sequentially as a result of the elevated bitcoin prices in July and August
  • Although Hut 8’s revenue per bitcoin ($10,200 USD) exceeded its adjusted cost per bitcoin ($7,100 USD) during the quarter, depreciation costs are likely unsustainably low following an $85 million impairment on mining equipment that was recognized during 4Q18
  • With the halving quickly approaching, the company seems optimistic that either a decrease in the network difficulty rate or an increase in bitcoin prices will offset the impact of the reduced block reward
The Canadian mining company, Hut 8, reported its 3Q19 earnings last month. Since its inception in December 2017, the company has built up its operations to include a total of 94 BlockBox AC data centers spread across two mining farms in the province of Alberta. Management estimates that its data centers have an aggregate operating […]

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