HUT 8 Announces Immediate Closure of bitcoin Mining Facility in Drumheller, Alberta: Surging Energy Costs and Power Disruptions Force Restructuring
HUT 8 Mining Corp., a prominent player in the bitcoin mining industry, has recently announced the closure of its mining facility situated in Drumheller, Alberta, Canada, effective immediately (news-release/2024/03/06/2841217/0/en/Hut-8-Streamlines-Operations-with-Closure-of-Drumheller-Site.html” rel=”nofollow noopener” target=”_blank”>globenewswire.com). The company attributed surging energy costs and power disruptions as the primary reasons for this decision.
Challenges Faced by Drumheller Site
The Drumheller facility, accountable for approximately 1.4% of HUT 8’s bitcoin production but consuming around 11% of its hash rate, has faced significant profitability challenges due to escalating energy expenses and underlying voltage issues (Asher Genoot, CEO).
Addressing Financial Viability
Genoot emphasized the importance of “elevated energy costs and underlying voltage issues” in impacting the site’s financial viability. In an effort to maximize value from assets and ensure profitable growth, HUT 8 intends to maintain its lease at the Drumheller site with the prospect of reactivating it if energy rates decrease or hash prices increase.
Background: Escalating Electricity Prices and Crypto Mining Regulations in Alberta
This decision comes amid the context of increasing electricity prices in Alberta, which have surged by over 1,000% since 2017, according to Energyrates.ca. Moreover, the provincial government’s restrictions on new cryptocurrency mining projects due to power usage concerns have added to sector challenges.
Financial Performance: Revenue Dip and Stock Market Impact
HUT 8’s financial performance has also been affected, with a notable 57% revenue decrease to CA$ 55,184 ($40,757) during the first nine months of 2023. This decline can primarily be attributed to declining bitcoin prices and HUT 8 presently holds a 1.3% share of the overall bitcoin network’s processing power.
Legal Troubles: Allegations and Denials
Additionally, HUT 8’s stock experienced a significant drop of over 23% on Jan. 19 following allegations involving its partner USBTC in a $725 million merger deal. The company refuted these claims, criticizing the report for its inaccuracies and speculative nature (bitcoin–mining-accounts-for-2-of-u-s/” target=”_blank” rel=”noopener”>cryptopolitan.com). Previously, HUT 8’s former CEO, Jaime Leverton, resigned on Feb. 8.
