Hut 8 (HUT) and U.S. Bitcoin have partnered up to take advantage of the January Bitcoin rally, announcing a merger Wednesday.
The New company, named Hut 8 Corp., will combine the resources of both firms to create a formidable crypto-mining powerhouse. This deal is one of many recently made by miners who have been struggling to recover from losses in 2020.
Key Points
- Canada’s Hut 8 and U.S. Bitcoin are joining forces to form a new mining enterprise.
- The new company hopes to increase its balance sheet and gain an edge in the mining industry.
- The mining industry is currently looking to cash in on BTC and restructure its debt.
The venture, known as “New Hut,” will be listed on both the Toronto Stock Exchange and Nasdaq and will carry a market capitalization of more than $990 million. Stakeholders from both companies will own the new business.
The firms said in a statement that “New Hut will have access to approximately 825 MW of gross energy across all six sites with self-mining, hosting, and managed infrastructure operations.”
The companies believe that this merger will make New Hut a major player in the mining industry and it will be able to access capital-raising options while boosting its balance sheet.
“This transaction has given us the opportunity to leverage the significant, unencumbered Bitcoin stack we have HODLed to date,” explained Jaime Leverton, CEO of Hut 8. “In the interim, we will cover our operating expenses through a combination selling and buying of Bitcoin.”
Hut 8 stocks dropped 8.6% on Tuesday in the wake of the announced merger. The crypto mining industry has been in a state of crisis since the value of Bitcoin dropped last year, forcing some miners to file for bankruptcy. Core Scientific (CORZ) in Austin, Greenridge Generation Holdings (GREE), and Pennsylvania’s Stronghold Digital (SDIG) all filed for debt restructuring in January.
Hut 8 is just the latest miner to take advantage of the recent Bitcoin rally, with Marathon Digital Holdings (MARA) in Las Vegas announcing their plans to sell 1,500 BTC in order to cover operational costs. The company stated that they may continue to sell some of their holdings in the future to help manage their treasury and corporate purposes.
The rush to sell cryptocurrency has the potential to adversely affect the value of Bitcoin. Furthermore, miners based in Texas have had to reduce production due to the winter storm that occurred in late January. Overall, the mining industry has been struggling and is dependent on the success of the Bitcoin rally in order to secure the necessary restructuring.
