Hut 8 Corp. (TSX: HUT) announced today that it has secured a $150 million investment from a fund managed by Coatue Management. This significant capital infusion is structured as a convertible note.
The partnership highlights Coatue’s strategic focus on advancing artificial intelligence (AI) and compute capacity. Robert Yin, Partner at Coatue, emphasized the strategic fit of Hut 8’s infrastructure capabilities in the current market scenario.
“The broader market is beginning to appreciate the scarcity of high-quality power assets, and Hut 8 has built a deep pipeline of highly attractive expansion assets. Their differentiated energy strategy and track record of fast, cost-efficient development will continue to drive competitive advantage as they execute on these opportunities,” said Yin.
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The deal, set to close by July 11, 2024, includes a convertible note with an initial term of five years, extendable up to three additional years at Hut 8’s option. The note carries an interest rate of 8% per year, compounded quarterly, and offers Coatue the option to convert it into shares of Hut 8’s common stock at a conversion price of $16.395 per share, a 45% premium to the 10-day volume-weighted average price through June 20, 2024.
Hut 8’s CEO, Asher Genoot, expressed enthusiasm about the partnership: “We are thrilled to be partnering with Coatue, given the firm’s deep expertise and long track record of investments in the AI ecosystem. We believe this partnership will allow us to unlock significant opportunities and connectivity to the broader space as we enter this next phase of growth.”
This investment comes at a crucial time for Hut 8. In April 2024, the company reported a significant production decline for March, producing only 231 Bitcoin, down nearly 21% from February’s 292 Bitcoin. The decline was attributed to a reduction in the hashrate, from 7.2 EH/s to 5.4 EH/s, as the company closed inefficient facilities, including the Drumheller site, and relocated miners to more efficient locations like Salt Creek and Alpha.
Despite these operational challenges, Hut 8 maintained a strong position in the market, holding 9,102 Bitcoin on its balance sheet at the end of March, and managing a total hashrate of 25.5 EH/s across its operations.
Hut 8 Corp last traded at $16.87 on the TSX, jumping around 5% on opening bell today.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
