Hut 8 Corp Loses Managed Service Capacity After Marathon Digital Site Purchase

Just two weeks after acquiring certain bitcoin mining sites in Texas and Nebraska, Marathon Digital (NASDAQ: MARA) is set to take over operational control of the sites from Hut 8 Corp(TSX: HUT).

The mining sites on a combined basis account for 390 megawatts of operational capacity, which it acquired for $178.6 million from Generate Capital on January 16. While the purchase for Marathon represents mining cost reductions of up to 30% per bitcoin, the sale of the facilities represents the loss of revenues for Hut 8.

Under a termination agreement entered into at the end of January, Hut 8 will cease to provide management services to the site as of April 20, 2024. However, they will receive a $13.6 million termination fee for the cancelled arrangement.

In terms of impact, during the month of December Hut 8 provided managed services to 680 MW worth of mining equipment, the major of which was made up by the Texas and Nebraska sites. Based on data provided by Hut 8 for its December performance, its managed services will drop to 280 MW following the termination of the contract, which will be offset by a new arrangement with Ionic Digital announced yesterday, whereby it expects to bring on 300 MW of additional managed services by the end of the year.

It is unclear at this time what the revenue impact of the lost contract with Marathon Digital will amount to.

Hut 8 last traded at $9.97 on the TSX.

Correction: A prior version of this article did not identify that the company has brought on further capacity through a transaction with Ionic Digital, the current capacity of which is unclear. The article has been corrected to identify this.

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.

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