Hut 8 Mining Mines 58% Less Bitcoin In Q2 2023

Hut 8 Mining (TSX: HUT) reported its financial results for the quarter ended June 30, 2023. The company mined 399 bitcoin for the quarter, representing a notable decline of around 58% in contrast to the same period last year.

The firm said the decline is attributable primarily to elevated bitcoin network complexity causing reduced mining output, the suspension of operations at the company’s North Bay facility, and the persistent electrical challenges at its Drumheller site.

As a result, the revenue for the quarter also experienced a decline to $19.2 million from $43.8 million reported in the previous year.

“While we continued to face mining challenges during the second quarter at Drumheller, which are reflected in decreased revenue and fewer Bitcoin mined, we were successful in strategically managing our costs,” said CFO Shenif Visram.

The cost of revenue was $23.8 million, a decrease from $47.7 million in the same period in 2022. Site operating costs for the quarter amounted to $14.3 million, with $11.8 million attributed to mining operations and $2.5 million to high-performance computing. In comparison, the costs for the same quarter in 2022 were $26.8 million, with $24.5 million for mining operations and $2.3 million for high-performance computing.

Mining cost per bitcoin for Q2 2023 was $29,551, higher than the prior year’s $25,611 due to increased power consumption per mined bitcoin and ongoing electrical issues at the Drumheller facility. This increase was partly offset by curtailed operations, lower energy prices, and improved miner efficiencies compared to the previous year.

Depreciation expenses decreased to $9.5 million in Q2 2023, down from $20.9 million in the same quarter of 2022. This reduction was mainly driven by the lower net book value of digital asset mining assets after a non-cash impairment charge recognition during the Q4 2022 annual impairment testing.

In the three-month period, the net loss was $16.7 million, with a net loss per share of $0.08. This represents an improvement from the net loss of $88.1 million and net loss per share of $0.49 for the same period in 2022. The change was primarily influenced by a decrease in non-cash revaluation losses on digital assets recorded in the income, partly balanced by a reduction in non-cash gains from revaluation of warrant liability, resulting in a lower net loss.

On the other hand, the adjusted EBITDA stood at a negative $2.7 million, in contrast to the negative adjusted EBITDA of $98.1 million in the corresponding period of the previous year. This change was primarily attributed to reduced losses in the revaluation of digital assets, offset by a lower digital asset mining profit and the aforementioned electrical challenges at the Drumheller facility.

Cash position declined to $26.7 million from the ending balance of $30.5 million at the end of 2022.

The digital miner has also consequentially announced that it has obtained an interim order from a Canadian provincial court, paving the way for a special shareholders’ meeting and bringing it closer to its merger with U.S. Data Mining Group, also known as US Bitcoin.

The Toronto-based digital asset mining company clarified that this interim order from the Supreme Court of British Columbia is essential for organizing the special meeting, which is slated for September 12th. For the merger to proceed, it is necessary to secure approval from shareholders and obtain a final order from the Supreme Court of British Columbia.

“We continued to build momentum toward closing our transaction with USBTC by progressing toward receiving regulatory approvals to proceed and improving our projected post-merger self-mining capacity to 7.5 EH/s,” said CEO Jaime Leverton. “That said, we are not here to simply chase exahash: we have been unique in our approach to growing our business primarily through inorganic means, and have done so with an infrastructure-first mindset. We believe that there is value to be captured beyond proprietary mining, which is why we acquired the HPC business.”

As of June 30, 2023, the company possessed a cumulative self-mined Bitcoin balance, securely held in custody or utilized as collateral, amounting to 9,136 Bitcoin, with a market value of $368.7 million. Within the second quarter of 2023, the company successfully mined 399 Bitcoin and subsequently sold 396 of them, resulting in total proceeds of $14.7 million.

Hut 8 Mining last traded at $3.71 on the TSX.

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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