Hut 8 Mining (TSX: HUT) this morning added to its cryptocurrency mining capacity via the finalization of an equipment financing loan for US$11.8 million. The financing comes from Foundry Digital, a subsidiary of Digital Currency Group, with the proceeds to be used for the purchase of 5,400 MicroBT Whatsminer M30S bitcoin mining machines.
The financing will see the company pay an annual interest rate of 16.5% under the equipment loan on a twelve month term, with the company to also pay a US$2.9 million deposit on the devices. The willingness of the company to pay such an exorbitant interest rate, in light of historically low interest rates, following the closing of a $77.5 million financing just one week ago, should be highlighted.
The loan arrangement was attempted to be justified by the company with the long lead time experienced by other vendors. Given the demand for mining rigs, Foundry last year reportedly partnered with MicroBT to secure future access to the latest generation of mining equipment. As a result, this loan agreement is said to “assure timely delivery” of the machines – in other words, the company is paying a premium to acquire the machines in the near term, versus waiting for longer lead times that currently extend up to eight months.
The addition of 5,400 M30S bitcoin mining rigs is anticipated to add a further 475 petahashes per second to the firms mining capacity over the next six months. Delivery of the first group of machines is expected to occur before the end of the month.
Hut 8 Mining last traded at $4.70 on the TSX.
Information for this briefing was found via Sedar and Hut 8 Mining Corp. 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.
The Grocery Grift: Why Toronto and New York Are About to Light Taxpayer Money on Fire