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Bitcoin miner HUT 8 shuts down mining site due to high energy costs

TL;DR

  • HUT 8 has closed its Drumheller, Alberta, Canada, mining facility due to high energy costs and power disruptions.
  • The company will relocate Bitcoin miners to its Medicine Hat facility, maintaining the lease at Drumheller for potential future use.
  • HUT 8 faces financial challenges, with a 57% revenue drop in the first nine months of 2023 and recent stock declines amid legal allegations.

HUT 8, a key player in the Bitcoin mining industry, has announced the closure of its mining facility in Drumheller, Alberta, Canada, effective immediately.

The company cited surging energy costs and power disruptions as the main reasons for the shutdown. The Drumheller facility, responsible for approximately 1.4% of HUT 8’s Bitcoin production but consuming about 11% of its hash rate, faced significant profitability challenges.

Asher Genoot, CEO of HUT 8, pointed to “elevated energy costs and underlying voltage issues” as critical factors impacting the site’s financial viability. He added: “Our restructuring plan aims to drive maximum value from our assets and position the company for profitable growth. With the nominal lease expense, we will also have a low-cost option to re-energize the site if energy rates in the AESO grid decrease or hashprice increases.”

The company has decided to relocate its Bitcoin miners to another facility in Medicine Hat, Alberta, maintaining its lease at the Drumheller site with the possibility of reactivating it if market conditions improve.

HUT 8’s Response and Financial Performance

The decision comes amid a backdrop of increasing electricity prices in Alberta, which have risen by 1,000% since 2017, according to Energyrates.ca. Additionally, the provincial government’s restrictions on new cryptocurrency mining projects due to power use concerns have added to the sector’s challenges.

HUT 8’s financial performance has also been affected, with a 57% drop in revenue to CA$ 55,184 ($40,757) for the first nine months of 2023, largely due to declining Bitcoin prices. The company currently accounts for 1.3% of the overall Bitcoin network’s processing power.

Furthermore, HUT 8’s stock took a hit on Jan. 19, falling more than 23% following allegations of legal troubles involving the company’s partner USBTC in a $725 million merger deal. Despite these challenges, HUT 8 refuted the allegations, criticizing the report for its inaccuracies and speculative claims. The firm’s former CEO, Jaime Leverton, resigned on Feb 8.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Damilola Lawrence

Damilola is a crypto enthusiast, content writer, and journalist. When he is not writing, he spends most of his time reading and keeping tabs on exciting projects in the blockchain space. He also studies the ramifications of Web3 and blockchain development to have a stake in the future economy.

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