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Investment banking company Benchmark has issued a “buy” rating for Bitcoin miner Hut 8, setting a $12 share price target.
Hut 8, is looking to expand its self-mining operations and diversify its revenue streams to remain competitive in the post-halving market. Despite having a lower self-mining hash rate than its competitors, Benchmark expects Hut 8 to close the gap over time.
The Report By Benchmark’s Analyst
Palmer cited Hut 8’s multiple revenue streams, including self-mining, cloud computing, high-performance computing, and artificial intelligence services, as justification for his price target.
He also said that Hut 8’s enterprise value-to-revenue multiple of 2.6 is slightly below the 3.1 average of its publicly traded Bitcoin mining peers, such as Marathon Digital, Riot Platforms, and others.
Although Hut 8 still needs to upgrade its hash rate, Palmer said its 9,102 Bitcoin held on reserve provides it with a “sizable liquidity cushion” and an ability to capture upside moves if the price of BTC were to rally significantly in the coming months.
On February 7, Hut 8 announced a leadership shakeup, with Asher Genoot replacing former CEO Jamie Leverton. Hut 8 refuted the report, claiming it was filled with inaccurate information and misrepresented data.
Hut 8 aims to increase its cash flow, reduce mining costs, and boost Bitcoin production by approximately 11% per EH by relocating efficient miners to its Medicine Hat site while retiring old and inefficient ones.
Hut 8’s diverse business operations may provide an advantage following the halving.
Investors are currently showing interest in self-mining as they expect the price of bitcoin to increase significantly after the latest halving, according to a statement. Hut 8, which has a self-mining deployed hash rate of 5.4 exahash per second (EH/s), is lagging behind some of the largest players in the same category, including Marathon Digital, which had 27.8 EH/s of installed hash rate at the same time, the statement added.
The statement also stated that Hut 8’s diversified platform is likely to provide long-term benefits, as its revenue streams outside of self-mining put it in a better position to withstand severe downturns in bitcoin’s price compared to most of its listed peers.
Hut 8’s merger with US Bitcoin Corp. in November, which created a combined company with 25.5 EH/s of hash rate and 884 MW of energy capacity under management, also has business lines focused on managed services, hosting, high-performance computing and AI, the statement added.
Hut 8 CEO Asher Genoot has been working on reducing costs and eliminating inefficiencies in all business lines. In a recent statement, the company announced it had energized a third of its 63 MW Salt Creek site in Culberson County, TX.
It relocated miners from its Kearney, NE and Granbury, TX sites to that location. According to the statement, the company’s holdings of 9,102 BTC – second in the mining segment to Marathon Digital – give it a solid liquidity cushion and the ability to capture upside during bitcoin price rallies.
The statement also pointed out that Hut 8’s mining fleet needs more efficiency upgrades. However, its diversified model and relative strength in bitcoin’s price should support its operating performance until new equipment is purchased and deployed.
Conclusion
Hut 8 has received a buy rating from one of the investment banks. The company announced a leadership change after a report from JCapital claimed it was in legal trouble. Hut 8 denied the report. Investors are interested in self-mining as they expect the price of bitcoin to rise after the latest halving. Hut 8 lags behind Marathon Digital in installed hash rate.
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading in stocks, cryptos or related indexes comes with a risk of financial loss.
Steefan George is a crypto and blockchain enthusiast, with a remarkable grasp on market and technology. Having a graduate degree in computer science and an MBA in BFSI, he is an excellent technology writer at The Coin Republic. He is passionate about getting a billion of the human population onto Web3. His principle is to write like “explaining to a 6-year old”, so that a layman can learn the potential of, and get benefitted from this revolutionary technology.
