Hut 8 Faces $71.9M Loss in Q2 Despite 72% Revenue Growth

North American Bitcoin miner and energy infrastructure operator Hut 8 Corp. released its financial results for Q2 2024, revealing a net loss of $71.9 million despite a significant 72% revenue increase year-over-year, reaching $35.2 million. The revenue growth was largely driven by a 21% reduction in the cost per kilowatt-hour for Bitcoin mining and the expansion of the company’s computing power business lines.

Energy Capacity and Hash Rate Drive Revenue Amid Losses

Hut 8’s energy capacity now stands at an impressive 1,075 megawatts (MW), encompassing Bitcoin mining, natural gas power generation, and cloud data centers. This substantial capacity has bolstered revenue, even as challenges like the recent Bitcoin network halving and declining Bitcoin prices pressured profitability. CEO Asher Genoot highlighted improved gross margins in the Digital Assets Mining segment, rising to 46% from 34% year-over-year, showcasing the company’s operational efficiency.

A key contributor to the reduced energy costs was the activation of the Salt Creek facility, which cut the energy cost per kilowatt-hour by 21%, from $0.040 in Q1 2024 to $0.032 in Q2 2024. Hut 8’s mining operations now boast a total hash rate of 4.8 exahash per second (EH/s) across approximately 49,400 miners.

Impact of New Accounting Rules and Bitcoin Price Decline

Despite the positive revenue growth, Hut 8’s $71.9 million net loss was primarily attributed to a $71.8 million fair value adjustment on its Bitcoin holdings. This adjustment was driven by new Financial Accounting Standards Board (FASB) rules and a decline in Bitcoin prices. This marks a stark contrast to the $1.7 million net loss recorded in the same period last year.

Strategic Shifts and Future Growth

Hut 8 produced 279 bitcoins in Q2, bringing its total holdings to 9,102 self-mined coins, valued at approximately $571 million as of July 31. This, however, reflects a decrease in production from the same quarter last year, when the company mined 740 bitcoins. The cost to mine each Bitcoin also nearly doubled year-over-year to $26,232 per coin.

The company is increasingly relying on its alternative computing business lines for revenue, generating $21.3 million in this segment compared to $13.9 million from Bitcoin mining. Hut 8 is focused on scaling its power infrastructure, highlighted by the development of a new 205 MW site in the Texas Panhandle and a $150 million partnership with Coatue Management.

Coatue’s $150 million investment in Hut 8, completed on July 11, involves a convertible note with an 8% annual return, reinforcing the company’s financial position for future expansion.