Hut 8 is on the brink of finalizing its merger with US Bitcoin Corp, a move set to usher in a new era of geographic diversity and increased revenue streams for the company. Termed a “merger of equals” by executives, the deal, initially disclosed in February, has gained momentum, with USBTC stockholders recently granting their approval. The anticipated closing date for the merger is November 30.
Hut 8 merger with USBTC gains momentum
During a recent earnings call, Hut 8 Mining CEO Jaime Leverton underscored the complementary nature of USBTC’s US operations, which include campuses in New York, Nebraska, and Texas, to Hut 8’s established Canadian footprint. The merger is regarded positively by Dan Weiskopf, co-portfolio manager of the Amplify Transformational Data Sharing ETF (BLOK). Weiskopf acknowledges that the combined company will be US-based, emphasizing the potential for transformation and synergies between the two entities.
However, he also notes that success may involve multiple strategic pivots and transformations, which aren’t always seamless. The union with US Bitcoin Corp brings additional business lines into play for Hut 8. Leverton pointed out that USBTC has fiat-based revenue streams, including hosting and managed infrastructure operations. This diversification is expected to enable the combined business to navigate various market conditions, particularly in high-performance computing and bitcoin mining leading up to the halving.
US Bitcoin Corp’s previous dealings, such as securing a deal with Celsius Network in August to host 8,500 miners, demonstrate its commitment to expanding revenue streams. The company was also selected in May to manage and operate Celsius-owned assets, comprising 122,000 mining machines, pending bankruptcy court approval. Reflecting on the Nov. 14 earnings call, Leverton highlighted the growth in fee-based revenue lines for USBTC over the past year, particularly in managed services and collaboration with Celsius.
Synergies and strategic shifts in the mining industry
Closing the deal with USBTC is expected to pave the way for strategic decisions regarding organic and/or inorganic growth. Weiskopf suggests that miners evolving their businesses is crucial for survival in the industry. As Hut 8 and USBTC move towards their merger, other players in the field are also making strategic shifts. Hive Digital Technologies signals a heightened focus on artificial intelligence, while Marathon Digital expands geographically and diversifies its mining methods.
Bitfarms, in a recent move described by Weiskopf as “quite positive,” announced the acquisition of nearly 36,000 Bitmain T21 miners as part of a transformative fleet upgrade plan. The ever-evolving landscape underscores the need for large-scale miners to make bold and forward-thinking decisions to stay competitive. The Amplify Transformational Data Sharing ETF, managing $485 million in assets, has allocated 2.28% and 1.67% to Hut 8 and Bitfarms, respectively.
Hut 8’s stock has experienced substantial growth, rising nearly 150% year-to-date and showing a 6% increase on a recent Tuesday. Weiskopf emphasizes the importance of being bold and forward-thinking to thrive in the mining industry, noting that some miners may not survive the halving. However, firms like Hut 8 and Bitfarms are positioning themselves with strategic decisions to navigate the challenges and potentially thrive in the evolving landscape.
