Hut 8 Mining sees record-breaking revenue in 2021 on bitcoin price rally – Financial Post

Crypto miner’s revenue leaps 327% in one year
Crypto miner Hut 8 Mining Corp. reported record annual revenue in 2021 thanks to last year’s bitcoin rally, and said it will use some of the money to diversify by investing in data centres.

The Toronto-based company said on March 17 that it generated revenue of $173.8 million over the 12 months ending Dec. 31, 2021, a 327-per-cent increase from a year earlier. For the quarter, Hut 8 saw revenue rise to $57.9 million from $12.9 million in the fourth quarter of 2020.

Bitcoin mining operations led the growth, generating $165.4 million through 2,786 bitcoin mined, compared with the $39 million in revenue from 2,798 bitcoin mined during the same period a year earlier.

Hut 8 had a balance of 5,518 bitcoin and a market value of $323.9 million as of the end of December.

The difference in the revenue yield from bitcoin mining came from the cryptocurrency’s price rally, which peaked around US$65,000 in October 2021. Soaring bitcoin prices brought in more revenue from mining operations, seeing the average revenue per bitcoin mined hit $59,367 in 2021, compared with $13,925 the year prior.

The price of bitcoin has since come off its 2021 highs, posing a challenge to maintaining the revenue momentum the company achieved last year.

“We are inextricably linked to the price of bitcoin,” Jaime Leverton, Hut 8’s chief executive officer, said in an interview. “Certainly fundamental to our core beliefs is over time, bitcoin will continue to appreciate up and to the right, and that will always be core to our business.”

Still, Leverton added that the company had been focusing on diversifying revenue streams over the past year by mining Ethereum, earning interest on the bitcoin that it has mined, repairing mining computer hardware for other companies, and by expanding its data-centre infrastructure by purchasing Canadian wireless network provider TeraGo Inc. in January.

“We’re super excited about this deal,” Leverton said, adding that her background had been in traditional tech operations before taking the Hut 8 helm in December 2020. “I see such an incredible opportunity to bring these two worlds together… looking at all of the exciting new blockchain projects that are coming into existence, we really see an opportunity to be more than just a digital asset miner, but really an infrastructure provider to this Web3 emerging ecosystem.”

Another factor driving Hut 8’s 2021 results was lower competition for global hash rates, or the computational power required in a crypto network to process transactions and mine cryptocurrencies. China banned crypto mining in September 2021, leading to a mass exodus of crypto miners into other countries such as the United States, Kazakhstan, Russia and Canada.

Leverton said Hut 8’s profitability went up virtually overnight as the world’s hash rate dropped by about 50 per cent, freeing more capacity for other miners to operate on the network. Russia stands as the third-largest crypto mining country, though Leverton said she has yet to see an impact on global hash rates from the conflict unfolding following Russia’s invasion of Ukraine.

Throughout 2022, Hut 8 will be focusing on building out other revenue sources and expanding on its data centre and mining infrastructure, including a third site under construction in North Bay, Ont. Leverton said on a conference call with analysts that she expects that site will be powered up in four to eight weeks.

Hut 8’s stock jumped about nine per cent to $6.82 by midday Thursday.

• Email: shughes@postmedia.com | Twitter:

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