HUT 8 Ceases Operations at Drumheller Mining Facility Due to Rising Costs and Power Outages
HUT 8, a prominent player in the Bitcoin mining industry, has officially closed its mining facility in Drumheller, Alberta, Canada, citing escalating energy costs and power interruptions as the primary reasons for the shutdown. The company is set to relocate its Bitcoin mining workforce to its Medisin Hat facility while maintaining the lease agreement in Drumheller for potential future use.
Facing financial challenges, HUT 8 reported a 57% decline in revenues during the first nine months of 2023, coupled with recent inventory decreases and legal claims. The closure of the Drumheller facility, effective immediately, is part of the company’s restructuring plan aimed at maximizing asset value and positioning the company for profitable growth.
Asher Genoot, CEO of HUT 8, identified rising energy costs and core power issues” as crucial factors affecting the site’s financial viability. He added, “Our restructuring plan aims to extract maximum value from our assets and place the company on a path of profitable growth. With nominal lease costs, we also retain a low-cost option to reactivate the site if energy rates on the AESO network decrease or retail prices rise.”
In response to the challenges, the company has chosen to transfer Bitcoin mining employees to its Medisin Hat facility in Alberta while retaining the lease contract at the Drumheller location with the option for reactivation under improved market conditions.
The decision comes amid a 1000% increase in electricity prices in Alberta since 2017, according to Energyrates.ca. Additionally, government-imposed restrictions on new cryptocurrency mining projects due to energy consumption concerns have compounded challenges in the sector.
HUT 8’s financial performance has been impacted, with a 57% revenue decline to CAD 55,184 (USD 40,757) for the first nine months of 2023, largely attributed to the significant drop in Bitcoin prices. The company currently represents 1.3% of the total processing power on the Bitcoin network.
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Furthermore, HUT 8 shares experienced a substantial hit on January 19, plummeting over 23% following claims of legal issues related to the company’s partner USBTC in a USD 725 million merger deal. Despite these challenges, HUT 8 refuted the allegations, criticizing the report for its lack of accuracy and speculative claims. The former CEO of the company, Jamie Leverton, resigned on February 8.
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