Hut 8 Mining increases Bitcoin mining production; Stock price 9%
Hut 8 Mining (TSE: HUT) (COTTAGE) generated 328 bitcoins (BTC-USD) in June, corresponds to a mining rate of around 10.9 bitcoins per day, an increase from last month’s 309. Despite this, the stock is currently down 9% today.
In total, the company has 7,406 self-extracted bitcoins in the reserves. Assuming a price of $ 20,000 per bitcoin, this equates to $ 148,120,000 in cryptocurrency.
Hut 8 Mining is a cryptocurrency mining company with bitcoin mining on an industrial scale in Canada. It gives investors direct exposure to bitcoin without the technical complexity or limitations of buying the underlying cryptocurrency.
The company continues to hold on to the bitcoin it extracts as it believes in its long-term prospects. In fact, Hut 8 Mining scaled up its production in June in the North Bay area, and it plans to continue to do so in the future.
Also worth noting, Hut 8 Mining also runs a high-performance computing business, which management says is not correlated with bitcoin or bitcoin mining.
In fact, it provides the company with monthly recurring revenue and is set to increase by 18% in 2022. CEO Jamie Leverton believes that these recurring revenues will allow Hut 8 to successfully navigate current market conditions.
Analyst recommendations on Hut 8 mining
Hut 8 Mining has a Moderate Buy consensus rating based on two Buys awarded over the past three months. The average Hut 8 Mining price target of C $ 7.16 implies 304.5% upside potential.
Last thoughts – Increasing production, but the risk remains
Investing in Hut 8 Mining is mainly about betting that the price of bitcoin will rise. One thing that may attract investors to Hut 8 Mining is that the stock is currently trading below book value, with a price-to-book ratio of 0.5x.
Because of this, investors can get exposure to this cryptocurrency stock at a discount relative to its intrinsic value. Although Hut 8 Mining is increasing its production numbers, investors should note that the company is currently burning cash since it stores almost all of the bitcoins it extracts, and its high-performance computing business does not outweigh the costs.
As a result, it has been dependent on equity financing to finance operations, which is diluting for shareholders. In addition, the book value is likely to have declined due to current market conditions and cash consumption. Therefore, investors may prefer to invest in the cryptocurrency itself.
Dissemination
