July 21, 2024
Hut 8 Shuts Bitcoin Mining Site Due to Soaring Energy Costs
Latest Cryptocurrency News

Hut 8 Shuts Bitcoin Mining Site Due to Soaring Energy Costs

Bitcoin miner Hut 8 is shutting down its Drumheller mining site in Alberta, Canada, citing power disruptions and surging energy costs as primary reasons. The closure affects approximately 1.4% of Hut 8’s Bitcoin (BTC) mining, causing a drop in hash rate by around 11%. The decision, effective immediately, is prompted by a profitability analysis revealing significant impacts from elevated energy expenses and underlying voltage issues.

Hut 8’s CEO, Asher Genoot, explained, “Following a comprehensive analysis, we have determined that the profitability of Drumheller has been impacted significantly by various factors, including elevated energy costs and underlying voltage issues.” To mitigate losses, all Bitcoin miners from the Drumheller facility will be relocated to Hut 8’s Medicine Hat site in Alberta, Canada. The company intends to retain its lease on the Drumheller site, preserving the option to re-energize it in the future if market conditions improve.

The cryptocurrency mining sector faces challenges such as record mining difficulty, the impending Bitcoin halving reducing mining rewards by 50%, and notably, soaring energy costs. In Alberta, Canada, electricity prices per kilowatt hour (kWh) have surged by 1,000% since 2017. Concerns over power consumption have led the provincial government to impose restrictions on new cryptocurrency mining projects.

Hut 8’s financial performance for the first nine months of 2023 indicates a 57% year-over-year revenue decline to CA$55,184 ($40,757), primarily attributed to falling Bitcoin prices during that period. Currently holding 1.3% of the Bitcoin network’s total processing power in terms of hash rate, Hut 8 grapples with a challenging market environment.

The company faced a substantial stock drop of over 23% on January 19 following allegations from short sellers regarding legal troubles in a $725 million merger deal involving Hut 8’s partner USBTC. In response, Hut 8 disputed the claims, denouncing the report as containing inaccuracies, misrepresented data, speculative claims, and unfounded character attacks. On February 8, the firm witnessed the resignation of its former CEO, Jaime Leverton. The dynamic challenges in the cryptocurrency mining industry continue to impact companies like Hut 8, necessitating strategic adjustments to navigate the evolving landscape.

Image by Gerd Altmann from Pixabay

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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