Hut 8 Closes Canadian Bitcoin Mine Due to High Energy Costs

Hut 8, a leading entity in the Bitcoin mining industry, has made a significant move by shutting down its operations at the Drumheller location in Alberta, Canada. The announcement came on March 6, citing relentless issues with power supply interruptions and the escalating costs of energy as primary reasons. The facility, responsible for a minor 1.4% of the company’s Bitcoin production, was utilizing a significant 11% of its hashing power, making the operation unsustainable under current conditions.

Strategic Shifts Amid Energy Challenges

Asher Genoot, the company’s CEO, shared that an in-depth analysis led to the difficult decision of discontinuing the Drumheller operations. The team highlighted that the profitability of the site had been severely affected by the rising energy prices and ongoing voltage problems. Hut 8 is now redirecting its Bitcoin mining operations to its other site in Medicine Hat, Alberta. Despite the closure, the company plans to hold onto its lease in Drumheller, with the possibility of resuming operations if the market situation improves.

The decision comes against a backdrop of several pressures facing the cryptocurrency mining industry. Notably, electricity costs in Alberta have seen a dramatic increase, with a reported 1,000% rise since 2017. This increase, alongside the highest mining difficulty recorded and the impending Bitcoin halving expected to cut mining rewards in half, has contributed to a standstill in the sector. Additionally, Alberta’s government has placed restrictions on new cryptocurrency mining projects due to their high power consumption.

Financial Impact and Corporate Developments

In the first nine months of 2023, Hut 8 witnessed a 57% decline in its year-over-year revenue, totaling CA$55,184 ($40,757). This downturn was primarily attributed to the falling prices of Bitcoin during the period. Despite these challenges, Hut 8 maintains a 1.3% share of the global Bitcoin network’s hash rate.

The company also faced setbacks when its stock value fell dramatically by over 23% on January 19, following allegations against its partner USBTC over legal issues in a $725 million merger deal. Hut 8 refuted these allegations, criticizing the report for inaccuracies and speculative claims. The firm also saw the resignation of its former CEO, Jaime Leverton, on February 8, marking another significant change in its corporate landscape.