- Hut 8 Mining Corporation has announced the closure of its Drumheller mining site in Alberta, Canada.
- The mining company is one of North America’s largest and most innovative Bitcoin miners.
- The decision comes as the company grapples with surging energy costs and an increasingly complex regulatory environment.
Hut8 is facing rising costs and regulatory hurdles
The Drumheller mining site contributed approximately 11% of Hut 8’s hashrate toward Bitcoin production. The site has been deemed unprofitable due to elevated energy costs and underlying voltage issues.
The closure is effective immediately, with the company’s Bitcoin miners shipping back to its Medicine Hat facility, which boasts superior infrastructure and economics.
Hut 8’s CEO, Asher Genoot, stated that the closure is part of a comprehensive restructuring plan to drive maximum value from the company’s assets and position it for profitable growth.
Despite the nominal lease expense, Hut 8 retains the option to re-energize the Drumheller site if market conditions improve, such as a decrease in energy rates on the AESO grid or an increase in hash price.
Even though the closure of the mining site seems like a bad decision, the move will enhance Hut 8’s cash flow, reduce its cost to mine a Bitcoin, and drive an increase in Bitcoin mined per EH of approximately 11%.
Electricity prices per kilowatt-hour (kWh) in Alberta have increased by 1,000% since 2017, prompting the provincial government to restrict new cryptocurrency mining projects over concerns about power usage.
For the first nine months of 2023, Hut 8’s revenue fell by 57% year-over-year, largely due to falling Bitcoin prices at the time.
This move is strategic because it comes during a time when the Bitcoin mining sector is facing stagnation due to high energy costs, record mining difficulty, and the anticipated Bitcoin halving, which will reduce mining rewards by 50%.
Bitcoin Price Surpassed $72,000 for the First Time in History
BTC made history, breaking above $72,000 for the first time in history. Moreover, it is also the first time for Bitcoin to establish ATH prices before the halving.
This sets a precedence for an extremely bullish supercycle for Bitcoin and the rest of the crypto market.
Some experts believe that another bull run like this could only have happened 100 years ago, and hence an extremely rare opportunity to profit off the markets.