Hut 8 to merge with rival cryptocurrency mining firm US Bitcoin
The resulting firm will be referred to as "New Hut" or "Hut 8 Corp."
Two notable Bitcoin mining firms, Hut 8 and US Bitcoin, have announced a merger as detailed in a press release published on Feb. 7.
Combined company will have six sites
The merger will combine two of Hut 8’s sites in Canada with all four of US Bitcoin’s sites in the US. The combined firm will utilize 825 megawatts of gross energy across all six sites. The new company will be able to leverage an estimated 5.6 exahashes per second (EH/s) of self-mining power across five sites.
The variation in the number of sites included in those estimates is due to ongoing conflicts. Hut 8 has a third site in Ontario, Canada, that has seemingly been halted to a power dispute. Additionally, one US Bitcoin site in Niagara Falls, NY, is locked in a dispute with the city but remains operational.
Though today’s agreement is described as a merger of equals within the press release, the new company will operate as “New Hut” or “Hut 8 Corp.” The merger will seemingly drop all branding related to US Bitcoin.
While an agreement has been reached among executives and stockholders, a special meeting must still close the deal in the second quarter of this year.
Hut 8 will also provide US Bitcoin with secured bridge financing up to $6.5 million, but not until definitive loan documentation has been completed.
Mining industry faces challenges
Hut 8 stock’s value is down 8.78% today. It is unclear whether this is due to a negative response to the merger or to broader market challenges.
The mining industry is currently facing harsh circumstances due to the high cost of power and Bitcoin’s relatively low market value. Hut 8 is known to be one of the companies affected by those challenges: earlier this year, the firm reported a drop in Bitcoin output in December as it sold back power to its energy supplier.
Hut 8 nevertheless held about 20% of the Bitcoin reserved by publicly traded miners at the end of 2022. It also managed to survive while its competitor Core Scientific failed, suggesting that it is in a relatively strong position.
The merger is expected to improve the value of the company. The deal is projected to roughly double Hut 8’s current market cap to $990 million, and its stock will be listed on both the Toronto Stock Exchange and Nasdaq.
Shares of Hut 8 will be consolidated at a ratio of five-to-one, meaning that the shares will be reduced in number but will also receive an increase in value.