Hut 8 (HUT) and U.S. Bitcoin are the latest crypto miners rushing to take advantage of the January Bitcoin rally.
Two firms announced their merger Wednesday, the latest deal in a wave of consolidation and balance sheet shuffling from battered miners still struggling with losses from last year. The new company would combine the two firms' resources and create a new crypto-mining giant named Hut 8 Corp.
- Canada's Hut 8 and U.S. Bitcoin will merge their BTC mining businesses.
- The new company will look to strengthen its balance sheet and compete in the mining space.
- The Bitcoin mining industry has been rushing to sell BTC and restructure debt.
Also referred to as "New Hut," the transaction will create a company that is listed on both the Toronto Stock Exchange and the Nasdaq. The companies said that the combined firm will have a market capitalization of $990 million and will be owned by shareholders of both firms.
"New Hut will have access to approximately 825 MW of gross energy across all six sites with self-mining, hosting, and managed infrastructure operations," the companies said in a press release.
The deal is expected to establish New Hut as a large-scale, publicly traded Bitcoin miner that can strengthen its balance sheet and gain access to capital-raising opportunities.
“This transaction has given us the opportunity to leverage the significant, unencumbered Bitcoin stack we have HODLed to date,” said Jaime Leverton, CEO of Hut 8. “During the interim period, we plan to cover our operating costs through a combination of selling the Bitcoin we mine, selling from our stack, and/or exploring various debt options."
Hut 8 stock fell 8.6% in Tuesday trading after the merger announcement.
Crypto Miners Rush to Restructure Debt
While some miners have been able to buy new mining rigs and sites at firesale prices during bitcoin's downturn, others have been forced to file for bankruptcy or restructure.
Austin's Core Scientific (CORZ) filed for bankruptcy in late December. Greenridge Generation Holdings (GREE) announced debt restructuring with its creditors in late January and on Wednesday Pennsylvania's Stronghold Digital (SDIG) did the same.
Hut 8 is just the latest in a wave of recent miners that have rushed to take advantage of the January Bitcoin rally. Las Vegas, Nevada-based, Marathon Digital Holdings (MARA) announced last week it would sell 1,500 BTC in a move the company said would help to fund operating costs.
“Marathon may continue to sell a portion of its Bitcoin holdings in future periods to support monthly operations, manage its treasury, or for general corporate purposes,” the company said in a statement.
The Bottom Line
The Bitcoin mining industry has been on the ropes since the decline in crypto assets started last year. The recent rally has allowed some much-needed balance sheet restructuring.
However, there is a risk that the rush to sell holdings of the world's largest cryptocurrency could impact its price. Texas-based miners have already faced another headwind in late January with a recent winter storm in the state forcing miners in the area to scale back their production.