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    Hut 8 (HUT)

    HUT Q1 2024: $20M Ionic JV Powers 85MW, Targets 300MW Growth

    Reported on May 12, 2025 (Before Market Open)
    Pre-Earnings Price$7.79Last close (May 14, 2024)
    Post-Earnings Price$8.32Open (May 15, 2024)
    Price Change
    $0.53(+6.80%)

    What went well

    • Ramping AI vertical: The company is deploying its first GPU cluster under a revenue-sharing joint venture model, which could drive significant upside as demand for AI compute grows.
    • Upgrading mining fleet for better efficiency: Management is actively retiring less efficient mining equipment while monitoring new efficiency machine orders, positioning the fleet for improved cost structures and profitability.
    • Robust Managed Services growth: The strategic agreement with Ionic Digital—covering over 85 megawatts currently with plans to expand to 300 megawatts—provides a recurring, fee-based revenue stream that diversifies and stabilizes earnings.

    Q&A Summary

    1. Fleet Upgrade
      Q: Future mining fleet plans?
      A: Management is retiring older, less efficient machines and waiting for superior, cost-effective units (e.g., Bitmain’s new models) to maintain profitability at around $0.04/kWh, even as market conditions weaken.

    2. Bitcoin Exposure
      Q: Change in Bitcoin stack strategy?
      A: They are open to leveraging their 9,102 Bitcoin to fund growth, potentially swapping exposure for new facility investment while keeping mining operations profitable.

    3. Managed Services
      Q: Ionic revenue contribution?
      A: The Ionic deal in West Texas contributes a fixed annual service fee of over $20 million, with initial management of roughly 85 MW and plans to expand further.

    4. Pipeline Update
      Q: 1.1 GW pipeline progress?
      A: The team has advanced the 1,100 MW (or 1.1 GW) pipeline with improved execution and stronger relationships with energy partners, signaling robust future capacity.

    5. Curtailment Efficiency
      Q: Efficiency gains with curtailment?
      A: Their proprietary software curtails operations for about 8.6% of the time, reducing the power cost from $0.059 to $0.026 per kWh—a saving of over 56%.

    6. GPU Orders
      Q: More GPU orders planned?
      A: Management has not announced additional GPU orders yet, focusing instead on generating revenue from the initial cluster of 1,000 Nvidia H100 GPUs.

    7. GPU Deal Structure
      Q: What’s unique about the GPU deal?
      A: The GPU deal features a joint venture with fixed payments supplemented by revenue sharing, offering a leveraged return based on on-demand performance.

    8. AI Cluster Location
      Q: Where is the AI cluster hosted?
      A: The initial GPU cluster will operate in a third-party data center to minimize execution risk, with future plans considering CapEx upgrades to existing centers for higher-density compute.

    9. Self-Mining Costs
      Q: Target energy cost for self-mining?
      A: Management expects energy costs to stay within the $0.03 to $0.04/kWh range, leveraging curtailment and operational efficiency to control expenses.

    10. Ionic Revenue Stream
      Q: Is Ionic’s fee fully active?
      A: Yes, the $20 million annual fee is expected to run at full rate into Q2 once the Cedarvale facility is fully energized, supporting a stable revenue model.

    Analyst Coverage

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