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    Hut 8 (HUT)

    HUT Q2 2024: 12 J/TH Fleet Upgrade to Cut Mining Costs, Boost Margins

    Reported on May 12, 2025 (Before Market Open)
    Pre-Earnings Price$11.39Last close (Aug 12, 2024)
    Post-Earnings Price$11.50Open (Aug 13, 2024)
    Price Change
    $0.11(+0.97%)
    • Fleet Upgrade for Efficiency Gains: Active discussions on upgrading the fleet to next-generation miners operating at 12 joules per terahash indicate a potential significant reduction in mining costs relative to current machines (down from approximately 17–18 joules per terahash), which could positively shift margins.
    • Robust and Expanding Power Infrastructure: With a reported ~1 gigawatt of wholly owned power capacity (inclusive of joint ventures) across 4 operating sites and a strong development pipeline, the company is well positioned to scale operations and leverage growth opportunities.
    • Diversified Revenue Streams via HPC Growth: The expansion into GPU-as-a-service, which is expected to generate around $20 million in annual revenue at current utilization rates, adds a valuable, non–Bitcoin mining revenue source, enhancing overall business diversification and resilience.
    • Utilization Risk in HPC Business: The GPU-as-a-service revenue target of $20 million annual run rate is based on current on-demand rates and average utilization that are below 100%, meaning any further decline in actual utilization could lead to revenue shortfalls.
    • Revenue Forecast Uncertainty: The reliance on partners' average utilization rates, rather than a guarantee of full utilization, introduces uncertainty whether the business model can consistently meet its projected financial outcomes.
    • Execution Risk in Expansion Strategy: The dual approach of exploring both co-location deals and owned GPU solutions introduces strategic and operational risks, as market dynamics and customer adoption may significantly affect the ability to scale and generate anticipated revenue.
    1. Fleet Upgrade
      Q: When will a full fleet upgrade complete and what’s current capacity?
      A: Management indicated they are actively discussing fleet upgrades with manufacturers to optimize efficiency. They noted that full upgrade timing depends on the purchase order execution, and highlighted having about 1 gigawatt of developed power capacity, including joint ventures, guiding their upgrade plans.

    2. GPU Agreement
      Q: Has the GPU-as-a-service agreement changed?
      A: Management confirmed the agreement remains as announced—operating under a 5-year fixed base plus revenue share model, with plans to explore additional project financing for future growth.

    3. HPC Connectivity
      Q: Are pipeline assets fully grid connected and what’s the Texas site timeline?
      A: Management clarified that all pipeline assets are grid connected, and the 205-megawatt Texas Panhandle site has an approved substation connection. They are in discussions with customers regarding its use for HPC, with site activity planned into calendar 2024.

    4. GPU Utilization
      Q: What is current GPU utilization and its revenue assumptions?
      A: Management explained that the $20 million annual run rate for GPU services is based on typical on-demand rates and average utilization, not assuming full 100% usage.

    5. HPC Go-to-Market
      Q: What is the strategy for expanding HPC offerings?
      A: They see distinct opportunities: one through the GPU-as-a-service model with dedicated teams, and another via co-location deals built-to-suit for large-scale customer demands. This dual approach leverages strong infrastructure and power availability to capture long-term market opportunities.

    Research analysts covering Hut 8.