Hut 8 closes Bitcoin mining site, citing surging energy costs

Bitcoin miner Hut 8 is closing its mining site in Drumheller, Alberta, Canada, due to power disruptions and surging energy costs.

According to the March 6 announcement, Hut 8’s Drumheller mining facility, which mines approximately 1.4% of the firm’s Bitcoin (BTC) but at the cost of around 11% of its hash rate, will be closed effective immediately.

“Following a comprehensive analysis, we have determined that the profitability of Drumheller has been impacted significantly by various factors, including elevated energy costs and underlying voltage issues,” Asher Genoot, CEO of Hut 8, said in a statement. Effectively immediately, all of the company’s Bitcoin miners will be relocated to its Medicine Hat, Alberta, Canada facility. “Hut 8 will maintain its lease at the site and the option value of re-energizing the site if market conditions improve,” its staff wrote.

A combination of factors, such as high energy costs, alongside record mining difficulty and the anticipated Bitcoin halving, which will reduce mining rewards by 50%, have resulted in sector stagnation. According to data compiled by Energyrates.ca, electricity prices per kilowatt hour (kWh) have increased by 1,000% in Alberta, Canada, since 2017. The provincial government has also restricted new cryptocurrency mining projects due to concerns over their power use. 

For the first nine months of 2023, Hut 8’s revenue fell by 57% year-over-year to CA$ 55,184 ($40,757), largely due to falling Bitcoin prices at the time. In terms of hash rate, Hut 8 currently accounts for 1.3% of the Bitcoin network’s overall processing power.

 On Jan. 19, Hut 8 stock fell by more than 23% in a single day after allegations surfaced from short sellers accusing the company’s partner USBTC of legal trouble in a $725 million merger deal. Hut 8 has since stated that the report “is filled with inaccuracies, misrepresented data, speculative claims, and unfounded character attacks.” On February 8, the firm’s former CEO, Jaime Leverton, resigned. 

Related: Bitcoin price retraces from $69K ATH as BTC hodlers take profit

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