Analysts reiterate ‘buy’ rating as Hut 8 inks $125m deal

Hut 8 announced a major hosting deal with Bitmain on September 19 that aims to generate $125 million in annual revenue.

HC Wainwright analysts are bullish on the move, as management is on the offensive and making a big deal. Under the deal, Hut 8 will deploy up to 15 exahashes per second of Bitmain’s U3S21EXPH ASIC miners at its new Texas-based site by Q2 2025, according to an HC Wainwright announcement shared with crypto.news.

HC Wainwright’s crypto analyst Mike Colonnese predicts that this option could increase Hut 8’s self-mining hash rate from 4.7 EH/s to 19.7 EH/s, solidifying the company’s market position.

Colonnese emphasized that the new generation of miners featuring direct liquid cooling are expected to triple processing power and provide a significant efficiency increase compared to current models.

The deal gives Hut 8 the option to purchase all deployed platforms within six months of activation at a competitive price of $21 per terahash, allowing the company to scale its mining operations.

“This unique hosting arrangement and miner purchase option structure provides Hut with three key benefits: 1) stable, recurring hosting revenues from Bitmain that are not dependent on BTC price fluctuations, 2) the option to purchase and instantly convert up to 15 EH/s of the latest generation into the company’s own mining fleet (these platforms had a below-average throughput rating of 31.7 J/TH as of 2Q24), and 3) reduced upfront capital requirements.”

HC Wainwright analysts

Stable incomes

This partnership provides Hut 8 with stable, recurring revenues from Bitmain while also reducing Bitcoin (BTC) price volatility.

Additionally, the custom-built data center design optimized for high-performance computing will support up to 180 kilowatts per rack, providing operational synergies and future cost savings. With an estimated 57% gross margin from this deal, Hut 8 is poised to increase profitability despite recent Bitcoin price volatility.

Hut 8 shares rose 3.7% after the news. Market watchers expect further gains as the company completes its expansion.

Analysts reiterated a “Buy” rating with a $13.50 price target, highlighting the company’s ability to self-fund construction using its $175.5 million cash reserves and $558.2 million worth of 9,105 BTC holdings.