Hut 8's Expansion Plans and Diversified Income Set to Boost Competitiveness: Benchmark Report
Summary:
Investment banking firm Benchmark anticipates that Hut 8's expansion plans and diversified revenue streams will boost its competitiveness in the Bitcoin mining field. Despite its current hash rate being lower than category leader Marathon Digital, the firm expects this gap to narrow over time. Analyst Mark Palmer highlighted Hut 8's multiple revenue routes, including artificial intelligence services, cloud computing, and high-performance computing, in addition to its substantial Bitcoin reserve, as factors likely to provide long-term benefit and resilience to market downturns.
Investment banking company Benchmark believes that American Bitcoin miner Hut 8's plans for expansion and diversified income streams will enhance its competitiveness, particularly post-Bitcoin halving. Mark Palmer, a senior analyst at Benchmark, provided insight on April 22 stating that the amalgamation of US Bitcoin Corporation and the "old HUT" resulted in the "new HUT," a firm with a diverse business portfolio and multiple sources of revenue. Having begun to cover Hut 8 stocks, Benchmark set a target price of $12, almost a 30% surge from the current rate of $9.22. Hut 8 is currently going for just above $9. Despite Hut 8's current 5.4 exahash per second (EH/S) self-mining hash rate being considerably less than that of Marathon Digital, the leader in the category with 27.8 EH/s, Palmer anticipates the gap to narrow. He asserts, "Hut is discounted against its Bitcoin mining counterparts, and we foresee the discount diminishing as the firm executes its self-mining expansion plans." Palmer sees Hut 8's wide array of income sources, which encompasses self-mining, cloud computing, high-performance computing, and AI services, as supporting his price target. "We project that Hut 8’s diversified approach will be beneficial in the long run, as it is strategically positioned to withstand significant Bitcoin price crashes better than most of its publicly traded peers, according to our analysis," Palmer explained. Furthermore, he clarified that Hut 8 had an enterprise value-to-revenue ratio of 2.6, marginally less compared to the average of 3.1 of its public Bitcoin mining peers, such as Marathon Digital and Riot Platforms, amongst others. While Palmer agreed that Hut 8 needs to bolster its hash rate, he pointed out that its Bitcoin reserve of 9,102 has given it a substantial liquidity buffer and the potential to capture any significant gain should the BTC price skyrocket in the forthcoming months. On February 7, Hut 8 underwent a management reshuffle following accusations by a short-selling firm, JCapital, that Hut 8 was in a legal predicament and warned investors about a potential "pump and dump". Hut 8 refuted the claims as attempts to spread false information and claimed the report contained inaccurate details and misrepresented data.
Published At
4/23/2024 5:04:00 AM
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