Hut 8 Closes Drumheller Mining Facility Amid Rising Energy Costs, Shifting Miners to Medicine Hat
Summary:
Canadian Bitcoin mining company, Hut 8, is shuttering its Drumheller facility due to increased energy costs and persistent voltage problems. The miners will be relocated to its Medicine Hat facility in Alberta. Despite the move, the company retains the lease for the Drumheller site and may restore operations if market conditions improve. This decision comes amid a sector-wide stagnation due to high energy costs, increased mining difficulty, and impending Bitcoin halving. In 2023, Hut 8's revenue saw a 57% drop from the previous year, with its share price falling by over 23% in a single day on January 19 following allegations against its partner, USBTC. Former CEO, Jaime Leverton, stepped down on February 8.
Bitcoin mining enterprise, Hut 8, is abruptly ending its operations in Alberta's Drumheller location in Canada, attributing its decision to recurrent power issues and heightened energy expenses. Issued on March 6, the formal statement indicates that the Drumheller site, responsible for mining around 1.4% of the company's total Bitcoin yield yet consuming about 11% of its hash rate, will no longer be operational. The company's head, Asher Genoot, pointed out that the site's profitability had been severely hit by multiple elements including escalating energy prices and persistent voltage complications. Consequently, all Bitcoin miners under the company's wing will be transferred to the Medicine Hat location in Alberta, while preserving the leasing rights to the Drumheller site with the eventual plan of reviving it if the market conditions turn favourable. The reasons for this outcome include inflated energy rates alongside unprecedented mining difficulty boosted by the impending Bitcoin halving, an event set to slash mining rewards by half, leading to a standstill within the sector. Energyrates.ca statistics indicate a staggering 1,000% increase in kWh electricity prices in Alberta, Canada from 2017. The provincial authorities have likewise imposed a ban on fresh cryptocurrency mining ventures due to worries about their heavy energy consumption. During the initial three quarters of 2023, Hut 8 experienced a whopping 57% year-on-year drop in its revenue, falling to CA$ 55,184 ($40,757), credited largely to the declining Bitcoin rates during the period. With respect to hash rate, Hut 8 currently contributes to 1.3% of the entire processing power of the Bitcoin network. On a related note, on January 19, Hut 8's share prices plummeted by over 23% within a day on account of allegations from short sellers who claimed that the company's partner, USBTC, was embroiled in a legal fracas in relation to a $725 million merger deal. Although Hut 8 termed the report as a compilation of inaccuracies and baseless assertions, its former CEO Jaime Leverton eventually tendered his resignation on February 8.
Published At
3/6/2024 6:52:36 PM
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