Hut 8, a Bitcoin mining company, has made the decision to shut down its mining site in Drumheller, Alberta, Canada due to power disruptions and rising energy costs. The closure of the Drumheller facility, which is responsible for mining around 1.4% of Hut 8’s Bitcoin but consumes approximately 11% of its hash rate, will take effect immediately, according to an announcement on March 6.
The CEO of Hut 8, Asher Genoot, explained that after conducting a thorough analysis, it was determined that the profitability of the Drumheller site had been significantly affected by several factors, including high energy costs and voltage problems. As a result, all of the company’s Bitcoin miners will be relocated to its facility in Medicine Hat, Alberta, Canada, with Hut 8 maintaining its lease at the Drumheller site and the option to reactivate it if market conditions improve.
The combination of factors such as soaring energy costs, the record mining difficulty, and the upcoming Bitcoin halving, which will cut mining rewards in half, has led to a stagnation in the industry. Electricity prices per kilowatt hour (kWh) in Alberta, Canada have risen by a staggering 1,000% since 2017, according to data compiled by Energyrates.ca. Additionally, the provincial government has imposed restrictions on new cryptocurrency mining projects due to concerns over their energy consumption.
Hut 8’s revenue for the first nine months of 2023 experienced a 57% year-over-year decline, amounting to CA$ 55,184 ($40,757), primarily due to the drop in Bitcoin prices during that period. Currently, Hut 8 accounts for 1.3% of the total processing power of the Bitcoin network.
On January 19, Hut 8’s stock plummeted by over 23% in a single day following allegations made by short sellers regarding legal issues involving the company’s partner, USBTC, in a $725 million merger deal. Hut 8 has refuted these allegations, stating that the report contains inaccuracies, misrepresented data, speculative claims, and unfounded personal attacks. Furthermore, on February 8, the company’s former CEO, Jaime Leverton, resigned from her position.
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