Despite the crypto boom, Hut 8 Corp recently had one of the largest US-listed stock downgrades on record. Their Q3 net loss came in at $134.3 million. That’s a $250.7 million reversal from the $250.7 million profit the company posted in that same quarter last year. That drop is due almost entirely to decreased block rewards from the latest Bitcoin halving that occurred in April. Hut 8’s revenue took a big hit as well, bringing in $21.8 million, a year-over-year drop of almost 58%.
Fortunately, the company’s earnings call, held on Thursday, provided a bit more clarity as to what’s driving this scary financial turn. CEO Asher Genoot attributed the fall to the compounding effects of the Bitcoin halving. This event greatly accelerated the destruction of mining rewards as it effectively halved them. Although the halving took place last April, Hut 8 only recently started seeing the complete financial impact.
Hut 8’s balance sheet is similar to other mining companies who are wrestling with impacts from the halving. To counter these headwinds, Hut 8 is pursuing diversification into non-crypto revenue streams (including AI and high-performance computing).
During the second quarter earnings call, Asher Genoot, CEO & Co-Founder, continued to double down on Hut 8’s new mining-focused venture American Bitcoin Corp. The company started this program to address the pains associated with dropping block rewards. It seeks to succeed in the complex, highly variable, and rapidly changing cryptocurrency market.
Analyzing the drop in revenue shows just how much of a negative effect the upcoming Bitcoin halving is having on Hut 8’s current performance. The move to a net loss only exacerbates those impacts. The company's exploration of new ventures reflects a proactive approach to adapting to the evolving landscape of the cryptocurrency industry.
