Hut 8 Stock Review: Should You Buy At Current Levels?

First of all, Hut 8 is a Canadian Cryptocurrency mining stock. The company is into mining Bitcoins and has mining equipment located in Alberta, Canada – Drumheller and Medicine Hat facilities.

With the increase in the Bitcoin prices (the current price of Bitcoin is $32,000 USD), all the Cryptocurrency stocks are doing extremely well. With some of them posting even 10X returns for the past 3 months alone. 

Hut 8 stock is listed on the TSX and OTCQX in the US Market. The stock trades under the symbol HUT in TSE and HUTMF under the OTCQX. 

In case you don’t know OTC stands for “Over The Counter” and the volume of these stocks trading in the OTC is usually far less compared to NASDAQ or NYSE listed stocks. OTCQX is the top tier compared to OTCQB or Pink stocks.

As of today, Hut 8 is trading just above $6 Canadian. Just FYI, the stock was trading at less at $2 in December 2020. 

Hut 8 Stock

Hut 8 Stock Overview

As you know Bitcoin price movement is extremely volatile, so does the Hut 8 stock.

Coz, the company mines BTC and its price is directly related to BTC prices for profitability. Hut 8 does not mine any other cryptocurrency such as Ethereum or Lite Coin. This is something to make a note of before you go ahead and invest. 

The stock has almost 6X since November 2020 i.e. $1000 invested into this stock has returned almost $6000 today.

But, should you invest in this stock? If you feel good about the rising price of Bitcoin and find it an interesting play, then why not. A small portion of your portfolio can definitely be invested in this stock. But, remember, you have every chance of losing everything here. 

Even though, that’s pretty harsh, to say the least. Bitcoin now is far matured compared to 2017 levels, with institutions pitching in to buy the digital currency and the number of addresses holding Bitcoin increasing every day. 

Demand for BTC far exceeds supply. And we have the limit of 21M Bitcoins that can ever be mined in its overall lifetime. Also, the Bitcoin fees are constantly on the rise. The next Bitcoin halving is set to occur in 2024, which makes it furthermore attractive right now.

Let’s now look at why you should probably consider buying Hut 8 stock over other Crypto Stocks.

Hut 8 Mining

Why Should You Buy The Hut 8 Stock? 

Ok, before we continue let’s quickly compare the Hut 8 stock to other Canadian crypto stocks quickly: 

1. You have Bitfarms, which trades on the TSXV (venture capital) market.

Bitfarms stock is currently priced at just over $4 CAD and a market cap of just over 300M.

2. Next, you have the Hive Blockchain, again, trading on the TSXV. Priced just above $3 CAD with a market cap just under 1B CAD.

Frank Holmes is the CEO of HIVE Blockchain and the company currently is into mining Ethereum, Bitcoin with mining centres located in Europe – Sweden and Norway and BC. 

Let’s keep it there. 

Now, you need to remember that TSXV is not the same as stocks trading on TSX.

TSX is the best in terms of the stock’s volume and volatility – especially for Canadians looking for investments. 

Top 8 Reasons To Buy The Hut 8 Stock Today 

Hut 8 is a wonderful Bitcoin mining company.

Here are my top 8 reasons to buy the Hut 8 stock today:

1. First, Hut 8, as a Bitcoin mining company, holds about 2900 Bitcoins (as of previous quarter numbers).

Until now, the company has collateralized almost 1800 Bitcoins for a loan of around 26 Million Dollars (Canadian dollars).

With the new CEO (Jaimie) and IR team head (Sue Ennis), the company is heading in the right direction, they recently offered shares to private institutions raising almost 77 M dollars to clear the debt completely, buy more Bitcoin mining machines and corporate expansion (waiting on the Press Release regarding expansion now). 

2. Continuing with point #1, so with the recent capital raise Hut 8 is very well positioned to clear the outstanding loan it has and take back the 1800 BTC’s under the loan possession and further show revaluation gains in the Balance Sheet.

The revaluation gains alone are going to be huge since Bitcoin has moved from $10000 USD To $40000 USD almost (comparing their BTC prices since the last Q to the reporting Q in the next few months).

2900 coins*40000 USD is 112M added to the balance sheet.

The company has around 115M outstanding shares right now, not sure but somewhere around that.

This will further help in the EPS and Forward P/E calculation. 

3. Next up, along with showing the increased price (in terms of revaluation gains for the BTC holdings) of the BTC on the Balance Sheet/Income Statement, Hut 8 also has recently come into an agreement with Genesis Bitcoin Holding Company.

By doing so, the company will earn a flat (fiat currency) of 4% interest per 1000 BTC holdings.

Now, that recurring revenue added to the Balance Sheet again which will bring down the operation costs further down. That’s a Win-Win for both Bitcoin holding and recurring revenue!

4. Hut 8 currently mines around 200 Bitcoins per month. 

That’s 600 BTC’s per quarter almost.

The company plans to continue holding most of the coins they mine and earn interest from it and the revaluation gains as the BTC price goes up. 

5. Hut 8, the company has in-house engineers for the mining equipment maintenance and this keeps the expenses further down.

Furthermore, the company has been holding the Bitcoins mined over the last two years which you can see in their latest M&A statement, equating to 3000 coins almost, which will further increase Q on Q (revaluation gains as BTC price will increase). 

6. Even at the current Bitcoin prices, Hut 8’s operating margins i.e. BTC mining revenue-electricity costs+operations costs considered, is still profitable.

As of writing this article, Hut.8 is still making close to 200K per day in operating profits by mining Bitcoins. Their breakeven price per coin mined is around 7.5K to be profitable.  

7. The only debt on the Balance sheet is the 26M Canadian dollar loan, which should be off this quarter, coz Hut 8 recently raised 77M to pay off the loans and further expand the mining equipment to increase Bitcoin production even further. 

8. Last but not the least, the company has excellent management in terms of Jaimie and Sue and is very well positioned to increase Bitcoin hodling and generate recurring revenue even further. 

So Should You Buy The Hut 8 Stock?

Of course, Yes, Hut 8 is one of the best Bitcoin mining stocks today.

The company is proudly Canadian and is located in Toronto, Canada. The miners are located in two locations of Alberta, Canada – Drumheller and Medicine Hat. 

Why Alberta? 

Coz, the electricity costs in Alberta are far less compared to other provinces and the weather further supports the heat these machines generate. 

Overall, Hut 8 is in excellent hands now with the recent changes in the Company’s Management – new CEO and IR head – Sue Ennis. 

Last but not the least, I recently sent out an email to Sue (IR head) asking if the company plans to upgrade from the OCTQX (US listing) to NASDAQ this year around. And the answer was an outstanding “yes”, looks like the company is actively working on this. 

By listing on NASDAQ, the stock’s liquidity and price movement will be much better for Hut 8.

Remember, while Hut 8’s daily trading volume is around 2M, other Bitcoin mining stocks such as MARA and RIOT have around 30M+ because of NASDAQ listing alone. 

Finally, Hut 8 currently has 1024 Petahash/second right now with plans of further expansion, while MARA And RIOT are far less than 1 Petahash and still command SP of $20+ US Dollars. 

Hut 8 Mining

Further Helpful Resources To Learn More About Mining Stocks

If you’re further interested in learning more about the Canadian/US Crypto Mining stocks you can look out for the “BLONITY” and “Empire Building” YouTube Channel. 

While BLONITY is run by a German named Lukas, Empire Building channel is hosted by Curtis, a fellow Canadian. BLONITY also offers a Patreon group with everyday stock price targets and portfolio updates along with operations (BMXI) data to help you learn and invest in the Crypto space and companies. 

Both these YouTube channels offer excellent value in terms of in-depth comparison of the Bitcoin mining companies and news related to the mining space including Bitcoin. 

Final Words

Like I said earlier, Hut 8 is one of the best Bitcoin mining stocks in Canada.

US Investors looking to buy the stock need to look at the OTCQX market for the symbol HUTMF. 

Again, Hut 8 as a company looks to be very genuine in everything they do and will answer your questions promptly on time (if you have any). 

Finally, with Bitcoin prices crashing off late, it’s time to accumulate and expose your portfolio probably 5-10% to Crypto Mining stocks such as Hut 8.  Always remember to buy low at these levels, hold and sell high for maximum profit booking. 

Thanks for reading. Let me know if any questions/comments below. Stay safe. Bye now. 

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