After the Bitcoin halving many bitcoin miners began to speak out about their diversification plans, some even venturing into AI.
Hut 8 has recently announced that it will be building out its vertical for high-performance computing to support AI.
Coatue Management is a technology-focused investment group that provided $150 million of funding to the company through a convertible note. Investor deems miner “well-positioned to accelerate new compute capacity” Advance the AI segment.
Hut 8 CEO Asher Genoot said Blockworks what he saw “hundreds of megawatts of opportunity” To build on existing mining footprints in a sector.
“We think that’s a significant size to capture some of the demand we’re seeing in the markets today, while giving us ample capacity and growth in the bitcoin mining business as well,” He clarified.
Yahoo Finance reported that Hut 8 rose by more than 12 percent on Tuesday, and another 5% increase was recorded Wednesday.
Core Scientific has seen its stock rise in recent weeks as a result of its 12-year hosting agreement with CoreWeave. The Hut 8 rival said it was set to host the cloud provider’s NVIDIA GPUs for HPC operations — adding the deal presented a potential annual revenue opportunity of $290 million.
This deal was expanded upon by the Texas miner on Tuesday. It announced in a release that they would be delivering an additional 70MW to CoreWeave.
Both companies are not looking to abandon bitcoin mining any time soon or at all, despite the fact that they have been seeking new revenue streams since April’s event, which halved block mining rewards, from 6,25 BTC per block to 3,125 BTC.
Hut 8 plans to expand the businesses “in parallel” — though it might take a contrarian approach on the BTC side, its CEO noted.
“We won’t necessarily grow when everyone else is growing,” Genoot is added. “And we might grow when people aren’t growing, because that’s when we believe growth is cheapest and has the best return.”
Read on for additional excerpts of Blockworks’ interview.
Blockworks: Hut 8 was attracted to this Coatue Investment.
Genoot: Because we believed that our shares were undervalued, we have always raised capital. The way we set up the investment enabled us to make a convertible bond whereby we can sell our stock for a higher valuation in the future.
Coatue, we believe, is one of most significant and respected investors within the tech space in the last decade. It is important to have them on board as investors because it validates our market thesis and expansion plans. They also provide a list of other potential partners and investors within their own ecosystem.
Blockworks: Which are your company’s biggest headwinds? Tailwinds?
Genoot: There’s no secret about the fact that bitcoin mining machines are getting older. Since I thought that newer machines would be coming out, I told the market I didn’t want to buy new machines.
With over 9,100 Bitcoin, we are a diversified company with a healthy balance sheet. We believe that as we carefully invest this capital we will be able build and drive a thoughtful business.
We can be patient and take the long term view to make good investment decisions to help grow our business.
Blockworks: Some miners choose to sell all or part of their BTC. Hut8 evaluates that.
Genoot: If we find an opportunity to invest that is highly intriguing, with a rapid growth rate for the business, we will look to see what the best method for us to use to get the money to this opportunity.
It could be equity, borrowing, or financing. If balance sheet capital costs the least, that is what we might do.
Blockworks: What are your thoughts on Core Scientific’s agreement with CoreWeave? What might Hut 8 do if a competitor changes their strategy?
Genoot: The market is growing quickly and we believe there are peers of ours that will grow and capture this opportunity alongside us…to build out this approach on power infrastructure.
This just proves that the opportunity exists. This market is too big; it doesn’t seem like direct competition.
For us, this Coatue investment is important as well — because for folks outside the crypto, bitcoin mining and digital asset space, it gives a certain level of validation that they’ve done their diligence and believe Hut 8 has a platform to expand and provide for AI companies in the ecosystem.
Blockworks: Can the AI/HPC business of Hut 8 ever be bigger than bitcoin mining? When will this happen?
Genoot: You can see that the market for AI/HPC is bigger in terms of dollars. It also has more conventional financing to support growth.
Our goal has always been and continues to be, in my opinion, one of the biggest bitcoin miners, when it comes to footprint.
We have a variety of energy partners. [it’s about] figuring out which is the best asset…in order to support the grid and be good partners.
There are different capital pools that can fund growth.
It would be a shame to not grow bitcoin mining when we’re one of the largest operators of bitcoin mining facilities in the world today — and continuing to maintain that footprint while expanding and growing within a new business vertical.
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