Hut 8 Mining Corp. (NASDAQ:HUT) Secures Major Hosting Agreement with Bitmain, H.C. Wainwright Maintains Buy Rating and $13.50 Price Target
H.C. Wainwright reaffirms its Buy rating and $13.50 stock price target for Hut 8 Mining Corp. (NASDAQ:HUT) after the company announces a significant hosting agreement with Bitmain. The deal involves deploying up to 15 EH/s of Bitmain's cutting-edge ASIC miner, the U3S21EXPH, at Hut 8's new 205 MW site in Texas. This strategic move is expected to boost Hut 8's mining capabilities with the new technology's enhanced efficiency.
According to H.C. Wainwright's analysis, the hosting contract could potentially generate around $125 million in annualized revenues for Hut 8. This projection is based on a fixed fee of $0.075 per kWh from Bitmain and a 95% uptime, resulting in an estimated gross margin of approximately 57%. Additionally, Hut 8 has the option to purchase all 15 EH/s of mining rigs at a discounted fixed price of $21 per terahash.
Despite the positive outlook, the stock price increase of 3.7% the day before was more influenced by a rise in Bitcoin prices rather than the hosting agreement news. H.C. Wainwright expects a more favorable market reaction to the deal and reiterates its Buy rating and $13.50 price target for Hut 8 Mining Corp.
In recent financial results, Hut 8 reported a 72% year-over-year revenue increase but also a significant net loss. The company is focusing on advancing its development pipeline and exploring AI compute opportunities, aiming to upgrade its ASIC fleet.
InvestingPro Insights show that Hut 8 trades at a low earnings multiple of 4.9, suggesting the stock may be undervalued. Despite some challenges, including revised earnings expectations and high price volatility, Hut 8 has shown profitability over the past twelve months. Investors can find additional tips for analyzing Hut 8 Mining Corp. on InvestingPro's platform.
In conclusion, Hut 8's partnership with Bitmain and its strategic initiatives position the company for potential growth and profitability in the future. It is crucial for investors to consider the company's financial metrics and market dynamics to make informed investment decisions.