According to Benchmark, a prominent investment banking firm, the expansion plans of Hut 8, a United States-based Bitcoin (BTC) miner, along with its diversified revenue strategies, are poised to enhance its competitiveness in the post-halving era.
In a research note dated April 22, Benchmark’s senior analyst Mark Palmer highlighted the evolution of Hut 8 into the “new HUT,” emerging from the amalgamation of the previous entity (“old HUT”) and the US Bitcoin Corporation. Palmer emphasized the firm’s “diversified business model” characterized by multiple revenue streams.
Benchmark commenced coverage of Hut 8 stock, setting a target price of $12, marking a substantial 30% surge from its current trading value of $9.22, as per data sourced from TradingView.
Hut 8’s current self-mining hash rate stands at 5.4 exahash per second (EH/S), significantly trailing behind Marathon Digital, the leader in this category, with a deployed rate of 27.8 EH/S. However, Palmer anticipates a narrowing of this gap in due course.
Palmer attributed his bullish outlook to Hut 8’s varied revenue streams, encompassing self-mining, cloud computing, high-performance computing, and artificial intelligence services, which he sees as pivotal factors supporting the target price.
Highlighting the resilience of Hut 8’s business model, Palmer expressed confidence that its diversified revenue sources would mitigate the impact of severe downturns in Bitcoin’s price, offering it an advantage over its peers.
Furthermore, Palmer noted that Hut 8’s enterprise value-to-revenue multiple of 2.6 marginally undercuts the 3.1 average of publicly traded Bitcoin mining counterparts, such as Marathon Digital and Riot Platforms.
Although acknowledging the imperative for Hut 8 to enhance its hash rate, Palmer underscored the significance of the 9,102 Bitcoins held in reserve, describing it as a substantial liquidity buffer and a potential avenue for capturing gains in the event of significant BTC price rallies.
In a notable corporate development on February 7, Hut 8 underwent a leadership transition, with Asher Genoot assuming the role of CEO, succeeding Jamie Leverton. This reshuffle followed closely on the heels of a report by short-selling firm JCapital, alleging legal issues and cautioning investors about a potential “pump and dump” scenario involving the Florida-based Bitcoin miner. Hut 8 vehemently refuted these allegations, denouncing the report as a deliberate dissemination of misinformation, citing inaccuracies and misrepresentations.
In conclusion, Hut 8’s strategic expansion plans and diversified revenue approach, coupled with its resilient business model, position it favorably for sustained growth and competitiveness in the evolving landscape of Bitcoin mining.