Hut 8 Shuts Down Bitcoin Mining Facility Due to Soaring Energy Expenses

Bitcoin mining company Hut 8 has made the decision to shut down its mining site in Drumheller, Alberta, Canada due to issues with power and rising energy costs. The facility, which is responsible for mining around 1.4% of Hut 8’s Bitcoin, but consumes 11% of its hash rate, will be closed immediately, according to an announcement made on March 6. Hut 8’s CEO, Asher Genoot, explained that the profitability of the Drumheller facility has been significantly impacted by factors such as high energy costs and voltage problems. As a result, all of the company’s Bitcoin miners will be relocated to its Medicine Hat facility in Alberta. However, Hut 8 will maintain its lease at the Drumheller site and may consider reopening it if market conditions improve.
The closure of the Drumheller mining site is a result of various factors, including soaring energy costs, the record mining difficulty, and the upcoming Bitcoin halving, which will cut mining rewards in half. Data from Energyrates.ca shows that electricity prices in Alberta have increased by 1,000% since 2017. Additionally, the provincial government has imposed restrictions on new cryptocurrency mining projects due to concerns about their power consumption.
Hut 8 has experienced a significant drop in revenue, with a 57% year-over-year decrease to CA$55,184 ($40,757) in the first nine months of 2023. This decline was mainly attributed to the falling price of Bitcoin during that period. In terms of hash rate, Hut 8 currently represents 1.3% of the total processing power of the Bitcoin network.
The company has faced other challenges recently, including a 23% drop in its stock price on January 19, following allegations from short sellers about legal issues involving its partner USBTC in a $725 million merger deal. Hut 8 has strongly denied these allegations, stating that the report contains inaccurate and misrepresented data. Furthermore, the firm’s former CEO, Jaime Leverton, resigned on February 8.