First of all, Hut 8 is a Canadian cryptocurrency mining stock. The company is into Bitcoin mining and has mining equipment located in Alberta, Canada – Drumheller and Medicine Hat.
With the increase in Bitcoin Price (Current Bitcoin price is $32,000), all cryptocurrency stocks are doing extremely well. With some of them even posting 10x returns in the last 3 months alone.
HUT 8 stock is listed on the TSX and OTCQX in the US market. The stock trades under Symbol Hut in TSE and HUTMF under OTCQX.
In case you don’t know that OTC stands for “Over the Over the Counter” and the volume of these stocks that trade in OTC is usually much less compared to stocks listed on NASDAQ or NYSE. OTCQX is the next level up compared to OTCQB or pink stocks.
As of today, Hut 8 is trading just above $6 Canadian. Just FYI, the stock was trading under $2 in December 2020.
Hut 8 Stock Overview
As you know, bitcoin price movement is extremely volatile, so is Hut 8 stock.
Coz, the company mines BTC and its price is directly linked to BTC prices for profitability. Hut 8 does not mine any other cryptocurrencies such as Ethereum or Lite Coin. This is something to note before going ahead and investing.
The stock is up almost 6x since November 2020, meaning $1,000 invested in this stock has returned almost $6,000 today.
But should you invest in this stock? If you feel good about the bitcoin price rise 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.
Although, it’s pretty tough, to say the least. Bitcoin is now far mature compared to 2017 levels, with institutions interlisting to purchase 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 21 million bitcoins that can ever be mined from its overall life. Additionally, Bitcoin fees are constantly increasing. The next Bitcoin swing is expected to occur in 2024, making it more attractive right now.
Now let’s take a look at why you should probably consider buying HUT 8 stock over other crypto stocks.
Why should you buy Hut 8 stock?
OK, before we continue to quickly compare Hut 8 stock to other Canadian crypto stocks quickly:
1. You have BitFarms, which trades on the TSXV (venture) market.
BitFarms Stock is currently priced at just over $4 CAD and has a market cap of just over 300m.
2. Then you have the Hive blockchain, again, 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 is currently mining Ethereum, Bitcoin with mining centers located in Europe – Sweden and Norway and British Columbia.
Let’s keep it there.
Now you need to remember that TSXV is not the same as stocks that trade on TSX.
TSX is best in terms of stock volume and volatility – especially for Canadians looking for investments.
Top 8 reasons to buy Hut 8 stock today
Hut 8 is a wonderful Bitcoin mining company.
Here are my top 8 reasons to buy Hut 8 stock today:
1. First, Hut 8, as a Bitcoin mining company, holds approximately 2900 Bitcoins (as of previous quarter numbers).
So far, the company has guaranteed almost 1,800 Bitcoins for a loan of approximately $26 million (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 $77m to completely wipe out debt, buy more Bitcoin mining machines and business expansion (waiting for the press release about Shard Now).
2. Continuing with point #1, with the recent Capital Ruge Hut 8 is very well positioned to clear the outstanding loan it has and take back the 1800 BTC under loan ownership and further post the revaluation gains on the balance sheet.
The revaluation gains are going to be huge as Bitcoin has gone from $10,000 to almost $40,000 (comparing their BTC prices since last Q to Q in the coming months).
2900 pieces * 40000 USD is 112 M added to the balance sheet.
The company has about 115 million shares outstanding right now, not sure but somewhere around that.
This will further help in EPS and transferred P/E calculation.
3. Next, as well as showing the increase in price (in terms of revaluation gains for BTC Holdings) of BTC in the balance sheet/income statement, Hut 8 also recently entered into an agreement with Genesis Bitcoin Holding Company.
By doing so, the company will earn a (fiat currency) of 4% per 1000 BTC Holdings.
Now, this recurring revenue has again added to the balance sheet, driving operating costs lower. It’s a win-win for both Bitcoin holding and recurring income!
4. HUT 8 currently mines around 200 bitcoins per month.
That’s 600 BTC per quarter almost.
The company plans to continue holding most of the coins they mine and earn interest and revaluation gains as the price of BTC rises.
5. Hut 8, the company has in-house engineers for the maintenance of mining equipment and this keeps expenses lower.
Additionally, the company has held the Bitcoins mined over the past two years which you can see in their latest M&A statement, which is equivalent to 3000 coins, which will further increase Q on Q (the revaluation gains as the price of BTC increases).
6. Even at current Bitcoin prices, HUT 8 operating margins, i.e. BTC mining electricity costs, mining costs + mining costs are still profitable.
At the time of writing this article, Hut.8 is still making almost 200 km per day in operating profits from mining bitcoins. Their break-even price per coin mined is around 7.5k to be profitable.
7. The only debt on the balance sheet is the CA$26 million loan, which is expected to be out of tune, Coz Hut 8 recently raised 77m to repay loans and further expand mining equipment to increase Bitcoin production even further.
8. Last but not least, the company has excellent management in terms of Jaimie and Sue and is very well positioned to grow the bitcoin heap and still generate recurring revenue.
So, should you buy 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 in Alberta, Canada – Drumheller and Medicine Hat.
Why Alberta?
COZ, electricity costs in Alberta are much lower compared to other provinces and the weather additionally supports the heat these machines generate.
Overall, Hut 8 is now in excellent hands with the recent changes in the company’s management – new CEO and Head of IR – Sue Ennis.
Last but not least, I recently sent an email to Sue (IR Head) asking if the company plans to move from OCTQX (American Listing) to Nasdaq this year. And the answer was an exceptional “yes”, it seems the company is actively working on it.
By listing on NASDAQ, the liquidity and price movement of the stock will be much better for Hut 8.
Remember that Hut 8’s daily trading volume is around 2m, other Bitcoin mining stocks such as Mara and Riot have around 30m and above due to the NASDAQ listing alone.
Finally, Hut 8 currently has 1024 Petahash/Second right now with plans for further expansion, while Mara and Riot are well under 1 Petahash and still command SP of $20+ US dollars.
Other Useful Resources to Learn About Mining Stocks
If you are further interested in learning more about Canadian/US crypto stocks, you can search the “Blonie” 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 daily stock price targets and portfolio updates as well as trading data (BMXI) to help you learn and invest in the crypto space and businesses.
These two YouTube channels provide excellent value in terms of in-depth comparison of Bitcoin mining companies and news related to the mining space, including bitcoin.
Last words
As I said earlier, Hut 8 is one of the best Bitcoin mining stocks in Canada.
U.S. investors looking to buy the stock should examine the OTCQX Marketplace for the symbol HUTMF.
Again, Hut 8 as a company seems to be very genuine in everything they do and will quickly answer your questions on time (if you have any).
Finally, with bitcoin prices crashing late, it’s time to accumulate and expose your portfolio probably 5-10% to crypto mining stocks such as HUT 8. 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. Be careful. Bye now.
