Bitcoin miner Hut 8 is shutting down operations at its Drumheller, Alberta, location in Canada due to unreliable power supplies and escalating energy costs.
Hut 8 has announced the imminent closure of its Drumheller mining facility, which processes an estimated 1.4% of the company’s Bitcoin at a cost of approximately 11% of its hash rate (March 6 announcement).
“Following a comprehensive analysis, we have determined that the profitability of Drumheller has been impacted significantly by various factors, including elevated energy costs and underlying voltage issues,” Asher Genoot, chief executive officer of Hut 8, stated in written communication.
The organization will promptly transfer every Bitcoin miner to its Medicine Hat, Alberta, Canada facility. “Hut 8 will maintain its lease at the site and the option value of re-energizing the site if market conditions improve,” according to its employees.
A confluence of elements, including exorbitant energy expenses, unprecedented mining challenges, and the forthcoming Bitcoin halving, projected to diminish mining incentives by 50%, have contributed to the sector’s stagnation.
Alberta, Canada, has experienced a 1,000% surge in electricity prices per kilowatt-hour (kWh) since 2017, according to data compiled by Energyrates.ca. Concerns regarding the power consumption of new cryptocurrency mining ventures have also prompted the provincial government to impose restrictions.
Hut 8’s revenue decreased by 57% year-over-year to CA$ 55,184 ($40,757) in the first nine months of 2023, primarily due to declining Bitcoin prices. At present, Hut 8 contributes 1.3% of the total processing capacity of the Bitcoin network in terms of hash rate.
On January 19, Hut 8 stock declined by over 23% in a single day following the disclosure of allegations by short sellers that USBTC, a company partner, was involved in legal issues related to a $725 million merger agreement.
Since then, Hut 8 has asserted that the report “is replete with false information, speculative assertions, unsubstantiated personal attacks, and inaccuracies.” The firm’s former CEO, Jaime Leverton, resigned on February 8.
