Hut 8 Merges with US Bitcoin to Fight Crypto Winter

Hut 8 Mining Corp. (NASDAQ:HUT), a digital asset mining company from North America, has announced an all-stock merger of equals with an operator of four Bitcoin (BTC) mining centers in the USA, US Bitcoin.

US Bitcoin and Hut 8 Join Forces

According to the press release, the combined company will be named Hut 8 Corp. The primary goal of the merger is to create a large scale publicly-trader crypto mining firm focused on diversifying revenue streams, cheaper mining and ESG practices.

The Boards of Directors of both companies have unanimously agreed to merge, and the new Board will consist of the five directors of Hut 8 and the five directors of US Bitcoin.

Bill Tai will retain his position as Chairman of the Board, Jaime Leverton will remain as the CEO, and Asher Ganoot will still serve as President. Michael Ho will be appointed the Chief Strategy Officer, while Shenif Visram will remain as the Chief Financial Officer.

"Bringing together Hut 8's operational track record and diversified revenue streams with US Bitcoin's scalable mining sites, sizeable hosting business, and industry-leading managed infrastructure operations not only accelerates our diversified strategy and positions us for near-term growth, but also establishes us as a strong, U.S.-based player that is ready and able to seize additional opportunities as they arise," Jaime Leverton, the CEO of Hut 8, said.

Higher Power and Mining Capabilities

The new Hut 8 will gain access to a total of 825MW of gross power spread across six data centers, each with the ability to mine, manage infrastructure and host independently. The post-merger mining potential of the two companies will reach 5.6 EH/s.

"We've been searching for the right partner to join us on our ambitious growth journey for some time and are confident that Hut 8 is the perfect fit," Michael Ho, the Co-Founder and CEO of US Bitcoin, said.

The company will utilize energy from a mix of zero-emission and renewable sources. The mining industry has recently been betting on environmentally friendlier solutions after strong criticism suggesting that it is responsible for excessive carbon dioxide emissions.

Watch the recent FMLS22 panel on Forex and crypto trends in 2023.

Crypto Miners Feel the Bitcoin Blues

Although Bitcoin's price rebounded 40% from multi-month lows in January, the mining industry is far from the results and revenues realized in 2020 or 2021.

Falling prices for BTC and other cryptocurrencies have caused many companies to cut back on their workforce, with miners earning $6 billion less in 2022 than the year before.

In January alone, cryptocurrency companies cut 3,000 jobs. These included the cryptocurrency platform Luno, which reduced its staff by 35%, and the exchange Gemini, which decided to cut its workforce for the third time in nine months.

Mining companies are managing to produce more coins than before, even though the difficulty of mining has increased. Still, this guarantees much lower revenues due to low profitability at current prices. Northern Data has increased its production by 315% compared to last year, but this has not translated into better financial results in dollar terms.

In challenging market conditions, only the strongest can survive. Hence the decision by Hut 8 and US Bitcoin to merge seems perfectly logical. The question is if cryptocurrencies continue to remain cheap in the long term, whether this will lead to further industry consolidation.