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Hut 8 Mining Announces May Bitcoin Production Results; Analysts are Bullish
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Hut 8 Mining Announces May Bitcoin Production Results; Analysts are Bullish

Story Highlights

Investing in Hut 8 Mining is essentially making a bet that the price of bitcoin will rise. The company recently provided an update on its production and operations, and things seem to be running smoothly. However, is the stock worth buying, or are investors better off just buying bitcoin?

Hut 8 Mining (TSE: HUT) (HUT) is a cryptocurrency mining company with industrial-scale bitcoin mining operations in Canada. It provides investors with direct exposure to bitcoin without the technical complexity or constraints of purchasing the underlying cryptocurrency.

It is in the business of utilizing specialized equipment to solve complex computational problems to validate transactions on the bitcoin blockchain. The company receives bitcoin in return for the commercial activity of bitcoin mining.

The company recently provided an update on its production and operations.

Hut 8 Mining Operations and Production

Hut 8 Mining generated 309 bitcoins in the month of May, equating to a mining rate of about 10 bitcoins per day. In total, the company has 7,078 self-mined bitcoins in reserve. At a price of $30,000 per bitcoin, this equates to $212,340,000 worth of the cryptocurrency.

The company also gets paid in bitcoin to mine Ethereum, which accounts for 14% of total production, at a cost of under C$3,654 per bitcoin.

HUT added a third mine in May in North Bay, Ontario, which began operating on June 2. According to CEO Jamie Leverton, these are the company’s most efficient and powerful machines. Management believes that the new mine will have a measurable impact on production results, going forward.

Analyst Recommendations

Hut 8 Mining has a Strong Buy consensus rating based on five Buys assigned in the past three months. The average Hut 8 Mining price target of C$10.50 implies 276.3% upside potential.

Final Thoughts

Investing in Hut 8 Mining is essentially making a bet that the price of bitcoin will rise. However, Hut 8 Mining is currently trading below its book value, with a price-to-book ratio of less than 0.9x.

Because of this, investors can get exposure to this cryptocurrency stock at a discount to its intrinsic value. Nevertheless, investors should note that Hut 8 Mining currently burns cash since it stores almost all the bitcoins it mines.

As a result, it has relied on equity financings to fund its operations, which is dilutive to shareholders. Therefore, investors may prefer to invest in the actual cryptocurrency.

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