Shares of Hut 8 (NASDAQ:HUT), a big player in the Bitcoin (BTC-USD) mining industry, sank in today’s trading despite announcing a power purchase deal for a new site in West Texas. This will give it access to 205 megawatts of power. This is the firm’s first deal from a planned 1,100 megawatts development pipeline. CEO Asher Genoot praised the team’s skills in navigating the tricky regulatory market to secure the deal.
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The new site, next to a wind farm and hooked up to the ERCOT (Electric Reliability Council of Texas) grid, offers some of the cheapest wholesale power in North America, which should give the company an operational edge in terms of cost structure. It has an operational substation, and construction for a new data center is underway. The site will support high-density computing like Bitcoin mining and AI and will improve Hut 8’s energy capacity to 1.3 gigawatts.
Hut 8 has been working hard lately to grow its operation. In fact, it recently secured a $150 million investment from Coatue Management. It also finished upgrades at its Salt Creek site, which allowed it to increase the number of deployed miners and boost its hashrate (the number of calculations a miner can perform per second). This led to a recent increase in the amount of Bitcoin produced.
Is Hut a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on HUT stock based on four Buys and one Sell assigned in the past three months, as indicated by the graphic below. After a 17% decline in its share price over the past year, the average HUT price target of $15.10 per share implies 13.6% downside risk.
