Shares of Hut 8 (NASDAQ:HUT) fell in today’s trading after the bitcoin (BTC-USD) miner secured a $150 million investment from Coatue Management. This investment, through a convertible note, will help Hut 8 build a “next-gen AI infrastructure platform” and expand its data center portfolio.
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Hut 8 CEO Asher Genoot believes the partnership will open significant opportunities for growth. The convertible note will pay 8% interest per year, with a five-year term and the option for three one-year extensions. Coatue can convert the note into Hut 8 stock at $16.395 per share, with adjustments to prevent dilution.
Bitcoin Leads Cryptocurrencies Lower
Although Bitcoin has been on a tear this year, Hut 8 shares have not benefitted from the rally, and it may be about to get worse for the Bitcoin miner. Bitcoin dropped sharply on Monday after news that the trustee for the defunct Mt. Gox crypto exchange will start returning over 140,000 BTC to clients in July.
Indeed, investors are worried about the impact of that many BTC flooding the market, according to CoinDesk. However, Alex Thorn, head of research at Galaxy, believes fewer coins will be distributed than expected, and the selling pressure will be less. He estimates about 95,000 coins will be distributed in July, with many individual creditors likely holding onto their BTC rather than selling, due to potential capital gains taxes.
Is Hut a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on HUT stock based on five Buys and one Sell assigned in the past three months, as indicated by the graphic below. After an 8% decline in its share price over the past year, the average HUT price target of $13.75 per share implies 12.61% upside potential.
