A bitcoin miner is ‘hodling’ as crypto’s winter gets worse

One Canadian data center operation, Hut 8, has been very clear that it’s not selling its bitcoin stash in this very difficult market.

Why it matters: Going long bitcoin, it turns out, doesn’t have to mean going all in on bitcoin. The lesson of this downturn turns out to be an old one: multiple cash flows are a good idea.

  • “The last time we sold was I think early January 2021. We sold a little bit,” Sue Ennis, vice president of corporate development told Axios in a phone interview. “We don’t want to be selling at these price levels.”

By the numbers: Hut 8 holds 7408 BTC (just north of $146 million worth at current prices), according to their latest production update.

  • It’s bringing in about 10 BTC per day (approximately $200,000). Core Scientific brings in 37 per day, but it also just sold all its bitcoin cheap.

What they’re saying: “Focusing on revenue diversification is a huge part of our strategy and also having revenue that’s uncorrelated to the digital currency space,” Ennis said.

  • Hut 8 spent $30 million to buy a data center that can do graphics processing, machine learning — basically all the buzzy new cloud things.
  • That generates something like $1.6 million a month for them in steady revenue that has nothing to do with the whims of token land.
  • And yet, if web3 takes off, it’s the tech stack Hut 8 will need to show leadership there as well.

Ennis says they are targeting 15 to 18% growth in that business this year, which is good overall but also gives them a way to weather crypto downturns without unloading bitcoin at clearance prices.


Situational awareness: Bitcoin difficulty is dropping, which indicates that miners are powering down. Lower difficulty improves the returns for operations like Hut 8.

  • Ennis says the drop can partly be explained by old hardware that’s no longer worth running. “Apparently about 25% of the total network hash rate was being run on S9s, and S9s are among the oldest miners out there,” Ennis said.
  • Plus, Texas is in a heat wave, so many of their competitors shutting down to support local grids there.

Red alert: Hut 8 has a view into the market much deeper than the average person. Looking every day at prices for miners and used miners, they started to get a warning sign that trouble was coming.

  • “Equipment that we had picked up in the previous bear market for $20 to $30 a terrahash, we saw it start trading for $80 to $90 a terrahash,” Ennis said.
  • Hut 8 backed away from capital expenditures at that point, but all indications are that many others didn’t.
  • “We do like the prices where they’re at now,” Ennis said.

Zooming out: Founded in 2017, Hut 8 is a publicly traded miner that also provides other data processing services. It’s name is a reference to the World War II codebreaking station once led by Alan Turing.