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Hut 8 Mining Adds 12 BlockBox Data Centers to Drumheller Facility
The 12 BlockBoxes were previously owned by the Bitfury Group and will increase Hut 8 Mining’s number of BlockBoxes to 85 split between its facilities in Drumheller and Medicine Hat, Alberta.
Hut 8 Mining (TSXV:HUT) announced on Monday (November 12) that 12 BlockBox Data Centers have been added to its bitcoin mining facility in Drumheller, Alberta.
According to the release, the BlockBoxes were previously owned by Bitfury Group while the transaction still requires approval from the TSX Venture Exchange (TSXV).
Upon completion of the transaction, Hut 8 Mining will have in operation 85 BlockBoxes between its facilities in Drumheller and Medicine Hat, Alberta.
Before the transaction is officially sealed, the 12 BlockBoxes will be improved to include 12  Petahash per second (PH/s) Bitfury Clarke ASIC chips. The BlockBoxes also bump up Hut 8’s mining capacity by 14.4 megawatts (MW) and roughly 144 PH/s. With its new total of 85 BlockBoxes, the company will have an aggregate maximum of 100.3 MW of fully-funded operating capacity that generates 785 PH/s.
“Our goal is to be the largest bitcoin miner in the world,” Andrew Kiguel, president and CEO of Hut 8, said in the release. “By increasing our operating capacity by over 20 percent through this transaction, Hut 8 will further solidify its position as the largest cryptocurrency miner in Canada and one of the largest bitcoin miners in the world.”
Other terms of the transaction include Hut 8 reducing the monthly management fee that is paid for each BlockBox to Bitfury from US$2,500 to US$2,000, which will save Hut 8 US$500,000 per year from the rate reduction.
Following approval from the TSXV, the new BlockBoxes will cost US$13 million and will be financed through a loan from the Bitfury Group totaling US$9 million, US$2 million in Hut 8’s shares at US$3.15 each and US$2 million in straight cash.
The loan from Bitfury to Hut 8 will be unsecured with a 12 percent coupon and have a 24-month term for the first US$6 million. The loan’s remaining balance will be repaid at the existing maturity date of the Galaxy Digital loan or if that loan is repaid early.
As it currently stands, Hut 8 Mining has 17 BlockBox data centers operating at its Drumheller facility at 18.7 MW and 140 PH/s. The additional 12 will bring that number to 29 BlockBox data centers with an operating maximum of 33.1 MW and 284 PH/s by next month.
Meanwhile the company’s Medicine Hat mining location has 56 BlockBox data centers operating at its current maximum of 63.2 MW and 500 PH/s. By Q1 2019, the company expects that number to increase to 67.2 MW. Since its mining operations began in December of last year, Hut 8 Mining has mined more than 4,400 bitcoins.
Since the announcement on Monday, shares of Hut 8 Mining have dipped 3.79 percent over the two-day trading period to close Tuesday’s session at C$3.79. The company is currently ranked as a “Sell” on TradingView with 14 against, eight neutral and four ranking it as a “Buy.”
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.Â
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