Hut 8 Mining Corp (TSX: HUT|OTCQX: HUTMF) posted a 43% decrease in revenue from the previous quarter. The Canada-based block reward mining operators recently published its latest financial results. The earnings report shows the firm generated revenue of C$5.7 million (US$4.3 million) in Q3, down significantly from C$26.7 million during the same period last year.
The news was not all bad. Hut 8 also reduced cost in Q3 2020, resulting in a narrower net loss of C$900,338 compared to the previous year. Its management team credits this improvement to a “successful” series of strategic and operational initiatives throughout the quarter that streamline cost.
Despite the revenue decrease, Hut 8 continues to expand its block reward mining operations. During the quarter, the firm deployed 2,000 new Whatsminer M31S hardware rigs in its Medicine Hat facility. This expansion resulted in a reported hash power increase of 154 PH/s using 6.7 MW of power. Hut 8 is set to receive an additional 1,590 M30S units this month, adding another 140 PH/s of hash power.
At CoinGeek, we have often pointed to the long-term problems block reward miners face as they attempt to build a reliable, sustainable business model, but this feels like a juncture where the problems have been rather worked over. The solutions to those problems are right in front of them, yet they still choose to look the other way.
Outside of digital currency traders and price speculators, there are no people and businesses that rely on Hut 8’s services or the BTC token Hut 8 support. As they continue to make significant investments in scaling out their hardware infrastructure, nothing practical or meaningful is generated from this endeavor.
Hut 8 expects the BTC token to “moon” once the “digital gold” narrative takes hold within financial institutions or the mainstream community. This is where BTC diverges from the use case of Bitcoin SV, which is why groups like Hut 8 prefer it. BTC mining is fundamentally an auto-pilot operation day to day, requiring minimal staff and effort once the hardware is deployed.
BTC has risen in price over the past few weeks, approaching levels that mirror its rise during the late 2017 ICO craze. Is this another bubble-induced euphoria or harbinger to another crazy market environment? Time will soon tell if there is real momentum or an overheated rally. If so, while it rises block reward miners embracing operational insanity might profit.
These temporary conditions will not last forever, and another price fall will occur since BTC has no utility. Once economic reality hits again, block reward miners will again start shutting down and liquidating hardware. This cycle goes on and on until there are no participants left to continue propping up this decaying project.
See also: TAAL’s Jerry Chan presentation at CoinGeek Live on The Shift from Bitcoin “Miners” to “Transaction Processors”
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