BTC block reward miner Hut 8 (NASDAQ: HUT) is shutting down one of its sites in Canada, citing surging power costs and “underlying voltage issues.”
The miner, which has been battling allegations of orchestrating a pump-and-dump scheme, recently announced the closure of its site in Drumheller, a town northeast of Calgary in Alberta, Canada.
Mining update – we are shutting down our Drumheller site as part of a broader restructuring strategy that aims to strengthen our financial performance. We expect to see an 11% pro forma increase in our Bitcoin mined per EH.
As part of the plan, we are moving the most efficient…
— Hut 8 (@Hut8Corp) March 6, 2024
Hut 8 will relocate all its modern mining rigs to its other site in the southeastern city of Medicine Hat in Alberta. It will eliminate the old and inefficient rigs, whose electricity consumption remains relatively high. The Drumheller site reportedly takes up 11% of Hut 8’s overall costs but only churns out 1.4% of its BTC.
The company will continue to hold the lease at the Drumheller site and might restart the operations “if market conditions improve.”
Commenting on the announcement, CEO Asher Genoot blamed “elevated energy costs and underlying voltage issues” for the shutdown.
According to the Canadian energy-comparison service Energy Rates, the average electricity rate has shot up from 2.88 cents per kilowatt-hour (kWh) in 2017 to 37.464 cents per kWh in 2022. Energy Rates cited extreme weather events, the increasing carbon levy, and an end to a government-mandated energy price cap for the hike.
With energy accounting for the bulk of mining costs, block reward miners in Alberta are feeling the pinch.
“Our restructuring plan aims to drive maximum value from our assets and position the company for profitable growth. With the nominal lease expense, we will also have a low-cost option to re-energize the site if energy rates in the AESO grid decrease or hash-price increases,” said CEO Genoot.
As it shuts down its Drumheller facility, the miner recently announced that construction is underway for a new site in Culberson County, Texas. The 63 MW site is expected to start operations in the second quarter.
In February, Hut 8 mined 292 BTC, a dip from the 339 BTC it mined in January, for a total of 9,110 BTC held on its balance sheets.
With BTC inching towards its halving, where the reward will go down from 6.25 BTC to 3.125 BTC, the miners’ woes will only worsen. BSV will slash its block reward just before BTC, but in stark contrast, BSV isn’t entirely reliant on block rewards. BSV’s massive scaling allows miners to compensate for the reduced block reward with transaction fees.
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