Hut 8 Stops Mining Of Bitcoin Due To Energy Conflict

Zinger Key Points
  • Bitcoin miner Hut 8's relationship breaks down with Validus.
  • Hut 8's Ontario site may experience issues due to a dispute with Validus, which could reduce its hashrate by 20%.

Bitcoin BTC/USD miner Hut 8 Mining Corp HUT is looking for third-party energy supplier mediation after disagreements over a joint power purchase agreement caused portions of its operations to shut down.

The Canadian company was forced to halt mining bitcoin at its facility in North Bay, Ontario, after the energy supplier Validus stopped supplying the location with energy. 

The mining company runs two other mining locations in Southern Alberta.

The service provider alleged Hut 8 missed payments on time. Hut 8 issued a statement on Monday refuting those claims. 

Hut 8 claimed earlier this month it had served Validus with a notice alleging the energy provider was on the verge of defaulting on its obligations under the terms of the two companies' power purchase agreement. 

Hut 8 blamed Validus for failing to meet specific operational milestones by important dates outlined in the terms.

Hut 8 also reported ongoing talks with Validus have so far failed to lessen the operational and financial effects of associated issues. 

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As of June, the Ontario site had 5,800 installed miners, used 20 MW of power and contributed 20% of Hut 8's overall hashrate.

Hut 8 indicated it was using a third party to mediate the dispute with Validus and expressed optimism that a settlement could be reached without going to court. Regarding the operational benchmarks it claimed Validus had missed, they declined to speak further.

Hut 8 Could Have Survived Without The Disruption
Most miners are finding it difficult to overcome considerable obstacles as a result of a sharp decline in Bitcoin's price, which has lost 66% of its value so far this year.

In fact, profits have been negatively impacted by high electricity costs, low Bitcoin prices and rising mining difficulty. 

Hut 8 thus experienced a 36% loss in third-quarter revenue from the same time last year, going from $50.3 million to $31.7 million, according to the latest financial reports.

Mining profits for the same quarter decreased by 72% to $9.3 million from $33.5 million in the third quarter of 2021. 

Last year at this time, Bitcoin was trading at around $60,000 and now it is around $16,500.

Despite the challenging market conditions, Hut 8 has publicly committed to holding onto all of its Bitcoin. 

At the end of August, the company was still mining 12.1 BTC ($200,000) every day, maintaining 8,111 BTC ($133.6 million) total.

Along with most of its competitors, the firm's stock, which commands a market value of about $220 million, has also suffered, falling more than 85% year to date, making it even more crucial to get its miners back up as quickly as possible.

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