On Monday, Hut 8 Mining reported that first-quarter revenue rose 5% to $9 million from $8.59 million a year ago after the amount of bitcoin (BTC) extracted plunged sharply. Quarter-on-quarter, revenue fell 14%.
For the three months to March 31, 2020, the Canadian bitcoin firm said it mined 1,116 BTC, down 54% from the 2,405 BTC realized a year earlier. It blamed the decline on “increasing network difficulty (that) impacted the company’s production negatively”.
At the end of the quarter, Hut 8 held around 3,000 BTC worth about $26.8 million at current market prices.
Adjusted earnings (loss) before interest, tax, depreciation, and amortization narrowed to $0.43 million compared to Q1 2019 loss of $0.92 million. Much of the loss came from the closing two weeks of March when the price of BTC collapsed, it said.
The Toronto Stock Exchange-listed company stated that net loss worsened to $5.96 million from $4.30 million last year, as site operating costs increased.
Included in the earnings release is a revaluation loss on digital assets of $0.91 million compared to the prior year gain of $0.71 million. The loss results from a 10% decline in the BTC price during the review period.
In the quarter, Hut 8 completed the refinancing of an unsecured loan from Bitfury with a $4.97 million loan extension from Genesis Global Capital at a 2% interest rate. As a result of the refinancing, the amount of BTC locked in collateralized loans increased to 94% or 2,823 BTC of the company’s bitcoin portfolio. That compares with 58% or 1,700 bitcoin during the first quarter of 2019.
Hut 8 has stressed that the recent third Bitcoin halving will present significant challenges for miners. Acting chief executive officer Jimmy Vaiopoulos told analysts in an earnings call that the company may be forced to shut down parts of its operation because of the halving, which cut mining rewards in half to 6.25 BTC.
“Certainly, without a corresponding increase in the price of bitcoin, Hut 8’s revenue will be impacted negatively. If the price of bitcoin and the network hashrate remains flat, Hut 8’s corresponding revenue would be cut in half subsequent to the halving,” said the company in the earnings release.
“Management is actively seeking ways to mitigate these industry-specific factors,” it added, amid reports the miner was looking to upgrade its mining machines to more efficient ones.
Shares of Hut 8 dropped 2.3% to $0.90 in Toronto trading today. Over the past 52 weeks, the stock has traded in the range of $0.36 to $2.09.
Hut 8 operates two bitcoin mining sites in Alberta, Canada, utilizing 94 Block Box AC data centers with a current maximum operating capacity of 952 PH/s.
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The post Canadian Firm Hut 8 Reports Bitcoin Mined in Q1 Declined 54% Due to Price Volatility appeared first on Bitcoin News.
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