Hut 8 Stock Analysis: Who they are and what they do

Hut 8 Stock Analysis - Who they are and what they do

Hut 8 Mining Corp. is the bitcoin mining company with the largest holding of bitcoin (BTC) in North America. Let’s dive into who this company is and get a better understanding of Hut 8 Stock value.

The cryptoverse has gained a lot of traction in the past few years as investors stock up on cryptocurrencies. They believe money that isn’t controlled by central banks could be the future. Bitcoin is the grand-daddy of all crypto.

A company whose primary business model is centered around extracting bitcoin is considered a bitcoin Miner. Three of the most popular bitcoin mining companies are $MARA (Marathon Digital Holdings), $RIOT (Riot Blockchain) and $HUT (HUT 8 Mining Corp). 

To understand why companies like HUT are pouring millions of dollars into bitcoin mining we need to understand the value of BTC itself. 

How Hut 8 stock gets value from BTC

Bitcoin is seen as the future of currency. It gives you control of your money, not the bank or government

Bitcoin’s value is $44,105 (as of February 16th). The theory is that the value of bitcoin will increase in the long term as the amount of BTC that can be mined is limited. Now, this is all speculation and the actual future of bitcoin is anyone’s guess. 

 Bitcoin 5Y Chart via google finance – 2/16

Hut 8 Mining Corp. is a Canadian based Fintech company that mines and accumulates Bitcoin. Their entire business model is based on holding all of their self-mined BTC and continuing to increase their capacity to mine more.

They’ve actually done this successfully in the last 3 months. The BTC they extracted as of their most recent report (January 2022) was 308 in a month (or 9.93 bitcoins per day on average).

$HUT’s BTC mined for the last 3 months

November 2021 – 265 BTC

December 2021 – 276 BTC

January 2022 – 308 BTC

Because they hold so much BTC, and because they’re business model relies almost exclusively on extracting more, $HUT stock price fluctuates as the price of Bitcoin moves.

Recently they found new strategies to make more money with their significant BTC stockpile. HUT began lending out their bitcoin in 2021 primarily to earn a 4% yield as revenue (in USD). 

They eventually would like to earn USD from white label hosting services as well. This could mean they are going to be a reseller who hosts other BTC miners. 

An illustration of HUT 8’s business model

Diving into Hut 8’s Financials

Currently HUT is a growth company so you wouldn’t expect them to be profitable, but according to TradingView, they were profitable in 2019 and 2020.

Most of the cash they accumulated to fund their operations are from shareholders through issuance of stock. As of June 2021 they are now listed on both the TSX and NASDAQ.

HUT’s market capitalization is $1.222B USD (as of February 15th) making it a small cap company. 

Their TTM (trailing twelve month) revenue and net income have both increased year over year. HUT’s total 2020 revenues were 31.95M while their trailing twelve month revenues are 101.57M. Their 2020 net income was 14.95M while their trailing twelve month net income is 51.86M. This is probably because of the rise of bitcoin’s value in the last 12 months. 

How HUT 8 stacks up against the competition

  Blue = $HUT, Yellow = $MARA, Teal = $RIOT via Google Finance 2/16

HUT is rapidly growing. You can see this growth through percentage gain/loss comparison with some well known competitors for the past year.  

All three companies’ charts trend in the same direction because they are all tied to the value of bitcoin, but HUT has the best percentage growth from August 2021 to now. 

In the coming months and years the question continues to be will HUT continue to grow and become the top bitcoin mining company in the industry or will their strategy of holding all bitcoin become detrimental to their profit growth? On time will tell.

Possible ways to invest in HUT 8 Stock

DISCLAIMER: Please note that this is not in any way financial advice nor are we or anyone from Stock Hacker Academy licensed to give financial advice. If you are seeking financial advice please speak to someone that is registered to provide it. Everything stated or wrote here is for educational purposes and opinion sharing only.

Ok, so there are several ways to make money with Hut 8 Stock:

  1. Buy shares outright. If you expect HUT to grow a lot in the next 5 – 10 years, then holding shares of HUT in a TFSA or RSP could be a good strategy.
  2. Sell naked puts. This let’s you set a lower entry price and collect some premium while you wait for the price to drop. If you get assigned, you’ll have bought it at a discount because of the premium you collected.
  3. Sell covered calls. You have to own at least 100 shares of HUT for this strategy. If you know what price you’d like to sell your shares at, you can sell a covered call at that desired strike price. You collect a premium up front, and if the shares don’t reach your price, you won’t have to sell them. You can use this strategy in a TFSA or RSP as well.
  4. The wheel strategy. This is a combination of selling naked puts and covered calls. Sell a naked put to get assigned shares of HUT. Then sell covered calls on your shares until they are called away. Then repeat.

If you’re lost when it comes to selling naked puts, covered calls, and the wheel strategy, check out our Options for Beginners series. Part 2 and Part 3 specifically cover the stock options strategies that you can use to make a little extra money from Hut 8 stock.

Happy trading,

🍒Cherry & Erwin

P.S. These stock options strategies make a great side hustle. If you’re interested in finding a new side hustle, we’ve put together a new case study that examines the four most popular side hustles for passive income in Canada. You can download this case study for FREE right now if you sign up for our email newsletter.

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