Hut 8: Energy Crisis, Ethereum Merge Slam Production By 25%

SummaryA portion of Hut 8's equipment at Alberta sites is unprofitable to operate at current Bitcoin prices and network difficulty during power price fluctuations.Competition will be a substantially larger drag on October's production as total network hash rate has quickly jumped to and maintained 255 EH/s.Hut 8 has a strong balance sheet and expanded their business without taking on substantial debt or selling their mined Bitcoin.As a rough estimate, about a fourth of the August to September decline in Bitcoin equivalents likely came from the suspension of Ethereum mining.The company's high-performance computer business is operationally profitable and growing, but small in absolute dollar amounts, representing about 11% of revenues in Q2.It's really all about mining costs and production. Hut 8's (HUT) adjusted operating costs per coin, excluding depreciation, went from about $13,100 in the first quarter this year, to $18,900 in the second quarter. The company's Bitcoin (BTC-USD) equivalent production for the first quarter was 942, with the second quarter coming in flat at 946. These two trends of lower margins and no growth look to continue or worsen in coming quarters as Hut 8 struggles with heightened energy prices and falling production levels resulting from its cautious view of mining economics.Offsetting these larger concerns, the company's high performance computer business is operationally profitable and growing. Howev...