BTC block rewards miner Hut 8 (NASDAQ: HUT) is shutting down one of its Canadian sites, citing soaring power costs and “underlying voltage issues.”
The miner, who is suspected of orchestrating the pump-and-dump scheme, recently announced the closure of his mine in Drumheller, a town northeast of Calgary, Alberta, Canada.
Mining Update – Closing the Drumheller site as part of a broader restructuring strategy aimed at strengthening financial performance. We expect the estimated number of Bitcoins mined per EH to increase by 11%.
As part of our plan, we are moving in the most efficient direction…
— Hut 8 (@Hut8Corp) March 6, 2024
Hut 8 will move all of its modern mining equipment to another location in the southeastern Alberta city of Medicine Hat. This will eliminate old, inefficient equipment with relatively high electricity consumption. The Drumheller site reportedly accounts for 11% of Hut 8’s total costs, but only produces 1.4% of BTC.
The company will maintain its lease at the Drumheller site and may resume operations “if market conditions improve”.
In response to the announcement, CEO Asher Genoot blamed “rising energy costs and fundamental voltage issues” for the closure.
Average electricity prices have jumped from 2.88 cents per kilowatt-hour (kWh) in 2017 to 37.464 cents per kWh in 2022, according to Energy Rates, a Canadian energy comparison service. The end of government-mandated energy price caps for energy bills to rise due to extreme weather events, increased carbon levies and more.
Block reward miners in Alberta are struggling because energy accounts for the majority of mining costs.
“Our restructuring plan aims to maximize the value of our assets and position the company for profitable growth. For a nominal rental fee, you also have a low-cost option to re-energize the field when energy bills from the AESO grid decrease or when hash prices increase,” said CEO Genoot.
With the closure of the Drumheller facility, the miner recently presentation Construction is underway on a new site in Culberson County, Texas. The 63 MW site is expected to begin operations in the second quarter.
Hut 8 mined 292 BTC in February, down from 339 BTC in January, and has a total of 9,110 BTC on its balance sheet.
As BTC approaches halving, miners’ misfortune will only get worse as their rewards are reduced from 6.25 BTC to 3.125 BTC. BSV plans to cut its block rewards just before BTC, but in contrast, BSV is not entirely dependent on block rewards. BSV’s massive scaling will allow miners to compensate for reduced block rewards with transaction fees.
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