Shares of Toronto-based Bitcoin Mining firm Hut 8 (TSX: HUT) fell 8% on Monday shortly after posting underwhelming Q2 earnings figures.
The firm said it mined 399 BTC during the quarter ending June 30—down 58% compared to the same period last year. This led to a $24.6 million revenue drop from $43.8 million in Q2 2022 to $19.2 million in Q2 2023.
According to Hut, the drop was primarily due to increased Bitcoin network difficulty between each period, and issues related to specific mining facilities. The firm vacated its North Bay facility of 7,000 mining machines back in March amid a legal dispute with its power supplier, suspending 680 petahashes per second (PH/s) of mining capacity.
Meanwhile, “high energy input levels” and “equipment failures” alongside high energy rates at the company’s Drumheller facility in May moved it to reduce operations to just 20% of on-site capacity. Hut has since implemented “custom firmware” across its miners to ensure its fleet “operates within safe limits.”
Ethereum’s shift to proof of stake in September last year also bit into company profits, as the firm was forced to halt all of its GPU-related mining activity.
Despite the challenges, Hut 8 CFO Shenif Visram said the firm was successful in “strategically managing our costs.”
“In our high-performance computing business, we signed a significant five-year contract during the period, and will begin to realize that revenue later this year,” he added.
Similar to other mining firms, including Applied Digital and Iris Energy, Hut 8 is set to repurpose its existing infrastructure toward high-performance computing (HPC) through a newly signed deal with Interior Health, a health authority in British Columbia. “Revenue earned from the agreement will commence later in 2023,” wrote Hut.
As of June 30, Hut’s self-mined Bitcoin balance held in custody or held as collateral totals 9,136 BTC ($368.7 million).
Earlier this month, rival miner Riot Blockchain (NASDAQ: RIOT) posted a 27% increase in Q2 Bitcoin production compared to a year ago. In the report, the firm said it expects to benefit from ongoing consolidation in the mining industry as other companies “continue to experience challenges.”