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New Hut 8 CEO prepared to make ‘hard decisions’ to nix inefficiencies

source-logo  blockworks.co 08 February 2024 17:35, UTC

Hut 8 says it’s pursuing a different path than its competitors, who are mainly focused on increasing their exahash capacity.

On his first day as the company’s new CEO, Asher Genoot emphasized that Hut 8 is not aiming to be the largest in the field, but is instead ready to make “hard decisions” to improve profitability.

Bitcoin miner Hut 8, which completed what it called a “merger of equals” with US Bitcoin Corp in November, replaced Jaime Leverton with Genoot on Wednesday. Leverton had been Hut 8’s chief executive since December 2020.

Read more: Hut 8 switches CEOs as it eyes ‘new strategic direction’ after merger

Two months after the merger, the board of directors decided the business needed to focus more on “being a low-cost operator,” Genoot said during a Wednesday X Spaces.

That focus trumps exahash growth, he added, as rivals continue to extend their lead over Hut 8 in that category. While Hut 8 had a self-mining deployed hash rate of 7.2 exahashes per second (EH/s), as of Jan. 31, the energized self-mining hash rate for competitors Marathon Digital and Core Scientific stood at 26.4 EH/s and 18.6 EH/s, respectively.

“The goal is not to be the biggest; the goal is not to have the biggest market cap,” Genoot said. “The goal is to invest money to drive shareholder return and shareholder value creation.”

Genoot was a co-founder of US Bitcoin Corp and previously served as its chief operating officer, and then president, before the company merged with Hut 8.

“Asher carries experience from US Bitcoin Corp of building and operating mining datacenters of hundreds of megawatts,” said BlocksBridge Consulting founder Nishant Sharma. “Following the biggest merger of its kind in the mining industry, Hut 8 will require such valuable experience.”

The company had 9,116 bitcoin (BTC) on its balance sheet, as of Jan. 31, which is currently worth about $414 million. Maintaining a strong balance sheet will be “critical” leading into the upcoming bitcoin halving, Genoot said — an event during which per-block rewards are set to decrease from 6.25 BTC to 3.125 BTC.

Read more: Crypto miners keep busy ahead of halving with accelerated machine buys

The new CEO noted that inefficiencies “naturally accumulate” as a company scales. Hut 8 endured a net loss of roughly $54 million CAD (about $40 million USD) during the third quarter of 2023. It has not yet published its fourth quarter financial results.

“I’m going to take a fresh lens and a fresh eye to look at every single business line we have, every facility we have, every cost center, all of our [selling, general and administrative expenses] line items and take a methodical and rigorous approach to figuring out how we increase efficiencies, focus on margin expansion and increase profitability,” Genoot said.

Hut 8’s Drumheller mining facility in Alberta, Canada, for example, has an aging fleet and elevated energy rates, the executive said. Ongoing electrical problems at that site in recent quarters has contributed to decreased bitcoin mining production.

“What the board has tasked me with is coming into this business and taking a fresh approach to the issues that exist in how we make the hard decisions to divest, invest and grow our assets,” Genoot added.

While bitcoin mining in many cases represents the best use of the company’s power, Genoot said, the company has other revenue streams.

Hut 8 Chief Strategy Officer Mike Ho said during a December call with analysts that the company could look to boost its footprint in the artificial intelligence infrastructure and computing segments.

“Is just jumping to AI the answer? No,” Genoot said. “But there are good investments to make where you have a low cost of capital [and] a good contract with a strong counterparty that’s creditworthy.”

“I’m a big shareholder in this company; my upside is in the shares of this company going up,” he added. “So for me, all that matters is [if we are] driving shareholder return in every investment we make.”

Hut 8 stock, trading on Nasdaq, was up about 9% on the day, as of about 11 am ET Thursday. The company’s share price is down 41% so far in 2024.