July 22nd, 2024

Power prices sink Hut 8’s Drumheller crypto-mining site

By Medicine Hat News on March 7, 2024.

A member of the Hut 8 board feels the heat coming off a bank of processors on one of dozens of units at the 10-acre facility in north Medicine Hat in this July 2018 file photo.--NEWS FILE PHOTO


Hut 8 will cease operations at its Drumheller site citing high energy costs in Alberta and technical problems related to power at the crypto-mine.

Hut 8 will ship useful equipment to the company’s Medicine Hat data-processing facility, but maintain the lease of the site in case conditions improve, the North American cryptocurrency firm announced Wednesday.

“Following a comprehensive analysis, we have determined that the profitability of Drumheller has been impacted significantly by various factors, including elevated energy costs and underlying voltage issues,” said Asher Genoot, CEO of Hut 8, in a release.

“Our restructuring plan aims to drive maximum value from our assets and position the company for profitable growth. With the nominal lease expense, we will also have a low-cost option to re-energize the site if energy rates in the AESO grid decrease or hash price increases.”

Hash rate refers to operational efficiency to process Bitcoin transactions on which the company earns a fee.

Since early 2023 the company that is now based in Miami has detailed operating problems in Drumheller due to power surges and other problems.

It told investors this month a decision would be announced soon, but also outlined that its larger Medicine Hat site is also shielded from volatile power costs through a long-term contract with the City of Medicine Hat’s power company.

The statement on Wednesday outlines the decision as part of an optimization plan stemming from a recent merger of the Canadian company with U.S. Bitcoin.

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