Hut 8 Shuts Down Bitcoin Mining Facility Due to Rising Energy Costs

Bitcoin Miner Hut 8 Closes Alberta Mining Site Due to Government Restrictions and Rising Energy Costs

Leading Bitcoin mining company Hut 8 has announced the closure of its mining facility in Drumheller, Alberta, Canada, citing government restrictions and soaring energy prices as the main reasons.

The Drumheller site, which accounts for 1.4% of Hut 8’s Bitcoin production but consumes 11% of its hash rate, will be shut down immediately, according to the company’s March 6 statement.

“After conducting a thorough analysis, we have determined that the profitability of Drumheller has been significantly affected by various factors, including excessive energy expenses and voltage problems,” stated Hut 8 CEO Asher Genoot. The company will relocate all of its Bitcoin miners to its Medicine Hat, Alberta, Canada facility with immediate effect. “Hut 8 will continue to hold its lease at the site and consider the possibility of reactivating it if market conditions improve,” the team added.

The crypto mining sector has been facing a slowdown due to a combination of factors, including high energy costs, record mining difficulty, and the upcoming Bitcoin halving event, which will halve mining rewards. According to data from Energyrates.ca, electricity prices per kilowatt hour (kWh) in Alberta, Canada, have skyrocketed by 1,000% since 2017. Additionally, the provincial government has imposed restrictions on new cryptocurrency mining projects, citing concerns over their energy consumption.

In the first three quarters of 2023, Hut 8’s revenue experienced a significant decline of 57% compared to the previous year, amounting to CA$ 55,184 ($40,757). This was mainly attributed to the decrease in Bitcoin prices during that time. Currently, Hut 8 holds a 1.3% share of the total processing power of the Bitcoin network.

The stock of Hut 8 plummeted by over 23% on January 19, following accusations from short sellers about the company’s partner USBTC facing legal issues in a $725 million merger agreement. Hut 8 has refuted these allegations, stating that the report contains false information, misrepresented data, and baseless attacks on their character. In addition, the former CEO of the firm, Jaime Leverton, resigned on February 8.