Hut 8 Mining Corp. strikes a deal to develop a massive Bitcoin mining site for Celsius Network amidst Celsius' bankruptcy turmoil.
Hut 8 Mining Corp., a leading figure in the Bitcoin mining industry, has recently inked an interim agreement to establish and operate a substantial mining facility for the embattled crypto lender, Celsius Network. This development, rooted in the ongoing bankruptcy proceedings of Celsius, is set to take place in Cedarvale, Texas, marking a significant expansion for Hut 8.
The facility, poised to host around 66,000 miners, will be powered by over 215 megawatts (MW) of energy. This venture not only signifies a remarkable growth trajectory for Hut 8 but also aligns with the company's strategic focus on enhancing its managed services business. Asher Genoot, President of Hut 8, outlined the dual objectives of this agreement: “The first [goal] is to build equity with creditors of Celsius while also growing the strength and vitality of our managed services business, which we anticipate will have more than 895 MW of infrastructure under our umbrella once the site is up and running.”
Construction of the Cedarvale site is slated to commence in the coming weeks, with Hut 8 set to deliver comprehensive development services encompassing design, engineering, financial modeling, budgeting, accounting, construction management, procurement, and logistics.
Amid Celsius Network's bankruptcy fallout, the partnership with Hut 8 represents a strategic maneuver. Last year saw Celsius, along with other cryptocurrency lending firms, succumb to market pressures due to questionable risk management and operational practices. The collapse led to a slew of legal actions against Celsius and its CEO, Alex Mashinsky, by various U.S. regulatory bodies, including a landmark $4.7 billion settlement with the Federal Trade Commission (FTC).
Despite the turbulent backdrop, Hut 8's shares showed minimal impact, with only a slight pre-market dip to $10.40, as per Yahoo Finance data. This resilience can be partly attributed to Hut 8's solid foundation, formed through the merger of Hut 8 Mining Corp. and US Bitcoin Corp (USBTC), and its strategic focus on building a robust managed services segment.
As the crypto industry navigates through its challenges, Hut 8's initiative to develop the Cedarvale mining facility underlines the company's commitment to growth and adaptability. This move is particularly timely, given the rising asset prices and the approaching Bitcoin halving, positioning Hut 8 favorably in the competitive landscape of digital asset mining.