HUT 8 Mining Corp battling insufficiency in Q2 due to the BTC price decline

HUT mined about 946 BTC in Q2 compared to 942 Bitcoins in Q1—a nearly 0.4% increase resulting from the firm acquiring new equipment and facilities to aid its mining operations. However, analysts still project that the firm’s revenue this year will decrease by 15% from 2021 due to the price of Bitcoin. 

The electricity price didn’t contribute to HUT’s operational cost surge. Notably, the firm’s operation has been within Canada alone. The Selling Price Index for Electricity in the country also reflects undisturbed electricity costs between Q1 and Q2. Statistics indicate a 12% decline in the cost of electricity.

Meanwhile, for the most significant part of Q2, HUT’s expenses didn’t suffer any instability.

The general and administrative costs resulted in about $8 million, which is even below the regular $8.2 million recorded in the last three quarters. Also, HUT didn’t record any increase in its share-based compensation (SBC); it remained at $1.5 million against the regular $1.72 million.

The firm’s High-Performance Computing (HPC) gross margins didn’t exceed 50%. 

Additionally, The company recorded $46.8 million in its overall business cost for Q2.

This figure equals $49,500 per BTC, a massive increase of 30% from what it recorded in the first quarter with $38,400 per BTC. Without including depreciation, The company’s operational expenditure cost per BTC hit $20,000 in the second quarter.

This figure illustrated an increase against the $13,800 cost per BTC in the first quarter. As a result, the firm operated at a loss when the price of BTC went beneath $20,000.

$21 million represented cash expense out of the total $46.8 million.

Meanwhile, the company’s cash position declined by $13 million, while the overall liabilities plummeted. As a result, share issuance served as the firm’s logical source of cash capital in the second quarter. As a result, HUT’s outstanding shares soared by 2% due to a cash inflow of $43.4 million. The net inflow sums to $36 million after repayments of loans.

HUT has been battling with insufficiency in the last quarter; reports from the second quarter illustrate the increase in its battle with the deficit.

The fall in the firm’s operating cost per BTC in the second quarter amounts to a significant crisis facing the firm. This is due to the plunge in the price of Bitcoin below $20,200 in the second quarter. Moreover, the problem is likely to prolong than expected because BTC is still struggling to recover from its losses.

As long as the BTC is yet to attain the level of its all-time high, the problem will likely persist.