Hut 8 Plans $500 Million Raise to Purchase Bitcoin as Reserve Asset
Hut 8, a publicly traded Bitcoin mining company, plans to raise $500 million to purchase Bitcoin as a strategic reserve asset, aiming to enhance digital asset adoption. The company's shares were trading at $25.18 during the announcement.
Hut 8 revealed three key developments: an “at-the-market” (ATM) equity offering program, a stock repurchase program, and a shelf registration statement with the United States Securities and Exchange Commission (SEC). The ATM program permits Hut 8 to offer common shares up to $500 million via sales on the Nasdaq Global Select Market and other channels.
The funds raised will support Hut 8's growth initiatives, including infrastructure development and Bitcoin purchases.
The $250 million stock repurchase program allows Hut 8 to buy back up to 4.68 million shares, or 5% of outstanding stock, over the next year at market prices, contingent upon approval from Coatue Tactical Solutions in line with their convertible note agreement.
Hut 8 has filed Form S-3ASR with the SEC to ensure compliance with US and Canadian regulations. These programs provide Hut 8 with flexibility to adapt its strategies based on market conditions, stock prices, and liquidity.
As of now, Hut 8 holds 9,102 BTC, while competitors Riot Platforms and MARA Holdings have 8,490 BTC and 26,842 BTC, respectively, according to CoinGecko data.
Bitcoin as a Strategic Reserve Asset
Hut 8's move to include Bitcoin as a strategic reserve asset reflects confidence in its long-term value. This positions Bitcoin alongside gold as a reserve asset, reinforcing its status as “digital gold” and a store of value.
Bitcoin serves as a hedge against inflation and currency devaluation. Hut 8’s decision aligns it with companies like MicroStrategy and Tesla that hold Bitcoin. However, due to Bitcoin's volatility, this strategy may carry risks, highlighting the importance of Hut 8's flexible approach.
The Donald Trump administration is also considering adopting Bitcoin as a strategic reserve asset, which could elevate its price above $100,000 if implemented. Additionally, Republican Senator Cynthia Lummis introduced the “Bitcoin Act of 2024,” mandating the US Treasury and Federal Reserve to acquire 200,000 bitcoins annually for five years until holdings reach 1 million coins. Reports indicate that ten states in the US are also exploring legislation for strategic Bitcoin reserves.