Key Points
- Hut 8, a Bitcoin mining company, aims to raise $500 million to buy Bitcoin as a strategic reserve asset.
- The company has launched an “at-the-market” equity offering program and a stock repurchase program.
Bitcoin mining company Hut 8 has announced plans to raise a significant $500 million. The funds will be used to purchase Bitcoin as a strategic reserve asset, marking a significant step towards digital asset adoption.
At the time of the announcement, Hut 8’s shares were trading at $25.18, indicating potential price growth. Alongside this, the company revealed three major developments.
Major Developments
Hut 8 launched an “at-the-market” (ATM) equity offering program, a stock repurchase program, and submitted a shelf registration statement with the United States Securities and Exchange Commission (SEC). The ATM program allows Hut 8 to offer common shares of up to $500 million via sales on the Nasdaq Global Select Market and other methods.
The money raised will be used for Hut 8’s growth, including infrastructure development and the purchase of Bitcoin.
The $250 million stock repurchase program enables Hut 8 to buy up to 5% or 4.68 million shares of the outstanding stock over the next year. These purchases will be made at market prices, after securing the approval of Coatue Tactical Solutions in line with their convertible note agreement.
Hut 8 filed the Form S-3ASR registration with the SEC, ensuring its compliance with the regional laws of the US and Canada. These two programs are based on the Bitcoin miner’s will as it retains flexibility to adjust its decisions in accordance with market conditions, stock prices, and liquidity.
Bitcoin miners and rivals to Hut 8, Riot Platforms and MARA Holdings hold 8,490 BTC and 26,842 BTC, respectively. Meanwhile, Hut 8 has 9,102 BTC.
Bitcoin as a Strategic Reserve Asset
The decision to include Bitcoin as a strategic reserve asset indicates Hut 8’s faith in the long-term potential of the world’s largest digital asset. While governments and companies hold gold as a reserve asset, the addition of Bitcoin in the same standards establishes its dominance as the “digital gold” and a store of value.
Bitcoin is also considered a hedge against inflation and currency devaluation. Hut 8’s decision further solidifies the bullish fundamentals behind BTC and puts the miner in the list of MicroStrategy, Tesla, and other companies that hold the leading virtual currency.
However, considering BTC’s volatility, this decision could also have side effects, and this is where Hut 8’s flexibility over the decision comes into effect.
The Donald Trump administration is also considering the addition of Bitcoin as a strategic reserve asset, which, if implemented, would easily push the leading digital asset above the $100,000 price level.
Pro-crypto Republican Senator Cynthia Lummis recently introduced the “Bitcoin Act of 2024,” which requires the US Treasury and the Federal Reserve to purchase 200,000 bitcoins every year for the next five years until the total holding reaches 1 million coins. Also, ten states under US jurisdiction have confirmed the introduction of legislation to implement the strategic Bitcoin reserves.
