Why This Canadian Crypto Stock Popped 11% on Wednesday

The cryptocurrency miner Hut 8 is likely to announce its Q4 results on March 17.

| More on:
crypto, chart, stocks

Image source: Getty Images

What happened?

The shares of Hut 8 Mining (TSX:HUT)(NASDAQ:HUT) staged a sharp recovery on Wednesday, erasing all their week-to-date losses. The Canadian cryptocurrency mining share price jumped by nearly 11% for the day to settle at $7.24 per share. Despite its recent recovery, HUT stock is still down by more than 30% on a year-to-date basis against slightly more than 1% advances in the TSX Composite Index.

So what?

Yesterday, Hut 8 Mining informed investors that it intends to release its Q4 2021 results next week on March 17. While investors’ high expectations from its upcoming earnings event could be one of the reasons for its rally, it might not be the only reason driving HUT stock higher.

A sudden jump in the value of large cryptocurrencies, including Bitcoin and Ethereum, could be another key reason for its recent rally. Notably, Bitcoin prices jumped by nearly 10% during Wednesday’s intraday trading to above US$40,000 per BTC. This sharp crypto market rally came after the White House said that U.S. president Joe Biden “will sign an Executive Order outlining the first ever, whole-of-government approach to addressing the risks and harnessing the potential benefits of digital assets and their underlying technology.” This news came as a big relief for the crypto investors who have lately been concerned about the possibilities of stricter regulatory action against cryptocurrencies in the U.S. market.

Appreciating Bitcoin value could lead to higher profitability and enhance the financial growth outlook of cryptocurrency miners. This could be the primary reason why Hut 8 Mining stock rallied sharply on March 9.

Now what?

As of December 31, Hut 8 Mining held a 5,518 Bitcoin balance in its reserve, showcasing a 97% year-over-year rise. During the year, its installed operating capacity rose by 125% to around two exahash per second. As a result of this solid operational growth, analysts expect Hut 8 Mining’s revenue to be around $63.5 million against $13 million in Q4 2020. Hut 8’s consistently increasing operational capacity could help the company post strong financial growth in the coming years and keep this crypto stock soaring.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool owns and recommends Bitcoin and Ethereum. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

More on Investing

Dice engraved with the words buy and sell
Dividend Stocks

EQB Inc Stock: Buy, Sell, or Hold

EQB Inc (TSX:EQB) is Canada's fastest-growing bank.

Read more »

pipe metal texture inside
Dividend Stocks

Enbridge Stock: Buy, Sell, or Hold Today?

Enbridge is up 7% in the past six months. Are more gains on the way?

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Tuesday, May 28

Besides Scotiabank’s earnings, the important U.S. consumer confidence numbers will remain on TSX investors’ radar today.

Read more »

money cash dividends
Dividend Stocks

The 2 Stocks Every Dividend Investor Should Own for Reliable Cash

Dividend stocks offering consistent and reliable returns can be a crucial asset in any portfolio, especially for income-producing dividend portfolios.

Read more »

grow dividends
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

These top TSX dividend-growth stocks now offer yields above 7%.

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

TFSA: 2 Canadian Stocks to Buy and Hold for Tax-Free Gains

Building a large, tax-free nest egg in your TFSA with growth stocks can give you more control over your tax…

Read more »

Group of people network together with connected devices
Tech Stocks

This Is the Best Overlooked AI Stock on the TSX Today

This AI stock has been a top growing in the last while, but remains overlooked despite its strong portfolio and…

Read more »

Women's fashion boutique Aritzia is a top stock to buy in September 2022.
Dividend Stocks

May Boycotts: Is Loblaw Stock in Trouble?

Even extreme fluctuations in consumer purchasing patterns may not impact a stock as aggressively as demoralizing actions like boycotts.

Read more »