Why Hut 8 Stock is Up 44% in the Last Week

Hut 8 stock (TSX:HUT) has surged in the last week, and even more year to date. But if you think it’s all from Bitcoin (CRYPTO:BTC), think again.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published April 23, 2024 8:30 pm EDT

Shares of Hut 8 (TSX: HUT) have climbed a whopping 44% in the last week alone. And even this week the company continues to demonstrate strength, with shares surging 15% on Monday alone. But what’s actually going on here? Let’s see if it’s all about crypto prices, or the stock itself.

A data center engineer works on a laptop at a server farm. — Source: Getty Images

Bitcoin increase

Of course, part of the increase comes down to the price of Bitcoin (CRYPTO: BTC) rising higher. Spot Bitcoin exchange traded funds (ETF) have been introduced in the United States, and investor interest has increased BTC’s price. These ETFs offer a potentially less risky way to invest in Bitcoin, rather than buying the pricey item.

Furthermore, some investors view Bitcoin as a hedge against inflation, particularly when interest rates are low. This could be a factor if investors are seeking alternative stores of value. Added to this, there’s a finite number of Bitcoins that can ever be mined, which creates scarcity. As more and more Bitcoins are mined, the remainder becomes more valuable, according to the principles of supply and demand.

As of writing, shares of Bitcoin are up to $90,960 per coin in Canada. That’s a 140% increase in just the last year alone!

What this has to do with Hut 8

If you’re not aware, Hut 8 stock is now a cryptocurrency miner. The company focuses on mining for Bitcoin, and so is directly exposed to the price of Bitcoin. The more of the cryptocurrency the company has, the more it is worth. And the more it can expand.

Which is what the company has been doing. Hut 8 stock has expanded first into the area of data centres. These are needed in cool places to keep them as energy efficient as possible. This allows data to be stored, and data storage is in high demand with the expansion of crypto mining as well as artificial intelligence.

Hut 8 investments

However, more than just the price of Bitcoin has kept this company’s share price growing the way it has. Part of the driver arose recently, when Hut 8 stock announced its Salt Creek site was coming online. Further, the cost to mine a Bitcoin at the site is expected to be 30% lower than the cost at hosted facilities. This comes from the favoured energy profile mentioned earlier.

So now, with a reduction in the price to mine for Bitcoin, and the price of Bitcoin rising higher, investors are seriously interested in Hut 8 stock once more. The outlook on its energy prices at the site remains strong. And this is yet one other location up and running that will add to its overall growth.

Bottom line

Bitcoin is up. Hut 8 stock is up. And the company’s costs are down. All this adds up for investors coming back on board, as they should be interested in the company once again. While cryptocurrency still remains quite risky, it seems as though Hut 8 stock might have found a sweet spot for investors to jump on board.