Hut 8 May Consider Acquiring a Hyperscaler, Says Clear Street

Key Points to Know:

• Hut 8 may spin off American Bitcoin to concentrate on data center hosting, according to the brokerage.

• Clear Street suggested the Bitcoin miner could explore acquiring a hyperscaler.

• The firm has issued a buy rating on Hut 8 shares, setting a price target of $23.

Hut 8’s (HUT) newly established subsidiary, American Bitcoin Corp.—a collaboration between the mining company and the Trump family—may be spun off, allowing Hut 8 to shift its focus toward data center hosting, Clear Street stated in a report on Monday.  

The brokerage pointed out that although the new division will be included in Hut 8’s financial reports, separating the businesses could enable the company to concentrate on generating high-margin revenue from data center hosting services.

Hut 8 is anticipated to acquire additional power resources and grow its data center hosting operations, according to the report. The potential acquisition of a hyperscaler is seen as a major catalyst for the company's future growth.  

Eric Trump and Donald Trump Jr. are combining their firm, American Data Centers, with American Bitcoin, a newly formed mining venture. As part of the deal, they will hold a 20% stake in the company, while Hut 8 will retain the remaining 80%. Hut 8 is contributing nearly 61,000 mining machines to the new entity.

Core Scientific’s (CORZ) agreement with cloud computing firm CoreWeave prompted a sector-wide reassessment last year, as investors grew more optimistic about Bitcoin miners diversifying into artificial intelligence (AI) and high-performance computing (HPC).  

Hut 8 is expected to experience significant expansion in the latter half of the year, fueled by the launch of its BITMAIN Colocation agreement, according to the report.  

Clear Street has issued a buy rating for Hut 8 stock, setting a price target of $23. In early trading, shares were up over 4%, reaching $12.10.  

Investment bank KBW pointed out that Eric Trump will take on the role of chief strategy officer at American Bitcoin. His involvement could be a major advantage due to his industry dedication and extensive connections. KBW has given the stock an outperform rating with a $30 price target.