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Broker Benchmark has initiated coverage of bitcoin miner Hut 8 with a buy rating and a $12 price target, citing promising prospects following its merger with US Bitcoin Corporation last year.
The merger has transformed Hut 8 into a more diversified entity with various revenue streams, including self-mining, managed services, hosting, and high-performance computing (HPC) and artificial intelligence (AI). Analyst Mark Palmer believes that Hut 8’s stock trades at a discount compared to its peers, a gap that is expected to narrow as the company expands its self-mining operations.
Hut 8 currently holds a significant stash of 9,102 bitcoins, ranking it second among listed miners in terms of bitcoin holdings. This sizable bitcoin reserve not only provides a liquidity cushion but also offers the potential for upside during bitcoin price rallies. The value of its crypto holdings amounts to approximately $592 million, equivalent to around 82% of its market capitalization.
Since the merger, Hut 8’s management has been focused on reducing the company’s cost of mining bitcoin and its realized cost of energy, while also increasing cash flow. These strategic efforts are anticipated to contribute to the company’s growth and profitability moving forward. Hut 8’s stock was trading 5.2% higher at $8.47 at the time of publication, reflecting positive investor sentiment following Benchmark’s bullish rating.
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