Another bitcoin miner, Hut 8 (HUT), has decided to pull the trigger on buying bitcoins on the open market, following companies like MicroStrategy (MSTR) and MARA Holdings (MARA).
The Miami, Florida-based company said it purchased about 990 bitcoins at an average price of $101,710 each. The latest purchase will raise the number of bitcoins held in Hut 8’s reserve to 10,096, or about $1 billion in market value, and place it among the 10 largest corporate bitcoin holders, the company said in a statement Thursday. .
The miner plans to use the reserve through options, pledging, sales or other strategies, according to the statement. Hut 8 CEO Asher Genoot told CoinDesk that his company will be opportunistic in purchasing more bitcoins on the open market.
“Today, the market recognizes and values our strategic reserve, which effectively reduces our cost of capital and strengthens our financial position. As long as this market dynamic persists, we will continue to be opportunistic in expanding our Bitcoin reserve,” Genoot said.
The move follows Hut 8’s announcement earlier this month that it began a new $500 million share issuance program on the market. At the time, the company said that part of the fund’s proceeds would be used to buy bitcoins on the open market, among other things.
MicroStrategy, the largest holding company of bitcoins on its balance sheet, started the trend of buying bitcoins on the open market. It wasn’t until MARA Holdings’ purchase of bitcoin on the open market this year that this became prominent among miners. Most recently, peer Riot Platforms (RIOT) purchased 667 bitcoins at an average price of $101,135 on December 16.
Buying large amounts of bitcoin on the open market has paid off for miners, opening new avenues to raise funds at a time when the industry is grappling with reduced profits following the recent Bitcoin halving event. Last month, MARA was able to raise $1 billion in interest-free convertible debt (a financial instrument where investors can convert debt into equity). This means that investors are willing to give up interest income from debt for stocks that provide them with exposure to bitcoin.
Hut 8 said that holding a reserve of bitcoins serves as a flexible option for the company that can help it grow. “We view our strategic reserve as a dynamic financial asset that can be actively managed to generate returns far beyond simple price appreciation,” Genoot told CoinDesk.
“Along with the significant investments we are making to expand our core operating business, with a clear path to 24 EH/s of self-mining capacity by the second quarter of 2025, strategic purchases of Bitcoin on the open market can strengthen our balance sheet and our investment capacity carefully in growth,” he said.
Hut 8 shares are up 74% this year, while the CoinShares Valkyrie Bitcoin Miners ETF (WGMI) is up 28%.
