Bitcoin miner Hut 8 is seeking mediation with a third-party energy supplier after relations broke down over a shared power purchase agreement — bringing some of its operations to a halt.
The Canadian firm was forced to stop mining bitcoin out of its North Bay, Ontario facility after provider Validus suspended delivery of energy to the site. The mining firm operates two other mining sites in Southern Alberta.
The provider claims Hut 8 has failed to make regular payments. Hut 8 is categorically denying those allegations, according to a statement on Monday. A spokesperson for Validus did not immediately return a request for comment.
Earlier this month, Hut 8 said it had handed Validus a notice claiming the energy provider neared default on obligations of the two firms’ power purchase agreement, and blamed Validus for failing to hit certain operational milestones by key dates laid out in the terms.
Hut 8 also noted ongoing discussions with Validus, meant to mitigate related operational and commercial impacts, which have so far been unsuccessful. The Ontario site had about 5,800 miners installed as of June, consuming 20 MW of power and contributing about 20% of Hut 8’s overall hashrate.
A spokesperson for Hut 8 confirmed the company was seeking mediation via a third-party and was hopeful it would reach a resolution with Validus outside of court. They declined to comment further on the operational milestones it claimed Validus had missed.
Bitcoin miner Hut 8 could do without the interruption
Most miners are struggling to navigate significant headwinds following a major drop in bitcoin’s price, which has shed 66% of its value year-to-date.
Indeed, high electricity costs, low bitcoin prices and soaring mining difficulty have taken a bite out of profits. As a result, Hut 8 saw a 36% decline in third-quarter revenue when compared to the same period a year ago, dropping from $50.3 million to $31.7 million, recent financial statements show.
Mining profits over the same period stood at $9.3 million compared to $33.5 million in Q3 2021, a 72% decline. Bitcoin hovered around $60,000 this time last year, while it now trades for $16,500.
Hut 8 has publicly pledged to hold onto all its bitcoin despite the tough market conditions. It maintained 8,111 BTC ($133.6 million) as of Aug. 30, mining around 12.1 BTC ($200,000) per day over Q3.
The firm’s stock, which commands a market value around $220 million, has also suffered, dropping more than 85% year to date alongside most of its rivals — which makes getting its miners back online as soon as possible even more critical.
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