Hut 8 CEO sees opportunity for bitcoin mining sites to become AI data centers

Welcome back to Talking Tokens.

We’re building the best place for quick crypto insights, news and in-depth interviews with the best leaders, startups, market players and up-and-coming founders that are changing the industry.

If you haven’t already, subscribe here.

Building up margins in bitcoin mining

When someone thinks of bitcoin mining the first, and perhaps only, thought for many is exactly what the name suggests. But what if these data centers expanded their operations beyond the often thinly-margined business?

That’s something that the publicly traded Hut 8 Corp. is trying to do.

“We see bitcoin mining as an infrastructure business where margins are based on how well you operate and how low cost operative you are,” Asher Genoot, CEO of Hut 8 said on Talking Tokens.

The company merged with US Bitcoin Corp earlier this year and is an energy infrastructure operator and bitcoin mining firm with operations across North America.

“f bitcoin [goes] up, then yes, we’ll make money and have really high margins for that period of time,” Genoot said. “But ultimately we’ve always seen mining as lowest cost producer wins business in a normalized state.”

Since bitcoin volatility can affect margins, Genoot said he’s exploring AI as another infrastructure business since there’s “a lot of excitement there today.”

“What’s interesting about AI and data centers is the counterparties there aren’t crypto companies, they’re the Microsoft’s, Meta’s of the world and so forth,” Genoot said. So it brings in more capital efficiency because people are more willing to invest in equity and debt, he added.

“So the cost of capital is lower, you have less risk and less volatility which allows you to create a business that should trade at a higher valuation based on your profitability because you have less risk associated with it and more clear direction.”

“For us, we own power,” Genoot said. “[If] we build AI data centers, investors understand it, we can put leverage on it and have really great returns.”

Hut 8 also has sites that might not be seen as “great because they’re in the middle of nowhere today.” It has 19 sites — 10 of which are bitcoin mining-focused — across Alberta, New York, Texas, British Columbia and Ontario.

In the bear markets of 2022, no one would buy a single one of these sites, Genoot noted. “But maybe in three to five years, they could be really great for AI data centers or for some other use case.”

“That’s why we love bitcoin mining because it allows us to capture sites people don’t think are valuable today; but we do believe in the long term thesis that ours will become more valuable and scarce,” Genoot said. “By having a tool that allows us to capture opportunities, we believe we will be able to harvest the value of those for many years to come.”

Check out the next section for more details and the full episode.

The latest Talking Tokens podcast 🎙️

For this week’s Tuesday episode, I sat down with Asher Genoot, CEO of Hut 8. 

We talk about Hut 8 being publicly traded, IPOs, bitcoin mining needing a new name, data centers and the role AI can play in them, among other topics. 

Talking Tokens episodes are released on Spotify and Apple Podcasts at 6AM EST or YouTube at 10AM EST every Tuesday and Thursday. Listen in!

Make sure to subscribe to keep up with the latest episodes. Feel free to leave a review and tell us your thoughts.

Monitoring blockchains

Looking at some of the biggest developments onchain.

• Avalanche-built battle royale game Off The Grid hits number one slot on Epic Games Store

• Ethena Labs has proposed to holders of USDe, its synthetic stablecoin, that Solana’s native token SOL should be added as a “backing asset”

• Arbitrum DAO member proposes $120 million recall from gaming fund that missed deadlines (The Block)

Taking on the tokens 

The total crypto market cap increased about 1% in the past 24-hours to $2.27 trillion. It is up 4.6% over a 7-day period.

As for the largest cryptocurrencies by market cap…

These metrics were taken prior to publication Tuesday morning EST.

Money and people moves

Latest updates on crypto startups that secured funding and industry players who are starting something new or are on the go.

1. Crypto custodian firm Copper makes ex-SEC Advisor and former Goldman Sachs MD Amar Kuchinad its new CEO 

2. Samara Asset Group Plans up to $32.8M Bond to Expand Bitcoin Holdings (CoinDesk)

3. Solv Protocol raised $11M in a strategic funding round, bringing its total funding to $25M to grow bitcoin staking operations

4. Trendies raised $1.75M in a pre-seed round for its community launchpad built on Base

Talking points for the road 

Here’s some headlines and topics that you can talk about at your next dinner party, crypto event or on a first date to look smart (results may vary.) 

1. Tether Talking to Commodity Traders About Lending Them Its Billions (Bloomberg)

2. Vice President Kamala Harris vows to support a crypto regulatory framework in plan to support Black men (The Block)

3. Trump-Backed World Liberty Financial Whitelists 100K Accredited Investors Ahead of WLFi Launch (CoinDesk)

Get involved and share the newsletter. The more you share, the higher your ranking.

• Refer 25 people and get my customized media guide.

• Refer 50 people for a chance at a 1:1 meeting with me to dive into best practices when engaging with the media.

Was this email forwarded to you? Subscribe here.

If you do (or don’t) like what you see, let me know by sending feedback to [email protected].

This product was built by Token Relations. 

Please note that this content is for informational and entertainment purposes only. Any views shared should not be considered financial advice, nor should it be used to make investment decisions. Cryptocurrencies are high risk and you should consult a financial professional before making any financial decisions. Make sure you do your own research. We may have a direct or indirect financial interest in content mentioned in this newsletter.