Is Hut 8 Stock a Buy in December 2022?


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Cabin 8 Mining (TSX:CABANA) is a Toronto-based cryptocurrency mining company. Today, I want to determine if this action is worth snatching up in the face of turbulence in the broader crypto space. Let’s jump.

What is behind the terrible, horrible, not good and very bad year of cryptocurrencies?

Bitcointhe world’s leading cryptocurrency by market capitalization, has seen its valuation constantly chipped, since 2022 has advanced. Now, as we approach the final weeks of the year, it is trading near its 52-week low. Meanwhile, Bitcoin has been strangled in the face of rising interest rates and increased economic uncertainty.

Bitcoin price fluctuations, Ethereal, and other major digital currencies have been overshadowed by the collapse of FTX, a former cryptocurrency exchange. FTX had entered Chapter 11 bankruptcy proceedings in early November. Binance, the world’s largest cryptocurrency exchange, had signed a letter of intent to acquire the company. However, it withdrew the offer the next day after reports surfaced that FTX had embezzled client funds. Last week, FTX founder Sam Bankman-Fried was arrested in the Bahamas for a spate of financial crimes.

This space will have to regain the confidence of regular investors in 2023 and beyond.

How has Hut 8 Mining fared in the face of this turbulence?

Hut 8 Mining shares plunged 88% in 2022 as of afternoon trading on December 19. Meanwhile, shares have fallen 21% over the past month. Investors can see how it has performed recently with the interactive chart below.

Should investors be encouraged by the company’s recent earnings?

On November 10, it released its earnings for the third quarter of fiscal 2022. Hut 8 Mining reported total revenue of $31.7 million, down from $50.3 million a year earlier. Furthermore, it mined 982 Bitcoin in the third quarter. That was up 8.5% compared to the third quarter of fiscal 2021.

Hut 8 Mining posted a net loss of $23.7 million in the third quarter. That was down from net income of $23.3 million a year earlier. Meanwhile, its net loss deepened to $57.1 million in the first nine months of fiscal 2022 compared to net income of $38.4 million in the year-to-date period in fiscal 2021. EBITDA means earnings before interest, taxes, depreciation and amortization. The company’s Adjusted EBITDA decreased to $2.07 million compared to $30.7 million in the third quarter (Q3) 2021. Additionally, adjusted EBITDA fell to $35.9 million in the year-to-date period date in fiscal 2022, down from $61.3 million in the prior year.

Mining Hut 8: Should you buy today?

The acquisition of new high-yield computing operations generated $4.4 million of primarily recurring revenue in the third quarter of fiscal 2022. Like other cryptominers, Hut 8 Mining will rely heavily on price fluctuations in Bitcoin, Ethereum, and other major digital currencies. In fact, high interest rates are expected to continue into the first half of 2023. That means this market will likely come under pressure in the coming months. I am not looking to buy the dip in Hut 8 Mining considering the risks in the crypto space right now.