Hut 8 (NASDAQ:HUT) reported third-quarter revenue of $71.1 million, down from $83.5 million a year earlier, while adjusted EBITDA rose to $33 million from $30.5 million as the company continued to expand its operating capacity and advance its AI data center development strategy.
The company reported GAAP net income of $189.5 million, including $131.1 million attributable to Hut 8. CFO Sean Glennan said the result was substantially affected by a $413.8 million gain from the fair-value remeasurement of digital assets as Bitcoin prices increased during the quarter.
Management emphasized that its strategy is increasingly centered on converting secured power capacity into long-term contracted AI infrastructure revenue, while using project-level financing intended to limit recourse to the parent company.
Contracted AI Capacity and Development Pipeline
CEO Asher Genoot said Hut 8 has contracted 949 megawatts of IT capacity under long-term AI data center leases with, or backed by, investment-grade companies. Those agreements represent approximately $27 billion in contracted revenue, according to Genoot.
The company’s front-of-the-meter greenfield development pipeline exceeded 6.4 gigawatts under diligence and exclusivity at quarter-end. Capacity under exclusivity increased by roughly 1.3 gigawatts during the quarter, as projects advanced through Hut 8’s development process and new opportunities were added.
Genoot said the pipeline is geographically diversified, with its largest shares located in the MISO, PJM and SERC regions. Less than 5% of the pipeline is in ERCOT, the Texas power market. He said this geographic mix reduces exposure to any individual power market, although Hut 8 continues to view its existing Texas interconnections as valuable.
Hut 8 also entered a definitive agreement to acquire two energized data center sites in West Texas from affiliates of Quoin. The sites could provide up to 230 MW of utility capacity upon full energization, subject to final power approvals and infrastructure development. Genoot said the company expects to close the transaction by year-end.
River Bend and Beacon Point Construction Update
Construction at the River Bend campus and Beacon Point Phase 1 remains on schedule, management said. Both projects are fully funded through project-level structures.
At River Bend, Hut 8 said more than 1,200 people are working at the site. Structural steel, roof decking and foundations are complete for all four data halls. The slab for Data Hall 1 is complete, while the remaining slabs are expected by year-end. Roofing and precast wall panels have been installed on Data Hall 1, with similar work on the other halls expected by mid-December.
At Beacon Point Phase 1, ground improvements were approximately 95% complete. Foundation work, underground utility installation and substation foundation work were underway, with steel erection scheduled to begin during the month of the call. Civil design and surveying were also underway for Beacon Point Phase 2.
Hut 8 amended its Beacon Point Phase 2 lease, extending the initial term to 17 years from 15 years. Genoot said the extension adds two years of contracted revenue for lenders to underwrite and could help offset potentially higher financing costs. The amendment does not affect Phase 1 or consume any lease extension options, management said.
Addressing the Texas governor’s race, Genoot said Hut 8 does not expect the election outcome to change the outlook for Beacon Point. He said the company expects an audit process related to its baseload designation to conclude in December and anticipates an unconditional classification on Dec. 17. Hut 8 expects 700 MW of the project’s 1-gigawatt capacity to be energized in the first quarter of 2027.
Segment Results and Operating Costs
Compute revenue totaled $68.4 million, compared with $70 million in the prior-year period. Glennan said lower average revenue per Bitcoin mined was mostly offset by increased Bitcoin production, supported by additional capacity at Vega and the re-energization of Drumheller.
Compute cost of revenue increased to $28 million from $22 million, which management attributed primarily to operating more capacity and incurring associated electricity expenses.
- Power revenue was $1.3 million, compared with $8.4 million a year earlier, primarily reflecting the February sale of the Far North portfolio.
- Digital infrastructure revenue was $1.4 million, down from $5.1 million, reflecting the termination of the Vega co-location agreement after American Bitcoin exercised its option to purchase miners at the site, as well as customer churn in the legacy CPU infrastructure business.
- AI cloud revenue increased as new customer contracts came online, though that growth was partly offset by the August sale of Hut 8’s traditional cloud business.
Reported general and administrative expense rose to $99.6 million from $25.9 million in the prior-year quarter. The total included $64.7 million of stock-based compensation, including one-time long-term incentive awards. Cash G&A was $34.8 million, compared with $24.8 million in the prior quarter and $19.5 million a year earlier.
Glennan said a portion of the increased expense reflects investments in personnel and capabilities needed to originate, finance, construct and operate several large campuses simultaneously.
Liquidity, Project Financing and Share Repurchases
At Sept. 30, Hut 8 held approximately $156.9 million in cash, $3.6 billion in restricted cash and cash equivalents, and $2.8 billion in restricted short-term investments. Glennan said the restricted amounts are principally project-financing proceeds for River Bend and Beacon Point and are designated for construction, debt-service reserves and other specified uses.
Hut 8 had approximately $7.6 billion of consolidated loans, notes payable and other financial liabilities, including roughly $7.5 billion tied to River Bend and Beacon Point project financings. Management said those obligations reside at project subsidiaries, are secured by project assets and accounts, and are non-recourse to Hut 8’s parent company.
River Bend is funded by $3.25 billion of investment-grade project bonds, while Beacon Point Phase 1 is funded by $4.25 billion of such bonds. Hut 8 also closed a $1.07 billion senior secured revolving credit facility in September, with no borrowings outstanding as of Sept. 30.
The company held about 1,361 unencumbered Bitcoin as of Nov. 1. During the quarter, it sold approximately 954 Bitcoin for $74.8 million and used the proceeds to repurchase 953,802 shares for $74.7 million. Including post-quarter-end activity, Hut 8 repurchased about 3.3 million shares for roughly $250 million, funded with approximately 3,100 Bitcoin.
The board increased the company’s share-repurchase authorization to $1 billion from $250 million. Genoot said Hut 8 does not intend to use its revolver for repurchases and plans to preserve liquidity and flexibility amid market volatility.
About Hut 8 (NASDAQ:HUT)
Hut 8 Corp. is a North American energy infrastructure and computing company whose business includes digital asset mining, high-performance computing and data center operations. The company develops and manages power and infrastructure assets intended to support energy-intensive computing applications.
Hut 8’s activities have historically centered on Bitcoin mining, supported by company-operated data centers and specialized mining equipment. It also provides infrastructure for emerging computing applications, including artificial intelligence and other high-performance computing workloads, as it seeks to expand beyond cryptocurrency mining.
The company was established in Canada and expanded its operations in the United States through its combination with U.S.
