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Hut 8's Power Segment Under Pressure: Can New Contracts Offset Losses?
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Key Takeaways
HUT's Power segment revenues fell after ending the Ionic Digital MSA, removing $17.8M in recurring services.
HUT's four Ontario gas plants boosted output, but gains didn't replace lost managed services revenues.
Hut 8 expanded American Bitcoin contracts; 85% capacity has 1 year terms, though monetization lags.
HUT 8 Corp.’s (HUT - Free Report) power segment faces clear pressure as losing a major contract has caused a clear near-term revenue drag. This is seen in the steady drop in Power segment revenues over the past three reported quarters of 2025, showing the full impact of ending the Managed Services Agreement with Ionic Digital in late 2024. The exit removed $17.8 million in recurring managed services revenues and highlighted the segment’s heavy reliance on a few large partners.
This weakness appears transitional rather than structural. The revenue shortfall was only partly offset by modest growth in Power Generation, supported by higher output and demand from Hut 8’s four natural-gas-fired power plants in Ontario. While this helped soften the decline, it was not enough to fully replace the lost managed services revenues in the near term.
At the same time, management is actively repositioning the Power segment toward more stable, long-term contracts. During the third quarter, Hut 8 expanded its managed services agreement with American Bitcoin to a record level of contracted capacity. As a result, more than 85% of energy capacity under management is now backed by executed agreements with terms of one year or longer, improving forward revenue visibility and durability.
However, a timing gap persists. Services provided to American Bitcoin are eliminated in reported figures, reducing Power revenues despite ongoing utilization, while much of the power pipeline remains in development and not yet revenue-generating. As a result, new contracts have not fully offset losses yet, but their successful monetization will be the key driver of recovery.
HUT’s Major Competitors in Energy & Digital Infrastructure
HUT’s growth in power-intensive digital infrastructure is challenged by strong competition from Hive Digital Technologies (HIVE - Free Report) and Bitfarms (BITF - Free Report) .
HIVE Digital Technologies is a major competitor to Hut 8 in energy and digital infrastructure. HIVE competes through its renewable, low-cost power strategy, relying heavily on hydroelectric energy in Paraguay, Canada and Sweden, including a 300 MW expansion tied to the Itaipú Dam. This gives HIVE a cost advantage in power-intensive Bitcoin mining and early AI workloads, though Hut 8 has stronger positioning near key U.S. AI demand centers.
Bitfarms is one of Hut 8’s closest competitors in energy and digital infrastructure. BITF is shifting from Bitcoin mining to HPC and AI data centers, backed by a large, well-located power portfolio in Pennsylvania, Quebec and Washington. With over 2.2 GW of power pipeline and owned power-generation assets, BITF closely mirrors Hut 8’s strategy, though its rapid expansion carries higher execution and capital risk.
HUT’s Price Performance, Valuation & Estimates
Shares of HUT have surged 179.3% in the past six months, outperforming the broader Zacks Finance sector’s return of 9.6% and the Zacks Financial Miscellaneous Services industry’s decline of 11%.
HUT’s Six Month Price Performance
Image Source: Zacks Investment Research
HUT shares are overvalued, as suggested by the Value Score of F. In terms of forward price/sales, HUT is trading at 14.19X compared with the industry’s 3.36X.
HUT’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for HUT’s 2026 loss is currently pegged at 60 cents per share, widened by a couple of cents over the past 30 days and down significantly on a year-over-year basis.
Image: Bigstock
Hut 8's Power Segment Under Pressure: Can New Contracts Offset Losses?
Key Takeaways
HUT 8 Corp.’s (HUT - Free Report) power segment faces clear pressure as losing a major contract has caused a clear near-term revenue drag. This is seen in the steady drop in Power segment revenues over the past three reported quarters of 2025, showing the full impact of ending the Managed Services Agreement with Ionic Digital in late 2024. The exit removed $17.8 million in recurring managed services revenues and highlighted the segment’s heavy reliance on a few large partners.
This weakness appears transitional rather than structural. The revenue shortfall was only partly offset by modest growth in Power Generation, supported by higher output and demand from Hut 8’s four natural-gas-fired power plants in Ontario. While this helped soften the decline, it was not enough to fully replace the lost managed services revenues in the near term.
At the same time, management is actively repositioning the Power segment toward more stable, long-term contracts. During the third quarter, Hut 8 expanded its managed services agreement with American Bitcoin to a record level of contracted capacity. As a result, more than 85% of energy capacity under management is now backed by executed agreements with terms of one year or longer, improving forward revenue visibility and durability.
However, a timing gap persists. Services provided to American Bitcoin are eliminated in reported figures, reducing Power revenues despite ongoing utilization, while much of the power pipeline remains in development and not yet revenue-generating. As a result, new contracts have not fully offset losses yet, but their successful monetization will be the key driver of recovery.
HUT’s Major Competitors in Energy & Digital Infrastructure
HUT’s growth in power-intensive digital infrastructure is challenged by strong competition from Hive Digital Technologies (HIVE - Free Report) and Bitfarms (BITF - Free Report) .
HIVE Digital Technologies is a major competitor to Hut 8 in energy and digital infrastructure. HIVE competes through its renewable, low-cost power strategy, relying heavily on hydroelectric energy in Paraguay, Canada and Sweden, including a 300 MW expansion tied to the Itaipú Dam. This gives HIVE a cost advantage in power-intensive Bitcoin mining and early AI workloads, though Hut 8 has stronger positioning near key U.S. AI demand centers.
Bitfarms is one of Hut 8’s closest competitors in energy and digital infrastructure. BITF is shifting from Bitcoin mining to HPC and AI data centers, backed by a large, well-located power portfolio in Pennsylvania, Quebec and Washington. With over 2.2 GW of power pipeline and owned power-generation assets, BITF closely mirrors Hut 8’s strategy, though its rapid expansion carries higher execution and capital risk.
HUT’s Price Performance, Valuation & Estimates
Shares of HUT have surged 179.3% in the past six months, outperforming the broader Zacks Finance sector’s return of 9.6% and the Zacks Financial Miscellaneous Services industry’s decline of 11%.
HUT’s Six Month Price Performance
Image Source: Zacks Investment Research
HUT shares are overvalued, as suggested by the Value Score of F. In terms of forward price/sales, HUT is trading at 14.19X compared with the industry’s 3.36X.
HUT’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for HUT’s 2026 loss is currently pegged at 60 cents per share, widened by a couple of cents over the past 30 days and down significantly on a year-over-year basis.
Image Source: Zacks Investment Research
HUT currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.