Got the Bitcoin (BTC-USD) post-halving event blues? Today I’ll lift your spirits with cryptocurrency pick Hut 8 (NASDAQ:HUT) stock, which can surely get any bitcoin bull back in the sport.

Mid-May appears to be a cooling-off period for cryptocurrency. The joy over the Security and Exchange Commission’s approval of spot bitcoin exchange-traded funds (ETFs) and April’s Bitcoin-halving event appears to be fading somewhat.

Moreover, the post-halving reality is beginning to set in. Bitcoin miners won’t receive the identical rewards they did previously, and investors might wonder if it’s worthwhile to purchase shares of mining stocks now. Nonetheless, a deep dive into Hut 8’s financials will suggest that the corporate ought to be in good condition despite the reduced mining rewards.

A diversified business, but mostly mining

One thing I like about Hut 8 is that there’s more to the corporate than simply bitcoin mining. The truth is, a few of Hut 8’s revenue derives from its Managed Services and High Performance Computing – Colocation and Cloud divisions.

Let’s not kid ourselves though. The overwhelming majority of Hut 8’s revenue comes from its Digital Assets Mining business. Consequently, that’s the business segment to observe closely should you’re going to guage Hut 8.

Let’s see where the info takes us. In the primary quarter, revenue for Hut 8’s Digital Assets Mining segment ballooned to $30.357 million, in comparison with $7.646 million within the year-earlier quarter. That’s a 297% increase, by my calculation.

It’s also vital to have a look at an organization’s cost of revenue, nevertheless. Thus, the price of revenue for Hut 8’s Digital Assets Mining segment expanded from $6.079 million within the year-earlier quarter to $16.622 million in Q1 2024. In other words, the corporate is demonstrating the old principle that it costs money to generate income.

This principle also applies to Hut 8’s business as an entire. The corporate’s total revenue jumped from $15.647 million within the year-earlier quarter to $51.741 million in the primary quarter of 2024. Nonetheless, during that very same time-frame, Hut 8’s total cost of revenue increased from $8.507 million to $28.147 million.

I’m mentioning all of this because Hut 8 CEO Asher Genoot touted the corporate’s “restructuring program,” which was launched in the primary quarter:

“We shut down our underperforming Drumheller site, retired inefficient miners, initiated the relocation of our fleet from hosted to owned facilities, and commenced the implementation of our proprietary energy-curtailment software across our sites.”

That’s all wonderful and well, nevertheless it stays to be seen when those cost efficiencies will show up in the businesses financial results. Hopefully Hut 8 will display higher cost containment in the approaching quarters.

Hut 8’s stunning bottom-line stats

I’ve been somewhat harsh on Hut 8, but there’s no denying that its revenue growth is outstanding. The identical may very well be said concerning the company’s bottom-line statistics for Q1 2024.

Hut 8 managed to extend its adjusted EBITDA by 2,576% from $11.1 million within the year-earlier quarter to $297 million in the primary quarter of 2024. During that very same time-frame, Hut 8 also grew its net income by 1,350% — from $17.3 million to $250.9 million.

Granted, the primary quarter of this yr was unusual with the bitcoin price rising from $45,000 to $70,000. One may additionally presume that the impact of April’s bitcoin-halving event on mining rewards didn’t affect Hut 8 through the first quarter.

Still, even when the corporate’s bitcoin-mining rewards are cut in half, its fast-growing revenue could greater than make up for that. Again, it could help if Hut 8 accommodates its expenditures.

Let the market normalize

For the reason that first quarter was so unusual for the cryptocurrency market, Hut 8 stock investors shouldn’t expect the identical level of pleasure in quarters two, three and 4. In addition they shouldn’t anticipate the identical rate of revenue and income growth that Hut 8 demonstrated in Q1.

The cryptocurrency market should normalize in the approaching quarter, and that’s not necessarily a foul thing. Just consider that the technique of price discovery for HUT stock might take some time. Until then, volatility ought to be expected.

Subsequently, it’s not an awesome idea to load the boat with Hut 8 stock. As a substitute, the prudent policy could be to simply buy a number of Hut 8 shares should you’re very bullish about bitcoin. With that strategy, you’d be invested in an income-positive business with an eye catching growth story, and in case your position size is small, you’ll have room so as to add more later should you’d wish to.