Hut 8 Mining Corp. (HUT:NASDAQ;HUT:TSX) recently announced an all-stock merger with U.S. Bitcoin Corp., noted Canaccord Genuity analysts Joseph Vafi, Pallav Saini, and William Johnston in a March 10 research note.
The analysts view this as a potential "game changer" for the company. The deal would double Hut 8's self-mining capacity and provide entry into complementary businesses like hosting and data center services.
"In the all-stock deal . . . HUT is getting a lot," analyst Joseph Vafi wrote.
Beyond extra hashrate, the merger brings cheap power, infrastructure, and an experienced management team. The combined entity will also re-domicile in the U.S., allowing access to broader capital markets.
Operationally, Hut 8 continues mining profitably despite disputes with an energy provider and infrastructure issues at two sites. Vafi believes these headwinds are temporary.
Valuation and Upside Canaccord lowered its price target from US$6 to US$5 based on the merger's dilution. However, Vafi sees the consolidation as a "material upside catalyst" versus Hut 8's standalone prospects. With shares around US$1.26, Canaccord's target implies a nearly 300% potential upside.
Vafi retained a Buy rating on Hut 8 Mining after the merger news, citing the opportunity for fundamental improvements. Investors await further details as the strategic rationale appears positive.
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