• Hut 8’s bitcoin mining operation in North Bay, Ontario has come to a standstill due to disagreements with its energy provider, Validus Power.
• Validus stopped supplying power to the facility while delivering its own default notice for payments, and has demanded that the Company make payments for delivery of energy higher than those negotiated.
• Hut 8 is exploring alternatives, including organic and inorganic growth opportunities, in order to mitigate the impact of the dispute and restart operations as soon as possible.
Hut 8’s bitcoin mining operation in North Bay, Ontario has come to a grinding halt due to a series of disagreements with its Canadian-based energy provider, Validus Power. The problems first came to light in November 2022, when the mining company reported in its Q3 operations update that it had issued a notice of default to Validus for “failing to hit certain operational milestones.” The situation deteriorated two weeks later, when Validus stopped supplying power to the facility and issued its own default notice for payments that it claimed Hut 8 had failed to make.
The Q3 report also revealed that Validus had demanded that the Company make payments for delivery of energy that were higher than those negotiated under the terms of the Power Purchase Agreement (PPA). As fluctuations in power costs can have a major impact on bitcoin mining operations, and favorable power purchasing agreements are essential for the sustainability of the business, this posed a major challenge for Hut 8.
In their most recent December update, the company stated that it was “continuing to explore alternatives to mitigate the impact of the dispute with the third-party energy supplier to the site, including through organic and inorganic growth opportunities.” The company also emphasized that it fully intends to resolve the issues and restart operations as soon as possible, whether that be through some kind of resolution involving Validus or through a potential alternative power supplier.
With the future of its North Bay mining operations hanging in the balance, Hut 8 is under pressure to find a solution that will allow the facility to resume production. It remains to be seen whether the company will be able to make a suitable arrangement with Validus or a new power supplier, or if the facility will remain shut down for the foreseeable future. Regardless of the outcome, the dispute highlights the importance of favorable power purchasing agreements for any bitcoin mining operations.