Benchmark significantly increased the target price of the Bitcoin mine Hut 8, not because of the mining itself, but because of the company ' s advancement in the AI data centre operations. The Agency considers that, with the commercialization of the Beacon Point project, the Hut 8 valuation framework is moving from a traditional mine to an AI infrastructure platform.
Target price up to $165
Benchmark increased the target price of Hut 8 from $85 to $165 and maintained the buy-in rating. According to the report, the Hut 8 share price has recently been around $100, which corresponds to approximately 65 per cent of the upper space.
According to analyst Mark Palmer, the market has not yet fully reflected Hut 8 implementation progress in recent weeks. Although the company ' s share price has fallen nearly 30 per cent over the past six weeks, its operations have progressed relatively rapidly, especially the landing of the Beacon Point AI data centre campus, which is the central cause of this valuation adjustment.
Two campuses, $16.8 billion in lease value.
Benchmark estimates that Hut 8 has locked the value of the underlying lease totalling $16.8 billion in two AI campuses; this figure could rise to $42.8 billion if the tenant exercises the option to renew the lease.
The two parks, located in River Bend, Louisiana, and Beacon Point, Texas, cover 597 MW IT capacity. The company has signed two contracts for a period of 15 years for three net leases with a take-or-pay clause. Such contracts usually mean that the tenants have to pay their contractual fees and help to improve cash flow stability.
Of these, Beacon Point was considered to be the main driver for this upward revision. Benchmark estimated that the first phase of the project alone corresponded to the value of $9.8 billion in base contracts, with an average annual net operating income of approximately $655 million.
Mining to AI infrastructure
The report also mentions that Hut8 recently completed funding of $4.25 billion in investment-level projects for Beacon Point, after having raised $3.25 billion for River Bend. According to Benchmark, this indicates that the company is reducing capital costs by converting developing assets into long-term contractual cash flows.
In addition to the commercialized projects, Hut 8 has a development reserve of more than 9 Giwa, covering several projects under exclusive negotiation, development, construction and management. According to Benchmark, this provides a longer growth space for the subsequent expansion of the company.
At the operational level, the Bitcoin mining company has been accelerating in recent years towards AI and high-performance computing infrastructure to cope with the fluctuations in mining profits and the rising demand for data centres. In addition to Hut 8, companies such as Core Scientific, Live Digital and Bit Digital are adjusting part of their electricity and infrastructure assets to secure long-term contractual revenue from large customers.
At the same time, Benchmark noted that the performance of Hut 8 in the second quarter could be affected by the market value of the Bitcoin hold and the accounting treatment of the American Bitcoin table. However, in the Agency ' s view, these factors may mask the performance of the company AI infrastructure business itself.