HUT Stocks Surge on Rumors of Data Center Approval

Hut 8 Mining Corp (NASDAQ:HUT) shares rose 3% following rumors that the company received approval to build a 300 MW data center in Louisiana. The approval, which was reportedly granted by the West Feliciana Parish Government Planning and Zoning Department on January 6, has been viewed positively by analysts and indicates a potentially significant expansion for the digital asset infrastructure provider.

Cantor analyst Brett Knoblauch noted that the company is in advanced discussions with a major unnamed customer referred to as a "hyperscaler." Knoblauch maintains a "buy" rating with a target price of $35 per share.

Similarly, Mark Palmer from Benchmark emphasized that this development brings Hut 8 significantly closer to launching a "game-changing" artificial intelligence data center complex. According to Palmer, the economics of the project could be highly favorable for Hut 8, which he compared to a similar agreement by Core Scientific.

Investors are drawing parallels between Hut 8’s potential agreement and Core Scientific's 12-year lease of data center capacity to CoreWeave. Palmer stated, "Investors looking to evaluate Hut's potential upside from the project's initial phase have looked at the economics of Core Scientific's 500 MW data center capacity lease agreement with its AI hyperscaler CoreWeave for 12 years. In this agreement, CORZ is poised to generate approximately $750 million in revenue and roughly $600 million in EBITDA each year of the agreement."

Palmer reiterated a bullish target of $41 for Hut 8, maintaining a "buy" rating. The consensus among analysts is that the transaction with the hyperscaler could provide Hut 8 with better economics per MW than what was achieved in Core Scientific's agreement with CoreWeave.

This news is viewed as a positive development for Hut 8, with the potential to significantly increase the company’s revenue and EBITDA if the agreement proceeds under favorable terms.