Hut 8’s new subsidiary, American Bitcoin Corp., established through a collaboration with the mining firm and the Trump family, may be separated from the parent company, enabling it to concentrate on data center hosting, according to a report released on Monday by broker Clear Street.
The report highlighted that while the new division will be reflected in Hut 8’s financials, the two businesses could be divided, allowing Hut 8 to zero in on revenue from high-margin data center hosting.
According to the report, Hut 8 is anticipated to obtain additional power and broaden its data center hosting services, with the opportunity to secure a hyperscaler serving as a significant growth driver for the company.
Eric Trump and Donald Trump Jr. are combining their firm, American Data Centers, with American Bitcoin, forming a new mining initiative and taking a 20% equity stake in the venture. Hut 8 will hold the remaining 80%, contributing nearly 61,000 mining machines to the operation.
A partnership between Core Scientific and the cloud computing provider CoreWeave has resulted in a re-evaluation of the industry last year, as investors became more open to the concept of bitcoin miners transitioning towards artificial intelligence and high-performance computing (HPC).
Hut 8 is projected to experience significant growth starting in the latter half of the year, fueled by the activation of the BITMAIN Colocation agreement, the report states.
Clear Street maintains a buy rating on Hut 8 shares, setting a price target of $23. Early trading saw shares rise over 4% to $12.10.
Investment bank KBW pointed out that Eric Trump will take on the role of chief strategy officer at American Bitcoin, which could prove advantageous given his “dedication to the field and strong connections.”
KBW has an outperform rating on the stock with a price target of $30.