Hut 8’s New Subsidiary Could Be Spun Off to Focus on Data Center Hosting, Clear Street Reports
Clear Street has issued a buy rating on Hut 8 (HUT) shares, setting a $23 price target, following the company’s announcement about its new subsidiary, American Bitcoin Corp. The subsidiary, a collaboration between Hut 8 and the Trump family, could be spun off, enabling Hut 8 to focus more on its high-margin data center hosting business, according to the broker’s report published on Monday.
While American Bitcoin will be included in Hut 8’s financials, Clear Street suggests that the two businesses could eventually be separated. This would allow Hut 8 to concentrate on its data center hosting operations, which are expected to expand as the company secures more power and boosts its business.
A significant growth catalyst for Hut 8 is the potential to secure a hyperscaler, which Clear Street identifies as a key driver for the company’s future performance. Hut 8’s collaboration with the Trump family, including Eric Trump and Donald Trump Jr., who will take a 20% stake in the venture, marks a major development for the company. The remaining 80% of the new American Bitcoin venture will be owned by Hut 8, which is contributing nearly 61,000 mining machines to the initiative.
This new venture follows a trend seen in the industry, as evidenced by Core Scientific’s (CORZ) deal with cloud computing firm CoreWeave, which helped shift market sentiment toward bitcoin miners entering the artificial intelligence (AI) and high-performance computing (HPC) space. Hut 8 is expected to enter a period of substantial growth later this year, especially with the energization of its BITMAIN Colocation agreement.
Clear Street’s report highlights Hut 8’s growth potential, with the broker maintaining its buy rating and $23 price target. The company’s shares saw a more than 4% increase, reaching $12.10 in early trading.
Additionally, investment bank KBW has also issued an outperform rating on Hut 8, with a $30 price target. KBW emphasized that Eric Trump’s role as chief strategy officer of American Bitcoin could be a significant positive for the company, given his commitment to the industry and strong relationships.
