Hut 8 Mining 3Q19 review: Core operations come out ahead but face significant headwinds

Quick TakeIn 3Q19, Hut 8 mined 1,966 bitcoin, a 30% decline from the previous quarter, which management attributed to a 61% increase in the bitcoin network’s difficulty rateDespite this, however, the company’s mining revenue only declined by 5% sequentially as a result of the elevated bitcoin prices in July and AugustAlthough Hut 8’s revenue per bitcoin ($10,200 USD) exceeded its adjusted cost per bitcoin ($7,100 USD) during the quarter, depreciation costs are likely unsustainably low following an $85 million impairment on mining equipment that was recognized during 4Q18With the halving quickly approaching, the company seems optimistic that either a decrease in the network difficulty rate or an increase in bitcoin prices will offset the impact of the reduced block reward