Coatue invests $150M in Hut 8 for AI infrastructure development
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The promise of artificial intelligence shielded Hut 8 from the bitcoin storm yesterday.
Driving the news: Philippe Laffont's Coatue Asset Management made a $150 million investment in Hut 8 via convertible bonds.
- Coatue has deployed more than $2 billion toward infrastructure and AI data-center verticals, according to a Hut 8 presentation. It's also behind a company called CoreWeave, a cloud computing firm that recently linked up with miner Core Scientific.
Between the lines: Investors appear to have newfound appreciation for crypto miners and their facilities, which can be used to host AI GPU centers.
- Hut 8 was already doing this, and CoreWeave just leased more data center space from Core Scientific.
Zoom in: A spokesperson for Hut 8 said it decided to issue the convertible notes after Coatue expressed interest in investing in the business.
- "We decided to issue convertible notes as they allowed us to raise capital on a future valuation rather than where our equity trades today."
Initial terms are for five years, with 8% interest paid to Coatue per year.
- The initial conversion price is $16.395 per share.
- Hut 8 has the right to force conversion two years after the closing on July 11, if certain conditions are met, including that the closing price of its stock equals or exceeds $24.5925 over a specified period.
💠Our thought bubble: There is a lot of drama in the sector — miners are selling their bitcoin, rejecting unsolicited deals, adopting poison-pill clauses, and/or subjects of short-sellers' reports.
- Plus, there are future grid concerns in Texas because of all that activity in mining and AI.
Flashback: Hut 8 had its own share of drama earlier this year.
- Then-CEO Jaime Leverton left in early February after short-seller J Capital Research alleged that its recent merger was a "pump and dump," which the mining operator refuted.
By the numbers: Hut 8 stock closed 1.5% higher yesterday, and is up over 18% this morning, trading at over $14.80.
