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Technology-focused investment manager Coatue Management will invest $150 million in Bitcoin miner Hut 8 as investors continue to capitalize on the artificial intelligence (AI) hype. On June 24, Hut 8 announced the multimillion-dollar investment by Coatue Management, owned by billionaire Philippe Laffont, through convertible notes.
Noteworthy Agreement from the Mining Firm
According to the Bitcoin miner, the agreement will pay 8% annually with an initial five-year term. Hut 8 will have the option to extend the investment for up to three one-year extension periods, and it will be Coatue Management’s senior unsecured obligation. Laffont stated that they see the Bitcoin miner as well-positioned to accelerate new computing capacity and capitalize on the opportunities arising from it:
“We are committed to supporting innovators developing AI and believe computing capacity is crucial to unlocking significant growth across the ecosystem.”
The completed transaction is expected to occur on or before July 11 this year. On June 21, Hut 8 submitted the investment agreement with Coatue to the United States Securities and Exchange Commission (SEC). Hut 8 stands as one of the largest public miners in terms of existing computing power, with a current market value of $1.1 billion.
Hut 8 and the Crypto Market
In the crypto industry, Hut 8 has become one of the first companies involved in the high-performance computing business sought after to power generative AI models and applications. Other crypto miners like Core Scientific and Terawolf have also ventured into hosting data centers or making deals with AI companies. Both of the aforementioned companies saw stock price increases after making AI-focused agreements.
Robert Yin, a partner at Coatue, stated that the broader market has begun to appreciate the scarcity of high-quality energy assets as Hut 8 builds a deep pipeline of highly attractive and scalable assets.
Following the Bitcoin halving event in April, many mining firms are looking for ways to make themselves more competitive despite profitability challenges. During this time, Hut 8 mentioned it is considering expanding its self-mining operations and the scope of its diversified revenue streams.
