Hut 8 Mining Corp., backed by billionaire investor Mike Novogratz, declined on its first day of trading on the TSX Venture Exchange as it seeks to boost bitcoin mining operations across North America.
Vancouver-based Hut 8 fell to $3.51 at 11 a.m. in Toronto, after opening at $4.70. The company is partially owned by chip maker Bitfury Group Ltd. and raised more than C$100 million ($78 million) in private placements ahead of its listing through the reverse takeover of Oriana Resources Corp. The most recent stock sale last month was at C$5 apiece.
"We think it's very compelling financials at this point. This is also why many competitors are entering the market, because of the margins," Chief Executive Officer Sean Clark said in a Bloomberg TV interview Tuesday from Toronto. "With these margins, competitors undoubtedly come in. But what makes us different is we have our chips allocated through Bitfury."
Hut 8's listing is an opportunity for investors to buy into the booming market for specialized computer chips that drive the world's bitcoin mining. Bitfury, its partner and largest shareholder, is the second-biggest supplier of those chips after China's Bitmain Technologies Ltd.
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Bitcoin has gone through waves of volatility over the past few months, rising as high as $18,674 and dropping to about $11,000 now. Even if the virtual currency continues to fall, Clark isn't worried.
"We benefit because we gain market share because then the hobbyist who's mining for 10 cents a kilowatt-hour is going to leave the market because their break-even point is much much higher," he said. "Because we're an industrial datacenter scale play, we can actually go below $1,000 for a while and everyone will leave and we'll gain market share."