Hut 8’s (HUT) recently established subsidiary, American Bitcoin Corp., formed through a collaboration with the Trump family, may be divested, enabling the company to concentrate on data center hosting, as noted by broker Clear Street in a report released on Monday.
The broker highlighted that while this new division will be reflected in the bitcoin miner’s financial statements, the “businesses could be separated, allowing HUT to prioritize high-margin data center hosting revenue.”
According to the report, Hut 8 is poised to secure additional power and enhance its data center hosting operations, with the “ability to secure a hyperscaler” recognized as a significant growth driver for the company.
Eric Trump and Donald Trump Jr. are consolidating their company, American Data Centers, with American Bitcoin, a new mining initiative, acquiring a 20% ownership in the venture. The remaining 80% will be held by Hut 8, which is contributing nearly 61,000 mining machines to this new entity.
The partnership between Core Scientific (CORZ) and cloud computing firm CoreWeave resulted in a reassessment of the sector last year, as investors began to embrace the notion of bitcoin miners transitioning to artificial intelligence and high-performance computing (HPC).
The report further indicated that Hut 8 is anticipated to enter a significant growth phase in the latter half of the year, “driven by the activation of the BITMAIN Colocation agreement.”
Clear Street has issued a buy rating for Hut 8 shares, setting a price target of $23. The shares were over 4% higher, trading at $12.10 in early trading.
Investment bank KBW mentioned that Eric Trump will take on the role of chief strategy officer for American Bitcoin, which is expected to be a substantial advantage due to his “commitment to the industry along with his notable connections.”
KBW has rated the stock as outperforming with a price target of $30.
