HUT’s Breakout: 1.5 GW, ABTC Spin, and a 932x P/E—Momentum or Madness?

Hut 8 (HUT) is trading like a company that just found a bigger stage. The stock is breaking out and in a frim upward trend, handily outpacing Bitcoin and most crypto miners. The narrative behind that move is more than “number go up.” Hut 8 has been rebuilding itself as an energy-infrastructure and compute platform: it hosts and manages power, develops data-center capacity, and now holds a controlling stake in American Bitcoin (ABTC) to separate capital-hungry self-mining from steadier, contract-driven cash flows. In plain English: keep the Bitcoin torque, add recurring infrastructure revenue, and court AI/HPC customers who care about cheap, reliable power.

What Hut 8 does now

Post-reorg, Hut runs three primary buckets. Power aggregates capacity contracts and energy sales (notably in Ontario) while marketing in-house energy expertise to institutions. Digital Infrastructure provides colocation for both Bitcoin rigs and CPU workloads. Compute is the largest—and messiest—mix: it includes consolidated Bitcoin mining (via ABTC), GPU-as-a-service/AI (Highrise), and cloud/data-center services. Management’s “Power First” strategy aims to lock multi-year energy deals, then allocate that power between mining and higher-margin compute tenants. The expansion pipeline is large: ~10.8 GW under diligence and ~3.1 GW under exclusivity, plus 1.53 GW of new U.S. sites (Louisiana, two in Texas, Illinois) moved into “Capacity Under Development.” When energized, that would more than double power under management to ~2.55 GW, positioning Hut as one of the bigger owners/operators of power that can swing between AI/HPC and ASIC mining depending on economics.

What to watch

A few KPIs will tell you whether this thesis travels from slide deck to P&L:

• Contracted power: management says ~90% of capacity under management is now locked on ≥1-year agreements (vs <30% a year ago). Sustaining and expanding that mix is crucial for visibility.
• HPC/AI wins: the River Bend, LA site (~300 MW, ~200 MW IT load) is the flagship. A marquee GPU/HPC contract here would validate the pivot beyond mining.
• ABTC milestones: Hut expects to retain ~64% control post ABTC’s go-public. ABTC’s planned scale (from 10.2 EH toward 50 EH) drives Hut’s equity torque, but also re-introduces cycle risk if Bitcoin stumbles.
• Cost discipline: SG&A and depreciation have ballooned; if AI buildouts lag, those fixed costs can bite.
• Clean profitability: strip out non-cash BTC revaluation and look for recurring margin expansion from hosting/colocation.

The quarter in focus

For Q2 2025, revenue was $41.3M (+17% y/y). The mix tells the story of a company in transition:

• Compute revenue $34.3M (+117% y/y) on stronger Bitcoin production and GPU-as-a-service. Compute COGS rose 69%, so Compute gross profit jumped from $7.1M to $19.6M—a real improvement.
• Power $5.5M (-48% y/y) and Digital Infrastructure $1.5M (-71% y/y) fell mainly because the Ionic Digital managed-services and colocation contracts ended in late 2024.
• Below the line, reported profitability was flattered by a $217.6M gain on digital assets, which swung net income to $137.3M and pushed adjusted EBITDA sharply positive. Helpful, but investors should recognize the heavy lift from unrealized BTC marks.

Management commentary was confident: Vegas continues to commercialize (targeting ~205 MW of ASIC colocation for Bitmain and ABTC); Ontario added 310 MW of five-year power capacity agreements; and the SEC declared ABTC’s S-4 effective with a listing expected soon (Note: It started listing this week). Analyst Q&A centered on converting the development pipeline, dual-purpose site economics, and capital allocation. The tone from the Street: constructive, but “show me” on HPC contracts and returns.

Price action and positioning

The tape is emphatic. HUT is up ~50% MTD, ~67% QTD, ~160% over six months, and ~243% y/y. It trades ~3% below its 52-week high and sits at an RSI ~73—overbought by textbook standards. There’s also fuel for squeezes: ~93.6M share float, ~16.2M shares short (~17% of float), and beta ~4.2. Momentum investors have the wind at their backs; mean-reversion types will point to how stretched the move is.

Valuation: can fundamentals grow into it?

At a recent $30–31 price, HUT screens expensive on simple multiples: Forward P/E ~932x, P/S ~23.5x. Those metrics are blunt—P/E is largely irrelevant when earnings swing with BTC revaluations, and P/S ignores the asset-heavy, contract-backed nature of the strategy—but they do capture the market’s message: expect a lot. The bull defense is that a re-rating is coming as ABTC trades publicly (clarifying Hut’s “infrastructure + fees + equity stake” model) and as one or two anchor HPC deals convert pipeline to revenue. Several brokers have nudged targets higher—$32–$36—citing the value of Hut’s ~10k–10.7k BTC HODL (roughly $1.1–$1.4B at spot), equity in ABTC, and optionality on ~2.6–2.55 GW of potential power.

The bear rebuttal is straightforward: execution risk. SG&A and depreciation are rising as the company builds for scale; if HPC deals slip or price poorly, operating leverage cuts the wrong way. Digital Infrastructure and Power declines tied to contract roll-offs show how lumpy transitions can be. And while ABTC gives cleaner lines of sight, the equity still “goes as Bitcoin goes.” If your core view is bullish BTC, owning BTC directly remains the purer—often better—instrument.

So… buy the breakout?

Tactically, the break above $28 is constructive, and short interest adds octane. For momentum-oriented investors, riding the trend with tight risk controls makes sense. For fundamental holders, the question is whether Hut can earn into today’s multiple. That requires: (1) signed HPC/AI contracts with attractive returns at River Bend and other U.S. sites, (2) sustained contracted-power mix (≥1-year terms) to stabilize cash flows, (3) non-BTC EBITDA growth that stands on its own, and (4) disciplined capex so SG&A/depreciation don’t outrun revenue.

My take: the strategy is credible and the asset base is real, but the valuation already bakes in a lot of success. If management lands one or two flagship HPC wins and ABTC trades well, the Street can grow into it. Until then, HUT is best treated as a high-beta, thesis-under-construction name—ownable on proof, tradable on momentum. If you need the crypto torque now, keep position sizes humble; if you want durable compounding, let the contracts—and the margins—show up first.