Wall Street broker Benchmark said Bitcoin miner Hut8 (HUT) is capitalizing on last week’s Riverbend announcement to solidify its transition from a crypto-first power owner to an institutional-grade digital infrastructure platform.
Analyst Mark Palmer said structure, counterparty and quality of cash flow are what differentiate the HUT deal from the recent wave of AI data center deals. He reiterated his buy rating on the stock and raised his price target to $85 from $77, implying a 93% upside from Friday’s closing price of $44.12. The stock price rose 2.8% from pre-market to $45.34.
Last Wednesday, Hut 8 signed a $7 billion, 15-year AI data center lease with Fluidstack for its River Bend data center in Louisiana. The stock price rose as much as 20% on the news.
“This transaction combined superior transaction economics relative to peers, long-term investment-grade backstop cash flow, and the inclusion of multiple tiers of expansion options across three counterparties,” Palmer said.
Palmer’s total of parts (SOTP) valuation includes Riverbend’s lease value, potential future expansion capacity based on first offer rights granted to Fluidstack, Hut8’s stake in American Bitcoin Corporation (ABTC), and Bitcoin held on its balance sheet as of September 30th.
Palmer said timing is key. Management did not rush to monetize power assets in the early stages of securing land for AI infrastructure, instead waiting for configurations that met internal revenue hurdles and strategic criteria.
He cautioned that Google’s (GOOG) 15-year payment backstop is a meaningful risk mitigation feature, which in his view allows Hut8 to reduce counterparty risk while retaining full economic ownership without the warrants or equity sweeteners that have appeared in other transactions.
With three five-year renewal options, the total contract value could reach approximately $17.7 billion, the report said.
Benchmark said it values the first 245 megawatt (MW) Riverbend tranche at approximately $7.6 billion, reflecting the scarcity value of AI-enabled power backed by contracted cash flows and an investment-grade backstop.
Rival broker Cantor Fitzgerald raised its price target on Hut8 last week to $72 from $64, and Canaccord raised its price target to $62 from $54.
read more: Kantar and Canaccord raise price target for Hut8 following Google-backed AI trade