A Look at Hut 8 (NasdaqGS:HUT) Valuation Following Ontario Power Plant Sale to TransAlta

Hut 8 (NasdaqGS:HUT) has reached an agreement to sell four natural gas power plants in Ontario to TransAlta. This move marks a strategic pivot and sharpens its focus on Bitcoin mining and high-performance computing operations.

See our latest analysis for Hut 8.

Hut 8’s latest move to divest its Ontario power plants and sharpen its Bitcoin mining focus has put a spotlight on its recent share price swings. The company’s 32.5% one-year total shareholder return hints at improving long-term momentum, even as the past month’s 27.9% share price pullback follows a stellar 56.9% year-to-date run and strong 46.4% gain over the last quarter.

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But with Hut 8’s renewed focus and a share price still well below analyst targets, is this the moment to catch an undervalued disruptor, or is the market already factoring in all the future gains?

Most Popular Narrative: 38.7% Undervalued

Hut 8’s last close of $34.34 sits well below the narrative’s fair value, indicating major upside according to the most closely followed analysis. The narrative’s bullish stance is rooted in Hut 8’s evolving business model and future platform scale.

The Power First strategy, featuring sizable pipeline origination (10.8 GW under diligence; 3.1 GW under exclusivity) and dual-purpose sites for both Bitcoin mining and AI compute, provides scalability and flexibility to benefit from rising institutional adoption of digital assets and accelerating demand for clean energy-powered blockchain infrastructure. This is expected to bolster future revenue and earnings growth.

Read the complete narrative.

Hungry for the inside logic? This narrative’s valuation hinges on exceptionally bold projections for both top-line expansion and margin transformation. Analysts are banking on a business pivot and a massive operational leap driving revenue to new heights. Find out the hidden assumptions and aggressive forecasts behind the most optimistic price target Hut 8 has seen to date.

Result: Fair Value of $56 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, Hut 8’s heavy dependence on Bitcoin pricing and significant exposure to regulatory shifts around natural gas remain major risks that could derail these optimistic forecasts.

Find out about the key risks to this Hut 8 narrative.

Another View: A Look Through Market Ratios

Taking a step back from the narrative-driven valuation, market ratios paint a less optimistic picture. Hut 8 trades at a price-to-earnings ratio of 18.2x, which is comfortably below the US Software sector’s 28.8x but above its own fair ratio of 11.7x. This gap suggests the market may be pricing in more future growth than fundamentals currently support, introducing valuation risk alongside opportunity. Do market multiples reveal a cautionary tale, or is it a springboard for further upside?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Hut 8 Narrative

If you see the story differently or thrive on doing your own analysis, you can build and test a custom view in just a few minutes. Do it your way.

A great starting point for your Hut 8 research is our analysis highlighting 3 key rewards and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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