Hut 8 secures $19.6B in AI leases, spurring second target hike
Hut 8 has fully leased its 1-gigawatt Texas AI campus in a matter of months, locking in nearly $20 billion in contracts and prompting analysts to revalue the firm as a data center real estate investment trust.
Benchmark Equity Research lifted its price target for Hut 8 to $195 from $165 on Wednesday, marking the second such increase this month. The upgrade follows a massive lease agreement that fully commercializes the company's Beacon Point AI campus in Texas. Hut 8 shares, which have already surged roughly 120% this year, were trading just above $111 on Wednesday afternoon, leaving roughly 75% upside to the new target.
The catalyst for the revised valuation was a second 15-year lease signed on Monday. The agreement adds $9.8 billion in contract value and doubles the existing tenant's footprint at Beacon Point to 704 megawatts. Combined with the initial phase, the 1-gigawatt facility now carries a total contract value of $19.6 billion. Across its entire portfolio, Hut 8 now has 949 megawatts of AI data center capacity under binding contracts.
These long-term agreements translate to substantial and highly predictable cash flows. The newest lease alone is expected to generate roughly $655 million in average annual operating income. When paired with the first phase, Beacon Point should produce a combined $1.31 billion in average annual net operating income.
Analyst Mark Palmer noted that Hut 8 executed the entire Beacon Point commercialization in just a few months. Crucially, the company leased the remaining capacity before the Texas site was even energized. Palmer argued this rapid timeline validates the company's approach of securing power and lining up anchor tenants before pursuing construction financing. He characterized the evolving business model as a "power-first data center REIT with an embedded development machine."
This strategic pivot carries significant implications for how the market values the firm. While Hut 8 originated as a cryptocurrency miner, its core value proposition is now anchored in heavy infrastructure for artificial intelligence. Beyond the data center operations, Benchmark's model still accounts for Hut 8's treasury of 10,278 bitcoin, currently worth nearly $680 million, alongside a 60% stake in American Bitcoin. For market participants, the remaining challenge is determining whether Hut 8 can successfully replicate this rapid development cycle across future sites to justify its elevated valuation.
