Shares of cryptocurrency mining company Hut 8 Mining (HUT -4.88%) fell on Thursday after the company gave its monthly update on operations. The company reported numbers for November, but it appears some confusion on October's results caused today's sell-off. As of 3 p.m. ET, Hut 8 stock was down 12.5%.
According to the official press release, Hut 8 Mining mined 265 Bitcoins (BTC -2.95%) during November. The price of Bitcoin is around $57,000 as of this writing, but the company is mining them at a cost of around $3,000. That's a great profit margin in theory. However, keep in mind that it doesn't sell Bitcoins for profit. Rather, it holds them and had 5,242 Bitcoins as of Nov. 30.
It's customary for cryptocurrency mining companies to update shareholders monthly, but here's where today's story gets interesting. Based on posts on social media, it appears investors believed Hut 8 mined fewer Bitcoins in November than it mined in October, which is why the market's reaction was negative. But a lower tally in November shouldn't be the case considering the company has increased its computing power over this time period.
Hut 8 didn't give an update for October, which makes it harder to resolve the confusion. But according to its third-quarter earnings report, the company held 4,729 Bitcoins as of Sept. 30. Since it mined 265 in November, this means it mined 248 in October. So mining production increased almost 7% month over month, which is about what you'd expect. Therefore, it looks like today's drop was the result of a misunderstanding.
While I don't personally have a strong opinion about Hut 8 Mining stock, I do appreciate how the company breaks out its cost for mining Bitcoins; most companies don't provide this kind of color. Keep in mind that companies like Hut 8 Mining are holding their Bitcoins, meaning their expenses are being paid for with cash from shareholders. However, so long as the company can mine cryptocurrency this efficiently, and the price of Bitcoin continues to rise, I wouldn't be surprised to see the stock rebound from today's drop.
If you were already interested in Hut 8 Mining, you might want to give this cryptocurrency stock another look after today's unwarranted drop.