Hut 8 Corp. surged by 10.37 percent on Monday to end at $100.93 apiece, as investors took heart from the $50.2-billion revenue potential of its Beacon Point data center campus in Texas.
This followed the inking of a new leasing agreement with an existing tenant for the second phase of the campus, covering 352 MW of IT capacity, for a base rent of $9.8 billion.
The unnamed tenant was the same customer that leased the first phase of the project, also covering the same amount and capacity.
In total, Hut 8 Corp.’s (NASDAQ:HUT) leasing capacity with the said tenant stands at 704 MW, with a combined base lease of $19.6 billion.
Beacon Point. Photo from Hut 8 Corp
15-Year Term
Under the new agreement, Hut 8 Corp. (NASDAQ:HUT) will deliver the committed capacity over the course of 15 years.
Hut 8 Corp. (NASDAQ:HUT) also offered the option to renew the lease by three five-year terms, bringing the potential leasing revenue to $50.2 billion.
The agreement covers a 3 percent increase in annual base rent over the course of the leasing term.
Hut 8 Corp. (NASDAQ:HUT) said that it expects to deliver the initial phase 2 data hall in the second quarter of 2028.
Beacon Point—First Fully Commercialized Project
Following the agreement, Hut 8 Corp. (NASDAQ:HUT) said that Beacon Point became the company’s first fully commercialized AI data center campus.
”The real test of our power-first approach is what our partners are willing to commit against it. Our tenant at Beacon Point chose to double its footprint at the site, the strongest validation an asset can receive,” said CEO Asher Genoot.
“We took this greenfield site from first lease to full commercialization in just months. That speaks to the quality of the sites we originate, the credibility of our delivery, and the long-term orientation of our partnerships. The opportunity ahead of us is to apply the same model across our development pipeline,” he noted.
River Bend Data Center
Apart from Beacon Point, the company also successfully commercialized its 245-MW AI data center at the River Bend Campus with a potential to generate up to $17.7 billion in revenues.
Late last year, Hut 8 Corp. (NASDAQ:HUT) shook hands with Fluidstack for the lease of 245 MW of IT capacity in the said development, also for a period of 15 years.
The lease covered an initial base of $7 billion, with the potential to hit $17.7 billion if its three five-year renewal options are exercised.
The agreement also grants Fluidstack the right of first offer for up to an additional 1,000 MW of IT capacity at future expansion phases of the campus, subject to the expansion of power at the site.
Lower Hedge Fund Participation
Institutional investors became more concentrated in the first quarter of the year, even as the number of hedge funds declined during the period.
Data from Insider Monkey showed that the number of institutional investors in Hut 8 Corp. (NASDAQ:HUT) declined to 60 in the first three months of the year from 64 in the quarter prior.
Despite the lower participation, the remaining investors notably displayed stronger conviction in the company, having increased their aggregate holdings to a combined $1.602 billion versus only $1.369 billion the quarter prior.
While we acknowledge the risk and potential of HUT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than HUT and that has 10,000% upside potential, check out our report about the cheapest AI stock.
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