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Hut 8 Corp., one of the largest publicly traded bitcoin mining companies, named Asher Genoot to succeed Jaime Leverton as chief executive, three weeks after a short-seller released a report critical of its recent merger.

The transition is effective immediately. Genoot served as the chief operating officer and the president of U.S. Bitcoin Corp. Miami-based U.S. Bitcoin, which has large-scale mining facilities across the United States including Texas, completed its merger with then-Canadian miner Hut 8 in late 2023.

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The leadership transition comes amid increasing competition among the miners, a bitcoin code update set to drastically reduce mining revenue in two months as well as the Jan. 18 report from short-seller J Capital Research alleging the merged company was a “pump and dump” waiting to happen. Hut 8 has disputed the claim.

“The Hut 8 board of directors has determined, following the completion of the company’s merger of equals, the time was right to set a new strategic direction for the company and that a transition of leadership was appropriate,” Hut 8 said in a statement on Wednesday.

Shares of Hut 8 tumbled as much as 26 per cent when the J Capital report was issued, which was also the day company officials rang the bell to open trading on the Nasdaq stock market. Hut 8 was down about 1.9 per cent to US$6.75 as of 1:41 p.m. in New York.

While bitcoin prices have been on a tear, crypto-mining companies are ramping up their operations to compete for the mining reward, a fixed amount of new coins released from the bitcoin blockchain to miners that successfully verify transactions on the network.

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Bitcoin mining is an energy-intensive process, in which the more computing power a miner has, the more likely they will win the reward. Mining difficulty, a measure of computing power to mine bitcoin, has broken all-time-highs over the last year, meaning a miner has to spend more money on new computers, or mining machines and power to get the same amount of reward.

A pre-programmed event, called “the halving”, on bitcoin will reduce mining reward by half in April, making mining profit margins much thinner. The quadrennial update aims to maintain the hard cap of 21 million for the largest cryptocurrency.

The J Capital report accused Hut 8 of a slew of issues including undisclosed stock ownership, connections, and low efficiency of its operations, which could be detrimental after the halving. Some major miners such as Marathon Digital Holdings Inc. and Riot Platforms Inc. have acquired large amounts of new machines and power plants to increase efficiency while decreasing operating costs.

During Leverton’s three-year tenure, Hut 8 became one of the few crypto-mining companies that can also provide its customers, including some artificial intelligence startups, with high-performance computing services, besides its bitcoin mining businesses.

Bloomberg.com

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