Hut 8 Expands Medicine Hat Facility as Bitcoin Hashrate Surges Toward 100 EH/s Milestone

The Hardware/Software Landscape

On September 3, 2019, Hut 8 Mining Corp. — one of North America’s largest publicly traded Bitcoin mining operations — announced a significant expansion of its Medicine Hat facility in Alberta, Canada. The company added 4.3 megawatts (MW) of additional mining capacity to an already substantial operation, signaling strong confidence in the long-term economics of Bitcoin mining at a time when the network’s total hashrate was hurtling toward the historic 100 exahash per second (EH/s) threshold.

Hut 8, trading on the TSX Venture Exchange under the ticker HUT and on OTCQX as HUTMF, operated two major mining sites in Alberta at the time: the Medicine Hat facility and the Drumheller facility. Both sites utilized Bitfury’s BlockBox air-cooled mobile data centers — specialized shipping containers packed with ASIC mining rigs designed for rapid deployment and efficient operation. The BlockBox architecture allowed Hut 8 to scale quickly by simply adding more units to existing infrastructure without requiring entirely new facility construction.

The 4.3 MW expansion at Medicine Hat was not a trivial addition. For context, 1 MW of power dedicated to Bitcoin mining at late-2019 efficiency levels could support roughly 70 to 80 petahashes per second (PH/s) of hashrate using Bitfury’s latest-generation Clarke ASIC chips. This means the expansion alone likely added approximately 300 to 350 PH/s to Hut 8’s mining capacity — a meaningful increment for a company that was already managing dozens of megawatts across its two sites.

Hashrate & Difficulty

The timing of Hut 8’s expansion was no accident. Bitcoin’s network hashrate had been on a relentless climb throughout 2019, recovering dramatically from the lows seen during the “crypto winter” of late 2018. By early September 2019, the seven-day average hashrate had already surpassed 80 EH/s, and the network was on track to cross the psychologically significant 100 EH/s mark within weeks. On September 16, the daily hashrate estimate actually touched 101.23 EH/s — though daily figures are noisy and a more reliable seven-day average didn’t cross 100 EH/s until slightly later.

Mining difficulty, which adjusts every 2,016 blocks (approximately two weeks) to maintain the ten-minute block time target, had been ratcheting upward in lockstep with hashrate growth. Each difficulty increase meant that individual miners needed more computing power to earn the same share of block rewards. This created a competitive dynamic where only the most efficient operations — those with access to cheap electricity, modern hardware, and well-managed facilities — could maintain profitability. Hut 8’s Alberta locations gave the company access to some of the cheapest natural gas-powered electricity in North America, a critical advantage in an increasingly competitive mining landscape.

The hashrate surge was driven by several factors: Bitcoin’s price recovery from its late-2018 lows below $4,000 to above $10,000 by mid-2019 had dramatically improved mining economics; next-generation ASIC hardware from Bitmain (Antminer S17 series), MicroBT (Whatsminer M20S), and Bitfury was coming online in large quantities; and large-scale mining operations in China, Central Asia, and North America were aggressively expanding their fleets. Bitcoin was trading at approximately $10,623 on September 3, 2019, with a market capitalization of roughly $190 billion.

Profitability Metrics

With Bitcoin hovering around $10,600 in early September 2019, mining profitability for efficient operations remained robust, though the margins were considerably thinner than during the heady days of late 2017 and early 2018. The block reward was still 12.5 BTC — the halving to 6.25 BTC was still eight months away, scheduled for May 2020 — meaning miners were earning approximately $132,500 per block at current prices, plus transaction fees.

For Hut 8 specifically, the company’s cost structure benefited enormously from its long-term power purchase agreements in Alberta. Industrial electricity rates in the region were among the lowest in Canada, typically ranging from $0.03 to $0.05 per kWh for large-scale operations. At these rates, and with Bitfury’s efficient BlockBox units, Hut 8’s all-in cost of mining a single Bitcoin was estimated to be significantly below the spot market price — even accounting for the rising network difficulty.

The expansion of 4.3 MW of additional capacity represented a direct bet that Bitcoin’s price would remain above the company’s breakeven threshold. Every additional megawatt deployed was a calculated wager that the mining economics would remain favorable through the upcoming halving event and beyond. The timing was particularly strategic: deploying new capacity in September 2019 meant these machines would have months to earn at the current 12.5 BTC block reward before the halving compressed revenues.

Environmental Impact

Hut 8’s Medicine Hat facility sat in a region of Alberta where the local economy had long been tied to natural gas production. The company’s power supply came primarily from natural gas-fired generation — a cleaner alternative to coal, though still a fossil fuel source. At the time of the expansion, the total power consumption of Hut 8’s operations was approaching 100 MW across both sites, consuming roughly the equivalent electricity of a small town.

The environmental question was becoming increasingly prominent in the Bitcoin mining discourse during 2019. With the network’s total hashrate approaching 100 EH/s, estimates suggested that Bitcoin mining globally consumed between 60 and 70 terawatt-hours (TWh) of electricity annually — comparable to the entire electricity consumption of countries like Switzerland or the Czech Republic. Critics argued this energy expenditure was wasteful, while proponents countered that Bitcoin’s energy consumption was a feature, not a bug — the cost of maintaining a decentralized, censorship-resistant global monetary network.

Hut 8’s choice to expand in Alberta rather than regions with coal-heavy grids was at least a partial nod to environmental considerations. Natural gas emits roughly half the CO2 per kilowatt-hour compared to coal, meaning the carbon intensity of Hut 8’s mining was lower than many competitors operating in coal-dependent regions of China and Central Asia at the time.

Strategic Outlook

Hut 8’s September 2019 expansion was part of a broader trend of publicly traded mining companies positioning themselves ahead of Bitcoin’s third halving, expected in May 2020. The logic was straightforward: deploy as much hashrate as possible before the block reward was cut in half, accumulate Bitcoin at below-market cost, and hold those reserves for potential price appreciation. This “mine and hold” strategy was particularly popular among North American mining firms that had access to public capital markets and could fund expansion through equity raises.

The broader mining industry was also undergoing a geographic shift in late 2019. While China still dominated global hashrate — controlling an estimated 65% or more of the network’s computing power — regulatory uncertainty and periodic crackdowns were pushing some mining operations to diversify into more stable jurisdictions. Canada, the United States (particularly Washington state and Texas), Iceland, and parts of Central Asia were all seeing increased mining investment.

For investors watching the mining sector, Hut 8’s expansion was a bullish signal. It demonstrated that at least one major publicly traded miner believed the current price level of around $10,600 was sustainable enough to justify capital investment — and that the post-halving economics, while tighter, would still be viable for well-positioned operators. The months ahead would prove whether that confidence was well-placed, as Bitcoin’s price journey through late 2019 and early 2020 would test miners’ resolve before the dramatic bull run that began in late 2020.

Disclaimer: This article is for informational purposes only and does not constitute financial, investment, or mining advice. Mining profitability depends on numerous factors including electricity costs, hardware efficiency, network difficulty, and cryptocurrency prices, all of which are subject to rapid change. Past performance is not indicative of future results. Always conduct your own research before making investment decisions.