Hut 8's (HUT) new subsidiary, American Bitcoin Corp., formed through a partnership between the mining company and the Trump family, could be spun off into a standalone company to focus on data center hosting, brokerage Clear Street reported in a report Monday.

The broker stressed that the new division will be included in the bitcoin miner's financial results, but “the business could be split, allowing HUT to focus on revenue from high-margin data center hosting.”

The report said Hut 8 is expected to gain more power and expand its data center hosting business, with the “ability to create a hyperscale solution” being a key catalyst for the company.

Eric Trump and Donald Trump Jr. are joining forces in American Data Centers with American Bitcoin, a new mining venture, acquiring a 20% stake. The remaining 80% will be owned by Hut 8, which is investing nearly 61,000 mining machines in the new organization.

Core Scientific's (CORZ) deal with cloud computing company CoreWeave led to a revaluation of the sector last year as investors became optimistic about the idea of Bitcoin miners shifting to artificial intelligence and high-performance computing (HPC).

The report also indicated that Hut 8 expects to enter a significant growth phase beginning in the second half of the year, “due to the activation of the BITMAIN equipment colocation agreement.”

Clear Street gave Hut 8 shares a buy rating and a $23 price target. Shares rose more than 4% to $12.10 in early trading.

Investment bank KBW noted that Eric Trump will be taking over as chief strategy officer of American Bitcoin, which could be a significant positive given his “commitment to the industry and obvious connections.”

KBW assigned the stock an Overweight rating with a $30 price target.

Source: cryptonews.net