Former bitcoin miner Hut 8 has agreed to pay $2.35 million to settle a securities class action alleging misleading investors in connection with its 2023 merger with U.S. Bitcoin Corp. (USBTC). According to court filings, the settlement requires court approval and ends a securities class action that followed a significant share price decline after a critical short-seller report in early 2024. The company, which now focuses on AI data centers and high-performance computing, has denied any wrongdoing or liability as part of the agreement, stating it agreed to the payment solely to avoid the costs and distraction of continued litigation. As per the settlement filing, defendants do not admit liability and continue to deny that they engaged in any misconduct or violated the law, with the parties reaching the amount after mediation and accepting a mediator's proposal in May.
The lawsuit, filed in the U.S. District Court for the Southern District of New York, focused on Hut 8's all-stock merger with USBTC, which closed in November 2023. Investors alleged the company overstated the transaction's benefits while failing to disclose persistent power-related issues at King Mountain, a 280-megawatt mining site in west Texas where USBTC held a 50% stake. The litigation gained momentum after short seller J Capital Research published a critical report in January 2024, questioning the value of USBTC assets and stating that King Mountain lacked reliable power and high-speed internet access at key points before the merger. The court earlier dismissed parts of the case, including Exchange Act claims and Securities Act claims tied to USBTC's alleged financial condition before the merger, but allowed Securities Act claims tied to alleged King Mountain disclosures to move forward.
According to court filings, the $2.35 million recovery represents roughly 19.6% of the estimated maximum recoverable damages, exceeding the 12.9% median and 14.6% average recovery rates for Securities Act-only settlements in 2025. The settlement amount reflects the company's acknowledgment of investor concerns while maintaining its position that no wrongdoing occurred during the merger process. The filing notes that continued litigation carried risk, with defendants having planned to challenge traceability because registered and unregistered shares were issued through the merger and later mixed in the market. The proposed $2.35 million payment represents about 19.6% of estimated maximum recoverable damages, with the company stating it will not materially impact ongoing business or strategic plans.
Despite the settlement, Hut 8 shares have demonstrated strong recovery, trading near $121 at the latest market check and gaining more than 640% over the past year. The company's pivot from traditional bitcoin mining to AI data centers and high-performance computing appears to have resonated with investors, positioning it for growth in the expanding AI infrastructure market. Hut 8 has since taken steps to address the King Mountain facility's operational challenges, including renegotiating power purchase agreements and upgrading infrastructure to improve mining output and profitability. The company recently signed a 15-year, $9.8 billion lease for a 352-megawatt Texas facility built around NVIDIA's reference architecture, as reported by crypto.news, framing Hut 8 as part of a wider shift where public Bitcoin miners are seeking AI and HPC revenue.
