Hut 8 Corp. has agreed to pay $2.35 million to settle a proposed securities class action tied to its 2023 all-stock merger with U.S. Bitcoin Corp., according to a filing in a New York federal court. The settlement covers traders who acquired the company’s securities in the United States or on U.S.-based exchanges between February 13, 2023, and January 18, 2024.
The agreement requires preliminary and final approval from Judge Victor Marrero. Hut 8 has not admitted wrongdoing and continues to deny violating securities laws or causing financial losses.
Claims centered on Texas mining operations
The lawsuit focused on whether Hut 8 adequately disclosed operational issues tied to King Mountain, a Bitcoin mining joint venture in Texas where USBTC held a 50% stake before the merger closed in November 2023. Plaintiffs argued the company failed to fully detail energy and connectivity challenges at the site.
The complaint also alleged that USBTC’s financial condition was misrepresented ahead of the merger announcement in February 2023, though those claims were later dismissed.
Short-seller report triggered sharp share drop
Scrutiny intensified after J Capital Research published a short-seller report on January 18, 2024, raising concerns about merger disclosures and alleging unreported problems at King Mountain. Hut 8’s shares fell more than 23% the same day, coinciding with a Nasdaq bell ceremony.
By September 2025, the court dismissed claims brought under the Exchange Act and narrowed the case to whether Hut 8 omitted key infrastructure risk disclosures related to King Mountain.
Settlement reflects higher-than-average recovery
The company had been preparing to challenge whether traders could trace their shares to the merger registration statement due to a mix of registered and unregistered shares. Plaintiffs cited that complexity, along with rising litigation costs, in supporting the settlement.
According to the filing, the $2.35 million payout represents about 19.6% of estimated damages of $12.08 million. That exceeds typical 2025 recovery levels for Securities Act-only cases, which averaged 14.6% and had a median of 12.9%, based on Cornerstone Research data.
Shares fell roughly 5% in pre-market trading following news of the settlement.
Industry pressures weigh on Bitcoin miners
The resolution comes as the digital asset mining sector faces sustained financial pressure. Bitcoin prices have remained below the estimated average production cost of around $78,000 for five consecutive months, according to JPMorgan, leaving roughly one-fifth of miners operating at a loss.
This environment has forced companies to increase Bitcoin sales to fund operations. Public miners sold more than 32,000 BTC in the first quarter of 2026 alone, exceeding total sales for all of 2025.
Shift toward AI and high-performance computing
To offset volatility, many mining firms are pivoting toward artificial intelligence and high-performance computing services, aiming for steadier revenue streams despite higher upfront costs. Infrastructure for these operations can reach $15 million per megawatt, compared with about $1 million per megawatt for traditional mining setups.
Reflecting this shift, Lucid Capital Markets recently initiated coverage on Hut 8 with a “buy” rating, citing its transition toward AI data center leasing. At the same time, recent regulatory filings show insiders have sold about $5.7 million worth of shares over the past two weeks.
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