Hut 8's (HUT) new subsidiary, American Bitcoin Corp., a partnership between the mining company and the Trump family, could be spun out

The broker noted that the new unit will be included in the bitcoin miner's financials, but the "businesses could be separated, allowing HUT to focus on high-margin data center hosting revenue."

Hut 8's (HUT) new subsidiary, American Bitcoin Corp., a partnership between the mining company and the Trump family, could be spun out, allowing the company to focus on data center hosting, broker Clear Street said in a report Monday.

The broker noted that the new unit will be included in the bitcoin miner's financials, but the "businesses could be separated, allowing HUT to focus on high-margin data center hosting revenue."

Hut 8 is expected to secure more power and expand its data center hosting business, the report said, and the "potential to secure a hyperscaler" is a key catalyst for the company.

Eric Trump and Donald Trump Jr. are merging their firm, American Data Centers, with American Bitcoin, a new mining venture, taking a 20% stake in the company. The remaining 80% will be owned by Hut 8, which is contributing almost 61,000 mining machines to the new entity.

Core Scientific's (CORZ) deal with cloud computing firm CoreWeave led to a re-rating of the sector last year, as investors warmed to the idea of bitcoin miners pivoting to artificial intelligence and high performance computing (HPC).

Hut 8 is projected to enter a phase of considerable growth, starting in the second half of the year, "driven by the energization of the BITMAIN Colocation agreement," the report added.

Clear Street has a buy rating on Hut 8 shares with a $23 price target. The shares were over 4% higher at $12.10 in early trading.

Investment bank KBW noted that Eric Trump will serve as the chief strategy officer of American Bitcoin, which could be a large positive given his "commitment to the industry as well as his obvious relationships."

KBW has an outperform rating on the stock with a $30 price target.