Hut 8 (NASDAQ: HUT) believes its Beacon Point AI data-center campus may be among 23 projects that ERCOT has allowed through the current review period, according to a Needham research note published Friday. Management described Beacon Point as a large load with no deficiencies flagged and initial energization scheduled for the first quarter of 2027.

The note does not include formal ERCOT authorization or identify the 15-year lease tenant. Interconnection testing is complete, according to management, but questions remain about the new QSA review and whether the audit will proceed in batches. A meeting scheduled for August 28 could clarify the process.

Texas Governor Greg Abbott ordered the review on August 3 as ERCOT considered more than 474 GW of interconnection requests, about 90% from data centers. The audit covers electricity and water consumption, onsite generation, cooling systems, public incentives and ownership. ERCOT subsequently paused its Batch Zero transmission-planning study for new and expanded loads of at least 75 MW.

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Beacon Point retains schedule buffer

Beacon Point is designed for six data halls, with each of the back five carrying about 55 MW. Each hall must complete a qualification test after power begins flowing, and management expects approximately six weeks between energization and the first hall entering service.

A delay into the second quarter of 2027 would remain within the construction schedule because Hut 8 has about two quarters of buffer before the ready-for-service ramp, Needham said. Initial data-hall delivery remains planned for the third quarter of 2027.

Hut 8 has signed two leases covering 704 MW of critical IT load at the 1 GW utility-capacity campus. The contracts carry $19.6 billion of aggregate base-term value, potentially rising to $50.2 billion if the tenant exercises its renewal options. Hut 8 financed the first 352 MW phase with $4.25 billion of non-recourse senior secured notes carrying a 6.129% coupon and maturing in 2042.

The notes begin amortizing in May 2030 and require semiannual interest payments, limiting near-term project cash-flow pressure. Needham maintained its Buy rating and $138 price target, implying about 66% upside from Hut 8's August 13 closing price of $83.02.

Hut 8 expands its energy pipeline

Hut 8 reported an 8.38 GW development pipeline in May, including 5.32 GW under diligence, 1.68 GW under exclusivity, 550 MW under development and 830 MW under construction. Capacity under exclusivity increased to 1.88 GW during the second quarter.