HIVE Blockchain Thrives in Difficult Crypto Market
The most recent crypto bear market has been challenging to say the least. It has left many companies with significant debt and seen the collapse of key players like FTX, Voyager Digital and Three Arrows Capital. But one company has thrived in these difficult times – HIVE Blockchain Technologies (TSX.V: HIVE, Nasdaq: HIVE), a Canadian Bitcoin miner that validates transactions on the Bitcoin network through an array of global data centers.
HIVE has managed to navigate perilous waters by first being a Bitcoin focused company. “All this trouble started in a crypto ecosystem where players had a lot of debt and were making wild bets on new tokens with little to back them” HIVE CEO Aydin Kilic declared. “Bitcoin has existed for well over a decade. I think that when you look at the digital currency market, it's very important to distinguish Bitcoin from the other digital currencies. Bitcoin is secured by proof of work, and it's fully decentralized. It’s a public infrastructure for digital wealth the same way the internet is a public infrastructure for information. Nobody owns it, but everybody can access it. Other digital currencies are owned by private companies, and they can falter.”
HIVE has also managed to maintain investor trust by being a publicly traded company (TSXV; Nasdaq; Frankfurt Stock Exchange) that is subject to a rigorous review process which includes the submission of annual audited financial statements, just like any publicly listed company.
And finally, the HIVE runs an infrastructure business with tangible assets that include data centres in Sweden, Iceland and Canada and a massive fleet of approximately 38,000 GPUs (Graphics Processing Units).
All of this has enabled HIVE to earn $55 million after operating and corporate costs in 2022, a figure that led the sector by a wide margin and enabled it to take advantage of steep discounts to expand their operation. Today, HIVE is debt free, with a strong balance sheet of over 2000 Bitcoin that were earned through their mining activities.
“I'm incredibly proud of how our team has performed,” Kilicsaid. “I think it puts us in a position for success when a bull market comes around.”
HIVE broke new ground from the very beginning. It was the first crypto mining company to be listed on the TSXV and the Nasdaq. The first to develop its own Bitcoin mining server in a strategic collaboration with the Intel Corporation, and the first to be green energy focused – just a few examples of the entrepreneurial, high-performance culture that is driving HIVE to maintain it’s leadership position in the cryptocurrency industry.
Nowhere is their leadership position more evident than in how the company manages the power it consumes. “When you're in the Bitcoin mining business, you’re in the energy game whether you like it or not,” Kilic said. “We fully embrace it and believe in mining Bitcoin with affordable and sustainable renewable energy.”
HIVE’s globally diversified operation, with facilities in Sweden, Iceland and Canada, allows it to participate in different energy markets where it can hedge energy contracts and manage them as a resource. For instance, last December, the company earned $3.1 million selling power back to the grid because they had hedged through low-cost contracts.
The company’s innovative spirit is also alive in Quebec, where HIVE is recycling heat generated from their 30-megawatt facility to heat a 200,000 square foot factory in Lachute.
It’s alive in northern Sweden as well where HIVE is planning to use a similar process to help grow greenhouse tomatoes and cucumbers close to the Arctic Circle. “In essence we are creating a negative carbon footprint, ”Kilic said, “because you don't have to fly produce from Italy and Spain in the winter. You can grow it in northern Sweden with the green energy from our Bitcoin mining operation.”
The company is also active on the AI front through its HIVE Cloud project. The project provides an infrastructure backbone to companies that require robust GPU capacity for their AI and machine learning applications. The venture has already generated revenue to the tune of about $1 million over the last year and HIVE expects revenue to grow by 20-fold within the next two years.
The year ahead looks like it will be just as promising for HIVE. The company has just announced that it will be growing its internal Bitcoin mining capacity by 100%. Beyond this significant upgrade, HIVE expects to be amongst among the first to employ new Lightning Network technology which will allow blockchain companies to significantly scale their operational capacity. The network will allow nearly 40 million transactions per second, up from the current capacity of about seven transactions per second. To put that into perspective, Visa does about 24,000 transactions per second, so this will be a significant step forward.
According to Kilic, it all adds up to an exciting time, with some exciting opportunities. “We're making about nine Bitcoin a day right now. That equates to the market caps of some of our peers. When you factor in the 100% fully funded growth that we anticipate over the next year, it's a very exciting time, and I think it makes Hive is an excellent proxy for shareholders looking for exposure to Bitcoin as an asset class. And our growing GPU cloud business has the potential to unlock additional shareholder value.”
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