HIVE Scaling New Heights As Computing Powerhouse
HIVE Digital Technologies
The introduction of AI applications such as ChatGPT is proving to be a game changer, giving users unprecedented creative and practical capabilities. But while these apps provide massive new opportunities, they also require massive amounts of GPU (Graphics Processing Units) processing power to build and operate. That’s where HIVE Digital Technologies (TSX.V:HIVE / Nasdaq:HIVE) comes in.
HIVE is a green energy focused, globally diversified Bitcoin miner that is devoting a portion of its substantial computing resources to provide an infrastructure backbone to power AI and other high-performance applications that require robust GPU capacity.
The opportunity to become a GPU infrastructure provider started to crystallize for HIVE in 2021 following the purchase of 38,000 Nvidia data center grade GPUs capable of handing modern AI and HPC workloads. This fleet of GPUs was initially utilized to mine Ethereum (ETH). Since the Merge ended proof-of-work on Ethereum, the HIVE technical team has been busy upgrading its infrastructure to accommodate cloud workloads. Earlier this year the company conducted a beta test, installing 400 GPUs onto an AI and high-performance computing platform to serve as a proof of concept. Plans are to scale up to 4,000 GPUs deployed in cloud services by this fall.
Once this initial rollout is completed, HIVE will become one of the largest GPU cloud operators, with AI offerings in both Sweden and Canada, capable of serving European and North American markets.
The new revenue stream derived from these enhanced operations is expected to be significant. The company intends to offer their GPU clusters to GPU marketplaces through both on-demand and fixed contract rentals. It’s an exciting opportunity that gives HIVE a huge advantage as it approaches the next Bitcoin Halving, an event that happens approximately every four years, where rewards for mining transactions drop by half to help lower the availability of Bitcoin. HIVE’s computing infrastructure activities are expected to protect the company from the potential drop in Bitcoin production as a result of this event. “Our GPU infrastructure rentals have the potential to provide us a much steadier cash flow,” Aydin Kilic HIVE’s President & CEO revealed. “It should become a nice complement to our Bitcoin mining business.” The GPU business has the potential to provide HIVE with a dependable revenue stream that can further protect the company from inherently volatile Bitcoin markets.
As HIVE gets more computing hardware online and expands its offering, their fleet of GPUs will also become a source of high-margin income. “When we say GPU is high margin, we mean 15 times more revenue per joule of energy than Bitcoin mining,” Kilic declared. “So, to put this into perspective, our high-performance computing applications and GPUs can generate Can$1.50 a kilowatt hour in revenue, whereas Bitcoin mining generates about Can$0.10 a kilowatt hour. That’s 15 times the profit density per unit of energy. If we were to convert all 38,000 of our GPUs, we would have a blue-sky potential of up to Can$100 million annually, which would be in addition to our core Bitcoin mining business.”
While the company’s foray into the GPU infrastructure business is a significant new development, it shouldn’t overshadow the impressive gains its core Bitcoin mining operations have made over the last year. During the 2022 calendar year, HIVE doubled its Bitcoin mining capacity and added Can$138 million of revenue, while leaving the company with approximately 2,000 Bitcoin on its balance sheet.
The company has also proven its metal as a technology leader by using the energy generated from its facility in Quebec to heat a neighbouring 200,000 square foot factory. In Sweden, HIVE is co-developing a greenhouse with heat with from its data center operations in that country.
HIVE is writing a story of innovation and leadership that promises to set it further apart from its peers and change the nature of the Bitcoin mining industry. “We aspire to be the best Bitcoin miner and data center operator in the world,” Kilic said. “We're a publicly traded company, so we're all about creating value for shareholders. And now with our move into the GPU cloud business, we’re a dual threat. When you include both pillars of our business, we’re aiming to grow our overall revenue by a factor of ten. I believe that makes HIVE a great value proposition for investors interested in either computing infrastructure operations or Bitcoin mining. So, it's a very exciting time for HIVE.”
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