Hive Blockchain is a Canadian Bitcoin and Ethereum mining company. At the moment, Hive is one of the very few profitable crypto miners in the world.
The company is headquartered in Toronto, Canada.
Frank Holmes is the Interim CEO of the company and the man behind the company’s amazing success and growth.
Below is a quick note from the CEO Frank Holmes regarding Hive’s operations and profitability:
“Blockchain technology has the potential to fundamentally improve transactions for all. HIVE’s operations provide shareholders with exposure to the operating margins of digital currency mining and a portfolio of coins. That makes this a unique global company out of the gate.” – Frank Holmes, CEO and CIO of U.S. Global Investors and Interim Executive Chairman of HIVE
What really separates Hive Blockchain from the rest of the crypto mining companies is the fact that Hive’s operating and profit margins are excellent (by revenue I mean more than 70% of the gross revenue and revaluation of the HODL digital currencies).
Simply put, hive’s profit margins are so high that the cost of their electricity to produce or mine the digital currencies are almost negligible.
Mind you, when we talk about the crypto mining companies and the profitability, electricity costs are always the #1 expense, as these GPU’s and mining machines are constantly consuming electricity. The company has almost 80% profit margins which are the highest in the mining industry.
Another thing to note here is that Hive is the only company right now in the world which is profitable, as per their previous quarter numbers. That’s coz, the company mines Ethereum along with Bitcoin which is all the way up to $1600 per coin.
In this article let’s talk everything about Hive Blockchain, what they do and should you consider investing in this company. Let’s begin.
Bitcoin and Ethereum
Before we begin, Let’s quickly look at where Bitcoin and Ethereum prices are: (as of today)
While the price of Bitcoin had reached an all-time high of $41,000 USD a couple of weeks back, it has since pulled back to the low $30,000 USD now, even breaking below the $30,000 mark a couple of times, but has pulled back since (resistance support).
Ether, on the other hand, has been making consistent all-time highs and trading extremely well with good volume and price range all around reaching an all-time high of $1700 USD.
The only reason I am talking about Ethereum price here is that Hive is mostly into Ethereum mining till now and as per recent reports, they are ramping up BTC production as well.
Also, Hive Blockchain has recently upgraded its Ethereum GPU chips from 4GB to 8GB cards to further mine more Eth which is an extremely good move by the company.
So Ethereum prices are very much important when talking about Hive Blockchain.
Hive Blockchain Overview
Hive trades on the Canadian and the US Stock markets.
In Canada, the stock trades on the TSXV market (Venture capital market) and in the US the stock trades on the OTCQX with the symbol HVBTF.
Right now, the stock is trading at $2.58 CAD. Below is the stock chart for the past 6 months (coz that’s the period when all these Bitcoin stocks really took off the charts).
As you can notice from the above screenshot, the stock which was trading below 0.50 cents in November is already up big time to $2+ in less than 3 months with an all-time high of $3.50 CAD.
The market cap of the company stands at 891M (Canadian) with 345.67M outstanding shares.
Like I said Hive is one of the very few, if not the only profitable crypto mining companies reporting profits in the previous quarters. I’ll get into this in a bit.
One more thing about Hive Blockchain is – the company mines both Ethereum and Bitcoin as of today. The mining centres are located in Europe – Sweden and Iceland for extremely low locked-in electricity rates and in Canada as well.
What is HIVE’s business model?
Simply put, HIVE is a cryptocurrency mining firm. We validate transactions on blockchain networks — like Ethereum — for rewards paid in cryptocurrencies.
Everyday HIVE earns new crypto coins that it can monetize for revenue and cash flow. HIVE offers shareholders exposure to the operating margins from cryptocurrency mining plus a growing portfolio of coins.
Why Should You Invest In Hive Blockchain?
Ok, like I said earlier Hive is by far the only mining company with excellent profitable margins and numbers.
Their operating margins are above 80% and the company is right now profitable.
Top Reasons to buy the Hive Blockchain Stock today:
1. Hive Blockchain mines not only Bitcoin but Ethereum too. Right now the company expects to increase the Bitcoin Hashrate to 2 Exahash/second this year.
With Ethereum mining the company has recently spent a lot of money (10M USD around) to upgrade the GPU chips from 4GB to the latest 8GB, to increase the mining efficiency and more coins.
2. Hive Blockchain is always in the news with so much positivity around, they keep releasing the latest numbers, purchases made, industry news plans moving forward, operations and efficiency details etc.
In point #1 I did mention that Hive has plans in place to increase their BTC mining capacity to almost 2 ExaH/s this year.
Prior to this announcement, the company had plans to increase the BTC hash rate to 1.2 Ex Hash which they outdid in just a matter of a few days/weeks and in the same January month.
3. Frank Holmes, CEO and the company are extremely transparent in everything they say and do.
The only drawback I can see in this company is the number of outstanding shares. The company currently has around 350M outstanding shares, which will hurt the EPS And Forward-looking P/E ratios.
But, Hive is an awesome buy because of their Ethereum and BTC holdings. The company mines the coins at a low electricity and operations cost and sells them only when required to gain maximum profits. As the cryptocurrency prices increase for BTC and Ethereum, the company shows that in the revaluation gains of the balance sheet instead of selling the coins (HODL). By doing so, Hive will constantly keep adding value to the company assets and balance sheet Quarter over Quarter.
The company currently has around 13,000 ETH and 200+ Bitcoin holdings, the numbers keep increasing every day in terms of operational efficiency.
Recent News: Hive is planning to increase its Ethereum mining by 30% more by the end of April 2021. Along with this purchase they have purchased a ton of Bitcoin mining machines which will be delivered month over month for the entire 2021, further increasing the companies position to mine Bitcoins.
Remember, Hive’s holdings (ETH and BTC) went down because the company recently upgraded the GPU chips in Sweden and Iceland (where they mine ETH) to 8GB of cards and that cost them around 10M dollars, so the sale of coins.
If not the sale, the company just like Hut 8 believes in Hodling the digital currencies and sell only when the prices are appropriate to book profits, which actually makes complete sense. Mine at low costs and sell when the price is high.
4. Understanding the mining profitability of these crypto mining companies is extremely easy. Here’s how it works at a high level:
Hashrate/second – Electricity costs + Operations expenses
This is where Hive really wins, they have locked in electricity rates in Sweden and Iceland for extremely lost rates for the entire 2021 and going forward too.
What are the keys to successful crypto mining?
Cryptocurrency is extremely competitive, hence the need for efficiencies of scale.
The largest inputs to mining are electricity costs and hardware. You need a reliable and cheap source of electricity for your hardware.
Fast and reliable internet access, as well as a cool climate, help to lower costs.
Hive Blockchain vs. Other Mining Companies
When you compare Hive Blockchain with other mining companies in the space (be it US or Canadian miners), you have The Marathon Patent Group (MARA), Riot Blockchain, Bitfarms, Argo Blockchain, Hut 8 and Bit Digital. These are the Bitcoin mining companies listed in the Canadian and US exchanges.
Let’s now dig a bit more deep here:
1. Marathon Patent Group is NASDAQ Listed. So the volume traded daily is excellent. Usually between 30-50M shares traded daily.
MARA only mines bitcoins. The company is expanding its hashrate to 10.36 EH/sec by Q1 22 and currently has around 4800 Bitcoins in the balance sheet (purchased at the price of $31000 USD).
2. RIOT Blockchain – Riot is again NASDAQ Listed. The daily traded volume is around the same as MARA.
RIOT plans to increase its yearly hashrate to 3.8 EH/sec by the end of 21 with new miners getting installed every month for the rest of the year.
RIOT currently holds around 1100 BTC and should be profitable in the next quarter.
3. Bitfarms – While MARA and RIOT are US-based companies, Bitfarms is proudly Canadian with headquarters in Toronto, ON.
Bitfarms trades on the Canadian and the US OTC market.
The company has its miners located in Alberta, Canada (where the weather is extremely cold) and currently has around 1 EH/sec, mining close to 200 BTC’s per month. The interesting fact about Bitfarms is its operating efficiency and leasing of the mining equipment.
4. Argo Blockchain – Argo trades on the London Stock Exchange (LSE) and in the US OTCQB Markets. The stock is currently trading in the $1 range.
Argo Blockchain mines both Bitcoin and ZCash. Their current hash rate is around 2 EH.
5. Hut 8 – Hut 8 is a Toronto Based Bitcoin Mining Company. I have already written an exclusive article on Hut 8. Do check that out to learn more about what this company does.
Hut 8 trades on the TSX and OTCQX market in the US.
The uniqueness of Hut 8 is that it currently hoddles the bitcoins it mines and stores them in a secure vault for future increased revaluation gains and recurring revenue from Genesis. The management team is great and so are the Hut 8 Black boxes.
Hut 8 was the first company to Hoddle Bitcoins even before the others started catching up with the trend quickly. The company currently mines around 250 Bitcoins per month.
6. Bit Digital – Bit Digital or BTBT is a Chinese Bitcoin mining company trading on the US NASDAQ market.
The company was recently in news for a scam, so please be very careful before investing your money here.
Cons Of Hive Blockchain
The only drawback with Hive Blockchain is that, while Ethereum mining can pretty soon shift to the proof of stake, no one knows exactly when this can happen. As per Frank (Hive’s CEO), Proof of Stake is not going to happen any time soon, at least not for the next 2-3 years. But you never know.
Again, with the Proof of Stake in place, Hive is very well prepared for the move in case it happens by maximizing the revue by staking the coins.
The second con is that Hive’s 350M Outstanding shares will definitely hurt the EPS and P/E ratios, while other Crypto stocks like MARA And RIOT have less than 100M shares outstanding.
Hive Blockchain is one of the most undervalued and pure crypto proxies in the Canadian and the US Market.
Hive’s management is extremely transparent in what they do, the company hoddles a lot of Ethereum and Bitcoins every day. They only plan on selling the digital currencies when the prices are sufficiently high (than mined) and when they plan on the expansion (adding more miners) or upgrade equipment.
With the increasing demand for Ethereum (Defi transactions) which Hive mines the most (almost 80%) of its revenue and the increase in GPU chips from 4-8GB, Hive’s next Quarter report should be more than excellent.
While Ethereum’s price has more than tripled from $600 to almost $1700 USD now (comparing Eth numbers from the previous quarter report), which should double/hopefully triple Hive’s revenue’s as well, given the fact that Hive is mostly into Ethereum mining with fixed electricity costs.
Thanks for reading, let me know your thoughts and comments below.
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Sagar Sridhar is a personal finance blogger from Canada. His genuine passion for personal finance coupled with his unique style of writing is what stands out. Professionally, he is a computer engineer, agile certified and has a master’s degree in Project Management. His writing has been featured or quoted in the leading Canadian publications such as Credit Canada and many other personal finance publications. While he is juggling between his day job and blogging, he is the main author on this blog and has miles to go before making the final pit stop.