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HIVE Blockchain Technologies reported a loss of $95.3m for the first quarter.

U.S. 100 dollar banknotes are arranged for a photograph in Tokyo, Japan, on Tuesday, Sept. 5, 2017. Japanese stocks fell as the yen strengthened while investors prepared themselves for the economic damage that Hurricane Irma may inflict on Florida and mulled U.S. President Donald Trump’s most recent comments on North Korea. Photographer: Tomohiro Ohsumi/Bloomberg

The company’s working capital also decreased by $112.4m million during the quarter, as the company attributed the decrease to “the sale of digital currencies during the quarter to fund expansion and a mark-to-market adjustment on the closing HODL – a cryptocurrency investing strategy in which individuals buy and hold assets for long periods of time- balances of the digital currencies held (revaluation of digital currencies).” 

However, HIVE also reported quarterly revenue of $44.2m, an increase of 13% compared to the corresponding quarter of the previous financial year. 

“We achieved a strong gross mining margin of $27m for the quarter, an 18% increase over the prior quarter of $22.9 million,” the company said. “This fiscal achievement was driven by our global Bitcoin and Ethereum mining operations, which experienced significant hash rate growth during this period.”

Claiming to be “the most efficient crypto-miner based on digital assets mined per Exahash (commonly measured as the quantity of mined Bitcoin per Exahash of reported hash rate),” HIVE reported an increase in its mining margin from 42% last quarter to 61% this quarter. 

“HIVE has been able to consistently mine with strong profit margins during periods of market volatility, as a result of being globally diversified and enjoying low power costs in Sweden and Quebec, and higher profit margins from the Ethereum mining business,” HIVE said.

HIVE Mined 1,338 Bitcoin and 7,675 Ethereum
The company mined 1,338 Bitcoin equivalent, including 821 green and clean Bitcoin, as well as 7,675 green and clean Ethereum. HIVE said that its overall production of digital currencies increased by 7% QoQ and comprised 4% more Bitcoin produced and 20% more Ethereum produced.

Talking about the positives on the balance sheet, Frank Holmes, HIVE’s executive chairman, said, “We wish to again thank our loyal shareholders for believing in our vision to mine both Ethereum and Bitcoin to generate robust cash flow returns on invested capital and we believe our results continue to validate the significant contribution to our strategy to mine both BTC and ETH and HODL as many coins as possible.”

The company also pointed out that its Bitcoin production of 821 Bitcoin this quarter represents an increase of 265% YoY, as the company produced 225 Bitcoin for the period ending June 30,  2021. “This large increase in the quantity of Bitcoin production stands even as network difficulty has effectively doubled during this one-year period,” HIVE said. 

“It was an extremely challenging quarter for the global digital asset ecosystem, where we saw the capitulation of Bitcoin and Ethereum prices not seen since 2020,” Holmes said. “On a relative basis, we are very pleased with our company’s performance amongst our peers in the digital asset industry.”

On the Flipside
Holmes urged investors to focus on HIVE’s operating earnings from the company’s data centers, which generate digital assets, because as a result of recent changes to IFRS reporting rules, the quarterly mark-to-market fluctuations in the value of HIVE’s investment portfolio in digital assets must be reflected on the company’s income statement each quarter. HIVE said that it is dedicated to navigating this crypto storm for its shareholders.

Why You Should Care
HIVE attributed its loss of $95.3m to depreciation, unrealized valuation losses on digital currencies and investments, and impairment charges on equipment and equipment deposits, which in turn were all affected by lower Bitcoin and Ethereum prices seen in June and July 2022.

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