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Stonegate Capital Partners Initiates Coverage on HIVE Blockchain Technologies LTD. (NASDAQ: HIVE)

Key Takeaways
  • High Operating Efficiency
  • ESG Oriented
  • Improving Mining Capacity

DALLAS, TX -- November 29th, 2022 -- HIVE Blockchain Technologies LTD. (NASDAQ: HIVE): Stonegate Capital Partners initiates coverage on HIVE Blockchain Technologies LTD (NASDAQ: HIVE). The full report can be accessed by clicking on the following link:

Company Summary

  • Leader in Bitcoin (BTC) Mining: HIVE is the first publicly traded cryptocurrency miner and was listed in 2017 on the TSX Venture Exchange. We estimate the Company is generating over 9.5 Bitcoin per day, over 8 from ASIC and over 1 from GPU, (~$149,600/day) using ASIC processor & over 1 BTC equivalent per day (~$18,700/day) while using GPU fleet as of November 2, 2022. This would translate to $177,650 revenue in crypto every day using November month spot prices. Due to recent price volatility for forward run rate calculations, we will use the trailing 30- day average of $18,700 BTC price for our revenue assumptions.
  • High Operating Efficiency: The Company is a market leader of BTC mined per exahash (EH) with 122 BTC mined per EH per month as of September 30, 2022. A modern and regularly updated mining fleet supports the Company’s production efficiency.
  • Post-Merge Repurposing: Historically, HIVE generated significant revenues and profits from mining Ethereum (ETH), which was 3x more profitable than mining BTC. On 9/15/22, ETH “merged” with Beacon Chain, transitioning from a Proof-of-Work to Proof-of-Stake framework and making ETH mining unprofitable. Due to the “merge”, HIVE repurposed their GPU fleet to mine altcoins (cryptos outside of BTC) and has maintained profitability mining these coins. This report has a focus section that reviews the transitional month post-merge (See page 9)
  • ESG Oriented: The Company has a green energy focus that includes hydroelectric and geothermal energy that powers their mining facilities. The Company owns green energy-powered data center facilities in Canada, Sweden, and Iceland which produces minted digital currencies.
  • Positioned to Benefit from Price Correction: The Company mines and holds Bitcoin, leading to large revenue swings. There are many secular drivers which support upward bias to spot prices, including a limited supply curve, increased institutional interest, and steady progress in regulatory acceptance for Bitcoin.
  • Vehicle for Investors Seeking Exposure to Crypto: The company generates revenue by mining cryptocurrency. HIVE mines and holds Bitcoin on its balance sheet. As a result, we believe the Company serves as an excellent vehicle for investors that are seeking exposure to cryptocurrency and its potential growth.
  • Improving Mining Capacity: The Company has invested heavily in upgrading its mining fleet. HIVE is one of just four miners who will partner on the new BTC ASIC chip being launched by Intel.
  • Valuation: We are using three methods to value the Company based on our 2022 estimates:
  • EV/EBITDA: Applying an EV/EBITDA multiple range of 5x to 7x, with a midpoint of 6x, results in a price range of $2.47 to $3.57, with a midpoint of $3.02.
  • EV/Revenues: Applying an EV/Revenue multiple range of 2x to 4x, with a midpoint of 3x, results in a price range of $2.67 to $5.62, with a midpoint of $4.15.
  • EV/Exahash (EH): Using an alternative approach, applying an EV/PH range of 200x to 400x, with a midpoint of 300x, results in a price range of $2.41 to $5.09, with a midpoint of $3.75. BTC mined and BTC/PH used to compute Peta Hash for all the company is as of September 30, 2022.

About Stonegate Capital Partners
Stonegate Capital Partners is a Dallas-based corporate advisory firm dedicated to serving the specialized needs of small-cap public companies. Since our inception, our mission has been to find innovative, undervalued public companies for our network of leading institutional investors who seek high-quality investment opportunities.

Key Takeaways
  • High Operating Efficiency
  • ESG Oriented
  • Improving Mining Capacity
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Dave Storms
Director of Research Stonegate Capital Markets
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Stonegate Capital Partners
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