Stonegate Capital Partners Updates Coverage on HIVE Blockchain Technologies LTD. (NASDAQ: HIVE) Q3 2022

DALLAS, TX -- March 27th, 2023 -- HIVE Blockchain Technologies LTD. (NASDAQ: HIVE): Stonegate Capital Partners updates coverage on HIVE Blockchain Technologies LTD. (NASDAQ: HIVE) The full report can be accessed by clicking on the following link: https://stonegateinc.com/reports/HIVE_22Q3.pdf

Company Updates

• 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 8.4 Bitcoin per day, almost 8 from ASIC and GPU, (~$183,000/day) using ASIC processor & approx. .5 BTC equivalent per day (~$11,585/day) while using GPU fleet as of January 2, 2023. This would translate to $194,628 revenue in crypto every day using January month spot prices. This is up from $177,650 in November of 2022. Due to recent price volatility for forward run rate calculations, we will use the trailing 30-day average of $24,000 BTC price for our revenue assumptions.
• High Operating Efficiency: The Company is a market leader of BTC mined per exahash (EH) with 114 BTC mined per EH per month as of December 31, 2022. A modern and regularly updated mining fleet supports the Company’s production efficiency.
• More Tasks Given to Repurposed GPUs: Historically, HIVE generated significant revenues and profits from mining Ethereum (ETH). On 9/15/22, ETH “merged” with Beacon Chain 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. HIVE has also announced that in 2Q23 these GPUs will be used for cloud computing services supporting AI, a venture that can be 25 times more profitable than using the GPUs for mining. With how GPU intensive AI applications are, this GPU allocation gives investors direct exposure to AI.
• 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. Notably, the recent infrastructure upgrades in New Brunswick and Quebec were completed using green, clean, and cheap energy.
• 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. HIVE is the only crypto miner that has survived two bear markets, and it is notable that their balance sheet remains clean. Recently they have strategically purchased ASIC miners at depressed prices. The strong balance sheet and opportunistic uses of its cash position can lead the Company to have a strong rebound in the event of a market correction. We believe a near term catalyst could be if the Fed pivots to a more dovish stance.
• Valuation: We are valuing the Company based on our 2023 estimates:
• EV/EBITDA: Applying an EV/EBITDA range of 8x to 10x, with a midpoint of 9x, results in a price range of $3.24 to $4.13, with a midpoint of $3.68.
• EV/Revenues: Applying an EV/Revenue range of 2x to 4x, with a midpoint of 3x, results in a price range of $2.60 to $3.77, with a midpoint of $3.18.
• EV/Exahash (EH): Applying an EV/EH range of 150x to 250x, with a midpoint of 200x, results in a price range of $3.11 to $5.41, with a midpoint of $4.26.