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HIVE Blockchain Technologies Announces Quarterly Revenue of U.S. $44.2 Million, But Net Loss Rises to $95.3 Million
Wednesday, August 24, 2022Company Profile | Follow Company
HIVE Blockchain Technologies Announces Quarterly Revenue of U.S. $44.2 Million, up 13% From The Same Quarter Last Year
Vancouver, BC, August 24, 2022--(T-Net)--HIVE Blockchain Technologies Ltd. (TSX.V:HIVE) (Nasdaq:HIVE) (FSE:HBFA) announced the earnings report for the first quarter ended June 30, 2022 (all amounts in US dollars, unless otherwise indicated).
The company says it achieved strong gross mining margin of $27.0 million for the quarter, a 18% increase over the prior quarter of $22.9 million. This was driven by their global Bitcoin and Ethereum mining operations which experienced significant hashrate growth during this period.
Additionally, the Company's gross mining margin of 61% this period is also an increase from the gross mining margin from last quarter of 42%.
HIVE says it 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.
The Company notes that currently with Ethreum at $1,900, the legacy GPU fleet of RX580 cards generate approximately $0.30 per KWHR of revenue, and their new data center grade Nvidia GPU cards generate approximately $0.40 to $0.50 per KWHR of revenue. Whereas Bitcoin ASICs are generating approximately $0.11 to $0.15 per KWHR in revenue, at Bitcoin price of $24,000 and Difficulty of 28.1T, for ASICs with efficiency between 30 to 40 Joules per Terahash (J/TH).
The company reported revenue of $44.2 million for this quarter, as they mined 1338 Bitcoin equivalent, comprised of 821 Bitcoin as well as 7,675 Ethereum. This compares with $49.8 million revenue in the previous quarter, when HIVE mined 1248 Bitcoin equivalent, comprised of 787 Bitcoin and 6,325 Ethereum. As such, HIVE's overall production of digital currencies increased by 7% quarter over quarter, comprised of 4% more Bitcoin produced and 20% more Ethereum produced.
The Company notes, HIVE's Bitcoin production of 821 Bitcoin this quarter represents an increase of 265% year over year, where in the same period last year (period end June 30, 2021), HIVE mined 225 Bitcoin. This reflects a substantial growth in their operating hashrate, in large part a result of their New Brunswick facility expanding from 30MW last year, to currently operating over 17,600 new generation ASIC miners, operating at approximately 60MW of capacity.
Frank Holmes, EXECUTIVE CHAIRMAN, HIVE Blockchain Technologies Ltd.
Frank Holmes, HIVE's Executive Chairman, stated "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. 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. On a relative basis we are very pleased with our Company's performance amongst our peers in the digital asset industry."
Q1 Quarterly Highlights- June 30, 2022
Q1 F2023 Financial Review
For the three months ended June 30, 2022, revenue from digital currency mining was $44.2 million, an increase of approximately 13% from the prior year primarily due to the increased production of Bitcoin because of the Quebec and Atlantic (New Brunswick) facility acquisitions, in addition to expansions at the Company's flagship European operation in Boden, Sweden.
Gross mining margin1 during the period was $27.1 million, or 61% of income from digital currency mining, compared to $32.8 million, or 84% of income from digital currency mining, in the same period in the prior year. The Company's gross mining margin from digital currency mining is partially dependent on external network factors including mining difficulty, the amount of digital currency rewards and fees it receives for mining, as well as the market price of digital currencies.
The Company notes that, while adjusted EBITDA1 this quarter was $11.2 million, as a result of mark to market accounting practice, net loss during the quarter ended June 30, 2022, was $95.3 million, or a loss of $1.16 per share, compared to net income of $23.5 million, or $0.31 per share, the same period last year.
The decline from the prior year was driven primarily higher non-cash charges such as 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.
Adjusted EBITDA is a non-IFRS financial measurement and should be read in conjunction with, and should not be viewed as, an alternative to or replacement of, measures of operating results and liquidity presented in accordance with IFRS.
Mr. Holmes noted "I have urged investors to focus on HIVE's operating earnings from our data centers which generate digital assets, however 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 was dedicated to navigating through this crypto storm for our shareholders, while delivering profitable gross mining margins of $27.0 million and adjusted EBITDA of $11.2 million. Our global team of technicians, coders and executives all working together delivered this for the shareholders."
EBITDA and Adjusted EBITDA
The Company uses EBITDA and Adjusted EBITDA as a metric that is useful for assessing its operating performance on a cash basis before the impact of non-cash items and acquisition related activities.
EBITDA is net income or loss from operations, as reported in profit and loss, before finance income and expense, tax and depreciation and amortization.
Adjusted EBITDA is EBITDA adjusted for removing other non-cash items, including share-based compensation, non-cash effect of the revaluation of digital currencies and one-time transactions.
The Company emphasizes that "adjusted EBITDA" is not a GAAP or IFRS measurement and is included only for comparative purposes.
Mark to Market in Accounting
Mark to market is an accounting practice that involves adjusting the value of an asset to reflect its value as determined by current market conditions. The market value is determined based on what a company would get for the asset if it was sold at that point in time.
Mark-to-market losses are paper losses generated through an accounting entry rather than the actual sale of a security. The swings in digital assets impact paper profits and losses each quarter. As a result, our Bitcoin and Ethereum digital assets generate unrealized gains and losses each quarter. It is important that investors understand the differences in operating earnings or losses in addition to Mark-to-market paper gains and losses each quarter.
Our adjusted EBITDA was strong for the quarter $11.2 million however the large decline in digital asset prices during the quarter impacted our financial results by $72.2 million, in addition to impairment of $6.3 million on mining equipment and $4.7 million impairment on mining equipment deposits, in addition to an unrealized loss of $8.7 million on investments. Digital assets are much more volatile than the stock market, thus our digital assets can significantly move income both up and down each quarter.
Non-Cash Charges
A non-cash charge is a write-down or accounting expense that does not involve a cash payment. Depreciation, amortization, depletion, stock-based compensation, and asset impairments are common non-cash charges that reduce earnings but not cash flows.
HIVE had non-cash charges of approximately $118.7 million for the past quarter, like many other crypto mining stocks during the big decline in the quarter.
Financial Statements and MD&A
The Company's Consolidated Financial Statements and Management's Discussion and Analysis (MD&A) thereon for the three months ended June 30, 2022 will be accessible on SEDAR at www.sedar.com under HIVE's profile and on the Company's website at www.HIVEblockchain.com.
About HIVE Blockchain Technologies Ltd.
HIVE Blockchain Technologies Ltd. went public in 2017 as the first cryptocurrency mining company with a green energy and ESG strategy.
HIVE is a growth-oriented technology stock in the emergent blockchain industry. As a company whose shares trade on a major stock exchange, we are building a bridge between the digital currency and blockchain sector and traditional capital markets. HIVE owns state-of-the-art, green energy-powered data centre facilities in Canada, Sweden, and Iceland, where we source only green energy to mine on the cloud and HODL both Ethereum and Bitcoin.
Since the beginning of 2021, HIVE has held in secure storage the majority of its ETH and BTC coin mining rewards. Our shares provide investors with exposure to the operating margins of digital currency mining, as well as a portfolio of cryptocurrencies such as ETH and BTC. Because HIVE also owns hard assets such as data centers and advanced multi-use servers, we believe our shares offer investors an attractive way to gain exposure to the cryptocurrency space.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release Forward-Looking Information Except for the statements of historical fact, this news release contains "forward-looking information" within the meaning of the applicable Canadian securities legislation that is based on expectations, estimates and projections as at the date of this news release. "Forward-looking information" in this news release includes, but is not limited to, statements with respect to information about the Offering and the use of proceeds, potential dilution and application of the Penalty Provision; business goals and objectives of the Company; and other forward-looking information concerning the intentions, plans and future actions of the parties to the transactions described herein and the terms thereon. [ MORE ] |
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HIVE Digital Technologies Ltd.
Vancouver (Other Tech Sectors)
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