HIVE Blockchain Technologies Ltd (OTCMKTS:PRELF) continues to emerge as a leader in the nascent industry of digital currency mining operations. We like to look at this as very much analogous to the establishment of oil drilling or gold mining operations: there is a large fixed cost investment in expanding capacity, and then variable costs accompany mining activities. In addition, we believe the establishment of the Bitcoin futures market, with a contract opening for trade last Sunday on the CBOE and one set to start trading this Sunday on the CME, will help to mitigate risks to companies, like Hive, who are expanding in this space.
The ramp continued this week as the company just announced that it has entered into binding letter agreements dated December 13, 2017 with its strategic partner and major shareholder, Genesis Mining Ltd., the largest digital currency mining hashpower provider, to significantly expand the Company’s digital currency mining operations in Sweden in 2018, including the addition of a large-scale Bitcoin mining facility.
HIVE Blockchain Technologies Ltd (OTCMKTS:PRELF) bills itself as a company building a bridge from the blockchain sector to traditional capital markets.
HIVE is strategically partnered with Genesis Mining Ltd., the world’s leading cryptocurrency mining hash rate provider, to build the next generation of blockchain infrastructure.
HIVE owns a state-of-the-art GPU-based cryptocurrency mining facility in Iceland, completed in May 2017, which produces mined cryptocurrency like Ethereum around the clock. HIVE has an option to acquire four additional facilities in Iceland or Sweden from Genesis. Genesis supports HIVE with data center infrastructure know-how and is HIVE’s largest shareholder.
According to company materials, “HIVE Blockchain Technologies Ltd. is a growth-oriented, TSX.V-listed company building a bridge from the blockchain sector to traditional capital markets. HIVE is strategically partnered with Genesis Mining Ltd. to build the next generation of blockchain infrastructure. HIVE owns state-of-the-art GPU-based cryptocurrency mining facilities in Iceland, which produce mined cryptocurrency like Ethereum around the clock.”
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As noted above, the company has put in place steps set to increase its digital mining operations in 2018.
“The addition of Bitcoin mining capability further establishes HIVE as a leader in digital currency mining and diversifies our revenue with a highly liquid currency,” commented Harry Pokrandt, President, CEO and a Director at HIVE. “Our new Bitcoin facility will be among the most energy-efficient and largest Bitcoin mining farms in Europe. This facility will complement our large-scale GPU-based facilities being built in Sweden and currently operating in Iceland, and allow us to diversify from mining GPU-driven consensus algorithms to also include SHA-256 consensus algorithms. Sweden, like Iceland, is an excellent jurisdiction for HIVE with its abundant cheap electricity, good governance, and cool climate.”
In addition, the company also announced it has entered into an agreement with a syndicate of agents led by GMP Securities L.P. and Eventus Capital Corp., “pursuant to which the Agents have agreed to place, on a best efforts basis, units of the Company at a price of C$3.15 per Unit, for aggregate gross proceeds of up to C$100,000,000”.
Apparently, according to the release, it would appear as if they already have a lead on at least C$50 million of that funding. Given the high fixed costs involved in expanding operations, this capital further supports the company’s plans to aggressively build a leadership position in the space.
Now commanding a market cap of $694.3M, PRELF has a significant war chest ($4.3M) of cash on the books, which compares with about $210K in total current liabilities. One should also note that debt has been growing over recent quarters. PRELF is pulling in trailing 12-month revenues of $214K. However, the company is seeing recent declines on the top-line on a sequential quarterly basis, with revenues flattening as of its latest reporting period. We will update the story again soon as further details emerge. Sign-up for continuing coverage on shares of $PRELF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $PRELF, either long or short, and we have not been compensated for this article.