Mr. Aydin Kilic reports

HIVE ACHIEVES ANNUAL REVENUE ENDED MARCH 31, 2023 OF $106-million WITH 2,332 BITCOIN ON THE BALANCE SHEET AND MINES 3,258 BITCOIN IN 2023 FISCAL YEAR

Hive Blockchain Technologies Ltd. has released its results for the full year ended March 31, 2023. All amounts are in U.S. dollars, unless otherwise indicated.

Revenue was $106.3-million this fiscal year, with a gross operating margin of $50.4-million, or a 47-per-cent operating margin on revenue. The company's selling, general and administrative for the fiscal year ended March 31, 2023, was $13.2-million. Therefore, on a cash basis, this corporate margin was positive.

The company grew its bitcoin mining ASIC (application-specific integrated circuit) hash rate by 50 per cent in this fiscal year, from two exahashes in March, 2022, to three exahashes in March, 2023. In this fiscal year, the company mined 3,258 bitcoin from ASICs and 3,503 bitcoin equivalent when including digital assets mined from GPUs (graphics processing units). Hive emerged through this period with 2,332 bitcoin on the balance sheet as at March 31, 2023, worth $65.9-million. The company notes these bitcoin are unencumbered, unleveraged and were all mined through Hive's green energy-focused operations.

Aydin Kilic, president and chief executive officer, stated: "I am proud of our teams' efforts navigating a challenging year in bitcoin mining, where we saw the combined headwinds of continued increases in the bitcoin difficulty, bitcoin prices averaging 49 per cent lower than last year and the ethereum merge to proof of stake. While this led to lower revenues and operating margins compared to last year, each quarter we still managed to realize a positive gross operating margin. Additionally, our gross operating margin each quarter exceeded our corporate SG&A and so the company was able to maintain this positive corporate margin1 each quarter."

The company notes that there are significant non-cash charges recorded in the financials, which reflect the revaluation by management of the company's operating assets, based on conservative guidance due to the bitcoin volatility.

The net loss reported of $236.4-million includes $81.7-million of depreciation, additionally an impairment of $70.4-million was applied to equipment, and furthermore an impairment of $27.3-million was applied to deposits. Hive has disclosed the vast majority of these non-cash charges in previous quarters. In its fourth quarter of fiscal 2023, the company recorded a gain on the revaluation of its bitcoin treasury in the amount of $9,616,399 and had the lowest impairments of the fiscal year. These non-cash charges are required to be recorded as assets relating to the company's bitcoin mining operations (even if still operational and in their useful economic life cycle) to reflect the lower profit margins in bitcoin mining during a bear market. On a year-over-year basis, the net loss of $236.4-million is down from net income of $79.6-million a year earlier. Basic loss per share was at $2.85, whereas last year income per share was $1.02. Gross operating margin contracted to $50.4-million, from $162.4-million last year. On a year-over-year basis, the company's revenue of $106.3-million is a 50-per-cent decrease from the prior year, as a result of the decrease in bitcoin price and increase in difficulty.

To summarize, these negative factors, most notably lower bitcoin prices, led to large non-cash impairments totalling $182-million during the year, comprising equipment and deposits on equipment impairments totalling $97.7-million, negative revaluation of digital currencies of $70.9, and unrealized loss on investments of $13.4-million. Of these non-cash impairments, the mark to market is the most volatile as Hive has seen over the past year as bitcoin prices have increased close to 10 per cent as of today since the end of the fiscal period just completed.

Frank Holmes, executive chair, concluded: "We are also proud that during the year we were able to take significant steps forward in pivoting into the HPC business marketplace, with our 38,000 Nvidia GPUs, which have the capability to do AI workload. We have much to accomplish to utilize our full fleet of GPU cards; however, we are very pleased that our beta project with only approximately 500 GPU cards generated $230,000 revenue this quarter."

Fiscal year 2023 highlights:

• Generated revenue of $106.3-million, with a gross operating margin of $50.4-million;
• Mined 3,258 bitcoin and 14,984 ethereum during the year ended March 31, 2023;
• Reported a net loss of $236.4-million for the year, due to non-cash impairments of $182-million and depreciation of $81.7-million;
• Working capital decreased by $112.3-million during the year ended March 31, 2023, as bitcoin prices were substantially lower in this fiscal year;
• Digital currency assets of $65.9-million, as at March 31, 2023.

The company's consolidated financial statements and management's discussion and analysis (MD&A) thereon for the three months and year ended March 31, 2023, will be accessible on SEDAR under Hive's profile and on the company's website.

Fiscal 2023 financial review

For the fiscal year ended March 31, 2023, revenue was $106.3-million, a decrease of approximately 50 per cent from the prior year primarily due to the fall in the bitcoin price and increase in the mining difficulty of ethereum and bitcoin resulting from continued growth in global mining operations.

Gross operating margin during the year was $50.4-million, or 48 per cent of revenue, compared with $163.9-million, or 76 per cent of revenue, in fiscal 2022. Gross operating margin is directly impacted by digital currency prices and network difficulties as this impacts revenue from mining operations. The decrease is mainly attributed to the decrease in bitcoin price and an increase in the bitcoin network difficulty versus the prior year, combined with the company not mining ether since the merge on Sept. 15, 2022.

Net loss during fiscal 2023 was $236.4-million, or $2.85 loss per share, compared with a net income of $79.6-million, or $1.02 per share, in fiscal 2022. The significant reduction in results was driven primarily by much higher non-cash charges recorded in the current year mostly related to the depressed bitcoin prices that were experienced during the year as well as an accelerated depreciation of its GPU and ASIC assets.

Webcast details

Management will host a webcast on Friday, July 30, 2023, at 8:30 a.m. Eastern Time to discuss the company's financial results. Presenting on the webcast will be Mr. Holmes, executive chairman, Mr. Kilic, president and chief executive officer, and Darcy Daubaras, chief financial officer.

About Hive Blockchain Technologies Ltd.

Hive Blockchain Technologies went public in 2017 as the first cryptocurrency mining company listed for trading on the TSX Venture Exchange with a sustainable green energy focus.

Hive is a growth-oriented technology stock in the emergent blockchain industry. As a company whose shares trade on a major stock exchange, it is 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 it endeavours to source green energy to mine digital assets such as bitcoin on the cloud. Since the beginning of 2021, Hive has held in secure storage the majority of its treasury of ETH and BTC derived from mining rewards. The company's shares provide investors with exposure to the operating margins of digital currency mining, as well as a portfolio of bitcoin. Because Hive also owns hard assets such as data centres and advanced multiuse servers, it believes its shares offer investors an attractive way to gain exposure to the cryptocurrency space.

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