Mr. Aydin Kilic reports

HIVE DIGITAL PROVIDES JULY 2023 PRODUCTION UPDATE AND ANNOUNCES DEPLOYMENT OF ADDITIONAL SUPERMICRO SERVERS FOR NVIDIA GPUS TO TRIPLE AI COMPUTING POWER

Hive Digital Technologies Ltd. has released the unaudited production figures from the company's global bitcoin operations for the month of July, 2023, with 263 bitcoin produced in July and a current BTC hodl balance of approximately 2,032 (as of Aug. 1). The company's ASIC hash rate has grown 5 per cent month over month and has maintained over 3.3 exahashes of bitcoin mining capacity on average for July, 2023, including ASIC and GPU BTC hash rate (all amounts are in U.S. dollars unless otherwise indicated).

Summary overview:

• Hive Digital produced 263 bitcoin in the month of July from ASIC and GPU mining operations, representing an average of 75.9 bitcoin per exahash, with an average hash rate of 3.46 exahashes per second for the month of July, 2023.
• Hive Digital produced an average of 8.5 BTC per day in July, 2023.
• BTC hodl position increased this month by 75 BTC to 2,032 BTC from the prior month-end of 1,957 BTC.
• Hive Digital ended the month with 3.64 EH/s of mining capacity, including the ASIC and GPU BTC hash rate.

GPU cloud and artificial intelligence update

Aydin Kilic, president and chief executive officer of Hive Digital, noted: "We are very excited to have installed our latest fleet of Supermicro servers in Sweden this week, where each server will power 10 Nvidia A40 GPUs, thus creating 480 [gigabytes] of VRAM per bare metal server, and additionally supplement these GPUs with dual Intel CPUs offering 96 threads, 512 GB of system RAM and 7.6 [terabytes] of NVMe storage. We are now in the tactical execution phase of our AI infrastructure business, where we will continually upgrade the CPU servers used to operate our fleet of Nvidia data centre grade GPUs and make these available for HPC and AI workloads."

Frank Holmes, executive chairman of Hive Digital, stated: "Mining BTC with ASIC chips is much less intense and complex than mining with GPU chips. We have extensive experience since Hive went public in 2017 in using high performing GPU chips. We started down the path to build an HPC strategy and [business-to-business] platform over three years ago, and this was accelerated when we purchased 38,000 Nvidia GPU chips in 2021. The suite of chips we purchased were robust because they could mine PoW coins and had capacity to be used for AI services. The launch of ChatGPT has accelerated demand for our HPC services, and a key factor for growth has been the delivery of enterprise-grade Supermicro CPU servers. I am pleased our team has shown a successful beta launch with only 1 per cent of our suite of Nvidia chips and are busy installing our GPU chips with a critical path to increase capacity every month this year. Based on current demand, the blue-sky potential is over $100-million in revenue with very high operating margins."

The company plans to continually scale the GPU AI and HPC business on a monthly basis between now and the end of December, 2023.

Mr. Kilic continued: "Earlier this year, we achieved $1-million of annual run rate revenue from our GPU computing business for AI and HPC workloads. This latest deployment of Supermicro servers will triple the footprint of high-end computing power, and thus can allow us to triple our current run-rate revenue. We have monthly deliveries of Supermicro servers, which will continue to scale our HPC and AI computing footprint."

The company's year-end target is to 10 times its annual run rate revenue from the GPU computing business for AI and HPC workloads, in addition to its bitcoin mining business.

Mr. Kilic concluded, "We look forward to powering the AI revolution and providing enterprise-grade AI compute services."

July, 2023, production figures

Luke Rossy, vice-president of operations, stated: "We are currently awaiting the installation of additional PDUs for our New Brunswick flagship facility, which will allow us to plug in 1,700 Hive BuzzMiners, which are on site ready to be installed. This installation of equipment will allow us to reach our interim target of four exahashes. Our year-end target is six exahashes of bitcoin mining capacity."

The company's total bitcoin production in July, 2023, was:

• 251 BTC produced from ASICs from an average hash rate of 3.3 EH/s from ASICs in July;
• 8.1 BTC produced per day on average from ASICs and 75.9 BTC/EH from ASICs in July;
• 3.64 EH/s of BTC month-end hash rate as of July 31, composed of 3.47 EH/s of ASIC BTC hash rate and 0.167 EH/s of GPU BTC hash rate;
• This represents a 5-per-cent month-end-over-month-end increase in BTC ASIC hash rate (June 30 month-end was 3.32 EH/s);
• Monthly average of 3.46 EH/s, composed of an average of 3.30 EH/s of ASIC mining capacity and average of 157 PH/s of bitcoin GPU mining capacity during the month of July;
• This is a 2-per-cent month-over-month increase in BTC average hash rate from ASICs and GPUs combined (June average BTC hash rate was 3.38 EH/s).

Bitcoin global network mining difficulty is volatile

Network difficulty factors are a significant variable in the company's gross profit margins. The bitcoin network difficulty was 50.65 T as of July 1, and reached a new all-time high of 53.91 T during the month before ending at 52.33 T on July 31. Accordingly, bitcoin mining difficulty ended the month about 3 per cent higher than the beginning of the month.

The bitcoin network difficulty is a publicly available statistic, which reflects the total number of bitcoin miners on-line and is important in analyzing a company's gross profit margins and number of bitcoin produced. These data are available on many websites.

As more people mine bitcoin (difficulty increases), the daily bitcoin block reward, which currently is fixed at 900 bitcoin per day, gets split amongst more miners; thus, each miner receives a smaller portion of the block reward. Conversely, as bitcoin prices fall, many miners may lose money and power down, thus taking their hash rate off the network, causing network difficulty to decrease.

Those miners with the lowest costs of production, by virtue of having more efficient machines and/or lower energy costs, are able to continue their production during these volatile cycles. Not all miners will continuously mine during the month. As a result, some miners will produce less bitcoin than expected, relative to their advertised hash rate. For the foregoing reasons, Hive Digital will self-curtail part of its operations if the unhedged spot energy prices are uneconomical, thereby leaving part of its total gross hash rate unutilized.

All bitcoin miners are striving to use the most efficient bitcoin ASIC chips, and the company is happy that it has been able to upgrade its global fleet during this crypto market downturn.

About Hive Digital Technologies Ltd.

Hive Digital 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 Digital 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 Digital 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 Digital has held in secure storage the majority of its treasury of BTC derived from mining rewards. Its shares provide investors with exposure to the operating margins of digital currency mining, as well as a portfolio of bitcoin. Because Hive Digital 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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