Mr. Frank Holmes reports

HIVE DIGITAL ANNOUNCES QUARTERLY REVENUE OF $23.6 MILLION, GROSS OPERATING MARGIN OF $8.0 MILLION AND ACHIEVES ADJUSTED EBITDA OF $5.3 MILLION FOR THE QUARTER AND THE PURCHASE OF 2,000 BITMAIN S19 XP ASIC MINERS FOR IMMEDIATE DEPLOYMENT

Hive Digital Technologies Ltd. has released its earnings report for the first quarter ended June 30, 2023 (all amounts are in U.S. dollars unless otherwise indicated).

Hive achieved revenue of $23.6-million this quarter by mining 834 bitcoin with a 34-per-cent gross operating margin, representing $8.0-million of income from operations.

The company notes that Hive's production of 834 bitcoin this quarter represents an increase of 1.6 per cent year over year, having mined 821 bitcoin last year, reflecting a continued growth in its operating hash rate. This is in large part a result of the completion of its New Brunswick data centre campus, spanning over four buildings, including its own substation, transformers and electrical infrastructure. This large increase in the quantity of bitcoin production was achieved notwithstanding an increase in mining network difficulty of approximately 60 per cent and a decline in bitcoin prices of 50 per cent at different points in the preceding 12 months.

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. We are disappointed that the higher margin from mining ethereum is gone; however, our HPC strategy is now growing rapidly on a month-over-month basis. We are happy to report that our robust growth is scalable and could potentially increase tenfold over the next year. Demand for our high-quality chips has risen due to the huge global demand for [artificial intelligence] projects like ChatGPT, medical research, machine learning and rendering. Further, Hive was the first to use its software to help balance the electrical grid and resell back energy whenever there is a spike in demand. This strategy has been good for the communities in which we operate and Hive. Hive is well positioned despite challenging fundamentals such as rising mining network difficulty. Strategically, we have not borrowed expensive debt against our mining equipment or pledged our bitcoins for costly loans; thus, our balance sheet remains healthy to weather this storm. We believe our low-coupon fixed debt, attractive green renewable energy prices and high performing energy-efficient ASIC and GPU chips will help us navigate this crypto winter. Stable sources of electricity, especially green energy, continues to be a challenge due to changing government tax and uncertain regulatory proposals in many jurisdictions, which we cover in greater detail in our interim filings. Also, Hive uses an accelerated depreciation of ASIC equipment over two years due to the four-year bitcoin halving cycle and the generation of more efficient chips every two years."

Aydin Kilic, president and chief executive officer of Hive, added: "Hive has skillfully navigated the digital asset mining industry in a postethereum merge environment. Questions about whether we could remain profitable have been answered by our gross operating margins of $8.0-million this quarter. In addition to this, we saw bitcoin mining difficulties increase 24 per cent quarter over quarter, reaching an all-time high of 52 T. Nevertheless, we produced 834 bitcoin this quarter, a 5-per-cent increase over last quarter. Furthermore, even though difficulty was 24 per cent higher on average this quarter, we improved our gross mining margin to 34 per cent (up from 22 per cent the previous quarter). This increase in production was accomplished by expanding our fleet of ASICs to increase our production, and also carefully managing our energy markets and striving to mine for optimal profits. To date, we've received delivery of all of the 11,269 ASICs we purchased in 2023. Of these, approximately 2,000 remain to be plugged in, which we hope to accomplish in the next week. Additionally, our mining GPUs are currently doing approximately $80 per megawatt-hour in revenue, which is similar to bitcoin mining economics with ASICs. I am incredibly proud of the team as we have among the leanest [general and administrative costs] as a percentage of revenue among our peers in the industry. Hive is dedicated to delivering its shareholders value, and strives to excel in optimization and efficiency. This quarter, the numbers illustrate the merit of our approach. We strive to set the gold standard of operational efficiency at Hive while constantly adapting to changing market conditions with an agility mindset."

Hive's gross operating margin was $8.0-million for the quarter, representing an increase of 100 per cent over the same period last year. This increase in gross operating margin was predominantly driven by higher average cryptocurrency prices during this period, which positively affected the entire bitcoin mining industry, allowing Hive to produce more bitcoin.

Relative to its peers in the industry, Hive has managed to mine with healthy profit margins during periods of market volatility as a result of its global presence in Sweden, Iceland and Quebec and their attractive sources of hydro and geothermal electricity.

Furthermore, Hive's average cost of production per bitcoin was $18,687 (including cost of goods sold, not including selling, general and administrative costs) for the quarter ended June 30, 2023, a 4.24-per-cent increase in cost from the previous quarter ended March 31, 2023. The company notes that with bitcoin mining hash rates and difficulty at all-time highs, it is expected that the cost of production for bitcoin will increase for the industry at large, as less bitcoin per terahash is being rewarded at these difficulty levels.

First quarter quarterly summary -- June 30, 2023:

• Generated revenue of $23.6-million, with a gross operating margin (1) of $8.0-million;
• Mined 834 bitcoin during the three-month period ended June 30, 2023;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (1) of $5.3-million for the three-month period;
• Working capital decreased by $8.3-million during the three-month period ended June 30, 2023;
• Digital currency assets of $59.5-million, as at June 30, 2023;
• Average cost of production per bitcoin was $18,687, where the average bitcoin price was $28,422, during the three-month period ended June 30, 2023; this also represents a 4.24-per-cent increase in production costs of bitcoin from the previous quarter of $17,928 for the three months ended March 31, 2023 (average price of bitcoin was $22,868 during this period);
• Net loss from continuing operations of $16.3-million for the three-month period, due greatly to the depreciation of ASIC equipment.

Q1 fiscal 2024 financial review

For the three months ended June 30, 2023, revenue was $23.6-million, a decrease of approximately 46.6 per cent from the prior comparative period primarily due to the ethereum merge and significant global hash rate growth combined with lower average cryptocurrency prices.

Gross operating margin (1) during the period was $8.0-million, or 34 per cent of revenue, compared with $27.0-million, or 61 per cent of revenue, in the same period in the prior year. The company's gross operating margin (1) 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 decrease in gross operating margin (1) is greatly affected by the price of digital currencies, which has decreased by approximately 12.6 per cent of what it was in the prior-year quarter.

The company notes that, while adjusted EBITDA (1) this quarter was $5.3-million, because of mark-to-market accounting practice, net loss from continuing operations during the quarter ended June 30, 2023, was $16.3-million, or a loss of 19 cents per share, compared with a net loss of $116.0-million, or $1.41 per share, the same period last year. The improvement from the prior comparative period was driven primarily by fluctuation in foreign exchange resulting in a gain and lower non-cash charges such as depreciation, unrealized valuation losses on digital currencies and investments, and impairment charges on equipment and equipment deposits. Adjusted EBITDA is a non-international financial reporting standard 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, "At Hive, we strive to maintain a high performance culture, which means that we always adapt to unexpected headwinds and maintain operational excellence in the process."

Financial statements and management's discussion and analysis

The company's consolidated financial statements and management's discussion and analysis thereon for the three months ended June 30, 2023, will be accessible on SEDAR+ under Hive's profile and on the company's website.

2,000 Bitmain S19 XP ASIC miners

Hive has purchased 2,000 Bitmain S19 XP ASIC miners for immediate delivery, which will allow it to upgrade a portion of its fleet to improve its average joule-per-terahash efficiency. With immediate delivery, these machines will cash flow quicker. As it strategically prepares for the halving, it has performed extensive analysis on behalf of Hive shareholders to skillfully navigate the year ahead. This will include additional purchases of high-efficiency ASICs to upgrade its fleet, and in some cases, it optimizes firmware of certain models of machines to improve their efficiency. In the same way it navigated the ethereum merge, the Hive management team will use its experience and acumen to strive for best cash flow return on invested capital.

This purchase increases its total ASIC acquisitions in 2023 to over 13,000 units.

At-the-market offering

Pursuant to the at-the-market equity program established by the company's prospectus supplement dated May 10, 2023, as required pursuant to National Instrument 44-102 (Shelf Distributions) and the policies of the TSX Venture Exchange, the company announces that, during its first quarter ended June 30, 2023, it has issued an aggregate of 534,400 common shares over the TSX-V, for aggregate gross proceeds to the company of $2,685,303 (Canadian). The ATM shares were sold at prevailing market prices, for an average price per ATM share of $4.92 (Canadian). Pursuant to the equity distribution agreement associated with the ATM equity program, a cash commission of $60,901 on the aggregate gross proceeds raised was paid to the agent in connection with its services under the EDA during the first quarter ended June 30, 2023.

Pursuant to the EDA, the company may, from time to time, sell up to $100-million of common shares in the capital of the company. The company intends to use the net proceeds of the ATM equity program, if any, primarily to support the growth and development of the company's existing mining operations, as well as for working capital and general corporate purposes. Additionally, the company wishes to be in a position to capitalize on opportunities which may exist or may be brought to its attention relating to distressed asset sales of mining equipment throughout the mining ecosystem.

About Hive Digital Technologies Ltd.

Hive 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 and high performance computing industry. As a company whose shares trade on major stock exchanges, it is building a bridge between the digital currency and blockchain sectors 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 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 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 and high performance computing space.

(1) A non-international financial reporting standard measure.

We seek Safe Harbor.