Mr. Aydin Kilic reports

HIVE DIGITAL PROVIDES SEPTEMBER 2023 PRODUCTION UPDATE AND PURCHASE OF 1,000 S19K PRO ASICS

Hive Digital Technologies Ltd. has released the unaudited production figures from the company's global bitcoin operations for the month of September, 2023, with 269.5 bitcoin produced in September. The company has maintained over 3.83 exahashes of bitcoin mining capacity on average for September, 2023, including ASIC and GPU BTC hash rate (all amounts in U.S. dollars, unless otherwise indicated).

Summary overview:

• Hive produced 269.5 bitcoin in the month of September, from ASIC and GPU mining operations, representing an average of 70 bitcoin per exahash, with an average hash rate of 3.83 EH/second for the month of September, 2023.
• Hive produced an average of nine BTC per day in September, 2023.
• Hive ended the month with 3.98 EH/s of mining capacity, including ASIC and GPU BTC hash rate, an 8.3-per-cent month-over-month increase.

Bitcoin halving strategy

Frank Holmes, executive chairman of the company, stated: "Hive was the first publicly listed crypto miner, listing on the TSX-V in 2017, and since then we skillfully and successfully navigated the last halving event in 2020, and additionally the bear markets of 2019, 2020 and 2022. Our team's track record, couple with our fiscal prudence, puts us in a strong position to weather the halving event next April. Our focus is to maximize ROI on bitcoin mining ASICs we purchase now, by making strategic acquisitions of only the very best offers in the market."

Mr. Holmes continued: "For example, we made a series of Bitmain S19 jPro purchases in Q4 2022, and thus far they have already made an ROI of between approximately 80 and 105 per cent after accounting for electrical costs. Thus some of these investments are already free cash flowing, and the remainder soon will be as well." The company notes this variance in return on investment is accounted for by purchase price and delivery date.

Mr. Holmes added: "We're laser-focused on acquiring high-efficiency bitcoin mining rigs at the best possible price. Hive produced an average of nine bitcoin per day in September, which is exactly 1 per cent of total bitcoin network block reward average of 900 bitcoin per day. We're doing this as a clean, green-energy-focused bitcoin miner. Going forward we will continue to invest in new bitcoin mining machines at prices that will have optimal payback before the halving next April, and through our analytics, we expect they should continue to be cash flow positive after the halving correction. Furthermore, the high-margin fixed-rate revenue from our GPU HPC and AI business unit will supplement our income from bitcoin, as we carefully plan for the halving in 2024."

Bitcoin ASIC upgrade with S19k Pro

Aydin Kilic, president and chief executive officer of Hive, stated: "We are thrilled to announce the acquisition of 1,000 Bitmain S19k Pro miners, with an efficiency of 23 joules/terahash [TH] and 120 TH/s per machine. This purchase is part of our strategic acquisitions to prepare for the halving. Our objectives with our equipment procurement strategy are the optimization of ROI, and sustaining positive cash flow posthalving. We note that 2022 was a choppy market for many crypto miners, and I'm very proud of our team at Hive, as we navigated this bear market with positive gross mining margins each quarter. This is a testament to our commitment to shareholders, to mine profitably, and our goal to realize the best possible cash flow return on invested capital."

Quarterly mining recap

The company notes that, based on publicly available filings, measuring revenues, direct operating costs and corporate costs (also know as general and administrative costs), recording the publicly available information from peers in the bitcoin mining sector (including monthly production press releases, and financial statements for the period end June 30, 2023), Hive led the sector in operating margin per average petahash and revenue per average petahash.

The company defines operating margin as a non-IFRS (international financial reporting standards) metric, measured as revenue less direct operating costs (commonly expressed as cost of goods sold or COGS in the management discussion and analysis filings for public companies) less corporate operating costs or G&A. The company believes this provides the basis for a direct comparison of listed bitcoin miners operating margins, to effectively compare all streams of income, against all cash operating costs, which are generally recorded in a similar manner since there are many non-cash line items that various companies may each record on a differing basis (including depreciation).

Furthermore, average revenue per petahash is an effective measure of efficiency of uptime as a bitcoin miner. The more uptime a bitcoin miner has during a certain period, the more time hashing and earning bitcoin. Publicly listed bitcoin miners generally follow similar IFRS reporting methods for revenue; this expresses the effective uptime or efficiency of a miner. Similarly, one may evaluate the average bitcoin per exahash mined during the same period.

September, 2023, production figures

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

• 259 BTC produced from ASICs from an average hash rate of 3.69 EH/s from ASICs in September;
• 8.6 BTC produced per day on average from ASICs, and 70.2 BTC/EH from ASICs in September;
• 3.98 EH/s of BTC month-end hash rate as of Sept. 30, comprising 3.83 EH/s of ASIC BTC hash rate and 0.15 EH/s of GPU BTC hash rate;
• This represents an 8.3-per-cent month-over-month-end increase in BTC ASIC hash rate (Aug. 31 month-end was 3.53 EH/s);
• Monthly average of 3.83 EH/s, comprising an average of 3.69 EH/s of ASIC mining capacity and average of 150 PH/s of bitcoin GPU mining capacity during the month of September;
• This is a 4-per-cent month-over-month increase in BTC average hash rate from ASICs and GPUs combined (August average BTC hash rate was 3.67 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 55.62 T as of Sept. 1, and increased to an all-time high of 57.12 T as of Sept. 30. 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.

As more people mine bitcoin (difficulty increases), the daily bitcoin block reward which presently 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 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 Hive is happy that it has been able to upgrade its global fleet during this crypto market downturn.

About Hive Digital Technologies Ltd.

Hive Digital 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, Hive 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. Hive'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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