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Hive Blockchain Technologies Ltd
Symbol HIVE
Shares Issued 332,640,300
Close 2018-07-18 C$ 0.93
Recent Sedar Documents

Hive Blockchain loses $26.15-million in fiscal 2018

2018-07-18 18:15 ET - News Release

Mr. Harry Pokrandt reports

HIVE BLOCKCHAIN RELEASES FOURTH QUARTER AND FULL YEAR 2018 FINANCIAL RESULTS AND PROVIDES OPERATIONAL UPDATE

Hive Blockchain Technologies Ltd. has released its results for the fourth quarter and full year ended March 31, 2018 (all amounts in U.S. dollars, unless otherwise indicated).

"It has been a transformational year for the company as we have grown from a 2.0-megawatt facility in Iceland to a company with more than 24 MW of operations to date and digital currency mining assets in three countries," said Harry Pokrandt, president and chief executive officer. "Despite volatility in the cryptocurrency market, we have significantly grown our inventory of newly minted coins and have a strong cash position. I am extremely pleased with the operational and financial performance of Hive and our position as a leading blockchain infrastructure company."

Fiscal year 2018 highlights:

  • Generated revenues of $13,081,395, with a gross mining margin (1) of $10,139,931, from mining of digital currencies;
  • Mined over 17,000 newly minted ethereum and 54,000 ethereum classic coins during the year ended March 31, 2018, including fourth-quarter production of 9,800 ethereum and 34,000 ethereum classic coins, representing an increase of 136 per cent and 170 per cent, respectively, over third-quarter production;
  • Raised gross proceeds of $160-million ($203-million (Canadian)) of growth capital during the year to finance rapid expansion, and future growth opportunities and investments;
  • Expanded operations with Genesis dedicated to graphics-processing-units-based digital currencies such as ethereum and ethereum classic in Sweden and Iceland, with a total of 17.4 megawatts in production at March 31, 2018, and a further 6.8 MW commencing production after March 31, 2018. The company currently has 20.4 MW in Sweden and 3.8 MW in Iceland, bringing the company's digital currency mining footprint to a total of 24.2 MW since its change of business in September, 2017;
  • Executed further strategic partnership agreement with Genesis to expand capacity with SHA-256 ASIC miners capable of mining bitcoin, including 20 MW to be dedicated to the operation of 200 petahashes (PH), with estimated delivery in September, 2018;
  • Return on investment of 20 per cent by March, 2018, through investment of $38,284,690 in data centre equipment since September, 2017, which has generated digital currencies with a value of $7,754,307 (excluding $22-million investment for Sweden phase 2 which came on-line March, 2018);
  • Net loss of $26,159,978 for the year, including a one-time charge of $17,741,024 for the formation of the strategic relationship with Genesis, representing 68 per cent of the loss;
  • Announced in March, 2018, and closed subsequent to year-end, the acquisition of Kolos Norway AS provides a critical path for growth for the company and the potential to access a substantial amount of competitive green power in a safe jurisdiction.

(1) Gross mining margin is a non-international financial reporting standard measure; see non-IFRS measures for reconciliation.

Financial review

For the year ended March 31, 2018, Hive's gross mining margin was 78 per cent, with revenues per average megawatt of over $2-million. Fourth-quarter revenues were produced from an average of 9.84 MW of production capacity, with Sweden phase 2 coming on-line at the very end of the quarter, increasing total capacity to 17.4 MW in operation as at March 31, 2018. Below is an analysis of the company's revenues and gross mining margin per MW for the year ended March 31, 2018.

(1) Gross mining margin equates to revenue less operating and maintenance costs, and is a non-IFRS measure; see detailed calculation in the annual management's discussion and analysis for the year ended March 31, 2018, for more information.

(2) Average MW for a period is calculated based on the computing capacity in production on a daily basis for each period.

The company recorded a net loss from continuing operations of $25,568,684; this included a one-time charge for the consideration for the strategic relationship with Genesis of $17,741,024, non-cash share-based compensation of $4,817,019, and general and administration expenses of $4,541,282. The company's expenses include start-up costs to develop a footprint in Iceland, Sweden, Switzerland and Norway, as well as developing the business in Canada.

Outlook

Hive continues to execute on its aggressive growth strategy to maintain its position as a market leader in the blockchain infrastructure industry and will increase operations from 17.4 MW of data centre equipment as at March 31, 2018, to 44.2 MW by September, 2018, an increase of 154 per cent. For phase 3 of the Sweden GPU data centre, 6.8 MW has already commenced production in April, 2018, and the 20 MW of SHA-256 AISC miners is expected to provide an additional 200 PH by September. These additional capacities were fully financed as at March 31, 2018, and their operation will not create a significant change in the company's overhead; the additional mining margin will directly increase the company's profits.

Hive continues to actively investigate other high-efficiency computing applications, such as artificial intelligence and graphic rendering, as well as private blockchain computing, which are becoming more widespread as the blockchain technology grows and develops.

"Hive continues to strive for growth and has delivered on its development plan to date, meeting key milestones and positioning itself as a blockchain infrastructure leader, as evidenced by the company's achievements," said Frank Holmes, chairman. "It has been impressive to watch Hive expand over the past nine months, and deploy capital in a prudent and efficient manner. I am excited about the strong pipeline of new opportunities and eagerly anticipate the next 12 months of operations as the company sees the launch of further production capacity."

Management update

Hive is pleased to announce Stephan Metz as country manager in Zug, Switzerland. Mr. Metz is an accomplished cross-border legal and tax expert, with experience in securities law. Prior to joining Hive, Mr. Metz worked as a senior manager at PWC and as a digital currency adviser assisting individuals relocate their businesses to Zug. He has invaluable experience in a rapidly evolving digital currency ecosystem, including tax structuring for mining companies, digital currency funds, trading platforms and initial coin offerings. Mr. Metz's experience and leadership will add additional expertise to the management team of Hive, and help increase operational efficiency in both Europe and internationally.

Financial statements, and management discussion and analysis

The company's financial statements, and management's discussion and analysis (MD&A) for the three and 12 months ended March 31, 2018, will be accessible on SEDAR under Hive's profile and on the company's website.

Webcast details

Management will host a webcast on Thursday, July 19, 2018, at 8:30 a.m. ET to discuss the financial results for the three and 12 months ended March 31, 2018. Presenting on the webcast will be Harry Pokrandt, chief executive officer, president and director, and Jessica Van Den Akker, chief financial officer. Analysts and interested investors may register for the webcast or visit the company's website for more information.

About Hive Blockchain Technologies Ltd.

Hive Blockchain Technologies is a growth-oriented, TSX Venture Exchange-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 digital currency mining facilities in Iceland and Sweden, which produce newly minted digital currencies like ethereum continuously, and provides shareholders with exposure to the operating margins of digital currency mining as well as a growing portfolio of cryptocoins.

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