HIVE BLOCKCHAIN UPDATES ON ANTICIPATED COST REDUCTIONS; ANNOUNCES RSU AND OPTION GRANTS
Hive Blockchain Technologies Ltd. now anticipates an approximately 40-per-cent reduction in the company's operating and maintenance costs at its GPU (graphics processing unit) mining facility in Sweden, compared with such costs under its previous service provider agreement, which it ended in November, 2019.
The updated cost reduction figure is higher than the approximately 25 per cent that the company had previously anticipated, as announced in its Dec. 2, 2019, press release. This improvement is the result of locking in a lower-than-anticipated electricity rate, stemming from an unusually warm winter in Sweden, for a majority of the company's electricity costs by hedging agreements that will continue through 2020. Electricity, which is provided through green energy, comprises the majority of the company's operating and maintenance costs.
"We're extremely pleased to have locked in advantageous electricity prices in Sweden through our direct agreements with local suppliers, the result of Hive assuming full control of its Sweden operations in November," said Frank Holmes, interim executive chairman of Hive. "This provides cost certainty and allows us to plan for our next stage of growth. It is another successful step in our efforts to increase our underlying mining profitability in 2020."
Hive is one of the world's largest public miners on the Ethereum blockchain. The company's Sweden facility comprises the bulk of Hive's current mining operations, along with a significantly smaller GPU mining facility in Iceland. The company has previously announced it is reviewing opportunities to improve profitability at its Iceland facility or relocate its GPU mining equipment there to a lower-cost jurisdiction.
"For the past two years, Hive's share price has been relatively correlated to the price of Ethereum, in part due to traders using our publicly listed and relatively liquid shares as a proxy for holding the cryptocurrency," noted Mr. Holmes. "That correlation unfortunately became decoupled last spring following our proxy battle. However, we are pleased that, thus far in 2020, our efforts through 2019 to assume control of and improve our mining operations, combined with the increasing adoption of the Ethereum blockchain and increasing investor interest in cryptocurrencies and blockchain technology, has resulted in similar investor interest in Hive."
Also, the company's board of directors has approved the grant of three million incentive stock options; 500,000 options each were granted to the company's directors and certain officers, which vest over 24 months. The options are exercisable into the equivalent amount of common shares of the company at a price of 29 cents per share. The grants are subject to the approval and rules of the TSX Venture Exchange and the company's incentive stock option plan. All options will expire on Feb. 10, 2030. The company's board has also approved the grant of an aggregate of 3.1 million restricted share units; 500,000 RSUs each were granted to the company's directors and certain officers, and 100,000 to a consultant to the company, which vest over 24 months. Each vested RSU entitles the holder to receive one common share of the company.
Prior to the grants, the company had approximately 327 million issued and outstanding common shares, and approximately 18 million stock options.
The company's stock option plan and restricted share unit plan were reapproved by shareholders at Hive's 2019 annual meeting of shareholders on Dec. 18, 2019.
Hive Blockchain Technologies Ltd.
Hive is a growth-oriented company building a bridge from the blockchain sector to traditional capital markets. 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 as well as cloud-based ASIC (application-specific integrated circuit) based capacity, which produces newly minted digital currencies like Bitcoin.
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