Mr. Frank Holmes reports
HIVE REPORTS RECORD TOP LINE INCOME FROM DIGITAL CURRENCY MINING FOR Q3 F2021 UP 174% FROM Q3 F2020 OR $13.7 MILLION, AND RECORD YEAR OVER YEAR CASH FLOW GROWTH. TOTAL INCOME FOR 9 MONTHS F2021 WAS $28 MILLION OR $0.08 CENTS PER SHARE AND $0.05 PER SHARE
Hive Blockchain Technologies Ltd. has released its results for the third quarter ended Dec. 31, 2020 (all amounts in U.S. dollars, unless otherwise indicated).
Income from digital currency mining was $13.7-million in this third quarter, a 174-per-cent increase from the same quarter last year and 5 per cent higher than the previous quarter. Record cash flow was $13.7-million, up significantly from $5.7-million a year earlier and $3.1-million higher than the previous quarter. Gross mining margin expanded to $10.6-million from $3.8-million last year and is $1.4-million higher than that experienced in the prior quarter of $9.2-million. Net income per share grew to five cents from one cent during the prior-year period ended Dec. 31 and is two cents higher than the previous quarter of Sept. 30, 2020.
"In spite of the decreased number of Ethereum coins mined during this quarter as a result of the lower transaction fees when compared to the previous quarter, our Bitcoin operations doubled in the quarter so that our combined revenue and cash flow made new highs. In addition, we started upgrading our memory chips during the quarter from four gigabytes to eight gigabytes, which has been a big challenge, with Europe locking down due to the COVID-19 crisis, but we were able to upgrade over 60 per cent of our mining equipment and still deliver record income and cash flow from operations for our shareholders," said Frank Holmes, executive chairman of Hive. "Even with the challenges that have been faced with raising difficulty levels, the strong cryptocurrency prices, coupled by our continued focus on lowering costs at our operations, we have seen very strong results for our shareholders.
"Our Sweden and Iceland operations mining Ethereum on the cloud has been and continues to be a very stable and profitable business for us. On average, we have been producing around 20,000 Ethereum coins per quarter, and when we experience quarters above that level, it is due to bonus transaction fees that vary from quarter to quarter," expanded Mr. Holmes.
Ethereum mined by Hive Blockchain Technologies
"As we have mentioned previously and we are so proud of, Hive is the only public crypto mining company, producing Ethereum on an industrial scale, sourcing green energy from facilities in Sweden and Iceland. With the continued explosion in DeFi, which has increased the demand for Ethereum, and now the debut of Ethereum 2.0, which will shrink the supply of Ethereum, we continue to be in a very envious position," continued Mr. Holmes.
Q3 fiscal 2021 highlights:
- Generated income from digital currency mining of $13.7-million, an increase of 174 per cent year over year;
- Generated gross mining margin (1) of $10.6-million, or 78 per cent of income from digital currencies;
- Mining output of newly minted digital currencies:
- 21,500 Ethereum;
- 165 Bitcoin;
- Generated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (1) of $13.7-million, a significant increase from $5.7-million a year earlier;
- Generated net income of $17.2-million for the period, or five cents per share, compared with $3.4-million, or one cent per share, last year;
- Digital currencies of $15.0-million, as at Dec. 31, 2020;
- Working capital was $23.2-million as at Dec. 31, 2020.
Q3 fiscal 2021 financial review
For the three months ended Dec. 31, 2020, income from digital currency mining was $13.7-million, an increase of 174 per cent from the prior comparative quarter. The increase was primarily due to an increase in cryptocurrency prices, the increased production of Bitcoin with the Quebec facility acquisition and the purchase of miners for that facility, which are partially offset by a decrease in the production of Ethereum.
Gross mining margin (1) during the quarter was $10.6-million, or 78 per cent of income from digital currency mining, compared with $3.8-million, or 77 per cent of income from digital currency mining, in the same period in the prior year.
Net income during the quarter ended Dec. 31 was $17.2-million, or five cents per share, compared with $3.4-million, or one cent per share, in the prior-year period. The increase was primarily due to a significant reduction of operational costs, experienced since the company has shifted from the former service provider over the past year, and increased cryptocurrency prices.
Three months ended Dec. 31, Nine months ended Dec. 31,
2020 2019 2020 2019
Income from digital currency mining $13,707,879 $5,003,944 $33,277,753 $23,968,532
Operating and maintenance costs of
digital currency mining (3,078,934) (1,170,145) (10,846,921) (19,296,937)
------------- ------------- ------------- -------------
Gross mining margin (1) 10,628,945 3,833,799 22,430,832 4,671,595
Gross mining margin % (1) 78% 77% 67% 19%
Depreciation (2,476,592) (1,345,212) (5,903,235) (3,850,241)
------------- ------------- ------------- -------------
Gross gain 8,152,353 2,488,587 16,527,597 821,354
Revaluation of digital currencies (2) 6,315,970 (727,064) 8,635,736 (2,639,579)
Gain on sale of digital currencies 1,679,213 107,960 4,156,500 934,220
Hosting revenues 393,518 - 585,318 -
General and administrative expenses (911,076) (1,125,864) (2,039,296) (3,791,320)
Foreign exchange 1,746,573 2,860,408 1,661,155 1,192,270
Share-based compensation (209,726) (62,220) (868,947) (371,119)
Realized gain on investments 6,639 - 6,639 1,531,464
Unrealized gain on investments 148,967 - 148,967 -
Finance expense (111,918) (153,792) (342,283) (261,314)
Net income (loss) from continuing operations 17,210,513 3,388,015 28,471,386 (2,584,024)
EBITDA (1) 19,799,023 4,887,019 34,465,698 (3,933)
Adjusted EBITDA (1) 13,692,779 5,676,303 26,950,115 3,006,765
Diluted income (loss) per share 0.05 0.01 0.08 (0.01)
Net cash inflows from operating activities 12,877,046 (2,404,273) 18,792,467 (1,216,180)
Net cash outflows from investing activities (17,999,415) - (22,094,739) -
Net cash inflows (outflows) from financing
activities (497,629) - (1,052,112) 306,712
(1) A non-international financial reporting standard measure. A reconciliation to its nearest IFRS measures
is provided under "Reconciliations of Non-IFRS Financial Performance Measures" in the company's management's
discussion and analysis.
(2) Revaluation is calculated as the change in value (gain or loss) on the coin inventory. When coins are
sold, the net difference between the proceeds and the carrying value of the digital currency (including the
revaluation) is recorded as a gain (loss) on the sale of digital currencies.
Financial statements and MD&A
The company's condensed interim consolidated financial statements and management's discussion and analysis (MD&A) thereon for the three and nine months ended Dec. 31, 2020, will be accessible on SEDAR under Hive's profile and on the company's website.
Management will host a webcast on March 2, 2021, at 10 a.m. Eastern Time, to discuss the company's financial results. Presenting on the webcast will be Frank Holmes, interim executive chairman, and Darcy Daubaras, chief financial officer. Please register for the webcast.
Pursuant to the ATM equity program, as required pursuant to National Instrument 44-102 (Shelf Distributions) and the policies of the TSX Venture Exchange, the company announces that, since the beginning of the program on Feb. 3, 2021, it has issued an aggregate of 13,201,800 common shares over the TSX-V, for aggregate gross proceeds to the company of $65,022,582 (Canadian). The ATM shares were sold at prevailing market prices, for an average price per ATM share of $4.93 (Canadian). Pursuant to the equity distribution agreement associated with the ATM equity program (the EDA), a cash commission of $1,539,706 on the aggregate gross proceeds raised was paid to the agent in connection with its services under the EDA.
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, principally for general corporate and working capital requirements, for financing continuing operations, to repay indebtedness outstanding from time to time, to complete future acquisitions, or for other corporate purposes.
About Hive Blockchain Technologies Ltd.
Hive Blockchain is a growth-oriented, TSX Venture Exchange-listed company, building a bridge from the blockchain sector to traditional capital markets. Hive owns state-of-the-art green-energy-powered data centre facilities in Canada, Sweden and Iceland, which produce newly minted digital currencies like Bitcoin and Ethereum continuously on the cloud. Its deployments provide shareholders with exposure to the operating margins of digital currency mining, as well as a portfolio of crypto-coins.
(1) A non-international financial reporting standard measure. A reconciliation to its nearest IFRS measures is provided under "Reconciliations of Non-IFRS Financial Performance Measures" in the company's MD&A.
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