Mr. Frank Holmes reports
HIVE COMPLETES SHARE INVESTMENT IN DEFI TECHNOLOGIES
Further to the announcement on March 25, 2021, Hive Blockchain Technologies Ltd. has completed the share swap transaction with DeFi Technologies Inc., pursuant to which Hive will receive 10 million common shares of DeFi Technologies, representing approximately 5 per cent of the existing outstanding common shares of DeFi Technologies in exchange for four million common shares of the company, representing approximately 1 per cent of the company's issued and outstanding common shares. Completion of the transaction is conditional on the approval of the TSX Venture Exchange. In addition, Hive and DeFi Technologies have created a partnership surrounding the decentralized finance (DeFi) ecosystem with specific applications around Ethereum and miner extractable value (MEV). The new partnership, which follows months of discussions, will provide Hive with a strategic stake in DeFi Technologies and a broader partnership surrounding the DeFi ecosystem with a specific focus on the Ethereum-based MEV space and developments surrounding it.
The boom in Ethereum has three powerful drivers, and DeFi has been a substantial part of the additional fees Hive has received for mining Ethereum on the cloud. The other are Stablecoins and more recently non-fungible tokens or NFTs. The company believes DeFi is the most significant demand driver, and the company's investment in DeFi Technologies gives shareholders a double benefit.
MEV refers to the amount of profit miners can extract from reordering and censoring transactions on the blockchain. It has become an important issue over the past year as the DeFi space has grown from $3-billion (U.S.) to $71-billion (U.S.) in market capitalization. Of the $347.3-million of extracted MEV, 88 per cent comes from DeFi activities. As can be seen from data by Coin Metrics, over half of all ETH miner revenue currently comes from transaction fees. By partnering together to take on these activities, individuals get a more capital-efficient market to play in while distributing greater returns to miners for acting more altruistic.
DeFi and new applications are focused on disrupting financial intermediaries. DeFi reached new heights over the past 12 months as dozens of projects launched and large amounts of capital flowed in. The majority of DeFi apps uses Ethereum's ERC token standard to create new coins. DeFi has pushed Ethereum prices to new highs this year, and it is accelerating innovation and experimentation. It is estimated that more than $1-trillion in transactions passed through the Ethereum ecosystem in 2020, putting it roughly on par with payment giant PayPal. This megatrend in DeFi is a big tailwind for Ethereum demand, and the company believes it is in the early innings. Bitcoin was up 300 per cent in 2020 while Ethereum surged 470 per cent due to the demand from DeFi apps like Stablecoins to decentralized exchanges known as DEXs. Hive is the largest public crypto mining company mining Ethereum, and it wishes to invest in the DeFi sector and will consider distributing its shares as a dividend to Hive shareholders over the next year.
Blockchain analysis firm Chainalysis said DeFi is growing at warp speed, and DeFi's explosive growth has much farther to grow. Since most DeFi applications are built on top of Ethereum, the world's second-largest cryptocurrency platform, and DeFi is a smart contract, the future looks very attractive with DeFi becoming a sustainable demand driver for Ethereum prices.
About Hive Blockchain Technologies Ltd.
Hive 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.
About DeFi Technologies Inc.
DeFi is a Canadian company that carries on business with the objective of enhancing shareholder value through building and managing assets in the decentralized finance sector.
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