Mr. Frank Holmes reports
HIVE BLOCKCHAIN REPORTS RECORD QUARTERLY REVENUE AND CASH FLOW, WITH OPERATING INCOME OF $9 MILLION, IN SECOND QUARTER F2021
Hive Blockchain Technologies Ltd. has released its results for the second quarter ended Sept. 30, 2020 (all amounts are in U.S. dollars, unless otherwise indicated).
Revenue from digital currency mining was $13.0-million, an 8-per-cent increase from the same quarter last year. Record cash flow of $10.6-million was up significantly from a loss of $4.6-million a year earlier. Gross mining margin expanded to $9.2-million from a loss of more than $560,000 last year. Net income per share grew to three cents from a loss of four cents during the period ended Sept. 30.
"I'm thrilled to see how well Hive has done since we settled all disputes with Genesis Mining in June, 2019," commented Frank Holmes, interim executive chairman of Hive. "We've been able to drive down costs, which has led to the highest cash flow in any one quarter since Hive went public three years ago. This, coupled with higher Ethereum and crypto prices, means that the company is doing better now than ever before.
"Two thousand twenty has been marked by healthy expansion in mining capacity, the most recent example being Hive's potential acquisition of a data centre campus in Grand Falls, N.B., that would give the company access to an additional 50 megawatts of low-cost green energy. Additionally, we recently locked in 50 per cent of our energy costs for calendar 2021 at 1.6 cents per kilowatt hour in Sweden. This data point is one of the lowest in the blockchain mining ecosystem, as well as in green energy.
"As we explained back in September of this year, the company produced a record number of Ethereum coins through the continued strong usage of the blockchain network, notably decentralized finance (DeFi) applications. In the quarter ended Sept. 30, Hive mined over 32,800 Ethereum and 88,300 Ethereum Classic coins. This represents a significant increase from the 25,000 Ethereum mined in the previous quarter, and a more than 50-per-cent increase compared to the same period last year.
"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 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 are in a very attractive position," continues Mr. Holmes.
Q2 fiscal 2021 highlights:
- Generated income from digital currency mining of $13.0-million, an increase of 8.2 per cent year over year;
- Generated gross mining margin (1) of $9.2-million, or 71 per cent of income from digital currencies;
- Mining output of newly minted digital currencies:
- 32,800 Ethereum;
- 88,300 Ethereum Classic;
- 89 Bitcoin;
- Generated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (1) of $10.6-million, a significant increase from a loss of $4.6-million a year earlier;
- Generated net income of $9.2-million for the period, or three cents per share, compared with a loss of $11.5-million, or four cents per share, last year;
- Net cash less loans payables of $1.7-million plus digital currencies assets of $10.7-million, as at Sept. 30, 2020;
- Working capital was $20.9-million as at Sept. 30, 2020.
Q2 fiscal 2021 financial review
For the three months ended Sept. 30, 2020, income from digital currency mining was $13.0-million, an increase of 8.2 per cent from the prior comparative quarter. The increase was primarily due to an increased number of Ethereum coins mined during the current quarter and a realization of higher average Ethereum prices than the prior comparative quarter.
Gross mining margin (1) during the quarter was $9.2-million, or 71 per cent of income from digital currency mining, compared with a loss of $563,839, or 5 per cent of income from digital currency mining, in the same period in the prior year.
Net income during the quarter ended Sept. 30 was $9.2-million, or three cents per share, compared with a loss of $11.5-million, or four cents per share, in the prior-year period. The increase was primarily due to a significant reduction of operational costs experienced since the company shifted from the former service provider over the past year.
FINANCIAL HIGHLIGHTS
Three months ended Sept. 30, Six months ended Sept. 30,
2020 2019 2020 2019
Income from digital currency mining $12,989,592 $12,007,978 $19,569,874 $21,131,608
Operating and maintenance costs of
digital currency mining (3,780,716) (12,571,817) (7,767,987) (18,126,792)
------------ ------------ ------------ ------------
Gross mining margin (1) 9,208,876 (563,839) 11,801,887 3,004,816
Gross mining margin % (1) 71% -5% 60% 14%
Depreciation (1,796,774) (1,252,072) (3,426,643) (2,505,029)
------------ ------------ ------------ ------------
Gross gain (loss) 7,412,102 (1,815,911) 8,375,244 499,787
Revaluation of digital currencies (2) 993,902 (4,806,346) 2,319,766 (1,912,515)
Gain (loss) on sale of digital currencies 1,729,821 (589,404) 2,477,287 153,721
Hosting revenues 191,800 - 191,800 -
General and administrative expenses (183,660) (1,366,341) (1,128,220) (2,665,456)
Foreign exchange (302,943) (2,052,200) (85,418) (3,162,619)
Share-based compensation (514,438) (15,019) (910,427) (308,899)
Realized (loss) gain on investments - (828,044) - 1,531,464
Finance expense (115,611) (53,557) (230,365) (107,522)
------------ ------------ ------------ ------------
Net income (loss) from continuing operations 9,210,973 (11,526,822) 11,009,667 (5,972,039)
EBITDA (1) 11,123,358 (9,393,149) 14,666,675 (4,890,952)
Adjusted EBITDA (1) 10,643,894 (4,571,784) 13,257,336 (2,669,538)
Diluted income (loss) per share 0.03 (0.04) 0.03 (0.02)
Net cash inflows from operating activities 5,442,119 294,969 5,915,421 1,188,093
Net cash inflows (outflows) from investing
activities (412,372) - (4,095,324) -
Net cash inflows (outflows) from financing
activities (288,374) 83,168 (554,483) 306,712
(1) 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 thereon for the three and six months ended Sept. 30, 2020, will be accessible on SEDAR under Hive's profile and on the company's website.
Webcast details
Management will host a webcast on Dec. 1, 2020, at 10 a.m. Eastern Time, to discuss the company's financial results. Presenting on the webcast will be Mr. Holmes, Tobias Ebel, Hive director, and Darcy Daubaras, chief financial officer.
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.
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