Hive Blockchain Turns to BTC Mining After ETH Merger
Mining companies that relied heavily on Ethereum have seen reduced revenue following the merger. The survivors have turned to BTC mining, and Hive Blockchain is among them.
Former Ethereum mining giant Hive Blockchain is diversifying after the loss of its cash cow. The Ethereum merger happened in mid-September, after which it was no longer possible to mine the asset.
The switch to proof-of-stake has been good for the network in terms of compliance with ESG (Environmental, Social, and Governance). It has also been good for ETH holders who can earn return on investment. However, companies that relied heavily on Ethereum mining have been hit hard.
Hive Blockchain is one of those companies, but its balance sheet looks healthy. BTC mining expert Jaran Mellerud has analyzed the firm’s third quarter report revealing why Hive is likely to survive.
Pivot to BTC Mining
The analyst estimated that Hive lost 40% of its revenue after the merger. He added that its “defunct ETH mining operation was much more profitable than its remaining BTC mining operation.” He added that the actual loss to the company’s operating cash flows is likely to be around 60%.
That was the bad news. The good news for Hive is that it is redeploying its Ethereum mining facilities to BTC mining. The firm plans to increase its Bitcoin mining capacity from 2.8 EH/s (exahashes per second) to 3.3 EH/s by February 2023.
Hive also has a liquid balance sheet consisting mainly of Bitcoin holdings. According to the report, the firm only has $8 million in cash, but has 3,311 BTC which accounts for 88% of its liquidity. This makes it the fourth largest BTC hodler among public miners.
In addition, Hive has among the lowest debt-to-equity ratios among the public miners, noted Mellerud. With only $26 million in interest-bearing debt, it has been spared the huge debt service payments that currently hamper its competitors.
Advantages of renewable energy
Hive was the first crypto mining company to go public in 2017. Furthermore, its fully hydro and geothermal powered operations are located in Canada, Sweden and Iceland. This means that it has not been subject to massive energy price spikes that have affected other miners.
Furthermore, the firm has historically been able to squeeze out between 5% and 30% more BTC than most of its competitors. “This could be due to the company achieving a higher uptime due to steady hydropower supply,” commented the analyst.
Bitcoin miners are currently dormant with depressed asset prices, high hash rates and expensive energy. Hash rates had dropped 14% from peaks of 273 EH/s by November 28, but have since recovered to 251 EH/s.
