Credit: Hive Blockchain Technologies
Hive Blockchain Technologies’ bitcoin mining operation in Sweden
The Vancouver-based crypto miner is up 142 percent year-to-date
The share: Don’t look now, but bitcoin is back above USD 30,000. The start of a new cryptocurrency growth cycle or a dead cat? Your answer will likely depend on whether you are a crypto believer or a skeptic. But what if you’re on the fence? How can you gain exposure to this alternative asset class if you are wary of risking your hard-earned fortune on a crypto exchange (remember FTX or QuadrigaCX)? One way is to invest in the stock of a bitcoin miner such as Hive Blockchain Technologies (TSXV, NASDAQ: HIVE ).
The drivers: Vancouver-based Hive Blockchain owns digital mining operations in New Brunswick, Quebec, Sweden and Iceland, all cold-climate jurisdictions where the power supply is largely renewable and emission-free. This is important in that Hive wants to be seen as conscientious about the environmental disadvantages of cryptomining, which requires tons of computing power. It is even working on selling the waste heat from its servers to supply nearby factories and greenhouses.
In many ways, investing in crypto miners is akin to investing in real mining and mineral exploration companies – it is an leveraged play on the price of the underlying commodity. You are investing in the digital gold the company has yet to uncover. So far this year, bitcoin is up 81.9% (in US dollars), and Hive is up 142%, to $5.06 on the TSX Venture exchange at the close on April 11.
Yes, company performance is still important. Hive prides itself on being one of the most efficient public bitcoin miners in terms of administrative costs per dollar of revenue (of which the company reported $88 million in 2022). But none of that matters if, as many investors felt last fall, the crypto market is dead; Hive shares bottomed out below $2 in December. Now, with many believing that we have seen the peak of the US Federal Reserve interest rate cycle, it appears that bitcoin is back.
Word on the street: The three analysts covering the stock all have a “buy” rating on Hive, with a median price target of $5 (CAD 6.74). “Unlike its peers, Hive is not saddled with debt and leverage. Its debt-to-equity ratio is low at 0.19 and it has a low ratio of current debt to current assets,” observed MarketBeat writer Matthew North .” Analysts were also bullish on the news that Hive will use its fleet of GPU miners in addition to ASICs. This will allow the company to use coins that are ASIC resistant, thereby unlocking additional revenue and opportunities in the altcoin market.”
Coming and going: Another Vancouver crypto company, WonderFi Technologies (TSX:WNDR), has reached an agreement to merge with two rival Canadian cryptocurrency platforms, CoinSmart Financial and Coinsquare. Although the combined entity will trade WonderFi’s stock, it will be known as Coinsquare and based in Toronto.
