Hive Blockchain Technologies' bitcoin mining operation in Sweden
The Vancouver-based crypto miner is up 142 percent year-to-date
The stock: Don’t look now, but bitcoin is back above US$30,000. The start of a new cryptocurrency growth cycle or a dead-cat bounce? Your answer will likely depend on whether you’re crypto believer or skeptic. But what if you’re on the fence? How can you get exposure to this alternative asset class if you’re wary of risking your hard-won wealth on a crypto exchange (remember FTX or QuadrigaCX)? One way is to invest in the stock of a bitcoin miner like 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 electrical supply is mostly renewable and emissions-free. This is significant in that Hive wants to be seen as conscientious of the environmental downside of crypto mining, which requires tons of computing power. It is even working to sell the waste heat from its servers to supply nearby factories and greenhouses.
In many respects, investing in crypto miners is akin to investing in real mining and mineral exploration companies—it’s a leveraged play on the price of the underlying commodity. You’re investing in the digital gold the firm has yet to unearth. So far this year bitcoin is up 81.9% (in U.S. dollars), and Hive is up 142%, to $5.06 on the TSX Venture exchange as of the close on April 11.
Yes, company performance still matters. Hive prides itself on being one of the most efficient publicly traded bitcoin miners in terms of administrative costs per dollar of revenue (of which the company reported US$88 million in 2022). But none of that matters if, as many investors felt last fall, the crypto market is dead; Hive shares bottomed below $2 in December. Now, with many believing we’ve seen the top of the U.S. Federal Reserve’s interest-rate cycle, bitcoin appears to be back.
Word on the street: The three analysts covering the stock all have a “buy” rating on Hive, with a median price target of US$5 (C$6.74). “Unlike its peer companies, 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 liabilities to current assets,” observed MarketBeat writer Matthew North. “Analysts were also bullish on the news Hive will be using its fleet of GPU miners in addition to ASICs. This will allow the company to tap into coins that are ASIC-resistant, thereby unlocking additional revenue and opportunities in the altcoin market.”
Coming & 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. Though the combined entity will trade using WonderFi’s shares, it will be known as Coinsquare and based in Toronto.