HIVE Blockchain Technologies aims to provide a link between cryptocurrency markets and traditional capital markets. Via its partnership with the world’s largest crypto miner, Genesis Mining, HIVE sets out to provide an avenue for traditional investors to get into the crypto space without direct participation in the oft-volatile exchange markets. HIVE’s system involves directly mining Ethereum and other cryptocurrencies while remaining active on the Toronto Stock Exchange as a publicly listed company.
Who Is Heading Up the Project?
HIVE’s CEO is Harry Pokrandt. Pokrandt previously served as managing director of Macquarie Capital Markets Canada from 1985 to 2015 and managing director of Espresso Capital from 2015 to 2017. He describes himself as an early believer and investor in Bitcoin who began his crypto mining career in his own home.
HIVE’s chairman is Frank Holmes, who serves as CEO and chief investment officer of mutual fund and asset management firm U.S. Global Investors.
The company’s other directors include co-founder Olivier Roussy Newton, a partner at quantum computing, financial technology, and bioinformatics firm Latent Capital; and Bjoern Arzt, a managing partner at blockchain and cryptocurrency investment fund Logos Fund.
What’s the Relationship between HIVE and Genesis?
Genesis was founded in 2013 by Bitcoin investors to mine cryptocurrencies with specialized hardware. HIVE was co-founded by Genesis and acts as its publicly held wing and largest shareholder. Genesis permits leasing of its mining resources to third parties, while HIVE is an independent operator with some management operations supervised by Genesis. This is the primary divider between the two organizations. Genesis gives crypto miners the tools to mine coins on their own in exchange for leasing fees. HIVE mines coins on behalf of its shareholders.
HIVE signed a letter of intent with Genesis in June 2017, in which HIVE would receive a 2-megawatt mining facility in exchange for US$9 million and a 30 percent stake in the company. The transaction closed in September, the same month in which HIVE opened its second facility in Iceland.
What Benefit Does HIVE Provide Traditional Investors?
Instead of diving directly into crypto mining with all the equipment and technological capital investment costs that entails, an investor can purchase publicly traded shares in HIVE to get a chance at profits without directly encountering the highly volatile cryptocurrency market. This provides a layer of insulation between investors and the cryptocurrency market at large. In the company’s FAQ, HIVE represents itself as knowledgeable intermediary and buffer.
“Simply put, HIVE is a cryptocurrency mining firm,” the company wrote. “We validate transactions on blockchain networks – like Ethereum – for rewards paid in cryptocurrencies. Every day, HIVE earns new crypto coins, which it can monetize for revenue and cash flow. HIVE offers shareholders exposure to the operating margins from cryptocurrency mining plus a growing portfolio of coins.”
Is Anyone Else Doing This?
HIVE describes itself as the first publicly traded blockchain mining company. While it theoretically is in competition with the legions of individual cryptocurrency miners in homes and small businesses, its partnership with the world’s largest miner – Genesis – puts it in a favorable position to accrue shareholder value. The decision to list HIVE on the Toronto Stock Exchange underscores that first-mover status, the company said.
“It provides equity shareholders a way of getting exposure to the crypto world through a traditional investment vehicle,” HIVE said. “The capital markets have very few options for investors to participate in the sector, and HIVE provides a unique opportunity to do so. Public markets are a huge untapped opportunity to finance the growth of the blockchain sector and HIVE.”
What Are HIVE’s Financial Details?
HIVE is listed on the Toronto Stock Exchange under the ticker HIVE. As of May 2, HIVE stocks were trading at about US$1.08 per share. HIVE boasts a market cap of US$332.18 million with 253.3 million shares either issued or outstanding.
In the fourth quarter of 2017, HIVE generated 3.27 million in revenue. Its net profit for the period was $221,078.
What Coins Does HIVE Mine?
Currently, HIVE mines primarily Ethereum, Monero, and Zcash. Ether is being considered for mining in the immediate future, but other altcoins are a possibility, as HIVE can mine any coin with a GPU-based algorithm. Bitcoin mining is a distant possibility, due to Genesis’ involvement in Bitcoin mining as well as the perceived higher profitability of Ethereum mining.
“HIVE’s decision to initially focus mining efforts on Ether does not mean we will not also mine Bitcoin and other cryptocurrencies in the future,” the company said. “However, we, like our partner Genesis, are very excited about the potential for the Ethereum project.”
Where Is HIVE located?
HIVE operates its flagship mining operations in Reykjanes, Iceland. Iceland was selected for the initial GPU mining facility due to its abundant, inexpensive, and environmentally friendly thermal power. Iceland is also relatively cold year-round, providing a favorable environment for heat-sensitive mining equipment. The company also operates GPU mining facilities operate in Sweden.
What Is HIVE’s Strategy for Managing Its Mined Coins?
HIVE stores its coins in designated digital wallets. The company is looking at additional security measures to reduce the possibility of hacks, as well as insurance for its assets. HIVE estimates that its hardware will likely not incur additional capital expenditures for at least four to five years, based on legacy Genesis assets. As for already mined coins, the company is developing a tiered liquidation strategy “…as a ratio of future forecasted expenses, while holding the remainder as inventory to benefit from price appreciation/volatility,” the company said.
What Does HIVE Plan to Do Next?
Growing HIVE’s market presence is the company’s chief priority, in the form of developing partnerships and strengthening its developer team. Security management is next on the list. Although the company believes it already has first-rate security and risk management processes in place, there are always opportunities for improvement in the rapidly developing crypto sphere. Lastly, HIVE is poised for growth via both acquisitions and organic growth in its core mining business.