ZUG, Switzerland and
VANCOUVER, March 3, 2020 /CNW/ - HIVE Blockchain
Technologies Ltd. (TSX.V:HIVE) (OTCQX:HVBTF) (the "Company" or
"HIVE") announces its results for the third quarter ended
December 31, 2019 (all amounts in US
dollars, unless otherwise indicated).
"I am pleased to report a healthy profit in the third fiscal
quarter driven by our ongoing efforts since the end of 2018 to
increase transparency, accountability and profitability across our
mining operations," said Frank
Holmes, Interim Executive Chairman of HIVE. "Notably, our
decision to restructure operations at our flagship Ethereum mining
facility in Sweden paid off as we
generated a strong increase in gross mining profitability vs prior
periods under our previous service provider relationship, which
ceased in November. Additionally, we benefited during the quarter
and subsequently from our prudent decision to suspend Bitcoin cloud
mining operations to avoid mining at a loss due to the significant
increase in mining difficulty combined with declining Bitcoin
prices in the second half of calendar 2019.
"These decisions have strengthened our balance sheet; we also
recently lowered our cost base while increasing our cost certainty
by entering into hedging arrangements related to our electrical
expenses in Sweden. Combined,
these will enable us to make appropriate investments to drive
future growth.
"We are extremely excited as we look ahead in 2020 and the
potential for further improvements to the profitability of our
Ethereum mining operations," added Mr. Holmes. "Institutional
adoption of blockchain technology, including Ethereum, is rising.
And Ethereum market conditions for miners have improved thus far
this year: daily block rewards increased in January and coin prices
have rebounded significantly over the past few months while the
network hash rate has been relatively stable. Additionally, it is
anticipated the Ethereum network will implement Programmatic Proof
of Work this year, which would effectively eliminate ASIC mining on
the network, thereby increasing the relative efficiency of GPU
mining facilities such as HIVE's.
"We continue to evaluate expansion opportunities globally, with
a preference towards maintaining 100% green energy, and look
forward to providing further updates on our progress through the
year."
Q3 F2020 Highlights
- Generated income from digital currency mining of $5.0 million
- Generated gross mining margin of $3.8
million from mining of digital currencies
- Mining output of newly minted digital currencies:
-
- 23,175 Ethereum
- 33,190 Ethereum Classic
- 127 Bitcoin
- Generated net income of $3.4
million for the period
- Net cash less loans payables decreased to $3.2 million due to cash used in operations,
reflecting upfront energy costs paid during the quarter in
Sweden for which the Company
anticipates receiving energy rebates in the future, with digital
currencies assets at $3.4 million, as
at December 31, 2019
- Working capital increased to $11.8
million
Financial Review
For the quarter ended December 31,
2019, income from digital currency mining was $5.0 million, a decrease of approximately 41%
from the same period in the prior year primarily due to the
Company's suspension of 200 PH/s of its ASIC cloud mining capacity
at the beginning of October, 2019 and the remaining 100 PH/s in
December 2019 due to worsening
Bitcoin mining market conditions as coin prices declined while
mining difficulty and network hash rates increased to a record
high. Third quarter income from digital currency mining was
produced from 24.2 MW of GPU production capacity, and 100 PH/s of
cloud mining capacity for a partial quarter.
Gross mining margin during the third quarter of fiscal 2020 was
$3.8 million, or 77% of income. It
was approximately $1.1 million
excluding the reversal of a value added tax ("VAT") provision in
Switzerland related to historical
periods originally recorded in the second quarter of fiscal 2020,
as well as upfront energy costs paid during the quarter in
Sweden for which the Company
anticipates receiving energy rebates in the future. This compares
to ($2.2) million, or -27%, in the
same period in the prior year. Excluding the impact of the reversal
of VAT and upfront energy costs noted above, the increase in mining
margin was driven by an improvement in the profitability of the
Company's Ethereum mining operations in Sweden due to a change in its service provider
relationship, as partially offset by a reduction in Bitcoin mining
profitability.
Net income and comprehensive income during the third quarter of
fiscal 2020 was $3.6 million, or
$0.01 per share, compared to a loss
of $36.2 million, or $0.12 per share, in the same period in the prior
year. The increase was driven primarily by the improvement in gross
mining margin, an impairment charge taken in Q3 of fiscal 2019, and
a decrease in depreciation expenses in fiscal 2020 stemming from
impairments taken in the prior fiscal year.
|
|
Three months ended
December 31,
|
|
Nine months ended
December 31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Income from
digital currency mining
|
$
|
5,003,944
|
$
|
8,449,545
|
$
|
26,135,552
|
$
|
25,633,426
|
Operating and
maintenance costs of digital currency mining
|
|
(1,170,145)
|
|
(10,694,763)
|
|
(19,296,937)
|
|
(19,574,719)
|
Gross Mining
Margin1
|
|
3,833,799
|
|
(2,245,218)
|
|
6,838,615
|
|
6,058,707
|
Gross Mining
Margin %1
|
|
77%
|
|
-27%
|
|
26%
|
|
24%
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
(1,345,212)
|
|
(9,392,790)
|
|
(3,850,241)
|
|
(19,220,035)
|
Gross gain
(loss)
|
|
2,488,587
|
|
(11,638,008)
|
|
2,988,374
|
|
(13,161,328)
|
|
|
|
|
|
|
|
|
|
Revaluation of
digital currencies2
|
|
(727,064)
|
|
(4,602,879)
|
|
(2,639,579)
|
|
(13,772,008)
|
Gain (loss) on sale
of digital currencies
|
|
107,960
|
|
(1,825,637)
|
|
261,681
|
|
(2,925,350)
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
|
(1,125,864)
|
|
(967,656)
|
|
(3,791,320)
|
|
(3,225,862)
|
Impairment
|
|
-
|
|
(15,967,785)
|
|
-
|
|
(30,714,205)
|
Foreign
Exchange
|
|
2,860,408
|
|
(895,312)
|
|
(302,211)
|
|
(2,745,910)
|
Share-based
compensation
|
|
(62,220)
|
|
(531,587)
|
|
(371,119)
|
|
(789,949)
|
|
|
|
|
|
|
|
|
|
Realized gain on
investment
|
|
|
|
|
|
|
|
|
Unrealized gain on
investments
|
|
-
|
|
-
|
|
1,531,464
|
|
-
|
Finance
expense
|
|
(153,792)
|
|
4,886
|
|
(261,314)
|
|
(11,856)
|
|
|
|
|
|
|
|
|
|
Tax expense
(recovery)
|
|
-
|
|
-
|
|
-
|
|
(50,000)
|
Net income (loss)
from continuing operations
|
$
|
3,388,015
|
$
|
(36,423,978)
|
$
|
(2,584,024)
|
$
|
(67,396,468)
|
|
|
|
|
|
|
|
|
|
EBITDA1
|
$
|
4,887,019
|
$
|
(27,036,074)
|
$
|
(3,933)
|
$
|
(48,114,577)
|
Adjusted
EBITDA1
|
$
|
5,676,303
|
$
|
(21,901,608)
|
$
|
3,006,765
|
$
|
(33,552,620)
|
|
|
|
|
|
|
|
|
|
Diluted income
(loss) per share
|
$
|
0.01
|
$
|
(0.12)
|
$
|
(0.01)
|
$
|
(0.22)
|
|
|
|
|
|
|
|
|
|
Net cash inflows
(outflows) from operating activities
|
$
|
(2,404,273)
|
$
|
(6,448,079)
|
$
|
(1,216,180)
|
$
|
(1,583,101)
|
Net cash inflows
(outflows) from investing activities
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
(7,305,432)
|
Net cash inflows
(outflows) from financing activities
|
$
|
-
|
$
|
19,253
|
$
|
306,712
|
$
|
355,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at
|
|
December 31,
2019
|
|
March 31,
2019
|
|
|
|
|
Total
assets
|
$
|
26,176,194
|
$
|
27,761,197
|
|
|
|
|
Total non-current
liabilities
|
$
|
290,915
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Gross mining margin
equates to income from digital mining less operating and
maintenance costs and is a non-IFRS measure; see Non-IFRS Measures
in MD&A for reconciliation
|
(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
|
(3)
|
EBITDA and Adjusted
EBITDA are non-IFRS measures; see Non-IFRS Measures in MD&A for
reconciliation
|
Financial Statements and MD&A
The Company's Condensed Interim Consolidated Financial
Statements and Management's Discussion and Analysis (MD&A)
thereon for the three and nine months ended December 31, 2019 will be accessible on SEDAR at
www.sedar.com under HIVE's profile and on the Company's
website at www.HIVEblockchain.com.
Webcast Details
Management will host a webcast on Tuesday, March 3, 2020 at 9:00 am Eastern Time to discuss the Company's
financial results. Presenting on the webcast will be Frank Holmes, Interim Executive Chairman and
Darcy Daubaras, Chief Financial
Officer. IMPORTANT- Click here to register for the
webcast.
About HIVE Blockchain Technologies Ltd.
HIVE Blockchain Technologies Ltd. is a growth oriented,
TSX.V-listed company building a bridge from the blockchain sector
to traditional capital markets. HIVE owns state-of-the-art
GPU-based digital currency mining facilities in Iceland and Sweden, which produce newly minted digital
currencies like Ethereum continuously as well as cloud-based
ASIC-based capacity which produces newly minted digital currencies
like Bitcoin. Our deployments provide shareholders with exposure to
the operating margins of digital currency mining as well as a
growing portfolio of crypto-coins.
For more information and to register to HIVE's mailing list,
please visit www.HIVEblockchain.com. Follow @HIVEblockchain on
Twitter and subscribe to HIVE's YouTube channel.
On Behalf of HIVE Blockchain Technologies Ltd.
"Frank Holmes"
Interim Executive Chairman
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this news release.
Forward-Looking Information
Except for the statements of historical fact, this news
release contains "forward-looking information" within the meaning
of the applicable Canadian securities legislation that is based on
expectations, estimates and projections as at the date of this news
release. "Forward-looking information" in this news release
includes information about restructuring of the Company's
operations and sustainable future profitability; potential further
improvements to the profitability of Ethereum mining operations;
the anticipated implementation of Programmatic Proof of Work and
elimination of ASIC mining on the network; potential expansion
opportunities globally; anticipated energy rebates in Sweden; improvements in GPU Ethereum mining
operational efficiency; the potential for the Company's long term
growth; the business goals and objectives of the Company, and other
forward-looking information includes but is not limited to
information concerning the intentions, plans and future actions of
the parties to the transactions described herein and the terms
thereon.
Factors that could cause actual results to differ materially
from those described in such forward-looking information include,
but are not limited to, the efficiencies obtained through
restructurings may not lead to operational advantages or
profitability; further improvements to the profitability may not be
realized as currently anticipated, or at all; Programmatic Proof of
Work may not be implemented or lead to any advantages (elimination
of ASIC mining on the network) as currently anticipated, or at all;
the ongoing partnership with Genesis and any of the
third parties for which the Company relies for its operations the
Company may not receive energy rebates in Sweden in the quantum anticipated, or at all;
the digital currency market; the Company's ability to successfully
mine digital currency; the Company may not be able to profitably
liquidate its current digital currency inventory, or at all; a
decline in digital currency prices may have a significant negative
impact on the Company's operations; the volatility of digital
currency prices; and other related risks as more fully set out in
the Filing Statement of the Company dated and other documents
disclosed under the Company's filings at www.sedar.com.
This news release also contains "financial outlook" in the
form of gross mining margins, which is intended to provide
additional information only and may not be an appropriate or
accurate prediction of future performance, and should not be used
as such. The gross mining margins disclosed in this news release
are based on the assumptions disclosed in this news release and the
Company's Management Discussion and Analysis for the quarter ended
December 31, 2019, which assumptions
are based upon management's best estimates but are inherently
speculative and there is no guarantee that such assumptions and
estimates will prove to be correct.
The forward-looking information in this news release reflects
the current expectations, assumptions and/or beliefs of the Company
based on information currently available to the Company. In
connection with the forward-looking information contained in this
news release, the Company has made assumptions about the Company's
ability to realize operational efficiencies going forward into
profitability; profitable use of the Company's assets going
forward; the Company's ability to profitably liquidate its
digital currency inventory as required; the Company's ongoing
partnership with Genesis and new partnership with Blockbase;
historical prices of digital currencies and the ability of the
Company to mine digital currencies will be consistent with
historical prices; and there will be no regulation or law that will
prevent the Company from operating its business. The Company has
also assumed that no significant events occur outside of the
Company's normal course of business. Although the Company believes
that the assumptions inherent in the forward-looking information
are reasonable, forward-looking information is not a guarantee of
future performance and accordingly undue reliance should not be put
on such information due to the inherent uncertainty
therein.
SOURCE HIVE Blockchain Technologies Ltd.