Credit: Hive Blockchain Technologies
Hive Blockchain Technologies bitcoin mining in Sweden
The Vancouver-based crypto miner is up 142% 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 your belief in crypto or your skeptic. But what if you're on the fence? How can you gain exposure to this alternative asset class if you're worried about risking your hard-earned fortune on a crypto exchange (remember FTX or QuadrigaCX)? One way is to invest in the shares of a bitcoin miner like Hive Blockchain Technologies (TSXV, NASDAQ: HIVE).
The drivers: Vancouver-based Hive Blockchain has digital mining operations in New Brunswick, Quebec, Sweden and Iceland, all cold-climate jurisdictions where electricity supply is mostly renewable and emissions-free. This is important since Hive wants to be considered aware of the environmental downsides of crypto mining, which requires tons of computing power. It even works to sell 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's a game of leverage on the price of the underlying commodity. You are investing in digital gold that the company has yet to discover. So far this year, bitcoin is up 81.9% (in US dollars) and Hive 142%, to $5.06 on the TSX Venture Exchange as of the April 11 close.
Yes, business 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; Shares of Hive bottomed below $2 in December. Now, while many believe we have seen the peak of the US Federal Reserve interest rate cycle, bitcoin appears to be back.
Speech in 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 peers, Hive does not struggle with debt and leverage. Its debt 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 that Hive will use its fleet of GPU miners in addition to ASICs. thus additional income and opportunities in the altcoin market.
Go and come : Another Vancouver crypto firm, 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 using WonderFi shares, it will be known as Coinsquare and based in Toronto.