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HIVE Blockchain Technologies a ‘Speculative Buy’ on overall positive 3Q results and upcoming launch of Performance Cloud, analysts say

Published: 15:48 22 Feb 2023 EST

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Analysts at Stifel GMP have reiterated their ‘Speculative Buy’ rating and US$4 price target for HIVE Blockchain Technologies Ltd after the cryptocurrency mining company reported its third quarter fiscal 2023 results.

HIVE shares were trading down 3.9% at about US$2.93 on the Nasdaq on Wednesday afternoon.

In a note to clients, the analysts wrote that HIVE’s results for the quarter ending in December 2022 were in line with backward-looking monthly production data but represented an overall positive in their view given strong margin performance amidst the most challenging quarter in the 2022 calendar year.

READ: Crypto rally a sign of risk-on market

“The company generated mining revenues of $14.3 million and realized healthy gross mining margins of 25%, which translates to an attractive break-even cost to mine of US$13,600,” they wrote.

“Furthermore, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came in at US$1.4 million, or 11% of revenues and in line with our estimates.

“Our $4/share target price is based on an EV/contracted hash rate of 110x, which implies a C23E EV/Revenue multiple of 5.3x.”

The analysts wrote that, per the company’s most recent production update, HIVE is currently operating at a hash rate of 2.68EH/s and expects to grow its fleet to more than 3 EH/s in the coming months as more BuzzMiner application-specific integrated circuits (ASICs) are installed.

Performance Cloud launch

They also noted the company’s plans to launch its Performance Cloud in the coming months, levering its existing graphic processing unit (GPU) fleet to perform high-performance computing workload and generate non-Bitcoin correlated fiat revenue.

“We are encouraged to learn that the company will pivot the existing GPU fleet to optimize cash flow and diversity the business,” Stifel analysts wrote. 

They concluded: “We continue to view HIVE as a leader in the industrial-scale cryptocurrency mining space with peer-leading operating efficiency and balance-sheet positioning to execute its existing growth plans.”

Contact the author at emily.jarvie@proactiveinvestors.com

Follow her on Twitter @emilyjjarvie

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