As the holiday season quickly approaches, Hive Blockchain Technologies Ltd. (TSXV:HIVE | OTCQX:HVBTF | FSE:HBF) released quarterly results recently that might come as a surprise to many within the blockchain space.
Hive reported revenue of $13 million during its fiscal second quarter, which ended on September 30, up 8.2% from the same period a year ago, with gross profits of $7.4 million. A key point in the Vancouver-based block reward mining firm’s earnings report included increased cash flow, rising to a new high of $10.6 million, up considerably from a loss of $4.6 a year earlier.
Interim Executive Chairman Frank Holmes said, “I’m thrilled to see how well HIVE has done since we settled all disputes with Genesis Mining in June 2019.” Hive’s working capital sits at $20.9 million as of September 30. It reduced operating expenses considerably once it shifted away from a former service provider.
The earnings stem largely from mining for the subsidiary reward on the Ethereum blockchain. Hive reported that it mined over 32,800 Ethereum and 88,300 Ethereum Classic tokens along with 89 BTC during the quarter. This predominant focus, coupled with the explosion in decentralized finance (DeFi) applications, which drove Ethereum price much higher, left Hive in an excellent financial position.
Hive is also coming off a spending spree that saw it expands its mining capacity and includes the recently announced purchase of a new 50 megawatts (MW) data center campus in Grand Falls, New Brunswick. The firm has entered a non-binding, exclusive memorandum of understanding with GPU.One Holding Inc. for a share purchase agreement to get the facility.
The eventual purchase price will be determined later on, after more negotiation and the completion of a satisfactory due diligence process.
The road ahead for Hive remains clouded, which should concern its shareholder. They should question whether earning these large amounts of profits is still a sign of good business in 2020.
While profitable today, the firm’s continued support of Vitalik’s non-scalable hobby platform does not bode well for its longer-term growth. Dysfunction, delays, and mediocre plague the Ethereum project as it struggles to release software updates.
The demand for Ethereum will decline. Like the ICO craze that came before, the recent DeFi hysteria has been ripe with scams and rug pulls. Once the DeFi craze dies down, an Ethereum price drop will follow quickly after.
See also: TAAL’s Jerry Chan presentation at CoinGeek Live on The Shift from Bitcoin “Miners” to “Transaction Processors”
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