HIVE Blockchain Technologies Ltd. (HIVE) in Vancouver, Canada, is a growth-oriented cryptocurrency mining company. The company owns and operates state-of-the-art green energy-powered data center facilities in Canada, Sweden, and Iceland. 

HIVE went public in 2017 by listing its shares on the Toronto Stock Exchange, making it the first publicly traded cryptocurrency mining company with green energy and ESG strategy.

HIVE listed its shares on the Nasdaq Capital Markets Exchange on July 1, 2021. The listing reflects HIVE’s leading position in the global clean energy-powered crypto mining industry. However, the stock has since declined 11.5% in price to close yesterday’s trading session at $2.53.

Here is what could shape HIVE’s performance in the near term:

Crypto Regulations

The United States does not have a clear regulatory framework that governs cryptocurrency assets. As such, U.S. financial regulators released an inter-agency policy plan, known as “crypto sprint,” last November to regulate the decentralized financial market. The policy plan highlights how banks can store, trade, and transfer cryptocurrency assets. It states guidelines regarding the issuance of stablecoins, loans backed by crypto assets, and tax accounting for such assets. The Basel Committee proposed capital requirements regarding cryptocurrencies, stating that bitcoin and equivalent assets should be subject to a higher risk weighting of 1250%.

The Federal Reserve, Federal Deposit Insurance Corp and the Office of the Comptroller of the Currency jointly released a statement, stating, “The interagency sprints quickly advanced and built on agencies’ combined knowledge, which helped identify and assess key issues related to potential crypto-asset activities conducted by banking organizations.”

Increased Mining Capacity

HIVE mined 4032 Bitcoin equivalent in 2021. This includes Bitcoin, Ethereum, and Ethereum Classic cryptocurrencies. The company mined 245 bitcoins and 2,178 Ethereum in December 2021. Regarding this, HIVE Executive Chairman Frank Holmes said, “We are very pleased to report HIVE has continued its strong momentum in expanding our Bitcoin hashing power even as the network difficulty rose. As of today, we are producing approximately 8.8 BTC a day. Our Bitcoin hashing power increased in December, and at the calendar year-end our hashrate was 1.7 Exahash, which translated into a 12% increase in BTC mining on a month-over-month basis, while BTC prices corrected.”

Impressive Financials

For its fiscal second quarter, ended Sept. 30, 2021, HIVE’s revenues increased 305% year-over-year to $52.60 million. Its net income came in at $59.80 million, up 549% from the same period last year. And its EPS rose 433.3% from the prior-year quarter to $0.16.

As of Sept. 30, 2021, HIVE held 1116 bitcoin worth $48.40 million and 25,154 ethereum, worth $74.70 million.

POWR Ratings Reflect Uncertainty

HIVE has an overall C rating, which equates to Neutral in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

HIVE has a C grade for Momentum, Quality, and Value. The stock is currently trading below its 50-day and 200-day moving averages of $3.34 and $3.05, respectively, indicating a downtrend in sync with the Momentum grade.

HIVE’s 76.56% trailing-12-month net income margin is 1092.6% higher than the 6.42% industry average. However, the company’s trailing-12-month levered free cash flow margin is negative 101.96%, justifying the Quality grade.

In addition, the stock’s 5.11 forward Price/Sales multiple is 28.1% higher than the 3.99 industry average, justifying the Value grade.

Of 77 stocks in the Technology – Services industry, HIVE is ranked #36.

Beyond what I have stated above, one can view HIVE ratings for Growth, Sentiment, and Stability here.

Bottom Line

Cryptocurrency regulations are expected to take shape this year as government agencies strive to lay down guidelines for trading crypto in the United States. On the global front, various countries, including China and India, have undertaken a strict crackdown on cryptocurrencies. In contrast, other countries such as El Salvador and Venezuela have embraced cryptocurrency as a legal tender.

While HIVE is well-positioned to benefit from a cryptocurrency rally, we think investors should wait until governments lay down a clear framework regarding such digital assets before investing in the stock.

How Does HIVE Blockchain Technologies Ltd. (HIVE) Stack Up Against its Peers?

While HIVE has a C rating in our proprietary rating system, one might want to consider looking at its industry peers, NetScout Systems, Inc. (NTCT) and Celestica, Inc. (CLS), which have an A (Strong Buy) rating.

HIVE shares were trading at $2.40 per share on Thursday morning, down $0.13 (-5.14%). Year-to-date, HIVE has declined -9.09%, versus a -1.15% rise in the benchmark S&P 500 index during the same period.

About the Author: Aditi Ganguly

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...

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