HIVE - A Top Canadian Crypto Stock
HIVE Blockchain Technologies is one of the largest digital currency miners listed on Canadian Venture exchange and its market cap recently crossed $1B. Hive operates crypto mining data centres in Canada, Iceland and Sweden. Their key competitive advantages are low working capital requirements and optimally situated data centres.
Looking at the stock chart, HIVE Blockchain is having a rocky ride since its inception in mid 2017. It had a pretty good start but then rolled on the bottom until Nov 2020. For the last six months the stock has been soaring with the recent boom in Bitcoin and other cryptocurrencies. It reached all-time highs of around $7.50 per share, before falling to half that price. Despite this pullback in its share price, Hive is well positioned to generate significant revenues as miners are leveraged to the price of the underlying crypto.
Share price of HIVE has been correlated with Ethereum price historically. Ethereum being one of the most active blockchain with its ability to run smart contracts offer great potential for the long term. A spike in these crypto prices will contribute to a spike in Hive Blockchain’s revenues and therefore translate in to an increase in its stock value. In the last few months HIVE hasn’t kept pace with the increase in Ethereum. So I feel there is enough room for the price to go up in near future provided Ethereum rally continues.
Taking a look in to their financials, they have a solid compound annual revenue growth rate of 55% from 2018 to 2020. This year they are expecting record revenue and has a digital currency mining income of $33.27 million in the first nine months. This is the first year they will be posting a net profit with a year to date of $28.5 million. They also have a very strong balance sheet with $36 million in cash and $60 million in coins. One thing to note is their strategy change in funding operations with the money from shares issued instead of selling mined coins. They also have a favourable pricing environment with the soaring cryptocurrencies.
Apart from the dispute they had with Genesis (ex-operating partner) which is now settled for a 16% stake there are no other overhangs on the stock. One of the major threat for Miners like HIVE is the volatility of cryptocurrencies and the capex spend required in regular intervals to upgrade mining equipment for efficient computing. This business depends heavily on the coin prices going up as a minimum coin pricing levels are required to breakeven.
If you’re looking for a top crypto stock to buy and hold for years, I would say HIVE is one of the best. Its exposure to Ethereum and Bitcoin is what makes it most attractive.
Check out ratings, analysis and investment checklist for HIVE on Stockzilla. https://stockzilla.app/stock/HIVE.V
Disclaimer: This is for educational and entertainment purposes and not financial advice. Please do your own due diligence before buying the stock.