I just analyzed Hive Blockchain's Q3 report. During this quarter, the company lost its ETH mining cash cow.
How has this impacted the former ETH mining giant? Does the company have the financial strength to transform into a full-time BTC miner? Find out in this thread 🧵
Nothing is more critical during a bear market than having a solid balance sheet. A common trait among all the struggling public bitcoin miners is high debt loads, particularly machine-and-bitcoin collateralized debt.
With little debt, Hive is definitely not among these struggling companies.
Hive has among the lowest debt-to-equity ratios of the public miners.
Hive's interest-bearing debt is only 26 million, sparing it from the massive debt service payments that currently plague many of its competitors.
Its insignificant debt service payments let it preserve most of its operating cash flows, which helps the company's liquidity
Hive's balance sheet is also highly liquid, proven by its quick ratio of 3. Only four top 15 public bitcoin miners by enterprise value have more liquid balance sheets.
Hive's liquidity primarily consists of its bitcoin holdings. The company only has 8 million in cash but holds 3,311 bitcoin, making it the fourth-biggest hodler of the public miners. Its bitcoin holdings are worth 57 million, making up 88% of the company's liquidity.
Hive enjoys relatively strong gross margins. The company operates in hydro- or geothermal-powered grids that haven't been that exposed to energy price inflation.
Hive has historically been able to squeeze out between 5% and 30% more bitcoin for its mining capacity than most competitors.
This could be due to the company achieving a higher up-time due to consistent hydropower supply.
Hive has been good at keeping its administrative costs down. The same can't be said about some of its competitors.
Hive just lost its ether mining cash cow.
I estimate its revenues to have fallen by 40% due to "the merge".
The 40% revenue decline after "the merge" is bad enough by itself. What makes it worse is that the defunct ETH mining business was much more profitable than its remaining BTC mining business, meaning that the actual loss to the company's operating cash flows is likely around 60%.
How does Hive deal with the loss of its ether mining division?
The company uses some GPUs for mining Ethereum Classic, but its main focus is repurposing its ether mining facilities to BTC mining. It aims to grow its BTC mining capacity from 2.8 EH/s to 3.3 by February 2023.
Read the full article here:this twitter thread.