Crypto miner HIVE Blockchain reported significant losses in its latest quarterly earnings report. While the company earned $14.3 million in Q3, ending December 31, 2022, by mining 787 Bitcoin.
According to the press release, the loss in revenue is due to Ethereum’s Merge, which caused the company to lose the higher margin it had been making on Ethereum mining.
The average Bitcoin prices this quarter decreased from the prior quarter by approximately 15%, adding to the overall losses. However, it realized a profit from mining operations through hedging energy contracts, selling power back to the grid, and optimizing its operating capacity.
HIVE notes that its production of Bitcoin this quarter represents a 13% increase from the same period last year, reflecting continued growth in the company’s operating hashrate. The increase in the quantity of production is due, in large part, to the completion of the company’s New Brunswick data center campus.
HIVE’s Strategy: No Costly Loans Or Pledged Bitcoins
Despite the losses, HIVE believes that its strategy will help it navigate through the ongoing crypto winter. The company has not borrowed expensive debt against its mining equipment or pledged its Bitcoins for costly loans, and its balance sheet remains healthy to weather this storm.
HIVE asserts that its low coupon fixed debt, attractive green renewable energy prices, and high-performing energy-efficient ASIC and GPU chips will help it navigate through difficult times.
The company’s President & CEO, Aydin Kilic, stated that HIVE had skillfully navigated the digital asset mining industry in a post-Ethereum merge period when many questioned how it could continue to generate profit from operations.
He added that the gross mining margins of $3.6 million in this quarter have answered these questions during a time when many other crypto miners are struggling for solvency.
Additionally, HIVE achieved a gross mining margin of $3.6 million for the quarter, a 77% decrease over the prior quarter of $15.9 million due to the loss of Ethereum revenues from the Merge and lower Bitcoin prices.
Significantly lower average cryptocurrency prices predominantly drove this decline in gross mining margin during this period, which negatively affected the company, as well as the entire Bitcoin mining industry.
On a relative basis, HIVE has been able to mine with healthy profit margins during periods of market volatility because of being globally diversified and enjoying attractive power costs in Sweden, Iceland, and Quebec.
Furthermore, the company’s average cost of production per Bitcoin was $13,599 for the quarter ending December 31, 2022, a 37% increase in cost from the previous quarter ending September 30, 2022.
The company notes that from October 2022 onwards, with Bitcoin mining hash rates and difficulty at all-time highs, it is expected that the cost of production for Bitcoin will increase for the industry at large, as less Bitcoin per Terahash is being rewarded at these difficulty levels.
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