管理層發言
Hello, everyone. Welcome to today's webcast on HIVE Digital Technologies Financial Results for the Quarter Ended September 30, 2024. My name is Nathan Fast, Director of Marketing and Branding at HIVE, and I'll be your moderator for today's call. Before we get started, on Slide #2, I would like to briefly note the disclosures for today's presentation. Except for statement of historical fact, this presentation contains forward-looking information within the meaning of the applicable Canadian and U.S. securities regulations. These forward-looking statements are based on expectations, estimates, and assumptions as of the date of this presentation. Further, in addition to discussing results that are calculated in accordance with International Financial Reporting Standards, or IFRS, we will also make references to certain non-IFRS financial measures such as adjusted EBITDA. For more detailed information on our non-IFRS financial measures, please refer to our management's discussion and analysis of our financial results that was published earlier today, which can be found on our Investor Relations website. On the next slide, I'm pleased to introduce today's presenters: Frank Holmes, Executive Chairman; Aydin Kilic, President and CEO; and Darcy Daubaras, Chief Financial Officer. I would now like to hand the presentation over to Mr. Frank Holmes for a macro recap of the quarter.
Thank you, Nathan, and thank you to shareholders. I'm going to try to give a macro overview and then turn over the more granular material information to the HIVE team, Darcy and our CEO, Aydin. I always like to start this off because it's been a heck of a week since the elections. I think our stock has surged about 56%, but it's a non-event for the DNA of our volatility over a 10-day period to be up or down 17%, which is significantly higher than the S&P 500, about 5 times. And the same thing on the down corrections, the volatility is much greater. MicroStrategy used to have less volatility and now it has more volatility than what we have for shareholders. One of the big factors driving all this, besides the enthusiasm of President Trump winning, relates to many alternative asset classes like Bitcoin and the all-time rising global debt. As the all-time global debt rises, more and more countries are greatly concerned.
In particular, you see the Central Banks are buying gold. The U.S. government may now start buying Bitcoin as a policy. All that enthusiasm relates to alternative assets and climbing global debt, and I don’t see anything changing this for this century because too many of the G20 countries are still practicing what's called Modern Monetary Theory, which believes that you can use monetary policies to right-size an economy. You can throw any type of socialistic policies, just print more money. And that really is a process and a stepping stone for devaluing the currency. This is what makes Bitcoin, particularly HIVE, well-positioned amid rising debt levels. One of my favorite books is called The Wisdom of Crowds. It emphasizes times when the crowds are very wise, which is the opposite of Groupthink, where everyone is reading from the same textbook or news source. We see this in many G20 countries.
The stock market is a mechanism that averages out wisdom, and it’s usually 6 months ahead of economic activity. We’ve seen a positive response to President Trump winning, especially in the financial sector, with the SEC creating a backlog for capital formation, IPOs, SPACs, funding, etc. A lot of major banking firms feel there will be increased capital formation, which has led to a boom, with HIVE showing up as an alternative asset class that participates in that boom. When you're a Bitcoiner, America voted for Bitcoin. This is evident across state lines, among Democrats and Republicans, with many Democrats supporting Bitcoin. This is very positive for the ecosystem and thought leadership in America regarding Bitcoin. We're seeing that 99.9% of Bitcoin addresses are now in profit, which is psychologically very important. HIVE took the lead in sponsoring education for Bitcoin magazine and we are witnessing unprecedented fund flows into ETFs and separate wallets for Bitcoin.
The psychology behind this is incredibly positive for our industry. However, one challenge is the Bitcoin hash rate has risen, meaning profit margins are not expanding as quickly despite Bitcoin rising. That's why we issued a press release today about increasing our exposure to buying Canaan machines that are much more energy efficient so that we can maintain our ambition of keeping this at 1% of the footprint of Bitcoin mining and expanding over the next 12 months to reach 2% of the global network. Trump is America’s Bitcoin President. This was celebrated in Nashville, and I want to thank all the Bitcoiners who supported the President and Democrats who were also supportive of the Bitcoin ecosystem. I believe this influenced many marginal voters who shifted their support to Republicans, while supporting Bitcoin, and that contributed to that outcome. Bitcoin has climbed to record highs following Trump's win, with the Republican Party vowing to defend the right to mine Bitcoin.
This is the most pro-crypto Congress we’ve seen, and this bodes well for Bitcoin prices, which is very positive for HIVE since we not only mine Bitcoin using green energy, we also hold as much Bitcoin as possible. HIVE operates in 9 time zones and 5 languages. That versatility is impressive as we work in many time zones and languages while maintaining top efficiency as miners. We have many industry milestones: first to go public as a crypto mining company in September 2017, first to develop our own ASIC mining rig, first to buy data centers and own the real estate, which gives us a competitive advantage for the AI boom and build-out, first to focus on green energy, first to balance the grid in Sweden, and first to have an AI strategy utilizing GPU chips as we pivot from Ethereum mining to the AI universe. HIVE's mission is to integrate the future of computing with the climate to promote sustainability and environmental consciousness.
We utilize green energy from Canada, Iceland, Sweden, and soon Paraguay, with low electricity costs, low temperatures, and fast internet connections. A visual shows our data center in Sweden, situated just south of the Arctic Circle among our 5 data centers, enhancing operational efficiency. In Lachute, just north of Montreal, we mine Bitcoin using 30 megawatts of electricity. We heat a liquid that can heat a significantly larger building just via the same electricity, showcasing our leadership in recycling energy. We're heating a 200,000 square foot building with a system utilizing the same molecules of energy, which is an innovative approach to energy utilization. We're proud to be leading the concept of reusing electricity efficiently. As reported, HIVE is listed in Canada, NASDAQ, and Germany. As of September 30, 2024, we have 118 million shares issued and outstanding, with options totaling 3.4 million and RSUs comprised of 3.8 million.
Looking ahead, we target Bitcoin mining expansion in Paraguay, where we expect to more than double our production and enhance HPC for AI initiatives in Canada and Sweden. Earlier this year, I met Jensen Huang, NVIDIA's CEO, and we made significant investments to acquire powerful GPUs as we build out our data centers. Our recent project in Paraguay aims for 100 megawatts, which we announced earlier, showcasing our commitment to green hydroelectricity as our core approach. We aim to ensure that the electrical company gets paid in a timely manner every month in U.S. dollars while creating a win-win for both HIVE shareholders and the government. HIVE excels with the lowest G&A in the industry, thanks to our disciplined approach and commitment to ensure cash flow return on invested capital. This visual demonstrates how we managed our compensation and RSUs responsibly, showcasing our operational excellence and value proposition for shareholders.
We've seen research coverage pick up from various reputable firms, and analysts predict a target average of $6.25, with even higher projections from Stifel believing our market value could reach $9, highlighting our strategic importance.
All right, Frank. Thank you for that excellent macro and strategy overview. Now I'm going to kick off an executive summary for this quarter, which ended on September 30. We ended this quarter with $22.6 million of total revenue, of which $20.8 million was from our Bitcoin mining business unit and $1.9 million came from our HPC business unit, where AI compute runs on our fleet of NVIDIA GPUs. Despite the bearish mining economics, with hash prices between $40 to $50 per petahash per day, we generated a commendable gross operating margin of $1.1 million. We also mined over 2,600 Bitcoin with green energy, which speaks to the sustained performance of our operations. We are pioneers in using green energy for Bitcoin mining, leading the sector with best-in-class uptime and efficiency. We achieved 5.6 exahash in October, and we have ambitious plans to expand to 12.5 exahash by the summer of next year.
We maintain a disciplined capital allocation strategy and strive for optimized ROI, ensuring all investments are made to be accretive to our results. Frank and I are the longest-standing executives in this sector since 2017, having weathered the ups and downs. HIVE was the first publicly traded Bitcoin mining company, and with that experience, we're excited about the next bull market, which will be our third. Our Paraguay expansion is particularly exciting as it will enhance our power and growth potential. We provided quarter-over-quarter projections detailing our hash rate and efficiency improvements. By Q1 of 2025, we target achieving 6 exahash using our recent 6,500 Canaan machines. As these upgrades roll out, we expect to significantly boost our output and efficiency, ensuring we remain competitive in the evolving landscape of Bitcoin mining. The recent Bitcoin price rally has been beneficial for HIVE, with an increase in the value of our HODL.
At the end of the reporting period, September 30, our HODL was valued at $165 million, and as of November 11, that value increased to $226 million due to the rising Bitcoin price, indicating a significant upside for our shareholders. Our strategic capital allocation has proven effective, and our technology infrastructure has positioned HIVE favorably in the sector. While we cannot predict Bitcoin prices, historical data suggests that as Bitcoin enters bullish phases post-halving, share price rallies may significantly exceed Bitcoin price increases due to the volatility unique to crypto mining stocks. In addition to our Bitcoin mining, we’ve also established a successful AI compute business with a recent revenue of $1.9 million. Our goal is to reach an annualized revenue in that segment of $20 million and to continue scaling our operations, which include working on larger contracts and ensuring high efficiency.
Great. Thank you, Aydin. At this point of the presentation, I will take you through a snapshot of the period, looking at the most recently completed quarter and some financial indicators. We are providing certain non-IFRS measures in the presentation today, as mentioned earlier. These measures provide investors an improved ability to evaluate the underlying performance of the company and may not be comparable to other issuers. Moving on to the next slide. This quarter's results reflect the impact of the halving event earlier this year, along with rising Bitcoin difficulty rates. We recorded $22.6 million of revenue and $5.6 million profit in adjusted EBITDA, driven by 340 Bitcoin equivalents mined. Our balance sheet remains healthy, with $7.2 million in cash and $165.2 million in digital currencies, primarily Bitcoin. Additionally, our strategic investments increased significantly, which strengthens our overall position.
We pride ourselves in maintaining a strong net cash position, complemented by working capital to support our growth objectives. Year-over-year, our revenue for this quarter was stable, at $22.6 million compared to $22.8 million last year, reflecting an average Bitcoin price that has more than doubled from the prior year. Nonetheless, this increase has been offset by the average Bitcoin difficulty rising and the halving event impacting our margins. When comparing the Q2 revenue with Q1, our revenue decreased significantly due to the halving's effect on production and Bitcoin price. Our gross operating margin decreased considerably as well, impacted directly by the halving event and the continuous increase in Bitcoin mining difficulty. As we reflect on our adjusted EBITDA, we indicated $5.6 million for this quarter compared to $14.9 million in the prior quarter. Overall, while we acknowledge the challenges posed by external factors, we remain committed to sustaining our operations and adhering to sound financial practices.
Thank you, Darcy. That concludes the presentation for today. We will now begin the question-and-answer portion of our call. I see we have a few hands raised. I will ask to unmute Bill from Stifel.
分析師問答
Congrats on breaking ground in Paraguay. For my first question, I was hoping you could share an updated capital allocation strategy as it pertains to HPC initiatives. And I'm curious to hear how that's weighing on management's mind with the recent rise in mining economics?
Hey Bill, it's Aydin here. Thanks for that question. We've been focusing on the infrastructure side of the HPC business earlier this year. We noted a pipeline for converting existing crypto mining assets and data centers that we own. Right now, we are working on a few things we haven't specifically commented on yet, so that's about as much as I can say. However, both business units are attractive economically.
As a follow-up, can you provide more insight into what the gross margins outlook could be for the HPC side? Has your targeted margin profile shifted at all?
I think what's going to happen is that the latest hardware will impact pricing. The indicative pricing for H100s and H200s is around $2 to $2.50 per hour. When it comes to upgrading to new gear, you could possibly consider margins of upwards of $3 an hour with better technology. However, the market will ultimately determine the pricing based on demand and performance capabilities.
I wanted to ask about Paraguay. Now that President Trump is in office, has his government’s approach to Bitcoin mining shifted? I recall that there was a tariff increase that capped expansion plans to 100 megawatts. Is there potential to grow that after the first site is completed?
We think that Paraguay is a very exciting business jurisdiction. We've just broken ground and plan to complete the first 30 megawatts in Q2. We've done business in many global jurisdictions and understand the regulatory headwinds. With the right strategy, there’s always a way forward, and I have a positive outlook on Paraguay.
Thank you for that question, Bill. I'll next ask Lucas from B. Riley to unmute.
This is Nick Giles asking questions on behalf of Lucas. Frank, Aydin, thanks for the comprehensive presentation. I'm curious about your thoughts on organic versus inorganic growth regarding M&A in the space, especially with several peers transitioning to HPC. Does that make consolidation more or less likely?
M&A has been an ongoing discussion since the sector's inception. The trend appears to reflect more interest in assets rather than teams unless you find a truly exceptional team. We’ve seen significant developments already in the market, and with good assets, there might be opportunities for M&A that aligns with our direction.
Next, we'll go to Darren from ROTH.
If I could, I'd like to ask a two-part question. How have your strategic thoughts changed regarding Bitcoin and digital infrastructure in light of the election results? And with the ground-breaking in Paraguay, how are you thinking about adding usable power to your portfolio?
The Trump administration has been very pro-Bitcoin, and we welcome that attitude. As for our future power options, we are always evaluating opportunities to grow while ensuring effective capital allocation. More updates will follow as we progress.
Thanks for that question, Darren. Next, we will go to Brett from Cantor.
Your target of 2% of the Bitcoin mining network is that a firm percentage? Given your target of 12.5 exahash, which is less than 2% of the current network hash, how should we consider your long-term targets concerning total network hash?
That’s a great question. I understand that the 2% target might imply more than 12.5 exahash. However, we have secured construction and planned construction for this site, and that’s what we’re focused on delivering. If there are opportunities to expand beyond 12.5, we will definitely explore those as they're viable.
We have time for one more question. We will give the floor to Mike from Northland.
Can you comment on the demand for your 30-megawatt HPC site and what type of customers you're engaging with? When do you expect to break ground?
For modeling purposes, reaching 2% of Bitcoin network would imply about 9 Bitcoin a day. Regarding our HPC site, we are evaluating client demand and planning in reference architecture clusters, following NVIDIA's designs for scaling. There is much to consider before we break ground.
Thank you for your questions today. That concludes our Q&A session and HIVE's Q2 2025 earnings call. Thank you to our attendees and analysts for joining us. We look forward to speaking with you again soon.