HIVE - HIVE Digital: Recovery Outlook And Sustainability

2024-01-31 06:52:34 ET

Summary

• HIVE's recovery exceeded our expectations by increasing its Bitcoin network share and Bitcoin production in 2023 when competitors (BITF, IREN, & HUT) failed to do so.
• The primary risks to HIVE's recovery sustainability are the potential losses incurable if HIVE's total mining cost doubles post-halving to $107,400 when the average expected price is $66,000 through 2024.
• HIVE's current Bitcoin production level and Bitcoin treasury cannot sustain such massive losses.
• HIVE is not only unprofitable but is also highly priced at 2.58x adjusted book value, providing insufficient safety to compensate the underlying risks.
• We think that investors should find Bitcoin mining exposure elsewhere.

Introduction

In our previous article, we established our thesis suggesting HIVE Digital's (HIVE) best days are behind it. We showed why HIVE's best-in-class operating efficiency is simply due to a temporal supply shock during the final remaining phases of Ethereum's (ETH-USD) PoS transition. We also discussed the many headwinds facing HIVE's recovery back to pre-PoS ETH levels....

For further details see: