$HVBT – HIVE Bitcoin & Ethereum Mining Company Goes LIVE as $HVBT. Should You Invest?
Price Targets for 2021-2022
Tomorrow (July 1st) $HVBTF becomes listed on the NASDAQ as $HVBT, HIVE Blockchain Technologies. This article will discuss why I believe it has the potential to be a $30 stock, while it currently trades a little above $2. I am not a financial advisor, this is not financial advice, and this is strictly my opinion and not an inducement for you to make a specific investment.
When looking at Mining stocks, it is important to keep in mind their Hash Rate (the rate at which they generate Crypto assets or Mining Capacity). HIVE has recently entered into an agreement to purchase a large sum of miners through 2021, significantly increasing its output, let’s compare it to $MARA.
Yahoo reports, “The addition of these 10,500 next-generation miners, increases HIVE's aggregate operating hash rate from Bitcoin mining to an estimated 2.474 EH/s or 2,474 PH/s by the end of 2021.” The timeframes are as follows, “This equipment is expected to be delivered in 5 tranches, with 1,000 miners in June, and 2,000 miners in each of the months of September, October, November, and December 2021.”
For Ethereum, “in addition to 2,725 Gigahash per second (GH/s) of GPU operations mining Ethereum”.
For comparison, Nasdaq reported “Marathon’s current mining fleet consists of 2,560 miners generating 248 PH/s”, on February, 1st 2021.
When this news broke on February 1st, $MARA traded at over $21. At the start of next year, HIVE will essentially have over 5x the hash rate MARA did when it traded at $21, not to mention the Ethereum mining which is another source of income that has appreciated well. But don’t get too excited yet, we’re not done.
The current stock price of MARA, and RIOT for that matter, are largely based on their fundamentals as a company, but also their aggressive expansion into the space, acquiring new real estate for hosting larger amounts of energy, and acquiring other companies to strengthen their capacities and balance sheets. We won’t address the successes of these two in-depth, just recognize them, and that HIVE will have to do the same to have a shot at reaching half of their potential. Let’s look at the fundamentals.
$MARA pivoted a failing business model, as did $RIOT and $SOS. They did get a public persona quicker than $HVBTF and focused entirely on Bitcoin. If you go back further than 2020, you can see that where HIVE currently sits is right on path with where MARA was a few years ago, but MARA only recently adapted to prominent Bitcoin Mining, and we are talking about the share prices rising for HIVE to early 2021 prices for MARA, so we will stick with the END of 2020 numbers to see how far we are.
Total Assets. MARA had a good earnings call for Q4 of 2020. Bitcoin held around $11,000 and the start of Q4 and finished the Quarter approaching $30,000. The majority of income represented of MARA’s balance sheet, at the time, was appreciating assets. This allowed their assets to surpass $313 Million, compared to the $66 Million held by HIVE at the end of Q4, 2020.
Total Debt. MARA cleaned its balance sheet and showed real strength by removing a lot of its debt. Debt is not necessarily a bad thing, typically, when you see a reasonable amount of debt, it can be attributed to expansion. In the case of HIVE, we see $6.8 Million of debt, but we also know they are acquiring over 10,000 mining rigs at a time when investors are being overcharged for refurbished rigs that had been previously shelved. This demand undoubtedly shoulders much of HIVE’s debt and can be seen as a push towards growth, as opposed to a burden. A good Asset-to-Debt ratio is 0.4 or below (40% or below). HIVE currently sits at 10% as of Q4 2020. So, healthy debt shows growth.
Common Stock. 99,480,000 / 363,880,000 = 0.27. There are a lot more shares for HIVE than there are in MARA. Theoretically, we can take this 27% and apply it to the Share Price of MARA on February 1st which was $21.05. That leaves us with a Share Price of HIVE at $5.68. Now, this is assuming all things are equal, which they aren’t because we have already discussed that at this time, MARA only held about 2,500 mining rigs, whereas, by the end of 2021, HIVE will have well over 10,500.
Revenue – Operating Costs, and Net Income. We can see that HIVE actually has higher revenue at this point, but significantly higher Operating Costs, which they announced at the start of June would be CUT IN HALF. MARA nets less income than HIVE, even with the outlandish Operating Costs. As we have discussed, much of MARA’s rise on the balance sheet was due to appreciating assets, not income.
Putting It All Together
HIVE prides itself on low Capital requirements that allow them to hodl coins, allowing for them to maximize profitability. They do sell some of these assets to generate income, my best estimate being that they sell more than MARA does, or probably RIOT, which allows them stronger cash flow, while also being able to realize gains from appreciation.
If we 5x the value based on mining capacity at the given time frames, as HIVE would be approaching if compared to the February timeframe (not now), then we would have a Share Price of $28.40. HIVE’s debt is healthy, so I would not deduct anything from this value involving the debt. HIVE only holds 21% of the assets MARA did at this time, so if we apply that to the Share Price then we have $22.44.
This does not account for HIVE having a higher Net Income, nor does it account for the 50% reduced Operating Costs of HIVE, an inevitable Bitcoin ETF, the Ethereum Mining, nor the aggressive push into more facilities we will see through purchases and acquisitions. I believe a strong case can be made for HIVE to be over $20 as we approach 2022, and an even stronger case to be made for a successful HIVE, that hits on all cylinders, and achieves over $30 for 2022. It will require strategic initiative, be contingent on the performance of its assets, and a wonderful public narrative. Obviously, these are vastly different stocks with varying free-floats. I do NOT think HIVE will overtake MARA or RIOT as they grow. If HIVE were to achieve a $25-$30 Price, I would expect the other two to be around $45-$60, possibly higher. Do you think they can do it?
If you like this article, please take a short moment to like, subscribe, and comment so we know what content appeals to our audience. If there is something you disagree with, let us know in the comments so we can do better next time. Thanks for your support! Follow the YouTube Channel: Crypto & Stocks with Shawn