The Canadian miner is launching its high-performance cloud computing business, which is 25 times more profitable than mining.
Crypto mining company Hive Blockchain (HIVE) posted losses in the fiscal third quarter as the switch from the Ethereum blockchain to proof-of-stake validation reduced its mining revenue and gross margin by approximately 50%.
The Vancouver-based firm reported a net loss of $90 million, or $1.09 per share, in the quarter ended December 31, compared with a profit of $51.2 million, or 66 cents. per share, from the prior year, it said in a statement on Tuesday. release. It had a loss of $37 million, or 45 cents a share, in the previous three months. The network was primarily attributed to deterioration from depreciation of mining rigs and chips due to lower cryptocurrency prices, according to the statement.
The last three months of 2022 were the first quarter that Hive did not mine ether after Ethereum’s Merge update in September ended the blockchain’s proof-of-work validation method.
Hive’s fiscal third-quarter revenue was $14.1 million, down about 52% from the prior year, primarily due to the Ethereum merger, higher global hashrate growth, and lower pricing for Hive. cryptocurrencies, according to the statement. Meanwhile, its mining gross margin was also affected by the fall in cryptocurrency prices, as it decreased to $3.6 million or 25% of crypto mining revenue vs. $15.9 million, or 54% of the same period of the previous year.
“HIVE has deftly navigated the digital asset mining industry in a post-Ethereum merger, when many questioned how we could continue to generate profit from operations. This has been answered by our gross mining margins of $3.6 million this quarter, over a time when many other crypto miners are struggling for solvency,” Hive CEO Aydin Kilic, who took office on Jan. 17, said in the statement.
Some of the ways Hive got through the rough quarter is by using some of its graphics processing units (GPUs), previously used to mine ether, to mine other crypto tokens which it then converts into bitcoin. Its post-merger strategy also includes the launch of the HIVE Performance Cloud, repurposing its GPUs to support high-performance computing workloads other than mining.
“This is an evolution of our skill set as a technology company and sets the stage for a new era in HIVE technology service delivery,” Kilic said. The company also sold power to the power grid and upgraded its mining machines to improve efficiency during the quarter, it added.
Under current market conditions, the cloud segment is 25 times more profitable than mining when measured in dollars per megawatt hour or electricity consumption, Hive said Tuesday. Hive expects $1 million in annual revenue on a run rate basis for this line of business.
Shares of the miner fell about 3.6% on Wednesday, in line with mining peers, while bitcoin fell about 2.9% over the past 24 hours, according to data from TradingView.