Earnings Labs

HIVE Digital Technologies Ltd. (HIVE)

Q3 2024 Earnings Call· Wed, Feb 14, 2024

$2.32

-5.51%

Key Takeaways · AI generated
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Same-Day

+2.76%

1 Week

-5.30%

1 Month

-31.57%

vs S&P

-35.96%

Transcript

Holly Schoenfeldt

Management

Hello, everyone, and welcome to today's webcast reviewing HIVE Digital Technologies financial results for the quarter ended December 31, 2023. On Slide #2, I would like to briefly note disclosures. Except for statements 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. 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. On the next slide, I would now like to hand the presentation over to Mr. Frank Holmes. Frank?

Frank Holmes

Management

Thank you, Holly, and thank you all shareholders and stakeholders that are involved with the story. Next, please. I always like to start off with a DNA of volatility because it's so important to understand that any emergent country or sector or industry, technology is always going to be much more volatile, and this is a classic to show you that gold used to be much more volatile than the S&P, but now they're the same 1 day or 10 days, whereas Bitcoin is double what gold is in the S&P. But over 10 days, it's plus or minus 7%. And we can see NVIDIA, over 10 days, is plus or minus 10%. That meaning 70% of the time is a nonevent for NVIDIA to go up or down 10% over 10 days. But when you come to Tesla, it's even more, it's 13%. And when you go to MicroStrategy, it's 16%. And when you come to HIVE, which is a trader's dream, it is 25%. And that makes it very challenging not only for investors, but it's also for running the business because we have to deal with the underlying volatility of Bitcoin, but which we do successfully. Next, please. This is a visual to show you the correlation. What's important is that with the basket of these miners, they trade with each other in the correlation and direction of Bitcoin. Next. So we're sponsoring this with Bitcoin Magazine. We have published several important videos on the amount of fundable energy that's out there in the marketplace, monitored by what appears to now be banking lobbyists, by -- and it seems to be the big money center banks and the Bank of International Settlements (sic) [ Bank for International Settlements ] are so concerned and petrified about this Bitcoin…

Darcy Daubaras

Management

Great. Thank you very much, Frank. As usual, at this part of the presentation, I'll be taking you through a snapshot of the most recently completed period, looking at some financial indicators. First of all, I'd like to remind our stakeholders that our earnings are comprised of our operational earnings or cash flow plus our investment earnings, which includes realized and unrealized earnings, which often includes noncash charges. Mark-to-market is an accounting practice that involves adjusting the value of an asset to reflect its value as determined by current market conditions. The market value is determined based on what a company would get for the asset if it was sold at that point in time. Next slide, please. Mark-to-market losses. Our paper losses generated through an accounting entry rather than the actual sale of the security. The swings in additional assets impact paper profits and losses each quarter. So our Bitcoin digital assets do generate unrealized gains and losses each quarter. It's important that our stakeholders and investors understand the differences in operating earnings or losses, in addition to mark-to-market paper gains and losses each and every quarter. Noncash charges is a write-down or accounting expense that does not involve a cash payment. Depreciation, amortization, depletion, stock-based compensation and asset impairments are common noncash charges that reduced earnings but not cash flows. Next slide, please. During our most recently completed quarter of December 31, 2023, which is our Q4 -- or sorry, our Q3 for our 2024 March 31 year-end. In this most recently, we recorded $31.3 million of revenue and a $17.3 million profit in adjusted EBITDA. This was driven by the production of 830 Bitcoin-equivalent mined and increasing Bitcoin prices during the quarter, which we're seeing starting to come out of this bear market. Next slide, please. As…

Aydin Kilic

Management

Thank you, Darcy. It's been a phenomenal quarter for us, and I'm excited to provide a little snapshot into the accomplishments we've had strategically, but also what lays ahead. So I'm going to talk about our HPC and AI business first. It's quite exciting. These are new pictures from our deploy in Montreal. This is a Tier 3 data center. You can see on the left how clean and organized these racks are. This is very different than a crypto mining center. I want to explain to everybody, our AI compute is not in our Bitcoin mine. They're 2 physically different facilities, like hours apart by car. So this is what a Tier 3 looks like. You can eat off the floor. On the right is our first cluster of nodes, we have gotten 96 H100s. These were just installed last week, and they're going to be cash flowing in a couple of weeks as we build out the networking components. And a note on that, a lot of people are talking about buying H100s. But, hey, they don't have any pedigree or experience running GPU clusters, number one; number two, there are so many other components at the infrastructure level that you have to build out that I'm not going to get into details because it's a little bit of a trade secret, and there is a certain level of know-how that is not common in crypto mining. This is in the data center world when you're building high bandwidth, tight elasticity redundant systems. So anyways, it's very exciting. And next slide. Here's why. So we've talked about growing. And we did almost $1 million of revenue this last quarter. But notably, as of the end of the quarter, we actually reached a run rate revenue of $5 million.…