VANCOUVER, March 30, 2020 /CNW/ - HIVE Blockchain
Technologies Ltd. (TSX.V:HIVE) (OTCQX:HVBTF) (the "Company" or
"HIVE") is pleased to announce that it has signed a definitive
agreement (the "Agreement") to acquire a dedicated cryptocurrency
mining operation with access to 30 megawatts ("MW") of low cost
green power at a leased facility located in Lachute, Quebec (the "Facility") from
Cryptologic Corp. for a total purchase price of approximately
C$4.0 million (the "Acquisition").
Pursuant to the Agreement, HIVE will satisfy the purchase
price through the issuance of 15,000,000 common shares ("HIVE
Shares") to Cryptologic at a deemed price of C$0.20 per HIVE Share and C$1,000,000 in cash, subject to a working capital
adjustment.
"This is an important strategic acquisition for HIVE that
diversifies our business significantly, and we are making it at an
opportune time at an attractive valuation for our shareholders,"
said Frank Holmes, Interim Executive
Chairman of HIVE. "The Acquisition provides us with an advanced,
operating Bitcoin mining facility ready to transition to next
generation mining hardware with access to some of the lowest cost
electricity on the planet. The cost of US$95,000 per MW is less than half the industry
standard build cost per MW.
"Additionally, the Acquisition provides us with direct control
of our destiny, including significant capacity for expansion and
flexibility for our future operations," added Mr. Holmes. "Along
with our recent assumption of full control of our Swedish
operations and planned expansion there, and the recent suspension
of our cloud mining operations, it is consistent with our focus
over the past 18 months to strengthen our operational control of
HIVE including improving transparency, accountability and financial
controls, and improving our operational efficiency including
optimizing our cost structure to set the foundations for profitable
growth. In addition, it is in line with the Company's green energy
strategy as the Facility is powered entirely by renewable
hydroelectricity, thereby maintaining our 100% green energy powered
operations globally."
The Acquisition will more than double HIVE's total available
power capacity globally to approximately 50 MW, placing it among
the largest of any publicly-listed cryptocurrency miner, and
provide significant diversification to the Company's business both
geographically and by blockchain network. HIVE's European
GPU-mining operations are currently mining on the Ethereum network,
while the Facility in Quebec is
able to support miners on the Bitcoin network.
The fully operational, state-of-the-art Facility features
US$0.04/kWh electricity costs and its
primary assets include 30 MW of HVAC and electrical infrastructure
that is unique to cryptocurrency mining, triple redundancy systems
for power and internet connectivity, operational staff, and
approximately 14,000 Bitmain S9 miners that are currently
installed, which provide about 173 Petahashes of SHA 256 Bitcoin
mining computing power and utilize a portion of the Facility's
power capacity. Due to the Facility's low electricity prices, these
miners generate positive gross mining marginsi under
current market conditions. However, the value of the Acquisition is
based primarily on the Facility's power capacity and cryptocurrency
mining assets. HIVE intends to invest in next generation miners and
potentially act as host for third-party miners to maximize
utilization of the Facility's power capacity. The Company also
anticipates exercising an option to extend the term of the Facility
lease for an additional five years commencing on or about the
closing of the transaction.
The Acquisition has been approved by HIVE's Board of Directors
and the board of directors and the shareholders of Cryptologic, and
remains subject to customary closing conditions including receipt
of regulatory approvals. The Acquisition is expected to close on
the date that is the later of: (a) Friday
April 3, 2020; and (b) the date that is two business days
after the date that the TSX Venture Exchange provides conditional
approval of the transaction. Following the Acquisition, Cryptologic
will own approximately 4% of HIVE's common shares. The HIVE Shares
are subject to customary resale and transfer restrictions.
HIVE is currently one of the world's largest public miners on
the Ethereum blockchain and this acquisition places HIVE among the
world's larger publicly-listed miners of Bitcoin. The newly
acquired Bitcoin mining facility in Quebec diversifies the Company's existing
portfolio, which includes a facility in Sweden that comprises the bulk of HIVE's
Ethereum-focused GPU mining operations and a smaller
Ethereum-focused mining facility in Iceland. As announced recently, HIVE is
expanding its operation in Sweden
by 20% over the next two quarters.
About HIVE Blockchain Technologies Ltd.
HIVE Blockchain Technologies Ltd. is a growth oriented,
TSX.V-listed company building a bridge from the blockchain sector
to traditional capital markets. HIVE owns state-of-the-art
GPU-based digital currency mining facilities in Iceland and Sweden, which produce newly minted digital
currencies like Ethereum continuously. Our deployments provide
shareholders with exposure to the operating margins of digital
currency mining as well as a growing portfolio of crypto-coins.
For more information and to register to HIVE's mailing list,
please visit www.HIVEblockchain.com. Follow @HIVEblockchain on
Twitter and subscribe to HIVE's YouTube channel.
On Behalf of HIVE Blockchain Technologies Ltd.
"Frank Holmes"
Interim Executive Chairman
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this news release.
Forward-Looking Information
Except for the statements of historical fact, this news
release contains "forward-looking information" within the meaning
of the applicable Canadian securities legislation that is based on
expectations, estimates and projections as at the date of this news
release. The information in this news
release about future plans and objectives of the Company,
are forward-looking information, including the proposed acquisition
and benefits of the cryptocurrency mining operation located in
Lachute, Quebec; and the
intentions, plans and future actions of the Company, as well as the
Company's ability to successfully mine digital currency, the
construction and operation of expanded blockchain infrastructure,
and the regulatory environment of cryptocurrency in the United States and other jurisdictions
where the Company may operate.
This forward-looking information is based on reasonable
assumptions and estimates of management of the Company at the time
it was made, and involves known and unknown risks, uncertainties
and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by
such forward-looking information. Such factors include, among
others: the COVID 19 crisis; the transaction described in this news
release may not occur on the terms as proposed and described herein
or at all and, if such transaction is completed, the cryptocurrency
operation may not meet expected performance levels for one or more
reasons; the proposed transaction may not have a
positive impact on HIVE's revenues, or gross mining margin; the
impact of new electrical power rates which could impair
profitability and operating performance; the operation of the
acquired assets may not occur as currently planned, or at all;
expansion may not materialize as currently anticipated, or at all;
the digital currency market; the ability to successfully mine
digital currency; revenue may not increase as currently
anticipated, or at all; it may not be possible to profitably
liquidate the current digital currency inventory, or at all; a
decline in digital currency prices may have a significant negative
impact on operations; the volatility of digital currency prices;
the Company may never realize more efficient operations, a lower
cost structure, or greater flexibility in operation;
risks relating to the global economic climate; dilution;
and other related risks as more fully set out in the
Management's Discussion and Analysis of Financial Condition and
Results of Operations for the year ended March 31, 2019, and other documents disclosed
under the Company's filings at www.sedar.com. The Company
has also assumed that no significant events occur outside of
the Company's normal course of business.
Although the Company has attempted to identify important
factors that could cause actual results to differ materially, there
may be other factors that cause results not to be as anticipated,
estimated or intended. There can be no assurance that such
statements will prove to be accurate as actual results and future
events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance
on forward-looking information. The Company
undertakes no obligation to revise or update any forward
-looking information other than as required by
law.
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i Gross mining margin equates to
income from digital mining less operating and maintenance costs and
is a non-IFRS measure
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SOURCE HIVE Blockchain Technologies Ltd.