Bitcoin (BTC) mining analyst Jaran Mellerud estimated that the Ethereum (ETH) merge might need led to a 40% drop in Hive Blockchain’s income.
Hive simply misplaced its ether mining money cow.
I estimate its revenues to have fallen by 40% as a result of “the merge”. pic.twitter.com/1vq0U6EUze
— Jaran Mellerud (@JMellerud) December 5, 2022
Mellerud highlighted that the mining agency’s ETH enterprise was extra worthwhile than its Bitcoin actions, that means the merge occasion might result in a 60% loss in its working money move.
Hive pivots to ETC and Bitcoin mining
The agency has began mining Ethereum Basic (ETC) to treatment the loss. However its predominant focus is to repurpose its Ethereum mining services for BTC mining and improve capability from 2.8 EH/s to three.3 by February 2023.
With the miner now wanting to enter sustainable Bitcoin mining, Hashrate Index examined its funds to see if it might make this transfer.
Hive funds stay sturdy
Based on Hashrate Index, the corporate’s steadiness sheet seems to be comparatively steady, with solely $26 million in interest-bearing money owed. This implies the corporate doesn’t need to spend a lot on debt servicing and may protect money flows, which is able to assist its liquidity.
In total liquidity, the agency has one of many lowest debt-to-equity ratios amongst public miners and has a fast ratio of three for its steadiness sheet liquidity. Solely 4 different public miners within the high 15 by enterprise worth have a extra liquid steadiness sheet.
Its liquidity is generally in its 3,311 Bitcoin holdings, with solely $8 million in money. On the present worth, Hive’s BTC holding is value $57 million and represents 88% of its liquidity.
The corporate additionally has comparatively sturdy gross margins as a result of its mining operations’ reliance on geothermal and hydro-powered grids. These grids usually are not uncovered to rising vitality prices and have lesser downtime.
Hashrate Index wrote that the agency has been in a position to mine extra effectively, producing between 5% and 30% extra BTC than opponents, primarily due to its constant hydropower provide.
Moreover, the miner has been in a position to maintain administrative prices low in comparison with opponents like Marathon.
In the meantime, the large decline within the worth of Bitcoin, coupled with excessive vitality prices and elevated mining problem, has made BTC mining unprofitable for many miners dealing with increased working prices as a result of debt servicing.