Hive Digital Boosts Bitcoin Holdings by 30% Amid Market Downturn

Hive Digital, a prominent data center infrastructure provider, has intensified its commitment to a long-term Bitcoin treasury strategy. This move comes as the company seeks to capitalize on the recent market downturn to expand its mining capabilities and explore potential acquisition targets. The strategy reflects a broader trend among public miners who are increasingly opting to retain their mined Bitcoin assets.

In a recent interview, Hive Digital’s chief financial officer, Darcy Daubaras, emphasized the company’s focus on retaining a significant portion of its mined Bitcoin. This approach aims to benefit from potential price appreciation, even in the face of steep market corrections, such as Bitcoin’s recent 30% drop. Daubaras highlighted that a long-term Bitcoin holding strategy is preferable to relying on debt or equity dilution for funding, which is a common practice in the mining industry.

Public miners have increasingly turned to equity dilution, issuing new shares to raise capital, as part of a broader deleveraging process. This shift is driven by high interest rates and declining creditworthiness. Without these strategies, miners are often forced to sell their mined Bitcoin to fund operations or expansion. Hive, however, has a more selective approach. While it has sold some of its Bitcoin holdings to fund acquisitions, such as the 200-megawatt facility in Paraguay, it aims to balance growth with long-term success by selectively selling Bitcoin to fund accretive investments.

Hive’s strategy includes adding more Bitcoin to its balance sheet, increasing its “hodl” position to 2,805 BTC in the final quarter of 2024. This approach is part of a broader effort to navigate the challenges of volatile prices, growing competition, and rising electricity and hardware costs. To combat these challenges, Hive has diversified its business model to include AI data centers and prioritized renewable energy sources.

Hive Digital executives have noted that repurposing a portion of its Nvidia GPUs for AI tasks can generate more than $2.00 per hour, compared to just $0.12 per hour for crypto mining. This pivot towards AI and high-performance computing is not unique to Hive; other miners, including Core Scientific, Hut8, and Bit Digital, have also diversified their income streams to include AI. This trend was emphasized in an October mining report, which suggested that less profitable Bitcoin mining may explain the rising trend of mining companies diversifying their income streams to include AI.

The cost per mined Bitcoin has essentially doubled following the April 2024 halving, making diversification even more critical. High-performance computing and AI applications are increasingly contributing to miner revenues, providing a predictable revenue stream to buffer against mining volatility. This diversification strategy is seen as a key to long-term success in the mining industry, as it allows companies to navigate the challenges of a volatile market and ensure sustainable growth.