HIVE Blockchain: Ethereum 2.0 Merger Raises Questions (NASDAQ:HIVE)

HIVE blockchain technology (NASDAQ: HIVE) Is less well known in the field of cryptocurrencies due to the fact that it mines Ethereum (ETH-USD), Ethereum Classic (ETC-USD) and Bitcoin (BTC-USD) compared to normal. Is one of the names Focus on one token (usually Bitcoin).When i wrote this Article HIVEBlockchain overcame the pain of tooth growth while actively trying to expand its operation. The company report Concerns about the long-term feasibility of cryptocurrencies. Today, many of these issues have been subsided by the company’s global, well-formed business.

But now, HIVE faces newer and more complex challenges. Today, we’ll take a look at the current status of HIVE Blockchain and explain what investors can expect from the company in the future.

Before you get started, if you need a definition of some important terms about cryptocurrencies, see the Crypto cheat sheet in my Riot Blockchain (RIOT) article. But of course, crypto veterans can skip this section.

Cryptographic mining challenges

Most cryptocurrencies rely almost entirely on tokens mined or purchased in the open market for profit. The problem is that you have to keep your tokens for a long time at a disadvantageous price and without any other source of income for the company to fund its operations. Long-term cryptocurrency bulls will argue that it is better for companies to fund operations through secondary offerings while they wait for the major movements of their respective cryptocurrencies. We have seen some significant dilutions of some of the biggest names that soften the ability of mining stocks to provide sensational movements when the crypto market heats up.This has sparked a lot of controversy as to whether it is wise. Buy tokens or mining stock..The answer to this question has more to do with more than a real miner Bitcoin price. That’s where HIVE stands out. They may not have done their best yet, but inventory will move. In fact, HIVE is sometimes comparable to Bitcoin. The graph below compares tokens to HIVE. In the bullish cycle, you can see that HIVE is a strict reflection of BTC. However, this only acts as a proxy for Bitcoin and is useful for accounts that cannot hold cryptocurrencies.

This is to give investors access to Bitcoin volatility in the upmarket, but we can see that the relationship has diminished over time. This may be due to a relative lack of offering or interest. Stock prices are currently in a serious slump following Bitcoin & Ethereum’s recent sluggish price behavior.

Investors in long-term cryptocurrency mining will instruct you to be aware of these conditions, as dilution occurs fairly regularly in this space, but HIVE is a bit different.

Although they have been diluted and recently discontinued, HIVE is opting for a hybrid approach in that it offers shares and regularly sells Ether in the open market to fund its business. Interestingly, the company is more bullish on Bitcoin and has opted not to sell tokens for the purpose of cashing out at a higher price. This move makes sense as the increasing difficulty has already slowed Ethereum production, and Bitcoin is the most famous token and allows for some truly sensational moves.

Outlook

HIVE is showing strong growth due to its huge investment in hash rates due to its computing power and expansion. The company is at the end of a solid monthly increase, which should signal mining production by the remaining calendar years of 2022.

The significant hash rate increase appears to be set to cool down in mid-2022. This is a logical move given that Bitcoin and Ethereum prices have recently stagnated and Ethereum was actively added to the mining fleet in 2021. The merger also influenced the leadership team’s decisions due to the fact that the dependence on miners seems to be largely eliminated. Miners could move to Ethereum Classic, but this move could do a lot of damage to the Ethereum mining industry.

HIVE is finally making progress in terms of revenue, with significant revenue growth in a row in each of the last four quarters. However, the loss of Ethereum’s mining income poses a serious threat to this trend.

As mentioned earlier, HIVE holds Bitcoin firmly. The company’s huge investment in hashrates seems to be finally profitable, and Bitcoin mining numbers have improved significantly.

As a result, the company’s balance sheet has also been significantly strengthened. With a healthy $ 67 million on hand and the ability to fund operations, there is no need to preemptively dispose of the $ 168 million cryptocurrency war chest for liquidity. Note that the merger of cryptocurrencies is unlikely to hurt Ethereum’s price, so it does not rush to release its position outside of funding operations, offsetting the decline in production due to increased difficulty in raising prices. It is important to do.

HIVE is also beginning to challenge some of the biggest players in the crypto mining space in terms of overall hash rate and Bitcoin production. For a long time, Marathon Digital (MARA) has been a leader in this field, but recent troubles have significantly slowed its progress. Interestingly, revenues that are multiples of market capitalization mean that the HIVE blockchain is somewhat undervalued by its peers, due to the uncertainty surrounding Ethereum mining in the coming months. I understand.

As a result, companies can put on a hat on Bitcoin, which is not risk-free. One of the key risks is the lack of Bitcoin. Due to the increasing difficulty, miners will need to increase the overall hash rate and earn tokens at the same rate (more on this here).

Take away

The HIVE leadership team does everything possible to balance mining goals and financial responsibilities. The signs seem unfavorable, but it is unclear how the merger of Ethereum will affect Ethereum’s mining industry. It’s important to note that the price of Ethereum is probably fine. At stake is an investment in Ethereum’s mining fleet. So far, there have been challenges in developing a merger, but investors need to be aware of negative headlines in the coming months. HIVE has made tremendous progress, but the merger is becoming an influential binary event. This is unlikely to break the company, but negative headlines can lower the stock price. Until then, it would be wise to avoid inventory.