Vancouver-based cryptocurrency mining firm Hive Blockchain Technologies Ltd. reported bigger losses in its latest quarterly earnings report published Tuesday. The net loss of US$90 million in the quarter that ended on Dec. 31 was a stark contrast to the net income of US$51.2 million in the same period the year prior.
The company attributed this largely to Ethereum’s Merge, which happened last September, and lower Bitcoin prices. The Merge upgrade saw the network ditching the mining-based proof-of-work consensus mechanism and transitioning to a proof-of-stake model. This was the first quarter in which Hive did not mine Ether.
“Hive navigated this quarter by selling energy back to the grid, repurposing our GPUs to mine Bitcoin, and upgraded our fleet of ASICs to improve our overall efficiency,” Aydin Kilic, president and chief executive officer of Hive, said in the report.
Hive’s shares on the Nasdaq closed down 9.5% on Tuesday at US$3.05, a 67% drop from US$9.35 a year ago. This is indicative of the difficulties the mining firm has faced due to the Ethereum Merge and lower Bitcoin prices.
The Ethereum Merge has been a major disruption to the mining industry, as it has made mining Ether unprofitable. Ethereum miners now have to find new ways to make money, such as by selling energy back to the grid or repurposing their GPUs to mine Bitcoin.
Hive has taken steps to adapt to the Ethereum Merge, such as upgrading its fleet of ASICs to improve its overall efficiency. This has allowed the company to stay afloat, but it has also been hit hard by the lower Bitcoin prices.
The lower Bitcoin prices have made it more difficult for Hive to make a profit, as it is more expensive to mine Bitcoin than it was before. This has put Hive at a disadvantage compared to other miners, as they can still make a profit from mining Bitcoin despite the lower prices.
The Ethereum Merge and lower Bitcoin prices have had a major impact on Hive’s bottom line. The company has had to adapt to the changing market conditions and find new ways to make money. However, it is clear that Hive is still struggling to stay profitable in the current climate.
Hive’s struggles are indicative of the difficulties that the cryptocurrency mining industry is facing. The Ethereum Merge and lower Bitcoin prices have made it more difficult for miners to make a profit, and many are having to find new ways to stay afloat.
It remains to be seen how Hive will fare in the coming months, but it is clear that the company is facing an uphill battle. With the Ethereum Merge and lower Bitcoin prices, Hive will have to find new ways to make money if it wants to remain profitable.
