Hive Blockchain (HIVE.V) announced the expansion of its GPU base digital currency mining facility in Sweden today.
It’s only 65 days to the Bitcoin halving, when the block reward drops from 12.5 to 6.25 bitcoins, and companies that haven’t filled out an adequate alternative to bitcoin for their revenue are going to suffer in the interim period where the price and hashrate make mining temporarily more expensive for the reward.
Hive isn’t going to have that problem, though. Their most recent expansion is expected to add an extra 20% to the facility’s Ethereum (ETH) mining base production within the next six months, while improving on its mining margin profile by using the facility’s existing cost base. And that adds to their existing gains from mining ETH.
“This is an opportune time for us to expand our Ethereum mining capacity and gross mining margin profile at a relatively low capital investment. We have full visibility into our Sweden facility build out costs after we assumed 100% control of our operations last year and entered into direct agreements with suppliers and service providers. Since that point, we have improved the efficiency of our mining rigs and significantly lowered our operating and maintenance expenses in Sweden,” said Frank Holmes, Hive’s interim CEO.
For the uninitiated, ETH is the second most valuable coin and first among altcoins. Its claim to fame isn’t that of a medium of exchange like Bitcoin (although you can), but what you can do with it, which is execute smart contracts and build autonomous organizations, businesses and applications. It’ll never be Bitcoin’s equal in terms of raw price, but it’s still the go-to for developers seeking their Web 3.0 fortune.
Bitcoins (and many altcoins) are mined using ASIC-chips, or application specific integrated circuits, which dedicate computing power to one process and once dedicated cannot be removed from that process. That way, if the price of Bitcoin ever drops below a certain threshold and it becomes unprofitable to mine, the wall-to-wall servers that constitute ASIC-rigs become little more than ship anchors or expensive paperweights. The only benefit that GPU’s have over ASIC-rigs is that the computing power can be diverted to other processes (like playing video games, or mining alternative coins) making an energy-saving pivot possible in the case of a drop in coin-price.
“Our decision to utilize GPUs as opposed to ASICs to mine Ethereum is for two reasons. It is anticipated the Ethereum network will implement Progressive Proof of Work this year, which would effectively eliminate ASIC mining on the network thereby increasing the relative efficiency of GPU mining facilities. Additionally, GPUs provide us with flexibility to identify and focus these computing resources on other existing and new cryptocurrencies if they become more profitable to mine, or for other high efficiency computing applications,” said Holmes.
HIVE’s facility in northern Sweden is where the company operates their GPU mining rigs. They use hydroelectric energy, keeping with an environmentally friendly green energy strategy. Hive is going to continue to leverage it existing relationships with local energy suppliers and facility operator Blockbase Mining Group, and don’t intend to introduce any extra staff.
“Additionally, we strongly believe in the future of Ethereum mining and are therefore strengthening and maximizing our core operation with this project. Mining market conditions for Ethereum have improved significantly since mid-December, with coin prices and block rewards up and mining hash rate stable,” said Holmes.
Capital expenditures, including additional GPU hardware, are expected to cost approximately $200,000 per additional megawatt of capacity, and will be paid from Hive’s store of cash. This is less than the $3.2 million per MW the company shelled out for the development of the Sweden facility two years ago.