VANCOUVER - HIVE Digital Technologies Ltd. (TSXV: HIVE) (NASDAQ: HIVE) (FSE: YO0), a company specializing in digital asset mining and data center operations, has finalized agreements to establish a new 100 megawatt (MW) digital asset mining operation in Paraguay. The agreements, announced today, include a share purchase agreement (SPA) and a construction agreement for the development of the facility.
The SPA involves HIVE's wholly-owned subsidiary, HIVE Paraguay, and the owners of W3X SA, the target company for the project. An experienced local contractor has been engaged to construct the mining infrastructure, which is expected to add 6.5 Exahash per second (EH/s) to HIVE's global mining capacity, bringing it to a total of 12.1 EH/s.
HIVE's President and CEO, Aydin Kilic, emphasized the utilization of green energy from the Itaipu hydroelectric dam for the operation, aligning with the company's commitment to environmental responsibility. However, he also noted that the company has capped its investment at 100 MW following a decision to turn down an additional 150 MW due to recent fiscal policy changes in Paraguay.
Executive Chairman Frank Holmes highlighted the importance of stable fiscal policies in attracting foreign investment and expressed concerns over a proposed 14% energy tariff hike for Bitcoin data centers in Paraguay. The increase in tariffs and uncertainties in contract durations have led HIVE to reassess its investment plans, which were initially projected to exceed $250 million for multiple projects in the country.
Despite these challenges, HIVE remains committed to contributing to Paraguay's economic growth. The company's investment is expected to provide a significant U.S. dollar revenue to the government-owned utility, contributing to local economic stability and infrastructure development. The construction phase of the project is set to mobilize around 80 workers.
HIVE, which has operations in Canada, Sweden, and Iceland, focuses on green energy-powered data centers and is actively involved in the blockchain industry. The company went public in 2017 and holds a majority of its treasury in Bitcoin.
InvestingPro Insights
In light of HIVE Digital Technologies Ltd.'s recent expansion into Paraguay, investors have been closely monitoring the company's financial health and stock performance. According to InvestingPro data, HIVE's market capitalization stands at $427.31 million, showing the scale of the company within the digital asset mining sector. Despite the company's strides in increasing its mining capacity, it's important to note that HIVE has a negative P/E ratio of -6.74, reflecting challenges in profitability over the last twelve months leading up to Q1 2023.
InvestingPro Tips suggest that HIVE has been facing significant volatility, with the stock price taking a substantial hit over the last week, showing a -12.9% total return. This volatility is a critical factor for investors to consider, especially in the context of the company's recent decision to limit its investment in Paraguay due to fiscal policy changes. Additionally, the company's valuation implies a poor free cash flow yield, which could be a concern for investors looking for companies with strong cash generation capabilities.
Despite these challenges, it's noteworthy that HIVE holds a strong return over the last three months, at 40.94%, indicating some positive investor sentiment in the shorter term. For investors seeking a deeper dive into HIVE's financials and stock performance, there are 12 additional InvestingPro Tips available, offering a comprehensive analysis of the company's financial health and market position.
As HIVE continues to navigate the complexities of international expansion and the volatile digital asset mining industry, these InvestingPro Insights provide a snapshot of the company's current financial metrics and stock performance, which are essential for informed investment decisions.
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