HIVE Digital Technologies Ltd.

Good morning, everyone. I'd like to welcome you to today's webcast reviewing Hive Blockchain Technology's financial results for the three months ended September 30th, 2021. On slide number two, except for the statements of historical facts, this presentation contains forward-looking information within the meaning of the applicable Canadian securities legislation that is based on expectations estimates and assumptions as the date of this presentation. And you can see the corresponding full disclosure up on the screen right now. On slide number three, you will see one of our most popular visuals. We included this last time. It's called the DNA of volatility. And we're always sure to include this table in our earnings presentation, especially following the disclosures, because it's just a really great reminder to investors and shareholders on just how much various asset classes can move up or down. over a one-day and 10-day timeframe. And as you can see here, the volatility of Bitcoin and Ethereum is much greater than the S&P or gold stocks. And then of course, if you look at Hive, it's even more volatile and that's because we mine both Bitcoin and Ethereum. If we move on to slide number four, I'm pleased to welcome the presenters for today's program, Frank Holmes, Executive Chairman, Darcy DeBarris, Chief Financial Officer, and Aiden Killick, President and Chief Operating Officer. Next, we will have guest presenters today, which we are really excited about, representatives from DeFi Technologies, which owns 4.9% of the company, And then Network Media Group, which Hive owns 3.4% of the company. And then if you move to slide number six, representing DeFi Technologies for today's presentation is Rebel Star, Executive Chairman and CEO. And on the next slide, representing Network Entertainment for today's presentation, Derrick Murray, Producer, Director, CEO. and Tom Lombardi, Strategic Advisor for NFT R&D Research. On the next slide, I would like to hand it over to Frank Holmes, Executive Chairman for Corporate Update.

Thank you, Holly. Well, this is a recent magazine, Real Assets Advisor, and it talks about real estate to gold, but the next big thing is Bitcoin and Hive being where it is as a position in that space. So I thought this was fitting because it really is our big growth, if you take a look at it, as I walk through the story today is Bitcoin. Next, please. Bitcoin mined and hodled by high continuous momentum. Due to the BTC halving, it fell to 88. And then as we increased our footprint, our production, which Aydin will go into greater detail later in the presentation, you can see that our production has been increasing each quarter. This translates into revenue. Not only is Ethereum sort of the stealth part of our revenue model, but our revenue continues, and we still are, as of the end of September, the highest revenue company of all the crypto mining companies. And a big part of that is not only the huge growth in our Bitcoin production footprint, but in the back of that is the Ethereum, the steady revenue, high gross profit margin of mining Ethereum, particularly in Sweden and also in Iceland. Strong profit and earnings per share. Income was up fivefold. Gross mining margin, Q over Q. If you take a look at the data points, Darcy's going to go into much more explicit detail on this. But what's really important for investors is basic income per share ended September 30th with $0.16. The previous year was $0.03. I like to compare the previous year to many of the peers in the crypto mining space. They were actually losing money. But we made money, and then not only did we make money the previous year, we expanded it dramatically with the rise of Ethereum and Bitcoin pricing, but in particular because we've been increasing our footprint in mining Bitcoin. High strongest revenue growth for quarter end of September. As you can see, we're number one. Number two comes Marathon, then Hut 8, BitFarms, and then Riot. What's most interesting is a big part of that revenue, steady growth in revenue has been from the Ethereum. But I'm going to repeat myself, but the big growth has been Bitcoin. And that's what we did a funding for last week to maintain that momentum. And some of these companies have market caps that are billions of dollars greater, which sort of scratches your head on that relative valuation metric. And so with us, it's just to recognize that we will focus on what we're doing in growing our revenue and having the highest returns on invested capital. Those cash flow returns on invested capital for Hive are the highest of its peers. Next, please. As a quant analyst, Matt Kayser has a company called FSA Valuation Statistics. He talks about ranking all the Canadian companies based on a free cash flow return on invested capital and cash flow return on invested capital And he picks the top tier stocks in each industry. And then as a group, he's a regular on BNN in Canada. And you can click through to watch the video where he talks about his analysis. But he feels that back in October the 19th, that Hive was undervalued and it was worth, at that time, $6.85 Canadian. Next, please. This is sort of an idea of the intrinsic value of this quant model, which is a very common type of discipline, particularly in America, of the quant approach of looking at these stocks. Next, please. Motley Fool's recently said that if you put $1,000 investment in Hyde in January 2020, it's worth over $47,000 today. So we have had nothing but so far, I would say, wonderful stories, especially companies like Motley Fool's, which have a broad distribution in both Canada and in the U.S. and red for their services. analysis of the industry, and they do take complexity and distill it down to simplicity for investors. Recent press release, November the 9th last week, we went out and raised over $100 million financing to expand our BTC production by an additional exahash. And I think I will go more in detail, but that's worth something like six bitcoins a day based on today's difficulty rate. It puts us in a very healthy position to maintain where we're going. And interesting for all you listeners, it was over 300% oversubscribed. And the other interesting part that the Bank of Montreal, which is a major Canadian bank, has for the first time have come in and participated in a financing in blockchain mining. So we're thrilled to be walking with Bank of Montreal and also thanking Stifel for leading this. And CanonCord participating. And CanonCord has done a great job in our ATM, which is now finished from last year. But this year allows us to fast track the momentum for next year. Recent press release on October 27th was our investment. And like we've made other investments, strategic investments, in other companies that are particularly using the Ethereum network. And so we made this a critical investment in the NFT business via Network Media Group, which we'll be presenting today. It's a phenomenal microcap stock that had its challenges during COVID. That's all turned around. They produce high-quality content, which is sold to Netflix or Primetime. It's Muhammad Ali. It's Bruce Lee. And you're seeing billions of dollars going into the NFT business. And the digitization, not just of film, it's also music. Next, please. We also mentioned in October we made the press release. Diana Biggs, who went to the University of McGill, is an engineer that has an incredible resume and has been deeply involved in the crypto space from a very early period for the past 10 years. So she brings tremendous knowledge. She was the head of HSBC Innovation Labs. And we're thrilled to have her here. She was very much involved with DeFi, still with DeFi. And she helped expand their footprint, especially their own ETF in the Nordic countries, which has about a half a billion dollars of Bitcoin in it. And it's a very profitable part of their business. She's joined us for our board of directors in Switzerland. where the company basically is in Zug, Switzerland, is like the Silicon Valley for all the foundations in the crypto industry. Next, please. You know, it's interesting, the ecosystem for Ether is the largest. And it's really important to recognize that this ecosystem includes thousands of altcoins, DAFs, NFTs, stablecoins. And J.P. Morgan, Bank of America, endorsed Ethereum. But for us, it's interesting because it's evaluation metrics and where the big growth is, Bitcoin. And that's what we're focused for is future growth by maintaining our Ethereum footprint because of this big battle between proof of stake and proof of work. And you'll no longer be able to do mining. I've heard this for five years. And it's supposed to be next year. It's going to eventually happen. But we'll see as we continue to mine and we have strategies in the event that proof of stake does take over from proof of work, we're in a very advantageous position with all the investments we've made in this high-performance equipment. Next, please. This is another visual to give you an idea of the depth and scope of the Ethereum ecosystem. Next, please. One of the big challenges, and I will go into more detail on this, but the difficulty continues to rise. It's interesting that it fell for Bitcoin, but it did hardly came off for Ethereum, and Ethereum has gone to all-time highs. And a big reason for that is that there are so many kids who have AMD 580 chips or Nvidia chips for gaming, in particular, that turn their computers on when they're, to mine when they're sleeping. So, you have a much more diversified ecosystem for mining Ethereum. And there's one young, it's anecdotal, but one young designer told me last week that does a CAD CAM city planning for San Antonio. that he turns the machine on, and it generates about $4,000 a year, which allows him to get to buy new equipment, new PCs, and any software he needs from mining Ethereum while he sleeps. Next, please. Now, I want to turn it over to Iden. Iden Killick is our recent President and Chief Operating Officer, and he's been doing a great job, and he's going to give you a wonderful update of where we are.

Iden? Thank you, Frank, for that introduction, and it's been a phenomenal quarter for Hive. I'm going to get into some of the operational numbers here that represent how we got to the best revenue this quarter amongst our peer group. So right off the bat, that is because we have 1.25 exahash of Bitcoin mining active right now. It's about 0.8% of the entire network. In addition to that, 4,200 gigahash of Ethereum mining. So on a composite as a equivalent, if you convert the Ethereum mining, which is about each 1000 gigahash of Ethereum mining works out to about 220 petahash of Bitcoin mining. So that actually puts our total to over 2x a hash of equivalent Bitcoin mining, about 2.1x a hash of equivalent Bitcoin mining. So that's good for the investing public to understand how did Hive get to best revenue in the quarter. Now, we're looking at the difficulty rate here. You know, the big news out of China earlier this year where we had the difficulty drop as a result of the miners coming offline. it underscores the importance of having a politically stable jurisdiction. In addition to having green and clean energy, all of our power sources are hydro and geothermal. Again, of course, we've got our operations in Sweden, Iceland, New Brunswick and Quebec. They're also politically stable jurisdictions. And that's, I think what gets overlooked sometimes is people just are focused on the megawatts or the dollar per kilowatt hour. It also shows how centralized Bitcoin mining was. Over 60% of Bitcoin mining hash rate used to be operating out of China. Crypto is supposed to be decentralized. We're seeing a very centralized spirit in Bitcoin mining, but What you see is a hash rate drop significantly down to about half of what it was from 180 million terahash down to about 80 million terahash in July. That's now almost completely recovered. We're at 160 million terahash. So a lot of that has found, a lot of that hashing power has found its way stateside into the U.S. and we expect these hash rates to continue to grow. as a lot of companies have been raising capital to get into the Bitcoin mining space. Next slide, please. Now, Ethereum, on the other hand, is a lot more decentralized. And what I mean by this is you see the focus of Ethereum has just continued to increase over the past few years here. And especially over the past year, you didn't see that massive drop the same way that you saw for Bitcoin mining. So to Frank's earlier point, Ethereum mining is a lot more decentralized globally. And as a result, we're seeing that it wasn't affected by China's outline of crypto mining anywhere nearly as much as Bitcoin mining. So, what does this all mean when we look at these two different ecosystems? Next slide, please. So, one more point on Ethereum, actually. You could see high production numbers here. You know, for example, in the second quarter, 8,688 Ethereum were mined, down from 32,800 Ethereum one year prior, right? However, of course, Ethereum has had a remarkable year, touching almost 5,000 US dollars per Ethereum up from, you know, four or 500 bucks a year before, right? So although the coin quantity has reduced by a factor of four, the price has increased by a factor of 10, right? And so the fundamental economics for mining Ethereum are still very strong and because Hive has had and historically had such a strong and large clear mining footprint. That's part of the contributing factor to us having such a stellar numbers this quarter. Next slide, please. So we talk about coin output and we talk about price. And so what this graph here actually does is it represents the combined mining economics, right? So what this does is this shows you for Bitcoin mining, quite simply put, a dollar per terahash per day you would be earning if you were mining Bitcoin, right? And so what it does is it takes the Bitcoin price and the Bitcoin quantity that you would be generating every day mining and it would give you a dollar per day price. So in this case, you can see that Bitcoin has remained very strong. You know, we sort of hit all time highs Sorry, we hit multi-year highs earlier this year in the bull market, you know, around February, March. And so there was a little bit of softening in the summer. But after the hash rate dropped for Bitcoin, the profitability went up because the quantity of coins went up. And so now in the past couple of months, you've also seen the strong price of Bitcoin driving the dollar per tera hash per day right back up to the levels that we saw in the spring of this year. So what this means is we're still seeing very strong Bitcoin mining economics, even though that hash rate has rebounded greatly. As we saw earlier, the dollar per tera hash per day is still very strong because Bitcoin is, you know, about $65,000 and all the time high. And just to keep in mind, so this is dollar per terahash per day. And so you get about, right now, about 40 cents per terahash per day. Well, high it has 1.25 million terahash, right? That's what, when we say we have 1.25 exahash, means we have 1.25 million terahash. Next slide, please. So now this is the same graph So this is dollars per mega hash per day, right, for Ethereum. And so you take a step back and you say, well, hold on a second. This actually looks like it's been very consistent for the last year. Now, there's a couple of big spikes in May of 2021 in February. And all those actually were, those were just transaction fee rallies. There's a few days where transaction fees in the Ethereum blockchain were very absorbent. And so the London hard fork that came about in early August was designed to prevent these exorbitant transaction fees. Why? Because they wanted the network to be accessible. They wanted the network to be usable. They want people to be able to send and receive Ethereum or, you know, mint their NFTs or have the, you know, dApps and and tokenized projects being able to efficiently operate on the Ethereum blockchain by preventing super high transaction fees on any given day. Now, in our last earnings, in some previous commentary, we pointed out in the 30 days following the London hard fork, right, compared to the 30 days preceding it, mining economics were actually better. And if you look at August here, you could see that there was a rally theory mining profitability compared to the month of July. And that basically illustrates the point that we were making earlier. Our technical team was running our own analytics. We were studying the poor rewards at the dollar per mega hash level exactly as presented here. So for the technical guys out here, it's always great to look at dollar per mega hash per day for Ethereum mining to understand the underlying economics and of course, dollar per hash for Bitcoin. Anyways, we've got a strong, consistent Ethereum mining business. And to our earlier slide, even though difficulties continue to go up, that strong Ethereum price action has made this a very lucrative business for us, which we're Very happy to be a part of this ecosystem. Next slide, please. Some big accomplishments in this last quarter. We hit that magical exahash mark in August of 2021. And at that point in time, we had our future equivalent of Bitcoin mining at three exahash. And we had announced 5,800 machines that were purchased in 45 days. So that was a big highlight. August was an illustrious month for Hive. But what's happened since then? Next slide. We've actually increased our active Bitcoin hash rate by 35% in the last three months. So 1.26 at the hash right now. In addition to that, we're at 4,200 gigahash. So our Ethereum footprint has increased. So this is remarkable because earlier I mentioned that Each thousand giga hash of Ethereum mining is about 220 Bitcoin peta hash. So Hive's total global hash rate now on a Bitcoin equivalent is over 2.1x a hash. And that's important for the investment. And that's the composite of these figures here. So remarkable growth this quarter. Next slide, please. An update on our data center new forensic constructions well underway. We're on track to have 50 megawatts online in December 2021. In Q1, so in a few months, we're going to have all 70 megawatts online hashing green and clean. This is a full-on infrastructure project. You can see our secondary substation that we've got there. It looks like something out of a sci-fi movie, and then our hot aisle in that that gorgeous silver wall with all those sand poking through. So very exciting. We're going to have over two hexahash of Bitcoin, or sorry, almost two hexahash of Bitcoin mining capacity at one site at our data center in New Brunswick. Beautiful, gorgeous passive design. You can see some of the architectural notes there in the superstructure photos. Next slide, please. And so the future looks bright for Hive. we have EPUs on track to bring us to over 6,000 gigahash of Ethereum mining. And previously, we had also highlighted that we have three exahash of Bitcoin mining. So this is very exciting. And, you know, again, if you take that 6,000 gigahash of Ethereum mining, that's over an exahash of Bitcoin mining. That's a over 1.2 exahash of Bitcoin mining. So again, on an equivalent basis, our current pipeline brings us to over 4.2 exahash of Bitcoin mining. Next slide, please. If that wasn't exciting enough, on top of all of that, just the compounding growth that we're experiencing at Hive, which again is always exciting with Frank's leadership, is just another $100 million raise. So that further increases that number that I just gave you to four exahash of pure Bitcoin mining capacity. In addition, we've got that Ethereum mining footprint. So that would put Hive's 2022 Bitcoin equivalent hash rate to about 5.3 exahash with our four exahashes Bitcoin mining capacity, and additionally, the 6,000 gigahash. So it's going to be a very exciting year ahead. And we've got a great team globally positioned as we develop infrastructure and deploy our chips. Next slide. And on that note, I'll turn it over to Mr. Darcy DuBaris.