HIVE Digital Technologies Ltd.

Hello, everyone, and welcome to today's webcast reviewing Hive Digital Technologies financial results for the quarter ended December 31st, 2023. On slide number two, I would like to briefly note disclosures. Except for statements of historical fact, this presentation contains forward-looking information within the meaning of the applicable Canadian and U.S. securities regulations. These forward-looking statements are based on expectations, estimates, and assumptions as of the date of this presentation. On the next slide, I'm pleased to introduce today's presenters, Frank Holmes, Executive Chairman, Iden Killick, President and CEO, and Darcy DeBarris, Chief Financial Officer. On the next slide, I would now like to hand the presentation over to Mr. Frank Holmes. Frank?

Thank you, Holly, and thank you all shareholders and stakeholders that are involved with this story. Next, please. I always like to start off with the DNA of volatility because it's so important to understand that any emergent country or sector or industry technology is always going to be much more volatile. And this is a classic to show you that gold used to be much more volatile than the S&P, but now they're the same, one day or 10 days. Whereas Bitcoin is double what gold is in the S&P, but over 10 days, it's plus or minus 7%. And we can see NVIDIA over 10 days is plus or minus 10%. That meaning 70% of the time, it's a non-event for NVIDIA to go up or down 10% over 10 days. But when you come to Tesla, it's even more, it's 13%. And when you go to MicroStrategy, it's 16%. And when you come to Hive, which is a trader's dream, it is 25%. And that makes it very challenging, not only for investors, but it's also for running the business because we have to deal with the underlying volatility of Bitcoin, but which we do successfully. Next, please. This is a visual to show you the correlation. What's important is that the basket of these miners, they trade with each other in the correlation, the direction of Bitcoin, right? Next. But so we're sponsoring this, you know, with Bitcoin Magazine. We've published several important videos on the amount of fun about energy that's out there in the marketplace sponsored by what appears to now be banking lobbyists by and it seems to be the big money center banks and the Bank of International Settlements are so concerned and petrified about this Bitcoin network. which to me is just so important for investors to appreciate. But you have to get through the FUD. That is false statements, statements that are uncertain, and statements that just create a basic doubt. And I think that a lot of the FUD has been pushed through, and it's quite remarkable. And the fact that there is no CEO for Bitcoin, there is no board of directors for Bitcoin, there's no... Balance sheet, there's no marketing budget. There's nothing but an idea, a software, and a very important algorithm with encryption around it. And nodes have been built, 17,000 Bitcoin nodes decentralized around the world, validating transactions for the people, by the people. Created not by a big bank. Created not by a big tech company. created by the people, and then parties like ourselves participating in raising capital to build out that infrastructure. And it's been an incredible, very exciting, at times disheartening, disappointing, and then a surge back reality. And now we finally have a Bitcoin ETF. And I started this journey in 2017, about this time to try to launch a Bitcoin ETF and realized it wasn't going to happen. So I co-funded the creation of the first crypto mining company, which was Hive. First started mining in Iceland, then Sweden, and then Canada. Green energy only. Next, please. And during that whole process, we've had to deal with so many challenges and headwinds, external forces, such as the mining difficulty, which is an inverse relationship. And as Bitcoin's adoption has increased dramatically, More and more people want to mine it with big capital markets putting money behind other competitors compared to the last time we had a halving. And I think that this is important for to realize that even though we doubled our footprint in machines out there, we're still 1% of the global network. And it's an unending run as more and more people come in to compete. And that competition is today, there's about 900 new Bitcoin mined a day. For validating a transaction, you earn a new Bitcoin. We are in about nine a day, as you can see, for last year. And that was a lot of hard work of getting the best of technology. Well, Bitcoin prices kept falling and the assault by banking lobbyists inspiring lots of fight out there. So I think what happens with this journey, as more people come into mind, even as the prices fell, it's called the difficulty was rising. And when the difficulty is rising, that means there's more competition for the same 900 Bitcoin every day. And come May this year, it's going to fall to 450, which will make it even more challenging. So rising difficulty means margins falling. Difficulty falling means margins rising. And I expect after the halving like we experienced, Darcy and I experienced at the last halving, that a lot of people fell off the grid. The difficulty fell. The margins improved. But it did take a few months before that happened. And during that journey, we were mining Ethereum also. We're no longer mining Ethereum. So we've had to deal with, this is our second halving experience. This is where we've also lost our big cash cow, Ethereum mining. And we have a bright new future for the shareholders. And that's high performance computing, which is starting to scale up. I hope that this presentation informs you, makes you feel comfortable where our vision is. Next, please. So high-visit green energy focus in Canada, Iceland, and Sweden, as I previously mentioned. Next. We're first to go public. We're first to develop our own ASIC mining rig. With Intel, we're first to buy data centers. We're first to focus on green energy. We're first to actually balance the grid. And so, therefore, there's so much wasted energy. 30% of all electricity wasted. created is just vaporized. It's just a waste of capital. But Bitcoin mining comes along and creates value. And we were first to have an AI strategy with GPU chips, which we learned so much from mining Ethereum with our GPUs. Next, please. So the leadership team includes myself as executive chair, Aiden Killick as CEO and president, Darcy DeBarris as CFO, Johanna Thornblatt as Sweden's country president, and Gabriel Hibby as general counsel. Next, please. So Hive and Bitcoin outperformed gold in the S&P last year. We're happy, but our short term, it's always extremely volatile. Next, please. So what happened the last time in a diversified, not an operative word, it's decentralized. A decentralized asset like gold and Bitcoin and art. But portable wealth is in particular gold and Bitcoin now as a new great digital transformation. And when the gold ETF came out, it was a big game changer. And you can see here what happened is that the GLD was launched in 2004, November, and then the IAU launches in 2005. And we saw gold go from basically $250 and slowly keep climbing and climbing all the way up to over $2,000. And $50 billion moved into the GLD. Gold was always perceived as a smart asset by smart investors and by a lot of the big banks as anti-gold themed because gold is of this alternative asset class. And what we found was that is that gold all of a sudden became an important asset class as it went into the ETF format. And I think that that's what's going to happen today with the new many ETFs coming out in the Bitcoin realm, that we're going to see this great adoption of Bitcoin. Next, please. Hive has been very, very conservative in how it's managed its balance sheet in addition to how it's managed its shares outstanding. We know that in the past cycle, other newcomers have come along and far outgrown us. And Mr. Market has basically allowed them to dilute the shareholders by 310-fold. We've been very conscientious about the preservation of value per share. Next, please. We have been contributing to the local community. There's a good-looking Darcy, our CFO, in Boden, Sweden, 100 miles south of the Arctic Circle. And I mentioned recently it was minus 40 degrees Celsius, which is extremely cold. And there are some of the things you have to deal with, but cold weather is a lot easier for Bitcoin mining and for running data centers. So in Bowdoin, we sponsor the local hockey teams for kids and training and the professional hockey league. And it's called the Hive Arena. Next, please. So positive corporate margins were the bear. I mean, it was just an incredible period. And this chart doesn't really capture what happened because just prior, six months prior to Bankman bankrupting FTX, we had Celsius go bankrupt and Bitcoin fell from 30,000 down. And then we had the disappointing of Ethereum going from proof of from proof of work to proof of stake. And that meant our Nvidia chips were no longer useful in mining Ethereum, which for us was always a very stable high margin business. And so we had to wrestle with that. And we started the pivoting just prior to that, of building out an HPC, a high performance computing strategy with those Nvidia chips. And now it's starting to pay fruit. We have a long way to go in a huge, huge opportunity. But during that journey, we saw Bitcoin basically fall from a peak in 21 of 60,000 down to $16,000 after FTX went bankrupt. And we saw many other companies lose lots of money, but we were able to squeak out a margin. Most important, I was impressed with the fact that how we dealt with the loss of the Ethereum gross margin business. Next, please. This is put out by Anthony Power of the UK. He's an accountant, and it ranks Hive as being number two in mined Exahash per month. As you can see, the high rating, which I find really interesting that a lot of companies that have much bigger market caps Like you can see at the bottom there, they really don't produce all that much mining for their exahash. And there's other reasons for it, in addition to having old machinery or your energy is used for stabilizing the grid, so therefore you're really not mining, but you're making a lot of money from balancing the grid. Next, please. Hive is a leader when it comes to low-cost Bitcoin mining. When we look at the G&A, what is the compensation for the board? What is the compensation for senior staff? Includes myself. I've taken nothing but stock as compensation, and other members have taken stock and cash. But when you take a look at it, everyone's well-paid, but not as egregious as I look at some of these other places. But Mr. Capital Markets basically is more focused on just the overall hash rate growth and Bitcoin in your balance sheet. So Hive is still going to maintain, and I think going forward, you'll see that we'll be able to use this to our benefit, especially after the halving. Because, next slide, please, at the last halving, there were many layoffs, many curtailments, many shutdowns, and it allowed us, actually, it was the opportunity to buy the facilities in Montreal, Quebec, which today, basically, we bought it with a little over 250 petahash, and now it's through an exahash. So that is something that we're very proud of, that during a crisis, we had a strong balance sheet at the time, and we were able to buy that and build out our Bitcoin mining footprint. This is another visual show that I've continued to profit while some of our peers lost money during when you take a look at particular last year. Now, all the numbers are not in for December year end for our peers to give you this relative snapshot. But I don't think it's really that much of a difference when you compare the end of September quarter end for December, except for it might be it would be better because Bitcoin prices rally. Next, please. Hive's total costs remain below the industry average of $28,000. And in our back of the envelope calculations, Bitcoin is going to have to be, where its difficulty is today, it's going to have to be over $60,000 per Bitcoin for companies to just break even. Our goal is not just to break even. Our goal is to be able to also increase our hodl. Next, please. Hive Solution, which I'm proud of, as you can see, the lowest here. Next, please. What's really exciting besides Bitcoin and the challenges in front of us with Bitcoin having and how we're going to navigate, we've navigated through other headwinds and other hurricanes and tornadoes, what's really significant is the AI world. And the world doesn't have enough AI chips to keep up with the booming demand. And our ability to go and buy these GPU chips from NVIDIA and get most of our money back from mining Ethereum and then mining altcoins and converting to Bitcoin as we now pivot into the HPC business model, it continues to grow. And those NVIDIA chips, we believe, have a very healthy long future. But it's very different than Bitcoin mining. The margins are higher, more like Ethereum, and it's less volatile. Next, please. So what is Sam Altman's vision that the global semiconductor industry and AI infrastructure? He has this vision because he's concerned that there's not enough chips and the prices are too high. But that cost of this is only $7 trillion. Now, the cost to America from 2020 to pay for COVID was $3 trillion. So when you think of $7 trillion, you got to say, where's he going to get the money? All I can share with you is that this is a big super cycle. And the adoption of Bitcoin has been incredible in the time period, but AI is even faster. Next, please. They are not able to keep up with the demand for AI chips, which is growing faster than they can produce. Next, please. And they are not able to innovate and improve their AI chips as fast as they need to. So we are in a very sweet spot with the AI chips that we bought. And they are not able to offer their AI chips at a low and affordable price. Next, please. So we have this incredible competition with Microsoft and Google and Facebook. And Facebook is Meta. But what's important here is to realize that on a daily basis, Meta has 2 billion people. On a monthly basis, 3 billion that use Facebook. The data collection and the AI that's going to make that business hum is quite significant. Next, please. So to shake up things and make the AI chips plenty and affordable is going to take a lot more money than most people think. And so Sam Altman is running around the world out with this big, great vision. And we're so delighted and thrilled to be part of this huge super cycle in the great digital transformation. And in particular now, the hyperlink wave is AI. Next, please. It's a powerful force changing how we live, work and interact across all facets of life. Next. So his vision is about shaping a future where AI's full potential is to be realized globally. Next, please. Who's at the top? NVIDIA. When we were mining Ethereum, we made a huge special order and bought AMD chips, and they were the best of breed at the time. And now we have Intel. But Intel and AMD and Qualcomm are still far behind where NVIDIA is. They all make chips for AI, but nothing at the level where NVIDIA is. So we're very happy with the strategic move we made two years ago in buying these chips that we're able to do two things. One, mine Ethereum or other crypto coins, and B, build out our high-performance computing data centers. And now with AI hitting our sailwind, it's full steam ahead. Next, please. So the catalyst is of 15.7 trillion economic renaissance by 2030. I mean, these are huge numbers. I mean, this is the GDP of China. Just think of that is all going to be created over the next six years because of AI. Next, please. And the difficulty is that you were seeing that they have to go to some of these sovereign funds. And these sovereign funds, like United Emirates, when you look at Abu Dhabi, they have $1 trillion. You look at Norway with $1.3 trillion. But these sovereign funds can be secretive. They have their own hidden goals and might want control over the project's direction. So I think raising that money will be a big challenge, but I don't think that it's not going to stop. I think it's only going to grow. And what we're seeing is in the Dubai region, besides building these incredible cities, is the adoption of Bitcoin and the adoption of the Bitcoin network. and the amount of money being thrown into the growth of AI. Next, please. So what we see here is a simple visual to show you. It's not just for doing calculations for high-frequency traders. or for research at medical places, it's really AI is needed for your phones, and it's needed for the cloud, and it's needed for gaming, and it's needed for the car industry. So there is a big demand for these chips. Please, next. So integrating the future of computing with the future of the climate to promote sustainability and the environmental conscious company, that is what Hive is about. Next, please. And when we started on this, we said our goal was to get to $250,000 for the quarter and then $250,000 for the month, $250,000 a week and $250,000 a day. Well, I'm happy to say that we've been public about this. We're through $250,000 a month. Our next big goal is to hit $250,000 a week. Next, please. Now I want to turn it over to our hardworking Mr. Dynamite, Darcy DeBaris, the longest-standing CFO in the industry. He has overcome all the hurricanes with me.

Great. Thank you very much, Frank. As usual at this part of the presentation, I'll be taking you through a snapshot of the most recently completed period, looking at some financial indicators. First of all, I'd like to remind our stakeholders that our earnings are comprised of our operational earnings or cash flow, plus our investment earnings, which includes realized and unrealized earnings, which often includes non-cash charges. Mark-to-market is an accounting practice that involves adjusting the value of an asset to reflect its value as determined by current market conditions. The market value is determined based on what a company would get for the asset if it was sold at that point in time. Next slide, please. Mark-to-market losses are paper losses generated through an accounting entry rather than the actual sale of a security. The swings in digital assets impact paper profits and losses each quarter. So our Bitcoin digital assets do generate unrealized gains and losses each quarter. It's important that our stakeholders and investors understand the differences in operating earnings or losses in addition to mark-to-market paper gains and losses each and every quarter. Non-cash charges is a write-down or accounting expense that does not involve a cash payment. appreciation, amortization, depletion, stock-based compensation and asset impairments are common non-cash charges that reduce earnings, but not cash flows. Next slide, please. During our most recently completed quarter of December 31st, 2023, which is our Q4, or sorry, our Q3 for our 2024 March 31st year end, Most recently, we recorded 31.3 million of revenue and a 17.3 million profit in adjusted EBITDA. This was driven by the production of 830 Bitcoin equivalent mined and increasing Bitcoin prices during the quarter, which we're seeing starting to come out of the spare market. Next slide, please. As you can see here, we continue to be proud having a healthy balance sheet. Our cash position stood at $17.8 million at December 31, 2023, along with an additional $71.9 million in digital currencies comprised almost entirely of Bitcoin. We also had $8.2 million in accounts and amounts receivable in prepaids, a decrease from the prior period. The market value of our strategic investments also increased due to the mark-to-market on these holdings. We maintain a strong net cash position and healthy working capital to fund our operations and growth objectives that we've been working on consistently. Next slide, please. Now switching gears and taking a look at our gross operating margin on a year-over-year basis, comparing the third quarter to the third quarter. Our gross operating margin, which equates to our total revenues minus direct operating and maintenance costs, increased in absolute dollars to $11.3 million or 36% in the most recent quarter compared to $3.6 million or 25% in the prior year comparative quarter. As you can also see there, the average price of Bitcoin has had a dramatic increase on our results this quarter. Gross mining margin is also partially dependent on various network factors, including the high mining difficulty we are experiencing, the amount of digital currency rewards miners receive, and as mentioned, the market price of the digital currencies, which were on average higher than the comparative period. In this most recent quarter, we are reporting a net loss of $0.08 per share compared to a net loss of $1.13 per share reported in the December 31st, 2022 last year. Moving on to the next slide, our year-over-year revenue, we generated total revenue in the third quarter of fiscal 2024 of $31.3 million, versus 14.3 million in the previous year third quarter. This increase in revenues versus the same quarter in fiscal 2023 can be attributable mostly to the average Bitcoin price, which is double what it was last year. And this is even with the ever increasing Bitcoin difficulty hash rates that we've experienced over the last 12 months. As mentioned previously, our gross mining margin, which equates to our revenues, minus direct operating and maintenance costs, increased in absolute dollars to $11.3 million in the most recent quarter, compared to $3.6 million in the prior period comparative. Turning to the next slide, now comparing our current fiscal Q3 quarter to the previous Q2 quarter, we generated revenue in this quarter of 31.3 million versus 22.8 million in the previous quarter. This increase in revenues versus the prior quarter was impacted positively by the increases in the price of Bitcoin that we are seeing. Our gross operating margin, also in absolute dollars, rose to $11.3 million in the most recent quarter compared to $4.6 million in the prior quarter comparative. The increase in gross mining margin versus the prior quarter was positively impacted by the increase in the price of Bitcoin in the quarter. Switching to the next slide, our adjusted EBITDA increased in this third quarter of fiscal 2024 to positive $17.3 million versus a negative adjusted EBITDA of $1.5 million just a quarter ago. I will highlight again for our stakeholders that adjusted EBITDA is a non-IFRS figure. And in the third quarter of fiscal 2024, we experienced a loss of $7.5 compared to a loss of $24.5 million in the prior quarter. This time, I'd like to thank our loyal stakeholders and turn the presentation over to our president and CEO, Aidan Killick, for an executive update. Aidan?