Jumping headlong into the middle of the cryptocurrency frenzy, HIVE Blockchain (TSXV:HIVE) began trading today on the TSX Venture Exchange, ending the day as the top percentage gainer and the most actively traded stock on the junior exchange.
After completing a special warrant private placement at $0.30 on September 15, Hive today closed up 220% to $0.97, as more than 7.1-million shares changed hands.
HIVE recently completed its agreement with Genesis Mining Ltd. to operate of a number of its currency mining centres in Reykjanes, Iceland, solidifying a partnership with Genesis. HIVE says its new capabilities were the product of a $16.5 million equity financing deal with Genesis.
“The data centres will be monitored with Genesis Hive, Genesis’ proprietary software tool for large-scale mining,” says the company, “to automatically optimize chip temperatures and power consumption for maximal coin production.”
In some ways, cryptocurrency mining is just as it sounds: companies put resources to use (in this case, massive amounts of computing power) in order to gain access to the “mined” product: the cryptocurrency supported by blockchain technology.
What makes blockchain unique is that for platforms such as Bitcoin and Ethereum, there are no central institutions such as governments or banks which serve to legitimize the currency and keep record of transactions. Instead, that work is carried out by a decentralized group of miners who work to establish the chain and create the transaction blocks, getting rewarded for their efforts by payment in cryptocurrency.
HIVE Blockchain says immediately following the deal on September 15, it began its mining operations.
“HIVE’s mission is to accelerate the blockchain sector through traditional capital markets and create long-term shareholder value,” said CEO Harry Pokrandt. “We are now focused on establishing a market presence and scaling our mining business. Our facility provides us significant flexibility to mine multiple cryptocurrencies including, but not limited to, Ethereum, Monero and ZCash. We will continue to examine other alt-coins for potential opportunities.”
Once within reach of the amateur hobbyist, cryptocurrency mining now requires vast stores of computing power, as the technology has been set up to make the establishing of new blockchains increasingly difficult, leaving fewer enterprising players in the mining game. Hive says that opening up trading will allow investors a way into the burgeoning cryptocurrency market.
“The market for cryptographic currencies has increased to over U$110 billion as of June 11, 2017, and continues to grow,” HIVE says, “but there are limited ways for investors to gain access. HIVE intends to provide investors with profitable, de-risked exposure to leading mining infrastructure and the mined cryptographic currencies themselves.”
After losing almost $1,000 of its value last week, Bitcoin has shot back up into the stratosphere, trading at $3,964 as of Monday afternoon. Bitcoin’s dip was blamed on a crackdown on cryptocurrency trading by the Chinese government.
Concerning Genesis, the company says the partnership with HIVE will increase its capabilities, which have already made it one of the world’s top miners and owners of Ether currency.
“The concept with HIVE is to give Genesis a footprint outside of the cryptocurrency world and build a bridge from the blockchain space to traditional capital markets,” says Marco Streng, co-founder and CEO of Genesis Group and an advisor to HIVE. “Genesis will support HIVE and will continue to operate separate facilities for our cloud mining customers, who will not be impacted in any way by the HIVE transaction.”