HIVE Blockchain has 192% upside, PI Financial says

Expansion plans at HIVE Blockchain (HIVE Blockchain Stock Quote, Chart, News: TSXV:HIVE) have PI Financial analyst David Kwan feeling bullish about the stock.

This morning, HIVE announced it would acquire Kolos Norway, which owns a 64-hectare property located approximately 225 kilometres north of the Arctic Circle. Management says the property is “ideally situated” for the construction of a large-scale, climate-cooled data centre.

“This is another major milestone in our continuing global expansion as a leading blockchain and cryptocurrency infrastructure company,” CEO Harry Pokrandt said. “Kolos will be a flagship data centre project for HIVE for years to come and has the potential to expand to more than 1.0 GW, or 1,000 MW, of green hydroelectricity consumption dedicated to blockchain infrastructure. For context, our advanced mining operations in Iceland and Sweden will collectively represent 44.2 MW of consumption – also from green sources. This acquisition provides HIVE with significant flexibility for long-term growth. Our vision is to scale the project in phases to be among the largest and most energy-efficient data centres in the world. We continue to explore non-dilutive financing alternatives to commence the build-out as soon as possible.”

Kwan says this move diversifies HIVE’s operations further into a politically stable jurisdiction and could be the company’s lowest cost operation, a move that plays well against a shifting background in the space.

“With an increasing number of jurisdictions slowing down or halting new cryptocurrency mining facilities (most recently in Quebec and Eastern Washington), securing real estate in attractive locations is getting increasingly difficult, which puts HIVE in an enviable position.

In a research update to clients today, Kwan maintained his “Buy” rating and one-year price target of $4.50 on HIVE Blockchain, implying a return of 192 per cent over Friday’s closing price of $1.54.

Kwan thinks HIVE will generate EBITDA of (US) $6.4-million on revenue of $13.2-million in fiscal 2018. He thinks those numbers will improve to EBITDA of $55.1-million on a topline of $91.0-million the following year.