HIVE Blockchain Technologies (TSXV: HIVE) is a company I have been following since 2018 and have traded a few times in the past. Although I am bullish on Bitcoin, cryptocurrencies and believe blockchain technology will have a bright future, I have never held the stock for more than a few weeks / months. However, in March 2020, during the big sell-off in the broad market, I decided to buy HIVE again as a long-term investment and took a position at $0.17 CAD.
Blockchain infrastructure & cryptocurrency mining company
HIVE Blockchain Technologies Ltd. is a publicly listed blockchain infrastructure company and pure-play blockchain investment. The company mines cryptocurrencies like Bitcoin (BTC) or Ethereum (ETH) in state-of-the-art green energy-powered data center facilities in Canada, Sweden and Iceland. An investment in HIVE provides exposure to digital currency mining as well as to a portfolio of crypto-coins. HIVE can be played as a leveraged crypto investment for portfolio diversification and as an alternative to direct cryptocurrency investments.
Investment thesis for HIVE Blockchain Technologies
Why I decided to buy shares of HIVE Blockchain Technologies as a long-term investment? In March 2020, cryptocurrencies, just like the overall stock market, experienced a major sell-off. These types of sell-offs, usually driven by fear, are excellent investment opportunities and with the upcoming Bitcoin halving in 2020 and improving sentiment for cryptocurrencies, the risk/reward for taking a position in HIVE was very good in my opinion.
My investment thesis was that HIVE would have massive upside potential if cryptocurrencies rallied again. During the last cryptocurrency hype in 2017, HIVE hit an intraday high of $6.75 CAD! What I also like is that HIVE is a great proxy for cryptocurrency exposure in a regular stock portfolio as an alternative to direct cryptocurrency positions. I decided to take a position in HIVE at $0.17 CAD with a weighting of ~0.30% in my stock portfolio.
Update November 17th, 2020:
While Bitcoin (BTC) is surging, HIVE Blockchain Technologies (TSXV: HIVE) is looking increasingly good here.
Update December 15th, 2020:
HIVE is running like a horse, up 20.95% today. This trade is evolving to become my trade of the year 2020. Position now up >996% since March 2020. It will be interesting to see where this ends once Bitcoin (BTC) accelerates.
Update December 28th, 2020:
Although HIVE’s share price has literally exploded (now trading above $2 CAD), I still see a lot of potential if the cryptocurrency rally continues. HIVE is mostly mining Ethereum and while Bitcoin has hit new all-time highs, Ethereum has yet to catch up. If that happens, HIVE could trade near its ATH at >$6 CAD. I bought my position at $0.17 CAD, so fortunately I have a very good risk/reward here. HIVE has been an excellent proxy for cryptocurrency exposure within a stock portfolio. I’m currently not adding to my position, but I’m happy to keep riding this rally.
The company invests heavily in new hardware to increase its mining efficiency and diversify its mining activities. They also actively manage their crypto portfolio in a smart way, selling coins after big rallies and mining them after sell-offs. I also like that they focus on being ESG compliant (which is an important factor for institutional investors) by relying solely on green energy and having a good corporate culture.
If you want to learn more, I can recommend their latest earnings webcast on YouTube:
Update January 6th, 2021:
While Bitcoin is hitting new all-time highs and Ethereum is catching up quickly, HIVE has failed to make new highs and is currently losing momentum. My thesis was that if Ethereum catches up, HIVE will follow suit and reach new highs as well. That hasn’t happened yet, and the stock has been consolidating since the company announced a private placement of convertible debentures on December 24th. After careful consideration, I have decided to reduce my position by 50%. It’s purely a risk management decision and doesn’t mean that I don’t see further upside potential.
In 2020, HIVE has massively outperformed Bitcoin, Ethereum, and literally every other stock I know. My position in HIVE is up ~1600% in just over 9 months and I think the stock may have gotten a little ahead of itself. It has become a sizable position for me and I see significant risk of a correction. I have decided to reduce my position and will instead reinvest the proceeds in some of my dividend growth stocks. I still think HIVE has great upside potential if the story for cryptocurrencies remains intact, but you have to be realistic and don’t let greed take over.
I think the rally we are currently seeing in cryptocurrencies has parallels to 2017 and is largely driven by herd mentality. On the other hand, the environment is also very different, as there is now institutional support, adoption is increasing, and companies like PayPal are absorbing much of the Bitcoin supply, leading to increased demand while supply is limited. However, there are also significant political risks (e.g. regulation). In addition to HIVE, I am still invested in Bitcoin, Ethereum, and Stellar Lumens and will continue to closely monitor the cryptocurrency rally.
What are your thoughts on HIVE Blockchain Technologies? Are you invested as well or do you prefer other cryptocurrency stocks? Please let me know in the comments below.
HIVE Blockchain Technologies charts by TradingView.