HIVE Blockchain Technologies Ltd

XTSX:HIVE

Earnings Call Analysis

Earnings Call Transcript 2024-Q3

[Holly Schoenfeldt]

Hello, everyone, and welcome to today's webcast reviewing HIVE Digital Technologies financial results for the quarter ended December 31, 2023. On Slide #2, 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; Aydin Kilic, President and CEO; and Darcy Daubaras, Chief Financial Officer.

On the next slide, I would now like to hand the presentation over to Mr. Frank Holmes. Frank?

[Frank Holmes, executive]

Thank you, Holly, and thank you all shareholders and stakeholders that are involved with the story. Next, please.

I always like to start off with a 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 1 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, plus or minus 10%.

That meaning 70% of the time is a nonevent 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 at 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 with the basket of these miners, they trade with each other in the correlation and the direction of Bitcoin. Next.

But so we're sponsoring this with Bitcoin Magazine. We have published several important videos on the amount of [ refundable ] energy that's out there in the marketplace, monitored by what appears to now be banking lobbyist 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 so important for investors to appreciate. But you have to get through the fund. That is false statements of their uncertain and statements that just create a basic dealt. And I think that a lot of the fund 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 is 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 just heartening disappointing and then a surge back reality. And now we finally have a Bitcoin ETF. And I started this journey in 2017, but this time to try to launch a Bitcoin ETF or realize it wasn't going to happen. So I co-funded the creation of the first crypto mining company, which was HIVE. First start up 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, 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 [ having ] and I think that this is important for you to realize that even though we doubled our footprint and 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 valuing [ validating ] a transaction, you earn a new bitcoin. We earn about 90 days, you can see end for last year. And that was a lot of hard work of getting the best of technology, while Bitcoin prices kept falling. And the assault by making lobbyists, inspiring lots of fun out there. So I think what happens with this journey, as more people come into mine, 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 [ having like we experienced, our C&I experience at the last having then a lot of people fell off the grid, the difficulty fell, the margins improved, but it was -- 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 having 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 HIVE is a 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 were first to actually balance the grid. And so therefore, is so much wasted energy. 30% of all electricity created is just waste to vaporize. And it's like -- it's just a waste of capital. But Bitcoin money 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; Aydin Kilic, a CEO and President; Darcy Daubaras, our CFO; Johanna Thornblad; as Sweden's Country President; and Gabriel [ Toby ] as General Counsel. Next, please.

So HIVE and the Bitcoin outperformed gold in the S&P last year. We're happy. But in short term, it's always extremely volatile. Next, please.

So what happened the last time in a diversified and not operative word is 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 at 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 smart asset by smart investors and by a lot of big banks is anti-gold team because gold is on this alternative asset class.

And what we found was that a 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 and 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 balances 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 [ for grown ] us. And Mr. [ Market ] has basically allowed them to dilute the shareholders by 310-fold where we've been very conscientious about the preservation of value per share. Next, please.

We have contributed to the local community. There's a good look in Darcy, our CFO in Boden, Sweden, 100-mile south to the Arctic Circle. And I mentioned recently, it was minus 40 degrees Celsius, which is extremely cold. And then are there some of the things you have to deal with, but cold weather is a lot easier for Bitcoin mining, if we're running data centers. So in Boden, we sponsor the local hockey teams from kids and trading and the professional hockey league and it's called the HiveArena. Next, please.

So positive corporate margins were the bar. I mean it was just an incredible period. And this chart doesn't really capture what happened because just prior 6 months prior to bankrupting FTX. We had Celsius go bankrupt. Bitcoin fell from 30,000 down. And then we had the disappointing of Ethereum from proof of work to proof of stake, and that meant our NVIDIA chips we are 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, building on an HPC, high-performance computing strategy with those via chips. And now are starting to pay fruit.

We have a long way to go and a huge, huge opportunity. But during that journey, we saw Bitcoin basically fall from a peak in '21 of 6 -- down to $16,000 after FTX bankrupt -- 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, the U.K. as an accountant, and it ranks HIVE as being #2 Ethereum -- I'm sorry, [ mine 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 bitcoining 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 having. Because next slide, please, the last having, there were many layoffs, many curtailments, many shutdowns and allowed us actually seize the opportunity to buy [ sites ] in Montreal, Quebec, which today basically, we bought it was a little over 250 per [ exahash ] and now it's [ 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 high [ content to profit ] while some of our peers lost money during, we take a look at the particularly last year -- 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 Raleigh. 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 and where is difficulty is today, it's going to have to be over $60,000 per bitcoin for companies that just break even. Our goal is not just to breakeven. Our goal is to be able to also increase our [ hotel ]. Next, please.

HIVE's dilution, which I'm proud of, as you can see, the lowest here. Next, please.

What's really exciting is that 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 high, these GPU chips from NVIDIA and get most of our money back from mining Ethereum and then mining altcoins and diverting 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 less volatile. Next, please.

So what is Sam Altman's vision that the global semiconductor industry in 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 in 2020, paid for Cobalt was $3 trillion. So when you think of $7 trillion, you got to say, where is 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 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 a [ day tube ]. So we are in a very sweet spot with the AI chips -- the chips that we bought. And they are not able to offer their AI chips at a low and affordable price. Next, please.

So we had this incredible competition with Microsoft and Google and Facebook, and Facebook as a 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 hub is quite significant. Next, please.

So the shake up things and makes the AI chips at 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 raised globally. Next, please.

Who's at the top? NVIDIA, when we're 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, AMD and [ Palchome ] 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 2 years ago in buying these chips that we're able to do 2 things: one, mining Ethereum or other crypto coins; and b, build out our high-performance computing these data centers and now with AI hitting our tailwind by his 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 6 years because of AI. Next, please.

And the difficulty is that you were seeing that HIVE 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 it's 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 is -- besides the building, these incredible cities is the adoption of Bitcoin and the adoption of the Bitcoin network and the amount of money thrown into the growth of AI. Next, please?

So what we see here is a simple visual to show you. This is not just for doing calculations for high-frequency traders for research and medical places, it's really -- AI is needed for your phones, and it's needed for the cloud, and it's for gaming, it 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 245 -- $250,000 for the quarter and then $250,000 for the month $250,000 a week and $250,000 a day. While I'm happy to say that we've been public about this, we're through $250,000 a month. Our next big goal is at $250,000 a week. Next, please.

Now I want to turn it over to our hard-working, Mr. Dynamite, Darcy Daubaras, the longest-standing CFO in the industry, he's overcome all the hurricanes with me.

[Darcy Daubaras, executive]

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 noncash 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 mark-to-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 loss, our paper losses generated through an accounting entry rather than the actual sale of the security. The swings in additional assets impact pay per 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. Noncash charges is a write-down or accounting expense that does not involve a cash payment. Depreciation, amortization, depletion, stock-based compensation and asset impairments are common noncash charges that reduced earnings but not cash flows. Next slide, please.

During our most recently completed quarter of December 31, 2023, which is our Q4 -- or sorry, our Q3 for our 2024 March 31 year-end. In this 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 [ went ] mined and increasing bitcoin prices during the quarter, which we're seeing starting to come out of this bar 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 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 and 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 consistent. Next slide, please.

Now switching gears and taking a look at our group operating margin on a year-over-year basis. In 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 could also see there, the average price of Bitcoin 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 and per share reported at December 31, 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 difficulty [ cash ] 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 the third quarter of fiscal 2024 and to positive [ $70.3 ] million versus a negative adjusted EBITDA of $1.5 million just a quarter ago. I will highlight again for [ first ] quarters that adjusted EBITDA is a non-IFRS figure. And in the third quarter of fiscal 2024, we experienced a loss of $7 million compared to a loss of $24.5 million in the prior quarter.

At this time, I'd like to thank our loyal stakeholders and turn the presentation over to our President and CEO, Aydin Kilic, for an executive update. Aydin?

[Aydin Kilic, executive]

Thank you, Darcy. It's been a phenomenal quarter for us, and I'm excited to provide a little snapshot into the accomplishments we've had strategically, but also what lays ahead.

So I'm going to talk about our HPC and AI business first. It's quite exciting. These are new pictures from our deploying in Montreal. This is a Tier 3 data center. You can see on the left how clean and organized these racks are. This is very different than an crypto mining center. I want to explain to everybody, our AI compute is not in our Bitcoin mine. It's 2 physically different facilities, like hours apart by car. So this is what a Tier 3 looks like. You can eat off the floor.

On the right is our first cluster of nodes, we have gotten 96 to 100s. These were just installed last week, and they're going to be cash flowing in a couple of weeks as we build out the networking components. And a note on that, a lot of people are talking about buying each 100s. But a, they don't have any experience running GPU clusters, number one. Number two, there are so many other components at the infrastructure level that you have to build out that I'm not going to get into details because -- it's a little bit of a trade secret, and there is a certain level of know-how that is not common in crypto mining, this is in the data center world when you're building high bandwidth, tight elasticity redundant systems. So anyways, it's very exciting. And next slide.

Here's why. So we've talked about growing. And we did almost $1 million of revenue this last quarter. But notably, as of the end of the quarter, we actually reached a run rate revenue of $5 million. And that's because we're growing, right? We're growing. And the infrastructure has been installed now, which is exciting. That's why we provided that picture. So now the marketplaces we work with are having more demand as we've got servers listed. And we are targeting $50,000 a day for the end of this current quarter, which would be $20 million annual run rate revenue. This is very exciting for us because going into having, we're having a high-margin business with our GPUs that will supplement the income while there will be a lot of volatility in the Bitcoin mining space. So it's a very exciting time. And again, I want to emphasize, we've already built the infrastructure. We built it in stock. We built it in Montreal. The GPUs are installed, they're up and running. You saw the 100. We've got 2 clusters, 2 more clusters in [ south of ] Montreal. And we even have a small cluster in Boden, where we're doing some high-performance computing in a small section of our facility. So it's very exciting, and I'm very proud of my team as we work towards our quarter end target. Next slide, please.

Of course, with the having coming up, here is our Bitcoin mining quarterly update. So it was a good quarter for us. We produced 830 bitcoin from September to December, which is an average of 9 Bitcoin a day, which is that magic number we like to maintain as there's 900 Bitcoin a day rewarded, 1% of 900 is 9 bitcoin a day. This is up 4% quarter-over-quarter.

But what's remarkable is that difficulty this quarter was 90% higher on average than the difficulty in the previous quarter. So we actually grew our production by 4% and even though difficulty grew by 19%. So we grew more than the Bitcoin mining network group, which is fantastic. Next slide, please.

Now here it is operationally and financially, I know Darcy touched on some of these things. revenue, $30 million; gross mining margin, $11 million and our exahash we [ hit over 4x ] exahash. Now next slide.

Let's look at the growth factors here. So we have seen growth in our hash rate. We had almost 40% growth in our revenue. We had almost 150% in our gross mining margin, which is phenomenal. We've been lean and mean through the bar market. And now as profits return as Bitcoin flourishes, having those low upping cost means we have more profit on the table. And so I'm very pleased that we've got a big increase in our gross mining margin. And by the way, our corporate G&A for this quarter is only $3.8 million. So what that means is, our corporate margin, if you take the gross mining margin of $11.3 million and you subtract the $3.8 million in cash, G&A operating costs, our corporate margin, the company still made $7.5 million. And that is a statistic I like to talk about because when you look a lot of crypto miners and you subtract their G&A costs, off their gross mining margin, a lot of the bitcoin miners are actually in the red.

And we've mined profitably. We're going to do a little historical recap, we mined profitably even with our G&A to the entire bar market. I'm very proud of my team for that. Next slide.

Now it's about understanding the intrinsic nature of the business. So even though our production we grew 10%, and difficulty grew 19%. But our revenue grew almost by 40%, right? -- highest hash price was up this quarter. Now hash price is very volatile. This is what it actually looks like on the right. On the left, it's summarized a single average figure for the entire quarter. So in Q3, it was about 80,000 per exahash per day. That means whether you're mining in Kazakhstan or Canada or in our case, Sweden you are earning 82,000 a day, U.S. for every exahash that you had on the Bitcoin mining network. This is a network-wide statistic. As crypto miners, we analyze these statistics, I understand the underlying health, what we call the hash rate economics.

Now the previous quarter, who was 68,000 in exahash per day. So you see as a 20% increase quarter-over-quarter. So while we grew our production 10%, the profitability of that hash power also grew by 20%. That's allowed us to realize some fantastic numbers this quarter. Next slide, please.

By the way, we had a really strong finish to the calendar year. We announced our S21 [ produce ]. And we've seen how our stock has been trading at a discount, and it is fairly common knowledge that there are a lot of funds out there that will take aggressive short positions for companies. And we were able to cover that short. And with the announcement of our S21 purchase and special warrant financing of CAD 28 million, we rallied at the end of the year. So it was a really strong finish to the year by shareholders, and I'd like to thank our loyal shareholders as we continue to navigate challenges and hurdles.

As a result of that, we were actually the best performing stock in British Columbia last year. We were covered by BC Bis magazine as the best full year performance stock. So that was exciting. Next slide, please.

But let's get back to business. So I want to provide a macro summary for all our loyal shareholders and investors who are curious about the having events. So in order to understand the future, you need to know your path, you need to know your history. So what we're plotting here is the hash price, dollars per exahash per day, from summer of 2022 until February of 2024. So this is current.

Now why am I going back all the way to summer 2022 because that was when Celsius went bankrupt, when FTX went bankrupt. You see on the left of this chart, 100,000 in exahash a day, those are healthy mining economics. You saw what happened after the Celsius news came out and when FTX came out, hash price dropped to 60,000 in exahash per day. That's that -- attention to that blue line.

And 60,000 exahash per day is pretty brutal. It is these economics that caused other crypto miners to file for bankruptcy during 2022. But you see the floor. You see how it never dipped below 60,000 a day. Why? Because the difficulty will drop, if the bitcoin price does not increase, right? So what you've noticed is the hash price broadly tracked the drop in Bitcoin mining price, now the orange line, if you pay attention to 2022. And after Bitcoin dropped and stated that 40,000 trough, so did the hash price. And then it finally recovered when Bitcoin price recovered.

Now we did have a nice rally from orders, which weren't correlated a Bitcoin price but rather transaction fees. And so it was good for miners because the demand for sending and receiving Bitcoin was high as people paid higher transaction fees to that [ ice ] little spike. But you know what, Bitcoin fell again, and it was below 30,000. And so in 2023 around September, October, again, we're in that 60,000 in exahash per day territory.

And so this has been a floor exahash value that we have seen twice in the last 1.5 years, and it's never fallen below that. Why? Because the mining network would not be able to sustain itself at that scale because it becomes unprofitable and minor shutdown difficulty drops. And so there's this parity between bitcoin pricing difficulty, which is best represented by the hash price. And so we explained this for our loyal shareholders and investors who are keen to learn about the nuances of crypto mine economics, which we have great expertise at HIVE. And so again, we're not about scale. We're about navigating these volatile markets as effectively as possible, efficiently low cost. And by the way, always driving for best cash flow return on invested capital.

More recently, we saw another rally with the ETF news, where we saw good price action where bitcoin rallied from 30,000 to 40,000. But even when bitcoin was static at the 40,000 range, in December, we saw another surge in transaction fees relating to the ETF news, which caused a nice rally in hash price to the 120,000 range for a short of time.

And then bitcoin sort of came down a little bit below 40,000. And then we finally saw the inflows again, where now the ETF are actually buying Bitcoin -- trading towards 50,000, we saw hash price grow up. So this is [ a case ] of how the bitcoin hash price, how the bitcoin mining economics behave over the last couple of years. Next slide.

Now we've been looking at dollar per hash per day. I'm going to shift gears a little bit. We're still growing in the same direction, but I'm just shifting gears. Now we're going to look at bitcoin per hash per day, okay? So it's similar but different. Why? Because this is just what the network pays you in Bitcoin per hash per day. Now the orange line is a bitcoin [ exahash ], right? And so you'll notice in summer of 2022, the network is paying 4, 4.5 bps coin a day. That dropped and you see where it's a [ TXCs ] spike. Well that was again that ordinal rally. So you still can have a spike in the amount of bitcoin that's awarded to miners because of spikes and transaction fees because people pay transaction fees in Bitcoin. But for the most part, the macro trend, difficulty has shot up substantively and consistently, we see new all-time high difficulties in the last couple of years. We're at about $75 trillion difficulty now and tomorrow, it's going to go to over $80 trillion difficulty.

And so what that means is next slide. The long-term trend as difficulty continues to increase is the scarcity and compression of Bitcoin awarded or exahash. Now that might sound obvious, but I wanted to be intuitive for our loyal shareholders. These are the scarcity economics of Bitcoin. It's part of the white paper, it's how it's all designed. We are trading below 2 Bitcoin and exahash. We hit 2 Bitcoin in exahash around November, December. But now we're trading below that. We're at about 1.8, 1.9 bitcoin exahash per day, that's today, today, February, I guess, it's February 14, by the way, happy Valentine's.

And we've got the having in a little over 2 months. So it's going to go to under 1 bitcoin exahash per day. So having will be a [ recon ] 1 because those hash rate economics that you saw 60,000 bitcoin a day could go down to 30,000 a day. Right now, the economics are about 80,000, 90,000 a day of dollars per exahash you're earning. Okay. So if you said the [ having ] happened tomorrow, if you're earning $90,000 a day, that means actually if the having happened to be earning $45,000 a day.

Okay, that's fine. But guess what, it's been worse than that. And conceivably, it can go to a lower floor. And so that's why it's so important to prepare for the happening. And I'm going to talk a little bit about our strategy now next slide.

A good way to be red for a crypto bear market is to have low overhead, is to have low operating costs. So this is an important slide, and this is the dollars per bitcoin mined of G&A -- over G&A. And this is often gloss over. These are cash items. You could see some of the companies on this chart are north of $10,000 of Bitcoin, just in corporate G&A. Never mind the electricity, we haven't touched that, never mind the electricity. HIVE is one of the lowest cost operators in the sector.

And by the way, these statistics here that we posted are based on Q2, which is period end September. [ Being that ] it's calendar year and a lot of these companies haven't reported their year-end figures here, which is fine. It's just a fiscal accounting thing. But we've put our number here. And again, in this quarter, Q3, 4,450 G&A cost per bitcoin, which is consistent with last quarter. Because what you'll notice is that a lot of companies grow and hire more staff, their G&A might grow as well. And so we kept that mean in mean. DNA going into the bear market because it is going to be a reckoning.

So now let's look at the overall picture, again, these are Q2 figures because not everybody has reported at this period in September. But it gives you a flavor of what's happening in the [ indice ]. So when you look at the actual corporate general and administrative costs to your lawyers, your directors of insurance, conferences, executive salaries, all that sort of stuff, right? G&A and you subtract that off the gross mining margin, you could see that period in September, we made money, while a lot of our peers lost money, right? And I'm stripping -- in this chart, we're stripping out energy credits and things that are sort of incidental, just looking at recurring revenues.

So going into this having event, which will be a reckoning, we are going into -- because guess what, unless you start laying off a whole bunch of people, your G&A costs are fixed. The bitcoin mining network doesn't care if you're -- you've got $14,000 a bit point of G&A costs. That's going to ramp your earnings, right? So we're very well prepared to high because we've got a very lean costs. Let's up to that next slide.

December was a great month as well. We did an average of 9.1 bitcoin a day, and you can with intention steadily scaling the business, even though difficulty has doubled in the last year and a bit, we have managed to maintain and in fact, increase our production. Last November, we were doing about 8.2 -- I'm sorry, November 2022, we're doing about 8.2 bitcoin a day. December, that was up to December 2023. That was up to 9.1 bitcoin a day. Next slide.

Now, moreover, for the entire quarter, we did 9 bitcoin a day on average, right, 830 bitcoin for the 3-month period. So we like having that 9 bitcoin a 1% of the network's scale. Next slide, please.

And here's a monthly breakdown. You can see we actually mined over 3,200 bitcoin. 3,261 bitcoin mined in the last 12 months. As of our last production report, our Bitcoin model is about 2,000 bitcoin which at 50,000 bitcoin, we've got about $100 million of Bitcoin on the balance sheet. And what we've done is we've always held the Bitcoin that are mined with green energy with our ASIC. So that's approximately 2,000 green and clean bitcoin on our balance sheet.

Going into the having and with scarcity and with all these inflows from the ETFs, for shareholders looking for exposure to companies that have Bitcoin on the balance sheet. HIVE is that company. Next slide, please.

And by the way, we've managed to mine profitably over the last 3 years. As we saw the calamity in the markets, you've seen how, you look at Celsius, you look at FTX. Look at the green and dark blue bars. The green bar is the gross mining margin. We manage mine profitably in the worst -- when bitcoin was $16,000, we were mining profitably in December 2022. Not many companies at all could say that. By the way, HIVE has survived the having in 2020. And my CTO has been mining since 2011. This will be his fourth having.

So it's a -- it's something that I want to highlight here, if you've seen companies go bankrupt in 2022, that wasn't as bad as the having is going to be. So you want a company that has the experience, know-how to navigate. You've done this successfully before. When I was running fortress blockchain through the last having event in 2020, same thing, we kept a strong treasury. HIVE is going into this having been with 100 million bitcoin on the balance sheet and profitable operations. And in a little bit, I'm going to tell you about our fleet upgrades. But you could see that revenue and mining margin are on the uptick going into the having. And next slide, please.

And now we look at similar data. This is just our gross mining margin or, sorry, I should say our gross operating margin because we also have some HPC revenue in here. We have consistently through the [ theory emerge ], right? Everyone thought HIVE was going to be in trouble after the theory emerge. Guess what, we made it through that and we made it through it profitably. FTFs bankruptcy, made it through mine profitably and through there. And now it's on the uptick. So we've been through having event in 2020 through the theory merger in 2022. We're a very resilient company. Again, we have a lean DNA because we have very low G&A. And it served us very well as a company. We huddle daily every day over 7 times those office in Vancouver is up at 7:00 a.m., very disciplined. And we treat this like a competition support. We're going for the gold. Next slide, please.

Now how have we prepared for the having strategically. We've upgraded our fleet. So by June of this year, which we've received all of our S21s, we'll be at 5.3 exahash with a global fleet efficiency of 25 jewels per terahash. And I saw some reports I think it was minor, that said we were at 38 jewels at terahash. It's very stale and outdated data. We got debt to 30 jewels terahash. More recently in 2023, and we're going to be down to 25 jewels of terahash in June. So for all the analysts out there pay attention, these get your numbers right, we'll be at 5.3 exahash and 25 jewels at terahash for June 2024.

So we are in a strong position to this happening. And actually, before we go to the next slide, there's something else I wanted to point out. We've made a lot of strategic ASIC purchases over the last year. But to put a summary figure on it, we've purchased approximately 25,000 ASICs for a total of 3.6x exahash with a blended efficiency of about 21 jewels at terahash and that is how we got our global fleet efficiency down to 25 jewels terahash and a total of 5.3x exahash. And this is running at about 140 megawatts of infrastructure.

Going into the having, you don't want to be too top heavy so you fall over and crack your head like Humpty Dumpty. It is a reckoning and you need to be lean, and you just need to make sure you've got a sound unit economics and you're not overexposed. And if you need to reduce your operating capacity, you could do so. And we are set up like that a HIVE. We have really good hedge positions for fixed power costs. And if we don't need to utilize excess power, we can reduce from 140 megawatts down to 100 megawatts. And so it puts us in a good position. So again, we've tried to stay and prepare for this having by the lean and mean. We purchased approximately 25,000 ASICs in the last year with a blended efficiency of 21 jewels at terahash. Next slide.

And January was a good month, and I want to clarify something. Our [ having ] as of January 31 was about 2,000 bitcoin. I believe it was 1,974 bitcoin. And that's an increase from the year-end huddle because our year-end huddle in December 31 was 1,700 bitcoin change. Why? Because when we closed our special warrant financing in late December, we did that so we can move into 100% huddle. And so going into the having is there's scarcity of Bitcoin and you see that Bitcoin is the network is paying less than 2 bitcoin a day and after the having, it's going to be less than 1 bitcoin a day. We understand the scarce economics is on Bitcoin. We know that shareholders want exposure to Bitcoin. That's why we are keeping and, in fact, growing our big balance sheet. So as of January 2024 end of the month, we had approximately 2,000 bitcoin on the balance sheet. Next slide.

And so you could see here. The quarter end was 1,704, but January was about 1,974 bitcoin. Next slide.

Follow our socials because we are posting updates on the AI story as well as our strategy in Bitcoin. We've got some great content. We're looking forward to sharing on Twitter. Short-form content that helps you keep up to date on all the exciting things happening in the HIVE multiverse just because we're working on many things. Sometimes, it's so much information to condense into a press release, but a quick tweet might get a simple point across to keep our loyal shareholders and investors. We're excited about our growth tuned in.