Hive doubles down on BTC hodl strategy amid miner equity dilution, debt reliance

Data center infrastructure provider Hive Digital is doubling down on its long-term Bitcoin treasury strategy and is using the recent market sell-off to expand its mining capacity and acquisition targets, signaling a growing shift among public miners to retain their mined assets. 

In an interview with Cointelegraph, Hive Digital’s chief financial officer, Darcy Daubaras, said the company remains focused on “retaining a significant portion of its mined Bitcoin to benefit from potential price appreciation.” 

This requires an active approach to treasury management to optimize liquidity in the face of steep market corrections, such as Bitcoin’s (BTC) recent 30% drop. However, a long-term Bitcoin hodl strategy is better than “[relying] more on debt or equity dilution for funding,” which is common in the mining industry, said Daubaras.

As Cointelegraph reported, public miners have increasingly shifted to equity dilution — or issuing new shares to raise capital — as part of a broad deleveraging process due to high interest rates and declining creditworthiness. 

Absent these strategies, miners are usually forced to aggressively sell their mined Bitcoin to fund their operations or expansion. 

While Hive isn’t opposed to selling some of its Bitcoin holdings — it did so to fund the acquisition of Bitfarms’ 200-megawatt facility in Paraguay — it’s better to “selectively sell Bitcoin to fund accretive investments, [which] creates a balance of growing our operations and positioning ourselves for long-term success,” said Daubaras.

Source: Frank Holmes

Hive added more Bitcoin to its balance sheet in the final quarter of 2024, increasing its “hodl” position to 2,805 BTC.

Related: BTC miners adopted ‘treasury strategy,’ diversified business in 2024: Report

Bull market conditions make it easier for miners to stack their Bitcoin, but long-term success requires navigating the minefield of volatile prices, growing competition, and rising electricity and hardware costs. 

To combat these and other challenges, Hive has revamped its business model to include AI data centers and has prioritized renewable energy sources.

Hive Digital executives told Cointelegraph in September that the company repurposed a portion of its Nvidia GPUs for AI tasks, which can generate more than $2.00 per hour compared to just $0.12 per hour for crypto mining.

Other miners have followed suit, including Core Scientific, Hut8 and Bit Digital. Their pivot was emphasized in an October mining report by asset manager CoinShares, which said less profitable Bitcoin mining “may explain the rising trend of mining companies diversifying their income streams to include AI.”

The cost per mined Bitcoin has essentially doubled following the April 2024 halving. Source: CoinShares

Miner diversification was also a key takeaway from a January report by Digital Mining Solutions and BitcoinMiningStock.io, which listed high-performance computing and AI as offering a “predictable revenue stream to buffer against mining volatility.”

High-performance computing and AI applications account for a growing share of miner revenues. Source: Digital Mining Solutions

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