HIVE is a crypto miner with mining assets in Canada, Sweden, and Iceland.At current BTC and ETH prices, HIVE appears to be mining at negative gross margins.HIVE is the most exposed to Ethereum, which is transitioning to Proof-of-Stake in the next few months and could make mining equipment obsolete.HIVE Blockchain Technologies Ltd. (HIVE) stock rose almost 8% on the back of its recently released Q4/2022 earnings. I find the reaction puzzling as I found the earnings report to be negative, while the stock reacted very positively. Of course this could simply be because I'm an old dinosaur and I just don't "get" the crypto story. But below, I'll highlight some of the red flags I saw from HIVE's earnings report and business in general.Mining At Negative Gross Margin?HIVE reported record $211 million in revenues and $79 million in earnings for fiscal 2022, and a 545% growth in BTC mining hashrate. All fine and good, what's the issue?The issue I have is the quarterly progression, especially in the mining margins. HIVE has a March year-end, so it's Q4 is the calendar quarter ended March 31, 2022.Figure 1 is reproduced from the company's Q4 MD&A report.Figure 1 - HIVE quarterly earnings (HIVE Q4/2022 MD&A)Notice HIVE's Q4 Gross Mining Margin was 46%. HIVE defines Gross Mining Margin as:The Gross mining margin is defined as revenue less direct cash costs, being operating and maintenance costs.In other words, it's revenues from se...
