HIVE Blockchain technologies is a

hyper overvalued Pump & Dump

SCAM GET OUT!
Sunday, November 5th, 2017. Version # 00019678EYZKGDQTQV
HIVE is a massive institutional-level Pump & Dump that involves the management & advisors,
core investors and the brokerage(s) that facilitated the various financing and transactions
(collectively referred to in this report as The Pumpers). This was only made possible by the
cryptoasset/blockchain hype of 2017, The Pumpers seeing the insane levels of interest for
blockchain, created a vehicle through which they could funnel retail money and offload their
positions in an attempt to exploit vulnerable retail investors.
If youre still reading this and have (or know anyone that has) any shares of HIVE, go to your
brokerage RIGHT NOW and SELL the shares, take some time and read through this report and
conduct your own due diligence to see if you are comfortable with holding the stock.
For those that have fundamentally supported the stock online, there is no loss of pride from
selling, this is not a battle of retail Bulls vs. Bears on forums. It has now become the current
retail holders vs. the people who have made 100s of % gain on the stock and are itching to
dump onto you. We do not even have a short position on the stock as the lack of available
shares prevents it, we are writing this report to warn retail investors that do not know or
understand what they are holding. Even if our estimated claims are off by 10x the stock is still
grossly overvalued.
Summary

HIVE is worth around $0.50 +/- $0.25 depending on accuracy of our model
By our calculations there are currently ~83M floating shares/300M. The float will
increase by 200% by end of Q1 2018, starting with 24.6M shares November 8th.
Assuming the completion of ALL announced facilities HIVE will only be able to generate
~1000 ETH/month ($300k USD) net of Genesis fee, and would be trading at a 400x P/E
multiple 2018E
HIVE does not own the real Genesis facilities(i.e. land & warehouse) as per the contract;
only graphics cards which depreciate 20%/pa
Power cost advantage is a marketing mirage & word on the street says its fishy
Who we are and why were writing this report
We first heard of HIVE blockchain technologies shortly after the resumption of trading of the
shares in late September. After hours of late night reading and some math we realized there
was nothing technological or blockchain-related about the company. Their business model did
not make any sense and was flawed from the start. We will remain as just 2 anonymous
individuals with experience on Bay Street coupled with experience mining & trading
cryptocurrencies.
We intended to publish this report before the November 15th lockup expiry, but The Pumpers
decided that given the price run up they would rather unload some of their shares earlier.
Subsequently, this accelerated the timeline for this report.

HIVE lock ups ending will dilute shareholders by 200%

In Fridays trading HIVE reached a high total valuation of $2B. While this may seem impressive,
the number of shares currently available to trade is no more than 85M, with a likely sizable
positions till held by The Pumpers allowing for mania to set in. Below is a chart illustrating the
days until lock up ends for various tranches of shares at various prices.
Take a look at your brokerage account, if the Weighted Average Cost here is lower than
your personal cost basis, these institutional guys will be more than happy to sell below
YOUR price.

Date of Expiry Days Until Expiry #of Shares Cost Basis

08/11/2017 2 24,636,705 $0.30

15/03/2018 130 11,381,130 $0.30
15/12/2017 39 333,333 $0.30
15/02/2018 101 24,636,705 $0.30
11/02/2018 97 4,666,667 $1.50
12/02/2018 98 20,000,000 $1.50
26/02/2018 112 10,715,000 $2.80
26/02/2018 112 10,715,000 $3.50
10/12/2017 34 37,830,000 $0.30
08/01/2018 63 17,170,000 $0.30
Total & Weighted Average Cost Basis: 162,084,540 $0.86

HIVEs volume on Friday was just a measly 21M, but also its largest volume day. At what price
do you think the market will clear 24M shares acquired at $0.30? We dont know, but we find out
Wednesday.
We also havent heard of any Q3 earnings announcements for HIVE, but why would they want
to report how much they were mining before share lock up expires? Most companies report
earnings for Q4 2017 near March/April 2018, conveniently right after most of the shares become
free floating, with only ~15% remaining locked.
Even if The Pumpers sell at $1 they have still 3x-6x their return at a minimum, they are, relative
to retail investors, price insensitive.
How much cryptocurrency can the facilities even mine?
Currently HIVE has purchased 3 facilities from Genesis. Below we tabulate the total
hashpower for ETH using the assumptions of (Samsung gddr5, RX470, 106-100):
Facility 1 Iceland US$ 9 Million & 67,975,428 Shares

As per the September 14th filing statement, Facility 1 will contain 2,301 GPU cards with
an optimistic assumption of 30 MH/s per individual card gives us roughly 69.03 GH/s
hashpower at Facility 1
Facility 2 Iceland US$ 5 Million & 2,000,000 Shares

Second data centre was said to increase hashpower by 70%, bringing aggregate
hashing power now to 117.351 GH/s (1 and 2 are Iceland-based)

Facility 3 Sweden US$ 22 Million

Third data centre was said to increase hashpower by 175%, bringing aggregate hashing
power now to 322.715 GH/s (completed in Dec 2017)

Facility 3 Phase II Sweden US$ 22 Million

The expansion on the Sweden data center states that hashpower will afterwards be
aggregated at roughly 78% Sweden and 22% Iceland
Assuming total Icelandic hashpower was 117.351 GH/s, this brings aggregate hashing
power to 533.413 GH/s (117.351/0.22)
To Summarize: The initial hashpower of Facility 1 is 69GH/s, meaning that our final number of
533GH/s is 7.7x the Facility 1 hashpower.

As per the September 21st release we know there was a revision of monthly fees, and these
fees will likely continue to increase proportionally to the number of facilities and hashpower of
the underlying. Current Hashpower calculations are specific to ETH, which is currently the most
profitable cryptocurrency to mine. At current rates, this leads to approximately 2,500 ETH, (the
most profitable altcoin) generated /month.

Assuming stable run-rate of $300USD/ETH, we get aggregate revenues per month across all
facilities of ~2500x300 = $750,000/month of unrealized revenue. The original MSA between
Genesis and HIVE called for $144,650/month in fixed servicing costs to be paid to Genesis for
Facility 1 ONLY. There are now 3x facilities with 7.72x more hashpower.

Assuming these costs only increase 3x given the addition of 2 additional facilities (incredibly
unlikely), this leaves HIVE with $316,050/month in Revenue (VERY optimistic scenario) before:
SG&A, Depreciation, Taxes and any other expenses. As HIVE has stated they intend to only
sell enough cryptocurrency to cover their fixed costs, we calculate that HIVE will be selling
roughly 1447 ETH/month to cover their fixed costs ($433,950/300)
This leaves them with only approximately ~1,000 ETH per month stockpiled in their reserves, or
an annual build of ~12,000 ETH (assuming no difficulty changes, $300/ETH constant run-rate
price, or any other factors).
At the end of a full year, assuming an ETH accumulation of ~12,000, HIVE will own
approximately $3.6 million USD worth of ETH. This is very much at odds with deceptive graphs
in the investor presentation.

The investor presentation slides feature a deceptively named Illustrative trailing 12-month
accumulation of ETH, which ONLY represent a unique one-off combination of low mining
difficulty and exponential price acceleration trends. Interestingly, this deceptive graph makes a
strong case for our point. Note how the Coin inventory goes nearly flat for the 5-month period
from May to September. If we look closely it looks like it rises from about 520k to 535k. Feel free
to use any online ethereum mining calculator to verify these results.

Valuation & other considerations

This means the current valuation based on 300M fully diluted shares at prices of $4.71 of over
$1.4B+ only generates a laughable 1,000 ETH/month ($300k after Genesis fee and before
SG&A, Depreciation or Taxes). So assuming in an ideal world where there are no salaries, no
depreciation in cards (there is 20%/pa) and no taxes, at the current valuation and the FULL
production of ALL facilities, the 2018E P/E ratio would be 400x, and this is the Blue Sky best
case scenario. Put in other terms investors are currently paying $4.71/share to get exposure to
$0.012 of ETH price/year. We dont understand why retail investors that want exposure to ETH
would not just invest $4.71 to receive exposure to $4.71
Even if our estimates are off by 50% up or down, would you feel more comfortable with owning
the stock at a 300x P/E ratio? If ETH prices went up 5x to $1500 USD would you be more that
much more comfortable paying $4.71 for $0.06 USD of ETH exposure?
HIVE does not own the data centers Only the rapidly
depreciating Graphics cards inside

This can be found in the actual Master Services Agreement uploaded to SEDAR on September
26th.
This raises some serious questions. HIVE spent the equivalent of $75M of retail investor capital
and issued 70 Million shares for the purchase of, what seems to be ~18,000 (2,301 x 7.72) of
rapidly depreciating GPUs, as per the filings the Genesis assigns a 20% depreciation rate to the
equipment. Thats about $4,000 USD per GPU, about 1000% over underlying value, kind of like
their share price.

HIVE does not have a power cost advantage

HIVEs Iceland facility boasts $.096/KWH, but Chinese mining farms have had access to
cheaper electricity rates & access to newest technology for years. Maybe thats why 70%+ of
bitcoins collective hashrate is in China. The stats wont be much different for other
cryptocurrencies.
Check out this quartz article to see already functioning Chinese facilities much larger than
anything HIVE has procured:
https://qz.com/1055126/photos-china-has-one-of-worlds-largest-bitcoin-mines/
Chinese power costs are extremely low:
http://www.scmp.com/news/china/economy/article/2112085/chinas-bitcoin-miners-limbo-after-
beijing-shuts-down-exchanges
Initially he was confident he could turn a profit because the site is located right next to a
hydropower station and that will cut electricity fees a key operating cost to about 0.25 yuan
per kWh. ($.05/KWH)
https://www.techinasia.com/inner-mongolia-bitcoin-mine
with the local government to access electricity from the State Grid for about four cents per
kilowatt hour
Overall this is just pure marketing.
HIVE word on the street isnt looking good

Conversation 1 with a Portfolio Manager in late September

Anon: Have you ever heard anything about this HIVE thing?
PM: I heard its some sort of blockchain technology company, but dont know too much about it.
GMP is promoting it and sending invites to pitch for their placement.
Anon: Just heard about it from a friend, saw GMP and Fiore are involved. What do you think?
PM: Yeah, from what I see its a bunch of the usual mining promoter guys out there trying to
create hype for this stock. I had one of my analysts do the math and it doesnt make any sense.
Anon: Seems like whenever you add blockchain to a company it rallies nowadays. Why not
short it?
PM: Probably a good short opportunity in the future, but at this point there are not enough
shares or liquidity and seems like there is a lot of people that want this thing to stay afloat until
the share lock out ends

Conversation 2 with Broker 1 in early October

Anon: Hey, know anything about HIVE, been following the name looks sketch.
Broker: Yeah some kinda hot blockchain deal, bunch of guys got in at 0.05 and 0.30 with GMP
& Fiore promoting it
Anon: So typical Bay Street commodity pump eh?
Broker: Seems like it, Ive never seen anything like this before. The level of promotion is unreal
someone really wants to move this thing.

Conversation 3 with large Cryptocurrency mining operator

Anon: So if you had a large warehouse facility in Iceland what kind of cards would you be
running? What would their ETH hashpower be?
CryptoGuy: I would probably be running the 1060s or RX 470s which would get something like
25MH/s and 30MH/s respectively in the most optimal set up. There is a way to dual mine more
than one cryptocurrency as well, which would increase your power consumption by 10% and
increase your yield by 10-30% depending on market conditions.
Anon: So to keep it simple could I just increase whatever the revenue they are earning by 30%
as a proxy?
CryptoGuy: Yeah that would work, but would be more than it currently is and very optimistic
Anon: No worries going for the most optimistic scenario here. What do you see on the
forums, and your network in terms of crypto mining activity? Is there more interest in mining
farms?
CryptoGuy: I would say some guys are trying to exit/downsize or at least not expand their
facilities, so I am surprised these HIVE guys are doing it. There is still solid demand for the
cards most of these guys are using, so they can just resell them to the next guy and wait for the
newer technology to come around. Coupled with the weaker alt-market pricing, since bitcoin is
rallying, capital moving there and the specialized ASIC Miners for bitcoin make using GPUs for
mining unprofitable.
Anon: All right that helps, a lot - Thanks

Conclusion
Our analysis is done based on the filings available. We are open to transparency, but given the
information this looks like a scheme by The Pumpers to unload their shares onto the retail
community and the 24 million November 8th shares are just the beginning.
When a company fails to disclose important aspects of a straightforward business (mining
cryptocurrencies) the mind wanders to a worst case scenario.
The current interest in blockchain technology has created an opportunity for new technological
innovation globally. However, this innovation wont be coming from HIVE Blockchain
Technologies. As an investment in the best of best case scenarios HIVE still has to fall 80%+.
We would love to spend my Sunday night doing something other than work, but we actually
read the filings.
The troubles with HIVE are not over, we have uncovered more facts and suspicious
activity that indicates there are deeper issues, but are currently investigating and
formatting the content for a later release.

Here are a number of things that should be released immediately by management to begin
rectify some of these claims:
1) Disclose hashing power, graphics card model and number of units in their filings for each
facility
2) Provide a guidance of the number and type of cryptocurrencies that were mined each
month in a press releases
3) Provide details regarding facility ownership and recurring fees paid to Genesis for all
new facilities
4) All redacted information in contracts & other filings