HIVE Blockchain Technologies (TSXV:HIVE) stock has been an excellent proxy for Bitcoin. The cryptocurrency miner tends to reflect the industry’s momentum, which is probably why it’s lost roughly half its value in recent months.
However, there are three major catalysts on the horizon that could catapult HIVE stock to fresh all-time highs. Here’s a closer look.
Cleaner Bitcoin
HIVE operations and mining facilities are based in Sweden, Iceland, and Canada. That makes it one of the cleanest producers of digital assets. The majority of electricity produced in these nations is derived from renewable sources such as geothermal and hydroelectric.
As Elon Musk intensifies the focus on cleaner Bitcoin mining, producers like HIVE seem well positioned to dominate the industry in the near future.
Bitcoin’s major upgrades
Bitcoin miners like HIVE Blockchain recently signaled their consent for a major upgrade to the network. The Taproot upgrade will be implemented in November and will reduce the space each block on the network occupies. This reduces fees and makes transactions more efficient. It also opens the door for more smart contracts on the Bitcoin network.
This major upgrade should enhance the digital asset’s value, which is great news for HIVE stock investors.
El Salvador
Last week, El Salvador became the first nation to declare BTC legal tender. The government is now considering whether government employees can be paid in BTC. Lawmakers also believe the adoption of digital assets will reduce the transaction fees of remittances that constitute 20% of the national economy. This move could change the way other nations and regulators treat digital currencies. It also marks the growing adoption of Bitcoin as a legitimate asset class.
HIVE stands to benefit from this, as its underlying asset gains wider acceptance.
Fundamentals
Bitcoin isn’t the only asset HIVE is focused on. The company also mines Ethereum and Ethereum Classic, while its reserves are spread across different digital and fiat assets. Diversified mining operations and treasury assets means HIVE can shrug off downturns better than any individual crypto asset.
Additionally, the company boasts of a tremendous track record in generating consistent revenues. In the third quarter, the company generated a 174% increase in income to $13.7 million.
As of the end of 2020, the company’s unrealized gain from investments stood at $149 million. Considering Bitcoin’s performance year to date and the fact that HIVE has probably generated more assets since the start of the year, these investments could be worth more by now.
HIVE stock is not cheap by any standards. The stock is currently trading with a price-to-sales multiple of 31 and a price-to-book multiple of 20. However, these three key catalysts could help the company grow into its valuation over time.
Bottom line
The focus on renewable energy for Bitcoin mining puts HIVE in a favourable position. Meanwhile, growing adoption of the cryptocurrency and an upcoming major update to the network could greatly enhance its value. HIVE stock should be on your radar if you’re optimistic about the future of this sector.
