Why Did Hive (TSXV:HIVE) Stock Surge Over 4%?

Hive Blockchain Technologies (TSXV:HIVE) stock surged 4% as it announced a partnership with Nvidia. See what doors this partnership opens.

Puja Tayal

Author Bio

Puja Tayal grew up in a small-business family where dinner conversations often centred on working capital and savings. Her early experiences with investing, particularly during the 2008 financial crisis, shaped her approach to understanding markets and evaluating investment opportunities. She began her career at a mutual fund company before moving into investor education and financial writing for asset and wealth management firms. Before joining The Motley Fool, Puja wrote for Market Realist, where she extensively covered the semiconductor industry. Her published work has also appeared in The Indian Express. Puja believes every stock has a story that can help investors understand its potential returns. She combines business analysis with different investing approaches to help investors make informed decisions and align their portfolios with their long-term financial goals. Outside of finance, Puja enjoys long drives, catching up with friends, watching superhero and science-fiction movies, and managing her family portfolio. She also has a keen interest in artificial intelligence and its potential to reshape the world.

Education

Bachelor's degree in Accounting and Finance, University of Mumbai (2007)
CFA Level I

Areas of Expertise

Qualitative company analysis, management strategy, risk assessment, long-term investing, portfolio diversification and rebalancing, dividend reinvestment, cyclical growth opportunities, compounding strategies, growth stocks, and dividend stocks.

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Favorite Investment Quote

"Risk comes from not knowing what you're doing." — Warren Buffett

Published July 2, 2021 3:08 pm EDT

Hive Blockchain Technologies (TSXV:HIVE) stock surged more than 4% today, even when Bitcoin price fell 2.75%. The stock surge as the company joined the NVIDIA (NASDAQ: NVDA) Partner Network (NPN) Cloud Service Provider program. This shows that Hive is serious about exploring its options in cloud computing.

Hive explores cloud computing opportunities

Hive has agreed to purchase NVIDIA’s data centre graphic processing units (GPU) worth over US$66 million. Before now, Hive used GPUs to mine Bitcoin and Ethereum at its data center farms in Canada, Sweden, and Iceland.

But the regulatory crackdown by China and United Kingdom has got Hive thinking, and it decided to diversify its revenue streams. Hive has a large capacity for high-performance graphic computing. Graphic cards act as accelerators that boost computing power.

Hive, in its last earnings, stated that it is exploring other GPU applications like artificial intelligence (AI), graphic rendering, and private blockchain computing. Since then, it has invested in Alpha Sigma Capital Fund that finances those companies working on various applications of blockchain technology. Its latest partnership with Nvidia strengthens its move from diversifying beyond crypto mining into cloud computing.

Many companies across different verticals use Nvidia’s GPUs for AI and graphic needs. Nvidia is at the forefront in autonomous driving, PC and cloud gaming, and AI at the edge. Nvidia is already a market leader in the discrete GPU space, supplying the most advanced hardware to the top cloud companies.

The cloud computing opportunity

ResearchAndMarkets.com expects the global cloud computing market to grow at a compound annual growth rate (CAGR) of 17.5% in the 2020-2025 period. Even Microsoft, IBM, and Amazon are eyeing their cloud computing services for growth as their core business stagnates. Until now, IT, telecom, banking, finance, and insurance service (BFSI), and media and entertainment were the leading users of the cloud.

But the pandemic has accelerated digital business transformation, encouraging more enterprise customers to put their business on the cloud.

Moreover, the growing internet penetration and the 5G rollout are building an infrastructure where AI at the edge will become a reality. The proliferation of the internet of things (IoT) and autonomous vehicles will need all possible AI capacity.

How Hive can leverage GPU computing

Hive currently earns revenue by selling BTC and ETH in the market and hosting computing capacity to miners. Hive can use its data centre farms to host GPU computing to enterprises. For instance, BlackBerry uses Amazon Web Services for its IVY platform.

The enterprise cloud computing services will bring steady cash flow for Hive. And whenever another crypto-mania comes, it will have sufficient BTC and ETH inventory to act as a crypto ETF.

Foolish takeaway

I am bullish on Hive not because of its crypto exposure but rather its move into other AI and blockchain avenues. Even Warren Buffett, who despises BTC, is bullish on the possibilities of blockchain technology. If you invest in Hive today, it holds the potential to grow your money multiple folds in the next five years.