HIVE Blockchain Technologies Ltd (OTCMKTS: HVBTF) started the year on a roll, rallying by more than 100% as sentiments in the broader cryptocurrency sector turned bullish. The rally aroused suggestions that the stock might as well have bottomed out.
HIVE Blockchain Price Analysis
Fast forward, the stock has come under immense bearish pressure, in recent weeks, depicted by a 20% plus slide from this year highs. The pullback raises serious concerns about the stock’s long-term prospects given that it comes at a time when the broader sector is trending higher.
Management wrangles pitying the company’s board and majority shareholder, (Genesis Mining) is the latest tailwind pilling pressure on HIVE Blockchain market sentiments. The emerging bearish trend is staring at support the $0.40 level.
Above the $0.40 technical level, HIVE Blockchain remains well supported for further upside action. Conversely, a breach of the support level could result in the acceleration of the downward pressure that could see the stock plunging to the $0.25 mark, seen as the next support level.
HIVE Blockchain needs to hold above the $0.40 mark to have any chance of taking out the $0.60 resistance level as part of the emerging uptrend.
About HIVE Blockchain
HIVE Blockchain is a cryptocurrency and blockchain technology focused company. The company operates a cryptocurrency mining firm through which it generates revenues through the mining of digital currencies. The company has also inked strategic partnerships with Genesis Mining Ltd for the building of the next generation blockchain infrastructure.
Why is HIVE Blockchain Tanking?
HIVE Blockchain market sentiments have taken a significant hit in recent weeks amidst claims that Genesis Mining, which owns 26% of the company, is trying to take over the Board. Reports indicate that the shareholder has already requisitioned a meeting of Shareholders to remove current directors and elect a new board of directors.
In response to the push, HIVE Blockchain board has set up an independent Special committee to deal with contractual disputes between the company and Genesis Mining. The management standoff stems from a formal notice issued by HIVE that accused Genesis Mining of material breaches of the Master Service Agreement.
HIVE Blockchain claims to have asked Genesis Mining to provide a review of electricity pricing in Iceland and Sweden on more than one occasion. Under the terms of the MSA, HIVE is entitled to Genesis Mining cost for power. HIVE Blockchain is crying foul over what it terms as unilateral increases to power charges that seem to have taken a toll on its profitability.
HIVE Blockchain alleges that the material breaches could as well have led to losses of as much as $50 million.
“We are frustrated that Genesis unilaterally gave notice of increased costs in Sweden and services under the MSA have not been ‘performed in a professional and workmanlike manner in accordance with the highest industry standards’ as required by the MSA. It is disappointing that Genesis has reacted by attempting to eliminate the dispute by taking control of the HIVE board,” explained CEO Frank Holmes.
Net Loss Concerns
The management standoff comes on the heels of HIVE Blockchain reporting mixed Q3 financial results depicted by widening net loss. The company says it generated income of $8.4 million, which led to a gross mining margin loss of $2.2 million. Net loss widened to -$36.4 million for the period.
On the positive side, the company mined 28,343 Ethereum, representing a 45% increase from second quarter production of 19,569. In defense of the mixed results, the CEO insists that the cryptocurrency sector continues to undergo significant volatility amidst evolving regulatory review and fluctuations in cryptocurrency prices.
“HIVE has remained committed to deploying infrastructure assets and diversifying our business mix to commence mining of new coins. We continue to accumulate Ethereum and Ethereum Classic and in the third quarter began adding Bitcoin to our coin inventory,” explained Mr. Holmes.
HIVE Blockchain remains well positioned to bottom out after the underperformance of 2018 on the broader cryptocurrency sector turning bullish. However, management squabbles involving the largest shareholder threatens to erode all the gains accrued over the past few weeks.
Amidst the squabbles, the company has shown improved operational efficiency depicted by an increase in mining activities. A spike in cryptocurrency prices is positive that should strengthen the company’s margins.
For investors eyeing opportunities in the stock, it might be wise to wait and see if HIVE Blockchain will stabilize above the $0.40 mark in view of the recent pullback.
We will be updating our subscribers as soon as we know more. For the latest updates on HVBTF, sign up below!
Disclosure: We have no position in HVBTF and have not been compensated for this article.