Hive Blockchain (Genesis Mining Partner) Q3 Highlights

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Extract from the Management’s Discussion and Analysis of Financial Condition and Results of Operations. December 31, 2017.

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Outlook

• HIVE continues to execute on its aggressive growth strategy to maintain its position as a market leader in the blockchain infrastructure industry and will increase operations to 44.2 MW of data centre equipment by September 2018 with a total of $75.5 million of the $78 million cost for the remaining 2018 projects already paid.
• HIVE’s annualized run rate revenue is projected to be $153 million once its announced Sweden expansion is fully online. The annualized run rate is calculated strictly on the basis of value of the digital currency earned at the time of mining, and does not include any adjustment for revaluation gains (or losses) for digital currencies held after that date.
• The following chart shows the growth in HIVE’s annualized run rate revenue for each phase of its announced 2018 expansion based on crypto prices and network assumptions as of February 26, 2018 noted below:

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The above illustrative annualized run rate revenue is calculated using the below assumptions as at February 26, 2018:

• Ethereum Price: US$868
• Ethereum Network Hash Rate: 247,529GH/s
• Total Daily Ethereum Rewards: 20,355 Ethereum
• Bitcoin Price: US$10,349
• Bitcoin Network Hash Rate: 21,079PH/s
• Total Daily Bitcoin Rewards: US$18.3M

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Q3 Highlights

• Expanded operations in Iceland with acquisition of second phase of GPU-based mining rigs from Genesis Mining Ltd. (“Genesis”), bringing the Company’s digital currency mining footprint in Iceland to 3.8 megawatts (“MW”);
• Solidified strategic partnership with Genesis with agreements to jointly construct two state-of-the-art data centres in Sweden to add a further 40.4 MW of capacity by September 2018, including 20.4 MW dedicated to mining GPU-based digital currencies such as Ethereum, Ethereum Classic and ZCash (the “Sweden GPU Data Centre) and 20.0 MW dedicated to mining SHA-256-based digital currencies such as Bitcoin and Bitcoin Cash (the “Sweden Bitcoin Data Centre”);
• Raised $147 million (CDN $187 million) of growth capital in the quarter to finance rapid expansion and future growth opportunities and investments;
• Generated revenues of $3,274,186, with a gross mining margin of $2,382,687, from mining of digital currencies at Iceland facilities;
• Net income of $149,724 for the period;
• Accumulated and held $5,827,805 worth of newly minted Ethereum, Ethereum Classic and ZCash as at December 31, 2017;
• Return on investment of 36% by December 2017 through investment of $16,284,690 in data centre equipment since September 2017 which has generated digital currencies with a value of $5,827,805.

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Performance

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References

HIVE Blockchain Investor Relations
https://www.hiveblockchain.com/medias/uploads/MDA.PDF