Crypto mining firm Hive Blockchain (HIVE) slid to a fiscal third-quarter loss as the Ethereum blockchain’s switch to proof-of-stake validation cut its revenue and gross mining margin by about 50%.
The Vancouver-based firm reported a net loss of $90 million, or $1.09 a share, for the quarter ended Dec. 31, compared with profit of $51.2 million, or $0.66 a share, the year before, it said in a Tuesday release. It had a profit of $37 million, or $0.45 per share, in the previous three months.
The last three months of 2022 was the first quarter Hive didn’t mine any ether following Ethereum’s “Merge” upgrade in September that ended the blockchain’s proof-of-work validation method. Revenue was also hit by the depressed price of bitcoin.
Hive is using some of its graphics processing units (GPUs), formerly used to mine ether, to mine other crypto tokens that it then converts into bitcoin. Its post-Merge strategy also includes launching HIVE Performance Cloud, redirecting its GPUs to support high-performance computing workloads other than mining.
“This is an evolution of our skillset as a technology company and sets the stage for a new era in HIVE’s outlay of technology services,” CEO of Hive Aydin Kilic, who took over Jan. 17, said in the statement.
Read more: Ex-Ethereum Miners Token Hop to Stay Alive After the Merge
In current market conditions, the cloud segment is 25 times more profitable than mining when measuring in dollars per megawatt hour, or electricity consumption, Hive said Tuesday. Hive expects $1 million of annual revenue on a run-rate basis for this business line.
Read more: Hive Blockchain Deploys First Intel-Powered Bitcoin Mining Machines