- Hive Digital stock has soared in the past few months.
- The company is accelerating its strategy to become a major data center player.
- The stock has formed some bullish patterns, pointing to more gains.
HIVE Digital stock price has soared this year as the Bitcoin mining company accelerated its strategic shift towards high-performance computing (HPC). It jumped to a high of $3.95, its highest point since November last year and 130% above its lowest point this year.
HIVE Digital Stock Jumps Amid AI Pivot
The Bitcoin mining industry is facing major headwinds as the BTC price remains below $100,000 and it continues to underperform the broader market.
As a result, most companies in the industry, including popular ones like MARA, IREN, and TeraWulf, have all pivoted to the booming AI industry. These companies have been inspired by CoreWeave, a company whose revenue backlog has jumped to nearly $100 billion.
HIVE Digital, a Canadian company, has pivoted to the industry as it seeks to gain large contracts by top hyperscalers like Microsoft and Google. In a statement this week, the company said that it was investing CAD $3.5 billion in a new facility in Ontario.
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It has already acquired 25 acres of land for $58 million and plans to take the facility online in the second half of the year. This plant, which will have 100,000 GPUs, will be powered largely by hydroelectric power. In a statement, the CEO said:
“At full build-out, this intelligence factory will deploy over 100,000 GPUs, creating one of North America’s largest domestically controlled AI clusters.”
BUZZ, its subsidiary, already has 5,500 GPUs online and is making money. As such, the hope is that the ongoing expansion will attract more hyperscalers, especially those needing a presence in Canada.
The neocloud industry is doing well as demand for computing power accelerates. Indeed, the four biggest companies in the tech industry plan to spend over $725 billion in capital expenditure this year.
These companies have made some major announcements recently. For example, Meta Platforms reached a $27 billion with Nebius, while CoreWeave has announced deals worth over $100 billion. IREN reached a $9.7 billion deal with Microsoft last year.
HIVE Faces Some Major Risks Ahead
Still, HIVE stock faces two main risks. First, there are signs that the industry has become saturated, with CoreWeave and Nebius emerging as key winners. As such, the company may struggle to attract the large customers.
Second, the company will need substantial sums of cash to expand its business. As a result, as we have seen with other neocloud companies, it will need to borrow heavily while diluting its shareholders.
Besides, the most recent numbers showed that it ended last year with $14 million in cash and a combined current assets of $90 million. Therefore, it will need to raise huge sums in the coming years.
HIVE Digital Share Price Chart Analysis
HIVE stock chart | Source: TradingView
The daily chart reveals that the HIVE stock price bottomed at $1.73 and then started going up to a high of $4 today. A closer look shows that the stock is about to form a golden cross pattern as the 50-day and 200-day Weighted Moving Averages (WMA) near their crossover.
The stock has also formed a cup-and-handle pattern. It has moved above the upper side of this pattern and is nearing the 38.2% Fibonacci Retracement level.
Therefore, the most likely scenario is where the stock consolidates or even pulls back to form the handle section. It will then rebound in the coming days or weeks, potentially to the 61.8% retracement point at $5.50, which is up by 43% above the current level.
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