Good morning everyone, thank you for joining us today for our webcast announcing HIVE Blockchain Technologies Ltd. results for the second quarter ended September 30th, 2020. My name is Holly Schoenfeldt. Except for the statements of historical facts, this presentation contains forward-looking information within the meaning of the applicable Canadian securities legislation that is based on expectations, estimates, and assumptions as of the date of this presentation. Please see the corresponding slide two up on your screen for full disclosures. Now I'm pleased to welcome the presenters for today's program, Frank Holmes, Interim Executive Chairman, Darcy Daubaras, Chief Financial Officer, and Tobias Ebel, Director. Now I would like to hand the presentation over to Frank to start us off.
Well, thank you, Holly, and thank you all you shareholders out there listening that have been loyal through all the challenges we've had to deal with. I'm really proud and thrilled to share with you, we've weathered that storm and all those difficulties of the winter and the largest shareholder, all those changes couldn't have been done without Darcy and Tobias. Tobias is on. Tobias is a musician. He is a violinist extraordinaire. He's a tax lawyer, and he's been very helpful for us with everything we've done in Europe, in the restructure and repositioning of HIVE Blockchain Technologies to be able to announce our record revenue and earnings. I'm thrilled to share that with you. Let's go quickly. As you can see, like a gold stock, when gold goes up, gold stocks historically have more volatility and they far outperform. Lots of good visuals to show you.
You can see Ethereum's had a spectacular move this year, but nothing like HIVE has been able to do for the shareholders. Next, please. You're also going to hear when it comes to stock price performance, we have the biggest market cap, but I notice that RIOT just surpassed us, but when it comes to liquidity, and it comes to overall performance and the breadth of our shareholders around the world, HIVE has clearly responded to that audience of investors that do not want to open up an account with a wallet and have to put their own Bitcoin and Ethereum into it, that they're using us as a proxy. I think, too, that the sort of interest in HIVE is that we are the largest Ethereum producer.
As an industrial scale, as a public company for traders and investors to go into, clearly this is attractive and a more wide and deep audience of traders and investors. Never forget the DNA of volatility. In every asset class, there is its own DNA of volatility. As you can see, the S&P is ±1%, but when it comes to Bitcoin, it's ±5%. Interestingly enough, over a 10-day trading period, the highest volatility out of gold stocks, oil, you name it is Bitcoin. Ethereum is just slightly greater volatility than Bitcoin itself. It's important that if you're going to this asset class or you're a new shareholder contemplating HIVE, that you respect the DNA of its volatility. We move with the price action of Ethereum and Bitcoin. Next, please. Bitcoin price increases following most recent halving.
As you can see, if you go back at this time period of the golden cross, where the 50-day moving average crossed above the 200-day, it happened basically 10 days after the Bitcoin halving, but there are still so many negative people out there, and there you can see Bitcoin has slowly climbed that wall of worry and doubt. Price returns following Bitcoin halving. This is an example what took place in the previous ones and where we are today, when you look at days since the halving took place. This is spectacular performance, and there's a rational reason for it. There are many more Bitcoin wallets. There are many more retail traders and investors globally, and institutions have come into Bitcoin in the past four years. Next, please.
I want to turn it over to Darcy to give you the deep down on the financial review, and what's driving our successes. Darcy?
Great. Thanks, Frank. As you can see here, we're looking at our capital structure. As we've had before, our key shareholder is still Genesis Mining at 15.9%. This is based on the most recent and available public disclosure that's been provided by Genesis to the markets and provided through their requirements on SEDAR, and you can see what our issued and outstanding is. Next slide, please. Throughout the quarter, we're continuing to have Ethereum driving our production and business, both in Iceland and Sweden. The year-over-year increase in Ethereum mining has been driven by this reboot in Sweden of the mining facilities that we took over in July of 2019 from our former Genesis Mining, who was running the facilities for us. On the Bitcoin side, we do have lower than what we have had in the past.
That is because we got out of our Hashrate cloud mining Bitcoin contract that we had because it was unprofitable moving forward. Next slide. Here we have a look at our income from digital currency mining quarter-over-quarter, comparing it to the following previous year. This quarterly income from digital currency mining represents HIVE's highest and best ever quarterly results at CAD 13.0 million for the second quarter of 2021. This increase in income versus the same quarter in fiscal 2020 was primarily due to higher Ether prices during the quarter. These higher Ether received was partially as a result of the sharp increase in transaction fees received as part of DeFi. All of this, as I mentioned earlier, partially offset by a decline in the production of the Bitcoin mining stemming from the shutdown of the prior cloud mining agreements in Q3 fiscal 2020.
Our gross mining margin, which equates to our revenues minus direct operating and maintenance costs, increased substantially in absolute dollars and remained strong as a percentage of revenues at 71%. The gross mining margin is also partially dependent on various external network factors. These include the mining difficulty, the amount of digital currency rewards that the miners receive, and of course, the market price of the digital currencies at the time of mining. Next slide, please. As you can see, and the same as what we had in Q1, the Ethereum mining margins have enabled HIVE Blockchain to make our initial acquisition into the Bitcoin mining space and gives us the opportunity to diversify our business, which we did in April of this year by purchasing the Lachute Bitcoin mining facility in Quebec. As I mentioned before, this is our fourth consecutive quarter of positive adjusted EBITDA and profitability.
This is a huge accomplishment for the HIVE team across the board, and it's coming from the focus that we've been putting since myself and Frank sort of started this, as we called it, HIVE 2.0, focusing on the operations and focusing on the reduction of costs. The gross mining margin and adjusted EBITDA are non-IFRS figures, which I want to make sure I'm highlighting to everybody on the call. The net income for the second quarter of fiscal 2021 was CAD 9.2 million. This is a huge increase, obviously, from what we had in the prior quarter.
As discussed before, this gross profit and adjusted EBITDA and net income, this is all as a result of our concerted efforts to reduce our operating costs, take advantage of the opportunities that have been given to us, and the biggest thing is when we were able to take control of our facilities and bring them under our own umbrella and control our costs. Also we've been very fortunate to take advantage of the higher average digital currency prices that we experienced this quarter versus what was experienced in the markets in the prior year. Next slide, please.
Great. Thanks, Darcy. I'll come back to Darcy and then down to Toby. We reported here earlier this year in September at the end of the month that the Ethereum mining production is driven by DeFi demand. Some of these additional transaction fees which we've been able to receive, they're a big benefit to anyone mining Ethereum, and we've had several of them during the quarter, these bonuses. What's really important to recognize is that when some of these DeFi, decentralized finance models, are actually going out and buying Ethereum, people taking Ethereum and they deposit it into an investment vehicle that turn around and does securities or Ethereum lending against Ethereum and pays you a yield.
What that has done is also taken a number of Ethereum supply out of the market, which is an important part whenever you take a look at as copper today is making an eight-year high. Well, predominantly, that's because there's been supply side restrictions along with a reboot in demand. That's what I think is happening here. There's a reboot in demand for Ethereum, and they're going to continue. If you go, by the way, to Cointelegraph is always pinging you, and it's always sending you new information, and you won't believe how many articles, if you're not aware, on this sort of build -out of DeFi as an industry, as a subset of the blockchain. It reminds me of what took place when Ethereum ran to CAD 1,400.
The backbone of that was ICOs, all these initial coin offerings, all backed by Ethereum as a sort of the collateral behind them, and that drove Ethereum prices. The resurgence of DeFi is another very significant factor supporting the long-term demand for Ethereum. Next, please. In my opinion. This is a visual that you can get from various chart services, and basically it shows you some of the transaction fees and bonuses you get. As you can see here, what Darcy talked about is that during the quarter, there were several of these transaction bonuses and even coming into this quarter. It's very public on what those benefits are for investors. Next, please. Healthy balance sheet. As you can see, the cash on hand, accounts receivable, cryptocurrencies. Darcy and I were chatting about this yesterday and how much that's improved from a year ago.
Our overall economic position has been much stronger, and we needed that. What's happened, what's been a big challenge that's going to take place, which is a big benefit because we're ahead of that curve, is what's called a DAG file. A DAG file is basically that long piece of blockchain that has to get validated on a regular basis. It's getting so long and so big that the 4 GB memory chips just can't process it. It's going to start slowing down your rewards, so you're going to be non-competitive. I think by the end of February, these 4 GB chips are going to be basically no longer viable for mining Ethereum. During this quarter, we have been taking a lot of our cash and deploying and upgrading.
We've mentioned this on previous presentations, but there's been a big spend this quarter on upgrading all of our facilities. We're still halfway there, more than halfway there, but we've still got a long way to go for us. We think by the end of January, we'll be fully rebooted. Every one of our 4 GB chips will be replaced by 8 GB and be able to participate. Now, what will that mean for us is that we believe that most of the world is mining Ethereum on 4 GB memory chips. They're going to fade away. They're going to be a non-event. The difficulty is going to drop, and our presence within mining is going to be even bigger. The reason why I say this is because this is on previous cycles when technology all of a sudden wipes out the competition.
I want to turn over to Tobias. Tobias Ebel is a very important, basically in the ground floor of the launch and the creation of Genesis Mining. He turned around with the creation of HIVE. He is a tax lawyer and has tremendous depth and experience in crypto and also capital markets in Europe. One of the big parts he's helped push us along in this direction as we've taken control of our destiny is the ESG strategy. Which is becoming more and more important as you look at securities and ETF fund flows and mutual fund flows, is where is our position? One of the big parts is that we only use green energy in what we're seeing in Sweden. We started in Iceland and now in Canada, in Quebec.
Hopefully we get this transaction closed with GPU.ONE with the founder diligence, and that will give us once again a green energy, and it'll be in New Brunswick. I want to turn this over to Toby to talk about this sort of ESG strategy for millennials and social issues, as you can see in the next visual, please. Why it's important for those investors. Toby, you're in charge here.
Thank you so much, Frank. I'm really excited to participate in this webcast now and to bring that news to you shareholders. When we went public three years ago, we had a great vision about cryptocurrencies and also about sustainability of this company, about a strategy including a sustainable business and using energy only from hydropower production, so green energy. What we did now in the last quarters, we even bring this vision of sustainability really to reality, and which is very exciting. We are not only using electricity from hydropower. Our facility is located right beside the hydropower station, the hydropower turbines. What we're also doing is now that we are working together with the hydropower electricity production to spend our availability and ability to reduce the energy demand for the grid. What is the problem?
The problem is that green energy is very promising for the world, but in particular, hydropower production is not fast enough for the always-changing supply and demand in the electricity grid. The demand is always changing from minute to minute even, and the electricity producers are making forecasts of it, but these forecasts are not always in the bandwidth as they have been anticipated. The lead time of a hydropower turbine is something like 15 minutes or so to ramp up electricity production. We say to the hydropower production, "Okay, we can step in here and fill that gap," because the hydropower turbines, they can't ramp up in seconds, in 15 minutes only, but we can switch down our computers in seconds. I'm explaining this to you to give you an understanding what we're doing.
We are working together with the hydropower production, we are spanning the full capacity of our facility, which is 17 MW, to reduce our electricity demand within seconds. We are receiving when actually the supply of electricity and demand of electricity is out of the bandwidths. We are receiving signals from the electricity producer in some kind of routers or so, and we are switching down the computers in seconds, and we are selling this availability of making electricity available to the market. We are getting compensation for that, of course. We are even making a profit with it. We are buying that electricity actually below the market price, below all participants in the market.
We are doing something very exciting and very great because what we are doing is actually as a consequence, we are making the base supply of electricity in the grid possible for many, many more megawatt. Not only that 17 MW, but with a multiplier of maybe 5, 10 or 15 available for the whole electricity grid. That is really an exciting piece of our sustainable strategy and that's what I wanted to share with you, and we are very proud of it. What is also good for the company is we are getting with the compensation, we are buying the electricity now for the next year at around about $0.013. That makes the facility in Sweden definitely profitable anyhow.
Thank you, Toby. What Toby has done for us, it was create a hedging process that you can hedge your costs in Sweden and something with the new management team. He's basically pioneered that for us, the relationships. He did it last year successfully and significantly dropped our costs, probably the lowest of all the public mining companies. Now with this, less than, what, CAD 0.0160 you said is our cost?
Yeah, we locked in the price for the next year at $0.017, but taking into account our compensation that we are getting the electricity cheaper than the rest of the market, cheaper than the spot price, we are ending up in something like $0.013 a kilowatt hour.
Thank you, Toby. What is important, I think, for investors to recognize in this sort of carbon footprint concerns on what we are doing and how we help the community, when everyone in the morning switches on their hairdryers in the cold northern Sweden in the winter, there is a huge spike in demand. The timeline for the, and the infrastructure, as Toby said, is 15 minutes to boot it up. We can download, go down from 20 MW down to 1 MW for only minutes, and maybe an hour, but we get compensated for that and then immediately boot up faster than what they can do. It is our flexibility with our software that we are helping the community. We are helping the overall. What does that mean for Sweden? It means less infrastructure spending, which is CAD billions.
We are a big contributor to the overall ecosystem for recycling of green energy. Next, please. Earlier this year during COVID, we announced the Lachute acquisition. The Quebec, it's been a slow build-out, for numerous reasons. Fortunately, their land has just been sold, new landlords, and we think this will also help fast-track our growth. The biggest issue has been COVID and what you're seeing, if you want to get equipment coming over from Asia, the timelines where people wrote checks for millions of dollars, and they couldn't get the equipment for not weeks, but months, six months out. There was some equipment that we had paid for, and I think we just got 19 S19s or 17 S19s installed because they just showed up, and we should have had those in July. It was a part of a bigger order.
The delivery mechanism, the production mechanism coming out of Asia, the cargo, the shipping of cargo has really created supply chain tensions for every product, for all products. We are experiencing that. The process of building out Quebec has been slower than we anticipated. Nevertheless, we've been adapting and getting more equipment and we're hoping to get this thing upgraded in the next three months, to completely finish what Lachute is. I think that that's an important part. In this ESG strategy, coming back, these are some of the slides. I think we just missed them on the flow here. I think that the reason why I'm reiterating this ESG is just so important today.
I know I have some fellow fund managers listening and who are all ESG compliant, and other ones are sort of just pure looking at the growth and revenue and cash flow. If you look at ETF fund flows, ESG just picks up stocks. It's just amazing to see this direction that's taking place. I think going forward for the branding strategy at HIVE is to really make sure that investors, and the next visual will show you that we are very focused on green energy. That's another part of it. We're happy that we are controlling our destiny because we found out that our other strategic partner was using coal energy in other countries. That was never our vision.
We wanted to stay purely focused on green energy. Now we're doing everything, as Toby points out, to become really conscientious of how we can help. Another part of this whole program, but it's a while out, I think, is the thought processes in Sweden was taking our heat and taking the excess heat we have from mining at our 20 MW facility and using that to build greenhouses that would then you would be able to use to grow tomatoes and grow lettuce and cabbage, et cetera. Therefore, you wouldn't have to ship stuff up from Spain. Prices would be cheaper for local citizens, also you would lower that overall carbon footprint. We are doing a lot into that idea of planning and thinking about it.
Stay tuned to that because I think that we have an exciting story to share with you. What's also really exciting for me to share with you is that HIVE Blockchain has entered into an agreement to buy GPU.ONE's new 50 MW campus at data centers in New Brunswick. It's an interesting transaction. It shares to the shareholders, and it's predominantly a commitment to build out and complete the last building, the facility, which is a de minimis amount of money in the scheme of getting this 50 MW up and fully full throttle by the first quarter of 2021. I really want to thank the team. Saveli Kotz is the founder. He's a special advisor. I'm sure he's on this call. What HIVE needs going to our next level is a great team of honest, ethical, professional people. This is just a great team.
One thing about this ecosystem I found in the crypto world, mining promoters always get the bad rap out of Vancouver. It makes them all look like choir boys. It really is a hard thing to find in that crypto space. I was just so disappointed in so many scams. Everybody reads about people hacking, et cetera, but getting really straight-up professionals, like Saveli's been able to put together, is significant for HIVE to jettison its position and to take it to the 1,000 petahash of Bitcoin mining in the future. Our footprint there is still small when we take a look at the total number of Bitcoins that we're mining in the scheme of all their other peers who are only Bitcoin.
We are the dominant Ethereum player, and I look forward to closing this transaction so that these young superstars can come and help HIVE build out its vision. As you can see, this is a picture of GPU.ONE's facility, and it's just a state-of-the-art building up with access to additional 50 MW of low-cost green energy. I'm going to jump to something else that's important, and we're seeing this in data points, that the number of Bitcoin addresses holding greater than one or equal to one Bitcoin share has continued to grow. It's grown even with the sort of winter that we had in Bitcoin. That means your broader adopters, and that's very big bullish if you apply what's called Metcalfe's law to the idea and the concept of price projection of where Bitcoin has the potential to go to.
I think that next year there's going to be a shortage of equipment, having the equipment and being able to build out an access tool will be very important for that growth profile, which I think we're in a strong position to be able to execute on. The next visual is just another previous halving of Bitcoin, seeing what took place, what the exponential moves are, as you can see on this visual. The next is Ethereum 2.0. This headwind of going from proof of work to proof of stake. I have heard of this story since I first launched Ethereum mining in Iceland in my first investment, and going into HIVE Blockchain back in September of 2017. You meet with institutions, and there's always this was going to happen tomorrow. Ethereum was a bad coin to be mining.
It was nothing but a negative headwind by several institutions. What's interesting is that it hasn't happened. It hasn't happened. Just now, today, is the proof of stake. The nodes of Ethereum have surpassed Bitcoin because people are now pushing in their Ethereum to be able to get a yield on their Ethereum. Once they do that, they can never get back their Ethereum. They can only get a yield on that node. That means the supply of Ethereum is shrinking. Based on my experience in the commodity world, if you have demand that's growing at a modest basis and you have supply contracting at a modest basis, you get tremendous upside movement in that particular commodity. I think that that's important for investors to appreciate that when will you go from proof of work to proof of stake 100%.
In talking to industry leaders and experts that are in the Ethereum space, one of our directors, Olivier, has been in contact and spoken to people that are on the original Ethereum project. They say it's going to take three to four years before that's going to be a serious issue. I think that HIVE will not only be the biggest Ethereum producer and upgrading now all of its GPU memory chips, we'll be in a very strategic position to be a major player in the mining of Ethereum. As we build up our inventory, then we'll have a huge staking node for it. These last few visuals just tell you that the money supply, the G20 finance ministers and treasury central bankers seem to last longer than many presidents and prime ministers. They have their own country club.
They meet on a regular basis. What's important is that they're all fighting COVID-19 in 2020, and you're seeing a conservative money printing. It's not just the U.S. you hear about it's a global phenomena. You're seeing the adoption of Bitcoin and Ethereum growing with this, and those are alternative asset classes, and they're getting the attention of other institutions. Like Paul Tudor Jones, they started buying Bitcoin last year, that's been known for his role in commodities, is all of a sudden becoming a crypto enthusiast and putting capital to work. When you take a look at overall blockchain spending, it's expected to grow in the next five years by 60%. That's just a huge driver. The last visual here is to show you all that HIVE Blockchain trading volume has been trending up. Yesterday, I think it was like 20 million shares.
We're very happy and thank all of those shareholders that have stayed with us. Please recognize that we correlate with Ethereum and Bitcoin price action. Over the past year, if you look at our daily basis now, it used to be 70%, and I think it pushes up something like 92%, the day-to-day price action. We fell from our highs all because Ethereum fell and Bitcoin fell. Bitcoin has come back up. Ethereum is at a bigger move. For us, we think that Ethereum is going to do a big catch up with Bitcoin on a relative basis, and this is only going to benefit HIVE as we're positioned over the next three months to complete our build-out to 8 GB chips.
We think, as I said earlier, that all the 4 GB memory chips will fall inside, the difficulty will drop, the profit margins will rise, and that is what we are excited about in our growth opportunities. We have a couple other visuals you can look at later, just showing you the enthusiasm, the open interest, and just thank you all for being loyal and shareholders, and thank you. Now some questions.
Yes. As Frank mentioned, we're going to open it up to questions right now. Just as a reminder, you can enter questions in the control panel on your screen, but we already have a few that we would like to address. The first one being, Frank, maybe you can speak to this. Are there any plans for a Nasdaq listing?
You can never make a promissory where you're going to get a listed win. It's a no-no to do anything promissory in the regulatory world. Let me paint a picture for you. Our long-term vision, in addition to two things. One is to own our own data centers. That's very important, and get great people to help us that really understand high-density data center management. That is a very important point of that growth. Two is that what we've seen is that HIVE has become a proxy for people that are reluctant to go on exchanges to open up a wallet to buy Bitcoin or Ethereum. They use us as that proxy. To do that, and we know that we have shareholders all over the world, and with that, was to get listed all over the world.
Our vision will be to get listed in the dominant markets, and it's an application process. I know that we trade, we're very liquid in the German market. The German market is the top 10 most active exchanges in the world. We trade millions every day in the U.S. over the counter, in addition to in Canada. It'll be now going globally and just like crypto trades globally, we want HIVE to trade globally.
Thanks, Frank. I have another question here. Darcy, maybe you can address it. Currently, are all coins mined being sold at market during the quarter?
No. What we like to do is we like to maintain an inventory of coins. That's been built up, gone down as markets have moved. What we're doing right now is, in essence, selling what our current production is. As production is happening, we're selling something close to that and maintaining the inventory we've got. We have had to accelerate a little bit of the sale of our coins, and this is taking a look at where the 50-day, 60-day averages are and taking a look at the metrics to fund the upgrades that we're doing in Iceland and Sweden for our 4 GB cards, moving them to 8 GB cards.
As one of the market leaders, we feel it's important to our shareholders and as a company to maintain a good inventory of coins, of Bitcoin and Ethereum because Ethereum will be important moving forward depending on when the changeover happens between proof of stake and proof of work.
I'd just like to add to what Darcy's saying, too, is that had we not had this massive build-out refiguring this big CapEx we did not expect six months ago, then we'd have a much bigger inventory of coins. We use a quant approach, and we did this in the first quarter of this calendar year, where we saw Bitcoin, but Ethereum jumped four standard deviations, trading over 60 days and 20-day rates of change. Mathematically, we sold into that. As it fell dramatically, it went down two standard deviations. We started mining and we built our inventory. We're not afraid short term of losing money on the cost of mining those coins if we can rebuild it in an advantageous position because we do know and we do respect the volatility.
When the coins go these and I write about this at usfunds.com. I've written about it for years now, managing expectations about understanding one of these charts I showed earlier is the DNA of volatility. What happens is that whenever you get the DNA where the price action is up over 20 days and over 60 trading days, which is a quarter, whenever those are both up two and three standard deviations, it is just wise that to sell into that, take that capital and improve your facilities or expand your facilities, buy more equipment to increase your overall production for the next leg up. These things always correct. They're violent when they correct. They correct much faster than they went up, and when they're down dramatically two standard deviations, we don't like to sell coins. We just like to mine them.
We've done that several times now, I would touch wood, say successfully.
Thanks, Frank. I think you both kind of mentioned or touched on this, but so on a longer-term picture, is there a plan to accumulate and then hold Bitcoin and Ethereum?
Well, we're always holding.
Okay.
We always have a hold position, and like I said, had we not had this massive CapEx of CAD 10 million to upgrade all of our chips, then we would've had many more coins, or we wouldn't be selling today 100%. It is just managing every day. We create a process so that to upload and these new chips are coming in, and new cards are coming in from Asia. Expecting 5,000 a week, they have to be download, upload, download, upload. We didn't want to have a huge number of cards at one time. We create this sort of machinery process that we're always expecting deliveries of new memory cards. The management, the team in Sweden is always taking down the old and putting up the new. Everyone stays active in this buildup.
Thanks, Frank. Darcy, I have another question that maybe you can touch on. Is there a plan to leverage Ethereum 2.0 and stake some of the Ethereum mined for additional reoccurring income?
Well, it's something that we've got on the, I guess, on the horizon, we're keeping an eye on. This is one of those reasons that we like to maintain an inventory of the Ethereum coins for the possibility of the staking, because there are some great opportunities out there to get some income. I guess part of the downside is having that Ethereum locked up once you stake it. It does have its advantages. We have to look at it a little bit more and as it moves on, to take advantage of some of those opportunities without hurting the shareholders, so to speak, by having Ethereum tied up for an extended period of time when we do stake.
Okay. Thank you. Another question here says, "How is coin inventory held? Is it in a cold wallet?
Yes. Yes, they are. They're held in cold wallets. Also we're working now with a company called Fireblocks out of the U.S. What they're going to be doing is working with us for the custody of our Ethereum and Bitcoin. We're working on that transition. Fireblocks is someone that has been used by a lot of institutional shareholders. I believe Fidelity has been mentioned. This is one that has incredible security, incredible controls, SOC 2 compliance from, if there's any accountants and auditors on the call, which is very important for us as a company to make sure that anything that we have inventoried is safe and secure.
Perfect. I think we'll have one or two more questions. This one says, "What is the plan for 4 GB chips once they become obsolete?
One of the things that Toby and the team that Toby was able to locate with our other service provider, and I think Toby, maybe you could jump in here, on the swaps.
Yeah, of course.
swapping, explain that, how we get back credits of $80 and $50 or something.
Yeah, of course. We were working this year, really, as we spent a lot of time on how or what we shall do, what is the best strategy. What we're doing now is really genius. We're doing something which you can't do as a private person in the market. We can do it only with our large quantity of cards because we are in direct relationship with Chinese factories, and we are sending back old cards to them. We are avoiding, of course, any downtime of machines. We're getting brand-new cards, even with a new warranty period, and we are sending over old cards, and we are getting a rebate for it, and a really very good rebate. In total, on the one side, we are buying the cards as bulk there for very cheap prices, which are not possible for private users or private miners.
Also, we are getting for the old cards, we are getting a considerable rebate, and this makes it really attractive for us. Right now, the decision has not been made if we still keep some 4 GB cards because there are actually, I saw some of the questions in the chat, there are actually some other blockchains which are still profitable and GPU mineable with our hardware. We are looking into that, of course. We can't jump with more than 100,000 cards on these chains, on these blockchains. The decision has not been made until now, how many cards we will swap to new cards and how many we shall keep then.
Just to try to add, as you mentioned, it is mega size. I mean, we are talking about over 100,000 cards with eight chips a card. Run through the math.
Yes, exactly.
It's 800,000 chips. We move the market. We've got to be so careful we don't get ourselves up and all of a sudden in that sort of, we call it Navy SEAL scramble to get in and get out.
If you want to go buy these new cards, it basically, if you can get them at CAD 300 a pop, you're talking about a CAD 24 million or CAD 30 million rebuild, we will never do that for those cards. We've been very so far as stealth as possible in getting the rebuild. What we're hearing is that a lot of these memory chips are being absorbed by telecom. There's a whole 5G build-out globally. There's a scramble for getting these memory chips. We're in, I guess a sweet spot of what we've been able to do, thanks to Toby and his team over in Europe. I want to end this with questions. I think Holly says it's time out.
Yeah, I would just ask if there's any closing comments from each of you. We can start with Toby and go to Darcy and then Frank, if there's anything you wanted to mention and didn't get to.
Toby, do you have any closing comments?
No, thank you. I was very happy participating in that webcast. Thank you so much, Frank.
Thank you.
Of course. Darcy, anything? Any closing comments?
I guess overall, the plan that Frank and I talked about two years ago, when I joined, I think we're well on our way. It's a focus on what we referred to back then as HIVE 2.0, and that's taking control of our facilities, reducing costs, so that we can be a very efficient miner. I believe that we've achieved that over the last two years. We're not there yet, but what it does do is it makes us lean and mean, so that when we do have the downturns in the cryptocurrency markets, we're going to be one of the survivors to come out stronger on the other side.
Wonderful. Frank, any closing comments?
I just share that I couldn't have done this without Darcy and Tobias. The two of them, we're the three amigos and thank all those shareholders that lived with us through all the volatility. I really respect it. Let's get the GPU.ONE deal done and go forward for a phenomenal year in 2021. Thank you, everyone.
Thanks, everyone. This concludes HIVE Blockchain Technologies webcast for the second quarter 2020. Thanks for tuning in.