HIVE Digital Technologies Ltd. (HIVE) announces that, further to its press release dated July 22, 2024, it has entered into definitive agreements (the “Agreements”).Agreements“) to develop a 100-megawatt (“MW”) digital asset mining operation in Paraguay. The Agreements consist of: (i) a Stock Purchase Agreement (the “SPA“) between Paraguay Digital Ltd. (“HIVE Paraguay“), a company wholly owned by the Company, and the owners of W3X SA (“W3X” or “Objective“); and (ii) a construction contract (hereinafter referred to as “Construction contract“) among the newly acquired W3X SA Company (“W3X“) and an experienced local contractor (or “The Contractor“) (all amounts are in US dollars unless otherwise indicated).

HIVE President and CEO Aydin Kilic stated: “We are proud to announce the acquisition of a 100 MW PPA in Paraguay, leveraging green and clean energy from the Itaipu Hydroelectric Dam. Our team is hard at work to design and begin construction of an additional 6.5 exahash per second (EH/s) Bitcoin mining infrastructure, increasing our global EH/s to 12.1 EH/s.” However, we have reduced our investment to 100 MW after rejecting an additional 150 MW due to unexpected changes in fiscal policy. Like many other public miners, we will be exploring other countries that offer stable capital for critical electrical infrastructure, data centers for the global digital economy, U.S. currency income, and see-through fiscal agreements.

Frank Holmes, Executive Chairman of HIVE, stated, “Stable fiscal policy is critical to attracting and retaining continued foreign direct investment from public companies and U.S. institutional investors. We will continue to advocate for fair treatment of the data center and bitcoin mining industry, as we have done in Canada, the United States, and Sweden. Paraguayan data centers act as a currency hedge, generating millions of stable U.S. dollars per month for the government-owned utility. When they are public companies and institutional funds, they have a multi-faceted, long-term vision for both their shareholders and for contributing to regional growth and development by providing meaningful employment opportunities, governance, transparency, and supporting education and skills development needed in data centers for the global digital economy.”

Strategic Investment Plans for Paraguay

HIVE explains its strategic investment plans for Paraguay in response to a recent proposal to impose a discriminatory 14 percent energy tariff augment on Bitcoin data centers.

Mr. Holmes continued: “While we are excited about the opportunities in Paraguay, the proposed increase in energy tariffs creates uncertainty that impacts our long-term investment decisions. We have conveyed our concerns to the government and look forward to further discussions to address these challenges. Stable costs and reliable contract periods are essential to attracting foreign public funds. We hope the government will address these policies to ensure continued investment.”

Following constructive meetings with key Paraguayan officials in May, HIVE initially planned for larger foreign direct investment (FDI), including land acquisition and negotiating PPAs for two potential 100 MW projects and another 50 MW project. This investment was expected to exceed $250 million, reflecting HIVE’s confidence in Paraguay’s vision and leadership. However, the proposed 14% electricity tariff augment, combined with short-term contract terms and a lack of clarity on energy prices, led to a reduction in our investment and a delay in our HPC data center strategy with our Nvidia GPU stack needed to participate in the AI ​​boom.

The 100 MW project must attract significant foreign direct investment into Paraguay and provide the necessary capital to convert high-voltage electricity into usable energy for industry and homes. Electricity payments from HIVE would provide a stable US dollar yield in excess of $100 million over three years, providing a reliable monthly income in addition to helping build the electricity infrastructure. This provides a synthetic US dollar hedge that banks could not match. In addition, the cost of the required electricity infrastructure to convert from high-voltage power to industrial and residential utilize is estimated to be around $16 million, creating local jobs. Today, our local contractor said that we will soon mobilize around 80 construction workers for initial work.

The Paraguayan guarani has depreciated against the US dollar by about 36% over the past five years and by about 16% over the past year, confirming the importance of stable foreign investment and US dollar earnings for Paraguay’s economic stability and growth.

Mr. Holmes distinguished himself as a global money manager: “Research confirms that increased electricity infrastructure drives faster economic growth. Studies by the World Bank and the IEA emphasize that investment in electricity infrastructure is key to economic development, increased productivity, industrial growth and quality of life.”

HIVE is not alone in its cautious approach. Other public Bitcoin mining companies gathered at the largest Bitcoin conference in Nashville last week and said they were similarly reassessing their investment plans in Paraguay due to proposed tariff increases and contract restrictions. This collective response at the Nashville conference, where former President Trump and Robert F. Kennedy Jr. endorsed the importance of Bitcoin and Bitcoin mining in their political campaigns ahead of this year’s U.S. presidential election, only illustrates the need for stable government fiscal policy to attract and retain key foreign capital investment from public mining companies and institutional funds.

HIVE’s approach, based on a see-through “Return on Invested Capital” (ROIC) model, supports sustainable investment and community engagement, as evidenced by our successful operations in Sweden and Canada. We value the opportunity to contribute to Paraguay’s economic growth and remain committed to creating a favorable environment for business and investment.