HIVE Digital Technologies to Develop 100 MW Hydroelectric Data Center in Paraguay, Aiming for 12 Exahash Next Year

HIVE Digital Technologies Ltd. (HIVE) Update on Paraguay Project

HIVE Digital Technologies Ltd. (HIVE) has announced the signing of definitive agreements for the establishment of a 100 megawatt (MW) digital asset mining operation in Paraguay, following up on a news release from July 22, 2024. The agreements include a share purchase agreement involving Paraguay Digital Ltd., a wholly-owned subsidiary of HIVE, and the owners of W3X SA, as well as a construction agreement between the newly acquired W3X SA and a local contractor.

Aydin Kilic, President and CEO of HIVE, expressed pride in securing a 100 MW power purchase agreement (PPA) in Paraguay, emphasizing the use of green energy from the Itaipu hydroelectric dam. He noted that the company aims to develop an additional 6.5 Exahash per second (EH/s) Bitcoin mining infrastructure, boosting its global capacity to 12.1 EH/s. However, HIVE has decided to limit its investment to 100 MW, having declined an additional 150 MW due to unexpected changes in fiscal policy. The company intends to explore investment opportunities in other countries with stable regulations for critical electrical infrastructure and data centers.

Frank Holmes, Executive Chairman of HIVE, highlighted the importance of stable fiscal policies in attracting foreign direct investment from public companies and institutional investors. He reaffirmed HIVE’s commitment to advocating for favorable conditions for the data center and Bitcoin mining sectors, as the presence of data centers in Paraguay can provide substantial revenue in U.S. dollars for the government-owned utility. HIVE aims to create long-term growth opportunities while contributing positively to the local economy through job creation, governance, transparency, and education.

In light of a proposed 14% energy tariff increase on Bitcoin data centers, HIVE clarified its strategic investment plans for Paraguay. Holmes acknowledged that the tariff hike poses uncertainties that could influence long-term investment decisions and emphasized the company’s hope for constructive dialogue with the government to address these issues.

Despite initial plans for a larger foreign direct investment, including potential acquisitions for two 100 MW projects and another for 50 MW, the proposed tariff increase, alongside uncertain contract durations and pricing issues, has resulted in a scaled-back investment approach and a delay in plans for high-performance computing data centers equipped with Nvidia GPU chips.

A successful 100 MW project is anticipated to draw significant foreign investment and contribute over $100 million in stable U.S. dollar revenue through electricity payments, thereby supporting the development of local electrical infrastructure. The estimated cost for the necessary electrical infrastructure to lower high-voltage power for industrial and residential use is approximately $16 million, which is expected to create local jobs. A local contractor has indicated that around 80 construction workers will soon be mobilized for initial efforts.

Due to a significant depreciation of the Paraguayan guaraní against the U.S. dollar in recent years—approximately 36% over five years and 16% in the last year—the need for stable foreign investments and dollar revenue has become critical for Paraguay’s economic growth.

Holmes emphasized that research indicates that enhanced electrical infrastructure can accelerate economic growth. Studies by global entities underline the importance of electricity infrastructure investments for productivity and overall quality of life.

HIVE’s cautious approach mirrors the sentiments of other public Bitcoin mining companies, many of which are also reconsidering their investment plans in Paraguay due to the proposed tariff increases and contract limitations. At a recent significant Bitcoin conference, similar concerns were voiced by industry peers, underscoring the necessity for stable fiscal policies to safeguard essential foreign investments.

Operating with a transparent Return on Invested Capital (ROIC) model, HIVE ensures sustainable investment and community involvement, drawing from its successful experience in Sweden and Canada. The company remains dedicated to contributing to Paraguay’s economic advancement and creating an attractive business environment for investors.