I sat down and started looking through the PRs on Hive's page to see what these bought deals were declaring as the value underpinning the deals.
For example, in this present deal, (a basis for perceiving what the most current "opinion" of the market value of the shares), the deal consists of 12,322,250 units priced at C$2.80 per Unit (1 share & 1 warrant). Now, buyers did NOT step up to buy this deal for present dollar value of the deal.... they intend to make money.... so there is an built in discount here.
OK... the warrants:
These warrants allow the holder to buy a share at a discount price for a period of time. Both the shares & the warrants are untradable until March 15, 2018.
The warrants require the holder to spend an additional $3.90 Canadian to get an additional share.
So, basically, lets put our thinking caps on and posit a scenario or two that realistically depict the possible outcomes at 3/15/18.
If the holders of these units decided to dump their shares at $2.80 Canadian on March 15, 2018, the price has to be above the $2.80 per share price or they are stuck with shares they can not get rid of. If they are able to dump because market prices are high enough for them to sell at a profit, they could not buy back in (exercising their warrants) unless they spend more than they get out of selling. In fact, they would have to spend $1.10 Canadian MORE to buy back in.
Now, theoretically, the price might be twice that.... say $7.80 Canadian. They would buy shares at $3.90 via spending to exercise the warrant, and then they would have twice the shares at a net valuation of $6.70 Canadian per share. They could then dump them at $7.80, for a profit of $1.10 per share (16.4%), not including warrant exercise costs and so forth.
16.4% is a tiny profit to speculate on, IMHO, and represents an unrealistic theoretical behavior.
Right now, the Canadian price is $3.32, so there is already a profit on the shares, as of the PR release date itself. Looks like a healthy deal to me. Just my opinion, mind you, and not a recommendation of any kind.
The other case is where price has crashed and they can not get $2.80 Canadian for the shares, and they would certainly not spend $3.90 to exercise the warrants.
And also, the fact is tha Genesis holds C$5,090,904 of the offering (14.755% of the offering).
What a shares & warrants price structure such as this does is that it puts a valuation basis under a stock at the date the exercise becomes possible.
In practical point of fact, in that $34,502,300 was raised & the details of the explained funding was to obtain money-making crypto mining facilities in Sweden, there is good reason to postulate that the buyers of these units are not anticipating a decline. If, after 3/15/18, they dump a hot running stock for a pittance, they lose $1.10 per share when they turn around and buy back into using their warrants.
A deal like this is supportive of prices because of these dynamics, IMHO. Summarizing: if the data centers are real and if completed as anticipated and on schedule (Iceland was already operating when that deal was done & Sweden is scheduled for the second week in December 2017), then by 3/15/18, the cash from mining operations will have been coming in for 3 months.
And with mining operations in freindly countries, they are not subject to the risk of legislation in a given jurisdiction.
So, that is why a news announcement like this puts a base under prices.
All my opinions, of course, and given the volatility & risk in the crypto world, profitable mining is not guaranteed, but for people like me, who believe that crypto is the next disruptive technology, this price on this deal involving the only tradable stock with an active presence in the miing business (ANDthe largest miner at that) is a slam dunk.
Also, notice that, while the markets have been digesting this PR, the price has put in what looks to be a rather solid bottom.
Long post, SORRY. But a complex subject. Hope my time attempting to help is worth it to people.
Imperial Whazoo
