HIVE Digital Technologies Ltd (HIVE) delivered a strong second-quarter performance on Monday, beating revenue estimates and posting gross margins that nearly doubled what analysts expected. The results suggest the crypto miner's aggressive capacity expansion is starting to pay off in a meaningful way.

Breaking Down the Numbers

For the second quarter of fiscal 2026, HIVE reported an EPS loss of 7 cents, which missed the consensus estimate of one cent. But revenue told a different story, coming in at $87.3 million compared to expectations of $80.76 million—that's 285% growth year over year.

The real standout was the margin performance. Gross margins reached 49%, crushing the analyst forecast of 32%. That drove adjusted gross profit to $42.4 million, substantially higher than the $25.5 million estimate. This kind of operating leverage is exactly what investors want to see when a company is rapidly scaling up operations.

Bitcoin Mining Delivers the Goods

Bitcoin mining revenue hit $82.1 million versus analyst estimates of $74.3 million. The company mined 718 Bitcoin during the quarter, well ahead of the forecasted 649. According to Rosenblatt analyst Chris Brendler, who reiterated a Buy rating with a $10 price target, the Paraguay expansion is running ahead of schedule and lifting gross margins by reducing hash costs. He expects further margin gains in fiscal 2027 as that expansion continues to ramp.

HPC Segment Shows Promise Despite Minor Miss

HIVE's cloud HPC (high-performance computing) revenue came in slightly below expectations at $5.2 million versus the $6.0 million forecast. However, gross margins in this segment improved to 61.6% compared to analyst estimates of 56.7%. While HPC isn't yet a major revenue driver, Brendler notes that management's fiscal 2026 HPC growth target of $100 million in annual recurring revenue will likely be a key topic on the earnings call.

The broader story here is about momentum. HIVE's rapid capacity buildout is delivering meaningful operating leverage right now, while the emerging HPC segment positions the company for additional growth as it scales up. That combination of current performance and future potential explains why investors sent the stock higher by 7.70% to $3.56 on Monday.