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Bitfarms Reports First Quarter 2024 Results

– Revenue of $50 million, up 9% Q/Q and 67% Y/Y –
– Gross mining margin of 59%, up from 52% in Q4 2023 & 41% in Q1 2023 –
– Secured additional 24,000 miners in March, increasing total delivery to 88,000 in 2024 –
– Current hashrate of 7.0 EH/s, up from 6.5 EH/s at year end –
– On track to achieve guidance of 21 EH/s and 21 w/TH in 2024 –

This news release constitutes a “designated news release” for the purposes of the Company’s prospectus supplement dated March 8, 2024, to its short form base shelf prospectus dated November 10, 2023.

TORONTO, Ontario and BROSSARD, Québec, May 15, 2024 (GLOBE NEWSWIRE) — Bitfarms Ltd. (Nasdaq/TSX: BITF), a global Bitcoin vertically integrated company, reported its financial results for the first quarter ended March 31, 2024. All financial references are in U.S. dollars.

Executing the expansion and transformative fleet upgrade, Bitfarms has realized notable efficiency gains and is progressing toward 2024 guidance of 21 EH/s and 21 w/TH, representing a 223% hashrate increase and 40% efficiency improvement. This would be the strongest growth and efficiency gains in both the Company’s history and among publicly-traded Bitcoin mining peers this year.

In addition, the Company recently doubled its contracted power capacity at its Yguazu site, in Paraguay, from 100 MW to 200 MW of stable, low-cost, sustainable hydropower. This will increase Bitfarms total megawatts under management by 23%, from 428 MW at year-end 2024 to 528 MW in 2025, and will provide significant capacity for growth.

“These strategic actions position us well to drive significant organic growth and capture a greater share of the global demand for Bitcoin,” said Ben Gagnon, Bitfarms Chief Mining Officer. “Our growth is gaining momentum. We are currently at 7 EH/s and on track to achieve 12 EH/s and 25 w/TH in Q2 2024. Our miner upgrades have improved overall fleet efficiency from 35 w/TH to 31 w/TH, including the 51% combined efficiency improvement at our Garlock and Farnham facilities in Quebec. Ongoing miner installations are expected to contribute to progressively lower corporate w/TH and dramatically lower production costs, which would make Bitfarms one of the most efficient Bitcoin miners by year-end 2024.”

In April, Bitfarms received confirmation from the Canadian tax authorities that $24 million in previously paid value added taxes (VAT) will be refunded as will future payments. With the recoverability of the VAT, the average direct cost of production per BTC would have been reduced by $2,100 in Q1 2024.

Jeff Lucas, Bitfarms CFO, said, “This cash infusion further enhances our financial flexibility. Combined with our robust balance sheet and our capital efficient strategy, we are well positioned to fund our 2024 growth initiatives. Most notably, we have sufficient liquidity to pay for all of the miners needed to reach 21 EH/s.”

Q1 2024 & Recent Operating Highlights

Q1 2024 Financial Highlights

Liquidity**
As of March 31, 2024, the Company had total liquidity** of $124 million, comprised of $66 million in cash and 806 BTC valued at $58 million based on a BTC price of $71,400 at March 31, 2024.

Q1 2024 and Recent Financing Activities

Quarterly Operating Performance

  Q1 2024 Q4 2023 Q1 2023
Total BTC earned 943 1,236 1,297
Average Watts/Average TH efficiency*** 35 35 38
BTC sold 941 1,135 1,267
  As of March 31, As of December 31, As of March 31,
  2024 2023 2023
Operating EH/s 6.5 6.5 4.8
Operating capacity (MW) 240 240 188
Hydropower (MW) 186 186 178


Quarterly Average Revenue**** and Cost of Production per BTC*

  Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023
Avg. Rev****/BTC $52,400 $36,400 $28,100 $28,000 $22,500
Direct Cost*/BTC $20,500 $16,200 $16,900 $15,700 $12,500
Total Cash Cost*/BTC $30,300 $25,200 $22,700 $21,800 $17,700


* Gross mining profit, gross mining margin, EBITDA, EBITDA margin, Adjusted EBITDA, Adjusted EBITDA margin, Direct Cost per BTC and Total Cash Cost per BTC are non-IFRS financial measures or ratios and should be read in conjunction with, and should not be viewed as alternatives to or replacements of measures of operating results and liquidity presented in accordance with IFRS. Readers are referred to the reconciliations of non-IFRS measures included in the Company’s MD&A and at the end of this press release.

** Liquidity represents cash and balance of digital assets.
*** Average watts represents the energy consumption of miners.
**** Average revenue per BTC is for mining operations only and excludes Volta revenue.

Conference Call
Management will host a conference call today at 8:00 am EST. A presentation of the Q1 2024 results will be accessible before the call on the Investor website and can be accessed here.

Participants may join by calling: 1-877-545-0523 (domestic), or 1-973-528-0016 (international), and should do so 10 minutes prior to the start time. Participants will be greeted by an operator and asked for the access code, which is 878603. If you do not have the code, then you may reference the Bitfarms’ Q1 2024 results conference call.

The conference call will also be available through a live webcast found here.

A webcast replay will be available and can be accessed in the Events section of our Investor website. An audio replay will be available through June 3, 2024, and can be accessed at 1-877-481-4010 (domestic), or 1-919-882-2331 (international), using access code 50495.

Upcoming Conferences & Events

Non-IFRS Measures*
As a Canadian company, Bitfarms follows International Financial Reporting Standards (IFRS) which are issued by the International Accounting Standard Board (IASB). Under IFRS rules, the Company does not reflect the revaluation gains on the mark-to-market of its Bitcoin holdings in its income statement. It also does not include the revaluation losses on the mark-to-market of its Bitcoin holdings in Adjusted EBITDA, which is a measure of the cash profitability of its operations and does not reflect the change in value of its assets and liabilities.

The Company uses Adjusted EBITDA to measure its operating activities’ financial performance and cash generating capability.

2023 Restatement
During the preparation of the Company’s financial statements for the year ended December 31, 2023, the Company reassessed the application of IFRS Accounting Standards on the accounting for warrants issued in connection with private placement financings conducted in 2021 and, as such, restated (the “Restatement”) its consolidated statements of financial position as of December 31, 2022 and January 1, 2022, its consolidated statements of profit or loss and comprehensive profit or loss for the year ended December 31, 2022 and the three months ended March 31, 2023 and its consolidated statements of cash flows for the year ended December 31, 2022 and the three months ended March 31, 2023, which were previously filed on SEDAR+ and EDGAR. For further details, consult Note 3e of the audited consolidated financial statements for the year ended December 31, 2023, and Note 3d of the interim condensed consolidated financial statements for the three months ended March 31, 2024, available on SEDAR+ and EDGAR. As described in the interim MD&A for three months ended March 31, 2024, available on SEDAR+ and EDGAR, the Company is undertaking remediation efforts in light of the Restatement and in order to improve the overall effectiveness of its internal control over financial reporting for the accounting of complex financial instruments.

About Bitfarms Ltd.
Founded in 2017, Bitfarms is a global Bitcoin mining company that contributes its computational power to one or more mining pools from which it receives payment in Bitcoin. Bitfarms develops, owns, and operates vertically integrated mining farms with in-house management and company-owned electrical engineering, installation service, and multiple onsite technical repair centers. The Company’s proprietary data analytics system delivers best-in-class operational performance and uptime.

Bitfarms currently has 12 Bitcoin mining facilities and one under development situated in four countries: Canada, the United States, Paraguay, and Argentina. Powered predominantly by environmentally friendly hydro-electric and long-term power contracts, Bitfarms is committed to using sustainable and often underutilized energy infrastructure.

To learn more about Bitfarms’ events, developments, and online communities:

www.bitfarms.com
https://www.facebook.com/bitfarms/
https://twitter.com/Bitfarms_io
https://www.instagram.com/bitfarms/
https://www.linkedin.com/company/bitfarms/

Glossary of Terms

Cautionary Statement
Trading in the securities of the Company should be considered highly speculative. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. Neither the Toronto Stock Exchange, Nasdaq, or any other securities exchange or regulatory authority accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements
This news release contains certain “forward-looking information” and “forward-looking statements” (collectively, “forward-looking information”) that are based on expectations, estimates and projections as at the date of this news release and are covered by safe harbors under Canadian and United States securities laws. The statements and information in this release regarding projected growth, target hashrate, opportunities relating to the Company’s geographical diversification and expansion, upgrading and deployment of miners as well as the timing therefor, improved financial performance and balance sheet liquidity, other growth opportunities and prospects, and other statements regarding future growth, plans and objectives of the Company are forward-looking information. Any statements that involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “prospects”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking information.

This forward-looking information is based on assumptions and estimates of management of the Company at the time they were made, and involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. Such factors include, among others, risks relating to: the construction and operation of the Company’s facilities may not occur as currently planned, or at all; expansion may not materialize as currently anticipated, or at all; the power purchase agreements and economics thereof may not be as advantageous as expected; the digital currency market; the ability to successfully mine digital currency; revenue may not increase as currently anticipated, or at all; it may not be possible to profitably liquidate the current digital currency inventory, or at all; a decline in digital currency prices may have a significant negative impact on operations; an increase in network difficulty may have a significant negative impact on operations; the volatility of digital currency prices; the anticipated growth and sustainability of hydroelectricity for the purposes of cryptocurrency mining in the applicable jurisdictions; the inability to maintain reliable and economical sources of power for the Company to operate cryptocurrency mining assets; the risks of an increase in the Company’s electricity costs, cost of natural gas, changes in currency exchange rates, energy curtailment or regulatory changes in the energy regimes in the jurisdictions in which the Company operates and the potential adverse impact on the Company’s profitability; the ability to complete current and future financings; the impact of the Restatement on the price of the Company’s common shares, financial condition and results of operations; the risk that a material weakness in internal control over financial reporting could result in a misstatement of the Company’s financial position that may lead to a material misstatement of the annual or interim consolidated financial statements if not prevented or detected on a timely basis; historical prices of digital currencies and the ability to mine digital currencies that will be consistent with historical prices; and the adoption or expansion of any regulation or law that will prevent Bitfarms from operating its business, or make it more costly to do so. For further information concerning these and other risks and uncertainties, refer to the Company’s filings on www.sedarplus.ca (which are also available on the website of the U.S. Securities and Exchange Commission at www.sec.gov), including the MD&A for the year-ended December 31, 2023, filed on March 7, 2024 and the MD&A for three-month period ended March 31, 2024 filed on May 15, 2024. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those expressed in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended, including factors that are currently unknown to or deemed immaterial by the Company. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on any forward-looking information. The Company undertakes no obligation to revise or update any forward-looking information other than as required by law.

Investor Relations Contact:
Tracy Krumme
SVP, Investor Relations
+1 786-671-5638
tkrumme@bitfarms.com

Media Contacts:
Actual Agency
Khushboo Chaudhary
+1 646-373-9946
mediarelations@bitfarms.com

Québec Media: Tact
Louis-Martin Leclerc
+1 418-693-2425
lmleclerc@tactconseil.ca


Bitfarms Ltd. Consolidated Financial & Operational Results

  Three months ended March 31,
(U.S.$ in thousands except where indicated) 2024   2023 (3) $ Change % Change
Revenues 50,317   30,050   20,267   67 %
Cost of revenues (60,999 ) (38,403 ) (22,596 ) 59 %
Gross loss (10,682 ) (8,353 ) (2,329 ) 28 %
Gross margin (1) (21 )% (28 )%    
         
Operating expenses        
General and administrative expenses (13,196 ) (8,360 ) (4,836 ) 58 %
Realized gain on disposition of digital assets   587   (587 ) (100 )%
Reversal of revaluation loss on digital assets   2,695   (2,695 ) (100 )%
Gain (loss) on disposition of property, plant and equipment 170   (1,566 ) 1,736   111 %
Operating loss (23,708 ) (14,997 ) (8,711 ) 58 %
Operating margin (1) (47 )% (50 )%    
         
Net financial income 11,443   10,967   476   4 %
Net loss before income taxes (12,265 ) (4,030 ) (8,235 ) 204 %
         
Income tax recovery 6,285   330   5,955   nm
Net loss (5,980 ) (3,700 ) (2,280 ) 62 %
         
Basic and diluted loss per share (in U.S. dollars) (0.02 ) (0.02 )    
Change in revaluation surplus – digital assets, net of tax 17,433   1,225   16,208   nm
Total comprehensive income (loss), net of tax 11,453   (2,475 ) 13,928   563 %
         
Gross Mining profit (2) 29,312   12,026   17,286   144 %
Gross Mining margin (2) 59 % 41 %    
EBITDA (2) 26,410   18,024   8,386   47 %
EBITDA margin (2) 52 % 60 %    
Adjusted EBITDA (2) 21,007   6,364   14,643   230 %
Adjusted EBITDA margin (2) 42 % 21 %    

nm: not meaningful

   
1 Gross margin and Operating margin are supplemental financial ratios; refer to section 9 –Non-IFRS and Other Financial Measures and Ratiosof the Company’s MD&A.
2 Gross Mining profit, Gross Mining margin, EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin are non-IFRS measures or ratios; refer to section 9 –Non-IFRS and Other Financial Measures and Ratiosof the Company’sMD&A.
3 Prior year figures are derived from restated financial statements. Refer to the Q1 2024 interim financial statements Note 3d –Basis of Presentation and Material Accounting Policy InformationRestatement.

Bitfarms Ltd. Reconciliation of Consolidated Net Income (loss) to EBITDA and Adjusted EBITDA 

  Three months ended March 31,
(U.S.$ in thousands except where indicated) 2024   2023(1) $ Change % Change
Revenues 50,317   30,050   20,267   67 %
         
Net loss before income taxes (12,265 ) (4,030 ) (8,235 ) 204 %
Interest expense and (income) (302 ) 1,354   (1,656 ) (122 )%
Depreciation and amortization 38,977   20,700   18,277   88 %
EBITDA 26,410   18,024   8,386   47 %
EBITDA margin 52 % 60 %    
Share-based payment 3,094   2,536   558   22 %
Realized gain on disposition of digital assets   (587 ) 587   100 %
Reversal of revaluation loss on digital assets   (2,695 ) 2,695   100 %
Gain on extinguishment of long-term debt and lease liabilities   (12,835 ) 12,835   100 %
(Gain) loss on revaluation of warrants (9,040 ) 1,221   (10,261 ) (840 )%
Gain on disposition of marketable securities (338 ) (2,171 ) 1,833   (84 )%
Net financial expenses and other 881   2,871   (1,990 ) (69 )%
Adjusted EBITDA 21,007   6,364   14,643   230 %
Adjusted EBITDA margin 42 % 21 %    
   
1         Prior year figures are derived from restated financial statements. Refer to the Q1 2024 interim financial statements Note 3d – Basis of Presentation and Material Accounting Policy InformationRestatement.

Bitfarms Ltd. Calculation of Gross Mining Profit and Gross Mining Margin

  Three months ended March 31,
(U.S.$ in thousands except where indicated) 2024   2023   $ Change % Change
Gross loss (10,682 ) (8,353 ) (2,329 ) 28 %
Non-Mining revenues (1) (894 ) (842 ) (52 ) 6 %
Depreciation and amortization 38,977   20,700   18,277   88 %
Purchases of electrical components 387   320   67   21 %
Electrician salaries and payroll taxes 321   356   (35 ) (10 )%
Other 1,203   (155 ) 1,358   876 %
Gross Mining profit 29,312   12,026   17,286   144 %
Gross Mining margin 59 % 41 %    
(1)   Non-Mining revenues reconciliation:
  Three months ended March 31,
(U.S.$ in thousands except where indicated) 2024   2023   $ Change % Change
Revenues 50,317   30,050   20,267   67 %
Less Mining related revenues for the purpose of calculating gross Mining margin:        
Mining revenues (49,423 ) (29,208 ) (20,215 ) 69 %
Non-Mining revenues 894   842   52   6 %

Bitfarms Ltd. Calculation of Direct Cost and Direct Cost per BTC

  Three months ended March 31,
(U.S.$ in thousands except where indicated) 2024   2023   $ Change % Change
Cost of revenues 60,999   38,403   22,596   59 %
Depreciation and amortization (38,977 ) (20,700 ) (18,277 ) 88 %
Purchases of electrical components (387 ) (320 ) (67 ) 21 %
Electrician salaries and payroll taxes (321 ) (356 ) 35   (10 )%
Infrastructure (1,974 ) (942 ) (1,032 ) 110 %
Other   82   (82 ) (100 )%
Direct Cost 19,340   16,167   3,173   20 %
Quantity of BTC earned 943   1,297   (354 ) (27 )%
Direct Cost per BTC (in U.S. dollars) 20,500   12,500   8,000   64 %

Bitfarms Ltd. of Total Cash Cost and Total Cost per BTC

  Three months ended March 31,
(U.S.$ in thousands except where indicated) 2024   2023   $ Change % Change
Cost of revenues 60,999   38,403   22,596   59 %
General and administrative expenses 13,196   8,360   4,836   58 %
  74,195   46,763   27,432   59 %
Depreciation and amortization (38,977 ) (20,700 ) (18,277 ) 88 %
Purchases of electrical components (387 ) (320 ) (67 ) 21 %
Electrician salaries and payroll taxes (321 ) (356 ) 35   (10 )%
Share-based payment (3,094 ) (2,536 ) (558 ) 22 %
Other (2,814 ) 62   (2,876 ) nm
Total Cash Cost 28,602   22,913   5,689   25 %
Quantity of BTC earned 943   1,297   (354 ) (27 )%
Total Cash Cost per BTC (in U.S. dollars) 30,300   17,700   12,600   71 %


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