Our strategy follows our principles of operational excellence, financial stability, and intelligent, accretive growth. Balance sheet strength and flexibility continue to be our highest priorities. Bitfarms utilized proceeds from the sale of our daily bitcoin production to fund operating expenses, contribute to debt service requirements, and reduce leverage – all while building the financial capability to continue our growth activities amidst the current bitcoin price volatility and increases in network difficulty.
Revenue in 2022 was $142 million, compared to $169 million in 2021, and Adjusted EBITDA was $52 million. Over the full year, we more than doubled our production capabilities and expanded our hashrate to deliver mining increases from 3,453 bitcoin in 2021 to 5,167 bitcoin mined in 2022. In February 2023, Bitfarms surpassed the milestone of 20,000 bitcoin mined since the Company's inception over five years ago.
Overall, Bitfarms more than doubled its hashrate in 2022, increasing it further in 2023 with 4.7 exahash per second at the end of February 2023.
Our financial highlights in Q4 are as follows:
- Mined 1,434 bitcoin compared to 1,515 in Q3affected in large part by the 20% increase in average total network difficulty from Q3 to Q4.
- Earned revenue for the quarter of $27 million compared to $33 million in Q3 2022. The lower revenue reflects a 14% decline in the average bitcoin price quarter-over-quarter and approximately 5% fewer bitcoin mined during the quarter as the network difficulty increased more than offset our average hashrate increase of 13%.
- Generated $54 million of proceeds from selling 3,039 bitcoin (1,434 from production and 1,605 from treasury) and received $3.6 million net cash proceeds from the sale of our De la Pointe farm in December.
- Decreased indebtedness by retiring our three oldest and most expensive equipment debt financings for $8 million, fully extinguishing our revolving bitcoin-backed credit facility, and we opportunistically settled about $22 million of term loan indebtedness in exchange for $8 million.
Other 2023 Financial Achievements to Date:
- Restructured our equipment financing with BlockFi, paying off the outstanding balance of $21 million for a settlement of $7.8 million in February 2023. In addition, we paid off in-full about $380,000 due to Reliz for $118,000. These moves reduce our principal and interest payments by more than $1.6 million per month, eliminating about $20 million in future debt service payments.
- Exited February 2023 with just $23 million in total indebtedness which is scheduled to fully amortize through February 2024, well in advance of the expected halving date.
- In summary, over the past nine months, we increased our financial flexibility and liquidity by reducing debt by more than $140 million and lowering capex commitments by almost $70 million.
State of Farm Operations to Date
Bitfarms ended 2022 with a total of 10 farms in 4 countries. We have 188 megawatts in operating capacity – 95% of which is powered by sustainable hydroelectricity. An additional 40 megawatts of built capacity in Argentina, which is awaiting approvals prior to commissioning, will allow for substantial and timely expansion. We also successfully completed our ambitious Canadian expansion ahead of schedule, increasing our hydro-powered megawatts.
Operating highlights include:
- Sherbrooke Quebec achieved full capacity of 96 megawatts under our power purchase agreement at our three recently built farms.
- Paraguay farm benefited from the installation 2,888 new MicroBT M30s. This addition added a net 168 petahash per second at the farm, bringing the total hashrate to 288 petahash per second on January 31, 2023, and improving our overall efficiency improved to 39 watts per terahash.
- Washington state is operating 20 megawatts and generating approximately 600 petahash per second.
- Rio Cuarto, Argentina, which has approximately 10 megawatts online and an additional 40 megawatts of capacity built and ready for the installation of more miners. Approval of our Power Permit, which we expect very soon, will support the purchase, and import 8,000-9,000 miners using some of our $22.4 million in hardware credits. Based on the current prices of miners, we expect the credit to more than cover our capital expenditure requirements to bring this 50 megawatts warehouse into full production during 2023.
- When Rio Cuarto is complete, we fully expect our corporate hashrate will increase to 6.0 exahash per second for our existing portfolio and this farm should become our lowest cost producer due to its very favorable electricity contract.
Mining Economics
Bitfarms' Q4 direct cost of production per bitcoin has remained relatively steady in the last 10 quarters and averaging just under $11,100 in Q4, continues to be among the lowest reported in the industry. The $1,500 increase from $9,600 per bitcoin in Q3 is less than the 20% increase in network difficulty as the Company benefitted from greater mining efficiency and a modest decrease in our total cost of electricity per kilowatt hour.
Gross mining profit in Q4 was $9 million (33% of revenue) compared to $17 million (52% of revenue) in Q3. This reflects a 15% lower average bitcoin price in Q4 compared to Q3 and overhead costs of $16,800 (up $2,500 from Q3). Importantly, our cash costs of production in Q4 2022 remained below the average bitcoin price of $18,100, thus delivering operating profitability.
Conclusion
Bitfarms is managed with the 2024 halving in sight. Our performance metrics are consistently industry-leading, and we have maintained low direct costs of production. Even at Q4 2022's depressed bitcoin price levels, we continued to generate positive cash from mining operations.
With our greater financial flexibility, we have increased our evaluation of potential acquisitions and greenfield expansion opportunities. Our experienced global management team is highly capable of finding and negotiating new international opportunities and building new farms economically and cost-effectively.
Our absolute discipline, evidenced by our track record of operating excellence, ensures that Bitfarms is well positioned to take advantage of emerging opportunities and continues to be a respected consolidator in the industry.
We look forward to updating you with our Monthly Production Reports and our Q1 Conference Call in May.
For more information on Bitfarms, visit www.bitfarms.com.
Disclaimer Regarding Forward-Looking Information:
This blog presentation has been issued as a matter of interest to investors and other followers of Bitfarms Ltd. This presentation contains forward-looking information and Bitfarms cautions readers that forward-looking information is based on certain assumptions and risk factors that could cause actual results to differ materially from the expectations of Bitfarms. 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. In particular, the ability of the Company tp expand its business on a profitable basis, effectively manage debt loads, and successfully identify and successfully identify and acquire expansion on terms which are economic or at all is forward-looking information. There can be no assurance that the intentions, plans and future actions of the Company will prove to be effective as actual results and future events could differ materially from those anticipated the forward-looking information.,. Readers should not place undue reliance on forward-looking information. Please refer to other risks set out in the public documents of Bitfarms filed on https://www.sedar.com/. Securities regulators including the Toronto Stock Exchange and Nasdaq have not reviewed the information disclosed in this blog presentation and no securities regulator accepts responsibility for the adequacy or accuracy of this content." The Company undertakes no obligation to revise or update any forward-looking information other than as required by law.