Bitfarms Third Quarter 2022 Financial Results Recap

Please see the disclaimer at the end of this presentation.

Bitfarms' third quarter saw the Company continue to experience successes, position itself better to endure the 'crypto' winter, and thrive in the long run. 

No one can control or predict the price of bitcoin – a reality of this business. All miner's margins have been compressed. Recent events have also brought closer scrutiny and concern to the market. However, Bitfarms remains insulated as our bitcoin transactions are audited by a Big Four accounting firm. The Company continues to differentiate itself operationally and financially with its:

  • Low-cost structure
  • Efficient operations and fleet
  • Stable energy pricing

This has resulted in superior mining profitability in Q3. Year to date, we've mined 4,219 bitcoin. On a year-to-date basis, this places us third in total production amongst the public miners – a testament to our ability to scale the business and generate consistent results. Benefiting from stable low energy costs, we've maintained profitable mining operations each quarter, as evidenced by $10 million in positive Adjusted EBITDA in Q3 2022. We've deleveraged our balance sheet, reducing financial risk and better positioning us to consider the increasing number of opportunities within the industry.

Q3 2022 Highlights

Turning to highlights of our results, Bitfarms mined 1,515 bitcoin in the third fiscal quarter, up 21% from Q2 2022, and we mined an additional 486 bitcoin in October. Although the growth in Q3 2022 production was offset by weaker bitcoin prices, we continued to deliver solid performance metrics and reduced both the direct costs and total cash costs of production.

As well as generating Adjusted EBITDA of $10 million and consistently being one of the largest publicly traded producers of Bitcoin, Bitfarms remains one of the lowest cost producers. For the last 2 years, we have kept our direct cost of production under $10,000 per bitcoin and, in fact, lowered these costs by $500 in the most recent quarter.  Our costs have remained relatively stable as we benefit from a portfolio of geographically diverse and mostly hydro-power contracts providing low-cost energy.

As new production came online in both Canada and Argentina, we increased our corporate hashrate 17% from the end of Q2 to 4.2 EH/s at the end of Q3. During the month of October, we were mining 15.7 bitcoin per day in daily production, and slightly over 115 bitcoin per average EH/s, which is the highest industry percentile in efficiency and performance.

While the industry is facing challenges due to the sharp decline in the price of Bitcoin, we benefit from experience in managing through past industry cycles, and we further benefit from stable electricity costs while rising energy prices have an outsized impact on those peers that rely on fossil fuel generated electricity.

At the end of the quarter, we had 10 farms in production in 4 countries and are predominantly drawing power from 3 hydro-electricity utilities that are geographically diverse. We now have a capacity of 182 megawatts, which is operating at 4.4 EH/s, and we have a clear path to ending the year at 188 megawatts running at 5 EH/s, with considerable future upside from Argentina.

State of Farm Operations to Date

Bitfarms ended the quarter with 10 locations and 176 megawatts in capacity, an increase of 39 megawatts from 9 locations and 137 megawatts in capacity at June 30, 2022. In October, we increased our total corporate capacity by 6 megawatts, bringing the current total to 182 megawatts.

In Sherbrooke Quebec, we have power supply commitments with Hydro-Sherbrooke for a total of 96 megawatts. The three recently constructed facilities in our Sherbrooke campus called Leger, The Bunker, and Garlock) are in close proximity, which affords numerous efficiency advantages, and we are in the final stages of completing our 2022 expansion plan. As we stated in our press release on November 4th, our hydroelectric energy agreements in Quebec remain in place, and we are excited about continuing to partner with local communities for future growth.

Our Leger farm continues to operate smoothly at its 30-megawatt capacity, delivering 740 petahash per second from 7,400 miners. On November 10th, we energized our first 6 megawatts in the 18,000 square foot Garlock farm, with the full 18 megawatts expected to be in production in early December.

Phase 3 of The Bunker is progressing as planned with 6 megawatts energized in late October and the remaining 6 megawatts expected to be online in early December. The Bunker, first activated in March 2022, is currently drawing 42-megawatts, and running 9,400 miners. In December, at full build out, The Bunker will be a 48-megawatt farm, housing 12,400 latest generation miners and contributing over 1.2 EH/s.

We expect to retire our original farm in Sherbrooke called de la Pointe by the end of this month and anticipate completing the sale of its real estate by the end of December, which will result in cash proceeds of $3.5 million which will be used to fund growth. The permanent closure of the de la Pointe facility and replacement and full build out of our Sherbrooke campus is running 3 months ahead of schedule.

As announced November 1, Bitfarms has adjusted our plans for our Argentina build out. We completed construction of Warehouse 1 recently and are continuing the process of commissioning. More specifically, the initial 10-megawatt module of the first 50-megawatt warehouse was completed in September, and the additional four 10-megawatt modules were completed in October and early November. At present, we are operating at almost 9 megawatts capacity with 2,300 miners delivering 237 petahash. 

We have worked hard to establish a consistent track record of execution against our stated goals and growth plan, leading to us doubling our hash rate to 4.4 EH/s year to date. However, in transparency, construction of our farm in Rio Cuarto, Argentina has moved along on plan and on budget. However, there are macro developments within the country that impedes importation of all foreign equipment, including our miners. We are working to resolve these issues.

As part of this announcement, we adjusted our year end guidance from 6 EH/s to 5 EH/s. We are working with the regulatory authorities and our logistics providers to remedy this matter. The country is wrestling with high inflation, currency devaluation, and a significant debt burden. Importation approval for mining and IT equipment has been delayed, which has adversely affected our ability to bring in the additional 12,000 miners we need to operate the first warehouse at its full capacity. 

In addition, our private power producer in Rio Cuarto is still awaiting approval of its final operating permit to provide power to us. In the meantime, our farm is drawing power during this start-up and commissioning phase from the provincial electrical utility at a higher cost than our agreement with the power producer. On a daily basis, we continue to evaluate operations and these higher than anticipated energy costs. At around 4% of total production, this temporary variance has limited impact on our total direct costs of production. While the power producer expects the necessary permit to be forthcoming before the end of 2022, we expect higher costs of production at the facility until we can draw at least 26 megawatts.

Since launching in January, Paraguay operations continue to run smoothly, consistently contributing about 125 petahash. With its extensive hydro power infrastructure, we continue to look for new opportunities in the country. 

Q3 Financial Results

Bitfarms is proud to report continued profitable growth during Q3 2022. We have maintained our financial strength and flexibility to execute on our growth plan, ending the third quarter with cash of $36 million and 2,064 bitcoin valued as of September 30th at $40 million, for total liquidity of $76 million.

Our quarterly revenue was $33 million, compared to $42 million in Q2 2022, reflecting the 21% increase in Bitcoin mined offset by a 35% decline in the average Bitcoin price quarter over quarter. We achieved Adjusted EBITDA for 3Q 2022 of $10.3MM, representing a 31% margin, as compared to Adjusted EBITDA of $18.7MM, for a 45% margin, in 2Q 2022.

Bitfarms' direct cost of production per bitcoin in Q3 2022 averaged $9,400 and is among the lowest reported in the industry. This is a $500, or 5%, decrease in production cost from $9,900 per BTC in Q2 2022 and was driven by a combination of:

  • slightly lower average network difficulty,
  • an approximate 2% improvement in our mining efficiency as measured by joules per terahash,
  • the beneficial impact of a stronger US dollar vs. Canadian dollar on our Canadian electricity costs.

The direct cost of production in the quarter includes the additional electricity costs associated with the start-up and commissioning phase in Argentina and a full accrual for potential Canadian Value Added Tax, or VAT, legislation that affects the VAT rate, but which has not yet passed into law.  Excluding the accrual for this potential legislation, our direct cost of production during the quarter would be $8,300.  This proposed legislation is being actively challenged by a coalition of Canadian miners, with whom we are heavily involved, which is seeing early indications of success to date.

It's worth emphasizing that, among the benefits of being over 95% hydro, we enjoy very stable electricity costs. Over the past two years, our quarterly direct cost to mine bitcoin has remained in the narrow range of $6,900 to $9,900. While many of our industry peers wrestle with the impact of rising fossil fuel costs, our electricity costs have been relatively impervious to the impact.

The total cash cost of production during the quarter was $14,300. This includes the direct mining costs, fixed cost of sales including rent, technician salaries, as well as cash general and administrative expenses. The $14,300 total cost of production represents a $2,700 decrease, or 16%, from $17,000 per Bitcoin in Q2 2022 and well below the current price of Bitcoin.

Our overall gross mining profit for the quarter was $17 million, compared to $27 million in the second quarter. This represents a 52% gross mining margin for the quarter in comparison to 66% in the prior quarter.

We ended the third quarter with total liquidity of $76 million comprising $36 million cash and 2,064 bitcoin valued at $40 million. Subsequent to the quarter, we paid down a further $3.2 million on our equipment-backed facilities and paid off in full our most expensive loan, raised another $1.9 million under our ATM, and reached agreement to sell our de la Pointe property for $3.6 million, of which we will expect to receive net proceeds of $3.5 million to supplement our cash balance.


To summarize our strong market position and our growth strategy, we are operating with 182 megawatts and 4.4 EH/s, a doubling in just the past 11 months. We remain diversified, with mining production in 4 countries – Canada, the US, Paraguay and Argentina. 

We are sustainable, with operations currently 95% powered by hydroelectricity. We have also continuously led the industry in transparency, from establishing the monthly production report standard to our corporate website, which provides unparalleled information about our mining operations.

Our performance metrics are consistently industry leading. In October, we recorded 115.7 'bitcoin-mined-per-average-exahash', placing us at the top of industry-performance from our assets. Even at recent bitcoin price levels, we continued to generate positive cash from mining operations.

The experienced, internationally based management team at Bitfarms has demonstrated they are highly capable of finding and building new farms in a cost-effective manner and are capable of generating sector leading results. With Bitcoin prices down, this is indeed an impressive performance and positions the company very well for future growth, to turn to distressed and under-performing companies, or to consolidate on a larger scale.

Looking at where we are today, Bitfarms has a strong balance sheet and financing resources, including positive cash flow from operations, to fund its continued growth. We're following a path of growth with discipline, and as evidenced by our track record of operating excellence, we are well positioned to take advantage of emerging opportunities and be a consolidator in the industry.

It's worth noting that we grow and manage our business with the 2024 halving in our sights.  All of our current indebtedness is scheduled to mature on or before February 2024, in advance of the expected halving date.

We are living and working in very challenging times. Context and results are paramount when you consider what Bitfarms has achieved this quarter and this year. In an industry where there are many performance metrics and comparisons, I would like to reiterate 3 points about Bitfarms:

  1. Year to date, we've mined 4,219 bitcoin. This places us 3rd in total production amongst the public miners, a testament to our ability to scale the business.
  2. Benefiting from stable low energy costs, we've maintained profitable mining operations each quarter, as evidenced by $10 million in positive Adjusted EBITDA in Q3 2022.
  3. We've deleveraged our balance sheet, reducing financial risk and better positioning us to consider the increasing number of opportunities within the industry.

We look forward to our future investor conferences, including the Ladenburg Thalmann Second Virtual Crypto Expo 2022 in December and the Needham 25th Annual Growth Conference in New York in early January.

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. Readers should not place undue reliance on forward-looking information. Please refer to those risks set out in the public documents of Bitfarms filed on 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."