Bitfarms Ltd. (“
Bitfarms”, or the
“
Company”) (Nasdaq:BITF/TSXV:BITF) today announces
its financial results for the second quarter ended June 30, 2021
(“Q2 2021”). All financial references are denominated in US
dollars, unless otherwise noted.
Q2 2021
Highlights
- Revenues of $36.7 million; gross
profit of $23.4 million (64% gross margin), operating loss of $2.1
million (-6% operating margin), and net loss of $3.7 million;
- Gross mining profit1 of $28.1 million
(79% gross mining margin);
- Adjusted EBITDA of $23.8 million
(65% Adjusted EBITDA margin);
- Mined 759 Bitcoin
with an average cost of approximately $9,000 per Bitcoin2 and held
1,293 Bitcoin valued at $35,057 per bitcoin, or approximately $45.3
million, as of June 30, 2021;
- Received and
installed 3,461 miners during the quarter, including the
replacement of certain older generation miners, resulting in a net
increase of approximately 240 PH/s;
- Completed a CAD$75 million private
placement, bringing total gross proceeds raised for the
year-to-date to CAD$155 million, and applied the majority of the
proceeds to place deposits to secure orders for previously
announced 56,300 new miners with expected deliveries in 2021 and
2022;
- Commenced trading on Nasdaq under
the symbol “BITF”; and
- Built out our global leadership
team with key promotions and hires
Emiliano Grodzki, Bitfarms’ Chief Executive
Officer, noted, “The second quarter of 2021 was a pivotal one for
our company. We made great progress towards our goal of becoming a
global Bitcoin mining company and solidifying our position as a
leader in the Bitcoin mining space. From the beginning of 2021
through the end of 2022, we expect to have increased our capacity
eight- fold and have expanded our geographic resources throughout
North and South America while continuing to pursue opportunities
elsewhere. We’ve commenced trading on Nasdaq, built out our
leadership team with additions and promotions in Canada, the US and
South America, and capitalized on our infrastructure capabilities
to build on our relationships and identify potential locations for
expanding our geographic presence.”
__________________
1 Gross mining profit, Gross mining margin,
EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin,
are non- IFRS performance measures; please refer to the Non-IFRS
Financial Performance Measures section of the Bitfarms Management
Discussion & Analysis for the three and six months ended June
30, 2021.2 Represents the direct cost of Bitcoin based on the total
electricity costs and hosting costs related to the Mining of
Bitcoin, excluding electricity consumed by hosting clients, divided
by the total number of Bitcoin mined.
“Further, while the price of Bitcoin continues
to fluctuate, the current market is favorable to our global
operation with the ban on crypto-mining in China and the resultant
shutdown of almost one-half of the network hash rate, allowing us
to increase our market share to just above 1.5% from less than 1.0%
at the beginning of the year,” added Mr. Grodzki. “In addition, the
China ban enables us to procure miners more competitively than we
have in the past and to leverage our infrastructure development and
operating capabilities to further support our ambitious plans for
expansion. We are very excited about the months ahead.”
Financial
Results for the
Quarter ended June
30, 2021
In Q2 2021, the Company generated revenues of
$36.7 million, up $29.3 million, or approximately 398%, compared to
the same period in 2020, driven by organic growth, as we increased
the Company’s average hash rate by approximately 618 PH/s, or
89%
Q2 2021 gross mining profit and gross mining
margin was $28.1 million and 79%, respectively, compared to $2.5
million and 36%, respectively, in Q2 2020. The increases are
primarily attributable to higher average Bitcoin prices in Q2 2021
when compared to the same period in the prior year
The Company’s average cost of production per
Bitcoin increased to $9,000 for the quarter in comparison to $5,075
for the prior year quarter, reflecting the May 2020 halving event
and expenses related to third-party hosting, offset by the benefit
from operating efficiencies.
The Company’s Q2 2021 EBITDA was $2.7 million,
resulting in an EBITDA margin of 7% compared to an EBITDA of $0.4
million and EBITDA margin of 6% in Q2 2020. The Company’s net loss
was$3.7 million in Q2 2021, which did not differ materially from
the net loss in Q2 2020. EBITDA and Net Loss reflect a loss of
$14.9 million for the revaluation of our Bitcoin holdings as a
result of the June 30, 2021, Bitcoin price being lower than the
average value of the Bitcoin we mined during the quarter and held
at the beginning of the quarter and a $6.3 million non-cash
share-based payment expense.
From a cashflow standpoint, the May 2021 private
placement with US institutional investors along with the exercise
of stock options during the quarter generated proceeds of
approximately$60 million in cash during the quarter, which was used
primarily to secure orders for the previously announced 56,300
miners and enabled the Company to retain over 95% of the 759
Bitcoin mined during the quarter as part of its Bitcoin retention
program commenced in January 2021.
The Company ended the quarter with cash of
approximately $36.2 million and total liquidity, defined as cash
and Bitcoin holdings, of approximately $81.6 million.
Conference
Call to be held
Monday, August
16, 2021 at
5:30pm ETManagement will host a
conference call on Monday, August 16, 2021, at 5:30 p.m. ET to
review financial results. Following management’s formal remarks
there will be a question-and-answer session where management will
address questions.
The conference call will be available through a
live webcast found here:
https://services.choruscall.com/mediaframe/webcast.html?webcastid=ksgqlgVN
Participants are asked to pre-register for the call
through the following link:
https://dpregister.com/sreg/10159337/ec19bc7656
Callers who pre-register will be given a
conference passcode and unique PIN to gain immediate access to the
call and bypass the live operator. Participants may pre-register at
any time, including up to and after the call start time.
Those without internet access or unable to
pre-register may dial in by calling: 1-866-777-2509 (domestic),
1-412-317-5413 (international). All callers should dial in
approximately 10 minutes prior to the scheduled start time and ask
to be joined into the Bitfarms call.
A webcast replay of the call will be available
approximately one hour after the end of the call through November
15, 2021, at the above webcast link.
At-The-Market
Equity Program
Bitfarms also announces that it has entered into
an at-the-market offering agreement dated August 16, 2021 (the “ATM
Agreement”) with H.C. Wainwright & Co., LLC (the “Agent”) as
agent, pursuant to which the Company established an at-the-market
equity program (the “ATM Program”). Pursuant to the ATM Program,
the Company may, at its discretion and from time-to- time during
the term of the ATM Agreement, sell, through the Agent, such number
of common shares of the Company (“Common Shares”) as would result
in aggregate gross proceeds to the Company of up to US$500 million.
Sales of Common Shares, if any, through the Agent will be made
through “at-the-market” issuances, including without limitation,
sales made directly on the Nasdaq Stock Market or another trading
market for the shares in the United States at the market price
prevailing at the time of each sale. No Common Shares will be
offered or sold under the ATM Program on the TSX Venture Exchange
or any other trading market in Canada. The ATM Program may be
terminated by either party at any time.
The Company intends to use the net proceeds of
the ATM Program, if any, principally for working capital
requirements, funding ongoing operations, repaying indebtedness
outstanding from time to time, completing future acquisitions, and
for other corporate purposes.
Since the Common Shares will be distributed at
trading prices prevailing at the time of the sale, prices may vary
between purchasers and during the period of distribution. The
volume and timing of sales, if any, will be determined at the sole
discretion of the Company's management and in accordance with the
terms of the ATM Agreement. To date, no Common Shares have been
distributed by the Company pursuant to the ATM Agreement.
The offer and sale of the Common Shares under
the ATM Program will be made by means of a prospectus supplement
dated August 16, 2021 (the “Prospectus Supplement”) to the
Company’s existing Canadian short form base shelf prospectus dated
August 12, 2021 (the “Base Shelf Prospectus” and, together with the
Prospectus Supplement, the “Prospectus”) and U.S. registration
statement on Form F-10 (the “Registration Statement”), which
includes the Base Prospectus. The Registration Statement was
declared effective by the United States Securities and Exchange
Commission (the “SEC”) on August 12, 2021. The Prospectus
Supplement has been filed with the applicable provincial regulatory
authorities in Canada and the SEC. The Prospectus is available on
the SEDAR website maintained by the Canadian Securities
Administrators at www.sedar.com and is available on the SEC’s EDGAR
website at www.sec.gov.
This news release does not constitute an offer
to sell or the solicitation of an offer to buy, nor shall there be
any sale of these Common Shares in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to the
registration or qualification under the securities laws of any such
jurisdiction.
About Bitfarms
Ltd.
Founded in 2017, Bitfarms is a Bitcoin mining
company, running vertically integrated mining operations with
onsite technical repair, proprietary data analytics and
Company-owned electrical engineering and installation services to
deliver high operational performance and uptime.
Having demonstrated rapid growth and stellar
operations, Bitfarms became the first Bitcoin mining company to
complete its long form prospectus with the Ontario Securities
Commission and started trading on the TSX-V in July 2019. On
February 24, 2021 Bitfarms was honoured to be announced as a Rising
Star by the TSX-V. On June 21, 2021, Bitfarms started trading on
the Nasdaq Stock Market.
Bitfarms has a diversified production platform
with five industrial scale facilities located in Québec. Each
facility is over 99% powered with environmentally friendly hydro
power and secured with long-term power contracts. Bitfarms is
currently the only publicly traded pure-play mining company audited
by a Big Four audit firm.
To learn more about Bitfarms’ events,
developments, and online communities:
Website: www.bitfarms.com
https://www.facebook.com/bitfarms/
https://twitter.com/Bitfarms_io
https://www.instagram.com/bitfarms/ https://www.linkedin.com/company/bitfarms/
Defined Terms
PH/s: Petahash per second. EH/s: Exahash per
second.
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 TSX
Venture Exchange nor its Regulation Services Provider (as that term
is defined in the policies of the TSX Venture Exchange) Nasdaq, nor
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 made in good faith by the Company pursuant to the
“safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995. The information in this release regarding
expectations in respect to the procurement of miners, Company
expansion plans, expectations in respect of the offering of Common
Shares under the ATM Program and the anticipated use of proceeds
from the ATM Program and about future plans and objectives of the
Company are forward-looking information. The Company may also
discuss “forward-looking information” or make “forward-looking
statements” in other communications by the Company, including the
conference call related to the Company’s financial results. Other
forward-looking information includes, but is not limited to,
information concerning: the intentions, plans and future actions of
the Company, as well as Bitfarms’ ability to successfully mine
digital currency, revenue increasing as currently anticipated, the
ability to profitably liquidate current and future digital currency
inventory, volatility of network difficulty and digital currency
prices and the potential resulting significant negative impact on
the Company’s operations, the construction and operation of
expanded blockchain infrastructure as currently planned, and the
regulatory environment for cryptocurrency in the applicable
jurisdictions.
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”, “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 and are intended to identify 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: market conditions and other factors that
may affect the Company’s ability to utilize the ATM Program and the
prices at which the Company may sell Common Shares in the ATM
Program; the dilutive effect of issuances of Common Shares in the
ATM Program; the global economic climate; dilution; the Company’s
limited operating history; future capital needs and uncertainty of
additional financing; the competitive nature of the industry;
currency exchange risks; the need for the Company to manage its
planned growth and expansion; the effects of product development
and need for continued technology change; protection of proprietary
rights; the effect of government regulation and compliance on the
Company and the industry; network security risks; the ability of
the Company to maintain properly working systems; reliance on key
personnel; global economic and financial market deterioration
impeding access to capital or increasing the cost of capital; and
volatile securities markets impacting security pricing unrelated to
operating performance. In addition, particular factors that could
impact future results of the business of Bitfarms include, but are
not limited to: the construction and operation of blockchain
infrastructure may not occur as currently planned, or at all;
expansion may not materialize as currently anticipated, or at all;
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 ability to complete current and
future financings, any regulations or laws that will prevent
Bitfarms from operating its business; historical prices of digital
currencies and the ability to mine digital currencies that will be
consistent with historical prices; an inability to predict and
counteract the effects of COVID-19 on the business of the Company,
including but not limited to the effects of COVID-19 on the price
of digital currencies, capital market conditions, restriction on
labor and international travel and supply chains; 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.SEDAR.com
including the annual information form for the year ended December
31, 2020, filed on April 7, 2021. The Company has also assumed that
no significant events occur outside of Bitfarms’ normal course of
business. 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. 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.
Caution
Regarding Non-IFRS
Financial Performance
Measures
This release makes reference to certain measures
that are not recognized under IFRS and do not have a standardized
meaning prescribed by IFRS, including "EBITDA," “EBITDA margin,”
"Adjusted EBITDA," “Adjusted EBITDA margin,” “Gross mining profit,”
and "Gross mining margin”. “EBITDA” is defined as net income
(loss) before: (i) interest expense; (ii) income tax expense; and
(iii) depreciation and amortization. “EBITDA margin” is defined as
the percentage obtained when dividing EBITDA by Revenues. “Adjusted
EBITDA” is defined as EBITDA adjusted to exclude: (i) share-based
compensation; (ii) non-cash finance expenses; (iii) asset
impairment charges; (iv) revaluation gains or losses on digital
assets and (v) other non-cash expenses. “Adjusted EBITDA margin” is
defined as the percentage obtained when dividing Adjusted EBITDA by
Revenues. “Gross mining profit” is defined as Revenues minus energy
and infrastructure expenses for the Backbone segment of the
Company. "Gross mining margin” is defined as the percentage
obtained when dividing Gross mining profit by Revenues for the
Backbone segment of the Company.
These measures may not be comparable to similar
measures presented by other companies. The Company uses non-IFRS
measures as additional information to complement IFRS measures by
providing further understanding of the Company’s results of
operations from management’s perspective. EBITDA and EBITDA margin
are common measures used to assess profitability before the impact
of different financing methods, income taxes, depreciation of
capital assets and amortization of intangible assets. Adjusted
EBITDA and Adjusted EBITDA margin are measures used to assess
profitability before the impact of all of the items in calculating
EBITDA in addition to certain other non-cash expenses. Gross mining
profit and Gross mining margin are measures used to assess
profitability after power costs in cryptocurrency production, the
largest variable expense in Mining. Management uses non-IFRS
measures in order to facilitate operating performance comparisons
from period to period and to prepare annual operating budgets.
Accordingly, they should not be considered in
isolation nor as a substitute for analysis of the Company's
financial information reported under IFRS. Reconciliations from
IFRS measures to non-IFRS measures are included in this press
release.
Investor and Media Contact: |
Investor Relations Contact: |
Jeffrey Lucas |
CORE IR |
Chief Financial Officer |
investors@bitfarms.com |
Bitfarms Ltd. |
+1.516.222-2560 |
+1.833.bitfarm (248.3276) ext. 109 |
|
jlucas@bitfarms.com |
|
|
|
Bitfarms Ltd.
Consolidated Results
of Operations
(Unaudited)
(U.S.$ in thousands except where indicated) |
Three months
ended |
Six months
ended |
For the periods ended as indicated |
June 302021 |
June 302020 |
$ Change |
% Change |
June 302021 |
June
30 2020 |
$ Change |
% Change |
Revenues |
36,687 |
7,372 |
29,315 |
398% |
65,119 |
16,584 |
48,535 |
293% |
Cost of sales |
13,332 |
7,506 |
5,826 |
78% |
22,452 |
15,423 |
7,029 |
46% |
Gross profit |
23,355 |
(134) |
23,489 |
nm |
42,667 |
1,161 |
41,506 |
nm |
Gross margin (loss) |
64% |
(2%) |
- |
- |
66% |
7% |
- |
- |
General and administrative expenses |
10,607 |
1,371 |
9,236 |
674% |
13,426 |
4,176 |
9,250 |
222% |
Gain on disposition of digital assets |
(47) |
(23) |
(24) |
104% |
(25) |
(23) |
(2) |
9% |
Loss on revaluation of digital assets |
14,885 |
- |
14,885 |
100% |
14,885 |
- |
14,885 |
100% |
Operating income (loss) |
(2,090) |
(1,482) |
(608) |
41% |
14,381 |
(2,992) |
17,373 |
581% |
Operating margin |
(6%) |
(20%) |
- |
- |
22% |
(18%) |
- |
- |
Loss (gain) on disposition of PP&E |
(146) |
707 |
(853) |
(121%) |
(165) |
707 |
(872) |
(123%) |
Net financial expenses |
1,127 |
1,545 |
(418) |
(27%) |
24,552 |
2,567 |
21,985 |
856% |
Net loss before income taxes |
(3,071) |
(3,734) |
663 |
(18%) |
(10,006) |
(6,266) |
(3,740) |
60% |
Income tax expense (recovery) |
604 |
(4) |
608 |
nm |
1,274 |
(112) |
1,386 |
nm |
Net loss |
(3,675) |
(3,730) |
55 |
(1%) |
(11,280) |
(6,154) |
(5,126) |
83% |
Basic and diluted net loss per share |
(0.02) |
(0.04) |
- |
- |
(0.08) |
(0.07) |
- |
- |
Revaluation loss on digital assets (net of tax) |
(5,128) |
- |
(5,128) |
(100%) |
- |
- |
- |
- |
Total comprehensive loss |
(8,803) |
(3,730) |
(5,073) |
136% |
(11,280) |
(6,154) |
(5,126) |
83% |
Gross mining profit (1) |
28,064 |
2,506 |
25,558 |
nm |
50,334 |
6,602 |
43,732 |
662% |
Gross mining margin (1) |
79% |
36% |
- |
- |
80% |
42% |
- |
- |
EBITDA (1) |
2,746 |
416 |
2,330 |
560% |
(283) |
2,249 |
(2,532) |
(113%) |
EBITDA margin (1) |
7% |
6% |
- |
- |
0% |
14% |
- |
- |
Adjusted EBITDA (1) |
23,827 |
1,435 |
22,392 |
nm |
43,528 |
4,340 |
39,188 |
903% |
Adjusted EBITDA margin (1) |
65% |
19% |
- |
- |
67% |
26% |
- |
- |
(1) Gross mining profit, Gross mining margin, EBITDA,
EBITDA margin, Adjusted EBITDA, and Adjusted EBITDA margin, are
non-IFRS performance measures; please refer to the Caution
Regarding Non-IFRS Financial Performance Measures section of
Bitfarms Management Discussion & Analysis for the three and six
months ended June 30, 2021(2) Represents the average
cost of Bitcoin based on variable cost of electricity and is
calculated by taking the total electricity costs related to the
Mining of Bitcoin, excluding electricity consumed by hosting
clients, divided by the total number of Bitcoin mined
Reconciliation of
Net Income
(loss) to EBITDA
and Adjusted
EBITDA
(U.S.$ in thousands except where indicated) |
Three
months ended |
Six months
ended |
For the periods ended as indicated |
June 302021 |
June 302020 |
$ Change |
% Change |
June 302021 |
June 302020 |
$ Change |
% Change |
Net loss before tax |
(3,071) |
(3,734) |
663 |
(18%) |
(10,006) |
(6,266) |
(3,740) |
60% |
Interest expense |
897 |
1,400 |
(503) |
(36%) |
1,795 |
2,785 |
(990) |
(36%) |
Depreciation expense |
4,920 |
2,750 |
2,170 |
79% |
7,928 |
5,730 |
2,198 |
38% |
EBITDA |
2,746 |
416 |
2,330 |
560% |
(283) |
2,249 |
(2,532) |
(113%) |
Share based payment |
6,342 |
254 |
6,088 |
nm |
6,762 |
1,264 |
5,498 |
435% |
Loss on revaluation of digital assets |
14,885 |
- |
14,885 |
100% |
14,885 |
- |
14,885 |
100% |
Financial expenses (income) and other |
(146) |
765 |
(911) |
(119%) |
22,164 |
827 |
21,337 |
nm |
Adjusted EBITDA |
23,827 |
1,435 |
22,392 |
nm |
43,528 |
4,340 |
39,188 |
903% |
Calculation of Gross Mining Profit and Gross Mining
Margin |
(U.S. $ in thousands except where indicated)
|
Three
months ended |
Six
months ended |
For the periods ended as indicated |
June 302021 |
June 302020 |
$ Change |
% Change |
June 302021 |
June 302020 |
$ Change |
% Change |
Revenues |
35,479 |
6,870 |
28,609 |
416% |
63,215 |
15,594 |
47,621 |
305% |
Cost of sales |
12,301 |
7,189 |
5,112 |
71% |
20,744 |
14,674 |
6,070 |
41% |
Gross profit (loss) |
23,178 |
(319) |
23,497 |
nm |
42,471 |
920 |
41,551 |
nm |
Depreciation and amortization |
4,886 |
2,729 |
2,157 |
79% |
7,863 |
5,682 |
2,181 |
38% |
Net change in inventory and other |
- |
96 |
(96) |
(100%) |
- |
- |
- |
- |
Gross mining profit |
28,064 |
2,506 |
25,558 |
nm |
50,334 |
6,602 |
43,732 |
662% |
Gross mining margin |
79% |
36% |
- |
- |
80% |
42% |
- |
- |
“Gross mining profit” is defined as Gross profit excluding
depreciation and amortization and net change in inventory and other
minor items included in cost of sales for the Backbone segment of
the Company. "Gross mining margin” is defined as the percentage
obtained when dividing Gross mining profit by Revenues for the
Backbone segment of the Company.
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