Release Date: November 13, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bitfarms Ltd (NASDAQ:BITF) successfully upgraded 10 data centers and added three new ones, significantly increasing their hash rate by 83% to 11.9 X A hash.
• The company improved its efficiency by 40%, reaching its year-end efficiency goal three months ahead of schedule.
• Bitfarms Ltd (NASDAQ:BITF) announced the acquisition of Stronghold Digital Mining, marking the largest acquisition in the Bitcoin mining sector between two public companies.
• The company has a strategic growth plan to expand its megawatt pipeline from 324 megawatts to 950 by the end of 2025, with potential growth up to 1.6 gigawatts.
• Bitfarms Ltd (NASDAQ:BITF) is diversifying its portfolio beyond Bitcoin mining, exploring high-growth areas such as hosting, HPC, AI, and energy generation.

Negative Points

• Bitfarms Ltd (NASDAQ:BITF) experienced minor construction delays and shipping issues, impacting their ability to meet the mid-year hash rate target.
• The company reported a net loss of $37 million for Q3, an increase from the previous quarter's loss of $27 million.
• General and administrative expenses increased significantly due to one-time non-recurring costs, including settlement expenses and acquisition-related costs.
• The company's operating loss increased to $44 million, driven by non-cash depreciation expenses and other factors.
• Bitfarms Ltd (NASDAQ:BITF) had to adjust its year-end hash rate target to the first half of 2025 due to delays in miner shipments and warranty servicing.

Q & A Highlights

• Warning! GuruFocus has detected 2 Warning Sign with BITF.

Q: Can you provide more detail on discussions with prospective customers for the HPC AI vertical and potential economics from an HPC AI hosting deal? A: Ben Yang, CEO: We are in active conversations with multiple parties. The revenue from an HPC AI deal is expected to be more than $100 per megawatt hour, which is higher than Bitcoin mining. However, we believe that Bitcoin mining will offer better economics and returns on invested capital over the next 15 to 18 months. The one megawatt HPC AI site is more about developing technology and expertise rather than being a significant revenue contributor.

Q: How should we think about the cadence of hash rate expansion from 11.9 EH/s to 21 EH/s in the first half of 2025? A: Ben Yang, CEO: We are continuing to plug in miners regularly and have started deploying miners at the hosting agreements with Stronghold. Expect regular linear growth, which can be tracked with our monthly production reports. The 21 EH/s target will be achieved in the first half of 2025.

Q: Regarding the two HPC pilot sites, are there additional megawatts available for larger projects once the pilots proceed? A: Ben Yang, CEO: Yes, both sites have expansion capacity. One site can expand to about 20 megawatts, while the other has a capacity in the triple figures.

Q: What was the decision behind moving inventory from Paraguay to Stronghold sites? A: Ben Yang, CEO: The decision was based on optimizing our portfolio. Deploying in the U.S. allows for earlier deployment, lower logistics duties, and better utility from the T21 miners due to energy demand response programs. This strategy provides more value to the Iguazu site by keeping it strategically flexible.

Q: How do you view the potential impact of an administration change in Washington on U.S. regulations? A: Ben Yang, CEO: The election results, particularly in Pennsylvania, are favorable for energy policies and infrastructure. We are bullish on our U.S. energy assets, and the regulatory environment looks promising under the new administration.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.