Bitfarms sold over 60% of August Bitcoin production amid rising network difficulty.

Canadian Bitcoin (BTC) miner Bitfarms announced that it sold nearly 63% of the Bitcoin it mined in August, amounting to 147 BTC out of the 233 BTC generated during the month.

In its August 2024 update, the Toronto-based company highlighted the sale as part of its ongoing focus on active treasury management amid the “increase in average network difficulty.”

The sale generated approximately $8.8 million in revenue, contributing to Bitfarms’ liquidity while allowing the company to grow its Bitcoin holdings. Despite the challenging conditions, Bitfarms added 86 BTC to its treasury, bringing the total to 1,103 BTC, valued at approximately $65.1 million as of Aug. 31, 2024.

August marked a particularly difficult month for Bitfarms, with the network difficulty decreasing by 1.3%, a modest reprieve after months of escalating challenges. The company’s total Bitcoin production dropped to 233 BTC, down 8% from July’s 253 BTC and nearly a 40% year-over-year decline from August 2023’s 383 BTC.

The reduction in output was partially offset by Bitfarms’ ongoing efforts to optimize its mining operations. The company received and began installing 2,744 new T21 miners from Bitmain, replacing underperforming units. By the end of August, Bitfarms’ operational capacity reached 11.3 EH/s, a 102% increase year-over-year and a 2% gain compared to July.

Bitfarms braces for future prospects

As the Bitcoin network continues to evolve, Bitfarms aims to position itself to adapt to the shifting landscape. The average operating efficiency remained at 25 watts per terahash, according to the report. However, the decline in BTC per average EH/s — from 25 BTC in July to 22 BTC in August — reflects the ongoing challenge of rising network difficulty.

The report comes as its key rival, Riot Platforms, urged Bitfarms’ shareholders in a public statement to support changes to Bitfarms’ board at an upcoming Oct. 29 meeting, citing concerns over “broken governance.”

In the statement, Riot criticized Bitfarms for what it described as “defensive” tactics to entrench the existing board, including a recently announced acquisition of Stronghold Digital Mining Inc. The company also questioned the timing and terms of the $175 million deal, suggesting it was engineered to benefit legacy directors “whose focus is maintaining their own positions.”

Canadian Bitcoin mining firm Bitfarms revealed in its Q2 financial results, featuring it is still on track to achieve guidance of 21 EH/s in 2024.

Bitcoin mining firm Bitfarms saw its shares surge over 20% late Aug. 8, following the release of its Q2 financial results, which showed a narrower net loss and stronger revenue than analysts had predicted.

In the report, the Toronto-headquartered firm said that its revenue in Q2 was $42 million, marking a 17% increase year-over-year, though it fell 16% from the previous quarter. Bitfarms attributed the quarter decline to the decrease in block rewards following the Bitcoin halving event that occurred earlier in April.

The firm’s net loss turned out to be $27 million, or $0.07 per basic and diluted share, which is better by 36.3% than what analysts earlier projected. Bitfarms’ BITF shares responded positively to the news, climbing 22% to $2.30, per Google Finance data, pushing the firm’s market capitalization to $983.8 million.

Bitfarms dodges takeover attempt, for now

During Q2, Bitfarms sold 515 (BTC) at an average price of $65,500. At the same time, the Canadian crypto miner added 111 BTC to its treasury, bringing its total reserves to 1,016 BTC held as of late July.

Bitfarms also reiterated that its Special Committee “unanimously determined that continuing to execute Bitfarms’ strategic plan as an independent public company,” though it added that the board and management team “remain open to reviewing any and all opportunities that may deliver value to shareholders.”

Earlier in April, Riot Platforms proposed acquiring Bitfarms for $950 million. However, Riot subsequently withdrew its proposal, citing an inability to engage with Bitfarms’ current board on a potential merger.

Ben Gagnon, Bitfarms’ newly appointed CEO, highlighted the company’s progress, stating that the firm has made “significant strides” to position itself for “accelerated growth and efficiency gains in the second half of the year and into 2025.” He emphasized that Bitfarms is on track to achieve its 2024 guidance of 21 EH/s, bolstered by new site agreements.

HC Wainwright has reiterated a buy rating with a target price of for the Bitfarms (NASDAQ:BITF) stock.

According to HC Wainwright analyst Mike Colonnese, Bitfarms is currently one of the “most attractively valued stocks in BTC mining.”

The company’s indication that it’s open to a sale if that maximizes shareholder value suggests that any successful bid could come at a hefty premium compared to where BITF currently trades.

Colonnese, who initiated coverage for the Bitcoin mining firm’s stock early this month, issued the bullish forecast for BITF in a research note published on Monday, June 17.

Analysts reiterate buy rating for Bitfarms stock

HC Wainwright analyst Mike Colonnese says that Bitfarm is one of the most undervalued publicly traded Bitcoin miners.

The analyst sees Bitfarm’s recent agreement for a .7 million deal in an all-stock transaction for 120 MW of power as a pointer to the company’s robust growth initiatives.

Shares of Bitfarms rose 15% when the company announced its expansion efforts last week. As reported, the miner’s agreement will see it bring up to 120 MW of power online via the new site in Sharon, Pennsylvania.

The above agreement will see Bitfarms add 0.6 EH/s to its capacity in the fourth quarter of 2024 and a total of 8 EH/s in the second half of 2025.

Another 6 EH/s will come online in 2025 via the recently announced 100 MW expansion at Yguazu. Bitfarm’s end of year projection for 2024 is 21 EH/s management’s guidance for 35 EH/ s by the end of 2025.

“Owned and operated infrastructure expected to grow to ~650 MW in 2025. Factoring in the new development site in Sharon, PA, we estimate BItfarms is now poised to increase total power capacity by 170% to 648 MW in 2025, up from 240 MW operating today,” the analyst wrote.

Risks

Despite the recent market upheavals and the Riot takeover saga, the stock’s price is up 30% in June and nearly 24% up in the past five days. BITF is up 5.7% year-to-date.

However, HC Wainwright suggests there might be risks to BITF hitting the price target.

These would include volatility in Bitcoin prices, delays at Bitfarms’ new mining facilities and a potential impact from shareholder dilution resulting from equity capital raises.