Q4 2023 Bitfarms Ltd Earnings Call

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Operator: The call will begin shortly. Please continue to hold. Thank you. Production, www.bitfarms.com BF-WATCH TV 2021, www.bitfarms.com Filling In, Good morning and welcome to the Bitfarms fourth quarter and full year 2023 conference call. All participants will be in listen-only mode.

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Operator: Should you need assistance, please signal a conference specialist by pressing star, then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad.

Good morning, and welcome to the bit farms fourth quarter and full year 2023.

Conference call all participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone.

Operator: To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Tracy Krumme, Senior Vice President, Head of Investor Relations at Bitfarms. Please go ahead.

Keypad to withdraw your question. Please press Star then two please.

Tracy Krumme: Thank you. Good morning, everyone, and welcome to Bitfarms' fourth quarter and year-end 2023 conference call. With me on the call today is Jeff Morphy, President and Chief Executive Officer, Jeff Lucas, Chief Financial Officer, and Ben Gagnon, Chief Mining Officer. Before we begin, please note that this call is being webcast with an accompanying presentation. Today's press release and our presentation can be accessed on our website, bitfarms.com, under the Investors tab. Turning to slide two.

Please note this event is being recorded.

I'd now like to turn the conference over to Tracey Crummy.

Senior Vice President head of Investor Relations at bit farms. Please go ahead.

Thank you good morning, everyone and welcome to bet farms fourth quarter and yearend 2023 conference call with me on the call today is Jeff Murphy, President and Chief Executive Officer.

Jeff Lucas Chief Financial Officer, and Ben Gun Yung, Chief Marketing Officer.

Tracy Krumme: I'll remind everyone that certain forward-looking statements will be made during the call and that future results could differ from those implied in the statement. Such forward-looking information is based on certain assumptions and is subject to risks and uncertainty, and I invite you to also consult Bitfarms' MD&A for a complete list of those. Please note that reference will be made to certain measures not recognized under IFRS and therefore may not be comparable to similar measures presented by other companies.

Before we begin please note that this call is being webcast with an accompanying presentation.

Today's press release and a presentation can be accessed at our website at farms Dot com under the Investor section.

Turning to slide two.

I'll remind everyone that certain forward looking statements will be made during the call and that future results could differ from those implied in the statement. The forward looking information is based on certain assumptions and are subject to risks and uncertainties and I invite you to also consult in Pittsburgh M. D N a.

Tracy Krumme: We invite listeners to refer to today's press release and our MD&A for definitions of the aforementioned non-IFRS measures and their reconciliations to IFRS measures. Please note that all financial references are denominated in U.S. dollars unless otherwise noted. Turning to slide 3, it is now my pleasure to turn the call over to Jeff Morphy. Jeff, please go ahead.

For a complete list of those.

Please note that references will be made to certain measures not recognized under ifr F and therefore may not be comparable to similar measures presented by other companies.

We invite listeners to refer to today's press release, and our MD&A for definitions of the aforementioned non ifr S measures and their reconciliation to ifr if measures.

Jeff Gao: Thank you, Tracy, and thank you, everyone, for joining us. I am happy to present and discuss with you our Q4 and full year results at such an exciting time in the industry. Multiple converging catalysts are leading to a very bullish setup, which is sending the Bitcoin price soaring and the market cap of Bitcoin to over $1.3 trillion. The favorable industry tailwinds include an improving regulatory and macro backdrop.

Please note that all financial references are denominated in U S dollars unless otherwise noted.

Turning to slide three it is now my pleasure to turn the call over to Jeff Murphy, Jeff. Please go ahead.

Thank you Tracy.

Thank you everyone for joining us today.

I'm happy to present and discuss with you our Q4 and full year results at such an exciting time in the industry.

Jeff Gao: The recent Bitcoin ETF approvals by the SEC, which are leading to rapid retail and institutional adoption. The upcoming halving, which Ben will speak to more in a minute. The positive impact of Bitcoin supply constraints with current daily demand exceeding five to 10 times the daily supply of newly mined coins.

Multiple converging catalysts are leading to a very bullish sentiment, which is sending the bitcoin price soaring in the market cap of bitcoin to over 1.3 trillion dollars.

The favorable industry tail wins include an improving regulatory and macro backdrop.

The recent big quaint ETF approvals by the SEC, which are leading to rapid retail and institutional adoption.

The upcoming having which then will speak to more in a minute.

Jeff Gao: And there's the prospect of a lower global interest rate environment, which has historically been very favorable to the Bitcoin sector. Over the last two months, these catalysts have caused a surge in investment, and investment in publicly traded Bitcoin miners and Bitcoin ETFs. The ETFs have charted unprecedented growth, with net inflows exceeding $8 billion.

The positive impact of bitcoin supply constraints with current daily demand exceeding five to 10 times the daily supply of newly mined coins.

And there's a prospect of a lower global interest rate environment, which has historically been very favorable to the bitcoin sector.

Over the last two months these catalysts that caused a surge in investment interest and investment in publicly traded bitcoin miners and bitcoin Etfs.

The Etfs have chartered unprecedented growth.

Net inflows exceeding 8 billion.

Jeff Gao: This is not just an anomaly but a paradigm shift for the industry. Partially as a result of this insatiable demand, earlier this week, Bitcoin achieved a new all-time high price, which is exceptional, as this is the first time Bitcoin has attained a new all-time high, leading into a have. With this demand and supply backdrop, 2024 looks to be a banner year for. Turning to slide four, I want to start off today's call with a quick reminder of what Bitcoin is, why we mine it, and how Bitfarms does it better. Bitcoin is a simple idea.

This is not just an anomaly, but a paradigm shift for the industry.

Partially as a result of this insatiable demand earlier this week bitcoin achieved a new all time high price, which is exceptional as this is the first time bitcoin has attained a new all time high leading into a havoc.

With this demand supply backdrop, 'twenty 'twenty, four and looks to be a banner year for bed farms.

Turning to slide four.

I want to start off today's call with a quick reminder of what Bitcoin is why do we mine it and how bit farms does it better.

Bitcoin is a simple idea flawlessly executed in code and organically adopted by people around the world at massive scale.

Jeff Gao: Flawlessly executed in code and organically adopted by people around the world at massive scale, this powerful technology is empowering individuals, entrepreneurs, corporations, and even countries and governments to participate in the world's most open, fair, and secure financial system on the planet, as shown in the chart on the left. Bitcoin's ongoing adoption and organic growth has made it the best performing financial asset of the last year and over the last decade, outperforming the S&P 500, NASDAQ 100, MSCI World Index, and Gold, in our opinion and according to others. Bitcoin is the hardest monetary asset on the planet.

This powerful technology is empowering individuals entrepreneurs corporations, and even countries and governments to participate in the worlds most open fair and secure financial system on the planet.

As shown in the chart on the left.

Bitcoins ongoing adoption and organic growth has made it the best performing financial asset last year.

And over the last decade outperforming the S&P 500, NASDAQ100.

M S C I World Index and gold.

In our opinion and according to others Bitcoin is the hardest monetary asset on the planet.

Jeff Gao: Bitfarms is a vertically integrated global Bitcoin mining company that provides investors with high-quality exposure. Through our publicly traded shares, we are democratizing and making available to investors exposure to some of the world's best built, best operated, and lowest cost Bitcoin mining operations and the operating cash flows they generate. What makes us a leveraged investment play is that every single day since Bitfarms was founded in 2017, we have produced Bitcoin at a materially lower cost than what people, institutions, and ETFs can purchase it for in the open market. We have earned over 24,000 Bitcoin since inception. I am thrilled to report that in 2023, Bitfarms was the best performing stock on the Toronto Stock Exchange and the eighth best performing stock on mass. A moment ago, I commented that our shares represent a high data exposure to Bitcoin.

The farms is a vertically integrated global Bitcoin mining company that provides investors with high quality exposure to bitcoin.

Through our publicly traded shares we are democratizing and making available to investors exposure to some of the world's best built best operated and lowest cost bitcoin mining operations and the operating cash flow as they generate.

What makes us a leveraged investment play is that every single day since its farms was founded in 2017, we have produced bitcoin at materially lower cost than what people institutions and Etfs can purchase it for in the open market.

We have earned over 24000 bitcoin since inception.

I am thrilled to report that in 2023 that pharmacy is the best performing stock on the Toronto stock exchange and the eighth best performing stock on NASDAQ.

A moment ago I commented that our shares represent a high beta exposure to bitcoin.

Jeff Gao: As the chart on the right illustrates, in 2023, Bitfarms outperformed Bitcoin by 286% and outperformed the mining industry, represented by the Valkyrie Bitcoin miners ETF, by 95%. Bitfarms' annual share price return of 592% compares to Bitcoin's annual price appreciation of 155%, which is a beta of approximately three. So how will we outperform Bitcoin in 2023? Let's turn to slide five.

As the chart on the right illustrates in 2023 bid farms outperformed bitcoin by 286% and outperformed the mining industry represented by the Valkyrie.

Find miners ETF by 95%.

The farms and you'll share price return of 592% compares to bitcoins annual price appreciation of 155%, which is a beta of approximately three times.

So how did we outperform bitcoin in 2023.

Let's turn to slide five.

Jeff Gao: In 2023, we acted with strong discipline to dramatically transform our balance sheet by growing the company's hash rate 44%, improving our energy efficiency by 12 and a half percent, thereby reducing our operating costs per terahat, paying down 85% of our debt, increasing our Bitcoin and Treasury by 99%, ending the year with $118 million in liquidity. And in November, we announced our transformative fleet upgrade with a contract to purchase up to 63,888 Bitmain T21 bits. These powerful new miners, combined with our new farms under development, are a game changer and put Bitfarms on track to triple our hash rate to 21x a hash by year-end 2024 and improve energy efficiency up to 34% to 23 watts per tera hash. Not only does this represent the greatest growth in our six-year history, but importantly, our integrated strategic growth plan will drive what we believe will be the biggest relative improvement in energy efficiency in our industry this year. Turning to slide six.

In 2023, we acted with strong discipline to dramatically transform our balance sheet by.

The company's cash rate 44%.

Improving our energy efficiency by 12.5%, thereby reducing our operating costs per taro harsh.

Paying down 85% of our debt.

Increasing our bitcoin and treasury by 99% ending the year with $118 million in liquidity.

And in November announcing our transformative fleet upgrade with a contract to purchase up to 63888 main P 21 miners.

These powerful new miners combined with our new farms under development are a game changer and pitch and put good firms on track to Triple our hatch rate to 21 acts of hashed by year end, 'twenty 'twenty, four and improve energy efficiency up to 34% to 23 watts per taro harsh.

Not only does this represent the greatest growth in our six year history, but importantly, our integrated strategic growth plan will drive what we believe will be the biggest relative improvement in energy efficiency in our industry. This year.

Turning to slide six.

Jeff Gao: I would like to elaborate on the impact of our transformative and creative fleet upgrade while speaking to our financial discipline and cost focus. This month in Quebec, we will begin to upgrade our fleet, starting with the replacement of approximately 11,000 M31S and M31S Plus miners with the first batch of new T21 miners, as a testament to our highly efficient operating structure. It is important to note that while these M31s miners are the least efficient and oldest miners, and were purchased around the time of the last halving in 2020, they are still profitable due to our low cost energy and high operating efficiency. During these four years, this group of miners have paid for themselves over five times, demonstrating solid ROI. On a unit basis, upgrading the M31S to the new T21 miners will deliver a two times improvement in energy efficiency, driving a 50% reduction in our operating costs per terahertz. They will also generate a nearly threefold increase in hash rate and mining revenue. All other things remaining constant.

I would like to elaborate on the impact of our transformative and accretive fleet upgrade program, while speaking to our financial discipline and cost focused approach.

This month in Quebec, we will begin to upgrade our fleet starting with a placement of approximately 11000 M 31 S and M 31 S plus miners with the first batch of new T 21 meters.

As a testimonial to our highly efficient operating structure it.

It is important to note that while these M 31 S miners are least efficient and oldest miners.

Were purchased around the time of the last having in 2021 'twenty 'twenty. They are still profitable due to our low cost energy and high operating efficiencies.

During these four years. These group of miners have paid for themselves over five times, demonstrating solid ROI returns.

On a unit basis upgrading the M 31 S. The new T 21 miners will deliver a two times improvement in energy efficiency, driving a 50% reduction in our operating cost per ton of ash.

They will also generate a nearly threefold increase in hatch rate and mining revenue.

All other things remaining constant the relatively the relative improvements from upgrading these M 31 ask miners.

Jeff Gao: The relative improvements from upgrading these M31S miners will more than offset the impact of the upcoming halving on a per year turning to slide seven. Approximately 68% of our T21s on order will be installed in our existing farms, with the lion share going to our Quebec farm. By utilizing our existing infrastructure, the upgrade is effectively a plug and play operation.

More than offset the impact of the upcoming having on a per unit basis.

Turning to slide seven.

Approximately 68% of our T 20 ones on order will be installed in our existing farms with the lion's share going to Oracle back farms.

By utilizing our existing infrastructure the upgrade is effectively a plug and play operation.

Jeff Gao: Significantly reducing CAPEX requirements, risks, and complexity. This low-risk and low-cost growth strategy provides immediate and tangible benefits to Bitfarms and our environment. With the first miner set to be upgraded this month, we are pleased to report that our transformative fleet upgrade is well underway, on time, and on budget.

Significantly, reducing capex requirements risks and complexity.

This low risk and low cost growth strategy provides immediate and tangible benefits to their farms and our investors.

But the first minor step to be upgraded this month. We are pleased to report that our transformative fleet upgrade is well underway.

On time and on budget.

Turning to slide eight.

Jeff Gao: I'll touch upon our progress in Paraguay, where most of our new site development is happening and where we will plan to deploy over 26,000 new miners this year. In Paraguay, we have two new farms under development and on track for energization this year. The first miners at our Paso Pei facility are scheduled to go online this month, with more miners coming online in April.

I'll touch upon our progress in Paraguay.

Where most of our new site development is happening and where.

We will plan to deploy over 26000, new miners this year.

In Paraguay, we have two new farms under development and on track for Energizer <unk> This year.

The first miners at our Paso pay facility are scheduled to go online this month with more miners coming online in April.

Jeff Gao: Paraguay is an important area of growth for us, and the two farms under development will generate many value-added corporate benefits, including favorable fixed power contracts at 3.9 cents per kilowatt hour before that. Our contracts with Andy that are not subject to inflation. No requirements for power curtailment, providing up to 100% uptime.

Paraguay is an important area of growth for us.

Our two farms under development will generate many value added corporate benefits, including.

Favorable fixed power contracts at 3.9 cents per kilowatt hour before that.

Our contracts with Andy that are not subject to inflation.

No requirements for power curtailment, providing up to 100% uptime.

Jeff Gao: 100% Renewable Energy. Fast Development, Construction, and Deployment Times, exceptionally low cost for construction and skilled labor, and lastly, the first mover advantage. Securing Bitfarms with a meaningful amount of electricity allocated to the cryptocurrency sector, putting us on track to be the largest miner in Paraguay by year. My recent visit reinforced the merits of our decision to invest further in this country. There is abundant and low-priced hydropower and a skilled labor pool.

100% renewable energy.

Fast development construction and deployment times.

Exceptionally low cost for construction and skilled labor and lastly, first mover advantage securing departments with a meaningful amount of electricity allocated to the crypto currency sector, putting us on track to be the largest minor in Paraguay by year end.

My recent visit reinforced the merits of our decision to invest further in this country.

There isn't a there is abundant and low priced hydropower skilled labor pool.

Jeff Gao: , , , , , , , , , , , , , , from the Primary Electricity Utility and, And they understand how Bitcoin mining functions as a digital electricity line for exporting their excess hydropower to a global market, by signing power contracts with Bitfarm, they're able to monetize and make better use of their existing infrastructure assets. Additionally, They are able to use the revenues from Bitcoin miners to finance the rebuilding and expansion of a significant portion of their domestic power infrastructure, which will bring benefits, for generations to come, and aligns the interests of Bitfarms, Ande, and Paraguay. Turning to slide nine.

Supportive crypto currency and bitcoin mining from the public and most importantly.

From the primary electricity utility and they.

And they understand how bitcoin mining functions as a digital electricity line for exporting their access hydropower to a global marketplace.

Signing power contracts with bid farms, they are able to monetize and make better use of their existing infrastructure assets.

Additionally.

They are able to use the revenues from bitcoin miners to finance, the rebuilding and expansion of a significant portion of their domestic power infrastructure, which will bring benefits for.

Jeff Gao: With minor upgrades underway, and the near completion of the initial phase of development at Paso Pei, we are on track and on schedule to deliver 12x a hash by the end of June 2024. Importantly, with the Bitcoin price and spot minor prices rising, the 28,000 miner option that we purchased in November is in the money. Exercising this option is a key element towards achieving 17 exahash per second.

For generations to come and aligns the interests are bit farms, and they and Paraguay.

Turning to slide nine.

With minor upgrades underway and the near completion of the initial phase of development of Paso pay.

We are on track and on schedule to deliver 12 extra cash by the end of June 2024.

Jeff Gao: Through this exercise, we plan to take delivery of T21 miners in the third and fourth quarters of this year, in line with the construction schedule at EGWAS. While these carefully constructed plans increase our hash rate to 17 exahash per second, we are targeting more than a three-fold growth this year to 21 exahash. Should market conditions continue to be favorable, we are actively considering additional farm expansions, new developments, acquisitions, and further minor redeployments to achieve this 21 Exahash target by the end of 2024. We have numerous actionable opportunities in our pipeline. We are well prepared to seize upon accretive growth opportunities to fill the remaining four acts of hash this year. Turning to slide 10.

Importantly.

With bitcoin price and spot minor prices rising to 28000 minor option that we purchased in November is in the money.

Exercising this option is a key element towards achieving 17 axa harsh per second and through this exercise we plan to take delivery of T 21 miners in the third and fourth quarters of this year in line with the construction schedule at Iguazu.

While these carefully constructed plans increase our harsh rate to 17 X a harsh per second we're targeting more than a threefold growth. This year to 20 onex a harsh per second.

Should market conditions continue to be favorable.

We are actively considering additional farm expansions, new developments acquisitions, and a fruit and further minor redeployments to achieve this 21 Axa has target by the end of 2024.

Jeff Gao: Let's take a look at our pro forma portfolio based on the plans that I just, After having successfully deployed 63,888 T-21 Miners through the Transformative Fleet Upgrade Plan and the new farm developments at Paso Pei and Iguazu, we will have completely rebalanced our portfolio, both geographically and economically. The expected result is 1, higher operating efficiencies with 79% of our miners operating at 22 watts per terahash and no miners operating above 30 watts per terahash, to a competitive blend of low cost electricity with high efficiency.

With numerous actionable opportunities in our pipeline.

We are well prepared to seize upon accretive growth opportunities to fill the remaining forex of hash this year.

Turning to slide 10.

Let's take a look at our pro forma portfolio based on the plans that I just discussed.

After having successfully deployed 63888 T 20 of my miners.

The transformative fleet upgrade plan and the new farm developments at Paso pay any Guangzhou.

We will have completely rebalanced, our portfolio, both geographically and economically.

The expected result is.

One higher operating efficiencies with 79% of our miners operating at 22 watts per tear ash and no miners operating above 30 watts procure ash.

Jeff Gao: Achieving greater geodiversification, with no single country contributing more than 50% of our hashrate and revenue, for benefit from predominantly stable hydro power rates, which represent about 85% of our port, if you take away nothing else from this. Our transformative fleet upgrade is unique, both in terms of its scope and its ability to drive meaningful improvements across three key performance indicators. Hashrate, energy efficiency, and our direct cost of mining, also known as hash cost.

Two a competitive blend of low cost electricity with high uptime.

Three.

Even greater Geo diversification with no single country contributing more than 50% of our harsh rate in revenue.

And for.

Benefit from predominantly stable hydro power rates, which represent about 85% of our portfolio.

If you take away nothing else from this update our transformative fleet upgrade is unique both in terms of its scope and its ability to drive meaningful improvements across three key performance indicators.

Benjamin Gagnon: These improvements will take place across all existing farms and farms under construction, ensuring we are ready for the halving and the widely anticipated subsequent boom. I will now turn the call over to Ben Gagnon, our Chief Mining Officer, to talk about our operating and financial metrics and the various assumptions post-hacking. Thanks, Jeff. I'm really happy to be here with all of you today.

Harsh rate.

Energy efficiency and our direct cost of mine also known as harsh cost.

These improvements will take place across all existing farms.

And farmers under construction, ensuring we are ready for the having.

And the widely anticipated subsequent bull market.

Benjamin Gagnon: Well, this will be my third halving event and the company's second. For many investors listening in on today's call, it is likely going to be their first. Accordingly, I think it's important to spend a few minutes discussing the halving, mining economics, and how we think about them. Put simply, having events as originally envisioned by Bitcoin's creator and how they have functioned historically are catalysts for creating greater economic value

I will now turn the call over to Ben Gagnon, Our Chief marketing officer to talk about our operating and financial metrics and the various assumptions post halyard.

Thanks, Jeff.

I'm really happy to be here with all of you today.

Well this will be my third having events and the company's second for many investors listening in on today's call. It is likely going to be their first.

Accordingly, I think it's important to spend a few minutes discussing the having mining economics, and how we think about them.

Put simply having events as originally envisioned by the claims grader and how they a function historically, our catalyst for creating greater economic value on the mining side, the 50% reduction in the blocks reward results in fewer bitcoins mind, which better is paradise incentivize this miners to cut costs concur.

Benjamin Gagnon: On the mining side, the 50% reduction in the block reward results in fewer bitcoins mined, which Ceteris Paribus incentivizes miners to cut costs. Concurrently, this also means that the daily supply of new bitcoins that would otherwise be liquidated to pay operating expenses is also cut in half, restricting supply relative to demand and, in turn, driving prices higher. Turning to slide 12.

Currently this also means that the daily supply of new Big claims that would otherwise be liquidated to pay operating expenses is also cut in half restricting supply relative to demand and in turn driving prices higher.

Turning to slide 12.

Benjamin Gagnon: Historically, each halving epoch follows a similar pattern, one of Bitcoin prices rising faster than the network cash rate can grow in the 3-18 months following a halving, resulting in quickly expanding mining revenue and margins, intensifying further network growth. Being on the right side of the cycle is crucial for miners to optimize returns and is a key part of our 2024 growth strategy. Despite each cycle producing 50% fewer bitcoins in revenue than the cycle before it due to rising BTC prices. The economic value of all mining revenue in dollar terms increases dramatically with every halving epoch, resulting in a materially larger industry with more economic activity despite the reduction in BTC terms. Notably, this cycle is marked by three very unique features not seen in previous HACCPs, the China mining ban in 2021, the emergence of ETFs in January, and the fact that Bitcoin has just hit a new all-time high leading into the halving. This had never happened before.

Historically, each having epoch, followed a similar pattern one epic when prices rising faster than network castrate can grow in the three to 18 months following the Hattie, resulting in quickly expanding mining revenue and margin Incentivising further network growth.

Being on the right side of the cycle is crucial for miners to optimize returns and is a key part of our 2024 growth strategy.

Despite each cycle, producing 50% fewer bitcoins and revenue cycle before it due to rising BTC prices the economic value of all mining revenue in dollar terms increases dramatically with every cabin epoch, resulting in a materially larger industry with more economic activity. Despite the reduction in <unk>.

<unk>.

Notably this cycle is marked by three very unique features not seen in previous habits, the China mining ban in 2020 one the emergence of ETF in January and the fact that Bitcoin has just had a new time, new all time high leading into the having.

This has never happened before and with only 450, new bitcoin is expected to be mined per day. After the happening relative to current ETF demand of up to 10000 bitcoin today. It may mean that this next cycle will be unprecedented in terms of its scale.

Benjamin Gagnon: And with only 450 new bitcoins expected to be mined per day after the halving, relative to current ETF demand of up to 10,000 bitcoins a day, this may mean that this next cycle will be unprecedented in terms of its scale. But this is all revenue. And outside of hedging activities, miners have very limited control over revenue. However, we do have full control over our costs, which is why at Bitfarms we take a hash cost first approach to mining. Turning to slide 13.

But this is all revenue and outside of hedging activities miners have very limited control over revenue.

However, we do have full control over our costs, which is why a bit farms, we take our cash cost first approach to mining.

Turning to slide 13.

Benjamin Gagnon: Energy efficiency is meaningless without also considering electricity costs. That's why we look at the blended figure hash cost. Calculating hash costs is easy and can be done by simply multiplying energy efficiency by the energy price over 24 hours.

Energy efficiency is meaningless without also considering electricity costs.

That's why we look at the blended figure cash cost calculating hash cost is easy and it can be done by simply multiplying energy efficiency with energy price over 24 hours. This will calculate the direct energy cost to operate per unit of compute per day in dollar terms.

Benjamin Gagnon: This will calculate the direct energy cost to operate per unit of compute per day in dollar terms. As we execute on our upgrade and deployment plans for 2024, we expect to improve efficiency by 11% from 35 watts per terahash today to 31 watts per terahash by the end of Q1. 29% to 25 loss per terahash by the end of Q2 and 34% to 23 loss per terahash by year end, driving our hash costs down by similar amounts. Importantly, as Jeff mentioned earlier, we believe these will be the most significant improvements across energy efficiency and hash cost in our industry this year. When comparing that to the most efficient miner on the market, an S21, you can see that our anticipated hash cost will be lower than an S21 operating at $0.06 by the end of Q2 and virtually on par with an S21 operating at $0.05 by year end, making our hash cost highly competitive. When compared to the sensitivity table for the hash price post-halving, it is hard to imagine a scenario where a hash cost would operate at a loss.

As we execute on our upgrade and deployment plans throughout 'twenty 'twenty four we expect to improve efficiency, 11% from 35 loss per tariffs stay just 31 loss per Terry asked by the end of Q1.

29% to 25 loss per tear ash by the end of Q2, and 34% to 23 lots for Terra hashed by year end driving our hash costs down by similar amounts.

Importantly, as Jeff mentioned earlier, we believe these will be the most significant improvements across energy efficiency and cash cost in our industry. This year.

When comparing that to the most efficient minor on the market in F. 'twenty. One you can see that our anticipated cash cost will be lower than in F. 'twenty, one operating that sixth sense by the end of Q2 and virtually on par with in F. 'twenty one operating at five times by year end, making a hash cost highly competitive.

When compared to the sensitivity table, perhaps price post having it is hard to imagine a scenario, where a hash costs would operate at a loss on the contrary. It is very easy to see how our low hash cost relative to hash price scenarios positioned us to capture the upside of rising bitcoin prices with quickly.

Benjamin Gagnon: On the contrary, it is very easy to see how our low hash cost relative to hash price scenarios positions us to capture the upside of rising Bitcoin prices with a quickly expanding mining margin. In summary, the upcoming halving is not something to be afraid of. Our growth plan in 2024 is positioned to make us a leader in low-cost production, with at every stage in the deployment plan resulting in anticipated direct costs to produce Bitcoin well below the current price, and with relative growth that is anticipated to outpace the network, rapidly increasing our market share and revenues, all else remaining constant. With that, I will now hand the call over to Jeff Lucas for the financial review. Thank you, Ben.

Expanding mining margins.

In summary, the upcoming having is not something to be afraid of our growth plan. In 2024 is positioned to make us a leader in low cost reduction got at every stage in the deployment plan, resulting in anticipated direct cost to produce a bitcoin well below current prices and with our relative growth that is anticipated.

Outpace the network rapidly increasing our market share and revenues all else remaining constant.

With that I will now hand, the call over to Jeff Lucas for the financial review.

Thank you Ben this is indeed, one of the most exciting times in our company's history as we aggressively pursue our growth plan and made great strides towards 12 back to hatch, but second in the second quarter and our 'twenty. One actually has the second target by year end more than a tripling of our hatch rates.

Jeffrey P. Lucas: This is indeed one of the most exciting times in our company's history as we aggressively pursue our growth plans and make great strides toward 12x a hash per second in the second quarter and our 21x a hash per second target by year-end, more than a tripling of our hash rate. Turning now to slide two. The fourth quarter total revenue was $46 million, up 34% over the third quarter and up 71% over the prior year. Quarter over quarter, the comparison reflects a 30% higher average Bitcoin price and 5% more Bitcoin earned during the quarter. In the fourth quarter, we are at 1,236 Bitcoin compared to 1,172 in the third quarter. Our hash rate, which does not yet include the impact of our upgrade program, was 6.5% higher sequentially, offsetting an increase in average network difficulty of 9%, excuse me, 19% over the third quarter of 2023.

Now on to slide 15.

Fourth quarter total revenue was $46 million up 34% over the third quarter and up 71% over the prior year.

The quarter over quarter comparison reflects 30% higher average claim price, 5% little bit quaint earned during the quarter.

In the fourth quarter, we earned 12 136, bitcoin compared to 1100 and 72 in the third quarter, our hash rate, which does not yet include the impact of our upgrade program with $6, 5% higher sequentially offsetting an increase in average network difficulty up 9% excuse me, 19% over the third quarter 'twenty.

23.

Jeffrey P. Lucas: Fourth quarter gross mining profit was $23 million or 52% of mining revenue compared to $13 million at 38% of mining revenue in the third quarter. Gross Money Profit reflects investment in advanced direct growth to 21x a hash per second and other costs reflective of a larger product production operation as well as non-recurring expenses. G&A expenses for the quarter were $13.4 million in comparison to $8.4 million in the third quarter.

Fourth quarter gross margin profit was $23 million.

2% of mining revenue compared to $13 million or 38% of mining revenue in the third quarter.

With money properly reflects investment in advance of outgrowth to 'twenty, one has to ask the second and other costs reflective of a larger product production operation as well as nonrecurring expenses.

G&A expenses for the quarter was $13 $4 million comparison to $8 $4 million in the third quarter.

Jeffrey P. Lucas: This includes $4 million of non-cash compensation versus $2 million in the previous quarter. The increase also includes higher incentive compensation payments associated with the achievement of annual performance targets, non-capitalizable professional services that are associated with corporate development to advance our growth initiatives for the second half of 2024 and 2025, and other recurring and non-recurring expenses. For the fourth quarter, our operating loss was $13 million, including non-cash depreciation expense of $22 million, in comparison to a third quarter operating loss of $19 million, also including depreciation expense of $22 million.

This includes $4 million of noncash compensation versus $2 million in the previous quarter.

The increase also includes higher incentive compensation payments associated with the keeping of annual performance targets non capitalize about professional service fees that are associated with corporate development to advance our growth initiatives for the second half of 'twenty, 'twenty, four and 2025 and other recurring and nonrecurring expenses.

The fourth quarter.

Operating loss was $13 million, including noncash depreciation expense of $22 million in comparison to a third quarter operating loss of $19 million also included depreciation expense of $22 million.

Jeffrey P. Lucas: Our net loss for the fourth quarter was $57 million, or $0.19 per basic and full diluted share, compared to a net loss for the third quarter of $17 million, or $0.06 per basic and full diluted share. Included in that loss are net financial expenses of $45 million. That includes a $38 million non-cash charge for the revaluation of financial liability for warrants issued in earlier financing, for a background on these wars. During the preparation of our annual financial statements, we reassessed the application of IFR-REF accounting standards when the Accounting of Private Places financing was closed in the first six months of 2021, almost three years ago. In consultation with our corporate counsel and accountants, it was determined that the warrants associated with the financing should be treated as a financial liability rather than as equity.

Net loss for the fourth quarter with $57 million by 19 cents per basic and fully diluted share.

Net loss for the third quarter of $17 million of six cents per basic and fully diluted share.

The net loss, our net financial expenses of $45 million that includes the $38 million noncash charge for the revaluation of financial liability for warrants issued earlier financings.

For background about these warrants.

During the preparation of our annual financial statements, we reassessed the application of Ifr with accounting standards when Theyre counting a private placement financing that closed in the first six months of 2021 almost three years ago.

In consultation with our corporate counsel and a talent it was apparent that the warrants associated with the financing should be treated as a financial liability rather than as equity.

Jeffrey P. Lucas: Accordingly, the financial statements for 2022 were restated to reflect this accounting. It's important to bear in mind that these are non-cash adjustments and do not have any impact on our reported adjusted EBITDA. More information and details can be found in our 2023 financial statements and MD&A, which were filed today. Turning our attention now to Bitcoin production cost and profitability. In the fourth quarter, Bitfarm's direct cost of production per Bitcoin, which is the all-in electricity cost to mine Bitcoin, was $16,200, down from $16,900 per Bitcoin in the third quarter of 2023.

Accordingly, the financial statements for 2022 were restated to reflect the county.

It's important to bear in mind that these are noncash adjustments did not have any impact on our reported adjusted EBITDA more information and details can be found in our 2023 financial statements and MD&A, which were filed today.

Turning our attention now to put their claim production costs and profitability.

In the fourth quarter, there's problems direct costs of production perfect coin, which is the all in electricity cost of mine bitcoin with $15200 down from the $16900 a decline in the third quarter of 2023.

Jeffrey P. Lucas: The approximate 4% lower cost of Bitcoin primarily reflects a reduction in the overall cost of electricity from 4.5 cents per kilowatt hour to 4.2 cents per kilowatt hour. This return was driven by a six-month contract with Argentina's power producer entered into in November that lowered our electricity cost to 2.1 cents per kilowatt hour, the lowest in our network. This gave Argentina a direct mining cost of less than $7,700 per Bitcoin. With Argentina representing about 22% of our overall Bitcoin production, the benefit to our corporate electricity rate and the direct cost of production will be even greater in the first quarter of 2024, as we'll have had the lower rate in effect for the full quarter. Our direct cost since February of 2022 includes a 15% value-added tax on Canadian energy costs as a result of legislation enacted last year.

The approximate 4% lower cost per bitcoin, primarily reflects a reduction in the overall cost of electricity and $4.05 per kilowatt hour before two cents per kilowatt hour.

And in turn was driven by a six month contract with Argentina's power producer entered into November that lowered our electricity costs at 2.1 cents per kilowatt hour the lowest in our network.

Gabe, Argentina, a direct mining cost of less than $7700 bitcoin.

With Argentina, representing about 22% of our overall big claim production the benefit they were corporate electricity rate and the direct cost of production will be even greater in the first quarter of 'twenty 'twenty four and we'll have led.

The lower rate in effect for the full quarter.

Our direct cost in February of 2022 includes a 15% value added tax in Canadian energy costs.

As a result of legislation enacted last year.

Jeffrey P. Lucas: We firmly believe that we are exempt from this incremental tax and are pursuing a revenue ruling with the Canadian and Quebec tax authorities to formalize our exempt status. With Canada representing about two-thirds of our productive capacity, our corporate electricity rate during the quarter without this tax would have been $0.037 per kilowatt hour, in comparison to our reported rate of $0.042 per kilowatt hour.

We firmly believe that we are exempt from this incremental tax.

Filling a revenue ruling with the Canadian and Quebec tax authorities the phone like exempt status.

With Candida, representing about two thirds of our productive capacity equivalent to your rate during the quarter without this tax would have been 3.7 cents per kilowatt hour and comparison.

Passenger our reported rate of caught my two cents per kilowatt hour and our direct cost the BTC would have been approximately $14600 $1600 lower than that reported.

Jeffrey P. Lucas: And our direct cost to BTC would have been approximately $14,600, $1,600 lower than that we reported. Now on to Adjusted EBITDA on slide 16. Adjusted EBITDA for the fourth quarter effectively doubled over the third quarter to $14 million, and it was at a 30% adjusted EBITDA margin in comparison to 90% in the previous quarter.

Now on to adjusted EBITDA on Slide 16.

Adjusted EBITDA for the fourth quarter effectively doubled over the third quarter to $14 million.

We're at 30% adjusted EBITDA margin in comparison to 90% in the previous quarter.

Jeffrey P. Lucas: The adjusted EBITDA equates to cash profitability per Bitcoin in the fourth quarter of $11,200, more than double the $5,400 profitability per Bitcoin in the third quarter. I'd like now to take a minute here to discuss how our adjusted event reporting is different than that of our peers. As a Canadian company, we follow international financial reporting standards, otherwise known as IFRS. Under IFRS, we do not mark to market our Bitcoin holdings, and accordingly, we do not reflect the unrealized gains and losses from our Bitcoin holdings in our income statement and our profitability. Similarly, we do not include these unrealized gains and losses in our adjusted EBITDA.

Yeah, adjusted EBITDA equates to cash profitability per bitcoin in the fourth quarter of $11200 more than double the 5400 dollar profitability per bitcoin and the third quarter.

I'd like now to take a minute here to discuss how our adjusted EBITDA reporting is different than that of our peers.

As a Canadian company, we follow international financial reporting standards, otherwise known as I if Iraq.

Under Ifr F. We do not mark to market a bit quite holding and accordingly, we do not reflect the unrealized gains and losses from our big quite holdings.

The income statement and our profitability.

Similarly, we do not include these unrealized gains and losses.

And EBITDA.

Jeffrey P. Lucas: Adjusted EBITDA for us is purely and consistently a measure of the cash profitability of our operations, and does not reflect the change in value of our assets and liabilities. It's a very straightforward and transparent calculation based simply on our cash profit of $11,200 for each of the 1,236 Bitcoin earned, plus roughly $200,000 profits generated at our bulk subsidiary. That's it. It is that straightforward.

Adjusted EBITDA for us is purely and consistently a measure of the cash profitability of our operation.

It does not reflect the change in value of our assets and liabilities.

It's a very straightforward and transparent calculation a simply on a cash profit of 11200 dog for each of the 1200 30 bitcoin.

That's roughly $200000 profits generated at a bulk of subsidiary that's it it is that straightforward.

Jeffrey P. Lucas: We believe, by the way, that the exclusion of balance sheet changes in our just-need-but-does, including our Bitcoin treasury, is a truer measure of the financial performance and the cash-generating capability of our operating activities. Turning now to slide 17, our liquidity. At December 31st, we held cash of $84 million and Bitcoin valued at $34 million for total liquidity of $118 million.

We believe by the way that the exclusion of balance sheet changes adjusted EBITDA, including a bit quaint fragile. He is a truer measure the financial performance and our cash generating capability of our operating activities.

Turning now to slide 17, and our liquidity.

At December 31st we held cash of $84 million and bitcoin and valued at $34 million with total liquidity of $118 million. This compares to $47 million cash and $6 million of liquidity at September 30.

Jeffrey P. Lucas: This compares to $47 million in cash and $56 million of liquidity at September 30th. During the fourth quarter of 2023, of the 1,236 Bitcoin earned, we sold 1,135 to generate $42 million of proceeds to fund our operating and debt service requirements. In the fourth quarter of 2023, we raised a total of $52 million in net proceeds from financing activities, $41 million of which was a private placement completed in November and an additional $11 million in December from the exercise of warrants related to the private placement. These funds were specifically earmarked for our growth initiative and our fleet upgrade plan. During the quarter, we paid down $6 million in debt, leaving us with a remaining balance of $4 million on December 31st.

During the fourth quarter of 2023 of the 1200 thirty-six Bitcoin earned we sold 1100 and 35 to generate $42 million of proceeds to fund, our operating and definitely with requirements.

In the fourth quarter of 'twenty, three we raised a total of $52 million in net proceeds from financing activities $41 million through a private placement completed in November and an additional $11 million in December from the exercise of warrants related to the private placement.

These funds were specifically earmarked for our growth initiatives and athlete upgrade plan.

During the quarter, we paid down $6 million in debt, leaving us with the remaining balance of $4 million at December 31st in the current quarter, we paid down the remaining balance Dan I am very pleased to say in February we met our stated target of having no debt on our balance sheet in advance of the habit.

Jeffrey P. Lucas: In the current quarter, we paid down the remaining balance, and I am very pleased to say that in February we met our stated target of having no debt in our balance sheet in advance of the halving. Lastly, I want to speak of the accretive nature of our mining upgrade program. The $36,000 minor purchase we announced in November represents a very accretive application of our invested capital. For an incremental capital deployment of about $100 million, we plan to increase our hash rate from 6.5x a hash per second to 12x a hash per second. This represents a marginal cost of about $18,000 per petahedron.

Lastly, I wanted to speak of the accretive nature of our mining upgrade program.

The 36000 minor purchase we announced in November represents a very accretive application of our invested capital.

The incremental capital deployment of about $100 million, we plan to increase our hatch rates and takes the half to half per second the TWA back to ask for a second this represents a marginal cost of about $18000 per pet a hash I'll note that economies valuation metric public miners as enterprise value of a pet a hash while this metric can vary.

Jeffrey P. Lucas: I'll note that the economy's valuation metric for public miners is enterprise value per petahedron. While this metric can vary among miners, the average for our sector overall is about $66,000 per petahat. By extension of this industry metric, we are redeploying about $100 million of capital to create $360 million of incremental shareholder value. Looking ahead, we expect to achieve a similar return on our invested capital with our purchase option for $28,000 additional T21 miners. With that, I will now hand the call over to Jeff for his concluding remarks. Thank you, Jeff. Let's turn to slide 18.

Nine or the average for our sector overall is about $66000 per pet a hash by extension of its industry metric. We are redeploying a weird deploying about what kind of million dollars of capital to create $360 million of incremental shareholder value.

Looking ahead, we expect to achieve a similar return on invested capital with a purchase option for 28000 additional T 21 minus.

With that I'll now hand, the call over to Jeff for concluding remarks.

Thank you Jeff.

Let's turn to slide 18.

In summary, the farms is a prominent player in the bitcoin mining sector offering investors high quality leverage exposure to bitcoin by our advanced operational capabilities and mining infrastructure.

Jeff Gao: In summary, Bitfarms is a prominent player in the Bitcoin mining sector, offering investors high-quality leverage exposure to Bitcoin via our advanced operational capabilities and mining infrastructure. With an industry-leading yield per exahash, Bitfarm distinguishes itself through exceptional margined performance, demonstrating operational efficiency and profitability in a highly competitive industry. And we are well prepared to navigate the upcoming Bitcoin trend. This preparation is underpinned by our robust balance sheet and strong liquidity, which are crucial for sustaining growth and capitalizing on new opportunities in this volatile market, led by a strong leadership team with a proven track record of driving profitable growth. Our expertise and strategic vision have been instrumental in our success over the past six years, including a previous having, Furthermore, Bitfarms' commitment to ESG reflects our dedication to sustainable and responsible mining practice.

With an industry, leading yield per X a hash that farm distinguishes itself through exceptional margin margin performance, demonstrating operational efficiency and profitability in a highly competitive industry.

And we are well prepared to navigate the upcoming bid quite having.

This preparation is underpinned by our robust balance sheet and strong liquidity, which are crucial for sustaining growth and capitalizing on new opportunities in this volatile market.

Led by a strong leadership team with a proven track record of driving profitable growth our expertise and strategic vision have been instrumental in our success over the past six years, including a previous having event.

Furthermore, the farms' commitment to ESG reflects our dedication to sustainable and responsible mining practices.

It's gratifying that our largest projects now I wonder development will draw power from the Thai food down the third largest hydropower facility in the world.

Jeff Gao: It's gratifying that our largest projects, now under development, will draw power from the Itaipu Dam, the third largest hydropower facility in the world. Overall, our strategic positioning, operational excellence, and commitment to sustainability position us for continued growth and success in 2024 and beyond. With that, I'll turn the call over to the operator to begin the question and answer session. To ask a question, you may press star and then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys.

Overall, our strategic positioning operational excellence and commitment to sustainability position us for continued growth and success in 2024 and beyond.

With that I'll turn the call over to the operator to begin the question answer session.

We will now begin the question and answer session.

Ask a question you May press Star then one on your telephone keypad.

If you're using a speakerphone please pick up your handset before pressing the keys.

If at any time if your question has been addressed and you would like to withdraw your question. Please press Star then two.

Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. Again, it is star then one to ask a question. At this time, we will pause momentarily to assemble our roster. The first question comes from Bill Papanastasiou. PEPFAR, Mr. Papanastasiou with C4HP, Please go ahead.

Again it is star then one to ask a question.

At this time, we will pause will materially.

Simple our roster.

The first question comes from Bill <unk>.

Yep.

Anastasia <unk> with Stifel.

Please go ahead.

Yeah. Good morning, everyone and thank you for taking my questions.

Bill Papanastasiou: Yeah, good morning, everyone. Thank you for taking my questions; I wanted to dial in on the salaries expense line. Obviously, it has increased this quarter, but from my understanding, you know, a large portion of this headcount is coming from Latin America where expansion plans are happening in Paraguay. Can you speak to the cost of labor in the region and how should we be forecasting this expense line item going forward? Good morning, Bill.

I just wanted to dial in on the salaries expense line.

Hum.

The increase this quarter, but from my understanding you know a large portion of this head count is obviously coming from Latin America, where expansion plans are happening in Paraguay.

Can you speak to the cost of labor in the region and how should we be forecasting this expense line item going forward.

Good morning, Bill, let's move that over to Jeff Lucas our CFO to take that question. Thank you.

Jeffrey P. Lucas: Let's move that over to Jeff Lucas, our CFO, to take that question. Thank you. So, good morning as well, Bill.

Sure.

Oh, good morning, as well Bill a couple of comments keep in mind here actually one of the benefits of being in Latin America is that the competition costs relative to North America, Oregon Madison lower.

Jeffrey P. Lucas: A couple of comments to keep in mind here. Actually, one of the benefits of being in Latin America is that the compensation costs relative to North America are dramatically lower. So we are certainly experiencing and going to expect to get a bit of an increase here as we're building out our team and our professional staff down there as well. Not overly material, I think, going forward here. I think what's more important to understand is that in the quarter that just ended, we actually had about $2.1 million of compensation associated with achieving goals and targets that were set in 2023, much of which was realized in the fourth quarter here. So I think what's important here is that we actually showed cash compensation of around $5.1 million in the quarter that just ended. To normalize this going forward, it'd be more like around $3.1 million, reflecting merit increases that we have in place for this year versus in the fourth quarter, and also the build out of our organization overall. Great, thank you. And then how's the team?

But we are certainly experiencing that goes back to get a bit of an increase here is in building out our team and our professional staff down there as well.

Not overly material I think going forward here I think what's more important to understand that in the quarter that just ended.

And we actually had about $2 $1 million of compensation associated with achieving goals and targets that were set actually in 2023, much of which realized actually in the fourth quarter here.

So I think what's important here is that we actually showed cash compensation around $5.1 million in the quarter that just ended.

To normalize this going forward, maybe more like around $3 $1 million, reflecting merit increases that we have in place for this year versus in the fourth quarter.

And also the build out of our organization overall.

Great. Thank you and then how is the team.

How's the team on our positioning and how does the decision, making changing given the spot price depreciation and transaction fees.

Moving higher and the market you know.

I didn't forecast incremental market opportunities following are having at this point.

There's a few things there.

And why don't you jump in and talk about the transaction fees and a sort.

How we account for those and how we plan for them.

Jeff Gao: How's the team positioning, and how's the decision making changing given the spot price appreciation transaction? Moving higher in the market. I need four.

Sure I'll.

I'll take that question you know, we take a conservative approach when it comes to modeling transaction fees and potential revenue.

Benjamin Gagnon: University and a few things there. Ben, why don't you jump in and talk about the transaction fees and how we account for those and how we plan for them. Sure. I have to take that question.

Which is why we take.

Look at our house cost first by position ourselves on that lower end of the operating cost curve, we basically make ourselves in a position where irregardless of what happens with mining revenues were transaction fees, we're going to be in a position that's going to be profitable.

Benjamin Gagnon: You know, we take a conservative approach when it comes to modeling transaction fees and potential revenue, which is why we take, www.bitfarms.com we look at a hash cost of $0.06 per pair of hash. And that's something that we've had in place for the halving for about 18 months now in our models. As we are at around $67,000 now, you know, where the halving happened tomorrow, we'd be at roughly 5.6 cents per terahash, so right about on the money for where we anticipated ourselves to be.

For modeling purposes.

So we look at a cash cost of six cents per tear house.

And that's something that we've had in place for the having for about 18 months now and in our models.

When we are at around $67000 now.

Where the having happened tomorrow, we'd be at roughly five pipeline six cents for Terra has a right about on the money for where we anticipated us to be.

Jeff Gao: As we're looking forward, you know, we're going to continue to evaluate where the hash price is, where the mining prices are, and try and look at opportunities in that framework. But certainly, we're always open to creative opportunities for us to increase our footprint and increase our hash rate in a cost-effective way. Bill, was that sufficient for your question, or was there a little more to it? Yeah, I mean, maybe you can just provide a little bit more color, Jeff, in terms of how you think market opportunities are, looking at potential M&A in the, following the having just, better favorable market. I would be happy to do that.

As we're looking forward, we're going to continue to evaluate warehouse price is where mining prices are indeed.

Try and look at opportunities in that framework.

We're always open to accretive opportunities for us to increase our.

Footprint and increase our hatch rates and cost effective ways.

So is that sufficient for your question or was there a little more to it.

Yeah, I mean, maybe you can just provide a little bit more color just in terms of how you think market opportunities you know.

Looking at a potential.

Potential M&A in the space are following to having just given the.

Hum.

Better.

Favorable market outlook.

Happy to do that well.

Jeff Gao: Well, I think I've been asked a similar question, I think quarterly for the last year and a half, and my answer really hasn't changed. We are excited about continuing to grow Bitfarms; we're in it for the long term. We have a corporate development team that specializes in looking for organic and inorganic opportunities for us. We have a pretty sophisticated system for evaluating these opportunities. We are out there and looking for good assets, good people, and opportunities to grow, whether it's in the United States, whether it's in Canada, whether it's in Latin America or elsewhere. We believe that finding surplus low cost electricity, preferably renewable, is a long-term benefit to the company. So if somebody else has developed something that makes sense to us and we can get it at the right price, strategically, then we're happy to layer it in. And frankly, we've looked at a number of opportunities, but we remain disciplined. We do not want to overpay for anything.

I think I've been asked a similar question I think quarterly for the last year and a half and my answer really hasn't changed.

We are excited about continuing to grow a bit farms went up for the long term.

Our corporate development team that specializes in and looking for organic and inorganic opportunities for us.

We have quite a system for evaluating these opportunities we are out there and looking for good assets, good people and opportunities to grow our whether that's in the United States, whether it's in Canada or whether it's in Latin America or elsewhere.

We believe that finding surplus low cost electricity.

Firmly renewable is is the long term benefit to the company. So if somebody else's developed something that sense to us and we can get it at the right price.

Strategically then we're happy to layer it in hand.

We're looking at we've looked at a number of opportunities, but we remain disciplined we do not want to overpay.

Jeff Gao: There are probably opportunities in the United States right now in some of the demand response areas. They are attractive, but it has to fit within our regime. It needs to be at the right cost, and it needs to add strategic value. So we continue to look.

There's there's probably opportunities very much so in the United States right now and some of the demand response areas.

They are attractive.

But it has to fit within our <unk>.

The regime.

He used to be at the right cost.

And that strategic value. So we continue to look to having.

Jeff Gao: Everybody says there's going to be consolidation. We expect there probably will be, too. We have our eyes wide open, and this company, this time around in the four-year epoch, is so much stronger and more able to react to these types of good opportunities than we were four years ago. So this is an exciting time, not just for our growth this year but for the opportunities that might present themselves. Okay, great. I appreciate the color.

Everybody says there's gonna be consolidation, we expect there probably will be to our we have our eyes wide opened and this company. This time around in the for your epoch is so much stronger and more able to react to these type of good opportunities and we were four years ago. So this is an exciting time not just for our growth this year.

What are the opportunities that might present themselves.

Okay. Great appreciate the color that's all the questions I have now.

Bill Papanastasiou: That's all the questions. Thanks, y'all. The next question comes from Kevin Dede with HC Wainwright. Please go ahead. Morning, gentlemen.

Thanks Kyle.

The next question comes from Kevin Dede with H C. Wainwright. Please go ahead.

Good morning, gentlemen, and thanks for having me on the call.

Kevin Darryl Dede: Thanks for having me on the call. I appreciate the presentation, Ben, on hash cost. I think it's only you and Harry that look at things that way.

I appreciate the presentation ban on harsh cost I think it's only human Harry that look at things that way. So I appreciated you Peel the onion back there on that.

Benjamin Gagnon: So I appreciated you peeling the onion back there on that. Jeff, would you mind talking a little about Argentina? I think Mr. Lucas mentioned a 2.1 cent cost on a six-month contract. Are you sort of scratching your head and thinking about executing on taking your 54 megawatts to 200 there? and maybe add your perception of what you've seen of the government, the drastic change in government in Argentina, and how that might lead to one way or the other.

Jeff would you mind talking a little about Argentina.

I think Mr. Lucas mentioned at 2.1 cent cost there on a six month contract are you sort of scratching their head and thinking about executing on taking your 54 megawatts to 200 there.

And maybe add your perception of what you've seen of the government drastic change in government in Argentina, and how that might.

Lead you one way or the other.

Jeff Gao: Thanks, Kevin. Lots of good content there. So Argentina has turned out to be quite an opportunity for us. Like that 2.1 cents contract that we fixed for six months in November, which represents summer time in Argentina, was certainly a coup for us and really illustrates the exciting potential for Argentina in terms of low cost. They have all this shut-in natural gas, and to be able to monetize it, because it's not really able to push it into a pipeline and send it to other countries, they don't have an LNG port, so it's there. We've now got a government there, the Malay government, that is pro-business, that wants to reduce government bureaucracy and really transform the country, and it's exactly They've been plagued with high inflation for a lot of years, and it needs this type of corrective action.

Thanks, Kevin.

Lots of good content, there so Argentina.

Argentina has turned out to be quite an opportunity for us like that 2.1 cents a contract.

We fixed for six months and in November which represents the summertime in Argentina with <unk>.

Certainly our crew for us and really.

Straights, the exciting potential for Argentina in terms of low cost they have.

All this shut in natural gas and <unk>.

And to be able to monetize it because it's not really able to.

Pushing it into our pipeline and send it to other countries. They don't have an LNG port so.

So it's there and.

We've now got a government there the Malay government that is pro business that wants to reduce government bureaucracy.

And really transformed the country and its exactly what.

Is really frankly need it there it's it's a they've been plagued with high inflation for a lot of years and it needs. It needs. This type of corrective action. So about a year ago, we made the strategic decision.

Jeff Gao: About a year ago, we made the strategic decision to take our Rio Cuarto plant and stop at one warehouse, at least for the time being. We've got that 210 megawatt contract. It's there.

To take a real core took place and stop at one warehouse at least for the time being.

We've got that 210 megawatt contract gets there.

Jeff Gao: And we think that things are starting to settle out in Argentina and give us the confidence that we might be able to invest again. So there's that location. And frankly, there are other locations in Argentina, too, that are very attractive and might actually offer a lower cost solution than what we have in Rio Cuarto. But Rio Cuarto is one that we've developed it, and we've got a substation that's able to basically supply at least one more warehouse. We've got government approval that could allow us to have one more warehouse. So that's some of the dry powder we have. But as stewards of capital, we need to be prudent. And when we went through that government change, we just didn't know.

And.

We think that things are starting to settle out in Argentina, and give us the confidence that we might be able to invest again, so there's that location and frankly, there's other locations in Argentina, two that are very attractive and it might actually offer a lower cost solution than what we have in real corridor real corridor is one that we've developed it we've got a substation that's our aim.

To basically supply.

At least one more warehouse, we've got a government approvals that could allow us for one more warehouse. So that's some of the dry powder, we have but as stewards of capital.

We need to be prudent and when we went through that government changed we just didn't know so we decided to take our foot off the pedal relax we.

Jeff Gao: So we decided to take our foot off the pedal, relax. We found alternative opportunities in Paraguay that are completely green, and we're building that out. But certainly Argentina represents a very attractive opportunity, especially at these prices for later this year, next year, and beyond. So very exciting. Can we talk a little bit about your commentary regarding Paraguay?

We found alternative opportunities in Paraguay that are completely green.

Building that out, but certainly Argentina represents.

Very attractive opportunity, especially at these prices for later this year next year and beyond so very exciting.

Can we talk a little bit about about your commentary regarding Paraguay I I understood your comments too.

Kevin Darryl Dede: I understood your comments to..., or I guess imply that you are not subject to curtailment restrictions. And I'm wondering how you think about that in the longer term and any recourse you might have in dealing with Andy, should they decide that they're going to need that power that they've allocated to you. Okay, well, Andy, we've got a very open dialogue on the go with and. Our first contract for the 10 megawatt facility was with a private company on a private franchise called Klipsa, and there is some curtailment there because of infrastructure issues, and we get an adjustment to our power right there. All right.

I guess imply that you aren't are not subject to curtailment restrictions.

And I'm wondering if you.

You know, how you think about that longer term.

And any recourse you might have in dealing with Andy should they decide that they're going to need that power that they validated to you.

Okay, well, yeah, Andy we've got a very open dialogue on the on the go with and.

Our first contract with a 10 megawatt facility was with a.

Private company on a private franchise called clips.

And there is some curtailment there because of infrastructure issues.

And.

And we get an adjustment to our power right there.

Jeff Gao: With Ande, though, we have, its more robust contracts are bigger. We've been located very close to their high-voltage substations, and they have carefully allocated megawatts to the crypto mining sector. They haven't overdone it, they haven't put it in, put themselves into a position where they're going to be short on power. They've been very conservative.

With Andy though we have it.

It's more robust contracts are bigger we've located very close to their high voltage substations and they have carefully.

Allocated megawatts to the crypto mining sector. They haven't overdone. It they haven't put it in put themselves into a position where they're going to be short on power they've been very conservative.

Jeff Gao: So the Andean contracts are not subject to curtailment unless there's an emergency situation, but these guys have these two large hydro power projects, including the Itaipu Dam, that is producing a lot of power, and Paraguay gets a significant amount of that power, and a significant amount of that power then gets sold back to Brazil, or at least sold to Brazil on a wholesale basis because they have no place to put it. I have never heard of Ande not having enough power, but they have had infrastructure constraints, which they are solving through upgrading their high-voltage lines, their high-voltage corridors, and their substations. And the one in Paso Pei in Vizirica is strong; it's been there for a few years, and there's abundant power there. The one in Iguazu is recently constructed, it's 1.2 gigawatts, and it's got 500 kV high-voltage lines leading into it. And we don't expect it.

So D&A contracts are not subject to curtailment, unless there's an emergency situation, but are these guys have these.

These two large hydro.

Power projects, including the eye type who dam that is.

Producing a lot of power and Paraguay gets.

A significant amount of that power and a significant of that none of that power then gets.

So back to Brazil, or at least sold to Brazil on a wholesale basis, because they have no place to put it I have never heard of and they are not having enough power, but they have had.

Infrastructure constraints, which they are solving through upgrading their high voltage lines, our HIFU high voltage corridors or substations and the one and pass a pay and visa Rica is strong it's been there for for a few years and there's a blended power there.

The one in Iguazu.

This is a recently constructed it's one two gigawatts, they've got 500 kv high voltage lines leading into it.

And we don't expect.

Kevin Darryl Dede: It's also closer to the Itaipu Dam, so the electrons have a shorter distance to go, but we just don't expect a curtailment to be there unless there's really these emergency conditions, which would be highly unusual. So one of the things we very much like about Paraguay is being able to operate our miners 24-7, around the clock. There's heat there, and since we've operated there for a couple of years, we know how to deal with that heat. So, I expect that the exohash that we'll be adding this year in Paraguay, especially with the T21 and the hydros, we're going to get a lot of active ongoing production coming out of that country. It's a solid place to do business, www.bitfarms.com. Just a couple of detailed infrastructure questions. One is Pasipae, 70 megawatts. I understand that you have all the heavy duty equipment and substations. I'm just wondering if you have anything running there.

And it's also closer to that I type, who damn silly electrons have.

Shorter distance to go but we just don't expect curtailment.

To be there unless it's really these emergency conditions, which would be highly unusual so.

It's one of the things, we very much like about Paraguay is being being able to operator, our miners 24 seven round the clock.

There's heat there and we figure and since we've operated there for a couple of years, we know how to deal with that heat.

So I expect that.

The extra hashed that we'll be adding this year.

In Paraguay, especially with the T 21 in the Hydro's are.

We're going to get a lot of active ongoing production coming out of that country, where it's it's it's a solid place to do business.

Just a couple of detail infrastructure questions. One pass of pay 70 megawatts I understand that you have all the the heavy duty equipment.

Substations I'm just wondering if you have anything running there what's actually on site now.

Benjamin Gagnon: What's actually on site now? I can add to this, but Ben, why don't you, as Chief of Mining, why don't you answer this question? Sure. Thanks for taking that question, Kevin.

Oh I can add to this but then why don't you.

Chief of mining a why don't you answer those questions.

Sure. Thanks, I'll take that question Kevin.

Benjamin Gagnon: Right now, what we have is we've got basically three buildings which are up, and we are deploying our first micro-BT hydro miners. So those hydro miners are going to be online this month. And next month, with these buildings and the T21s, we are going to be deploying T21s in April. So a little bit of a phased deployment.

Right now what we have is you've got basically three buildings, which are up and we are.

Point, our first micro BT hydro miners. So those hydro miners are going to be online. This month and next month with these are with these buildings in the T 21, we're going to be deploying P. 20. Once in April so a little bit of a phased deployment first minus coming online. This month, they're gonna be the micro BT hydro's and next month we.

Benjamin Gagnon: The first miners coming online this month are going to be the micro-BT hydros, and next month, we are going to be deploying T21s. So Ben, are any of the hydros running now? What's sort of your immediate takeaway and how... How do you see operating, you know, the operating requirements there versus air-cooled? I'm wondering. There's been a lot of chatter in the industry about using immersion to defray operating costs.

We're gonna be point to 20 months.

So Ben.

Any of the hydro is running now what what sort of your immediate takeaway and how.

How do you see operating.

The operating requirements there versus air cooled I'm wondering there's been a lot of chatter in the industry about using immersion to defray operating costs and I'm wondering if you've had any touch on that with this deployment so far.

Benjamin Gagnon: And I'm wondering if you've had any touch on that with this deployment so far. Sure. Well, we don't have any micro-BT hydros up and running in Paraguay right now, but you know, we do have quite a bit of experience with Immersion. Personally, I founded an Immersion technology company back in 2018, where I was doing Immersion with 3M and U.S. manufacturing for Bitcoin mining purposes. Now, realistically, when we look at Immersion versus air-cooled, there are some benefits to using Immersion from an efficiency perspective, but the capital expense required to set up that infrastructure versus the air-cooled infrastructure is, really, we just feel is unjustified.

Sure well, we don't have any microbial T hydro is up and running it in Paraguay right now, but we do have quite a bit of experience with emerging.

Personally I founded a emerging technology company back in 2018, I'm, where I'm just doing the immersion with with three Ami U S manufacturing for them.

For bitcoin mining purposes.

Realistically when you look at immersion versus air cooled.

Sure there are some benefits from using emerging from an efficiency perspective, but the capital expense required to set up that infrastructure bursty. The air cooled infrastructure really we just feel as if you don't justify.

Benjamin Gagnon: The micro-BT hydro units are pretty different. The way that they've designed those hydro units makes them a lot more analogous to how we operate our air-cooled facilities. You know, we have Microsoft Office Word Document MSWordDoc Word.

The microbes key hydro units are pretty different.

The weight of deep design dose those hydro unit makes it a lot more analogous to how we operate our air cooled facilities.

We have.

Liners that are physically sitting in some sort of a server rack that can be pulled in can be plugged back in they can be hot swap.

Benjamin Gagnon: Document.8 Cleaning the miners, preparing the miners, every single time you interact with a miner, it's quite a laborious process. With the hydro miners, we expect them to be operating in a relatively similar way that we operate our air-cooled miners. The only thing that's really different is how that heat is pulled out of the miner itself.

When youre doing immersion technology, you've got to deal with all this fluid you've got a deal with a.

Cleaning the minor is preparing the miners are every single time, you interact with the minor it's quite a laborious process.

With a hydro miners, we expect them to be operating relatively similar way that we operate are air cooled miners. The only thing that's really different it is how it actually you just pulled out of the minor itself, which from everything that we've seen so far in the past some tours of the hydro sites that we've seen.

Jeff Gao: Which, from everything that we've seen so far in the tests and the tours of the hydro sites that we've seen, is done in a very, very clean, efficient, and stable manner. Last question for me. What's on site and what's contracted for Iguaçu, Jeff? It's, I understand you have the site, not clear if you've got transformers lined up, and give us your take on meeting your timeline objectives there. Sure, the timeline there is, we will have production by the end of the year, full production there by the end of the year. We secured the land in January, which you needed the physical address for to be able to start the other studies. So there's an environmental and electrical study on the go with Ande right now. We have hired a third-party company, which is an EPC contract, to construct the Connect at the Ande substation, which is right across the road from us.

He's done in a very very clean efficient and stable manner.

Our last question from me.

What's on site and what's contracted for Iguazu, Jeff. It's it's understand you have the site not clear if you've got transformers lined up.

And give us your take on on meeting your timeline objectives there.

Sure.

The timeline there is a we will have production.

By the end of the year of full production there at the end of the year.

We secured the land in in January, which which you needed the physical address to be able to start the other studies. So there's a environmental and electrical study on on the go with Andy right now we have hired a third party company.

Two which is an EPC contract to construct the.

Connect at the and a substation, which is right across the road from us.

Jeff Gao: So that's specked out. That's underway, approximately seven months, line of sight from when they will get that done, 7-8, www.bitfarms.com the important connection points, the primary connection points, in place later this year, probably fourth quarter. And we've already had the scheduling done with the T21s for going into there. So things are coming together nicely. It's Kevin. The site is quite exceptional.

So that's backed out that's that's underway there.

As a.

That's it.

Approximately seven months.

Line of sight from when they will get that done seven eight.

Months, there, there's a that the timeline for Transformers and cabling is about seven months, it's pretty much exactly the same as what we went through it in the Paso pay site. So we expect that those orders will be going in now so that we can get.

The important connection points the primary connection points in place later this year.

Probably fourth quarter.

And we've already had scheduling done with the 'twenty ones.

Jeff Gao: As I mentioned, it's right across the street from the Anbay substation, which is brand new, and we will put in an underground cable. It will lead to the substation. It will go under the road and basically right into the field where we are now, which is nice high ground. It's not subject to water.

For going into there so things are coming together nicely.

Kevin the site is quite exceptional as I mentioned, it's right across the street from the NDA substation, which is brand new.

And we will do an underground cable it will leave the substation that will go under the road and basically right into the field, where we are now which is nice high ground, it's not subject to the water, it's nice and firm and solid.

Jeff Gao: It's nice and firm and solid. We've got enough land to fully develop the hundred Megawatt Power Purchase Agreement there, and, in fact, a bit more. It really is a superior site. Thank you very much, gentlemen. I appreciate it. I'll turn over the floor. The next question comes from Joshua Siegler with Cancer Fitzgerald.

We've got.

Land to fully develop the 100.

They go up a power purchase agreement there and in fact a bit more so.

It really is a superior site.

Yeah.

Thank you very much gentlemen, appreciate it I'll turn it over the floor.

Yeah.

The next question comes from Josh Ziegler with Cantor Fitzgerald. Please go ahead.

Joshua Michael Siegler: Please go ahead. Hey, team, this is Will Carlson on for Josh. First question, do you have any foresight into additional PTA opportunities in Paraguay? Good morning, Will. Yes, we do. As I mentioned earlier, they've taken a very conservative approach to bringing Bitcoin and crypto mining into the country. They've allocated megawatts, some at high voltage, some at medium voltage, sort of in the order of about 650 megawatts in total because they do not want to run out of power in the country.

Hey, Tim This is world Carlson on for Josh first question do you have any foresight into additional PPA opportunities in Paraguay.

Absolutely.

Well.

Yes, we do.

They.

As I mentioned earlier, they've taken a very conservative approach to bring in bitcoin and crypto mining into the country. They've allocated megawatts are somewhat high voltage summit at medium voltage.

So in the order of about 650 Mega.

Megawatts in total because they do not want to.

Run out of power in the country. They wanted to go slow, but they also wanted to do it in a meaningful way. So that the sector has can go into production there and generate revenues for the company, but I do not.

Jeff Gao: They want to go slow, but they also want to do it in a meaningful way so that the sector can go into production there and generate revenues for the company. But I do not expect any new power purchase agreements there to be let over the next couple of years, maybe just a year. It's tough to say for sure, but for the time being, they're wanting to make sure that the power purchase agreements they have signed will actually be developed.

Not expect any new power purchase agreements there to the left over the next couple of years, maybe just a year. So it's tough to say for sure but for the time being they're wanting to make sure that the power purchase agreements they've signed will actually be developed.

Jeff Gao: We are well on our way with ours. There are some others that are well underway. There are others that are going a little more slowly.

We are well on our way with with ours. There are some others that are well underway. There's others that are going a little more slowly. So I expect that if in the short term we are to pick up.

Jeff Gao: So I expect that if, in the short term, we are to pick up a contract, it probably will not be a new contract but one that's already been existing. That will be an existing contract that we might be able to buy or joint venture or do something with that's already out there. But I think as we, as a company and as a sector, continue to develop there, I think, and they will gain more confidence; I think the government and the people will gain more confidence in what we can bring to the whole country. It really is a partnership. And it's still in the fairly early stages of that partnership.

Ah contract it probably will not be a new contract, but one that's already been existing there would be an existing contract that we might be able to buy or joint venture or do something with that's already out there, but I think as as we as it.

As a company in our sector continues to develop there I think.

And they will get more confidence I think the government and the people will get more confidence in what we can bring to the whole country. It really is a partnership and it's still fairly early stages of that partnership.

Hum.

Jeff Gao: So I think there's more there. But for the time being, we're just going to focus on developing our 170 megawatts that we already have, that we've already acquired, that we already have in place, and we'll go from there. Great, I really appreciate that cover.

I think there's more there but for the time being we're just going to focus on developing our 170 megawatts that we already have we've already acquired that we already have in place.

And we'll go from there.

Great really appreciate that cover and the second question. You know you guys have done a phenomenal job and your international.

Joshua Michael Siegler: And the second question, you guys have done a phenomenal job in your international expansion by all measures. I'm just curious, how are you guys thinking about future expansion opportunities within the United States? Well, as I commented earlier, and on earlier quarterly calls, too, we think there are areas in the United States that represent really neat strategic opportunities for us. We do, as we said in the script, we do want a balanced portfolio. And the United States is an area that we are lower than we'd like to be.

National expansion by all measures I'm just curious how are you guys thinking about future expansion opportunities within the United States.

Well as I commented earlier and and an earlier quarterly calls too we think theres areas in the United States that represent.

Really neat strategic opportunities to us we do as we said in the script, we do want a balanced portfolio and the United States is an area that.

We are lower than we'd like to be there.

Jeff Gao: We continue to look for good opportunities there. We're looking at a couple right now, but it's early stage. We've looked at many, many opportunities over the last year and a half, and for whatever reason, they just, they haven't come together. But this year might be different.

We continue to look for good opportunities there.

We're looking at a couple right now, but it's early stage, we'd looked at we looked at.

Yeah.

Many many opportunities over the last year year and a half.

And for whatever reason they just they havent come together.

This year might be different.

Jeff Gao: And we will continue to look. We look with a very open mind and open eyes to trying to do something very interesting there. Hopefully, something will materialize.

We will continue to look we look with a very open mind and open eyes to trying to do something very interesting there hopefully something will materialize.

Joshua Michael Siegler: Thanks for your time. The next question comes from Lucas Pipes with B. Reilly. Please go ahead.

Thanks for the color.

The next question comes from Lucas pipes with B Riley.

Jeffrey P. Lucas: Hi, this is Fedor Shabalin asking questions on behalf of Lucasfibes. Congratulations on paying down debt. And my first one may be for Ben as it's more technical. I want to talk a little bit more about the outperformance of T21. As you said, when you tested it, it outperformed the manufacturer's specifications in both normal and high energy modes. Can you talk more a little bit about how high your hash rate readings are and what about power consumption and, I mean, how economical it is to run them on, I mean, higher than stated characteristics?

Please go ahead.

Hi, This is actually a feather shuttling asking question on behalf of Lucas pipes, congratulations on paying down debt and my first one maybe for Ben as it's more technical I wanted to talk a little bit about outperformance of T 21.

So you you you say then you test it.

If they outperform the manufacturer's specifications in both normal and high energy mode can you talk more a little bit Tao, hi, Hugh well touch rate ratings, and what about power consumption and I mean, how economical.

Run them on.

I mean higher than than stated characteristics.

Benjamin Gagnon: Yeah, great question. I'm happy to answer it. So we have our first 12 T21 miners, and in our tests, we've been seeing, in the normal energy mode, performance anywhere between 193 versus 193 to 195 terahash per miner at the same exact energy efficiency that is specified by the manufacturer at that 19 watts per terahash level.

Yeah, Great question I'm happy to answer it. So we have our first 12 T 21 miners and we've been in our tests, we've been seeing in the normal energy mode performance anywhere between 193 versus 100, and 993 to 195 Tera half for minor at the same igloo.

<unk> energy efficiency.

By by the manufacturer of that 19 watts per tire harsh level in a high energy mode. Most of our miners are operating between $2 35, and $2 38, but we've seen minor so up to $2 41, and that is actually better than the energy efficiency mode that was promised bike at me. So that's just under the 22 loss per tire hops that the adverse.

Benjamin Gagnon: In a high energy mode, most of our miners are operating between 235 and 238. But we've seen miners go up to 241. And that's actually better than the energy efficiency mode that was promised by Bitmain. So that's just under the 22 watts per terahash that they advertised.

Benjamin Gagnon: If you go back and take a look at that hash cost table that I showed you, you can see that that 22 watts per terahash efficiency, especially with our really low cost of power, around 4 cents, is incredibly attractive and incredibly profitable. And so by squeezing more units, more hash rate out of the unit, effectively, what we could get is a cheaper miner, both in terms of absolute cost because it's less than the S21, and we also get a significantly lower effective cost per terahash that we purchase. So, when we bought these miners at 14 dollars a terahash, that's at the 190 spec, but when we operate them at the 233 or this kind of 235 range, you know, that number goes down significantly below 14 down to, I think, around 1130 or 1140, if my memory is correct, per terahash. So we get a lot more out of the miners; they generate greater levels of profitability and faster payback. I appreciate all the color, Ben.

Hi.

If you go back and you take a look at that have cost table that I showed you.

You can see that that 22 watts per terra harsh efficiency, especially with a really low cost of power around four cents is incredibly attractive and incredibly profitable and so by squeezing more units more halfway out of the unit.

I believe what we could get is a cheaper minor both in terms of absolute costs, because it's less than that.

It's a lower price than they asked 'twenty, one and we also get a significantly lower effective cost per tear house that we purchased so when we bought these miners at $14 a pair of harsh that's off the 190 stuff, but when we operate them at the 233 or just kind of to 35 range that number goes down significantly below 14.

Down into I think around 11, 30, or <unk> 40, if my memory is correct for Terre Haute.

So we get a lot more out of the the miners they generate greater levels of profitability and a faster payback.

I appreciate all the color Ben.

Jeffrey P. Lucas: That's very interesting and exciting news. And my second question may be about the cadence of additional capital raising in 2024 to fund your stated growth and maybe potential M&A opportunities. How are you going to raise funds for this, if that's the case? Thank you. Over to you, Jeff Lucas.

That's very interesting and exciting.

And my second one maybe about the cadence of a decent capital right in 'twenty 'twenty four two to finding yeah. You stated girls and they may be it may be a potential M&A opportunity Ah yeah. How are you how are you going to write a fun for them. So this is it.

If it if it's the case thank.

Thank you.

Over to you, Jeff Lucas right. Thank you good morning, etc.

Jeffrey P. Lucas: So a couple of comments here. First of all, you know, our liquidity still continues to be very strong, comparable to the level that we reported in December. And this is after having made substantial payments for the 36,000 miners that were part of the upgrade that we announced on November 28 here. So when you think about the numbers overall, you know, that liquidity level that we had in mind. You know, as we're going forward here, and we're bringing the operations online, particularly down in Paraguay here, the business overall has the, and we do have further expenditures involved here in the CapEx side as we're continuing the build out of Wazoo and Pasope and what's happening in Bay Como here. And that's roughly around maybe the $40 million level. And then we have continuing payments on the 36,000 miners. And if we were to excise, the option would come into play as well.

Comments here first of all you know our liquidity still continues to be very strong comparable to the level that we reported in December and this is actually after having made substantial payments with the 36000 minor they are a part of the upgrade that we announced November 28th here.

So when you think about the numbers overall.

That liquidity level that we had in mind.

It isn't going forward here, and we're bringing the operations aligned particularly down in Paraguay here.

Business overall has the.

Capability really to be generating about $7 billion of cash flow above operating expenses per month.

In mind, the fact that we've actually paid down our debt in February and cool except for lease obligations, which are there are small.

The additional $2 million as part of that $7 million here. So we're in pretty good shape overall here.

Do afraid of expenditures involved here and the Capex side as we're continuing to build out it was due in part to pay and what's happening back home over here and that's roughly around maybe the $40 million level and then we add back and can you you know payments on they predict thousand miners and if we were to exercise the option to come into play as well over there as well so generally in a cash position where.

Jeffrey P. Lucas: So, generally, in a cash position, we're pretty good. But all that being said, we are considering and certainly giving attention to additional potential raises in the marketplace. And I do really want to underscore here that any capital raise that we do, we always do with an eye towards what is going to be the accretive element that's going to benefit our shareholders. An example I gave in my script here where we're spending about $95 million on the 36,000 miners here, yielding about $350 million of incremental value to our shareholders. That is a key element and a key metric that we look at as we consider whatever fundraising we're going to be doing going forward. I appreciate all the detail here, Jeff. And my last one; just trying to squeeze in a high-level one.

Pretty good but all that being said you know we are considering and can they give me attention to additional Pennsylvania marketplace.

And I do really want to underscore here that any capital raise that we do we always do with an eye towards what is going to be the accretive element that's been a benefit of our shareholders.

Example, I gave here you know in my script here, what we're spending about $95 million on a three 6000 miners here, yielding about $350 million of incremental value to our shareholders that is a key element and a key metric that we look at as we consider whatever fund raising but they'd be doing going forward.

I appreciate all the color here, Jeff and my my last one just trying to squeeze in a high level on we know we already talked about M&A opportunities and industry consolidation.

Jeffrey P. Lucas: We know, we already talked about M&A opportunities and industry consolidation, potential port halving, but in your opinion, at the current economic and economic environment, current BTC pricing, less efficient miners, but we're still efficient. And don't you think it could be less M&A port halving if these conditions persist? Thank you. I think you're right. Transcribed by https://otter.ai, With the hash rate coming off from the less efficient miners, we thought probably 20, 25, maybe even 30% of the network hash rate would come from the less efficient miners.

That show a port housing, but in your opinion at the car on the current economic and.

Economical environment current BTC pricing.

If you send mindset, but it's still a few cents and.

Don't you think it could be.

It could be less M&A.

Clothing, if if these conditions persist, but thank you.

Yeah, I think you're right.

Oh.

Originally.

With the having coming up we thought probably.

2025, maybe even 30% of.

The network hash rate would come off from the less efficient miners, that's what happened in the past.

Jeff Gao: That's what happened in the past. But this time with the ETFs, the demand, and the price going up to an all-time high, effectively five weeks ahead of the halving.

But this time with the Etfs are the demand.

Rice going up to an all time high.

Actively like five weeks ahead of having these are different market conditions that are prevailing right. Now. This we are in a transition ARY market a paradigm shift as I said in my script.

Jeff Gao: These are different market conditions that are prevailing right now. We are in a transitionary market, a paradigm shift, as I said in my script. And things at this point are different this time. And as a result, I think it's probably going to give a longer lifespan to some of those less efficient liners. It's going to make some of the miners that maybe have been struggling because of older machines not getting the same type of margins, maybe not having the same type of access to capital. It allowed them to continue to carry on, as opposed to either going out of business or seeking somebody larger to come in and upgrade their operations. So I think you're right there. It may not have the same level of M&A, activity, and consolidation as we probably thought even a few months ago.

Thanks at this point are different this time.

And as a result, I think it's probably going to give a.

A a longer lifespan of some of those less sufficient miners, it's going to make some of the miners that are.

Maybe it had been struggling because of older machines are not getting the same type of margins, maybe not the same type of access to capital.

It allowed them to.

Continuing to carry on as opposed to either going out of business or.

Seeking a somebody larger can come in and upgrade their operations. So I think you're you're right. There. It may not have the same level of M&A activity.

And consolidation as we probably thought even a few months ago.

Jeffrey P. Lucas: I appreciate all the current details around here. Thank you very much, guys, and continue with best of luck. Thank you. Thank you. And we have a follow-up from Kevin Dede from H.C. Wainwright. Please go ahead.

I appreciate all the color and details around here. Thank you very much guys and continued best of luck. Thank you.

Thank you. Thank you.

And we have a follow up from Kevin D. D from H C. Wainwright. Please go ahead.

Kevin Darryl Dede: Oh, thanks for staying on, gentlemen. Appreciate it. Ben, you showed a shot of the T21s racked up in location Quebec. But what wasn't clear was whether or not you were intending to run them in three phase or two phase if you were using the same PDUs that you were using for the M30s and what kind of CapEx requirement or any change you'd need to make in those legacy facilities. Yeah,

Well, thanks for staying on gentlemen, appreciate it Ben you showed a shot of.

The T 20 ones racked up and location in Quebec, but what wasn't clear was whether or not you're intending to run them in three phase two phase if you're using the same PD use.

That you were using for the M thirties.

And what kind of capex requirement or any changes you'd need to make in those legacy facilities.

Yeah, Great question, one of the advantages of the T. 21 is kind of the robust design of it and that includes a pretty.

Benjamin Gagnon: You know, one of the advantages of the T21 is its kind of robust design, and that includes a pretty powerful Power Supply Unit that operates at three phase. So in order to support that, we are upgrading all of our PDUs to smart PDUs that supply the power in three phases. So if you look back on that photo, what you can see is that the PDU that's above the T21s looks pretty different than the PDU that's below. The upgrade process there is incredibly simple. Basically, the panel goes right up to the rack, and then you've got one plug from the PDU directly into the panel and the breaker there. We don't even need to change the cable. We just need to change the PDU that's plugged into the cable.

Powerful.

Power supply unit that operates at three phase so in order to support that we are upgrading all of our PD use are too.

Smart ptu's that supply the power and three phase. So if you look back on that photo, which you can see as you can see.

Peter you that's above the T 21 looks pretty different then the PTU that's below.

The upgrade process there is incredibly simple.

Basically the the panel goes right up to the rack and then you've got a one plug from the PD you directly into the panel and the breaker there.

We don't even need to change the cable we just need to change the PD you that's plugged into the cable so that plug and play nature of the Btu upgrade makes it really really cost effective and really really quick.

Jeffrey P. Lucas: So that plug-and-play nature of the PDU upgrade makes it really, really cost-effective and really, really quick. That is the only infrastructure upgrade that we need to make at basically every single site that we operate at. And Jeff Lucas could probably speak better to the CapEx costs associated with Ben. Actually, the capex cost associated with Ben was spoken to as pretty modest, particularly very modest relative to what's involved with the miners themselves.

That is the only infrastructure upgrade that we need to make it at basically every single site that we operate at and Jeff Lucas could probably speak better to the capex costs associated with that.

Actually the capex costs associated with we've been talking to is pretty modest very modest relative.

What's involved with the monarch itself.

Okay.

Jeff Gao: Thank you, gentlemen. But just to punctuate a little more on what we were saying there, keep in mind 68% of these T21s are going into existing facilities in a plug-and-play installation. And Ben said it was pretty straightforward: yes, we are upgrading the racks modestly, but we're ready to go. It really is a straightforward and certainly less complex build out with substantial gains than building new infrastructure. So this, when we said this was going to be the fastest, most, Lockheed Martin, Randy Blair, SoftwareHoward, and Seth Paulson, David Peterson Bloody Mageor, David Eagle, Jeffrey Lucas, Bill Papanastasiou. This, this is going to be a big year for us. And, fortunately, most of it's fairly straightforward.

Thank you, but I think just a punk just Kevin just to punctuate a little more what our what we're seeing there keep in mind and 68% of these two 'twenty ones are going into existing facilities in a plug and play installation and when Ben said it was pretty straightforward, yes, where we are upgrading the racks modestly.

We're ready to go it really is.

He is a straightforward and certainly less complex buildout with substantial gains than building new infrastructure. So this when we said this is going to be the fastest most.

<unk> increased expansion in our company history. It is true and this is why and unfortunately, it's so cost effective and frankly simple comparison due to building new facilities, we have our hands.

Paul with are the two big installations and in Paraguay that are going to take the other miners but.

This this is gonna be a big year for us and Unfortunately, most of it's a fairly straightforward.

Jeff Gao: So I just wanted to add that. Thanks, Jeff. Thank you very much, gentlemen. Appreciate you following up with me. Thank you. Thank you, Kevin. This concludes our question and answer session. I would like to turn the conference back over to Jeff Morphy.

I just wanted to add that.

Thanks, Jeff. Thank you very much gentlemen, appreciate you followed.

Following up with me thank you.

Thank you Kevin.

This concludes our question and answer session I would like to turn the conference back over to Jeff Morphy C.

Jeff Gao: CEO for any closing remarks. Thank you all for attending today's conference call. We look forward to updating you with our monthly reports, other developments, and on our Q1 2024 conference call in May. Thank you for attending. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect from the www.bitfarms.com program.

CEO for any closing remarks.

Thank you all for attending today's conference call.

We look forward to updating you with our monthly reports other developments and on our Q1 'twenty 'twenty four conference call in May.

You for attending.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

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Yeah.

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