Bitfarms Ltd. (NASDAQ/TSX: BITF) ("Bitfarms" or the "Company"), a
global leader in vertically integrated Bitcoin data center
operations, has entered into a miner hosting agreement (the
"Hosting Agreement") with Stronghold Digital Mining Hosting, LLC, a
subsidiary of Stronghold Digital Mining, Inc. (NASDAQ: SDIG)
(“Stronghold”) at Stronghold’s Panther Creek site in Pennsylvania.
Under the terms of the Hosting Agreement,
Bitfarms will be accelerating the deployment of 10,000 Bitmain T21
miners, originally scheduled to come online at the Company’s
Yguazu, Paraguay site in December 2024, to Stronghold’s Panther
Creek site. Energization is anticipated in October 2024 and will
bring 2.2 EH/s online immediately.
“This Hosting Agreement represents an important
milestone in our efforts to further optimize our assets and take
greater control over our top cost element, the cost of power,”
stated Ben Gagnon, Chief Executive Officer. “The opportunity to
vertically integrate our operations with Stronghold’s existing
power generation infrastructure provides a robust pathway to
continued, profitable growth. Further, Stronghold’s Pennsylvania
sites have substantial multi-year expansion potential and provide
access to energy trading opportunities, competitive power costs,
and HPC/AI. We look forward to completing our acquisition of
Stronghold and accelerating our strategy to diversify beyond
Bitcoin mining to create greater long-term shareholder value.”
The Hosting Agreement will commence on October
1, 2024, and continue for an initial term expiring on December 31,
2025, after which it will automatically renew for additional
one-year periods unless either party provides written notice of
non-renewal. Pursuant to the Hosting Agreement, Bitfarms will pay
Stronghold a monthly fee equal to fifty percent of the profit
generated by the Bitfarms miners, subject to certain monthly
adjustments between the parties to account for the upfront monthly
payment due from Bitfarms to Stronghold in the amount of $210,000
and for taxes and the net cost of power associated with the
operation of the Bitfarms miners. In connection with the execution
of the Hosting Agreement, Bitfarms also deposited with Stronghold
$7.8 million, equal to the estimated cost of power for three months
of operations of the Bitfarms miners, which will be refundable in
full to Bitfarms within one business day of the end of the initial
term expiring on December 31, 2025.
About BitfarmsFounded in 2017,
Bitfarms is a global vertically integrated Bitcoin data center
company that contributes its computational power to one or more
mining pools from which it receives payment in Bitcoin. Bitfarms
develops, owns, and operates vertically integrated mining
facilities with in-house management and company-owned electrical
engineering, installation service, and multiple onsite technical
repair centers. The Company’s proprietary data analytics system
delivers best-in-class operational performance and uptime.
Bitfarms currently has 12 operating Bitcoin data
centers and two under development situated in four countries:
Canada, the United States, Paraguay, and Argentina. Powered
predominantly by environmentally friendly hydro-electric and
long-term power contracts, Bitfarms is committed to using
sustainable and often underutilized energy infrastructure.
To learn more about Bitfarms’ events,
developments, and online communities:
www.bitfarms.comhttps://www.facebook.com/bitfarms/https://twitter.com/Bitfarms_iohttps://www.instagram.com/bitfarms/https://www.linkedin.com/company/bitfarms/
Glossary of Terms
- HPC = High-performance
computing
- AI = Artificial intelligence
- EH or EH/s = Exahash or exahash per
second
Cautionary StatementTrading in
the securities of the Company should be considered highly
speculative. No stock exchange, securities commission or other
regulatory authority has approved or disapproved the information
contained herein. Neither the Toronto Stock Exchange, Nasdaq, or
any other securities exchange or regulatory authority accepts
responsibility for the adequacy or accuracy of this release.
Forward-Looking StatementsThis
news release contains certain “forward-looking information” and
“forward-looking statements” (collectively, “forward-looking
information”) that are based on expectations, estimates and
projections as at the date of this news release and are covered by
safe harbors under Canadian and United States securities laws. The
statements and information in this release regarding the impact of
the Hosting Agreement, projected growth, target hashrate,
opportunities relating to the Company’s geographical
diversification and expansion, upgrading and deployment of miners
as well as the timing therefor, closing of the Stronghold
acquisition on a timely basis and on the terms as announced, the
ability to integrate and successfully operate the Sharon mega-site
with access to up to 120 MW, entering into a definitive lease
agreement and receiving regulatory approvals in respect of the
letter of intent for a lease to an additional 10 MW site in Sharon,
the benefits of the Stronghold acquisition and the other Sharon
lease transactions (collectively, the “Sharon
Acquisitions”), the ability to gain access to additional
electrical power and grow hashrate of the Stronghold business and
the Sharon Acquisitions, performance of the plants and equipment
upgrades and the impact on operating capacity including the target
hashrate and multi-year expansion capacity, the opportunities
to leverage Bitfarms’ proven expertise to successfully enhance
energy efficiency and hashrate, the benefits of the growth strategy
including to merge HPC / AI with Bitcoin mining operations, and
other statements regarding future growth, plans and objectives of
the Company are forward-looking information.
Any statements that involve discussions with
respect to predictions, expectations, beliefs, plans, projections,
objectives, assumptions, future events or performance (often but
not always using phrases such as “expects”, or “does not expect”,
“is expected”, “anticipates” or “does not anticipate”, “plans”,
“budget”, “scheduled”, “forecasts”, “estimates”, “prospects”,
“believes” or “intends” or variations of such words and phrases or
stating that certain actions, events or results “may” or “could”,
“would”, “might” or “will” be taken to occur or be achieved) are
not statements of historical fact and may be forward-looking
information.
This forward-looking information is based on
assumptions and estimates of management of Bitfarms at the time
they were made, and involves known and unknown risks, uncertainties
and other factors which may cause the actual results, performance,
or achievements of Bitfarms to be materially different from any
future results, performance or achievements expressed or implied by
such forward-looking information. Such factors include, among
others, risks relating to: receipt of the approval of the
shareholders of Stronghold and the Toronto Stock Exchange for the
Stronghold acquisition as well as other applicable regulatory
approvals; that the Stronghold acquisition may not close within the
timeframe anticipated or at all or may not close on the terms and
conditions currently anticipated by the parties for a number of
reasons including, without limitation, as a result of a failure to
satisfy the conditions to closing of the Stronghold acquisition; a
letter of intent on an additional 10 MW site is subject to entering
into a definitive lease agreement and TSX approval, none of which
is assured; the power purchase agreements and economics thereof may
not be as advantageous as expected; the inability of Bitfarms to
operate the plants as anticipated following consummation of the
Sharon Acquisitions; the construction and operation of new
facilities may not occur as currently planned, or at all; expansion
of existing facilities may not materialize as currently
anticipated, or at all; new miners may not perform up to
expectations; revenue may not increase as currently anticipated, or
at all; the ongoing ability to successfully mine digital currency
is not assured; failure of the equipment upgrades to be installed
and operated as planned; the availability of additional power may
not occur as currently planned, or at all; expansion may not
materialize as currently anticipated, or at all; the power purchase
agreements and economics thereof may not be as advantageous as
expected; potential environmental cost and regulatory penalties due
to the operation of the Stronghold plants which entail
environmental risk and certain additional risk factors particular
to the business of Stronghold including, land reclamation
requirements may be burdensome and expensive, changes in tax
credits related to coal refuse power generation could have a
material adverse effect on the business, financial condition,
results of operations and future development efforts, competition
in power markets may have a material adverse effect on the results
of operations, cash flows and the market value of the assets, the
business is subject to substantial energy regulation and may be
adversely affected by legislative or regulatory changes, as well as
liability under, or any future inability to comply with, existing
or future energy regulations or requirements, the operations are
subject to a number of risks arising out of the threat of climate
change, and environmental laws, energy transitions policies and
initiatives and regulations relating to emissions and coal residue
management, which could result in increased operating and capital
costs and reduce the extent of business activities, operation of
power generation facilities involves significant risks and hazards
customary to the power industry that could have a material adverse
effect on our revenues and results of operations, and there may not
have adequate insurance to cover these risks and hazards,
employees, contractors, customers and the general public may be
exposed to a risk of injury due to the nature of the operations,
limited experience with carbon capture programs and initiatives and
dependence on third-parties, including consultants, contractors and
suppliers to develop and advance carbon capture programs and
initiatives, and failure to properly manage these relationships, or
the failure of these consultants, contractors and suppliers to
perform as expected, could have a material adverse effect on the
business, prospects or operations; the digital currency market; the
ability to successfully mine digital currency; revenue may not
increase as currently anticipated, or at all; it may not be
possible to profitably liquidate the current digital currency
inventory, or at all; a decline in digital currency prices may have
a significant negative impact on operations; an increase in network
difficulty may have a significant negative impact on operations;
the volatility of digital currency prices; the anticipated growth
and sustainability of hydroelectricity for the purposes of
cryptocurrency mining in the applicable jurisdictions; the
inability to maintain reliable and economical sources of power to
operate cryptocurrency mining assets; the risks of an increase in
electricity costs, cost of natural gas, changes in currency
exchange rates, energy curtailment or regulatory changes in the
energy regimes in the jurisdictions in which Bitfarms and
Stronghold operate and the potential adverse impact on
profitability; future capital needs and the ability to complete
current and future financings, including Bitfarms’ ability to
utilize an at-the-market offering program ( “ATM Program”) and the
prices at which securities may be sold in such ATM Program, as well
as capital market conditions in general; share dilution resulting
from an ATM Program and from other equity issuances; volatile
securities markets impacting security pricing unrelated to
operating performance; the risk that a material weakness in
internal control over financial reporting could result in a
misstatement of financial position that may lead to a material
misstatement of the annual or interim consolidated financial
statements if not prevented or detected on a timely basis;
historical prices of digital currencies and the ability to mine
digital currencies that will be consistent with historical prices;
and the adoption or expansion of any regulation or law that will
prevent Bitfarms from operating its business, or make it more
costly to do so. For further information concerning these and other
risks and uncertainties, refer to Bitfarms’ filings
on www.sedarplus.ca (which are also available on the
website of the U.S. Securities and Exchange Commission (the “SEC")
at www.sec.gov), including the MD&A for the year-ended
December 31, 2023, filed on March 7, 2024 and the MD&A for the
three and six months ended June 30, 2024 filed on August 8, 2024.
Although Bitfarms has attempted to identify important factors that
could cause actual results to differ materially from those
expressed in forward-looking statements, there may be other factors
that cause results not to be as anticipated, estimated or intended,
including factors that are currently unknown to or deemed
immaterial by Bitfarms. There can be no assurance that such
statements will prove to be accurate as actual results, and future
events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on
any forward-looking information. Bitfarms does not undertake any
obligation to revise or update any forward-looking information
other than as required by law.
Additional Information about the Merger
and Where to Find ItThis communication relates to a
proposed merger between Stronghold and Bitfarms. In connection with
the proposed merger, Bitfarms intends to file with the SEC a
registration statement on Form F-4, which will include a proxy
statement of Stronghold that also constitutes a prospectus of
Bitfarms. After the registration statement is declared effective,
Stronghold will mail the proxy statement/prospectus to its
shareholders. This communication is not a substitute for the
registration statement, the proxy statement/prospectus or any other
relevant documents Bitfarms and Stronghold has filed or will file
with the SEC. Investors are urged to read the proxy
statement/prospectus (including all amendments and supplements
thereto) and other relevant documents filed with the SEC carefully
and in their entirety if and when they become available because
they will contain important information about the proposed merger
and related matters.
Investors may obtain free copies of the
registration statement, the proxy statement/prospectus and other
relevant documents filed by Bitfarms and Stronghold with the SEC,
when they become available, through the website maintained by the
SEC at www sec.gov. Copies of the documents may also be obtained
for free from Bitfarms by contacting Bitfarms' Investor Relations
Department at investors@bitfarms.com and from Stronghold by
contacting Stronghold's Investor Relations Department at
SDIG@gateway-grp.com.
No Offer or SolicitationThis
communication is not intended to and does not constitute an offer
to sell or the solicitation of an offer to buy, sell or solicit any
securities or any proxy, vote or approval, nor shall there be any
sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offer of securities shall be deemed to be made except by means
of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
Participants in Solicitation Relating to
the MergerBitfarms, Stronghold, their respective directors
and certain of their respective executive officers may be deemed to
be participants in the solicitation of proxies from Stronghold's
shareholders in respect of the proposed merger. Information
regarding Bitfarms’ directors and executive officers can be found
in Bitfarms’ annual information form for the year ended December
31, 2023, filed on March 7, 2024, as well as its other filings with
the SEC. Information regarding Stronghold’s directors and executive
officers can be found in Stronghold’s proxy statement for its 2024
annual meeting of stockholders, filed with the SEC on April 29,
2024, and supplemented on June 7, 2024, and in its Form 10-K for
the year ended December 31, 2023, filed with the SEC on March 8,
2024. This communication may be deemed to be solicitation material
in respect of the proposed merger. Additional information regarding
the interests of such potential participants, including their
respective interests by security holdings or otherwise, will be set
forth in the proxy statement/prospectus and other relevant
documents filed with the SEC in connection with the proposed merger
if and when they become available. These documents are available
free of charge on the SEC’s website and from Bitfarms and
Stronghold using the sources indicated above.
Investor Relations
Contacts:BitfarmsTracy KrummeSVP, Head of
IR & Corp. Comms.+1 786-671-5638tkrumme@bitfarms.com
Innisfree M&A
IncorporatedGabrielle Wolf / Scott Winter+1
212-750-5833
Laurel Hill Advisory
Group1-877-452-7184416-304-0211assistance@laurelhill.com
Media Contacts:U.S.:
Joele Frank, Wilkinson Brimmer KatcherDan Katcher or
Joseph Sala+1 212-355-4449
Québec: TactLouis-Martin
Leclerc+1 418-693-2425lmleclerc@tactconseil.ca
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