Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the Bitfarms First Quarter 2021 Financial Results and Corporate Update Conference Call. Currently, all participants are in a listen only mode.

Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately one hour after the end of the call through August 26, 2021.

I would now like to turn the conference over to Jules Abraham of CORE IR, Bitfarms’ Investor Relations firm. Please go ahead..

gross mining profit; gross mining margin; adjusted EBITDA and adjusted EBITDA margin; EBITDA and EBITDA margin as additional information to complement IFRS measures to provide a further understanding of the Company’s results of operations from management’s perspective.

We invite listeners to refer Company’s Q1 2021 Management’s Discussion & Analysis for definitions of the aforementioned non-IFRS measures and reconciliations to IFRS measures. Please also note that all financial references are denominated in U.S. dollars, unless otherwise noted.

Joining me today from Bitfarms leadership team are Emiliano Grodzki, Bitfarms’ Chief Executive Officer; and Mauro Ferrara, the Interim CFO and Corporate Secretary for the Company. Geoff Morphy, Bitfarms’ President is also available during the [Technical Difficulty]. And it is now my pleasure to turn the call over to Emiliano.

Emiliano over to you, please.

Emiliano?.

Thank you, Jules, and welcome everyone to Bitfarms Q1 2021 results conference call.

Before jumping into Bitfarms’ Q1 2021 operational highlights, I would like to take this time to thank all of our shareholders and employees for their support through the years, which on May 7th culminated with Bitfarms announcing it will be listed on the NASDAQ Global Markets here.

The approval for listing on the NASDAQ Global Markets is an incredible achievement for Bitfarms and is the fruition of multiple years of work and dedication. Over the last four years, we have managed to build and operate one of the largest Bitcoin mining operation worldwide.

And we obtain clearance from the Depository Trust Company, we will be listed on trading on one of the most prestigious exchanges in the world, significantly expanding the market reach of our Company. Now, moving on to some operational metrics.

In Q1 2021, our average hashrate was 988 petahash, compared to 709 petahash [ph] for the same period in 2020, an increase of 39% as we installed over 4,500 best-in-class miners in our operating facilities across Quebec during the quarter. Our ending petahash for the quarter stood at 1.2 exahash.

And with miners acquired and scheduled for delivery over the next two quarters, we anticipate reaching 2.5 exahash sometime in the fall of 2021, in line with our target of reaching 3 exahash by year’s end. In terms of Bitcoin production we mined 598 Bitcoins compared to 1,087 Bitcoins in Q1 2020. This represents a decrease of approximately 45%.

The decrease in production was primarily due to the Bitcoin Halving Event in May 2020, resulting in Block Reward to miners dropping from 12.5 to 6.25 BTC per block, as well as an increase in network difficulty. The Bitcoin Halving Event is prescribed by the Bitcoin protocols and takes place after every 210,000 blocks of roughly every four years.

The third halving in the history of Bitcoin took place in May 2020. When halving started to take place, the Block Reward decreased by half, which means the revenue generated from mining activities of Bitfarms and all other miners decreased by one half.

As was the case following the previous halving, crypto mining economics normalized over the following six to eight months with higher price of BTC. This trend continues in Q1 2021 with Bitcoin price averaging approximately $45,000 in the quarter, resulting in mining revenues increasing from $8.7 million in Q1 2020 to $27.7 million in Q1 2021.

From efficiency perspective, approximately 97% of all electricity consumed by the Company in the quarter 100% generating from hydro was used for crypto mining purposes. To put things perspective, the benchmark efficiency for top tier data center is usually in this plus 90% range.

In terms of average petahash per megawatt usage Q1 2021 stood 16.8 compared to 14 for the same period in 2020. Bitfarms’ power use proficiency driven by the efficient design of our facilities as well as best-in-class miners are the main reason for remaining a leader in terms of average cost production per BTC amongst all publically traded miners.

I’ll now turn the call to Mauro to walk us through some of our Q1 2021 financial metrics.

Mauro?.

Thank you, Emiliano. In Q1 2021, the corporation generated revenues of $28.4 million, up $19.2 million or 209% compared to same period in 2020, driven by organic growth as we increased our average hash rate and by approximately 39% and a significant increase in Bitcoin price.

The average Bitcoin price for the quarter stood at approximately $45,000 compared to approximately $8,300 for the same period in 2020. Q1 2021 gross mining profit and gross mining margin stood at $22.3 million and 80%, respectively, compared to $4.1 million and 47% in Q1 2020.

The increase in both metrics was mainly attributable to the same factors as the increase in revenues. Our average cost of production per Bitcoin stood at approximately $8,400 for the quarter, driven by our operating efficiencies and competitive hydro electricity rates.

For the quarter, adjusted EBITDA and adjusted EBITDA margin stood at $19.5 million and 69% respectively, compared to $2.8 and 30% in Q1 2020. The increases in adjusted EBITDA and adjusted EBITDA margin were mainly attributable to the same factors as for the increases in gross mining profit and gross mining margin.

The Company’s Q1 2021 EBITDA was negative $3 million, resulting in EBITDA margin of negative 11% compared to an EBITDA of $1.8 million and an EBITDA margin of 20% in Q1 2020.

The EBITDA metric in Q1 2021 was negatively impacted by the non-cash nature of both warrants related expenses, and debt retirement embedded derivative related expenses, totaling approximately $22.8 million for the quarter. Looking at our cash flows, the January and February private placement equity raises with U.S.

institutional investors totaling C$80 million allowed us to institute several transformative changes to our Company.

With the funds raised, we retired all of our Dominion Capital outstanding debt, we started executing on our infrastructure plans at a number of locations, both in Quebec and in South America, we put into motion a Bitcoin retention program, and we placed orders for 48,000 miners for delivery starting in 2022.

The Company ended the quarter with approximately $53 million in cash and total liquidity, defined as cash and Bitcoin holdings of approximately $85.5 million. This completes my prepared remarks for the quarter. I now turn the call back to Emiliano.

Emiliano?.

Thank you, Mauro. Our future has never looked as brighter. As indicated by Mauro, the funds we raised in Q1 2021 provided us the date to put in motion our growth plans for 2021.

The C$75 million private placement we concluded on May 20 provided additional liquidity to continue marching towards our 3 exahash target for the end of 2021 and our 8 exahash target by the end of 2022, while providing us the flexibility to retain as much as possible, the Bitcoin remains an inventory.

With our current hashrate at approximately 1.42 exahash, we are generating between 7 and 9 BTC per day, with a mining average cost of approximately $8,400 at current BTC prices ,these provide us with a new asset class that will allow to explore additional financing alternatives to fuel our longer term growth prospects.

Q1 2021 was a monumental quarter for our Company with our expansion plans now firmly into place, and in motion. We will push ever harder to achieve new highs. I now return the call back to Jules who will moderate a question-and-answer period of submitted questions by the public.

Jules?.

Thank you, Emiliano. Company received many questions from investors for today’s call. And we thank you for your interest, your feedback, and continued support as shareholders. Many of these questions were repetitive. And so, on today’s call, we’ll be addressing the most frequently asked questions.

Additionally, the Company has received a number of questions seeking information not disclosed by the Company or of a forward-looking nature.

As a matter of policy and regulatory compliance, the Company does not offer a firm operational or financial updates, forward-looking guidance or capital market strategies, nor does it comment on the performance of its shares in the market.

Now, for the first question, which will be for Geoff Morphy, President of Bitfarms, which is to please offer an update on NASDAQ listing..

Thank you, Jules. On May 7th, Bitfarms announced approval by NASDAQ for its listing and the trading of our sock. It was conditioned on at least three business days’ prior written notice and two smaller administrative items, which were immediately satisfied.

After receiving the approval letter from NASDAQ, we learned then that we needed to apply and get approval from the Depository Trust Company to be DTC eligible. The Depository Trust Company,, or DTC as it’s known, facilitates electronic trading of securities in the U.S.

This eliminates the need for buyers and sellers placing trades in DTC eligible securities to produce physical certificates to settle the trades. Bitfarms hired IssuerSolutions LLC, a company that specializes in helping companies with their application to DTC and has a record of success at expediting DTC approval process.

According to their website, IssuerSolutions LLC has assisted over 400 issuers in obtaining DTC eligibility since 2011. The average approval time is two to four weeks. Bitfarms completed its application to DTC within two days of the NASDAQ approval back on May 7th. It has now been about two and a half weeks from the date of our submission to DTC.

As such, based on their stated guidance, we anticipate obtaining DTC approval within approximately the next two weeks. We can then provide an update to NASDAQ and start trading three to four business days thereafter. Back to you, Jules..

Thank you, Geoff.

This next question will be answered by Mauro Ferrara, Interim CFO and Corporate Secretary of Bitfarms, which is where does the firm stand on holding versus selling Bitcoin? And how does that balance against capital requirements necessary to grow, both short and long term?.

Thanks, Jules. As we stand right now, at an average mining cost of approximately $8,400 per BTC, we view that holding on to as much BTC as we mine makes sense, not only for the short-term, but also for the longer term.

That is why we have and will continue to use the bulk of the net proceeds from our four private placements to date, totaling approximately C$155 million to finance our infrastructure and miner acquisition programs.

With great institutional acceptance for BTC as a potential hedge against inflation, we believe that using BTC for future cash flow needs is our best course of action this time. Back to you, Jules. .

Thank you, Mauro.

The next question is again for Geoff Murphy, President of Bitfarms, which is, what is the status of the Sherbrooke noise abatement initiative? And how is the community response?.

Jules, that’s a very topical question. Let me take you back a little ways and give you some context. About three years ago, we purchased a former Sherwood hockey stick manufacturing facility. It is located in an industrial area in Sherbrooke, Quebec. The site had been vacant for 10 years.

We rehabilitated the building, installed transformers, mining infrastructure, and plugged in the miners. When we first started operations, we learned from residents who live on the far side of a nature trail and the river that they could hear some of our operations. We have met with residents, the mayor, and local politicians many times.

Initially, we installed a sound absorption wall about 10 feet from the exterior of the building. It extends both, the entire length of the building on the one side and is about 20 feet high. It significantly reduced the level of sound coming from the farm.

Late in 2020, we learned that this improvement was not sufficient as some residents still claimed to hear noise. In November 2020 and I think this is what I’ve already reported, we hired two sound expert companies, one to analyze and provide us the solutions and the other to help us with hardware requirements.

In each case, they were highly confident of working with us to achieve a solution. They performed some very detailed sound and frequency testing throughout the area to fully understand the dynamics and the variables.

The plan that was devised in early January was to install new and quieter fans, install sound deadening insulation inside the building and reconfigure the miners and the venting. The plan was to undertake all of this work in February and March. Accordingly, the city gave us until the end of March, March 31st of this year to make the improvements.

Unfortunately, due to COVID and the global logistics problems, we were only able to receive half the fans in March, the other half followed in April. We are proactively sending updates to the city, residents and the provincial Ministry of Environment.

Last week, we worked cooperatively with the Ministry as they performed a number of sound tests for the area. We do not expect to learn results of those tests for about three weeks. In the meantime, we are in the process of providing a written update to the city.

And we will be inviting politicians and residents to meet with us to show them the improvements and let them listen for themselves for the improvements. All-in-all, we’ve spent upwards of $1 million to remedy the noise issue.

And we feel good that the test results, when they arrive, will show that Bitfarms is now operating within the provincial noise limits. Jules, back to you..

Thank you, Geoff. The next question is for Emiliano Grodzki, which is to please discuss the mining machine acquisition landscape in general and globally as Bitfarms sees it? We understand, it’s the difficult supply environment.

So, how confident is Bitfarms that machines ordered will ship next year on companies March 2nd announcement? And has MicroBT offered some assurances, deliver per the contract stipulation? If not, what [Technical Difficulty]?.

Thank you, Jules. In early 2021, the mining machine application landscape was very tight with equipment production and deliveries already filed close to capacity for 2021 and with price reaching all time highs for miners.

However, with the current development in the crypto space, we anticipate that more mining equipment will become available in 2021, and we will continue to work with our strategic partners to obtain best-in-class miners at competitive price to attain our self impulsive [ph] has target for the end of 2021.

For 2022, we are confident that majority will be able to deliver on the 48,000 miners order we placed with them earlier this year....

This next question is for Geoff.

What details can be offered with expansion plan? A, the status of the Argentina initiative; and B, what opportunities exist in Quebec, either in expanding existing locations and/or perhaps converting abandoned paper mills, lumber mills, earth mining facilities, or other facilities that have established high power electrical infrastructure?.

Thanks, Jules. With regard to the Argentine initiative, on April 19, 2021, we announced that we have signed a power purchase agreement with a local private power company.

At the time of the announcement, we stated that we still needed to finalize our arrangements with the EPC, which is an engineering procurement and construction company, and a third-party engineering and construction monitoring company. These discussions are ongoing and evolving very nicely.

We’re also assembling a local team, which is already working interactively with our Quebec-based management team. Logistically, it’s hard to make any commercial progress involving payments until the wholly-owned Argentine subsidiaries incorporated and the government approves our application to open local bank accounts.

We’re also working on building permits. Once the bank accounts are open, which is expected very soon, then our plan is to return to the board to seek approval to sign the additional contracts and get construction started. It is still our expectation that we can be initially operational in the first quarter of 2022.

With regard to the opportunities closer to home, on April 26th, we provided details about our Quebec expansion plans. During the past month nothing has really changed in our outlook. The build out of the expansion in Cowansville is well underway and should be ready to accept additional miners in late June or early July.

In terms of the expansion to our second facility in Sherbrooke, this is a leased site with an existing building. We are working closely with the landlord on leasehold improvements. And we have ordered transformers and racks. We intend to submit our site plan and application for building permits in the next few weeks.

In terms of other locations in Quebec, we have had discussions with a number of public and private companies. Many of these sites are dismissed immediately as the interconnection point for electricity is not robust enough or the possible electricity is too high. However, we have some other interesting discussions underway.

There are always pros and cons to every situation. And we will continue to look for new opportunities. In fact, we are close to signing a contract with a specialty firm to help us with opening new doors and advancing discussions with the province and Hydro Quebec as well as very various other third parties. Jules, back to you..

Thank you, Geoff. With no more questions to be addressed, the conference call has now concluded. We thank you all for your continued support and look forward to our next quarterly results conference call. You may now disconnect..