There aren’t many industries where half your competition is suddenly removed, but that’s what happened when China banned Bitcoin mining in the country. Suddenly, the total hash rate in the ecosystem dropped by about half. Miners like Canadian firm Bitfarms have since been minting gold, literally.
In Q2 of 2020, the Nasdaq-listed Bitfarms reported that revenues increased by 396% to about $50.1 million. In particular, out of USD 36.7 million revenue, Bitfarms reported gross profits of USD 23.4 million (64% gross margins).
Despite this growth, the crypto mining outfit still ran a $2.87 million operating loss and a $5 million net loss during that quarter.
However, Bitfarm’s shares (NASDAQ: BITF) grew 240% for the year to date, trading at about 7.65 AUD at last check. Bitcoin’s strong growth contributed to this growth despite increasingly bearish sentiments tied to a looming market crash.
Wonderful Quarter for Bitfarms
China’s ban in June brought up Bitfarms’ market share to 1.5% up from 1%. This is probably why the company managed to mine a total of 759 BTC during the quarter, holding a total of 1,293 BTC by June 30th.
According to Emiliano Grodzki, Bitfarms’ CEO, this second quarter was pivotal. The company now expects to expand its Bitcoin mining capacity eightfold by investing in more physical resources in North and South America.
Bitfarms is one of the green mining operations utilising over 99% green hydroelectric power. Due to this, it has been able to expand its capacity even while there is a lot of backlash over Bitcoin’s energy use.
Reports indicate that:
- Bitfarms mined 745 BTC during the month of August, currently mining about 10 BTC a day
- So far, Bitfarms had mined a total of 2,102 BTC during the first 8 months of 2021
- Thanks to new facilities being set up in Paraguay as well as upgrade of equipment in its five facilities in Quebec to Bitmain S19j’s, the company plans to expand to 3 Exahash of mining power by Q1 2022
Working to Bitfarms (as well as other major mining facilities) are working to fill up the void left by Chinese miners.
BTC Halving Eating Into Profits
Despite such a great performance, Bitfarms still made a net loss in the quarter. This is partly attributable to the increased cost of production. That price tag currently stands at USD 9,000 (12,316 AUD) per BTC compared to $5,075 (6,945 AUD) before the May 2020 halving event.
Other expenses related to the rising cost of electricity and third-party hosting costs have also played a major role. That is why Bitfarms is currently negotiating with Paraguay and other government authorities for cheaper power.
Bitfarms Planning to HODL
Even though Bitfarms was only founded in 2017, it has come a long way to become the only publicly traded pure-play mining company. It integrates mining operations with proprietary data analytics and electrical engineering and installation services to gain an edge over the industry.
As per the report, Bitfarms has deposited 2,102 BTC into treasury through 1st September 2021 all valued at USD 101.4 million (calculated with an average BTC price of USD 50,000). The company is planning to hold on to this for Bitcoin’s price to rise into the future.
Whatever your opinion is towards Bitcoin’s energy cost and mining difficulty, what’s for sure is that large operations like Bitfarms have bigger long-term plans for it. Perhaps those with the patience to HODL should do the same.