Bitfarms: Why Canadian Bitcoin Miners are Flocking to the Nasdaq


Briefly

  • Bitfarms grew to become the second Canadian mining firm to checklist on the Nasdaq over the previous week.
  • The itemizing would additionally open the agency to recent capital and permit it to proceed its enlargement all through Latin America.

The Canadian Bitcoin mining firm Bitfarms started buying and selling on the Nasdaq yesterday, with shares buying and selling below the ticker BITF. 

BTIF opened at $4.04 per share and hit highs of $4.11 earlier than closing the day at $3.96.

Based in 2017, Birfarms makes use of “greater than 99%” hydroelectric renewable electrical energy to mine Bitcoin on 5 services in Québec. The corporate is already listed on Canada’s TSX Enterprise Alternate, buying and selling for $4.25 per share. It would retain its twin itemizing.

Regardless of the bearish market, Bitfarms CEO Emiliano Grodzki informed Decrypt that the mining enterprise is extra resilient to downward market swings than non-mining firms with massive quantities of Bitcoin on their stability sheets. 

“If Bitcoin went all the way down to $16,000, we’d nonetheless proceed to make an enormous sum of money,” Grodzki stated. 

Establishments that purchased Bitcoin at increased costs at the moment are down on that funding, he defined, however Nasdaq buyers ought to perceive that Bitcoin publicity is a unique play for miners. 

Bitfarms, like all miners, obtains Bitcoin at a fraction of the fee no matter market circumstances. It’s because the corporate is incomes moderately than shopping for, which implies their prices for buying Bitcoin are comparatively mounted. Hire, worker salaries, mining machines, and electrical energy don’t fluctuate almost as a lot as the value of cryptocurrencies. 

Within the first quarter of the 12 months, Bitfarms acquired one Bitcoin at the price of $8,400—that’s across the time establishments purchased one Bitcoin for round $50,000 at spot-market value, Grodzki stated. Bitfarms continues so as to add roughly eight Bitcoin a day to its stock.

Bitfarms is the second Canadian mining firm to go public on the Nasdaq, after Alberta-based Hut 8 final week. Hive, one other Canadian mining firm, introduced on June 18 that it acquired approval to checklist shares on Nasdaq.

In contrast to Hut 8, which now additionally mines Ethereum, Bitfarms has no plans to diversify its mining operations. 

“I actually do not perceive why you’d wish to diversify away from Bitcoin mining when it is one of the worthwhile intervals we have ever had,” Ben Gagnon, chief mining officer, informed Decrypt. “It is principally a wierd technique to make use of throughout a development section. That is the type of factor that you simply apply on the finish of the expansion section, not at the start.”

The Nasdaq’s attraction for Bitfarms, Canadian miners

There are solely 4 variables by which to guage a publicly-traded miner, defined Gagnon: hashrate and the day by day Bitcoin manufacturing charge, price to supply Bitcoin, quantity of Bitcoin on the stability sheet, and quantity of hashrate coming sooner or later.

Solely when it comes to “market cap-to-hash charge,” Bitfarms considers itself to be one of the undervalued publicly-traded mining firms in North America, based on a corporate presentation dated June 2021.

The chart under signifies that although Bitfarms instructions roughly 4.5 instances the hashrate of Hive, it’s lower than 1 / 4 of the market capitalization of the latter. 

Publicly reported knowledge as of June 1, 2021. Picture courtesy of Bitfarms.

American mining firm Riot, which has a decrease hashrate than Bitfarms, is presently buying and selling for $31.57 on the Nasdaq—a far cry from Bitfarms’ $4.85 per share on Canada’s TSX Enterprise Alternate.

This evaluation means that mining firms are higher valued within the U.S. and due to this fact commerce at a premium in comparison with Canada. It’s not clear why there could be a discrepancy between U.S. and Canadian monetary markets, Gagnon stated, but it surely could possibly be on account of tax or jurisdictional causes, or maybe only a signal of an immature market. “However there’s a really clear arbitrage alternative between the 2 markets,” he stated.

The pondering then goes that Bitfarms shall be valued a lot better on New York’s Wall Road than Toronto’s Bay Road. 

A greater valuation would additionally imply higher entry to capital markets if Bitfarms may obtain that.

Cheaper capital for the corporate will come in useful too, as Bitfarms has plans so as to add a sixth facility in Québec, one in Argentina, and increase additional in Latin America over the next years. 

CEO Grodzki thinks Latin America could possibly be the following China for Bitcoin mining. However he admits, as an Argentinian, he could possibly be a bit partial.



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