Bitfarms Reports Fourth Quarter and Full Year 2022 Results

- Mined 1,434 BTC in Q4 2022; 5,167 BTC in 2022;
and 20,000+ BTC since inception through February 2023 -
- Averaged direct cost of production of $10,000 per BTC in 2022-
- Reported Q4 2022 net loss of $17 million and positive Adjusted EBITDA of $1 million -
- Expects over 30% increase in hashrate to 6.0 EH/s with existing portfolio by year-end 2023 -

This news release constitutes a "designated news release" for the purposes of the Company's prospectus supplement dated August 16, 2021 to its short form base shelf prospectus dated August 12, 2021.

TORONTO, Ontario and BROSSARD, Québec, March 21, 2023 (GLOBE NEWSWIRE) -- Bitfarms Ltd. BITFBITF, a global Bitcoin vertically integrated company, reported its financial results for the fourth quarter and year ended December 31, 2022. All financial references are in U.S. dollars. During fourth quarter 2022, Bitfarms mined 1,434 BTC.

 "In 2022, we once again ranked among the most cost-effective publicly traded BTC mining companies as we focused on delivering superior performance, particularly during challenging times, while upholding the highest mining, operating and accounting standards," said President and CEO of Bitfarms Geoff Morphy. "Over the past nine months, we completed the construction and commissioning of three new farms in Canada, further optimized existing operations, and improved financial flexibility. These initiatives contributed to increasing our hashrate to 4.5 EH/s as of December 31, 2022, over 100% from the beginning of 2022. Looking ahead, we plan to leverage our existing infrastructure in Argentina and utilize equipment credits to prudently expand our EH/s to 6.0 with our existing assets by year end 2023. With our strengthened balance sheet, we are actively evaluating potential acquisitions that we expect to be accretive and complement our geographically diverse mining operations."

"We ended 2022 with 5,167 BTC mined, and in mid-February 2023 we surpassed 20,000 BTC mined since our inception in 2017. Our high operating efficiencies and low-cost power contracts yielded an average direct cost of production of $10,000 per BTC*** in 2022. Even during an especially challenging BTC pricing environment in Q4 2022, we continued to generate positive cash flow from operations and posted $1 million in Adjusted EBITDA as we maintained total cash cost of production per BTC less than the average price of BTC for the quarter," added Morphy.

Financial Highlights for the Quarter ended December 31, 2022

• Total revenue was $27 million, compared to $33 million in Q3 2022, as the 13% increase in Bitfarms' hashrate was offset by 15% lower average BTC prices and a 20% increase in network difficulty.
• Gross mining profit* and gross mining margin* were $8 million and 33%, respectively, compared to $17 million and 52% in Q3 2022, respectively.
• General and administrative expenses excluding non-cash share-based compensation and a charge associated with terminated consulting agreements, were $7 million, down 25% from Q4 2021 and up 6% from Q3 2022. The increase from the third quarter reflects modestly higher compensation expense and professional services fees largely associated with the Argentina build-out.
• Operating loss, including a $9 million non-cash impairment reversal, a $29 million realized loss on disposition of digital assets, and a $23 million change in unrealized gain on revaluation of digital assets, was $20 million, compared to $98 million in Q3 2022, which included an $84 million non-cash impairment charge, a $44 million realized loss on disposition of digital assets, and a $46 million change in unrealized gain on revaluation of digital assets.
• Net loss was $17 million, or ($0.08) per basic and diluted share, compared to $85 million, or ($0.40) per basic and diluted share, in Q3 2022.
• Non-IFRS adjusted EBITDA* was $1 million, or 4% of revenue, compared to $10 million, or 31% of revenue, in Q3 2022, driven by the lower average BTC price.
• The Company mined 1,434 BTC at an average direct cost of production per BTC*** of $11,100, compared to $9,600 in Q3 2022.
• Total cash cost of production per BTC was $16,800 in Q4 2022, up from $14,500 in Q3 2022.

Liquidity at December 31, 2022
At December 31, 2022, the Company held $31 million in cash and 405 BTC valued at approximately $7 million based upon a BTC price of approximately $16,500.

Chief Financial Officer Jeff Lucas said, "Network difficulty increases are raising the cost of production for everyone, and only the most efficient players will succeed. Bitfarms continues to execute tactics to support our low-cost structure and strong balance sheet. Consistent with our strategy of carefully pursuing accretive growth opportunities, as market conditions improve, we are positioned for intelligent growth."

Financing Activities

• Q4 2022
  • Paid $23 million to fully extinguish the BTC-backed credit facility.
  • Paid down $8 million in equipment related indebtedness.
  • Renegotiated miner purchasing agreements, extinguishing without penalty payment obligations of $45 million and establishing a $22 million credit for deposits previously made, to be applied toward future purchase agreements.
  • Raised approximately $6 million in net proceeds through the Company's at-the-market (ATM) equity offering program.
• Subsequent to December 31, 2022
  • Settled all outstanding principal and interest due to BlockFi totaling $21 million for a cash payment of $8 million and paid off the $379,000 agreement with Reliz for $118,000 in February 2023.
  • Ended February 2023 with $23 million indebtedness, down 86% from a high of $165 million in June 2022.

Q4 2022 and Recent 2023 Operating Highlights

• Reached 4.7 EH/s online in early 2023.
• Surpassed 20,000 BTC mined with renewable hydropower since 2017 founding.
• Completed construction of the first 50 MW warehouse in Rio Cuarto, Argentina.
• In Sherbrooke, Quebec:
  • Completed the Garlock facility, energizing 18 MW, representing full capacity.
  • Energized the remaining 12 MW capacity at The Bunker, bringing it to 48 MW and the total Sherbrooke operations to 96 MW, both representing full capacity.
  • Decommissioned and sold the De la Pointe facility for net cash proceeds of $4 million.
• Imported and installed 2,888 new MicroBT M30s into Paraguay, which added a net 168 PH/s at this farm, bringing its total hashrate to 288 PH/s at January 31, 2023.
• Improved efficiency of the overall fleet to 39 w/TH and of the newly unencumbered Bitmain miners in Washington state by 16% from 31 w/TH to 26 w/TH with new firmware.
  

Quarterly Operating Performance

Quarterly Operating Production

Quarterly Average Revenue** and Cost of Production per BTC***

Financial Results for the Year-ended December 31, 2022
In 2022, the Company generated revenue of $142 million, compared to $169 million in 2021.
2022 gross profit was $11 million, or 7% gross margin*, compared to $111 million, or 66% gross margin*, in 2021.

The Company mined 5,167 BTC for an average cost of production** per BTC of $10,000 in 2022.

Operating loss was $284 million in 2022, compared to operating income of $64 million in 2021. 2022 net loss was $239 million, or $(1.15) per basic and diluted share, compared to a net income of $22 million, or $0.13 per diluted share, in 2021. EBITDA* was a loss of $170 million, with EBITDA margin* of (119%) compared to a positive EBITDA* of $71 million, with EBITDA margin* of 42%, in 2021. Adjusted EBITDA* was $52 million, with 36% Adjusted EBITDA margin*, compared to $114 million, and 67% Adjusted EBITDA margin*, in 2021.

Conference Call
Management will host a conference call on Tuesday, March 21, 2023, at 11:00 a.m. ET to review the financial results. Following management's formal remarks there will be a question-and-answer session, which may include pre-submitted questions. Participants are asked to pre-register for the call through the following link:
        Q4 2022 Conference Call

Please note that registered participants will receive their dial in number upon registration and will dial directly into the call without delay. Those without internet access or unable to pre-register may dial in by calling: 1-866-777-2509 (domestic), or 1-412-317-5413 (international). All callers should dial in approximately 10 minutes prior to the scheduled start time and ask to be joined into the Bitfarms call.
The conference call will also be available through a live webcast found here:
        Live Webcast

A webcast replay of the call will be available approximately one hour after the end of the call and will be available for one year, at the above webcast link. A telephonic replay of the call will be available through March 28, 2023, and may be accessed by calling 1-877-344-7529 (domestic) or 1-412-317-0088 (international) or Canada (toll free) 855-669-9658 and using access code 4928932. A presentation of the Q4 2022 results will be accessible on Tuesday, March 21, 2023, under the "Investors" section of Bitfarms' website.

About Bitfarms Ltd.
Founded in 2017, Bitfarms is a global, publicly traded BITF Bitcoin mining company. Bitfarms runs vertically integrated mining operations with in-house management and company-owned electrical engineering, installation service, and onsite technical repair. The Company's proprietary data analytics system delivers best-in-class operational performance and uptime.

Bitfarms has 10 mining facilities around the world, which are housed in four countries: Canada, the United States, Paraguay, and Argentina. Powered by predominantly environmentally friendly hydro-electric and long-term power contracts, Bitfarms is committed to using renewable, locally based, and often underutilized energy infrastructure.

To learn more about Bitfarms' events, developments, and online communities:
Website: www.bitfarms.com
https://www.facebook.com/bitfarms/
https://twitter.com/Bitfarms_io
https://www.instagram.com/bitfarms/
https://www.linkedin.com/company/bitfarms/

Glossary of Terms

• BTC BTC/day = Bitcoin or Bitcoin per day
• EH or EH/s = Exahash or exahash per second
• MW or MWh = Megawatts or megawatt hour
• PH or PH/s = Petahash or petahash per second
• TH or TH/s = Terahash or terahash per second
• W/TH = Watts per Terahash

*Gross margin, gross mining profit, gross mining margin, operating margin, EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin are non-IFRS financial measures or ratios and should be read in conjunction with, and should not be viewed as alternatives to or replacements of, measures of operating results and liquidity presented in accordance with IFRS and refer readers to reconciliations of Non-IFRS measures included in the Company's MD&A and at the end of this press release.

** Average revenue per BTC is for mining operations only and excludes Volta revenue.

*** Cost of Production per BTC represents the direct cost of Bitcoin based on the total electricity costs, and, where applicable, hosting costs related to the mining of Bitcoin, excluding electricity consumed by hosting clients, divided by the total number of Bitcoin mined.

Cautionary Statement
Trading 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 Statements
This 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 expansion plans, including construction in Argentina and Québec, and potential strategic opportunities, expectations for monthly growth, targets, and goals for productive capacity and hashrates, debt reduction and liquidity including the ability to lower interest payments and manage bitcoin holding, and other future plans and objectives of the Company are forward-looking information. Other forward-looking information includes, but is not limited to, information concerning: the intentions, plans and future actions of the Company, as well as Bitfarms' ability to successfully mine digital currency, revenue increasing as currently anticipated, the ability to profitably liquidate current and future digital currency inventory, volatility of network difficulty and digital currency prices and the potential resulting significant negative impact on the Company's operations, the construction and operation of expanded blockchain infrastructure as currently planned, and the regulatory environment for cryptocurrency in the applicable jurisdictions.

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", "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 and are intended to identify forward-looking information.

Contacts:

LHA Investor Relations
David Barnard
+1 415-433-3777
Investors@bitfarms.com

Actual Agency
+1 646-373-9946
Lisa Helfer
mediarelations@bitfarms.com

Québec Media: Tact
Louis-Martin Leclerc
+1 418-693-2425
lmleclerc@tactconseil.ca

Bitfarms Ltd. Consolidated Financial & Operational Results

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Bitfarms Ltd. Reconciliation of Consolidated Net Income (loss) to EBITDA and Adjusted EBITDA

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Bitfarms Ltd. Calculation of Gross Mining Profit and Gross Mining Margin