Mr. Geoff Morphy reports

BITFARMS REPORTS SECOND QUARTER 2023 RESULTS

Bitfarms Ltd. has released its financial results for the second quarter ended June 30, 2023, with revenue of $35-million, net loss of $25-million and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $8-million. All financial references are in United States dollars.

"During the second quarter, we continued our strategy of leading into the next BTC [bitcoin] halving responsibly, deploying capital to drive greater operating efficiencies in conjunction with geographic expansion and diversification," said Geoff Morphy, president and chief executive officer of Bitfarms. "With ongoing investments in infrastructure and fleet upgrades, we increased our hashrate by 10 per cent during Q2 2023 to 5.3 EH/s [exahashes per second] as of June 30, 2023, and as BTC prices continued to recover amidst increases in network difficulty, our low operating cost model drove adjusted EBITDA to $8-million, up from $7-million in Q1 2023. Averaging 13.4 BTC mined per day in Q2 2023, we mined a total of 1,223 BTC in the quarter. Continuing to position our company for opportunistic development across multiple jurisdictions, we increased financial liquidity and flexibility by paying down indebtedness and retaining a portion of BTC from production. We added to our BTC holdings each month in Q2 2023, as gross mining profit of $14-million and gross mining margin of 42 per cent supported continued holding as we added 114 BTC to treasury during the quarter.

"In July, we acquired contracts for up to 150 MW [megawatts] of low-cost, eco-friendly hydropower in Paraguay, which is a highly attractive market with substantial potential for development. Based on our experience, Paraguay has among the lowest build-out costs, quickest project time lines to completion and a straightforward importation regime. In August, we initiated our deployment plan for a new 50 MW farm at Paso Pe in Paraguay with a 30 MW air-cooled facility, along with the purchase of 20 MW of MicroBT hydro-cooling miners and containers. As we expect to commission this farm in Q1 2024, we are introducing a target hashrate of seven EH/s by the end of March, 2024.

"In Rio Cuarto, Argentina, we ramped production to 29 MW, and became a self-importer of miners to reduce costs and simplify the importation process. To support our target of 6.3 EH/s in Q3 2023, we have approximately 7,500 miners en route and in the process of being installed at Rio Cuarto and at Baie-Comeau, Que.

"In summary, we are projecting 20-per-cent sequential growth in our hashrate in Q3 2023 as we execute against our fleet expansion and upgrade plans. With Paso Pe expected to come on-line in Q1 2024 and as we evaluate other diverse development opportunities, we are poised for further growth," Mr. Morphy concluded.

Financial highlights for the quarter ended June 30, 2023:

• Total revenue of $35-million, compared with $30-million in Q1 2023, reflecting higher hashrate and average BTC prices, partially offset by a decrease in total BTC produced.
• Gross mining profit and gross mining margin of $14-million and 42 per cent, respectively, compared with $12-million and 42 per cent in Q1 2023, respectively.
• General and administrative (G&A) expenses of $9-million, including non-cash share-based compensation of $2-million, up 10 per cent from Q1 2023.
• Operating loss of $25-million, including $10-million in impairment charges, compared with an operating loss of $15-million in Q1 2023, which included a $1-million realized gain on disposition of digital assets and a $3-million reversal of revaluation loss on digital assets.
• Net loss of $25-million, or a loss of 10 cents per basic and diluted share, compared with $2-million, or a loss of one cent per basic and diluted share, in Q1 2023.
• Non-IFRS (international financial reporting standards) adjusted EBITDA of $8-million, or 22 per cent of revenue, compared with $7-million, or 22 per cent of revenue, in Q1 2023.
• The company mined 1,223 BTC at an average direct cost of production per BTC of $15,700, compared with $12,500 in Q1 2023.
• Total cash costs of production, including G&A expenses, per BTC were $21,800 in Q2 2023, up from $17,600 in Q1 2023.

Liquidity as of June 30, 2023

The company held $31-million in cash and 549 BTC, valued at approximately $17-million based upon a BTC price of approximately $30,500, as of June 30, 2023.

Q2 2023 financing activities:

• Sold 1,109 BTC at an average price of $27,900 per BTC for total proceeds of $31-million, a portion of which was used to repay equipment-related indebtedness.
• Paid down $5-million in equipment-related indebtedness, reducing the total outstanding balance to $16-million as of June 30, 2023.
• Held $19-million in remaining credits for prepaid deposits to be applied against future miner purchase agreements as of June 30, 2023.
• Raised $22-million in net proceeds through the company's at-the-market equity offering program.

Financing activities subsequent to Q2 2023:

• Sold production totalling 333 BTC during July, 2023, generating proceeds of $10-million.
• Added 45 BTC to treasury in July, 2023, increasing BTC in custody to 594, representing a total value of $17-million based on a BTC price of $29,200, on July 31, 2023.
• To support accretive growth, raised $26-million in net proceeds through the company's at-the-market equity offering program during July, 2023, through Aug. 7, 2023.

Q2 2023 and recent operating highlights:

• Operations:
  • Reached 5.3 EH/s corporate hashrate as of June 30, 2023.
  • Averaged 13.4 BTC per day in daily production for Q2 2023.
  • Mined 378 BTC in July, 2023.
• Miners:
  • Imported and installed approximately 5,100 new M30S Whatsminer miners into Argentina in Q2 2023, which increased capacity over 100 per cent to 29 MW and added approximately 510 PH/s (petahashes per second) to the Rio Cuarto facility, bringing its total hashrate to approximately 700 PH/s.
  • Purchased approximately 12,500 new high-efficiency miners with a blended energy efficiency of 30 W/TH (watts per terahash) at an average direct cost $13.94/TH, with approximately 7,800 miners for deployment to Argentina and approximately 4,700 miners for deployment to Canada, in both cases in Q2 2023.
  • Purchased eight MicroBT 2.4 MW hydro containers and 1,920 MicroBT M53S+ hydro miners in August for deployment to new Paso Pe farm in Paraguay.
• Expansion strategy:
  • Became a self-importer of miners in Argentina, reducing the cost and facilitating the importation of miners, and terminated existing contracts with importation brokers, resulting in a $7-million impairment loss on short-term prepaid deposits.
  • Purchased Baie-Comeau facility and initiated production in July.
  • Acquired two power purchase agreements for up to 150 MW of hydropower in Paraguay in July and initiated deployment plan in August for new 50 MW farm at Paso Pe.

Conference call

Management will host a conference call and live webcast with an accompanying presentation today, Tuesday, Aug. 8, 2023, at 11 a.m. ET, to review the company's financial results and quarterly activity. Following management's formal remarks there will be a live question-and-answer session, which may include presubmitted questions.

Participants are asked to preregister for the call on-line.

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 who are unable to preregister 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 on-line.

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 Aug. 16, 2023, and may be accessed by calling 1-877-344-7529 (domestic), 1-412-317-0088 (international) or Canada (toll-free) 855-669-9658 and using the access code: 4369556. A presentation of the Q2 2023 results will be accessible on Tuesday, Aug. 8, 2023, under the investors section of Bitfarms' website.

About Bitfarms Ltd.

Founded in 2017, Bitfarms is a global, publicly traded (NASDAQ/TSX: BITF) bitcoin mining company. Bitfarms runs vertically integrated mining operations with in-house management and company-owned electrical engineering, installation service and multiple on-site technical repair centres. The company's proprietary data analytics system delivers best-in-class operational performance and uptime.

Bitfarms currently has 11 operating farms and two farms in development located 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 sustainable, locally based and often underutilized energy infrastructure.

We seek Safe Harbor.