Executive Summary / Key Takeaways

• Strategic Transformation to HPC/AI: Bitfarms has rapidly pivoted from a Bitcoin-centric miner to a North American energy and compute infrastructure company, leveraging its extensive power portfolio to capitalize on the surging demand for High-Performance Computing (HPC) and Artificial Intelligence (AI) infrastructure.
• Robust North American Energy Portfolio: The company boasts a unique and geographically diversified energy portfolio, including significant footprints in Pennsylvania (over 1 gigawatt in pipeline), Quebec (170 MW of hydropower), and Central Washington (18 MW), positioning it strategically in emerging AI hubs with access to low-cost, reliable power.
• Strong Financial Foundation & Liquidity: Despite the strategic shift, Bitfarms' Bitcoin mining operations remain a low-risk, cash-generative core, projected to deliver approximately $8 million in free cash flow monthly. This, coupled with a $300 million Macquarie (MQG) financing facility for its flagship Panther Creek HPC campus and approximately $230 million in total liquidity as of August 11, 2025, provides ample capital for its growth initiatives.
• Technological Edge & Operational Efficiency: Bitfarms has consistently upgraded its Bitcoin mining fleet to achieve high efficiency (currently 17 watts per terahash) and is applying its expertise in large-scale energy infrastructure development and management to the more complex demands of HPC/AI, aiming for a superior Power Usage Effectiveness (PUE) of around 1.25.
• Undervalued Assets and Shareholder Value Focus: Management believes the market undervalues both its Bitcoin business and HPC potential, evidenced by a recent share buyback program. The planned U.S. redomicile and GAAP transition are expected to broaden its investor base and enhance valuation.

From Bitcoin Pioneer to AI Infrastructure Powerhouse

Bitfarms Ltd., founded in 2017, has undergone a profound transformation, evolving from an international Bitcoin miner into a formidable North American energy and compute infrastructure company. This strategic pivot, particularly accelerated since early 2024, is a direct response to the "insatiable" global demand for compute power, driven by the exponential growth of AI and cloud computing, where power, not chips, has become the primary bottleneck. The company's history of developing and operating large-scale energy-intensive data centers provides a unique foundation for this transition, leveraging its core competencies in energy management and operational expertise.

The company's strategic rebalancing has seen its energy portfolio shift dramatically towards North America. The U.S. now accounts for 33% of its energized megawatts, projected to increase to nearly 80% as its extensive growth pipeline is executed. This shift was underscored by the transformative acquisition of Stronghold Digital Mining (SDIG), integrating strategically located power facilities in Pennsylvania, and the simultaneous, profitable divestiture of its 200-megawatt Yguazu data center in Paraguay. These moves not only expanded Bitfarms' U.S. power capacity by over 300 megawatts but also freed up significant capital for reinvestment in higher-value U.S. infrastructure opportunities.

Technological Edge and Operational Prowess

Bitfarms' operational strength is rooted in its highly efficient Bitcoin mining fleet and its deep expertise in managing energy infrastructure. The company has consistently pursued fleet upgrades, notably completing a program in early July 2025 that exchanged over 10,000 T21 miners for approximately 8,500 S21+ miners. This commitment to efficiency is reflected in its current operational metrics of 17.7 exahash at an impressive 17 watts per terahash across its 14 data centers. This efficiency is a tangible benefit, directly reducing the cost to mine Bitcoin and enhancing profitability. For instance, in Q2 2025, the direct cost to mine a Bitcoin was $48,200, with an all-in cash cost of $77,100, yielding a profit of $20,900 per Bitcoin.

This operational acumen is now being directly applied to the more demanding requirements of HPC and AI infrastructure. The company's experience in designing, building, and operating large-scale data centers for Bitcoin mining provides a significant advantage in developing HPC facilities. While specific quantitative benefits for HPC are still emerging, Bitfarms is targeting a Power Usage Effectiveness (PUE) of around 1.25 for its facilities, which is "a little better than the industry overall" benchmark of 1.5. This superior PUE translates directly into lower operational costs for clients and higher margins for Bitfarms. The company's R&D in this area is focused on optimizing infrastructure for power-intensive GPU clusters and high-speed data connectivity, with initial feasibility studies validating all U.S. sites for HPC/AI conversion.

Competitive Landscape: Carving a Niche in the AI Gold Rush

Bitfarms operates within a dynamic competitive landscape, facing both direct rivals in Bitcoin mining and emerging competition in the HPC/AI data center space. In Bitcoin mining, companies like Marathon Digital Holdings (MARA), Riot Blockchain (RIOT), Hut 8 Mining (HUT), and Cleanspark (CLSK) are key players. Bitfarms differentiates itself through its unique and geographically diversified energy portfolio, claiming to be the largest public miner in Quebec and Canada, and holding significant footprints in Pennsylvania and Central Washington.

While competitors like Marathon Digital Holdings have pursued aggressive mining scale, Bitfarms' strategy emphasizes operational versatility and a broader service offering, including energy generation and trading, hosting, and its Volta Electrical Services subsidiary. This diversification provides a more stable revenue stream during crypto market downturns compared to more singularly focused miners. For instance, Bitfarms' ability to manage energy costs through PJM's power trading and demand response programs, a capability enhanced by the Stronghold acquisition, offers a distinct advantage in optimizing free cash flow.

In the burgeoning HPC/AI data center market, Bitfarms is strategically positioned in what is rapidly emerging as a new AI hub: Pennsylvania. Major players like Amazon (AMZN), CoreWeave, Google (GOOGL), Meta (META), Blackstone (BX), and Brookfield (BN) have committed over $90 billion in investments in the region, citing robust energy and fiber infrastructure. Bitfarms, as the "only public Bitcoin miner with a big Pennsylvania footprint," is at the center of this activity. Its partnership with T5, a top-tier data center developer that has worked with "every major hyperscaler," further validates its development potential and enhances its credibility with prospective HPC customers. While direct quantitative comparisons of HPC offerings are still developing, Bitfarms' focus on providing powered shell or co-location opportunities, balancing CapEx with attractive returns on invested capital, positions it to capture meaningful market share.

Financial Performance and Robust Liquidity

Bitfarms' financial performance in recent quarters reflects its strategic pivot and operational discipline. In Q2 2025, the company reported total revenue of $78 million, an impressive 87% increase year-over-year. Revenue from mining activities stood at $71 million, contributing a gross mining profit of $32 million and a direct mining margin of 45%. The all-in cash cost to mine a Bitcoin was $77,100, resulting in a healthy profit of $20,900 per Bitcoin.

The company's Bitcoin mining operations are currently generating approximately $8 million of free cash flow per month, providing a stable financial foundation.

Liquidity remains strong, with approximately $230 million in cash and unencumbered Bitcoin as of August 11, 2025. This includes approximately 1,200 BTC, valued at $145 million at a Bitcoin price of $119,000.

A significant financial milestone was securing up to $300 million from a division of Macquarie Group in April 2025, specifically for the development of its flagship Panther Creek HPC campus. An initial $50 million tranche was drawn for soft costs and land acquisition, with the remaining $250 million drawable upon meeting specific development milestones. With only $10 million of planned CapEx for Panther Creek anticipated for the remainder of 2025, additional Macquarie tranches are not expected to be drawn until 2026, demonstrating prudent capital management. The company's "Bitcoin One" program, a quantitative investment strategy, has also proven successful, realizing $11 million in profits since its February 2025 inception, building on over $28 million in net profit from market operations since October 2023.

Growth Initiatives and Forward Outlook

Bitfarms' outlook is firmly centered on its HPC and AI growth strategy. The company has completed all Bitcoin mining growth initiatives and is now focused on converting its energy portfolio to HPC. The flagship Panther Creek campus in Pennsylvania is advancing rapidly, with PPL confirming 50 megawatts of firm service by year-end 2026 and an additional 300 megawatts as early as 2027. The total build-out cost for Panther Creek through 2026 is estimated at around $400 million, implying an $8 million per megawatt cost for a full build-out ready for large GPUs.

Beyond Pennsylvania, Bitfarms is eyeing its 18-megawatt Washington site, where utility approval allows for HPC conversion without regulatory red tape, potentially cutting energy costs by almost 50% to below $30 per megawatt hour. In Quebec, the company's 170 megawatts of hydropower offer significant HPC conversion potential, though regulatory approval is required and "will take some time to run its course." Tentative plans for Quebec conversion are set for 2027 and 2028.

Management anticipates that its Bitcoin mining fleet will continue to generate "continued revenue and free cash flow performance... throughout the remainder of 2026," providing a stable base for HPC expansion. The company is also taking steps towards a planned U.S. redomicile in 2026 and a transition to U.S. GAAP accounting for full fiscal year 2025 results, aiming to simplify reporting, reduce costs, and broaden its U.S. investor base.

Risks and Challenges

While Bitfarms' strategic pivot presents significant opportunities, it is not without risks. The company recently made the difficult decision to shut down its mining operation in Argentina by November 11, 2025, due to halted electricity service and rising costs. While this improves fleet-wide efficiencies and liquidity, it highlights the geopolitical and operational risks inherent in international operations.

Regulatory hurdles remain for converting Canadian Bitcoin mining megawatts to HPC, as there is no clearly defined approval path. Furthermore, the company is currently facing class action lawsuits alleging deficient internal controls over financial reporting and incorrect categorization of digital asset sale proceeds. These legal challenges could impact financial performance and reputation. The inherent volatility of Bitcoin prices and the potential for continued network hashrate growth also pose risks to the profitability of its mining operations, though management believes its new generation miners are "largely insulated from Bitcoin price pullbacks." The execution of large-scale HPC data center development also carries significant capital expenditure and timeline risks.

Conclusion

Bitfarms is undergoing a profound and strategic transformation, repositioning itself from a Bitcoin mining specialist to a diversified North American energy and compute infrastructure company. This pivot, driven by the explosive demand for HPC and AI, leverages its established expertise in energy management and large-scale data center operations. With a robust North American energy portfolio, a strong cash-generative Bitcoin mining foundation, and significant financing secured for its flagship HPC campus, Bitfarms is building a compelling narrative for long-term growth.

The company's technological prowess in efficient mining, coupled with its strategic partnerships and disciplined capital allocation, positions it favorably within a competitive landscape where power is the ultimate differentiator. While risks such as regulatory approvals and market volatility persist, Bitfarms' proactive approach to portfolio management, U.S. expansion, and focus on shareholder value through initiatives like its share buyback program underscore a confident outlook. For discerning investors, Bitfarms represents an opportunity to participate in the foundational infrastructure of the burgeoning AI revolution, underpinned by a resilient and evolving business model.