Bitfarms Ltd.

Good morning and welcome to the BITFARMS fourth quarter and full year 2022 financial results conference call. All participants will be in a listen-only mode. And should you need any assistance during the call, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note that this event is being recorded today. I would now like to turn the conference over to David Barnard with LHA Investor Relations. Please go ahead, sir.

Thank you, Joe. Good morning, everyone. Welcome to Bitfarm's conference call for the fourth quarter of 2022. With me on the call today is Jeff Murphy, President and Chief Executive Officer, and Jeff Lucas, Chief Financial Officer. Before we begin, please note this call is being webcast live with an accompanying presentation. To watch along with the slides, you can log into our website at www.bitfarms.com under Investors Presentations. If you prefer to listen to the call on your smartphone, you can download the presentation from there as well. I would like to remind you that this morning's BitFarms issued a press release announcing its fourth quarter 2022 financial results. Turning to slide two, I'll remind everyone that certain forward-looking statements will be made during the call. Future results could differ materially from those implied in the statement. The forward-looking information is based on certain assumptions and is subject to risks and uncertainties, and I invite you to consult Pitfarm's MD&A for a complete list of these. Also, during the call, reference will be made to supporting slides, and you can find the presentation again on our website at pitfarms.com under the investor relations section. The company will also refer to certain measures not recognized under IFRS and that do not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies. We invite listeners to refer to today's earnings release and the company's fourth quarter 2022 MV&A presentation of the aforementioned non-IFR measures and their reconciliations to IFR measures. Please note that all financial references are denominated in U.S. dollars unless otherwise noted. During today's call, CEO Jeff Murphy will review our operations for the quarter, CFO Jeff Lucas will follow with a detailed financial review, and Jeff Morphy will return for some closing remarks after the Q&A. We've requested investors to send questions and events, which I may read to management, time permitting, after the call to analysts interested in the live Q&A. Now, turning to slide three, it's my pleasure to turn the call over to Jeff Morphy.

Thank you for joining us today, as we are excited to talk to you about our recent successes and why Bitfarms is well positioned in the current environment to take advantage of improving market conditions. As a leading publicly traded international Bitcoin mining company, we continue to carefully assess strategic decisions regarding geographic diversification, farm expansion, miner utilization, public and private company acquisitions, and capital allocation. We have created the following key differentiators. We ensure our competitive low-cost structure by maintaining strict discipline when evaluating expansion opportunities. We seek out and source stable and surplus sources of energy with attractive pricing to continue to expand with a view to reducing our production costs. We utilize and continue to enhance our proprietary mining management software and vertically integrated electrical subsidiary to yield and improve fleet and operational efficiencies. We set the standard for KPI reporting transparency, maintain the highest standards in financial controls and reporting, and have been audited by a big four accounting firm since going public in 2017. During the past year and one half, we have built an exceptional management team. Our international team has significant experience and enables us to scale our operations without additional resources. And for the past nine months, we have implemented and continue to improve on a highly disciplined approach to growth and capital preservation, including debt reduction. We will continue these efforts in 2023 by continuing to seek out accretive and cost-effective acquisition opportunities to bring further expansion, increase cashflow from operations, diversify our international footprint and leverage capabilities of our management team, and using our proprietary software to add immediate value. Industry consolidation will continue and BitFarms, as we have mentioned numerous times in the past, has a superior platform for this type of growth. Completing and integrating acquisitions prior to the next halving in Q2 2024 is strategically important. Also, in Rio Cuarto, Argentina, we plan to soon overcome recent impediments and execute on a plan to fully activate our new farm with 50 megawatts of low-cost electricity and adding well over 1x a hash of new production. Most importantly, this will be accomplished with very little capital outlay. On the development front, the pipeline is robust and there are emerging opportunities that may meet our fundamental criteria for transaction growth, which we are working to realize. Now I'll review our accomplishments since the beginning of 2022. Please turn to slide four, which shows some highlights. We more than doubled our hash rate in 2022 and increased it further so far in 2023, reaching 4.7 exahash per second at the end of February. We mined 5,167 Bitcoin in 2022, and in February, 2023 surpassed the 20,000 milestone for Bitcoin's mind by Bitfarm since its inception over five years ago. We generated $142 million in revenue and $52 million in adjusted EBITDA in 2022. Our costs remain amongst the lowest in the industry. With our all-in quarterly cash cost of production lower than the quarterly average Bitcoin price, we again posted positive cash flow from operations in Q4 2022 which is an accomplishment as the industry struggles. We also significantly increased our flexibility and liquidity by reducing debt by over 140 million during the last nine months and lowering capex commitments by almost 70 million. Slide five summarizes the status of our farms. We ended 2022 with 10 farms in four countries. we have 188 megawatts in operating capacity, 95% of which is powered by sustainable hydroelectricity and additional 40 megawatts of built capacity in Argentina is awaiting impending approvals, which will allow for substantially and timely expansion with electricity costs that we fully expect will bring down our overall corporate Bitcoin production costs. Turning to slide six. we show some of our particularly noteworthy achievements at our farms. Ahead of schedule, we successfully completed our ambitious Canadian expansion plan, increasing our hydro-powered megawatts. Specifically, at our three new farms located in Sherbrooke, Quebec, we achieved full capacity of 96 megawatts under our power purchase agreement. During Q4 2022, at our garlic farm, we energized 18 megawatts. At the bunker, we energized the remaining 12 megawatts capacity, bringing it to 48 megawatts. And as planned, we decommissioned and sold the Dillapoint facility for net proceeds of $3.6 million. In Paraguay, at our Villarica farm, we imported and installed 2,888 new micro BTM-30s, which added a net 168 petahash per second at the farm. bringing the total hash rate in Paraguay to 288 petahash per second at January 31, 2023, and improved our overall efficiency to 39 watts per terahash. The previous miners have been sold. In Washington State, we are operating 20 megawatts and generating approximately 600 petahash per second. Farm highlights are continued by turning to slide seven. In Rio Cuarto, Argentina, there are approximately 10 megawatts currently online and additional 40 megawatts of capacity built and awaiting approvals. We expect approval of our power permit very soon. Once we receive this approval, we can draw power under our power purchase agreement from our private power producer. Once activated, we expect this farm to benefit from the lowest cost power across our operations. When the importation of new equipment has been approved using some of our $22 million of hardware credits, we will purchase and import 8,000 to 9,000 miners. Based on current prices of miners, we expect the hard group credit to more than cover our capital expenditure requirements to bring this 50 megawatt warehouse into full production during 2023. When complete, this will increase our corporate hash rate to six exahash per second for our existing portfolio. After the first 50 megawatts are deployed, we can then ascertain the timing of the construction and build out of the second 50 megawatts on the same property with the same beneficial attributes. For a glimpse of our operations in Rio Cuarto, I encourage you to refer to the two minute video that was recently posted to our website. Please turn to slide eight, which summarizes and highlights our operations and positions as we proceed in 2023. With that, I will now hand the call over to Jeff Lucas for the financial review.