Bitfarms Ltd.

Good morning, everyone, and welcome to the BitFarm's limited first quarter 2023 financial results conference call. All participants will be in a listen-only mode. Should you need assistance, 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 and then one on your touchtone telephones. To draw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to David Barnard of LHA Investor Relations. Sir, please go ahead.

Thank you, Jamie. Good morning, everyone, and welcome to Bitfarm's conference call for the first quarter of 2023. With me on the call today is Jeff Morphy, 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 on to our website at www.bitfarms.com under the investor relations section under 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 BitFarms issued a press release and its first quarter 2023 financial results. I'll remind everyone turning to slide two that certain forward-looking statements will be made during the call and that future results could differ from those implied in this statement. The forward-looking information is based on certain assumptions and is subject to risks and uncertainties and invite you to consult Bitfarms MD&A for a complete list of these. Also, during the call, references were made to supporting slides and you can find the presentation on our website again at bitfarms.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, or excuse me, the first quarter 2023 MD&A for definitions of the aforementioned non-IFRS measures and their reconciliations to IFRS. Please note, that all financial references are denominated in U.S. dollars unless otherwise noted. During today's call, CEO Jeff Morphy will review our operations for the quarter, CFO Jeff Lucas will follow with detailed financial review, and Jeff Morphy will return for some closing remarks after the Q&A. And with that, turning to slide three, it's my pleasure to turn the call over to Jeff Morphy.

Thank you for joining us today. I trust you will take away why BitFarms is well positioned to capitalize on the improving Bitcoin mining economics. To this end, I would like you to take away four points. First, we have established the financial and operating discipline that gives us the strength and flexibility to achieve our existing growth plan on an accelerated schedule. Second, we have also, and importantly, updated our end of year six exahash per second target to the end of the third quarter 2023. Third, with our foundation and momentum, we expect to seize opportunities both today and around the next Bitcoin halving, which is approaching in April of 2024. Fourth, during Q1 2023, we improved our balance sheet, and more recently, we resolved some significant hurdles in Argentina that unlocked the best economics in the industry. As a low-cost producer with relatively stable energy costs and a fixed operating structure, BitFarms achieves asymmetrical upside with financial performance that exceeds Bitcoin performance. Turning to slide four, I'll review some of our accomplishments that took place in Q1 2023. We ended March 2023 with 4.8 exahash per second, up 7% from December 31, 2022, and up 78% from March 31, 2022. Subsequently, we have increased our hash rate another 4% to 5.0x a hash per second. During Q1 2023, we mined 1,297 Bitcoin, up 35% from Q1 2022. Then in April, we announced a major achievement of 21,000 Bitcoin mined, using 100% renewable energy. With the finite supply of 21 million Bitcoin, to date, BitFarms has mined over one one-thousandth of all Bitcoin to be mined. We believe we are the first publicly traded miner in the industry to reach this milestone with renewable energy. Bitcoin prices are rising and drove Q1 2023 revenue to over $30 million. With our low-cost operations, we delivered gross mining profit of $12 million, which represents a gross mining margin of 42%. Our direct cost of production of $12,500 and our all-in cash cost of production of $17,600 support high margins and remain a strategic advantage as we approach the next halving in less than a year. Adjusted EBITDA improved from $1 million in Q4 2022 to $6.3 million in Q1 2023. And looking ahead to the halving, we have continued to deleverage our balance sheet and improved our financial flexibility. In a moment, Jeff will elaborate on our reduction of more than $140 million of debt in 10 months. to just $19 million at April 30th, 2023. Slide five shows we have 10 farms located in four countries. In April, we reached 196 megawatts in operating capacity, 91% of which is powered by sustainable hydroelectricity. I will now review our operations and development plans. Please turn to slide six. In Q1, 2023, in Rio Cuarto, Argentina, we are transitioning from our startup phase. Now we have 18 megawatts currently online and an additional 32 megawatts of built capacity. In April, we made a lot of progress. First, our private power provider received its operating permit to power up to 100 megawatts. triggering our miner acquisition plan at our built 50 megawatt warehouse. Second, we energized 2,100 additional miners, bringing the total to 4,400 and expanded operating megawatts from 8 to 18. Third, with our power permit approved and miners on site, we started drawing power under our power purchase agreement at prices approximately $0.03 per kilowatt hour. This is the lowest in our portfolio and reduced our overall corporate cost of production. Fourth, we finished testing and brought online our substation, which has more than enough capacity to power the permitted 100 megawatts. Fifth, we purchased an additional 6,200 bitmain and micro-VT miners. About half are in transit, and the others will be shipped in the next couple of weeks. Upon their installation, the first warehouse will achieve over 75% capacity. As previously stated, we already received approval to import the MicroBT miners, and this morning, we received approval for the Bitmain miners. In each case, the importation approval was given in about 10 days of us making the submission. We are working expeditiously to ramp production at our first 50 megawatt warehouse to full capacity by the end of Q3 2023. To this end, we are in the process of procuring 3,000 additional miners. Seven. With this increased visibility in Argentina, we have accelerated our six hexahash per second target from the end of the fourth quarter 2023 to the end of the third quarter. Turning to slide seven. In Paraguay, in January 2023, we installed 2,888 new, more efficient miners that boosted the farm's hash rate to 290 petahash per second. We are optimistic about future opportunities in the region as it has abundant and underutilized hydropower. Also, we believe the country is on the verge of greater clarity about the industry. As the election concluded on April 30th, and a new president will be inaugurated in August. In North America, we have 178 megawatts with the option to tap another 10 megawatts in Quebec. In Washington State, we have planned ongoing modifications and cost improvements through 2023. Each facility continues to run smoothly, reflected by our minor uptime, defined as the actual production output versus the theoretical capacity of all our miners. Our proprietary MGMT miner and facilities monitoring system empowers our team to optimize our return on assets. Our repair facilities excel at promptly getting miners back in action. Uptime varies with weather conditions, curtailment programs and other factors, such as parts availability. As we approach summer in North America, the winter curtailment programs have ended and we are entering a period of peak power availability. In April, our uptime reached 97.7%, demonstrating what is possible with moderate weather, good contracts, and optimized operations. In fact, operating reliability from both minor uptime and our power sourcing is a hallmark of BitFarms and contributes to strong and consistent margins in cash flow. In Quebec, we are prudently executing our expansion strategy to accretively add megawatts and create operating synergies. In Bay Como, we entered into an agreement for a new farm for up to 22 megawatts of hydropower capacity. Our two-phase plan slates 11 megawatts to come online in 2023 and another 11 megawatts in 2024. The transaction is expected to close by the end of Q2 2023, after which we will expect to increase our EXA hash projections. Please turn to slide eight. I will now hand the call over to Jeff Lucas for the financial review.