Bitfarms Ltd.

Good morning, everyone. My name is Alan, and I will be your conference operator today. At this time, I would like to welcome everyone to the Bitfarm's second quarter 2023 financial results conference call. 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 then one on your touchtone phone. As a reminder, this conference is being recorded today, August 8, 2023. I would like now to turn the call over to David Bernard from LHA Investor Relations. David, you may begin your conference.

Great. Thank you, Alan. Good morning, everyone, and welcome to Bitfarm's conference call for the second quarter of 2023. With me on the call today is Jeff Morphy, President and CEO, and Jeff Lucas, Chief Financial Officer. Before we begin, please note this call is being webcast live in an accompanying presentation. To watch along with the slides, you can log on to our website at www.bitfarms.com under the 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, BitFarms issued a press release announcing its second quarter 2023 financial results. Turning to slide two. I'll remind everyone that certain forward-looking statements will be made during the call and that future results could differ materially from those implied in these statements. The forward-looking information is based on certain assumptions and is subject to risks and uncertainties, and I invite you to consult Bitfarms 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 www.bitfarms.com under the Investor Relations section. This company will also refer to certain measures not recognized under IFRS and that did 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 press release and the company's second quarter 2023 MD&A for definitions of the aforementioned non-IFR measures and their reconciliation 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 Murphy will return for some closing remarks after the Q&A. We have also requested investors to send questions in advance, which I will read to management after we open the call to analysts interested in the live Q&A. And now it's my pleasure to turn the call over to Jeff Morphy.

Thank you for joining us today. I'll begin by emphasizing that we have built a quality portfolio of assets and the resources to manage them very effectively. Together with ongoing investments, they provide investors with excellent exposure to rising Bitcoin prices, particularly as we approach the next Bitcoin halving. To capitalize on this further, we are executing an aggressive and disciplined growth strategy to optimize overall returns while managing risks. Pillars of our growth strategy are responsible capital deployment, reinvestment in our fleet with the latest in minor technology, continued geographic diversification, adherence to strong financial and operating controls, audited by a big four accounting firm since incorporation over five years ago, and we have the most highly experienced and accomplished team supporting our global growth. In the past 24 months, we have expanded from 69 megawatts powering five production facilities in Quebec to 212 megawatts energizing 11 operating farms in four countries. During this time, we increased our hash rate over 275% to 5.3 exahash per second. We have built an incredibly sound infrastructure to support scalable and sustainable growth, and we are now leveraging our infrastructure as we pursue current and future opportunities. I'll now review our foundation. Our farms are well established and efficient, maximizing output while minimizing costs, leading to higher and more consistent profitability, with each location contributing positively. We excel in operations and continuously work to improve facilities and processes, including the adoption of cutting edge technologies to enhance efficiency and productivity, driving effective deployment of miners and fleet enhancements. We carefully manage our capital structure. And this quarter, we further deleveraged our balance sheet by utilizing our surplus free cash flow after debt service while still investing in growth. We ended June with only $16 million in debt, enhancing our financial flexibility to expeditiously seize upon growth opportunities and deploy capital quickly and effectively. A perfect example is our accretive expansion in Paraguay, where we acquired 150 megawatts of hydropower contracts in July and recently initiated deployment plans for the first 50 megawatts, which I'll detail in a moment. We are truly a global player. with a well-diversified portfolio of production assets and management personnel. These attributes mitigate risk associated with concentrated operations in a small number of facilities in a single region. Our stellar corporate development team is actively seeking new opportunities, including expanding into new geographies, adding complementary businesses, and improving overall operations. With just eight months until the next Bitcoin halving, the pipeline is growing. And with our global footprint, sound balance sheet, and respected integrity, BitFarms is well positioned to take advantage of situations meeting our criteria of stable low cost power contracts, quick paybacks, and high return on invested capital. Simply put, our portfolio of high quality assets offers exposure to rising Bitcoin prices. And BitFarms leverages this inherent value with efficient operations, strong execution, financial discipline, global diversification, and a proactive approach to identify and act on opportunities, and risk management practices incorporated to safeguard against potential adverse developments. On slide five, I'll review some of our accomplishments for Q2 2023. We ended June 2023 with 5.3 exahash per second, up 10% from March 31, 2023, and up 47% from June 30, 2022. Current installations in Rio Cuarto and Bay Como continue, and our target for completion in September, increasing our hash rate 19% to 6.3 exahash per second. During Q2 2023, we mined 1,223 Bitcoin. With higher average Bitcoin prices, Q2 2023 revenue increased 18% from Q1 2023. We delivered adjusted EBITDA of $8 million and increased our HODL to 594 Bitcoin at June 30th, 2023. Slide six. shows a summary of operating capacity and installed miners for our farms. Eleven operating in four countries, and we now consider our two new locations in Paraguay as farms under development. In July, we reached 212 megawatts in operating capacity, up 28% from a year ago. Notably, 86% is powered by sustainable hydroelectricity. I will now review our operations and development plans. Turning to slide seven. In Paraguay, we acquired two power purchase agreements totaling 150 megawatts of low-cost hydro power in July that will energize two new farms. These were very strategic acquisitions because Paraguay is highly attractive for development. Based on our experience, this country has amongst the lowest build-out costs Quickest project timelines to completion and a straightforward importation regime. Yesterday, we announced our initial deployment at our new Paso Pei farm. The Paso Pei farm will be only about one kilometer away from our existing Bijarika farm. In addition to plans for 30 megawatts of air-cooled facilities, we purchased Micro-PT hydro-cooled miners and related containers entirely with vendor credits. or 20 megawatts of deployment of this latest mining technology. We expect the new farm to be fully commissioned at 50 megawatts in Q1 2024. Turning to slide eight. In Rio Cuarto, Argentina, we increased production to 29 megawatts as we imported and installed approximately 5,100 new M30S What's Miner miners. This added approximately 510 petahash per second to the facility and brought its total hash rate to approximately 700 petahash per second. We also qualified and strategically became a self importer of miners. Doing so streamlines and lowers the cost of importing miners into the country. And as of today, 4,680 additional miners have arrived and are being processed by Argentine customs. and additional 2,797 miners are in transit, and all miners are expected to be installed and running in Q3 2023, which will bring us up to 50 megawatts at this farm. We can provide more details on this equipment if so desired. In Canada, we closed the purchase of the Baycomo acquisition and initiated production in early July. The acquisition not only brought new production capacity but also provided us with the opportunity to optimize our fleet by redeploying miners from Magog. This was undertaken to free up suitable rack space in Magog for higher performance miners. The Bay Como farm is presently operating with 1,300 miners at five megawatts. And with the remaining miners from Magog, we should reach 11 megawatts in Q3 2023 as planned. This, in conjunction with the Rio Cuarto build-out that I just mentioned, gives us confidence we can achieve our 6.3 exahash per second Q3 2023 target. Regarding Magog, in July, we leveraged our assets to respond quickly to a lightning strike that took out our primary transformer. Our proactive risk mitigation strategy handles unforeseen incidents and minimizes their impact on production and operations. By combining redundancy, geographic diversification, in-house capabilities, and spare equipment, we were able to respond swiftly and effectively to the outage, ensuring minimal disruption to our overall business. Favorably, the facility is hashing at full capacity, and no miners were damaged as part of this lightning strike. In Washington State, we upgraded intake and exhaust systems, greatly improving efficiencies. The intake is now equipped with a two-stage filter, which includes an evaporative cooling component, which saves energy and reduces service requirements. The exhaust system now includes automated fans, reducing power consumption by as much as 90%. Results have been impressive. For example, deterioration of hash rate on 100-plus degree day has been limited to only 2% to 3% versus approximately 30% previously. Considering this, we are now evaluating these enhancements for use on our other farms. We continue to enhance our MGMT proprietary software. This software remains one of the longest running and robust systems in the industry. New capabilities include the precise tracking of power consumption and operating performance per miner per location. This enables greater detail on miner performance the optimization and reconciliation of electricity consumption, and adds the predictive capability to power forecasting for all micro VT miners, which comprise about 90% of our fleet. In summary, as we execute against our fleet expansion and upgrade plans, we are projecting 20% sequential growth in our hash rate in Q3 2023. And with PasoPay expected to come online in Q1 2024, we are expecting to achieve 7X a hash in Q1 2024. Those are our near-term goals as we continue to evaluate other diverse capital efficient development opportunities. Please turn to slide nine. With that, I will now hand over the call over to Jeff Lucas for the financial review.