Bitfarms Ltd.

Everyone and welcome to the Bitfarm's third quarter financial results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to David Barnard, LHA Investor Relations. Please go ahead, sir.

Thank you. Good morning, everyone, and welcome to BitFarm's conference call for the third 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 in an accompanying presentation. To watch along with the slides, you can log on to our website at www.bitfarms.com under the Investor's Presentation section. 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, Bitfarm's issued a press release announcing its third quarter 2003 financial results. Turning to slide two, I'll remind everyone that certain forward-looking statements will be made during the call, and future results could differ 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 BitFarm'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 bitfarms.com under the Investor Relations section. The company will also refer to certain measures not recognized under IFRS and that did not have the 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 third quarter 2023 MD&A for definitions of the aforementioned non-IFR measures and their reconciliation to IFR measures. Please note that all financial records are denominated in U.S. dollars unless otherwise noted. During today's call, Jeff Morphy will review our operations for the quarter, and CFO Jeff Lukens will follow a detailed financial review, and Jeff Morphy will return for some closing remarks after the Q&A. We have also requested investors to send questions in advance, which I will ask for management after we open the call to those interested in the live Q&A. Turning to slide four, slide three, and then on to slide four, it's my pleasure to turn the call to Jeff Morphy.

Thank you for joining us today. I'm excited to review highlights of our third quarter performance and our strategic outlook with you. The timing of capital investments is the most important factor of the four year Bitcoin mining cycle. As such, we continue to follow a disciplined plan, stressing an attractive ROI hurdle for upgrades and new projects so that we are best positioned for the having in April of 2024 and beyond. We plan to move aggressively to capitalize on improving market conditions going into the halving and capture market share consolidation opportunities that will likely arise post-halving. This, in conjunction with sustained and predictable costs of operation, we believe will drive long-term value. I'll elaborate. First, until the last 30 days, we deemed miners to be at unacceptably high prices. To avoid overzealous spending to achieve high growth targets with unacceptable returns, we exercise patience and discipline. Two, throughout 2023, we prudently fortified our balance sheet and made modest opportunistic expansion moves, such as at Baycomo and in Paraguay. Three, we remain committed to investing in new facilities and minor upgrades. Now with the Bitcoin rally and the recent introduction of new high performance miners at lower costs, we are focusing on opportunities to take advantage of more competitive pricing for equipment upgrades. Four, combined with years of international development in securing surplus energy and realizing low direct costs while reducing overhead, we are well positioned to continue our expansion and further reduce corporate operating costs. On slide five, I'll review some of our accomplishments for Q3 2023 and post third quarter events. In September, we fully energized our first warehouse in Rio Cuarto, increasing X a hash per second to 6.1 at quarter close, up 15% from June 30th, 2023, and up 45% from September 30th, 2022. In October, In Baycomo, we completed the first phase of expansion, increasing from 5 megawatts to 11 megawatts, bringing our corporate hash rate to 6.3 exahash per second. During Q3 2023, we earned 1,172 Bitcoin, compared to 1,223 earned in Q2 2023, reflecting increased network difficulty. Q3 2023 revenue remain consistent at $35 million compared to Q2 2023, reflecting network difficulty increases, offset mainly by our hash rate increase. Adjusted EBITDA was $7 million for Q3 2023, and our Bitcoin holdings increased to 703 at September 30th, 2023. Slide six shows a summary of our operating capacity and installed miners. Our diversified portfolio comprises 11 operating farms in four countries, as well as two more in development. In October 2023, we reached 240 megawatts in operating capacity, up 32% from a year ago. With long-term and low-cost energy contracts totaling 573 megawatts, only 42% of contracted capacity has been placed into operation, highlighting our considerable embedded development runway. I will now review our operations and development plans. Turning to slide seven. In Paraguay, we acquired two hydropower purchase agreements, one for 50 megawatts at Paso Pei, adjacent to our Villarica farm, and another for 100 megawatts at Iguazu. We expect the new Paso Pei 50 megawatt farm construction to be completed in Q1 2024 and development is progressing quickly. For civil work, we have been preparing the site, improving the access road and constructing the high voltage substation connection. We anticipate completing most of the substation building and the production buildings by year end 2023. For equipment, we purchased 20 megawatts of micro BT hydro cooling miners and related containers, primarily employing 19 million of vendor credits, substantially reducing the capital outlay for this farm. These hydro miners utilize the latest mining technology and feature among the best efficiencies in the industry, which will drive significantly lower costs of operations. The additional 30 megawatts of capacity would be housed in two air-cooled warehouses currently under construction. For nominal added cost, we purchased the high-voltage transformer rated at 80 megawatts, creating optionality for more expansion at Paso Pei. I'll add that the timely delivery of this transformer is key in meeting our Q1 2024 operating target, and progress reports from the manufacturer indicate it is on schedule. At Iguazu, The site selection process is going well, and the final decision will be reached that fully aligns with our timeline in 2024. Turning to slide eight. En Río Cuarto, Argentina. By modifying the rack layout, we managed to expand capacity from 50 megawatts to 54 megawatts, or 8% beyond original design. With 7,500 new miners installed in Q3 2023, we added 800 petahash per second and brought our hash rate to over 1.6 exahash per second in October. Notably, in Argentina, October 1st marked the start of the summer season when natural gas is typically less expensive. During this seven-month period, we expect fully loaded energy costs at Rio Cuarto to be reliably below 3 cents per kilowatt hour, compared to between 3 and 3.5 cents during the winter months. This makes Rio Cuarto amongst the lowest cost operating facilities in the industry. As this farm represents about 23% of our operating capacity, it will reduce our direct cost for Bitcoin, which is one of our strategic goals. In summary, our LATAM investments are poised for growth in the coming investment cycle. Bitfarm's benefits from exceptionally low costs in this region and there are significant barriers to entry to LATAM, uniquely positioning us in this region to capitalize on low cost expansion opportunities. For example, we have paid our dues in Argentina and others looking to duplicate our development efforts in this low cost country will face many organizational and logistical challenges. We have a track record and a strong team We have also achieved qualification as a self-importer of miners and retain an additional 156 megawatts of contracted low-cost power for future development in Rio Cuarto. In short, we remain excited about the long-term prospects for further development in the country. And in Paraguay, we have one operating farm and 150 megawatts under development. In Canada, in early July, we closed the purchase of Baycomo and initiated operation at five megawatts. In October, we achieved our plan of activating the first 11 megawatts of operating capacity. We plan to complete the construction of the additional 11 megawatts in the second half of 2024, coincident with the delivery of power to the facility. In Magog, we further optimized the facility as we imported and installed approximately 2,900 high-efficiency S19 ProPlus miners. We concurrently relocated the older miners to the Bay Como facility. By increasing the density of rack miners at both farms, we netted an increase of 110 petahash per second at Magog and provided a cost-effective cattle deployment at Bay Como. In Washington State, we upgraded ventilation and cooling systems, increasing average uptime. While we took two megawatts offline, reducing total operating capacity to 18 megawatts, we are in the process of various facility modifications and improvements. To elaborate, we are adding fiber optics to reduce latency between buildings and constructing a new warehouse. These improvements and operating practices will result in greater efficiencies in early 2024. Please turn to slide now, slide nine. With that, I will now hand the call over to Jeff Lucas for the financial review.