Bitfarms (BITF), a prominent Bitcoin mining company, experienced a significant downturn, with its stock plunging 18% on Thursday. The decline followed the company's announcement of a strategic shift involving winding down Bitcoin mining operations at its Washington state facility and pivoting towards Artificial Intelligence (AI) and high-performance computing (HPC).
The company's stock traded as low as $2.56, before closing at $2.60 on Thursday. This represents a sharp decrease from its previous close at $3.17. The trading volume also saw a massive surge, with 112,267,867 shares changing hands, a 154% increase compared to the average session volume of 44,222,750 shares. However, in pre-market trading Friday, the stock price showed signs of recovery, trading at $3.09, but still reflecting an 8.32% decrease since the market opened.
This strategic shift is linked to Bitfarms' third-quarter earnings report, which revealed a $46 million net loss, equating to a loss of $0.08 per share. This is almost double the net loss of $24 million from the same period last year. While the company's revenue increased by 156% year-over-year to $69 million, it still fell short of analysts' expectations by approximately 15%. The operating loss of $29 million included an impairment charge of $9 million and non-cash depreciation of $27 million.
In response to these financial results and facing increasing costs and competition in the Bitcoin mining sector, Bitfarms has decided to convert its 18 MW Washington state facility into an AI/HPC worksite. This conversion is projected to be completed by December 2026. The revamped facility will feature up to 190 kW per rack and advanced liquid cooling. Bitfarms has entered into a binding agreement of $128 million with a publicly traded American multinational provider of critical infrastructure and services for data centers to support this transition.
CEO Ben Gagnon stated that the company is executing its strategy to pivot from an international Bitcoin miner to a North American energy and digital infrastructure company. He added that the company's portfolio is being built to support Nvidia's next-generation Vera Rubin GPUs.
As of November 12, Bitfarms reported total liquidity of approximately $814 million, which included roughly $637 million in cash and $177 million in unencumbered Bitcoin. During the quarter, Bitfarms earned 520 BTC at an average direct cost per BTC of $48,200 and held 1,827 BTC.
Analysts have mixed views on Bitfarms' strategic shift. While the company holds a consensus rating of "Moderate Buy" with an average target price of $4.75, some analysts believe the move reflects the challenges Bitcoin miners face due to rising costs and volatile crypto prices. Others view it as a proactive step to capitalize on the growing AI sector, with global AI investment projected to reach $200 billion by 2025.
Several institutional investors have recently adjusted their positions in Bitfarms. SBI Securities Co. Ltd. increased its stake by 69.9% in the first quarter, while Theory Financial LLC initiated a new position in the company.
Bitfarms' move highlights the increasing trend of companies in the cryptocurrency space diversifying their operations to mitigate risks and explore new opportunities in emerging technologies.
