Bitfarms Ltd

Recommendation: Speculative Buy

Entry Date Symbol Recommendation Entry Price (USD) Target 1 (USD) Target 2 (USD) Holding Duration Potential Upside
18 Sep, 24 BITF Speculative Buy USD 1.96 USD 2.1 USD 2.3 1 day 17.3%

Fundamentals

  • Previous Close 1.84
  • Market Cap786.02M
  • Volume9847002
  • P/E Ratio-
  • Dividend Yield-%
  • EBITDA49.58M
  • Revenue TTM166.63M
  • Revenue Per Share TTM0.58
  • Gross Profit TTM 10.52M
  • Diluted EPS TTM-0.4

Data Powered by EOD Historical Data (“EODHD”).

Company Overview

Bitfarms Ltd. engages in the mining of cryptocurrency coins and tokens in Canada, the United States, Paraguay, and Argentina. It owns and operates server farms that primarily validates transactions on the Bitcoin Blockchain and earning cryptocurrency from block rewards and transaction fees. The company also provides electrician services to commercial and residential customers in Quebec, Canada. It also undertakes hosting of third-party mining hardware. The company was founded in 2017 and is based in Toronto, Canada.

Key Positives

Rising Revenues: USD 41.55 mn in Q2 FY24 vs USD 35.48 mn in Q2 FY24

Enhanced Liquidty: Current Ratio of 3.02x in Q1 FY24 vs Industry Median of 1.71x 

Key Negatives

Negative Profitability: Net Margin of 11.9% in Q1 FY24

Decreasing Shareholders' Wealth: ROE of -1.8% in Q1 FY24 vs Industry Median of 0.6%

Key Investment Risks

Debt Levels, Infrastructure Reliability, Geographic Concentration, Acquisition Risks, Energy Supply Agreements, Market Demand for Mining Services, etc.

Recommendation Summary

Technical Summary

Entry Price Support* Target 1 Target 2
1.96 1.6 2.1 2.3

Data Source: REFINITIV, Analysis: StockNextt

*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.

Key Reasons for Speculative Buy

August 2024 Operational Highlights:

a) Bitfarms continued to expand its operational capacity in August 2024, achieving several key milestones:

b) The company maintained an average operational hashrate of 10.4 EH/s, up 104% year-on-year and 1% month-on-month.

c) Despite the higher network difficulty, Bitfarms earned 233 BTC, representing an 8% month-on-month decline and a 39% year-on-year decrease.

d) On average, 7.5 BTC were earned daily, generating approximately USD 443,000 per day, based on a Bitcoin price of USD 59,000 at the end of August 2024.

Progress in Global Operations: Bitfarms is actively expanding its operations across multiple locations. In August, 5,040 T21 miners were in transit, with 3,060 destined for Canada, 648 for Washington, and 1,332 for Argentina. Construction at the Yguazu site in Paraguay is progressing swiftly and remains on schedule, further demonstrating Bitfarms' commitment to scaling its global mining operations.

Financial Performance and Treasury Update: In August 2024, Bitfarms sold 147 of the 233 BTC earned as part of its treasury management strategy, generating total proceeds of USD 8.8 million. The company added 86 BTC to its treasury, bringing the total to 1,103 BTC, valued at USD 65.1 million, based on a BTC price of USD 59,000 at the end of the month. Furthermore, Bitfarms held 647 long-dated BTC call options as part of its Synthetic HODL™ strategy, further enhancing its financial positioning.

Year-to-Date Bitcoin Production: Bitfarms’ year-to-date Bitcoin production totaled 2,043 BTC as of August 2024, a notable decline from 3,281 BTC during the same period in 2023. The decline in production reflects the increasing complexity of the Bitcoin network, along with fluctuating market conditions, which have impacted overall mining output. Despite this, the company continues to prioritize operational efficiency and strategic investments in new technology to enhance future productivity.

Technical Observation (on the daily chart):

The Relative Strength Index (RSI) over a 14-day period stands at a value of 41.75, currently upward trending, with expectations of a consolidation or an upward momentum if the current important support levels of USD 1.80- USD2.00 holds. Additionally, the stock's current positioning is below both the 50-period SMA and 200-period SMA, which may serve as dynamic short to medium-term resistance levels. 

 

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Speculative Buy’ rating has been given to Bitfarms Ltd. (NASDAQ: BITF) at the closing market price of USD 1.96 as of September 18, 2024.

 

Key Financials in Pictures

Income Statement

Balance Sheet

Change in Cash

Total Operating Cash

Data Powered by EOD Historical Data (“EODHD”).

Peer Comparison

Sector: Financial Services Industry: Capital Markets

Company Change (USD) Price (USD) Trailing PE (x) Forward PE (x) Price Sales TTM (x) Price to Book Value (x) Enterprise Value to Revenue (x) Enterprise Value to EBITDA (x)
BITF
Bitfarms Ltd
-0.0603 3.28% 1.78 - 60.61 4.15 2.05 3.50 -66.2036
MS
Morgan Stanley
1.45 1.34% 108.94 16.50 13.76 2.80 1.65
SCHW
Charles Schwab Corp
1.41 2.17% 66.31 22.86 17.39 6.14 4.28
GS
Goldman Sachs Group Inc
7.52 1.51% 504.09 18.44 10.60 2.83 1.16
IBKR
Interactive Brokers Group Inc
1.12 0.76% 148.71 21.95 17.48 10.41 3.30 1.04 1.22

Data Powered by EOD Historical Data (“EODHD”).

Disclosures:

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer :
This report has been issued by StockNextt which has an Ontario Business Identification Number 1000958347 and British Columbia registration Number FM1051529 is a trade name under Kalkine Canada Advisory Services Inc. having Business Number 761925130BC0001. Kalkine Canada Advisory Services Inc. and StockNextt are collectively referred to as “StockNextt”, “we”, “us”, and “our”. The website https://stocknextt.com and associated pages are published by StockNextt. The information in this report and on the StockNextt website has been prepared from a wide variety of sources, which StockNextt, to the best of its knowledge and belief, considers accurate. StcokNextt has made every effort to ensure the reliability of information contained in its reports, newsletters, and websites. All information represents our views at the date of publication and may change without notice. The information in this report does not constitute an offer to sell securities or other financial products or a solicitation of an offer to buy securities or other financial products. Our reports contain general recommendations for investing in securities and other financial products. StockNextt does not offer financial advice based upon your personal financial situation or goals, and we shall not be held liable for any investment or trading losses you may incur by using the opinions expressed in our reports, publications, market updates, news alerts and corporate profiles. StockNextt does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation. StockNextt’s general advice does not in any way endorse or recommend individuals, investment products or services for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional authorised financial planner and adviser. You should be aware that the value of any investment and the income from it can go down as well as up and you may not get back the amount invested. Please also read our Terms and conditions for further information. Employees and/or associates of StockNextt and its related entities may hold an interest in the securities or other financial products covered in this report or on the StockNextt website. Any such employees and associates are required to comply with certain safeguards, procedures and disclosures as required by law.

Copyright © 2023 Krish Capital Pty Ltd. All rights reserved. No part of this website, or its content, may be reproduced in any form without our prior consent.