Bitfarms Announces Wind Down of Bitcoin Mining Operations Amid Challenges

Bitfarms has announced plans to wind down its Bitcoin mining operations over the next two years. The company intends to convert its mining facilities to artificial intelligence and high-compute data centers.

This decision follows a significant drop in its stock price, which plunged 18% after the announcement. The first site to be converted will be an 18-megawatt Bitcoin mining facility located in Washington State, with the conversion expected to be completed by December 2026.

According to CEO Ben Gagnon, this site conversion to GPU-as-a-Service could potentially generate more net operating income than what the company has ever achieved through Bitcoin mining. He explained that the transition is necessary as the challenges in the Bitcoin mining sector continue to grow, particularly concerning rising mining difficulty and costs.

Gagnon noted that public miners represent nearly a third of the Bitcoin network and many are looking to transition to high-performance computing and AI due to the more favorable economics associated with these sectors.

He emphasized that while Bitcoin mining is location-agnostic, high-performance computing requires investment in established markets, making the shift a strategic move for Bitfarms. This announcement comes on the heels of Bitfarms reporting a net loss of $46 million for the third quarter of 2023, which is a significant increase from a $24 million loss reported in the same period last year.

The reported loss of eight cents per share was worse than analyst expectations, which had anticipated a loss of two cents per share. Revenue did see an increase of 156% year-over-year, reaching $69 million, but still fell short of analyst estimates by over 16%.

Bitfarms produced 520 Bitcoin at an average cost of $48,200 each and held a total of 1,827 Bitcoin as of the end of the reporting period. Following the Q3 results, shares of Bitfarms closed down nearly 18% and continued to decline in after-hours trading.

This situation highlights the mounting financial pressures faced by cryptocurrency mining companies and reflects an industry-wide shift in strategies as firms adapt to the changing economic landscape of cryptocurrency mining.