Stifel GMP analysts published a research note Tuesday on Bitfarms (TSX-V:BITF) Ltd, after the publicly-traded Bitcoin mining company announced an agreement to acquire 22 megawatts (MW) of hydroelectric power capacity from a local utility company in Quebec for total consideration of US$1.8 million while also securing a 10-year lease agreement.
The analysts said Quebec remains an attractive region for Bitcoin mining operations given the abundance of hydroelectric generation and sustainably low power rates and, as a result, Bitfarms (TSX-V:BITF) has continued to strategically expand its foothold and remains a leader in the province with an active mining capacity of ~3.65 exahashes per second (EH/s) and power contracts secured for up to 182MW capacity (once the deal closes).
“Bitfarms (TSX-V:BITF) is a leader in operating efficiency and continues to generate industry-leading yield-per-exahash,” the Stifel analysts wrote.
“The combination of (i) low power costs; (ii) an efficient mining fleet; and (iii) scale help position the company favorably in the road ahead relative to many peers,” they added.
The Stifel analysts also noted that the company is drawing power in the province at an attractive rate of roughly ~US$0.047/kWh, which implies an attractive regional gross mining margin of greater than 45%, based on existing mining economics.
The analysts have a US$2 per share target price on Bitfarms stock, saying the company’s fleet is currently operating at ~4.8 EH/s capacity, however, near-term expansion is expected with the completed construction of the first 50MW warehouse in Argentina, which is expected to drive its systemwide hash rate capacity to 6.0 EH/s by year-end.
Contact Sean at sean@proactiveinvestors.com