Miner Bitfarms Sold Almost Half Its Bitcoin to Reduce Debt

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Bitcoin miner Bitfarms (BITF) sold almost half its stash of the cryptocurrency in the past week for about $62 million to reduce debt as miners feel the squeeze of the crypto market downturn.

• Bitfarms is adjusting its "hodling" strategy to "improve liquidity and strengthen its balance sheet," according to a Tuesday press release that played on a mistype of the word "hold." The sale of 3,000 BTC cuts the miner's holdings to 3,349 including month-to-date production.

• Bitfarms, based in Toronto, also closed a $37 million equipment-financing deal with NYDIG, announced last week, bringing liquidity to $100 million.

• The money raised in the sale helped the miner to reduce a bitcoin-backed credit facility from Galaxy Digital to $38 million. Last week, Bitfarms said it had sold BTC 1,500 to reduce the rolling loan to $66 million from $100 million.

• A slouching bitcoin price has spurred miners' profit margins to dwindle – after many of the miners borrowed heavily to fund their operations.

• Bitfarms was one of the miners with a strategy of keeping its daily bitcoin production on its balance sheet, using lending and share offerings to fund expansion and day-to-day costs.

• Asked about selling bitcoin to improve cash flow or minimize stock dilution, Chief Mining Officer Ben Gagnon said in an interview published on April 22 that Bitfarm's at-the-market offering and borrowing against its BTC holdings were alternative options.

• "We think that bitcoin is currently undervalued" and the long-term and medium-term potential of bitcoin "is significantly greater" than the cost of capital to borrow against the cryptocurrency, he said in April. At the time, BTC was about double today's price.

• "While we remain bullish on long-term BTC price appreciation, this strategic change enables us to focus on our top priorities of maintaining our world-class mining operations and continuing to grow our business in anticipation of improved mining economics," Chief Financial Officer Jeff Lucas said in Tuesday's statement.

• Bitfarms shares rose 6.8% on Nasdaq.

Read more: Bitcoin Miners Are Starting to ‘Hodl’ Again, but for How Long?