Bitcoin mining company Bitfarms has reported a significant decline in revenue for May, highlighting the impact of the recent Bitcoin halving event on its operations and raising concerns about potential industry consolidation.
Impact of Bitcoin Halving on Bitfarms
Bitfarms earned 156 BTC in May, representing a 42% drop from April and a 66% decrease year over year. This sharp decline is attributed to the “post-halving economics” as May marked the first full month following the Bitcoin halving event. As a result, Bitfarms’ 24.5 BTC/average EH/s (exahash per second) metric is down 45% from the previous month. The company’s total BTC holdings increased to 850 BTC, worth approximately $57.2 million based on a BTC price of $67,300 on May 31.
The Bitcoin halving event, which occurs approximately every four years, reduces the block reward for miners by 50%. This reduction in block reward impacts miners’ earnings, although they continue to earn transaction fees for each block mined.
Operational Updates and Challenges
Bitfarms’ Chief Mining Officer, Ben Gagnon, highlighted the company’s ongoing efforts to upgrade its fleet. “Our fleet upgrade is progressing at a rapid pace. Year-to-date, we have received 25,600 miners and installed 23,600 miners, with the remaining 16,200 miners en route. Together, these miners provide sufficient hashing power to achieve 12 EH/s in June,” Gagnon stated.
Despite these efforts, Bitfarms faced significant operational challenges, including the departure of former CEO Geoffrey Morphy, who filed a $27 million lawsuit against the firm for alleged breach of contract and wrongful dismissal.
Rejected Acquisition Proposal
Adding to its challenges, Bitfarms recently rejected a nearly $1 billion acquisition proposal from Riot Platforms. Riot offered to buy all of Bitfarms’ outstanding shares at $2.30 each, a 24% premium on the one-month weighted average per share, amounting to $950 million in total equity value. Riot has since acquired a 9.25% stake in Bitfarms, becoming the largest shareholder.
Juan Leon, Bitwise Senior Crypto Research Analyst, noted that combining the operations of Bitfarms and Riot could result in “52 EH/s of self-mining capacity by year-end 2024 across 15 sites globally.” The rejected proposal and ongoing lawsuit have placed Bitfarms’ board under significant pressure, with potential for higher takeover bids benefiting shareholders.
Market Performance
As of the latest update, Bitfarms’ stock was trading 4% higher at $2.33 per share. Despite this, the stock has seen an 18% decline year-to-date.
Founded in 2017, Bitfarms currently operates 12 Bitcoin mining facilities and has one under development across four countries: Argentina, Canada, Paraguay, and the United States.
