Tuesday - Cantor Fitzgerald has assumed coverage on Bitfarms Ltd. (NASDAQ:BITF), a cryptocurrency mining company, with an Overweight rating and a new shares target of $5.00. The firm identifies a significant turning point in Bitfarms' operations, anticipating a substantial increase in the company's mining capacity by the end of the year.
Bitfarms is expected to take delivery of approximately 88,000 T21 mining rigs in the near future, which is projected to boost its hash rate from the current 7 exahashes per second (EH/S) to over 21 EH/S by the end of 2024. This expansion is seen as a key step in enhancing Bitfarms' mining efficiency and reducing its overall cost-to-mine.
The company currently ranks as the second-worst in fleet efficiency among the 10 publicly traded miners with a capacity greater than 5 EH/S. Additionally, Bitfarms' energy costs for mining are the third-highest in the same group. The new equipment is expected to address these challenges, lowering the energy expenses and improving profitability.
The focus in the near term for Bitfarms, as noted by Cantor Fitzgerald, will likely be on the developments with RIOT Blockchain, another player in the cryptocurrency mining sector. There is anticipation around whether RIOT will be able to garner support from other shareholders, which could lead to Bitfarms potentially selling itself to RIOT.
This coverage update comes as Bitfarms aims to strengthen its position in the competitive cryptocurrency mining industry, with strategic investments that could significantly lower operational costs and enhance production capabilities.
In other recent news, Riot Platforms (NASDAQ:RIOT) has increased its stake in Bitfarms, acquiring additional shares and expressing intentions to nominate new board members. This move has raised Riot's ownership to approximately 12.00%, indicating a potential influence over Bitfarms' corporate decisions.
Bitfarms, on the other hand, has seen a series of analyst ratings. H.C. Wainwright initiated coverage with a Buy rating, while Stifel Canada downgraded Bitfarms stock from Speculative Buy to Hold due to tensions surrounding Riot Platforms' attempted acquisition. Meanwhile, Compass Point maintained a Buy rating but reduced the price target following Bitfarms' Q1 2024 performance.
Bitfarms also announced significant operational advancements, securing an additional 100 megawatts of sustainable hydropower in Paraguay. This could potentially add 6 exahash per second to its capacity in 2025.
Additionally, Bitfarms' first quarter 2024 financial results outlined ambitious growth objectives and operational enhancements, with a 9% revenue increase from the previous quarter, reaching $50 million. These are some of the recent developments that investors might want to keep an eye on.
InvestingPro Insights
As Bitfarms Ltd. (NASDAQ:BITF) gears up for a transformative year, recent data from InvestingPro shows that the company holds more cash than debt, a positive sign for potential investors. Analysts are also anticipating a sales growth in the current year, indicative of the company's expanding operations and capacity. However, it's important to note that Bitfarms has been grappling with weak gross profit margins, and the stock has experienced significant volatility.
The latest metrics highlight that Bitfarms has a market capitalization of $920.61 million, with a sharp revenue growth of 26.09% over the last twelve months as of Q1 2024. Despite the current negative gross profit margin of -3.2%, the company has seen a strong return over the past year at 111.01%. These figures underscore the company's potential for growth coupled with the need for strategic improvements in profitability. Investors should take note that while the company does not pay dividends, its liquid assets exceed short-term obligations, suggesting a strong liquidity position.
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