Keel Infrastructure Corp. (BITF) Earnings Call Transcript & Summary

Good morning, everyone. Welcome here. My name is Nicolas Bonta, I'm the Executive Chairman and Co-Founder of Bitfarms. Together with Emiliano, CEO and Co-Founder as well, we started this company in 2016. We started mining Ethereum in Argentina in a garage when Ethereum was $3 and the Bitcoin was $600. And when we thought of growing the company, we came to Canada and we started here in Canada, where we know now Bitfarms.

Good morning to everybody, welcome. As Nico mentioned, we are Argentinian and we grew up there with plenty of inflation and devaluation. And when we discovered in 2016, we believed immediately that this protocol could help to improve the hope of the people in the entire world, especially in the emerging countries. And when after 6 years of hard work and commitment we build up this company and we believe that the industry is just in the beginning, in early stage. And well, thank you for coming, and I'm glad to present our team that we believe that is our best asset. Geoff, please come in.

Thank you, Emi. Thank you, Nico. Good morning, and welcome to Bitfarms' first Analyst and Institutional Investor Day. My name is Geoff Morphy, I'm the President and COO. Whether you're here in person or virtually, we're excited that you could join us. You can look forward to getting to know some of the department heads today as they offer you a deeper look into how they contribute to Bitfarms being a world leader in Bitcoin. Now I'm on the audio, that helps -- leader in Bitcoin mining. For those of you here in-person, you get the added benefit of being able to meet other department heads, some of the directors that are here today and get a tour of 3 of our mining facilities, some of our latest mining facilities. Before we get underway with the presentations, I would like to remind you that certain statements that we make during this presentation and throughout the day may constitute forward-looking information and statements. Please refer to the safe harbor statement being displayed behind me and posted on the slide deck for more information. During the presentations and throughout the day, we hope to leave you with 5 takeaways: Bitfarms is a low-cost miner of Bitcoin; two, with 5 years of operational experience and our vertically integrated self-mining business model, we produce results; three, led by experienced entrepreneurs, we are nimble and flexible; four, we are uniquely diversified with people and operations in 4 countries; five, we have a strong foundation, capable of looking to seize -- capable of looking and to seize upon opportunities brought about by current market conditions. So some background before we get going. When we first started planning this day, we asked a few of you sort of what you wanted to see out of today's session. And what we heard back was you didn't even want to hear from the 2 Jeffs anymore. You wanted to meet more of the team members. So we've constructed an agenda today where you're going to hear primarily from some of the team members and have an opportunity to meet some of the other team members and see our facilities. So my part is going to be pretty minimal. Jeff will be speaking, but trying to play that down so that you can really get to know how we evaluate situations. So Bitfarms has always been a leader in providing timely and accurate information. And today will be no different. We will be as transparent as possible without breaking any securities disclosure laws. When the day is finished, it is our hope that you have a far deeper understanding of Bitfarms, a much clearer understanding of how we are different and how many of our publicly traded -- like different from the other publicly traded companies. So today's agenda will be as follows. Our first presentation is entitled Miner Procurement and Operational Advantages and it will be given by Ben Gagnon. Ben is our Chief Mining Officer and is well known in the industry, given his years of involvement and public speaking. Before joining Bitfarms in December 2019, Ben had set up mining operations in the United States, Canada and Mainland China. Ben speaks at many conferences and quoted often in the media given his years of experience. Following Ben, Ben's presentation, Benoit Gobeil will give a presentation entitled, How We Optimize the Design and Build Out of our Facilities. Benoit is a master electrician and was one of the founders of Volta Electrique, which Bitfarms acquired a few years ago. As well as overseeing the operations of Volta, Benoit is responsible for construction of all of our farms in all 4 countries and the infrastructure therein. Our third presentation will be given by Damian Polla. Damian is a native of Buenos Aires and worked for many years in New York. Damian is our General Manager of our South American operations. As no other publicly traded Bitcoin mining companies have multiple developments underway in LATAM, I think you will find Damian's overview and presentation entitled, LATAM, to be very interesting. Philippe Fortier, our Vice President, Special Projects was an investment banker and has been involved in launching, growing and financing many companies. He will present strategic growth and development and will give you an inside look at the way we evaluate acquisitions and new growth opportunities. The last presentation will be given by Jeff Lucas, our CFO. His presentation will be financing strategy, and which is very topical given the current market conditions. When Jeff is finished, which should be shortly after about 9 a.m., we will open the floor to about 10 to 15 minutes of questions. I will then provide a brief wrap up. And for those of you attending in person, we'll then grab our bags and head to our deluxe transportation, and departure is at 9:30 a.m. sharp. It is now my privilege to turn the floor over to Ben Gagnon.

Thanks, Geoff. All right. Hi, everyone. My name is Ben Gagnon and I'm the Chief Mining Officer for Bitfarms. Today, we're going to go over a little bit of our miner procurement strategies and practices. We're first going to start off with the current status of our mining fleet, where we stand in terms of our purchase commitments and our anticipated deployments, a little bit about the performance advantages of MicroBT and the Bitmain equipment which make up the majority of our fleet. We're also going to go into a little bit about our planning rationale and methodology. And then finally, how we manage our operations and our miners. So to begin, here is our active mining fleet. What you can see here is that we currently have approximately 40,000 miners deployed with an average terahash of 89 and an average watt per terahash efficiency of 40 watts per terahash. This is a huge improvement from where we started the company at 5 years ago with S9s. It's about a 630% improvement in terahash per unit and about a 60% improvement in the watt per terahash energy efficiency. Huge, huge improvement. And we were still even operating some of those S9s through a little bit of Q3 last year. So this is a process where these miners last significantly longer than most people expect. Usually, we are expecting 5-plus years of profitable cash flows. And that's exactly what we got with the S9s. And this is exactly what we expect to get with the new equipment that we're deploying now. At this point, our fleet is almost entirely the latest and greatest from the 2 main Bitcoin mining manufacturers, Bitmain and MicroBT. But I am going to talk about one thing here beyond this energy efficiency that you might not expect. And there's more to efficiency than just that watt per terahash number, it's about capital and cash flows. So surprisingly, I'm going to focus on our Innosilicon T3s here for a moment. Our T3s here are our oldest miners that we still employ. We purchased these in 2019 and have long since ROI-ed, but still generate positive cash flows. When we were looking to deploy our new site in Villarrica and Paraguay, we were looking at how do we best utilize this equipment that we have on hand. And the reality is, is that while these miners are still profitable and so very reliable units, after the China mining ban, the emphasis has switched from miners to infrastructure. And these miners started trading at a value significantly below the cash flows that they generate because miners were incentivized to utilize their infrastructure with the most efficient and the most throughput miners possible. However, because they trade at such a discount, it didn't really make sense to sell those miners. So what we did was the most capital effective strategy that we could do. We redeployed those miners in Villarrica. This had 3 huge benefits: one, we've reduced the overall capital cost of setting up that facility dramatically because miners make up the lion's share of any new mining facility that we deploy; secondly, because we moved those miners to a lower-cost jurisdiction, we're able to extend the economic use of lifespan and extend the positive cash flows that those miners will generate far beyond the value that the market would ascribe to those miners where we would sell them; third, we freed up space in Québec for our new miners coming in, a space where -- or a jurisdiction where we're able to finance those miners like the NYDIG financing that we announced last week. All of these things combined make this the most capital effective more -- capital-efficient strategy that we can have when we're deploying our equipment. Of course, Bitfarms is still growing rapidly. And that's mostly based on our miner purchase commitments that we have for this year. The majority of those are the 48,000 miners from MicroBT, which we have at one of the lowest prices announced by anybody in the industry, $38.50 per terahash. We also have a smaller contract for 1,200 of the XP Pros, which are the most efficient miners available on the market today. And so that brings us to where we expect to be at the end of the year. At the end of the year, we expect to have approximately 62,000 miners deployed with an average terahash of 93 per unit and an improved efficiency of 39 watts per terahash. Now this is going to be deployed across all 10 sites in 4 different countries. And this is showing how our improvements and efficiency are changing over time. And this improvement in efficiency is incredibly important. On the right here, there's a table that shows the estimated direct cost to mine a Bitcoin for various Bitcoin miners at various electricity prices. I've highlighted the green area at $0.04, which is our average electricity rate at Bitfarms. On the left, you have the S19j Pros, which are the most efficient equipment that we have. Going towards the right, you have less efficient equipment. Now we don't have S9s running, but I did put the S9 up there for a comparative measure. You can see that the S19s and the M30s that we're running are consistently generating Bitcoin at a direct cost well below $10,000. Our less efficient miners, the M20S and the T3s are still producing Bitcoin at an estimated direct cost in the low teens, significantly below even the $20,000 level and the $21,000 level that we're at now. Were we did not to make those improvements from our S9s that we had in 2017 all the way through last year, we would basically be breakeven on a cash flow basis now, showing how important these upgrades and efficiency are over time. But this is just thinking about our mining fleet. Now we actually have to think about why is our mining fleet so heavily on MicroBT? This is a unique thing for Bitfarms because most of the other public companies are primarily Bitmain. And while Bitmain does produce the most efficient units that we have in our fleet, there are a number of reasons why we choose MicroBT. First and foremost, we've been running different miners for over 5 years, over a dozen models from 4 different mining manufacturers. We know that Bitmain makes the best product. It consistently has the lowest hardware failure rates and is consistently the easiest miner to operate. So we know that when we buy these miners and we deploy these miners, we're going to be able to rely on them for the 5-plus years of cash flows that we want to draw down on them from. The second thing here is negotiating power. Bitmain has a very, very strong monopoly in this industry. With their massive market share, they are enable to enforce consistent market prices and terms across all of their customers. When we go to MicroBT, the second largest manufacturer, we're able to negotiate better terms and better pricing. This is something that's very, very unique for us and something that we've done because of our years of experience operating this business that new players simply don't understand yet. The next thing, that price per terahash is huge. By having that price per terahash, that means lower capital requirements for that growth. It means easier ability to finance those miners on better terms. And it also, of course, means a faster ROI. You might also notice that the form factor is different. These miners are significantly smaller, which means that they're easier to service, they're lighter to carry, they require less physical square footage, less racks and that also means less wires. Overall, saving us lots of costs both in the CapEx to deploy them and also our operational costs in keeping them running, which combined leads to faster ROIs and longer life spans which as a miner, what we're trying to do is get the best cash flows for the lowest price and maintain them for the longest periods of time. So that's how we think about our miners. But how do we actually think about the industry and our place in them? To do that, we use sensitivity tables. This sensitivity table helps us understand the full range of possible economic mining scenarios that we can expect in the future based in USD. The 2 variables you see up here are the only 2 variables that we as a company cannot control, and that's the network hashrate and the Bitcoin price. Combined, you can use these 2 to derive our USD per terahash revenue. On the x-axis, you can see the network increases from the left to the right. And on the y-axis, you can see the Bitcoin price increasing as you go from top to bottom. Now of course, anything can happen in Bitcoin. And what we would expect is that over time, you would be trending downwards to the right with a rising Bitcoin price and a rising network hashrate. But in the current environment right now, you're seeing a trend to the upper left corner, a reduction in price, but also a reduction in the network hash rate that's helping to reduce that reduction in Bitcoin price. Right now, we have the green area highlighted, which is where we stand now at 214 exahash, as well as the price between $20,000 and $25,000. This shows why it's important to be such a low-cost producer. If we can position ourselves as such a low-cost producer operating this equipment, irregardless of whatever economic scenarios happen, other miners who are operating less efficient equipment and/or at higher electricity prices and costs are going to have to turn off their miners, seed in their market share and their daily share of the Bitcoins mine to companies like Bitfarms, helping us to remain profitable and survive virtually any economic situation. We make this a little bit more clearly by colorizing the chart. On the right here, we've got our direct cost to operate the terahash for some of our mining equipment. On the left, we have our S19 Pros and on the right, we have our T3s. And this is all modeled out at our $0.04 on average cost. In the chart here behind me on the colors here, you can see that the levels that we'd have to fall to for Bitcoin to be unprofitable on a direct cash flow basis are the purple areas here. These areas are pretty hard to fathom. You'd have to have a pullback to between $5,000 and $10,000 with the same network hashrate that we have now at $20,000. This is a very, very unrealistic scenario. Alternatively, you could also have a fall to $10,000, a 50% reduction in price, and you'd have to grow the network hashrate from here, also a very unrealistic scenario. Anything beyond that, that is upside for us in terms of a cash flow basis. We are currently right now in the light green area, highlighted by those white dotted lines. And you can see here that even with the pullback in price, we still enjoy relatively healthy and profitable direct cash margins. Anything beyond these levels is all upside. And in the worst-case scenario, we do have a couple of different strategies beyond just being a low-cost producer that help us to manage the storm. In March 2020, when Bitcoin price fell to $4,000, we did something called under clocking. Under clocking does reduce our overall hash rate, but it dramatically improves our energy efficiency. That means that we can provide that same unit of terahash for a lower cost. So were the market to pull back to these purple areas here, we still have another tool in our bucket to further reduce our costs, improve our margins and remain cash flow positive. So now we talk about how we think about the economics, how do we actually run this equipment. I'm going to walk you through really quickly how one of our technicians would actually see the mining software that we have here, our MGMT2 and run through the problems. Highlighted here at the top, we have our company performance for all of our different sites aggregated across 9 sites, 3 countries. You can see our total hashrate, our local hashrate at the pool, what we should be hashing at, our total amount of miners online and our off-line rate, which is just under 99%. Down here, we have all of our different sites broken down with the site specifics. How many miners do we have, what's their hashrate, how close are they to what they should be hashing and what's our offline rate. To drill down into this further, like a technician would, I'm going to focus on Farnham, which is my favorite site in Québec because it has our lowest electricity prices. Here we see Farnham. In Farnham, all the racks are broken down and organized according to their offline rate, so the technician knows exactly which racks they should be focusing on in order to improve the uptime as quickly as possible and restore that profitability. We can see here, rack 19 has 1 miner offline. So the technician would drill down into that and see the entire rack visually within the software. We can see almost every miner is operating fully in green in real time. And we also see there's 1 miner here in the red. This red miner indicates exactly what down miner, that technician needs to access in the rack physically for servicing. We can also drill into the miner and see what's wrong with it. We can see the miners currently offering at 0 hash rate and has a number of error codes. Based on these error codes, we know exactly what's wrong with the miner. And because of those error codes, I know that this miner doesn't need something like a simple reboot, it actually needs to go to our in-house repair lab. Our in-house repair lab based in Cowansville is a beautiful facility that helps us to repair our miners quickly at lower cost and without sending our miners overseas, waiting weeks, possibly months for that miners to come back and start generating cash flows again, something that we're able to do in-house quickly and is part of why we are such an efficient mining company. So that's what's going on with MGMT in our operations right now. And now I'll just give you a little preview about what we're going to be building in MGMT in the future. First, economics integration. Right now, all of our miners are kind of looking at an evil -- sorry, an even level footing. You look at what miners are offline and we go and fix those miners. What we're working on now is economic integration so that we can prioritize the most economic repairs first, making sure that we are focusing on cash flows. Second, variable load and hashrate control. We don't generally adjust our mining performance on a regular basis. So this is something we currently do manually. But the features I'm talking about like under clocking, this is something that will be baked into MGMT2 in the future for us to do quickly and easily. Finally, markets and grid integration. In addition to pulling in the Bitcoin mining economics, we'll also be integrating things like grid integration and market pricing so that we can variably control all of our miners according to the economic inputs and according to things like curtailment programs to make sure that we're balancing the grid and we're making use of the miners in the most cost-effective way possible. So that's for software. That's our operations, that's our miners. And now I'm going to bring up Benoit and Stephanie to help me talk a little bit about our operations.

Good morning, everyone. Thanks for joining us again. I'm Stephanie Wargo, Head of Marketing here at Bitfarms. And the next part of our discussion is going to be a panel discussion between Benoit and Ben. And Ben, you've spent a lot of time talking about our miners and how we deploy them. But how do we look at our actual facilities when it comes to the efficiency and profitability of Bitfarms.

Yes. I think the 2 biggest factors that we look at, the 2 biggest metrics are a metric called PUE and uptime. Uptime is pretty clear. The more uptime we have, the more revenues we're generating. We're not going to get paid for a miner that's not plugged in and not operating, right? So we've got to keep that number incredibly high. And it's a number we consistently keep around 98%, 99%, which is one of the highest numbers in the industry. The second number is PUE. So we have a PUE of 1.04. What that means is that 96% of the electricity that we consume as a company goes directly to revenue-generating activities, mining. Only 4% of the electricity we consume as a company goes to overhead, the lights, the bathrooms, that sort of stuff, stuff that's not directly generating revenues. And by minimizing all of that electricity consumption, we're minimizing our costs and making sure that we have the highest levels of profitability. But that's just those numbers. Benoit can talk a bit about the operations.

Yes, for me, it's all the strength about our teams that work well together and they are able to do like all the maintenance. We have like tools like MGMT. MGMT will be able to find a problem very easily. After that, we'll have the NOC that is a security system work like 24/7. They are able to tell the problem to the guys. And after that, the people of ops will be able to repair the miner very, very quickly to be able to have the hashrate, like you said, and have the better PUE that we can.

Now is that across every farm? Is it the exact same?

Yes, the exact same. And we have like a VIKI. We name it like the VIKI in Bitfarms, but we have like a big charge of everything that we already have like some problem or something like that. And the guy can rely on this like paper that we make 5 years, all issues and all those stuff we can have very easy after that for everybody to go in and be able to repair it.

Yes, the VIKIs are documented set of operating procedures. So over the last 5 years, whenever we've encountered a problem and we've responded to it, we've documented that process. So when we bring on new people, we set up new sites, they haven't had that same experience, they're able to automatically transfer that knowledge to that new site and those new employees, so they know exactly what to do in any situation that we've already experienced, which is basically everything at this point.

Thanks, Ben.

All right. Benoit, you're a master electrician and we -- everyone today is going to be able to walk the farms and see the difference in some of our older farms versus the brand new farms that are being built. So can you talk a little bit about the design and how we have improved that over the past 5 years?

Yes, sure. I've been in the construction for like since 2000. I've been like a master electrician for 15 years with my own company who knows people at Volta Electrique. I created like it's a big thing. It was like -- the next move was like very intelligent to go like somewhere that I will be able to use like all my knowledge and be able to maximize what I learned in the past. And we can see like the old farm of Cowansville and the new one that normally were using like, PDU.

Yes, PDU.

PDU. And after that, it was like already banned by China or something like that. But now we use like our own PDU that we designed internally to be able to maximize all the voltage, watts and all those stuff. And we have on this photo too that we see like the smallest transfer, now it's like bigger transfer. We are able to enter with high voltage and until like decreasing the voltage and go like further and, further and lost like some amps everywhere in the site. We're able to maximize everything like Ben was talking about the PUD and we're able to have like all the power in the miners and be able to react like fastly, eagerly, everything is like the same way. And the other important thing is like you can change it on Slide 2.

The airflow. So here, you can see just point out before we go to the next slide, you can see the difference here between our old slides -- our old farms in 2017 and our new farms now. Back then, we had this kind of pod structure. The airflow had to make a bunch of different bends and turns in order to meet the miners. That was very inefficient and it wasn't good for the miners in the long term. Now we have much more simplified designs in this kind of straight rack, which is better illustrated here.

Yes, you will see because we'll visit the bunker, now it will be building over there. But airflow goes cold air, hot air, naturally go up. And after that, it's very simple. And the more efficient that we can have.

So one of the things you'll notice when we get to bunker, which is our last site is that this is all now closed in, but we really want to show you in the construction about how it was designed from the beginning to maximize this airflow. So with that, what other aspects are we unique versus our competitors in this space when it comes to design, besides just the airflow?

Yes. For me, I think that the good thinking of like Emi and Nico to bring like a company, Volta Electrique, inside the Bitfarm was a very good idea because, yes, the ops people need to be there and react for the miners, but electricity is like 75% to 85% of our business. If we are able to have like the miner -- not the miner, but the transpo and everything powered up and be able to react very fast, I think it was like the most important thing, and we manage Volta like it's very easy to have someone in the field.

Yes, having those electrical contracts or the Voltas is a huge advantage and something that I don't know any other public miner has done on the vertical integration side. When other miners are looking to set up a new site or even maintain their sites, if there's an issue, they got to call a third party, they got to bring them in, maybe they're not familiar with the equipment, maybe they're not responding at 3 a.m. when the equipment goes down. With Volta, all the electricians have been doing this for 5 years. They know exactly how to fix everything, they know exactly where to go, what to repair. We constantly have electricians standing by to respond to things even in the middle of the night. It doesn't matter what time it is, it doesn't matter if it's Christmas, they're there to respond to the site and restore that functionality.

Right. And one of the other things, we're all obviously here in Canada, we're going to see 3 sites in Canada. How does this transfer to our sites in North America and South America?

For sure for me, it will be to recreate the team that we have here that will be like creating 5 years. Now we know how to do it, and we'll try to do it like everywhere we go, find people, good professionals to work with. And for sure use all the tools that we create about little mistake we make some time. But now that we are able to manage, we'll try and do like our best over there without doing like those, the little mistake with the VIKI, the NOC, and the MGMT2 that will help like that.

We also send our people around, right? So the people from Québec travel out to Washington. Our manager in Washington has been operating in Québec for a long time, and now he has built up and trained all the local staff there. Benoit and pretty much the entire team in this room has been down to Argentina and to Paraguay to help coordinate on those facilities and train the people that we have there, too. So it's not just the systems, but it's the actual involvement of the people going out there and training people and transferring that knowledge abroad.

Wonderful. Well, thank you both so much. We really appreciate it. And with that, I'm going to turn it over to Damian, and you're going to hear a lot more about LATAM.

Thanks, Stephanie. Is this working? Hello? Good morning, everyone. I'm Damian Polla. I joined Bitfarms about a year ago to develop the first project that we have in the region in Argentina and also identify new opportunities. I want to show you where we're located. We have our headquarters in Buenos Aires. The first project in the province of Río Cuarto, which is about in the center of Argentina. And we did -- sorry -- and the project in Paraguay in Villarrica. Villarrica is about 3 hours south of Asunción. What has been our strategy in LATAM, basically, first of all, to establish a solid team. We started building the team in July of last year. Right now, we have already 15 people on the team, and we're putting together the ops team for Río Cuarto. We also have about 15 people in Villarrica. Number two, we've been identifying opportunities, not only in Argentina, but also to do something else in Paraguay. In Paraguay, we have a small operation, 10 megawatt, but we want to do more. And we started developing local suppliers and adapting some of the farm design. For instance, in Villarrica, we have a wet wall that we don't have here. The design of Río Cuarto, we'll look into further detail later. And the strategy has been to do a risk managed gradual growth. We did the test project in Villarrica, 10 megawatts. And in Río Cuarto, we're doing the first farm of 50 megawatts by the end of this year and the second 50 megawatts by the first quarter of next year. That's our team. We put together a team basically of professionals coming from different industries. We have people that came from the automotive industry, from the construction industry and so forth. And we have Emiliano and Nicolas in our office as well. Now I'm going to be talking -- I'm going to show you a little bit about the energy matrix in both Paraguay and Argentina for those of you who are not aware of how the energy sector works there. And then I'm going to talk into further detail about the specific things that we're doing in both Río Cuarto and Villarrica. In Paraguay, the energy sector is basically controlled by ANDE. ANDE is a state-owned utility. They own all the transmission and distribution assets. They buy power primarily from 2 hydro dams, Itaipú, that is hereby national dam between Brazil and Paraguay. And Yacyretá which is by national between Argentina and Paraguay. So ANDE basically acquires energy from these dams and they own all the transmission and distribution assets, and they basically have a tariff for -- the industrial tariff for residential tariff. The only private distribution company that is in Paraguay, it's called CLYFSA and it actually serves a small population of about 17,000 people, they have 60 megawatts. And the first project that we did there was with CLYFSA. Going forward, anything else that we will do, most likely, we'll be doing directly with ANDE. The Villarrica operation, we basically started investing in the fourth quarter of last year. We put it up and running in January. We're fully operational right now. We have 2,900 T3s working there, about 144 petahash and the energy price is $36. As I said, we have several opportunities under analysis, over 130 megawatts of opportunities. And there are a few things that are happening in the market that are interesting to talk about. Number one, the Itaipú agreement has been renegotiated. That may result in tariffs. There is an expectation that tariff will be coming down in Paraguay. And the second and very important is that Crypto Law is very likely to be passed in the next couple of months. It was treated in the lower house a month ago. It had been approved in the Senate, was approved in the lower house with some changes. So most likely will be implemented in the next couple of months. The most interesting feature about that law is that it sets a ceiling on energy prices for cryptomining relative to industrial tariffs. Right now, what the laws says is that cryptomining tariffs cannot be 15% higher than any industrial tariff. So that's very interesting for future projects. Now turning to Argentina. The Argentine Energy sector. You're probably aware, Argentina is very rich in energy resources. On the one side, it holds the second largest shale gas reserves in the world and there is a strong renewable energy potential, solar and wind. The installed capacity of Argentina is about 42 gigawatts. As you can see in the chart there, more than half of that is thermal gas fired, actually, what you see there thermal. The maximum consumption of electricity in Argentina took place, I think, in December of last year, it consumed about 27 gigawatts. So as you can see, there is excess capacity. And typically, the marginal cost is determined by natural gas. Our project in Argentina, we read inside defense. So we're basically not buying electricity from the market. We have a private PPA with an established industrial, it's a company called Albanesi. So we're behind the meter with an 8-year private PPA in the first 4 years with a large fixed price component. We're off taking from the Maranzana -- the Albanesi has about 1.5 gigawatts of installed capacity in Argentina in different locations. The Maranzana power plant, the one in Río Cuarto has 350 and they're actually under construction, they have another 120. This is a layout of our project. You will see on the bottom side, we are -- it's a quite interesting project because we're off taking electricity in high voltage here. So we're doing a quite large investment in terms of infrastructure. We are doing the enlargement of the bars. You can see that on the bottom side. We're building a high-voltage 132 kV line that takes basically the energy to the back of the property, where we will have our own substation. And what you see drawn there is the first warehouse. That warehouse for 50 -- each warehouse of 50 megawatts is about 5,200 square meters, about 56,000 square feet, and it has 5 modules plus a service area. Here are some of the latest pictures on what it looks like. Actually, this week, we're almost finalizing the roofing and working already on the flooring for the first warehouse and made significant progress in the transmission line. Here are some 3D designs of what it will look like in a couple of months. The project has been developed in stages, as we discussed. The first warehouse finalized by the end of this year, in the fourth quarter. The second one in the first quarter of 2023. I mean the key takeaway, I think, for LATAM for the region is really the opportunity of energy availability in different jurisdictions, not only Argentina and Paraguay. I think if the market gets better, we will definitely be able to pursue some of these opportunities. We do have already a local team that we have been putting in place and we're working very well with our Canadian colleagues. We have Benoit, Ben coming to the region every month or so. And we think that having this geographic diversification makes a lot of sense because this is an industry that you never know when things will change, regulation will change either in Canada, in the U.S., in LATAM. So having 3, 4, 5 geographies make a lot of sense for a cryptominer. So with that, I leave it to Philippe. Well, hopefully, next year, we do the tour of the facilities in Argentina and Paraguay. If you're willing to take the trip, we'll wait for you guys there. Philippe?

Thank you, Damian, and good morning, everyone joining us here in Brossard and online. My name is Philippe Fortier, and I'm the Vice President of Special Projects here at Bitfarms, mostly working alongside the rest of the team you'll see here today, trying to grow our footprint globally and also consolidate our leading position as a Bitcoin miner out here. So today, I just want to touch upon the characteristic and element of the opportunities and growth and acquisition opportunities we look at. So to state the obvious, any opportunities we will review needs to fit within the broader Bitfarms strategy. One of the first criteria we'll look at, if we're looking at a global opportunity, is whether the jurisdiction we're looking at is investable or not. For that purpose, we look at a variety of macro market-driven and regulatory indicators. And I'll show you an example of that in just a few moments. Next, critical to us is the ability of Bitfarms to add -- to sustain adding value to the opportunities, is the alignment of that opportunity fitted with Bitfarms' core operational capability. Then we look at the long-term value creation potential of an opportunity. And that means are we able to see a long-term future or value creation for that opportunity. And in that context, ESG criteria and indicators are key, considering not only environmental impact, but also a positive contribution to communities in which we seek to invest. On the operational side, operational fit is key. And here, we're trying really to align with our core capabilities that we've built and refreshed over the last 6 years of our existence. So basically looking for opportunities where we can mine on-grid and centralize at scale warehouses and ideally in proximity in the vicinity to pools of talent and vendors. On the electricity market side, it's not only the price of electricity that matters, but also what makes the market a sustainable one, we look at the market dynamic. Is the market in oversupply of electricity or shortages, is the long-term outlook positive, what type of power is part of the grid we seek to meet to mine in. And that ultimately will derive in a positive price outlook for that market. On the regulation side, we also seek positive support of governments and taxation for those purposes. So as I mentioned, here's an example of how we would address tiering in screening in our outage jurisdiction for potential investment. You'll see on the top left corner, an example of a proprietary tool, basically a data analytics tool that we've developed internally. It's cross-referencing a certain database provided by the World Bank, CIA, Capital IQ and the likes, where we're able to derive indicators of a jurisdiction. So on the growth trajectory of a jurisdiction, we will be looking at GDP, GDP per capita, GDP growth. On the monetary side, indicators such as inflation, unemployment. And very important as well on the ease of doing business in a jurisdiction, we'll be looking at farm investment, corruption index, AGI and the likes. So this example right here, shows, for instance, Paraguay and why it's such a great mining jurisdiction. When we look at the energy matrix, the energy market, relative price in Paraguay is extremely attractive. And this is definitely sustained by the fact that 100% of the grid is hydro, that there is a tremendous surplus of energy production in that jurisdiction, also supported by low consumption by the people and by the community in Paraguay. And overall, a low carbon footprint for what is there. So definitely a great mining jurisdiction. Just to give you a few other examples of opportunities we've looked at. And we're often solicitated or proactively seeking opportunities in the Nordics and to have a great investability score. We like the regulatory framework there. And however, their global exposure, their general exposure to global energy market is a serious consideration for the long-term outlook of the mining operation in Europe. Middle East and the country is flushed with abundant and cheap energy. However, the regulatory framework there, access to talent and the overall ability to Bitfarms to adding value there is sometime a mitigating factor. When we look at Central America, the Caribbean and Mexico, return on investment tends to be great. Cost to build in this region is really cheap. However, concession needs to be made when you look at the energy matrix. There it tends to be an offset between the seasonality of power and its carbon footprint. So when it comes to numbers and actually factoring in opportunities, cost per megawatt or petahash is key. We look at other measure on an equity or shareholder base, such as accretion, so either dollars or Bitcoin per share and overall return on invested capital. Stakeholder values is key. And ESG component not only includes environmental. The fact that we retrofit often abandoned warehouses contributes positively to the communities we're involved in, but we also bring good paying jobs to those communities, and we access pool of talents when we're able to mine close to those communities. Access to financing for those projects is key and is part of our cash flow management strategy as well as it integrates with strategic growth. And just concluding, here is a case study of our first operation acquisition, our Washington site that we acquired last November. This today is our most efficient and most profitable site. It is a market that's flushed with hydropower. It is among the cheapest electricity rate in the country. And it is also -- it has embedded a limited inflationary pressure within its grid since all the hydro dam have been paid for a long time. This opportunity also optimize our time to hash as we were able to deploy a miner there very rapidly. So that's it for me. Thank you. And I'll pass it on to Jeff for his comments on our finance.

Thank you, Philippe. Good morning. I'm Jeff Lucas, I'm the Chief Financial Officer at Bitfarms. Our goal this morning was to help you understand and appreciate our operational capabilities, our growth opportunities and a low-cost structure. Ben went into detail here in terms of our miner economics and hopefully gave you an understanding of the rigor and discipline that we bring as you make analysis of how we allocate and utilize our capital. My goal in the 3.5 minutes I've been allocated here is to just give you a sort of a sense of how our financing strategy really supports the achievement and the maintenance of the sustainable competitive advantages that we enjoy in the marketplace here. So really, the pillars of our financing strategy are very, very straightforward, they are really pretty much is what you see here in the left here. In particularly in the environment we're in now, we're looking to maintain and ensuring our financial security and stability going forward. These are indeed interesting times where we go argue trading areas that we haven't had a lot of exposure or that the industry hasn't had a lot of exposure to previously. So we want to obviously do that very, very definitely careful with a keen eye towards preserving obviously, our shareholder value to this whole process here. Secondly, we want to make sure that we're positioned to finance the growth initiatives, whether it's improvements in our operating capabilities and efficiency or whether it's finding and capitalizing on some of the opportunities that Philippe has spoke about a few minutes ago. And thirdly, of course, we want to do all this with an eye towards how do we minimize our cost of capital. going forward, particularly in environments like today. So we've got 4 really pretty straightforward means of achieving that, no surprises here really. The first one we have is our operating cash flows, we generate currently about 42.5 Bitcoin a day. As maybe Ben helped you appreciate and Benoit as well, we have a very high level of uptime, very consistent flow of Bitcoin and cash. That makes it very easy for us as we made a very difficult decision to explain that to adopt -- excuse me, to adapt our holding process -- holding strategy that we put in place back in January of last year, where we accumulated over 600 Bitcoin that given the alternative cost of capital out there now for different financing sources to begin utilizing some of our rationale at Bitcoin and mine every day to meet some of our operating and debt service cash requirements. Secondly, here, we have, of course, equipment backed borrowings. Now the beauty that we have in being such a profitable business is that we have a very, very quick payback on our assets, and that makes them the ideal candidates for financing purposes. One of the measures that we have that Ben sort of just touched on and that Philippe and I work closely with is financing capacity. And we do that on a project-by-project basis. So we assess a project, as Ben mentioned, what we're doing in Canada, where we have we can readily borrow against some of those miner assets, that gets applied to a wholly different ROI than what we use actually when we consider opportunities in Latin America where needless to say, financing is a little more of a challenge here. So that all comes into place. So as we assess our ROI, we, of course, look at a period of time, we look at some of the risk elements to which Philippe spoke to and also that the financing capacity or the opportunity that exists there with those particular investments. That, again, sort of goes side by side with some of the rigor that Ben spoke to in terms of how we look at and assess the economics of miners here. Thirdly, we, of course, have the opportunity to borrow against our Bitcoin, which we've taken advantage of. The beauty of that, of course, is that we get to maintain the upside of holding the Bitcoin while also be able to fund our operations and debt service at a relatively low cost of capital. And then last here, of course, we have being a public company, the benefits of equity funding going in the marketplace. On August 18 of last year, we put in place an at-the-market financing program for $500 million. We've raised about $175 million through that program. The vast majority of that done in the fourth quarter of last year and the beginning of the first quarter this year, where obviously Bitcoin prices and our share price is higher. Now if we were to use that or as we use that, we do so very, very judiciously going forward. So those are the elements really that sort of make up our financing strategy overall. Naturally, in terms of what's been happening over the past couple of weeks, I'm sure you are asking what's happening and what's the company's financial position overall. So again, with the 2 slides I've been allocated, I squeezed a lot in this one to try to get my point across. And hopefully, I can do that effectively. I do want to give you a sense of what our financial overview and our financial position is currently. We are actually very, very strong, financially capable at this point in time. We, again, want to be positioned not only to deal with the uncertainties that we're all experiencing in the market now, but to be positioned to make continued operating enhancements and improvements to our business going forward and to still be able to take advantage of a lot of opportunities that Philippe identifies that are now being present in the marketplace, that our operational strands can allow us to take advantage of and run more profitably and then successfully than a lot of our peer companies. We want to be positioned that we can actually do that. So what you see here actually is over the past 2 weeks, we did make the decision that we were going to sell a portion of our Bitcoin, use that access to pay down our BTC backed facility. So we reduced that from about $100 million down to about $38 million. That gives us much greater flexibility. Like any BTC backed facility, of course, it has margin calls. What we've done with this action here is 2 benefits, one of which is -- we've seen lower the price -- the Bitcoin price very, very dramatically, well below where we are today, that would trigger a margin call. Secondly, though, it also frees up additional liquidity, additional BTC for us. It gives us more of a war chest to take advantage of those opportunities as they unfold. So overall, our capital -- our liquidity position is very strong right now, both in terms of the cash that we have on hand, supplemented in part by a financing that we can close on for $37 million that we announced with NYDIG in equipment financing last week. We did that in very favorable terms actually going forward. And then secondly, with the BTC that we have in hand here. If you take a look here quickly at the chart to the right, you will see actually what our commitments are going forward. Our commitments are really in 2 forms: one, repayment of the debt that we have outstanding here; and then secondly, of course, financing paying for the MicroBT miners and the other miners that Ben spoke to that we have as part of our purchase commitments. And these are actually very, very manageable and meaningful going forward, and we feel we're very well positioned to address those and of course, to meet in addressing the other opportunities that present themselves going forward. What allows us to do all this or the overall economics for our business in general. And that's best exemplified by the chart here on the lower left. And that shows what our quarterly breakeven BTC price, the direct cost for us to mine BTC. Two elements of what you see here. One, that's one of the lowest costs in the industry. Secondly, and very important, look how consistent that cost is. What you see here is it's been ranging for the past 7 quarters, as an example here, and even before that, if you back out the having impact, of anywhere from roughly $6,900 to $9,000. And the fact that it's been so consistently in that range makes life a heck of a lot easy for all of us, whether it's Philippe as he's putting together the rigors of his analysis and that's how we manage our cash and our allocations going forward. So that puts us in a very strong position. How does all this unfold? Ben gave you -- I showed you the sort of revenue sensitivity table. Let me take that just sort of one step further and speak how it affects us overall. So this table here called operational flexibility, typos and all kind of gives you a sense of how profitable it can be even with those 2 variables that are beyond our control, network hashrate and the BTC price. And just to give you an example, today, you can say we're approximately a network hashrate of 210. If you would assume a BTC price of $20,000, we actually get more than a 50% margin on the Bitcoin that we mine, 52.6% to be precise. The beauty of that is that you can see here that as let's say we get down to 200 or maybe even lower than there were cash rate as the BTC price comes down, even down to $10,000, we are still profitable. We are still achieving returns here of anywhere from 1% to up to 14.5% depending on again what the network hashrate is at $10,000. So we feel overall that we're pretty strong economically and pretty well positioned going forward. With that, I'll now turn it over to Stephanie, I think who will be leading -- or Geoff will be leading the Q&A here.

Yes, can the presenters come back up, please? Okay, thank you. We're a little ahead of schedule. Okay. Well, as promised, we have about 10, 15 minutes to take some questions both from people in the room and through Stephanie and David from the virtual audience. So let's open it up. I'm sure there's a fair bit of content there. So probably there's a few questions to be asked and flesh out a few points. Who wants to go first?

Ben relative to move to MGMT2.5, can you just talk about incrementally what that might mean for your key outputs?

Yes. I mean, right now, like I said, everything is kind of on an even footing. And so an S19 is going to be producing more hashrate than M20S or an M30. But the older equipment is what's going to go offline first, right? Right now, everything is leveled equally. But what we should be doing is we should be prioritizing the most efficient miners to repair first, right? And so integrating all those economics into MGMT2 is going to give us that real-time actionable information. So we're not just trying to keep up the uptime, but we're prioritizing our actions so that they have the most economic impact. Then secondly, when we integrate all of that economics calculations as well as the variable control of the equipment, and the external market pricing stuff like external market prices for electricity or maybe even signals from Hydro Québec or another utility provider for curtailment, that's when it enables us to, and real time, maximize the economic productivity of every miner at every site. And so these aren't things that are going to dramatically change our business, but it's about absorbing every possible dollar incentive revenue that we can out of our operating assets.