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

Welcome to the Annual General and Special Meetings of Bitfarms Limited. Please note that this meeting is being recorded. Please note that only shareholders can address the meeting by typing your question or comments in the box call to ask a question at the left side of your screen. I would like to introduce Nicolas Bonta, moderator of today's meeting. Mr. Bonta, please go ahead.

[Foreign Language] Good morning, ladies and gentlemen. I'm Nicolas Bonta, Co-Founder and Chairman of the Board of Directors of Bitfarms Ltd., and I will act as Chair of the meeting. On behalf of the Board, I would like to welcome you to the 2024 Annual General and Special Meeting of Shareholders of Bitfarms Ltd. We have 5 items of business to conduct today: first one, to receive the corporation's audited consolidated financial statements for the years ended December 31, 2023, and 2022, together with the auditor's report thereon before the meeting; second, to elect the directors of the corporation for the ensuing year; third, to appoint PricewaterhouseCoopers LLP as the auditors of the corporation for the ensuing year and to authorize the directors to fix their remuneration; number four, to consider and, if deemed advisable, pass an ordinary resolution approving the renewal of the corporation's long-term equity incentive plan and the unallocated entitlements thereunder, as more particularly described in the circular; and five, to transact any other business that may be properly brought before the meeting or any adjustment or postponement thereof. At the meeting, registered shareholders and duly appointed proxyholders will have an opportunity to vote. TSX Trust shall open the poll momentarily, which will remain open for the duration of the meeting. We will go through the items of business one by one by -- shareholders may vote on each of the items at any time prior to the polls being closed. Please follow the instructions on screen are -- or as provided by the operator. Once the formal business of the meeting has been completed, there will be an opportunity to ask questions. Questions that are not relevant to the matter before this meeting may not be addressed. Depending on the number of questions received, we may not be able to address them all. Nonetheless, we always appreciate comments and feedbacks from our shareholders and encourage you to reach out to our Investor Relations department with any questions to -- not have been addressed today. The meeting will now come to order. And unless there is an objection, I will ask Patricia Osorio to act as Secretary and TSX Trust, through its representative Kieran Webb, to act as scrutineer. The notice calling this meeting and combining management informational -- information circular, form of proxy and the consolidated financial statements of the corporation, together with the auditor's report thereon, have been made available to each of the shareholders of the corporation. The corporation has utilized the notice and access process under National Instrument 54-101 - Communication with Beneficial Owners of Security of a Reporting Issuer and National Instrument 51-102 - Continuous Disclosures Obligation for distribution of its meeting materials. Additional copies of the meeting materials are available on the corporation website, on SEDAR+ and on EDGAR. An affidavit of mail -- of the documentation required to be mailed and the notice and access provision has been provided by TSX Trust to the corporation, and I direct that this affidavit be annexed to be -- to the minutes of the meeting. Accordingly, unless there is an objection, I will dispense with the reading of the notice of the meeting. Based on the preliminary report on attendance provided by the scrutineer, there are 464 shareholders represented in person or by proxyholding, 149,457,098 shares, and representing 39.782% of the total issued and outstanding. There is a quorum present, and proof of notice calling this meeting has been given in accordance with the corporation bylaws and the Ontario Business Corporation Act. I now declare that the meeting is regularly called and properly constituted for the transaction of business. I direct that the scrutineers complete report and attendance be annexed to the minutes of the meeting, together with the declaration of mailing. As indicated, all registered shareholders and our proxy nominees who have logged into the meeting and are virtually presented at the meeting and who have not released -- submitted a proxy will be able to vote using their control number by following the instructions included in the management information circular dated April 16, 2024. I now instruct TSX Trust to open the polls, which shall remain over the course of the meeting. Shareholders may vote on any of the items of business while the polls are open. The scrutineers shall close the polls and tally the votes towards the end of the meeting, once we have put forth each of the items of business to be voted on. There are several matters that must be dealt with during this formal part of the meeting. In order to expedite these matters, I have requested that certain persons make and second the formal motions, and I will call on these persons at the appropriate time. Shareholders may make comments specific to these motions prior to the vote but should hold any comments on general matters until the question period to be held following the termination of the meeting. I now present to the meeting the financial statements of the corporation for the years ended December 31, 2027 (sic) [ 2023 ] and December 31, 2022, together with the report of the auditors, thereon. Copies of such documents have been mailed to -- also [ accordance ] of the corporation and are also available on corporation's profile on SEDAR+ and on EDGAR. It is not proposed to ask the shareholders to approve the financial statements. However, after my remarks on the operations of the corporation and after any formal business of the meeting, we would be pleased to answer any relevant question concerning the financial statements. It is now -- in order to proceed with the election of directors for ensuing year, the number of directors to be elected at the meeting is 5. Management nominates the following persons as specified in the management information circular delivered with the notice of meeting, namely Nicolas Bonta, Andreas Finkielsztain, Emiliano Joel Grodzki, Edith Hofmeister and Brian Howlett, to be elected to serve as director of the corporation to hold office until the next Annual Meeting of Shareholders or until the successors are duly elected or appointed in accordance with the articles and bylaws of the corporation. The company has not received advance notice of any other nominations in accordance with the company advanced notice bylaws. Accordingly, I declare nominations closed. I have been advised by the scrutineer that the proxies deposit of -- for the meeting have been positively voted for the election of 4 of the 5 nominees. The corporation intends to issue a news release regarding this matter later today. I would ask someone to move the following resolution, which I will now read. Be it hereby resolved that Nicolas Bonta, Andreas Finkielsztain, Edith Hofmeister and Brian Howlett be elected as director of the Corporation to hold office until the close of the next Annual Meeting of Shareholders or until their successors are duly elected or appointed in accordance with the articles and bylaws of the corporation.

I am Patricia Osorio and I so move.

May I have the motion seconded?

I am Jeffrey Lucas, and I second the motion.

Thank you. As previously indicated, online participants are able to vote on the resolution at any time prior to the polls being closed. The next item of business is a resolution appointing PricewaterhouseCoopers LLP as the auditors of the corporation for the ensuing year and authorizing the directors to fix their remuneration. Are there any question from shareholders in regard to this resolution? I have been advised by scrutineers that the proxy deposits for the meeting have been positively voted for the appointment of the auditors, and I would ask someone to move the following resolution that I will now read. Be it hereby resolved that PricewaterhouseCoopers LLP be -- and they are hereby appointed as auditors of the corporation to hold office until the close of the next Annual Meeting of Shareholders or until their successors are appointed, at such remuneration as may be fixed by the directors and the directors would be and they are hereby authorized to fix such remuneration. Will someone so move?

Patricia Osorio, I so move.

Jeffrey Lucas, I second the motion.

Thank you. Online participations -- participants may vote on the motion anytime until the polls are closed. The next item of business is to consider and, if deem appropriate, to pass an ordinary resolution approving the renewal of the corporation long-term equity incentive plan and all unallocated restricted share units and options to purchase common shares under the long-term incentive plan of the corporation. The corporation's long-term equity incentive plan is what is commonly referred to as a rolling plan pursuant to which stock options and restricted share units may be issued, which, together, equal no more than 10% of the common shares issued and outstanding at the time of any grant. As of April 16, 2024, the date of the circular, there were 20,638,137 stock options and 799,998 restricted shares unit outstanding, leaving a total of 16,131,252 common shares available for reservation pursuant to new grant under the plan. A copy of the plan is attached as Schedule B to the circular and a summary of the plan may be found in the circular under the heading Statement of Executive Compensation - Compensation Discussion and Analysis - Long-Term Incentive Plan. In accordance with the requirements of the Toronto Stock Exchange, every 3 years after adoption, all unallocated option, rights and other entitlements under a security-based compensation arrangement, which do not have a fixed maximum number of securities issuable thereunder, must be provided by the shareholders. Because the plan and the securities issuable pursuant thereto were last approved by shareholders on June 5, 2025 (sic) [ 2021 ], the shareholders are required to approve all unallocated securities issuable pursuant the plan by no later than June 5, 2024. The resolution requires the approval of not less than 50% of the vote cast by the holders of the common shares represented in person or by proxy at the meeting. Are there any questions from shareholders in regard to this resolution? I have been advised by the scrutineers that the proxies deposit for the meeting have been voted for the approval of the resolution. I will ask someone to move the following resolution, which I will now read. Be it hereby resolved as an ordinary resolution that: one, all unallocated restricted shares unit and options to purchase common shares under the long-term incentive plan of the corporation as attached to the corporation information circular dated April 16, 2024, are hereby authorized and approved, which approval shall be effective until May 31, 2027; and second, any one director or officer of the corporation will be and the same is hereby authorized for and on behalf of the corporation to execute or cause to be executed and to deliver or cause to be delivered all such documents and filings and to do or cause to be done all such acts and things, as in the opinion of such director or officer may be necessary or desirable in order to carry out the terms of this resolution, such determination to be conclusively evidenced by the execution and delivery of such documents or the doing of any such act or thing. Would someone so move?

Patricia Osorio, I so move.

Jeffrey Lucas, I second the motion.

Thank you. I will now call for a brief adjournment of the meeting in order to allow for TSX Trust to tally the votes received online. I call the meeting to order. TSX Trust has reported that the resolutions respecting the election of Nicolas Bonta, Andreas Finkielsztain, Edith Hofmeister and Brian Howlett and the appointment of the auditors have been carried by a majority of vote cast at the meeting. Additionally, the resolution with respect to the corporation long-term equity incentive plan has been carried by affirmative votes cast by the holders of more than 50% of the common shares represented at the meeting. If any shareholder is interested in the exact number of broadcast in favor of or against the resolution which have been voted on, particulars may be obtained an inquiry from the Corporation Secretary and will be published by the corporation following the meeting. Is there any other formal business that may be properly brought before the meeting? As there is no further business, I will entertain a motion to terminate this meeting.

Patricia Osorio, I move that this meeting be terminated.

Jeffrey Lucas, I second the motion.

Thank you. I hereby declare the meeting terminating -- terminated.

Thank you all for attending the meeting. This will conclude the formal business. The corporation will now be providing a presentation regarding the corporation's activities.

I will now turn the meeting over to Jeff Lucas, who will present the corporation's activities and provide an update. The presentation will be posted on our website. Over to you, Jeff.

Thank you, Nico. Good afternoon, everybody. I am Jeffrey Lucas, the Chief Financial Officer of Bitfarms. On Wednesday, May 29th, we issued a press release confirming receipt of the unsolicited proposal from Riot Platforms. As stated in the press release, the Bitfarms' Board of Directors formed a special committee comprised solely of independent directors to thoroughly evaluate the proposal. After careful consideration, the special committee determined that Riot's proposal was inadequate and significantly undervalues Bitfarms, our growth prospects and our considerable value creation opportunities. Bitfarms also received additional unsolicited expressions of interest from other parties, prompting a special committee to commence a robust strategic alternatives review process to maximize shareholder value. The Bitfarms' Board is committed to acting in the best interest of all shareholders and, as such, will carefully consider all alternatives, including among others, continuing to execute on our growth plan, a strategic business combination or other strategic transaction or a sale of the company. The unsolicited proposals and expressions of interest that Bitfarms has received to date is clear validation that our strategy is working. We are in this position because of the strong company that we have built and become. Bitfarms continues to be the best operator in the industry and is well-positioned for industry-leading growth in 2024 and beyond. Our pursuit of 21 exa hash per second and 21 watts per terahash efficiency, equivalent to a 223% hash rate increase and greater than 40% efficiency improvement, will deliver the strongest growth and efficiency gains in both the company's history and among publicly traded bitcoin mining peers this year. We strongly believe that the continued execution of our growth plan will maximize value and is in the best interest of our shareholders. And now turning to Slide 3. Let's review quickly some of the last year's highlights. As many of you know, in 2023, Bitfarms was the best performing stock on the Toronto Stock Exchange and the eighth best-performing stock on NASDAQ. We outperformed most of our mining peers, delivering a high beta to bitcoin with a share price returns of almost 600% compared to bitcoin returns of 155% in the same period. In 2023, we acted with rigor and discipline to position the company for accretive growth and substantially strengthen our balance sheet. Among our noteworthy achievements: we grew the company's hash rate by 44%; improved our energy efficiency by 12.5%, thereby reducing our cost per terahash; paid down 85% of our debt, leaving just $4 million of debt at year-end; increased the bitcoin treasury by almost 100%; and ended the year with $118 million of liquidity. In addition, in November, we announced our transformative fleet upgrade with a contracted purchase up to 63,888 bitcoin T21 miners, among the most powerful and efficient miners in the market. These actions in 2023 laid the foundation for the extraordinary growth and performance targets we've established and are positioned to achieve for 2024. The miners we are purchasing, combined with our new funds under development, are a game changer, and it put your company, Bitfarms, in a position to deliver the greatest hash rate growth and cost improvements in our history with industry-leading benchmarks. Moving now to Slide #4. Just 2 weeks ago, we provided an update on our year-to-date progress during our first quarter results call. By executing on our growth plan, we are well-positioned to gain market share, and we believe our planned growth towards our year-end portfolio represents the best opportunity in the market. In our first quarter earnings call on May 15, we reiterated that by the end of '24, we will have: increased our hash rate 223% from 6.5 exa hash per second to 12 exa hash -- excuse me, 21 exa hash per second; expanded our energy capacity 78%, from 240 megawatts to 428 megawatts; improved our energy efficiency 40%, from 35 watts per terahash to 21 watts per terahash; increased the mine deployed by 48%; and lastly, increase our total funds under management by almost 20%. Collectively, we believe these figures make up the most meaningful and concrete growth plan announced among the publicly traded miners. As a result, we will close the year with a geographically well-balanced portfolio of nearly 100,000 highly efficient and competitive miners, purchased at some of the lowest cost in years, operated at our 13 farms spread across North and South America, primarily powered with consistent and sustainably low-cost hydropower. By year-end, we expect to have about 85% of our energy requirements met by hydropower. Moving now to Slide 5. Building upon a strong growth this year, we are now looking for -- to 2025 and beyond. We recently signed an agreement with a Paraguay state-owned utility, ANDE, doubling the [ edge ] of capacity of our Yguaza site with an addition of 100 megawatts in 2025. Growing Yguaza to 200 megawatts increases our 2025 megawatts under management 23% from 420 (sic) [ 428 ] megawatts to 528 megawatts. Importantly, this expansion takes advantage of our existing construction plan, amortizing costs over -- and a great amount of infrastructure and driving down overall cost per megawatt. Changes to construction plans and equipment orders are already in progress, and we are currently developing the miner deployment players. To contextualize the impact of this expansion, assuming a similar miner model in the same 20 watts per terahash efficiency already plan for Yguaza, this additional 100 megawatts could support an additional 5 exa hash per second in 2025, above what we've accomplished and will accomplish in 2024. Moving now to Slide 6. Before we wrap up, I'd like to summarize just a few key points here. First, we are dramatically altering our operating profile via our ongoing operational upgrade and our expansion plan. Recent miner upgrades are already delivering major efficiency gains, and further gains throughout the year should contribute to post halving margin improvements. Driving growth and improving our portfolio, we are on track to achieve 21 exa hash per second in 21 watts per terahash efficiency in 2024. Second, with an industry-leading bitcoin mine per exa hash, Bitfarms distinguishes itself through exceptional margin improvements, demonstrating operational efficiency and profitability in a highly competitive industry. This preparation is underpinned by a robust balance sheet and strong liquidity, which are crucial for sustaining growth and capitalizing on new opportunities. Third, we have a very strong team in place with a proven track record of driving profitable growth. And our operational excellence and strategic vision have been instrumental in the success over the past 6 years, including 2 halving events. Finally, Bitfarms' commitment to ESG reflects our dedication to sustainable and responsible mining practices. It's gratifying that our largest projects now under development will draw power from the Itaipu Dam in Paraguay and Brazil, the third largest hydropower facility in the world. In conclusion, with lessons learned from the past halving, over the past 2 years, we deliberately deleveraged our balance sheet and follow the strategy emphasizing low-cost vertically integrated operations. Now with [indiscernible] and rapidly increasing hash rate, improving energy efficiency and cost reductions on a per bitcoin basis, we are aggressively entering this new era to capture maximizing returns and driving long-term value for our shareholders. Lastly, I want to speak about our most important and our best-performing asset, our people, no surprises here to those of us who have the terrific good fortune to work with these folks each and every day. We have a management team and an operating staff of extraordinary committed individuals who bring great expertise and passion to their work. We are recognized by our own employees as a Great Place to Work, and we built a high-performing culture in a corporate environment that, even being globally disparate, works collectively to identify, develop, evaluate and execute on the most innovative and effective initiatives in our industry. And that you are seeing and [ also ] reflected in our goals and achievements this year and beyond. It's easy to say this. It's not easy to put this in place, and it takes years. We have done that. This concludes our brief presentation. We'll be happy now to respond to any questions from our shareholders and proxyholders. And I'll now turn the meeting over to Tracy Krumme, Senior Vice President and Head of Investor Relations. Tracy?

Thank you, Jeff. If anybody has any questions, you may now post them. I do not see any questions that are now in the chat, but I'll give this a few minutes. At this time, I do not see any questions. I'll turn the call back to Jeff.

Jeff, you are on mute.

Let me repeat that, please. We want to thank you for joining us today and for your support of Bitfarms. We and the Bitfarms team are deeply proud of what we've accomplished and the foundation we have built and are excited about the growth plan we have [ forth ] for 2024 and beyond. Thank you all, and have a great day.

Thank you for everyone -- thank you, everyone, for attending. You may now disconnect.