It appears our analysis last week on Bitfarms Ltd (TSX: BITF) was close to being right on the money. In light of the continued fall in the value of bitcoin, the firm this morning announced that it has been forced to review its current “HODL” strategy for the cryptocurrency.
The company has evidently again reduced its current bitcoin holdings, selling off an additional 1,500 bitcoin over the course of the last week, bringing total sales to 3,000 bitcoin. The firm last week had indicated it sold 1,500 bitcoin at an estimated figure of $22,666 per coin, to settle $34.0 million in bitcoin-backed debt.
Total proceeds from the sale of 3,000 bitcoin is said to total $62.0 million, implying that the second tranche of sales amounted to roughly $28.0 million, equating to an average price per bitcoin of $18,666. The company now has just 3,349 bitcoin remaining in its holdings following the sale, down from 6,075 at the end of May.
In connection with the sale, $28.0 million has been applied to the bitcoin-backed facility currently outstanding with Galaxy Digital, reducing the debt down to $38 million, and providing the company with some breathing room on this debt. At $20,000 bitcoin, its estimated a total of 2,717 bitcoin are required to be pledged to meet collateral requirements.
“In consideration of extreme volatility in the markets, we have continued to take action to enhance liquidity and to de-leverage and strengthen our balance sheet. Specifically, we sold 1,500 more Bitcoin and are no longer HODLing all our daily BTC production,” commented the firms CFO Jeff Lucas.
The company reportedly has a cash position of $42 million at the current time, along with $67 million worth of bitcoin at $20,000 bitcoin. Notably, $54.3 million worth of bitcoin is required to be pledged against its outstanding loan with Galaxy Digital based on current margin requirements.
Bitfarms last traded at $1.74 on the TSX.
Information for this briefing was found via Edgar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.