Bitfarms is still undervalued, ATB Capital says

While cost pressures and earnings fell short of some expectations, Bitfarms (Bitfarms Stock Quote, Chart, News, Analysts, Financials TSX:BITF) is shifting strategically toward high-performance computing and artificial intelligence infrastructure and showing prudent financial management.

In a May 14 note on the company’s Q1 earnings, ATB Capital Markets analyst Martin Toner maintained his “Outperform” rating and $3.75 price target.

Toner views Bitfarms’ Q1 2025 results as a mixed but overall positive step, highlighting the company’s capital discipline and early progress on its HPC strategy.

“Before market open on May 14, BITF reported Q1/25 revenue of $66.8mm (+33% y/y), in-line with consensus of $66.0mm,” Toner said. “Mining gross profit, which excludes depreciation, was $28.0mm, a touch below our estimate of $31.3mm, resulting in a mining gross profit margin of 42.0%, down from a 46% margin in Q4/24, driven by an increase in the network hash rate.

“Adjusted EBITDA of $15.1mm missed consensus of $19.0mm but beat ATBe of $13.3mm. The company hit a 19 w/TH H1/25 efficiency goal three months ahead of schedule and finished the quarter with a 19.5 EH/s hash rate, up from 12.8 EH/s last quarter.”

On April 2, Bitfarms announced it secured a private loan of up to $300-million to help fund its high-performance computing project at Panther Creek. The company also finished a study to confirm the site’s potential for HPC and AI development in Pennsylvania.

“While mining costs are increasing (due to a rise in global hash rate), we think BITF is moving in the right direction on the HPC side,” Toner said. “Since reporting Q4/24, the Company has sold more BTC than it produced and increased the share count by 2mm shares, a constructive sign of capital discipline.”

Bitfarms originally focused on Bitcoin mining. This pivot diversifies its revenue and helps reduce dependence on Bitcoin mining alone.

On January 28, Bitfarms announced it sold its 200-megawatt mining site in Yguazu, Paraguay, for $85-million. The company plans to use the money to invest in Bitcoin and new high-powered computing and AI infrastructure.

In March, Bitfarms completed its acquisition of Stronghold Digital Mining.

“The Yguazu miners have been redeployed to Stronghold,” Toner said. “The company’s strategic shift towards HPC/AI creates new optionality for BITF, and we believe this transaction moves BITF one step closer towards its HPC/AI ambitions.”

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