- Bitfarms Deployed 10,000 Miners at Stronghold’s Scrubgrass Facility, Improving Operational Efficiency
- Shares of Bitfarms have continued to fall amid broader market pressure.
Bitfarms, a prominent player in Bitcoin [BTC] mining industry known for its vertically integrated data center operations has strengthened its partnership with Stronghold Digital Mining. It has done this by entering into a second hosting agreement through one of its subsidiaries.
This agreement calls for the deployment of 10,000 miners at Stronghold’s Scrubgrass facility in Pennsylvania. This implies a shift from the originally planned location in Yguazu, Paraguay.
These miners are expected to start operations in December 2024. This is expected to boost Bitfarms’ capabilities and strengthen its position in the cryptocurrency mining industry.
Managers weigh in…
I’m noticing the same thing, CEO Ben Gagnon said,
“Optimizing our assets with these rapid upgrades at Stronghold’s Pennsylvania locations will deliver significant value to Bitfarms in the near term.”
Gagnon further emphasized that Bitfarms’ deployment of 20,000 highly efficient miners, in collaboration with Stronghold’s energy facilities, aims to improve the overall efficiency of the fleet while reducing operational costs.
Thus, by integrating mining directly with Stronghold’s power generation capabilities, Bitfarms would minimize additional capital expenditures and gain greater control over energy costs.
This arrangement would not only facilitate energy trading but also enable operational flexibility. This will allow the company to adjust mining operations based on energy market conditions to optimize profitability.
He added:
“We look forward to completing our acquisition of Stronghold and executing our strategy to grow and diversify our U.S. footprint beyond Bitcoin mining.”
Details of the agreement
The Hosting Agreement between Bitfarms and Stronghold runs until December 31, 2025, with annual automatic renewals unless canceled by either party.
Here it is worth noting that Bitfarms will share 50% of its mining profits with Stronghold.
That said, the company has already put up $7.8 million to cover estimated energy costs for the first three months. This amount will be fully refunded at the end of the first term.
This setup ensures operational continuity and provides Bitfarms with some flexibility and cost predictability in its mining efforts.
Bitfarms’ Bitcoin Strategy
In June, Bitfarms increased its Bitcoin production to 189 BTC, up from 156 BTC in May. It also sold 134 BTC for $8.8 million, bringing its total holdings to 905 BTC – worth about $57 million.
However, production in 2024 is down more than 50%, with only 1,557 BTC mined so far, compared to 2,520 BTC at the same time last year.
This decline is due to reduced productivity and lower rewards for miners, which are impacting returns in the crypto mining industry.
What do market trends indicate?
Finally, the latest data from IntoTheBlock revealed that Bitcoin mining rewards rose from 378.13 BTC ($23.37 million) in June to 493.75 BTC ($35.12 million) in October – a sign of a better reward structure for miners.
Source: IntoTheBlock
In the midst of it all, Bitfarms shares fell 10% in after-hours trading to $1.96 and fell to $1.93. This coincided with a 2.61% drop in the value of Bitcoin, with the crypto at $70,140.91 at the time of writing.
On the contrary, when Bitcoin was in a bullish phase, mining stocks saw impressive gains, with some experiencing increases of up to 24.4%. For example, Riot Platforms, a leading force in Bitcoin mining, reported a 65% increase in year-over-year revenue.