Exhibit 99.2
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(Expressed in thousands of U.S. dollars - audited)
BITFARMS LTD.
TABLE OF CONTENTS
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BITFARMS LTD.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Bitfarms Ltd.
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of Bitfarms Ltd. and its subsidiaries (together, the Company) as of December 31, 2023 and 2022, and the related consolidated statements of profit or loss and comprehensive profit or loss, changes in equity and cash flows for the years then ended, including the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Restatement of Previously Issued Financial Statements
As discussed in Note 3(e) to the consolidated financial statements, the Company has restated its 2022 financial statements to correct errors.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Canada
March 6, 2024
We have served as the Company’s auditor since 2020.
PricewaterhouseCoopers LLP
PwC Tower, 18 York Street, Suite 2500, Toronto, Ontario, Canada M5J 0B2
T: +1 416 863 1133, F: +1 416 365 8215, ca_toronto_18_york_fax@pwc.com
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
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| BITFARMS LTD. |
| CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
| (Expressed in thousands of U.S. dollars - audited) |
| As of December 31, | As of December 31, | As of January 1, | ||||||||||||||
| Notes | 2023 | 2022 (restated - Note 3e) | 2022 (restated - Note 3e) | |||||||||||||
| Assets | ||||||||||||||||
| Current | ||||||||||||||||
| Cash | 6 | |||||||||||||||
| Trade receivables | 7 | |||||||||||||||
| Other assets | 8 | |||||||||||||||
| Short-term prepaid deposits | 12 | |||||||||||||||
| Taxes receivable | ||||||||||||||||
| Digital assets | 9 | |||||||||||||||
| Digital assets - pledged as collateral | 9, 17 | |||||||||||||||
| Derivative assets | 10 | |||||||||||||||
| Assets held for sale | 11 | |||||||||||||||
| Non-current | ||||||||||||||||
| Property, plant and equipment | 13, 29 | |||||||||||||||
| Right-of-use assets | 18 | |||||||||||||||
| Long-term deposits, equipment prepayments and other | 15 | |||||||||||||||
| Intangible assets | 14 | |||||||||||||||
| Goodwill | 12 | |||||||||||||||
| Deferred tax asset | 19 | |||||||||||||||
| Total assets | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Current | ||||||||||||||||
| Trade payables and accrued liabilities | 16 | |||||||||||||||
| Current portion of long-term debt | 17 | |||||||||||||||
| Current portion of lease liabilities | 18 | |||||||||||||||
| Credit facility | ||||||||||||||||
| Taxes payable | ||||||||||||||||
| Warrant liabilities | 10, 21 | |||||||||||||||
| Non-current | ||||||||||||||||
| Long-term debt | 17 | |||||||||||||||
| Lease liabilities | 18 | |||||||||||||||
| Asset retirement provision | 20 | |||||||||||||||
| Deferred tax liability | 19 | — | ||||||||||||||
| Total liabilities | ||||||||||||||||
| Shareholders’ equity | ||||||||||||||||
| Share capital | ||||||||||||||||
| Contributed surplus | ||||||||||||||||
| Revaluation surplus | ||||||||||||||||
| Accumulated deficit | ( | ) | ( | ) | ( | ) | ||||||||||
| Total equity | ||||||||||||||||
| Total liabilities and equity | ||||||||||||||||
Should be read in conjunction with the notes to the consolidated financial statements
| March 6, 2024 | /s/ Nicolas Bonta | /s/ Geoffrey Morphy | /s/ Jeffrey Lucas | |||
| Date
of approval of the financial statements |
Chairman of the Board of Directors |
President
& Chief Executive Officer |
Chief Financial Officer |
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| BITFARMS LTD. |
| CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND COMPREHENSIVE PROFIT OR LOSS |
| (Expressed in thousands of U.S. dollars, except per share amounts - audited) |
| Year ended December 31, | ||||||||||||
| Notes | 2023 | 2022 (restated - Note 3e) | ||||||||||
| Revenues | 9, 29 | |||||||||||
| Cost of revenues | 28 | |||||||||||
| Gross (loss) profit | ( | ) | ||||||||||
| Operating expenses | ||||||||||||
| General and administrative expenses | 28 | |||||||||||
| Realized loss on disposition of digital assets | 9 | |||||||||||
| Reversal of revaluation loss on digital assets | 9 | ( | ) | ( | ) | |||||||
| Loss on disposition of property, plant and equipment | ||||||||||||
| Impairment on short-term prepaid deposits, equipment and construction prepayments, property, plant and equipment and right-of-use assets | 12 | |||||||||||
| Impairment on goodwill | 12 | |||||||||||
| Operating loss | ( | ) | ( | ) | ||||||||
| Net financial expenses (income) | 28 | ( | ) | |||||||||
| Net loss before income taxes | ( | ) | ( | ) | ||||||||
| Income tax recovery | 19 | ( | ) | ( | ) | |||||||
| Net loss | ( | ) | ( | ) | ||||||||
| Other comprehensive income (loss) | ||||||||||||
| Item that will not be reclassified to profit or loss: | ||||||||||||
| Change in revaluation surplus - digital assets, net of tax | 9 | |||||||||||
| Total comprehensive loss, net of tax | ( | ) | ( | ) | ||||||||
| Loss per share | 26 | |||||||||||
| ( | ) | ( | ) | |||||||||
| Weighted average number of common shares outstanding | 26 | |||||||||||
Should be read in conjunction with the notes to the consolidated financial statements
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| BITFARMS LTD. |
| CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY |
| (Expressed in thousands of U.S. dollars, except number of shares - audited) |
| Notes | Number of shares | Share capital |
Contributed surplus | Accumulated deficit | Revaluation surplus | Total equity | ||||||||||||||||||||||
| Balance as of January 1, 2023 (restated - Note 3e) | ( | ) | ||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Change in revaluation surplus - digital assets, net of tax | — | |||||||||||||||||||||||||||
| Total comprehensive loss, net of tax | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Transfer of revaluation surplus on disposal of digital assets to accumulated deficit, net of tax | — | ( | ) | |||||||||||||||||||||||||
| Share-based payment | 27 | — | ||||||||||||||||||||||||||
| Issuance of common shares and warrants | 21 | |||||||||||||||||||||||||||
| Settlement of restricted share units | 27 | ( | ) | |||||||||||||||||||||||||
| Exercise of stock options and warrants | 21, 27 | ( | ) | |||||||||||||||||||||||||
| Balance as of December 31, 2023 | ( | ) | ||||||||||||||||||||||||||
| Balance as of January 1, 2022 (restated - Note 3e) | ( | ) | ||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Share-based payment | 27 | — | ||||||||||||||||||||||||||
| Issuance of common shares and warrants | 21 | |||||||||||||||||||||||||||
| Deferred tax expense related to equity issuance costs | 19 | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Exercise of stock options | 21, 27 | ( | ) | |||||||||||||||||||||||||
| Balance as of December 31, 2022 (restated - Note 3e) | ( | ) | ||||||||||||||||||||||||||
Should be read in conjunction with the notes to the consolidated financial statements
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| BITFARMS LTD. |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (Expressed in thousands of U.S. dollars - audited) |
| Year ended December 31, | ||||||||||||
| Notes | 2023 | 2022 (restated - Note 3e) | ||||||||||
| Cash flows from operating activities | ||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||
| Adjustments for: | ||||||||||||
| Depreciation and amortization | 28 | |||||||||||
| Impairment on short-term prepaid deposits, equipment and construction prepayments, property, plant and equipment and right-of-use assets | 12 | |||||||||||
| Impairment on goodwill | 12 | |||||||||||
| Net financial expenses (income) | 28 | ( | ) | |||||||||
| Digital assets earned | 9 | ( | ) | ( | ) | |||||||
| Proceeds from sale of digital assets earned | 9 | |||||||||||
| Realized loss on disposition of digital assets | 9 | |||||||||||
| Reversal of revaluation loss on digital assets | 9 | ( | ) | ( | ) | |||||||
| Share-based payment | 27 | |||||||||||
| Income tax recovery | 19 | ( | ) | ( | ) | |||||||
| Loss on disposition of property, plant and equipment | ||||||||||||
| Interest and financial expenses paid | ( | ) | ( | ) | ||||||||
| Income taxes refunded (paid) | ( | ) | ||||||||||
| Changes in non-cash working capital components | 30 | ( | ) | |||||||||
| Net change in cash related to operating activities | ||||||||||||
| Cash flows used in investing activities | ||||||||||||
| Purchase of property, plant and equipment | ( | ) | ( | ) | ||||||||
| Proceeds from sale of property, plant and equipment | ||||||||||||
| Purchase of marketable securities | 28 | ( | ) | ( | ) | |||||||
| Proceeds from disposition of marketable securities | 28 | |||||||||||
| Acquisitions of assets | 5 | ( | ) | |||||||||
| Purchase of digital assets | 9 | ( | ) | |||||||||
| Proceeds from sale of digital assets purchased | 9 | |||||||||||
| Equipment and construction prepayments | ( | ) | ( | ) | ||||||||
| Net change in cash related to investing activities | ( | ) | ( | ) | ||||||||
| Cash flows from financing activities | ||||||||||||
| Issuance of common shares and warrants | 21 | |||||||||||
| Repayment of long-term debt | 17 | ( | ) | ( | ) | |||||||
| Proceeds from long-term debt | 17 | |||||||||||
| Repayment of lease liabilities | 18 | ( | ) | ( | ) | |||||||
| Exercise of stock options and warrants | 21, 27 | |||||||||||
| Proceeds from credit facility | ||||||||||||
| Repayment of credit facility | ( | ) | ||||||||||
| Net change in cash related to financing activities | ||||||||||||
| Net increase (decrease) in cash | ( | ) | ||||||||||
| Cash, beginning of the year | ||||||||||||
| Exchange rate differences on currency translation | ||||||||||||
| Cash, end of the year | ||||||||||||
Should be read in conjunction with the notes to the consolidated financial statements
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| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 1: | NATURE OF OPERATIONS |
Bitfarms Ltd. was incorporated under the Canada Business Corporations Act on October 11, 2018 and continued under the Business Corporations Act (Ontario) on August 27, 2021. The consolidated financial statements of the corporation comprise the accounts of Bitfarms Ltd. and its wholly-owned subsidiaries (together referred to as the “Company” or “Bitfarms”). The common shares of the Company are listed on the Nasdaq Stock Market and the Toronto Stock Exchange (NASDAQ/TSX: BITF). Its registered office is located on 110 Yonge Street, Suite 1601, Toronto, Ontario, Canada, M5C 1T4.
The activities of the Company mainly consist of selling its computational power used for hashing calculations for the purpose of cryptocurrency mining in multiple jurisdictions as described in Note 29 “Geographical Information”. The Company’s operations are currently located in Canada, the United States, Argentina and Paraguay. Volta, a wholly-owned subsidiary of the Company, assists the Company in building and maintaining its server farms and provides electrician services to both commercial and residential customers in Quebec.
Bitfarms owns and operates server farms comprised of computers (referred to as “Miners”) designed for the purpose of validating transactions on the Bitcoin Blockchain (referred to as “Mining”). Bitfarms generally operates its Miners 24 hours a day, which produce computational power used for hashing calculations (measured by hashrate) that Bitfarms sells to a Mining Pool under a formula-driven rate commonly known in the industry as Full Pay Per Share (“FPPS”). Under FPPS, Mining Pools compensate Mining companies for their computational power used for hashing calculations, measured through hashrate, based on what the Mining Pool would expect to generate in revenue for a given time period if there was no randomness involved. The fee paid by a Mining Pool to Bitfarms for its computational power used for hashing calculations may be in cryptocurrency, U.S. dollars, or another currency. However, the fees are generally paid to the Company in BTC on a daily basis. Bitfarms accumulates the cryptocurrency fees it receives or exchanges them for U.S. dollars through reputable and established cryptocurrency trading platforms.
Terms and definitions
| Term | Definition | |
| 1 | Backbone Hosting Solutions Inc. | |
| 2 | 9159-9290 Quebec Inc. | |
| 3 | Backbone Hosting Solutions SAU | |
| 4 | Backbone Hosting Solutions Paraguay SA | |
| 5 | Backbone Mining Solutions LLC | |
| 6 | Orion Constellation Technologies Inc. | |
| 7 | Bitcoin | |
| 8 | Blockchain Verification and Validation Equipment (primarily Miners) | |
| 9 | Canadian Dollars | |
| 10 | U.S. Dollars | |
| 11 | Argentine Pesos |
| 8 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 2: | LIQUIDITY |
Bitfarms is primarily engaged in the cryptocurrency Mining industry, a highly volatile industry subject to significant inherent risk. Declines in the market prices of cryptocurrencies, an increase in the difficulty of BTC mining, delays in the delivery of Mining equipment, changes in the regulatory environment and adverse changes in other inherent risks can significantly and negatively impact the Company’s operations and cash flows and its ability to maintain sufficient liquidity to meet its financial obligations. Adverse changes to the factors mentioned above have impacted the recoverability of the Company’s digital assets and property, plant and equipment, resulting in impairment losses being recorded.
The Company’s current operating budget and future estimated cash flows indicate that the Company will generate positive cash flow in excess of the Company’s cash commitments within the twelve-month period. These analyses are based on BTC market factors including price, difficulty and network hashrate, for the twelve-month period following the date these consolidated financial statements were authorized for issuance.
At current BTC prices, the Company’s existing cash resources and the proceeds from any sale of its BTC treasury and BTC earned may not be sufficient to fund capital investments to support its growth objectives. If the proceeds from the sale of BTC are not sufficient, the Company would be required to raise additional funds from external sources to meet these requirements. There is no assurance that the Company will be able to raise such additional funds on acceptable terms, if at all.
If the Company raises additional funds by issuing securities, existing shareholders may be diluted. If the Company is unable to obtain financing from external sources or issuing securities, or if funds from operations and proceeds from any sale of the Company’s BTC holdings are negatively impacted by the BTC price, the Company may have difficulty meeting its payment obligations.
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| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 3: | BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION |
The following accounting policies have been applied consistently in the consolidated financial statements for all periods presented unless otherwise stated.
| a. | Basis of presentation of the financial statements |
The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”). These consolidated financial statements were approved and authorized for issue by the Board of Directors on March 6, 2024.
The consolidated financial statements have been prepared on a cost basis, except for derivative financial instruments and digital assets that are measured at fair value. The consolidated financial statements are presented in U.S. dollars and all values are rounded to the nearest thousand, except where otherwise indicated.
| b. | Material accounting policy information |
Presentation of profit and loss
The Company has elected to present the profit or loss items using the function of expense method.
The operating cycle
The operating cycle of the Company is to exchange computational power used for hashing calculations for digital assets and then routinely deposit them into custody, or convert them to fiat currency as needed. The Company’s activities have a one-year operating cycle. Accordingly, the assets and liabilities are classified in the statement of financial position as current assets and liabilities based on the Company’s operating cycle.
Consolidated financial statements
These financial statements consolidate the Company’s subsidiaries from the date of acquisition until the date that control is lost. The subsidiaries are controlled by the Company, where control is achieved when the Company is exposed to or has the right to variable returns from its involvement with the investee and has the current ability to direct the activities of the investee that significantly affect the investee’s returns.
The financial statements of the Company and its subsidiaries are prepared as of the same dates and periods. The consolidated financial statements are prepared using uniform accounting policies by all subsidiaries of the Company. Significant intercompany balances and transactions and gains or losses resulting from intercompany transactions are eliminated in full in the consolidated financial statements.
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| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 3: | BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued) |
| b. | Material accounting policy information (Continued) |
Goodwill
Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests and any previous interest held over the fair value of the net identifiable assets acquired and liabilities assumed).
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company’s cash-generating units (“CGUs”) or group of CGUs that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
A CGU or group of CGUs to which goodwill has been allocated are tested for impairment annually or more frequently when there is an indication that the CGU or group of CGUs may be impaired. If the recoverable amount of the CGU or group of CGUs is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU or group of CGUs and then to the other assets of the CGU or group of CGUs on a pro-rata basis of the carrying amount of each asset in the CGU or group of CGUs. An impairment loss recognized for goodwill is not reversed in a subsequent period. The Company has designated December 31 as the date for its annual impairment test.
Foreign currency translation
| i. | Functional currency and presentation currency |
The financial statements are presented in U.S. Dollars, which is the functional currency of the parent company, as well as the functional currency of Backbone, Backbone Argentina, Backbone Paraguay, Backbone Mining and Orion. The functional currency is the currency that best reflects the economic environment in which the Company operates and conducts its transactions.
The Company determines the functional currency of each subsidiary. Volta, a Canadian subsidiary, has a Canadian functional currency, and, as such, assets and liabilities are translated using the exchange rate in effect at each reporting date. Revenues and expenses are translated using the average exchange rates in effect for all periods presented. The resulting translation differences are included in other comprehensive income. The translation differences on foreign currency translation of Volta were immaterial for the years ended December 31, 2023 and December 31, 2022.
| ii. | Transactions, assets and liabilities in foreign currency |
Transactions in foreign currency are initially recorded at the exchange rate in effect on the transaction date. Monetary assets and liabilities in foreign currency are subsequently translated into the functional currency at the exchange rate in effect at each reporting date. Exchange rate differences, other than those capitalized to qualifying assets or carried to equity in hedging transactions, are included in profit or loss. Non-monetary assets and liabilities in foreign currency stated at cost are translated at the exchange rate in effect at the transaction date. Non-monetary assets and liabilities in foreign currency carried at fair value are translated at the exchange rate at the date on which the fair value was determined.
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| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 3: | BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued) |
| b. | Material accounting policy information (Continued) |
Revenue recognition
Revenue from contracts with customers is recognized when control over the goods or services is transferred to the customer. The transaction price is the amount of the consideration that is expected to be received based on the contract terms, excluding amounts collected on behalf of third parties (such as taxes). The following are the specific revenue recognition criteria which must be met before revenue is recognized:
| i. | Revenues from sale of computational power used for hashing calculations |
The Company has entered into arrangements with a Mining pool and has undertaken the performance obligation of providing computing power used for hashing calculations to the Mining pool in exchange for non-cash consideration in the form of cryptocurrency, which is variable consideration. The cryptocurrency earnings are calculated based on a formula which, in turn, is based on the hashrate contributed by the Company's provided computing power used for hashing calculations allocated to the Mining pool, assessed over a 24-hour period, and distributed daily based on the FPPS methodology. The Company assesses the estimated amount of the variable non-cash consideration to which it expects to be entitled for providing computational power used for hashing calculations at contract inception and subsequently measures if it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. The uncertainties regarding the daily variable consideration to which the Company is entitled for providing its computational power used for hashing calculations are no longer constrained at 23:59:59 UTC regardless of the timing of the BTC received. The amount earned is calculated based on the Company's computing power used for hashing calculations provided to the Mining pool and the estimated (i) block subsidies and (ii) daily average transaction fees which the Mining Pool expects to earn, less (iii) a Mining pool discount.
(i) Block subsidies refers to the block reward that are expected to be generated on the BTC network as a whole. The fee earned by the Company is first calculated by dividing (a) the total amount of hashrate the Company provides to the Mining pool operator, by (b) the total BTC network’s implied hashrate (as determined by the BTC network difficulty), multiplied by (c) the total amount of block subsidies that are expected to be generated on the BTC network as a whole.
(ii) Transaction fees refers to the total fees paid by users of the network to execute transactions. The fee paid out by the Mining pool operator to the Company is further calculated by dividing (a) the total amount of transaction fees that are actually generated on the BTC network as a whole less the 3 largest and 3 smallest transactions per block, by (b) the total amount of block subsidies that are actually generated on the BTC network as a whole, multiplied by (c) the Company’s fee earned as calculated in (i) above. The Company is entitled to its relative share of consideration even if a block is not successfully added to the blockchain by the mining pool.
(iii) Mining pool discount refers to the discount applied to the total FPPS payout otherwise attributed to computing power service providers for their sale of computing power used for hashing calculations as defined in the rate schedule of the agreement with the Mining pool operator.
The Company is entitled to the fee from the Mining Pool as calculated above regardless of the actual performance of the Mining Pool operator. Therefore, even if the Mining Pool does not successfully add any block to the blockchain in a given contract period, the fee remains payable by the Mining Pool to the Company. Accordingly, the Company is not sharing in the earnings of the Mining pool operator.
| 12 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 3: | BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued) |
| b. | Material accounting policy information (Continued) |
Revenue recognition (Continued)
| i. | Revenues from sale of computational power used for hashing calculations (Continued) |
The Company’s agreements with the Mining pool operator provide the Mining pool operator and the Company with the enforceable right to terminate the contract at any time without substantively compensating the other party for the termination. Upon termination, the Mining pool operator is required to pay the Company the amount due related to previously satisfied performance obligations. As a result, the Company has determined that the duration of the contract is less than 24 hours and the contract is continuously renewed throughout the day. The Company has also determined that the Mining pool operator’s renewal right is not a material right as the terms, conditions, and compensation amounts are at then-current market rates.
The cryptocurrency earned is received in full and can be paid in fractions of cryptocurrency. Revenues from providing cryptocurrency computational power used for hashing calculations are recognized upon delivery of the service over a 24-hour period, which generally coincides with the receipt of crypto assets in exchange for the provision of computational power used for hashing calculations and the contract inception date. The Company updates the estimated transaction price of the non-cash consideration received at its fair market value. Management estimates fair value daily based on the quantity of cryptocurrency received multiplied by the price quoted from Coinbase Inc. (“Coinbase”) on the day it was received. Management considers the prices quoted on Coinbase to be a level 1 input under IFRS 13, Fair Value Measurement.
| ii. | Revenue from electrical services |
The Company, through Volta, sells electrical components and provides electrician installation of those components as well as repair and maintenance services. Revenues are recognized according to the stage of completion of the transaction as of the balance sheet date. The stage of completion is estimated based on the costs incurred for the transaction compared to the estimated cost of completion for the project. Under this method, revenues are recognized in the reporting period in which the services are provided. In the event that the outcome of the contract cannot be measured reliably, the revenues are recognized to the extent of the recoverable expenses incurred.
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| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 3: | BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued) |
| b. | Material accounting policy information (Continued) |
Digital assets
Cryptocurrency on hand at the end of a reporting period, if any, is classified as digital assets, and is accounted for under IAS 38, Intangible Assets, as an intangible asset with an indefinite useful life initially measured at cost, deemed to be the fair value upon receipt as described above, and subsequently measured under the revaluation model. Under the revaluation model, increases in the cryptocurrency’s carrying amount, determined as the excess of fair value on revaluation over the weighted average cost, are recognized in other comprehensive income, except to the extent that they reverse a revaluation decrease previously recognized in profit or loss. Decreases are recognized in profit or loss, except to the extent that they reverse a revaluation increase previously recognized in other comprehensive income. Once the cryptocurrency is sold, the revaluation increase related to it is transferred from revaluation surplus to retained earnings. The Company revalues its cryptocurrency on hand on a monthly basis and following any significant fair value fluctuations. The fair value of cryptocurrency on hand at the end of the reporting period is calculated as the quantity of cryptocurrency on hand multiplied by the price quoted on Coinbase as of the reporting date.
The Company reports cryptocurrency on hand at the end of the reporting period as digital assets, which are classified as current assets as Management has determined that the cryptocurrency on hand at the end of the reporting period has markets with sufficient liquidity to allow conversion within the Company’s normal operating cycle and the Company expects to realize the digital asset within twelve months after the reporting period. The Company presents cryptocurrency pledged as collateral separate from unencumbered cryptocurrency.
Income tax
The income tax expense for the year comprises current and deferred taxes. These taxes are recognized in profit or loss except to the extent they relate to items which are recognized in other comprehensive income or loss or directly in shareholders’ equity.
| i. | Current taxes |
The current tax liability is measured using the tax rates and tax laws that have been enacted or substantively enacted by the reporting date as well as adjustments required in connection with tax liabilities in respect of previous years.
| ii. | Deferred taxes |
Deferred taxes are computed in respect of temporary differences between the carrying amounts in the financial statements and the amounts attributed for tax purposes. Deferred taxes are measured at the tax rate that is expected to apply when the asset is realized, or the liability is settled, based on tax laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is not probable they will be utilized. Deductible carryforward losses and temporary differences for which deferred tax assets had not been recognized are reviewed at each reporting date and a respective deferred tax asset is recognized to the extent that their utilization is probable.
Taxes that would apply in the event of the disposal of investments in investees have not been taken into account in computing deferred taxes as long as the disposal of the investments in investees is not probable in the foreseeable future.
| 14 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 3: | BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued) |
| b. | Material accounting policy information (Continued) |
Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. The determination is based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Company as a lessee applies a single recognition and measurement approach for all leases except for short-term leases and leases of low-value assets. The Company recognizes lease liabilities to make lease payments and right-of-use assets (“ROU assets”) representing the right to use the underlying assets.
| i. | ROU assets |
The Company recognizes ROU assets at the commencement
date of the lease (i.e., the date the underlying asset is available for use). ROU assets are measured at cost, less any accumulated depreciation
and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of ROU assets includes the amount of lease liabilities
recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received.
| Asset Class | Depreciation Method | Depreciation period | ||
| Leased premises | ||||
| Vehicles and other | ||||
| BVVE and Electrical components |
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, the asset is depreciated over the estimated useful life of the asset and is classified with property plant and equipment. Refer to the accounting policies of property, plant and equipment in this note. The ROU assets are also subject to impairment. Refer to the accounting policies of Impairment of non-financial assets in this note.
| 15 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 3: | BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued) |
| b. | Material accounting policy information (Continued) |
Leases (Continued)
| ii. | Lease liabilities |
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
| iii. | Short-term leases and leases of low value assets |
The Company applies the short-term lease recognition exemption to its short-term leases of machinery, equipment and farming facilities (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). The Company also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognized as an expense on a straight-line basis over the lease term.
Assets held for sale
Non-currents assets or a disposal group are classified as held for sale if their carrying amount is expected to be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the assets must be available for immediate sale in their present condition, the Company must be committed to their sale, there must be a program to locate a buyer, and it is highly probable that a sale will be completed within one year from the date of classification. From the date of such initial classification, the assets are no longer depreciated and are presented separately as current assets at the lower of their carrying amount and fair value less costs to sell. The gain or loss on disposition of assets held for sale will be presented separately in other comprehensive income (loss) only when it qualifies as part of discontinued operations.
When an entity no longer plans to sell an asset in a sale transaction, it ceases the classification of the asset as held for sale and measures it at the lower of its carrying amount had it not been classified as held for sale or the recoverable amount of the asset on the date of the decision not to sell the asset.
| 16 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 3: | BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued) |
| b. | Material accounting policy information (Continued) |
Property, plant and equipment
Property, plant and equipment are carried at cost, including directly attributable costs, less accumulated depreciation, accumulated impairment losses and any related investment grants, and excluding day-to-day servicing expenses. Cost includes spare parts and auxiliary equipment that are used in connection with plant and equipment. The cost of an item of property, plant and equipment includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which the item is located.
| Asset Class | Depreciation Method | Depreciation period | ||
| BVVE | ||||
| Mineral assets * | ||||
| Electrical equipment | ||||
| Leasehold improvements | ||||
| Buildings | ||||
| Vehicles |
*
The useful life, depreciation method and residual value of an asset are reviewed at least each year-end and any changes are accounted for prospectively as a change in accounting estimate. Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale and the date that the asset is derecognized.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||||||
| Rate | ||||||||||
| Percentage |
Intangible assets
Intangible assets consist of acquired software, access rights to electricity, and a below market lease acquired in a business combination used in the Company’s cryptocurrency Mining operations. Intangible assets acquired separately are initially measured at cost plus direct acquisition costs. Intangible assets acquired in business combinations are measured at their fair value as of the acquisition date.
Intangible assets, other than access rights to electricity and favorable lease, with a finite useful life are amortized over their useful lives using the sum of years method. Access rights to electricity and favorable leases are amortized using the straight-line method over the lease term of the facility or the access rights period. Intangible assets are reviewed for impairment whenever there is an indication that the asset may be impaired. The amortization period and the amortization method for an intangible asset are reviewed at least at each year end.
| 17 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 3: | BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued) |
| b. | Material accounting policy information (Continued) |
Intangible assets (Continued)
| Asset Class | Amortization Method | Amortization period | ||
| Systems software | ||||
| Access rights to electricity | ||||
| Favorable lease |
| i. | Systems software |
The Company’s assets include computer systems comprised of hardware and software. Certain hardware comes pre-installed with firmware. Without this firmware, the hardware could not function and therefore both the hardware and firmware are classified within property, plant and equipment. In contrast, stand-alone software that adds functionality to the hardware is classified as an intangible asset.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||||||
| Rate | ||||||||||
| Percentage |
| ii. | Access rights to electricity |
The Company’s access rights to electricity were obtained from the acquisitions of assets described in Note 5.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker, who is responsible for allocating resources and assessing the performance of the operating segments, and which has been identified as the Management team that makes strategic decisions.
Impairment of non-financial assets
The Company evaluates the need to record an impairment of non-financial assets whenever events or changes in circumstances indicate that the carrying amount is not recoverable. If the carrying amount of non-financial assets exceeds their recoverable amount, the assets are reduced to their recoverable amount. The recoverable amount is the higher of fair value less costs of sale and value in use. In measuring value in use, the expected future cash flows are discounted using a pre-tax discount rate that reflects the risks specific to the asset. The recoverable amount of an asset that does not generate independent cash flows is determined for the CGU to which the asset belongs. Impairment losses are recognized in profit or loss.
An impairment loss of an asset, other than goodwill, is reversed only if there have been changes in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. Reversal of an impairment loss, as noted above, shall not be increased above the lower of the carrying amount that would have been determined (net of depreciation or amortization) had no impairment loss been recognized for the asset in prior years and its recoverable amount. The reversal of impairment loss of an asset presented at cost is recognized in profit or loss.
| 18 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 3: | BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued) |
| b. | Material accounting policy information (Continued) |
Financial instruments
| i. | Financial assets |
Initial recognition and measurement
Financial assets are initially measured at fair value plus transaction costs that can be directly attributed to the acquisition of the financial asset, except in the case of a financial asset measured at fair value through profit or loss in respect of which transaction costs are charged to profit or loss.
Subsequent measurement
Financial assets presented at amortized cost are subsequently measured using the effective interest rate method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired. The Company’s financial assets at amortized cost includes trade receivables and certain items included in other assets. Net changes in financial assets measured at fair value are recognized in the statement of profit or loss. The Company’s financial assets at fair value include derivative assets.
Impairment
The Company recognizes an allowance for expected credit losses (“ECLs”) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
For trade receivables, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date.
The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
| 19 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 3: | BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued) |
| b. | Material accounting policy information (Continued) |
Financial instruments (Continued)
| ii. | Financial liabilities |
Initial recognition and measurement
Financial liabilities are classified at initial recognition at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company’s financial liabilities include trade payables, accrued liabilities, warrant liabilities and long-term debt.
Subsequent measurement
Financial liabilities are either measured at fair value through profit or loss or at amortized cost. Financial liabilities measured at fair value through profit or loss included warrant liabilities relating to the private placement described in Note 3e, 10 and 21. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate (“EIR”) method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as financial expenses in the statement of profit or loss. This category generally applies to interest-bearing loans and borrowings.
| iii. | Derecognition of financial assets |
Financial assets are derecognized when the contractual rights to receive the cash flows from the financial asset expire, or when the Company transfers the contractual rights to a third party to receive the cash flows from the financial asset or assumes an obligation to pay the cash flows received in full to a third party without significant delay.
| iv. | Derecognition of financial liabilities |
Financial liabilities are derecognized when they are extinguished, which occurs when the obligation defined in the contract is fulfilled, cancelled or expires. A financial liability is fulfilled when the debtor repays the liability by paying cash, providing other financial assets, goods or services, or is otherwise legally released from the liability.
| v. | Cash flow hedges |
The company entered into BTC option contracts to reduce the risk of variability of cash flows resulting from future sales of digital assets. Each BTC option contract meets the definition of a cash flow hedge as per IFRS 9, Financial Instruments (“IFRS 9”). IFRS 9 provides a non-compulsory accounting policy choice of hedge accounting. The Company elected to not apply hedge accounting on BTC option contracts. The changes in the fair value of the derivatives are recognized in profit or loss.
| 20 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 3: | BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued) |
| b. | Material accounting policy information (Continued) |
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Fair value measurement is based on the assumption that the transaction will take place in the asset’s or the liability’s principal market, or in the absence of a principal market, in the most advantageous market. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. Fair value measurement of non-financial assets takes into account the ability of a market participant to derive economic benefits from the asset through its best use, or by selling it to another market participant capable of using the asset to its best use.
| Level | Definition | |
| Level 1 | ||
| Level 2 | ||
| Level 3 |
Provisions
Provisions represent liabilities to the Company for which the amount or timing is uncertain. Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligations and the amounts can be reliably estimated. When the Company expects that part or all of the expense will be refunded, such as an insurance claim, the refund will be recognized as a separate asset only on the date when there is certainty of receiving the asset. The expense will be recognized in the statement of profit or loss net of the expected refund.
Asset retirement provisions
These provisions relate to Backbone and Backbone Argentina’s legal obligation, in relation to its leased properties, to restore the properties to their original condition at the end of the lease period. The provisions are calculated at the present value of the expected costs to settle the obligations using estimated future cash flows discounted at a rate that reflects the risks specific to the obligations. Changes in the estimated future costs, or in the discount rate applied, are recorded as an adjustment of the cost of the related asset.
| 21 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 3: | BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued) |
| b. | Material accounting policy information (Continued) |
Share-based transactions
Transactions settled with equity instruments
The cost of employee services paid in equity instruments is measured at the fair value of the equity instruments as of the grant date. The fair value is determined using a generally accepted option pricing model. Equity settled transactions with other services providers are measured at the fair value of the goods or services received in return for the equity instruments. The cost of equity-settled transactions is recognized in profit or loss together with a corresponding increase in contributed surplus during the period in which the performance and/or service conditions are to be satisfied and ending on the date on which the relevant employees become entitled to the award (“the vesting period”). The cumulative expense recognized for equity-settled transactions at the end of each reporting period until the vesting date reflects the extent to which the vesting period has expired and Management’s best estimate of the number of equity instruments that will ultimately vest.
Expenses related to grants that do not vest are not recognized. Grants where the fair value is determined at the date of the grant based on non-vesting market conditions are treated as vested, assuming all other vesting conditions (service and/or performance) are met.
When the Company modifies the terms of equity-settled transactions, an additional expense is recognized on the date of the modification and is calculated as the increase in the fair value of the compensation granted in excess of the original expense. Cancellation of equity settlement that has not vested is treated as if it had vested on the date of cancellation, with the unrecognized expense recognized immediately. However, if the cancellation is subsequently replaced by a new agreement and is designated as an alternative settlement, then it is treated as a modification of the original agreement as described above.
Earnings per share
Earnings per share is calculated by dividing the net income attributable to the Company’s shareholders by the weighted average number of common shares outstanding during the period. Potential common shares are included in the calculation of diluted earnings per share if their effect dilutes earnings per share from continuing operations. Potential common shares that were converted during the period are included in diluted earnings per share only up to the conversion date, and from that date are included in basic earnings per share.
Share capital and issue of a unit of securities
Share capital represents the amount received on the issuance of shares, less issuance costs (net of tax).
The issue of a unit of securities involves the allocation of the proceeds received before issue expenses to the securities issued in the unit based on the following order: financial derivatives and other financial instruments measured at fair value in each period. Fair value is then determined for financial liabilities that are measured at amortized cost. The proceeds allocated to equity instruments are determined to be the residual amount. Issue costs are allocated to each component pro rata to the amounts determined for each component in the unit.
| 22 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 3: | BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued) |
| c. | New accounting amendments issued and adopted by the Company |
The following amendments to existing standards were adopted by the Company as of January 1, 2023:
Amendments to IAS 1, Presentation of Financial Statements (“IAS 1”)
Amendments to IAS 1 change the requirements in IAS 1 with regard to disclosure of accounting policies. Applying the amendments, an entity discloses its material accounting policy information instead of its significant accounting policies. Further amendments to IAS 1 explain how an entity can identify material accounting policy information.
Amendments to IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”)
Amendments to IAS 8 replace the definition of a change in accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty.”
The adoption by the Company of the amendments listed above did not have a significant impact on the Company’s Financial Statements.
| d. | New accounting amendments issued to be adopted at a later date |
The following amendments to existing standards have been issued and are applicable to the Company for its annual period beginning on January 1, 2024:
Amendments to IFRS 16, Leases (“IFRS 16”)
Amendments to IFRS 16 require a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a manner that does not recognize any amount of the gain or loss that relates to the right-of-use retained. The new requirements do not prevent a seller-lessee from recognizing in profit or loss any gain or loss relating to the partial or full termination of a lease.
Amendments to IAS 1
Amendments to IAS 1 clarify how to classify debt and other liabilities as current or non-current. The amendments help to determine whether, in the consolidated financial statements, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. The amendments also include clarifying the classification requirements for debt that an entity might settle by converting into equity.
Amendments to IAS 1 specify that covenants to be complied with after the reporting date do not affect the classification of debt as current or non-current at the reporting date. Instead, the amendments require information about these covenants be disclosed in the notes to the financial statements.
Amendments to IAS 7, Statement of Cash Flows (“IAS 7”) and IFRS 7, Financial Instruments: Disclosures (“IFRS 7”)
Amendments to IAS 7 and IFRS 7 introduce disclosure requirements to enhance the transparency of supplier finance arrangements and their effects on an entity’s liabilities, cash flows and exposure to liquidity risk.
The Company is currently evaluating the impact of adopting the amendments on the Company’s consolidated financial statements.
| 23 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 3: | BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued) |
| e. | 2022 Restatement |
During the year ended December 31, 2023, the Company identified errors in its accounting for warrants issued in connection with certain private placement financings in 2021. The warrants are convertible for a fixed number of common shares of the Company but have a contingent cashless exercise clause, which results in a classification as a financial liability and measurement at fair value through profit and loss, not equity.
The effects of the restatement on the affected financial statement line items for the prior periods are as follows:
| As of December 31, | As of January 1, | |||||||||||
| 2021 (as reported) | Adjustments | 2022 (as restated) | ||||||||||
| Liabilities | ||||||||||||
| Current | ||||||||||||
| Warrant liabilities | ||||||||||||
| Total current liabilities | ||||||||||||
| Total liabilities | ||||||||||||
| Shareholders’ equity | ||||||||||||
| Share capital | ( | ) | ||||||||||
| Contributed surplus | ( | ) | ||||||||||
| Accumulated deficit | ( | ) | ( | ) | ( | ) | ||||||
| Total equity | ( | ) | ||||||||||
| Total liabilities and equity | ||||||||||||
| As of December 31, | As of December 31, | |||||||||||
| 2022 (as reported) | Adjustments | 2022 (as restated) | ||||||||||
| Liabilities | ||||||||||||
| Current | ||||||||||||
| Warrant liabilities | ||||||||||||
| Total current liabilities | ||||||||||||
| Total liabilities | ||||||||||||
| Shareholders’ equity | ||||||||||||
| Share capital | ( | ) | ||||||||||
| Contributed surplus | ( | ) | ||||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||||||
| Total equity | ( | ) | ||||||||||
| Total liabilities and equity | ||||||||||||
| 24 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 3: | BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued) |
| e. | 2022 Restatement (Continued) |
| Year ended December 31, | ||||||||||||
| 2022 (as reported) | Adjustments | 2022 (as restated) | ||||||||||
| Operating loss | ( | ) | ( | ) | ||||||||
| Net financial income | ( | ) | ( | ) | ( | ) | ||||||
| Net loss before income taxes | ( | ) | ( | ) | ||||||||
| Income tax recovery | ( | ) | ( | ) | ||||||||
| Net loss and total comprehensive loss | ( | ) | ( | ) | ||||||||
| Loss per share | ||||||||||||
| ( | ) | ( | ) | |||||||||
| Weighted average number of common shares outstanding | ||||||||||||
| Year ended December 31, | ||||||||||||
| 2022 (as reported) | Adjustments | 2022 (as restated) | ||||||||||
| Cash flows from operating activities | ||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||
| Adjustments for: | ||||||||||||
| Net financial income | ( | ) | ( | ) | ( | ) | ||||||
| Net change in cash related to operating activities | ||||||||||||
| 25 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 4: | SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES |
The preparation of the consolidated financial statements requires Management to undertake judgments, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. These judgments and estimates are based on Management’s best knowledge of the events or circumstances and actions the Company may take in the future. The actual results may differ from these assumptions and estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to assumptions and estimates are recognized in the period in which the assumption or estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Information about the significant judgments, estimates and assumptions that have the most significant effect on the recognition and measurement of assets, liabilities, income and expenses are discussed below.
| a. | Judgements |
Going concern
The Company has exercised judgment and used assumptions to determine that it will continue to operate as a going concern. Judgments and estimates were used to determine the Company’s future estimated cash flows for the twelve-month period following December 31, 2023, based on BTC market factors, including price, difficulty and network hashrate. Due to the sensitivity of cash flows to market conditions, small changes in these assumptions may give rise to the determination that there are material uncertainties.
Revenue recognition
There is currently no specific guidance for cryptocurrencies under IFRS Accounting Standards. However, judgement is still required due to the particular characteristics of mining cryptocurrencies. The Company applies judgement to account for the revenue recognition from cryptocurrency mining. In the event that new guidance is issued by the International Accounting Standards Board, the Company may be required to change its accounting policies, which could have a material effect on the Company’s financial statements.
Digital assets
There is currently no specific guidance for cryptocurrencies under IFRS Accounting Standards. However, judgement is still required due to the particular characteristics of holding cryptocurrencies. The Company applies judgement to account for the subsequent remeasurement of cryptocurrencies held under IAS 38, Intangible Assets. In the event that new guidance is issued by the International Accounting Standards Board, the Company may be required to change its accounting policies, which could have a material effect on the Company’s financial statements.
| b. | Estimates and assumptions |
Leases
The application of IFRS 16 requires the Company to make judgments and estimates that affect the valuation of the lease liabilities and the valuation of ROU assets. These include the determination of contracts in scope of IFRS 16, the lease term and the interest rate used for discounting future cash flows.
The Company measures the lease liability at the present value of the lease payments using the implicit interest rate in the lease at the commencement of a new lease or when a lease is modified. If the rate cannot be readily determined, the Company evaluates its incremental borrowing cost using assumptions and estimates.
| 26 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 4: | SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES (Continued) |
| b. | Estimates and assumptions (Continued) |
Leases (Continued)
The Company determines the lease term as the non-cancellable
term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or
any periods covered by an option to terminate the lease if it is reasonably certain not to be exercised.
After the commencement date, the Company reassesses
the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise
(or not to exercise) the option to renew (e.g., a change in business strategy). The Company includes the renewal period as part of the
lease term for leases of most farming facilities due to the significance of those assets to its operations. The Company has not included
renewal periods for farming facilities when the lease term exceeds
Property, plant and equipment and intangible assets
Estimates of useful lives, residual values and methods of depreciation are reviewed annually. Any changes based on additional available information are accounted for prospectively as a change in accounting estimate.
Goodwill
Determining whether goodwill is impaired requires an estimation of the recoverable amount of the CGU or group of CGUs. Such recoverable amount corresponds, for the purpose of impairment assessment, to the higher of the value in use or the fair value less costs of disposal of the CGU or group of CGUs to which goodwill has been allocated.
The value in use calculation requires Management to estimate future cash flows expected to arise from the CGU or group of CGUs and a suitable discount rate to calculate present value. The key assumptions required for the value in use estimation are the revenue per terahash, energy prices, discount rate and the terminal value.
For the value in use approach, the values assigned to key assumptions reflect past experience and external sources of information that are deemed accurate and reliable. The value in use is categorized as Level 3 in the fair value hierarchy described under IFRS 13, Fair Value Measurement, as one or more key assumptions used is based on unobservable data requiring the use of judgement.
When using the value in use approach, cash flows for each CGU or group of CGUs are derived from the budget for the upcoming year, which is approved on an annual basis by members of the Company’s Board of Directors, and a long-term forecast prepared by Management which covers an additional period from 4 to 5 years. The discount rate is derived from the Company’s pre-tax weighted average cost of capital and is adjusted, where applicable, to take into account any specific risks. When applicable, Management estimated the terminal value of the Miners included in the CGU for the purposes of the impairment testing based on the daily revenue per Terahash in effect at the end of the value in use calculation multiplied by the ending hashrate for a period of time.
| 27 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 4: | SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES (Continued) |
| b. | Estimates and assumptions (Continued) |
Impairment and reversal of impairment of non-financial assets
The Company reviews the need for recording impairment of mineral assets, as detailed in Note 12, for which purpose it engaged an independent external appraiser to assist in determining the value of the assets. The fair value was determined through the use of the market approach, which includes analyzing similar and comparable mineral properties and making adjustments for differences between those properties and the subject property among certain identifiable parameters.
Management exercises significant judgement in estimating the inputs used to determine the value in use of its equipment and construction prepayments, property, plant and equipment, right-of-use assets and intangible assets. When there is any indication that any tangible and intangible assets other than goodwill have incurred an impairment loss, the determination of the recoverable amount of such tangible and intangible assets other than goodwill requires Management to estimate cash flows expected to arise from those assets and a suitable discount rate in order to calculate the present value in a manner described above for goodwill.
Contingent Liability
Contingent liability is an existing condition, situation, or set of circumstances involving uncertainty as to a possible loss that will ultimately be resolved when one or more future events occur or fail to occur. The Company is party to various legal proceedings, claims, and regulatory, tax or government inquiries and investigations that arise in the ordinary course of business. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company, with assistance from its legal counsels, evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. A provision for legal claims against the Company is recorded when the Company has a present legal or constructive obligation as a result of past events, and that is more likely than not to be settled with an outflow of economic resources that can be measured reliably.
| 28 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 5: | ACQUISITIONS OF ASSETS |
| a. | Acquisition of assets in Baie-Comeau |
On July 5,
2023, the Company acquired
The acquisition of Orion does not meet the definition of a business combination under IFRS 3, Business Combinations, as Orion’s primary assets consist mainly of a contractual right for up to 22 MW of hydro power capacity. Therefore, the transaction has been recorded as an acquisition of a group of assets.
The assets acquired and the liabilities assumed were recognized and measured by allocating the fair value of the consideration paid to their relative fair values at the closing date of the transaction. All financial assets acquired and financial liabilities assumed were recorded at fair value.
| As of July 5, | ||||||||
| Notes | 2023 | |||||||
| Purchase price | ||||||||
| Cash consideration | ||||||||
| Value of | ||||||||
| Transaction costs | ||||||||
| Net assets acquired | ||||||||
| Security deposits | ||||||||
| Leasehold improvements | ||||||||
| Trade payables and accrued liabilities | ( | ) | ||||||
| Customer deposit | ( | ) | ||||||
| Intangible - access rights to electricity | 14 | |||||||
In addition, the Company separately entered into a lease agreement with a third party for a site to install the infrastructure to operate the acquired capacity. Refer to Note 18.
| 29 | Page |
BITFARMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited)
| NOTE 5: | ACQUISITIONS OF ASSETS (Continued) |
| b. | Acquisitions of assets in Paraguay |
On July 14, 2023, the Company acquired
| Notes | Villarrica (Paso Pe) | Yguazu | ||||||||||
| Purchase price | ||||||||||||
| Cash consideration paid at closing | ||||||||||||
| Cash consideration payable | ||||||||||||
| Transaction costs | ||||||||||||
| Net assets acquired | ||||||||||||
| Cash, cash equivalent and other current assets | ||||||||||||
| Property, plant and equipment | ||||||||||||
| Intangible - access rights to electricity | 14 | |||||||||||
| 30 | Page |
BITFARMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited)
| NOTE 6: | CASH |
| As of December 31, | As of December 31, | |||||||
| 2023 | 2022 | |||||||
| USD | ||||||||
| CAD | ||||||||
| CAD held in trust | ||||||||
| ARS | ||||||||
| NOTE 7: | TRADE RECEIVABLES |
A receivable
represents the Company’s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before
payment of the consideration is due). Most trade receivables are derived from the sale of electrical components and services to external
customers by the Company’s wholly-owned subsidiary, Volta. Trade receivables are non-interest bearing and are generally on terms
of
| As of December 31, | As of December 31, | |||||||
| 2023 | 2022 | |||||||
| 1 - 30 days | ||||||||
| 31 - 60 days | ||||||||
| 61 - 90 days | ||||||||
| > 91 days | ||||||||
| Allowance for ECL | ( | ) | ( | ) | ||||
| NOTE 8: | OTHER ASSETS |
| As of December 31, | As of December 31, | |||||||
| 2023 | 2022 | |||||||
| Sales taxes receivable* | ||||||||
| Electrical component inventory | ||||||||
| Other receivables | ||||||||
*
| 31 | Page |
BITFARMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited)
| NOTE 9: | DIGITAL ASSETS |
| Year ended December 31, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| Quantity | Value | Quantity | Value | |||||||||||||
| Balance of digital assets including digital assets pledged as collateral as of January 1, | ||||||||||||||||
| BTC earned* | ||||||||||||||||
| BTC purchased | ||||||||||||||||
| BTC exchanged for cash and services | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Realized gain (loss) on disposition of digital assets** | ( | ) | ||||||||||||||
| Change in unrealized gain on revaluation of digital assets** | ||||||||||||||||
| Balance of digital assets including digital assets pledged as collateral as of December 31, | ||||||||||||||||
| Less digital assets pledged as collateral as of December 31,*** | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Balance of digital assets excluding digital assets pledged as collateral as of December 31, | ||||||||||||||||
*
**
***
| 32 | Page |
BITFARMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited)
| NOTE 10: | DERIVATIVE ASSETS AND LIABILITIES |
BTC option contracts
Starting in the first quarter of 2023, the Company purchased BTC option contracts to which gave it the right, but not the obligation, to sell digital assets at a fixed price. Options contracts are used to reduce the risk of BTC price volatility and reduce the variability of cash flows resulting from future sales of digital assets. The Company did not apply hedge accounting on these contracts. There were no derivative asset and liability activities relating to BTC option contracts in 2022.
| Year ended December 31, | ||||||||
| 2023 | ||||||||
| Derivative Assets | Derivative Liabilities | |||||||
| Balance as of January 1, | ||||||||
| Remeasurement recognized in statement of profit or loss during the period | ||||||||
| Purchases | ||||||||
| Sales | ( | ) | ||||||
| Balance as of December 31, | ||||||||
| Year ended December 31, | ||||
| 2023 | ||||
| Unrealized change in fair value of outstanding contracts | ||||
| Realized loss on settled contracts | ( | ) | ||
Warrant liabilities
In November 2023,
the Company completed a private placement which included
As of December 31,
2023, the Company had warrant liabilities in the amount of $
The Black-Scholes model and inputs below were used in determining the values of the warrants and broker warrants at initial recognition, prior to their derecognition as described in Note 21 and at period end.
| 33 | Page |
BITFARMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited)
| NOTE 10: | DERIVATIVE ASSETS AND LIABILITIES (Continued) |
Warrant liabilities (Continued)
| Initial recognition | Remeasurement on settlement of warrants | Remeasurement at period end | ||||||||||||||
| Measurement date | November 28, 2023 | December 18, 2023 | December 27, 2023 | December 31, 2023 | ||||||||||||
| Dividend yield (%) | — | |||||||||||||||
| Expected share price volatility (%) | % | % | % | % | ||||||||||||
| Risk-free interest rate (%) | % | % | % | % | ||||||||||||
| Expected life of warrants (years) | ||||||||||||||||
| Share price (CAD) | ||||||||||||||||
| Exercise price (USD) | ||||||||||||||||
| Fair value of warrants (USD) | ||||||||||||||||
| Number of warrants granted (exercised) | ( | ) | ( | ) | ||||||||||||
| Initial recognition | Remeasurement on settlement of warrants | Remeasurement at period end | ||||||||||||||
| Measurement date | November 28, 2023 | December 20, 2023 | December 22, 2023 | December 31, 2023 | ||||||||||||
| Dividend yield (%) | ||||||||||||||||
| Expected share price volatility (%) | % | % | % | % | ||||||||||||
| Risk-free interest rate (%) | % | % | % | % | ||||||||||||
| Expected life of warrants (years) | ||||||||||||||||
| Share price (CAD) | ||||||||||||||||
| Exercise price (USD) | ||||||||||||||||
| Fair value of warrants (USD) | ||||||||||||||||
| Number of warrants granted (exercised) | ( | ) | ( | ) | ||||||||||||
| Remeasurement at period end | Remeasurement at period end | Remeasurement at period end | ||||||||||
| Measurement date | January 1, 2022 | December 31, 2022 | December 31, 2023 | |||||||||
| Dividend yield (%) | ||||||||||||
| Expected share price volatility (%) | % | % | % | |||||||||
| Risk-free interest rate (%) | % | % | % | |||||||||
| Expected life of warrants (years) | ||||||||||||
| Share price (CAD) | ||||||||||||
| Exercise price (CAD) | ||||||||||||
| Fair value of warrants (USD) | ||||||||||||
| Number of warrants outstanding | ||||||||||||
| 34 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 10: | DERIVATIVE ASSETS AND LIABILITIES (Continued) |
Warrant liabilities (Continued)
| Remeasurement at period end | Remeasurement at period end | Remeasurement at period end | ||||||||||
| Measurement date | January 1, 2022 | December 31, 2022 | December 31, 2023 | |||||||||
| Dividend yield (%) | ||||||||||||
| Expected share price volatility (%) | % | % | % | |||||||||
| Risk-free interest rate (%) | % | % | % | |||||||||
| Expected life of warrants (years) | ||||||||||||
| Share price (CAD) | ||||||||||||
| Exercise price (USD) | ||||||||||||
| Fair value of warrants (USD) | ||||||||||||
| Number of warrants outstanding | ||||||||||||
| Remeasurement at period end | Remeasurement at period end | Remeasurement at period end | ||||||||||
| Measurement date | January 1, 2022 | December 31, 2022 | December 31, 2023 | |||||||||
| Dividend yield (%) | ||||||||||||
| Expected share price volatility (%) | % | % | % | |||||||||
| Risk-free interest rate (%) | % | % | % | |||||||||
| Expected life of warrants (years) | ||||||||||||
| Share price (CAD) | ||||||||||||
| Exercise price (USD) | ||||||||||||
| Fair value of warrants (USD) | ||||||||||||
| Number of warrants outstanding | ||||||||||||
| Remeasurement at period end | Remeasurement at period end | Remeasurement at period end | ||||||||||
| Measurement date | January 1, 2022 | December 31, 2022 | December 31, 2023 | |||||||||
| Dividend yield (%) | ||||||||||||
| Expected share price volatility (%) | % | % | % | |||||||||
| Risk-free interest rate (%) | % | % | % | |||||||||
| Expected life of warrants (years) | ||||||||||||
| Share price (CAD) | ||||||||||||
| Exercise price (USD) | ||||||||||||
| Fair value of warrants (USD) | ||||||||||||
| Number of warrants outstanding | ||||||||||||
| 35 | Page |
BITFARMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited)
| NOTE 10: | DERIVATIVE ASSETS AND LIABILITIES (Continued) |
Warrant liabilities (Continued)
| Remeasurement at period end | Remeasurement at period end | Remeasurement at period end | ||||||||||
| Measurement date | January 1, 2022 | December 31, 2022 | December 31, 2023 | |||||||||
| Dividend yield (%) | ||||||||||||
| Expected share price volatility (%) | % | % | % | |||||||||
| Risk-free interest rate (%) | % | % | % | |||||||||
| Expected life of warrants (years) | ||||||||||||
| Share price (CAD) | ||||||||||||
| Exercise price (USD) | ||||||||||||
| Fair value of warrants (USD) | ||||||||||||
| Number of warrants outstanding | ||||||||||||
| Remeasurement at period end | Remeasurement at period end | Remeasurement at period end | ||||||||||
| Measurement date | January 1, 2022 | December 31, 2022 | December 31, 2023 | |||||||||
| Dividend yield (%) | ||||||||||||
| Expected share price volatility (%) | % | % | % | |||||||||
| Risk-free interest rate (%) | % | % | % | |||||||||
| Expected life of warrants (years) | ||||||||||||
| Share price (CAD) | ||||||||||||
| Exercise price (USD) | ||||||||||||
| Fair value of warrants (USD) | — | |||||||||||
| Number of warrants outstanding | ||||||||||||
| Remeasurement at period end | Remeasurement at period end | Remeasurement at period end | ||||||||||
| Measurement date | January 1, 2022 | December 31, 2022 | December 31, 2023 | |||||||||
| Dividend yield (%) | ||||||||||||
| Expected share price volatility (%) | % | % | % | |||||||||
| Risk-free interest rate (%) | % | % | % | |||||||||
| Expected life of warrants (years) | ||||||||||||
| Share price (CAD) | ||||||||||||
| Exercise price (USD) | ||||||||||||
| Fair value of warrants (USD) | — | |||||||||||
| Number of warrants outstanding | ||||||||||||
| 36 | Page |
BITFARMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited)
| NOTE 11: | ASSETS HELD FOR SALE |
| As of December 31, | As of December 31, | |||||||||||
| Notes | 2023 | 2022 | ||||||||||
| Miners | i. | |||||||||||
| Mining electrical components | ii. | |||||||||||
| i. | Miners held of sale |
| Antminer S9 Miners (a) | Innosilicon T2T & T3, Canaan Avalon A10 and Antminer T15 & S15 Miners (b) | MicroBT WhatsMiner M20S Miners (c) | Bitmain S19j Pro Miners (d) | TOTAL | ||||||||||||||||||||||||||||||||||||
| Qty | Value | Qty | Value | Qty | Value | Qty | Value | Qty | Value | |||||||||||||||||||||||||||||||
| Balance as of January 1, 2021 | ||||||||||||||||||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||||||||||||||||||
| Dispositions | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Impairment | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||||||||||||||||||
| Dispositions | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Impairment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||
| a. | Antminer S9 Miners |
During 2021, the
Company ceased using its Antminer S9 Miners. During the year ended December 31, 2022, 3,982 Antminer S9 Miners with a carrying amount
of $
| 37 | Page |
BITFARMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited)
| NOTE 11: | ASSETS HELD FOR SALE (Continued) |
| i. | Miners held for sale (Continued) |
| b. | Innosilicon T2T, Innosilicon T3, Canaan Avalon A10, Antminer T15 and Antminer S15 Miners |
During 2022, the
Company ceased using Innosilicon T2T Miners, Canaan Avalon A10 Miners, Antminer T15 Miners and Antminer S15 Miners with plans to dispose
of them within the next 12 months. During the year ended December 31, 2022, 207 Antminer T15 Miners with a carrying amount of $
During the year
ended December 31, 2023, the Company ceased using its Innosilicon T3 Miners with plans to dispose of them within the next 12 months.
Due to the performance of these Miners, they were fully written off along with the remaining Innosilicon T2T Miners and an impairment
loss of $
| c. | MicroBT WhatsMiner M20S Miners |
During 2022, the
Company ceased using its MicroBT WhatsMiner M20S Miners and planned to dispose of them within the next 12 months. During the year ended
December 31, 2022, the Company sold
During the year
ended December 31, 2023, the Company sold
| d. | S19j Pro Bitmain Miners |
During the year ended December 31, 2023, the Company ceased using 300 Bitmain S19j Pro Miners and planned to dispose of them within the next 12 months.
| ii. | Mining electrical components held for sale |
During the year
ended December 31, 2023, the Company de-energized its immersion cooling pilot project in Washington State, ceased using the electrical
components used in the project with a carrying value of $
| 38 | Page |
BITFARMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited)
| NOTE 12: | IMPAIRMENT |
| Year ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Impairment on short-term prepaid deposits, equipment and construction prepayments, property, plant and equipment and right-of-use assets | ||||||||
| Impairment on goodwill | ||||||||
| Year ended December 31, | ||||||||||||||||||||||||||||
| 2023 | ||||||||||||||||||||||||||||
| Short-term prepaid deposits | Equipment
and construction prepayments | Assets
held for sale | ROU assets | Property, plant and equipment | Goodwill | Total | ||||||||||||||||||||||
| Immersion cooling equipment | ||||||||||||||||||||||||||||
| Short-term deposits | ||||||||||||||||||||||||||||
| Miners held for sale | ||||||||||||||||||||||||||||
| Suni mineral asset | ||||||||||||||||||||||||||||
| Year ended December 31, | ||||||||||||||||||||||||||||
| 2022 | ||||||||||||||||||||||||||||
| Washington State cryptocurrency Mining CGU (“Washington CGU”) | ||||||||||||||||||||||||||||
| Argentina cryptocurrency Mining CGU (“Argentina CGU”) | ||||||||||||||||||||||||||||
| Quebec cryptocurrency Mining CGU (“Quebec CGU”) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Paraguay cryptocurrency Mining CGU (“Paraguay CGU”) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Miners held for sale | ||||||||||||||||||||||||||||
| Suni mineral asset | ||||||||||||||||||||||||||||
| 39 | Page |
BITFARMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited)
| NOTE 12: | IMPAIRMENT (Continued) |
| a. | 2023 impairment loss |
Impairment on short-term prepaid deposits during the second quarter of 2023
| i. | Background |
In 2022, the Company entered into agreements with external brokers to be able to proceed with the importation of its miners into Argentina. Under the agreements, the Company was required to make advance deposits to the external brokers, which were classified as short-term prepaid deposits on the consolidated statements of financial position. During the second quarter of 2023, the Company decided to terminate the importation agreements with the external brokers as of June 30, 2023.
| ii. | Impairment loss |
The
Company assumed the cost of terminating the importation agreements with the brokers in order to execute its new importation strategy,
resulting in the Company forgoing a deposits balance of $
Impairment on mineral assets during the second quarter of 2023
| i. | Background |
The
Suni mineral asset was acquired in connection with the reverse acquisition of Bitfarms Ltd (Israel) on April 12, 2018, and its value
at the time was estimated at $
| ii. | Impairment loss |
During the second
quarter of 2023, in connection with the planned disposal of the Suni mineral asset, Management tested the cash-generating unit for impairment,
resulting in a further impairment charge of $
Impairment on electrical components during the fourth quarter of 2023
| i. | Background |
During the third quarter of 2023, the Company de-energized its 2 MW immersion cooling pilot project in Washington State as the equipment did not perform to the Company’s expectations of performance and costs. With the de-energization of the immersion cooling pilot project, the 2 MW of hydro-electricity remains available to the Company to use in the future.
| ii. | Impairment loss |
During the fourth
quarter of 2023, in connection with the planned disposal of the de-energized immersion cooling electrical components, Management tested
those assets for impairment, resulting in an impairment charge of $
| 40 | Page |
BITFARMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited)
| NOTE 12: | IMPAIRMENT (Continued) |
| b. | 2022 impairment loss and impairment loss reversal |
| i. | Background |
During the year ended December 31, 2022, as a result of the decline in the BTC price, the Company performed evaluations of the recoverable amount of the assets for operating the cryptocurrency mining facilities in Quebec, Washington State, Argentina and Paraguay separately. As the group of assets for each CGU do not generate cash inflows that are independent of each other, the recoverable amount was calculated for each CGU comprised of the property, plant and equipment, ROU assets, long-term electricity deposits, long-term construction and equipment prepayments and favorable lease used in the operating cryptocurrency mining facilities in Quebec, Washington State, Argentina and Paraguay.
| ii. | Impairment loss |
The
recoverable amount was calculated using the value in use model, which calculated the present value of the future cash flows expected
to be derived from the Washington CGU and Argentina CGU, which were determined to be lower than their carrying amount. Based on its calculation,
the Company determined that impairment losses should be recorded on its Washington CGU and Argentina CGU in the amount of $
| iii. | Reversal of impairment loss |
The
renegotiation of the
| iv. | Suni mineral asset |
In
connection with the reverse acquisition of Bitfarms Ltd (Israel), the Company engaged an independent appraiser to determine the fair
value as of the acquisition date, April 12, 2018, of Suni, an iron ore deposit located in Canada held by the acquiree. The
appraiser’s valuation report was based on the market comparison method and the analysis of similar assets. Following certain
adjustments resulting from changes in the price of iron ore, among other variables, Suni’s value at April 12, 2018 was
estimated at $
An
independent appraiser was engaged to determine Suni’s fair value as of September 30, 2022 due to the decline in the iron ore price
during the third quarter of 2022. Using the same method as the previous independent appraiser, the new appraiser determined that the
fair value of Suni was $
| 41 | Page |
BITFARMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited)
| NOTE 13: | PROPERTY, PLANT AND EQUIPMENT |
| Notes | BVVE
and electrical components | Mineral assets | Land
and buildings | Leasehold
improvements | Vehicles | Total | ||||||||||||||||||||||
| Cost | ||||||||||||||||||||||||||||
| Balance as of January 1, 2023 | ||||||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||||||
| Additions related to asset acquisitions | 5 | |||||||||||||||||||||||||||
| Dispositions | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Transfer to assets held for sale | 11 | ( | ) | ( | ) | |||||||||||||||||||||||
| Effect of change in discount rate | 20 | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance as of December 31, 2023 | ||||||||||||||||||||||||||||
| Accumulated Depreciation | ||||||||||||||||||||||||||||
| Balance as of January 1, 2023 | ||||||||||||||||||||||||||||
| Depreciation | ||||||||||||||||||||||||||||
| Dispositions | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Transfer to assets held for sale | 11 | ( | ) | ( | ) | |||||||||||||||||||||||
| Impairment | 12 | |||||||||||||||||||||||||||
| Impairment on deposits transferred to PPE | ||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | ||||||||||||||||||||||||||||
| Net book value as of December 31, 2023 | ||||||||||||||||||||||||||||
| BVVE
and electrical components | Mineral assets | Land
and buildings | Leasehold
improvements | Vehicles | Total | |||||||||||||||||||||||
| Cost | ||||||||||||||||||||||||||||
| Balance as of January 1, 2022 | ||||||||||||||||||||||||||||
| Measurement period adjustment to business combination | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||||||
| Dispositions | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Transfer to assets held for sale | 11 | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance as of December 31, 2022 | ||||||||||||||||||||||||||||
| Accumulated Depreciation | ||||||||||||||||||||||||||||
| Balance as of January 1, 2022 | ||||||||||||||||||||||||||||
| Depreciation | ||||||||||||||||||||||||||||
| Dispositions | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Transfer to assets held for sale | 11 | ( | ) | ( | ) | |||||||||||||||||||||||
| Impairment | 12 | |||||||||||||||||||||||||||
| Impairment on deposits transferred to PPE | ||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | ||||||||||||||||||||||||||||
| Net book value as of December 31, 2022 | ||||||||||||||||||||||||||||
| 42 | Page |
BITFARMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited)
| NOTE 13: | PROPERTY, PLANT AND EQUIPMENT (Continued) |
| BVVE |
| Notes | MicroBT
Whatsminer* | Bitmain
S19j Pro | Innosilicon T3 & T2T | Bitmain
S19XP | Total | |||||||||||||||||||
| Quantity as of January 1, 2023 | ||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||
| Dispositions | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Quantity as of December 31, 2023 | ||||||||||||||||||||||||
| Classified as assets held for sale | 11 | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Presented as property, plant and equipment | ||||||||||||||||||||||||
*
Refer to Note 11 for more details on assets held for sale.
| Notes | MicroBT
Whatsminer* | Bitmain
S19j Pro | Innosilicon
T3 & T2T** | Canaan
Avalon A10 | Bitmain
S19XP | Other
Bitmain Antminers*** | Total | |||||||||||||||||||||||||
| Quantity as of January 1, 2022 | ||||||||||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||||||||||
| Dispositions | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Quantity as of December 31, 2022 | ||||||||||||||||||||||||||||||||
| Classified as assets held for sale | 11 | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Presented as ROU asset**** | 18 | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Presented as property, plant and equipment | ||||||||||||||||||||||||||||||||
*
**
***
****
Includes
Refer to Note 11 for more details on assets held for sale.
| 43 | Page |
BITFARMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited)
| NOTE 14: | INTANGIBLE ASSETS |
| Notes | Systems software | Access
rights to electricity | Favorable lease | Total | ||||||||||||||||
| Cost | ||||||||||||||||||||
| Balance as of January 1, 2023 | ||||||||||||||||||||
| Additions related to asset acquisitions | 5 | |||||||||||||||||||
| Balance as of December 31, 2023 | ||||||||||||||||||||
| Accumulated amortization | ||||||||||||||||||||
| Balance as of January 1, 2023 | ||||||||||||||||||||
| Amortization | ||||||||||||||||||||
| Balance as of December 31, 2023 | ||||||||||||||||||||
| Net book value as of December 31, 2023 | ||||||||||||||||||||
| Systems software | Access
rights to electricity | Favorable lease | Total | |||||||||||||||||
| Cost | ||||||||||||||||||||
| Balance as of January 1, 2022 | ||||||||||||||||||||
| Measurement period adjustment to business combination | ||||||||||||||||||||
| Balance as of December 31, 2022 | ||||||||||||||||||||
| Accumulated amortization | ||||||||||||||||||||
| Balance as of January 1, 2022 | ||||||||||||||||||||
| Amortization | ||||||||||||||||||||
| Balance as of December 31, 2022 | ||||||||||||||||||||
| Net book value as of December 31, 2022 | ||||||||||||||||||||
Additions related to acquisitions of assets
During the year
ended December 31, 2023, the Company made three acquisitions of groups of assets, resulting in additional access rights to electricity.
The access rights represent a contractual right to hydro power capacity and are classified as intangible assets.
| Acquisitions | Additions to intangibles | Additional capacity | Term of contractual
access rights | Amortization method and period | ||||||
| Baie-Comeau, Quebec | ||||||||||
| Villarrica (Paso Pe), Paraguay | * | |||||||||
| Yguazu, Paraguay | ||||||||||
| * |
| 44 | Page |
BITFARMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited)
| NOTE 15: | LONG-TERM DEPOSITS, EQUIPMENT PREPAYMENTS, COMMITMENTS AND OTHER |
| As of December 31, | As of December 31, | |||||||||||
| 2023 | 2022 | |||||||||||
| VAT receivable | ||||||||||||
| Security deposits for energy, insurance and rent | ||||||||||||
| Equipment and construction prepayments | a | |||||||||||
| a. | Equipment and construction prepayments |
As of December 31,
2023, the Company has deposits for BVVE and electrical components in the amount of $
During the year ended
December 31, 2023, the Company placed a firm purchase order for
| b. | Commitments |
| As of December 31, | ||||
| 2023 | ||||
| Three months ending March 31, 2024 | ||||
| Three months ending June 30, 2024 | ||||
If the Company is unable to meet its payment obligations, it could result in the loss of equipment prepayments and deposits paid by the Company under the purchase order and remedial legal measures taken against the Company which may include damages and forced continuance of the contractual arrangement. Under such circumstances, the Company’s growth plans and ongoing operations could be adversely impacted.
| 45 | Page |
BITFARMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited)
| NOTE 15: | LONG-TERM DEPOSITS, EQUIPMENT PREPAYMENTS, COMMITMENTS AND OTHER (continued) |
| c. | Contingent liability |
In 2021, the Company imported Miners into Washington State that the vendor located in China claimed originated in Malaysia. In early 2022,
U.S. Customs and Border Protection challenged the origination of the Miners, asserting their manufacture in China, and notified the Company
of a potential assessment of a U.S. importation duty of
During the third quarter of 2023, the Company submitted the supporting documentation to U.S. Customs and Border Protection in defense
of its position that the Miners were manufactured outside China and the associated custom duties in the amount of $
| NOTE 16: | TRADE PAYABLES AND ACCRUED LIABILITIES |
| As of December 31, | As of December 31, | |||||||
| 2023 | 2022 | |||||||
| Trade accounts payable and accrued liabilities | ||||||||
| Government remittances | ||||||||
| NOTE 17: | LONG-TERM DEBT |
| As of December 31, | As of December 31, | |||||||
| 2023 | 2022 | |||||||
| Equipment financing | ||||||||
| Vehicle loans | ||||||||
| Total long-term debt | ||||||||
| Less current portion of long-term debt | ( | ) | ( | ) | ||||
| Non-current portion of long-term debt | ||||||||
| As of December 31, | As of December 31 | |||||||
| 2023 | 2022 | |||||||
| Balance as of January 1, | ||||||||
| Issuance of long-term debt | ||||||||
| Payments | ( | ) | ( | ) | ||||
| Gain on extinguishment of long-term debt | ( | ) | ||||||
| Interest on long-term debt | ||||||||
| Balance as of period end | ||||||||
| 46 | Page |
BITFARMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited)
| NOTE 17: | LONG-TERM DEBT (Continued) |
| a. | Equipment financing activity |
Repayment of Foundry Loans #2, #3 and #4
In April and May 2021, the Company entered into four loan agreements for the acquisition of 2,465 WhatsMiner Miners referred to as “Foundry
Loans #1, #2, #3 and #4.” During 2022, Foundry Loan #1 matured and was fully repaid. In January 2023, the principal amounts of the
remaining Foundry Loans #2, #3 and #4 were fully repaid before their maturity date with forgiveness of prepayment penalties totaling $
Settlement of the loan with BlockFi Lending LLC (“BlockFi”)
In
February 2022, Backbone Mining entered into an equipment financing agreement for gross proceeds of $
In December 2022, Backbone Mining ceased making installment payments, which constituted a default under the loan agreement, and the BlockFi Loan was classified as current.
On
February 8, 2023, BlockFi and the Company negotiated a settlement of the loan in its entirety with a then outstanding debt balance of
$
NYDIG Loan
In June
2022, Backbone entered into an equipment financing agreement, referred to as the “NYDIG
Loan”, for gross proceeds of $
| b. | Summary of equipment financing |
| Maturity date | Stated rate | Effective rate* | Monthly repayment ($) | Long-term
debt balance ($) | NBV
of Collateral ($) | Collateral** | ||||||||||||||||||||
| NYDIG Loan | % | % | ||||||||||||||||||||||||
*
**Represents the quantity of WhatsMiners received in connection with the equipment financing and pledged as collateral for the related loan.
During 2024, the
NYDIG Loan balance was fully repaid, and the Company’s
| 47 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 18: | LEASES |
| Leased premises | Vehicles | Other equipment | Total ROU assets | Lease liabilities | ||||||||||||||||
| As of January 1, 2023 | ||||||||||||||||||||
| Additions and extensions to ROU assets | ||||||||||||||||||||
| Reclass to property, plant and equipment | ( | ) | ( | ) | ||||||||||||||||
| Depreciation | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Lease termination | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Payments | ( | ) | ||||||||||||||||||
| Gain on extinguishment of lease liabilities | ( | ) | ||||||||||||||||||
| Interest | ||||||||||||||||||||
| Foreign exchange | ||||||||||||||||||||
| As of December 31, 2023 | ||||||||||||||||||||
| Less current portion of lease liabilities | ( | ) | ||||||||||||||||||
| Non-current portion of lease liabilities | ||||||||||||||||||||
| Leased premises | Vehicles | Other equipment | Total ROU assets | Lease liabilities | ||||||||||||||||
| As of January 1, 2022 | ||||||||||||||||||||
| Additions and extensions to ROU assets | ||||||||||||||||||||
| Depreciation | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Lease termination | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Impairment | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Payments | ( | ) | ||||||||||||||||||
| Interest | ||||||||||||||||||||
| Foreign exchange | ( | ) | ||||||||||||||||||
| As of December 31, 2022 | ||||||||||||||||||||
| Less current portion of lease liabilities | ( | ) | ||||||||||||||||||
| Non-current portion of lease liabilities | ||||||||||||||||||||
| a. | 2023 lease activities |
Reliz Lease
In February 2023, the Company
negotiated a modification to its lease agreement with Reliz Ltd. (where BlockFi was the lender to Reliz Ltd.) in order to settle its
outstanding lease liability of $
Baie-Comeau
On July 5, 2023, in conjunction
with the Baie-Comeau acquisition, the Company entered into a lease agreement with a third party for a site to install the infrastructure
to operate the acquired capacity. The lease agreement is for an industrial site in Baie-Comeau for an initial term of
| 48 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 18: | LEASES (Continued) |
| b. | 2022 lease activities |
The Company maintained one lease agreement for Mining hardware, consisting
of
During the year ended December 31,
2022, the Company recognized an impairment loss of $
| NOTE 19: | INCOME TAXES |
| Year ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Current tax expense (recovery): | ||||||||
| Current year | ( | ) | ||||||
| Prior year | ||||||||
| ( | ) | |||||||
| Deferred tax expense (recovery): | ||||||||
| Current year | ( | ) | ( | ) | ||||
| Prior year | ( | ) | ||||||
( | ) | ( | ) | |||||
( | ) | ( | ) | |||||
The 2022 current tax recovery represents the expected tax refund as a result of losses realized in 2022 that will be carried back to offset prior period taxable income.
| Year ended December 31, | ||||||||||||||||
| 2023 | 2022 (restated - Note 3e) | |||||||||||||||
| Income tax recovery at statutory rate of | ( | ) | % | ( | ) | % | ||||||||||
| Increase (decrease) in taxes resulting from: | ||||||||||||||||
| Foreign tax rate differential | ( | ) | % | ( | )% | |||||||||||
| Prior year | ( | )% | % | |||||||||||||
| Non-taxable warrant loss (gain) and other permanent differences | ( | )% | ( | ) | % | |||||||||||
| Deferred tax asset not recognized | ( | )% | ( | )% | ||||||||||||
| ( | ) | % | ( | ) | % | |||||||||||
| 49 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 19: | INCOME TAXES (Continued) |
Deferred tax assets and liabilities
Deferred taxes are computed at
a tax rate of
| Operating losses carried forward | Lease liability | Asset Retirement provision | Financing fees | PPE | Reserves and other | Total | ||||||||||||||||||||||
| As of January 1, 2022 | ||||||||||||||||||||||||||||
| Credited to statements of profit or loss | ||||||||||||||||||||||||||||
| Deferred tax asset derecognized in the statements of profit or loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Deferred tax asset derecognized in the statements of equity | ( | ) | ( | ) | ||||||||||||||||||||||||
| As of December 31, 2022 | ||||||||||||||||||||||||||||
| Credited to statements of profit or loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Deferred tax asset derecognized in the statements of profit or loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Deferred tax asset derecognized in the statements of equity | ( | ) | ( | ) | ||||||||||||||||||||||||
| As of December 31, 2023 | ||||||||||||||||||||||||||||
Offsetting deferred tax liabilities as of December 31, 2023 | ( | ) | ||||||||||||||||||||||||||
Net deferred tax assets as of December 31, 2023 | ||||||||||||||||||||||||||||
| PPE | ROU Asset | Reserves and other | Total | |||||||||||||
| As of January 1, 2022 | ||||||||||||||||
| Charged to statements of profit or loss | ||||||||||||||||
| As of December 31, 2022 | ||||||||||||||||
| Credited to statements of profit or loss | ( | ) | ( | ) | ( | ) | ||||||||||
| As of December 31, 2023 | ||||||||||||||||
Offsetting deferred tax assets as of December 31, 2023 | ( | ) | ||||||||||||||
Net deferred tax liabilities as of December 31, 2023 | ||||||||||||||||
| 50 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 20: | ASSET RETIREMENT PROVISION |
| As of December 31, | As of December 31, | |||||||
| 2023 | 2022 | |||||||
| Balance as of January 1, | ||||||||
| Additions during the period | ||||||||
| Accretion expense | ||||||||
| Effect of change in the foreign exchange rate | ( | ) | ||||||
| Effect of change in discount rate | ( | ) | ||||||
| Balance as of period end | ||||||||
As of December 31, 2023,
the Company estimated the costs of restoring its leased premises to their original state at the end of their respective lease terms to
be $
The effect of change in discount
rate was accounted for as a reduction of asset retirement provision totaling $
| NOTE 21: | SHARE CAPITAL |
Common shares
The Company’s authorized share
capital consists of an unlimited number of common shares without par value. As of December 31, 2023, the Company had
Warrants
| Year ended December 31, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| Number of warrants | Weighted average exercise price (USD) | Number of warrants | Weighted average exercise price (USD) | |||||||||||||
| Outstanding, January 1, | ||||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ( | ) | — | — | ||||||||||||
| Expired | — | — | ( | ) | ||||||||||||
| Outstanding, December 31, | ||||||||||||||||
The weighted average contractual life of the
warrants as of December 31, 2023 was
| 51 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 21: | SHARE CAPITAL (Continued) |
Significant transactions
| i. | Garlock Acquisition |
In the first quarter of 2022,
the Company acquired a building in Quebec referred to as “Garlock” in exchange for cash consideration of $
| ii. | At-The-Market Equity Offering Program |
Bitfarms commenced an at-the-market
equity offering program (the “ATM program”) on August 16, 2021, pursuant to which the Company may, at its discretion and
from time-to-time, sell common shares of the Company, resulting in the Company receiving aggregate proceeds of up to $
During the year ended December 31,
2023, the Company issued
During the year ended December 31,
2022, the Company issued
| iii. | Stock Options |
During the year ended December 31,
2023, option holders exercised stock options to acquire
| iv. | 2023 private placement |
| Closing Date | November 28, 2023 | |||
| Gross proceeds (CAD) | ||||
| Common shares issued | ||||
| Warrants issued* | ||||
| Warrant strike price (USD) | ||||
| Warrant life (years) | ||||
| Commission paid | % | |||
| Broker warrants issued* | ||||
| Broker warrant strike price (USD) | ||||
| Broker warrant life (years) | ||||
| * |
| 52 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 21: | SHARE CAPITAL (Continued) |
Significant transactions (Continued)
| iv. | 2023 private placement (Continued) |
In December 2023,
The Black Scholes model and the inputs described in Note 10 were used
in determining the values of the warrants and broker warrants prior to their derecognition, which resulted in a non-cash loss on revaluation
of warrants of $
| NOTE 22: | FINANCIAL INSTRUMENTS |
| a. | Measurement categories and fair value |
Financial assets and financial liabilities have
been classified into categories that determine their basis of measurement.
| As of December 31, | As of December 31, | |||||||||
| Measurement | 2023 | 2022 (restated - Note 3e) | ||||||||
| Financial assets at amortized cost | ||||||||||
| Cash | Level 1 | |||||||||
| Trade receivables | Level 3 | |||||||||
| Other receivables | Level 3 | |||||||||
| Financial assets at fair value through profit and loss | ||||||||||
| Derivative assets | Level 2 | |||||||||
| Total carrying amount and fair value | ||||||||||
| Financial liabilities at amortized cost | ||||||||||
| Trade accounts payable and accrued liabilities | Level 3 | |||||||||
| Long-term debt | Level 2 | |||||||||
| Financial liabilities at fair value through profit and loss | ||||||||||
| Warrant liabilities | Level 2 | |||||||||
| Total carrying amount and fair value | ||||||||||
| Net carrying amount and fair value | ( | ) | ||||||||
The carrying amounts of trade receivables, other receivables, trade payables and accrued liabilities and long-term debt presented in the table above are a reasonable approximation of their fair value.
| 53 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 22: | FINANCIAL INSTRUMENTS (Continued) |
| a. | Measurement categories and fair value (Continued) |
The fair value of option contracts is categorized as Level 2 in the fair value hierarchy and is presented under derivative assets and liabilities in the consolidated statements of financial position when there is an outstanding contract at period end. Their fair values are a recurring measurement. Fair value of derivative financial instruments generally reflects the estimated amounts that the Company would receive or pay, taking into consideration the counterparty credit risk or the Company’s credit risk at each reporting date. The Company uses market data such as BTC option futures to estimate the fair value of option contracts at each reporting date.
Warrant liabilities related to the 2021 and 2023 private placements are classified as financial liabilities at fair value through profit or loss with the change in fair value recorded to Net financial expenses (income). The fair value measurement is categorized as Level 2 in the fair value hierarchy, is a recurring measurement and is calculated using a Black-Scholes pricing model at each reporting date.
| b. | Risk management policy |
The Company is exposed to foreign currency risk, credit risk, counterparty risk, liquidity risk and concentration risk. The Company’s senior Management monitors these risks. In addition, during 2023, the Company established a Risk Committee to monitor these risks.
Foreign currency risk
Foreign currency risk is the
risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The
Company’s functional currency is the US Dollar as all of its cryptocurrency Mining revenues, most of its capital expenditures and most
of its financing are primarily measured or transacted in US dollars. The Company is exposed to variability in the Canadian dollar
and Argentine peso to US dollar exchange rates when
making expenditures payable in Canadian dollars and Argentine pesos. The Company funds foreign
currency transactions by buying the foreign currency at the spot rate when required. A
| As a of December 31, | As a of December 31, | |||||||||||||||
| 2023 | 2022 | |||||||||||||||
| CAD | ARS | CAD | ARS | |||||||||||||
| Cash | ||||||||||||||||
| Trade receivables | ||||||||||||||||
| Trade payables and accrued liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Long-term debt | ( | ) | ||||||||||||||
| ( | ) | ( | ) | ( | ) | |||||||||||
| 54 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 22: | FINANCIAL INSTRUMENTS (Continued) |
| b. | Risk management policy (Continued) |
Credit risk and counterparty risk
Credit risk is the risk of an unexpected loss if a third party fails to meet its contractual obligations, including cash and cash equivalents. The risk regarding cash is mitigated by holding the majority of the Company’s cash with a Canadian chartered bank.
The Company is exposed to counterparty risk through the significant deposits it places with suppliers of Mining hardware to secure orders and delivery dates as well as deposits it places with construction companies and suppliers of electrical components and construction materials. The risk of a supplier failing to meet its contractual obligations may result in late deliveries or long-term deposits and equipment and construction prepayments that are not realized. The Company attempts to mitigate this risk by procuring Mining hardware from larger, more established suppliers and those with whom the Company has existing relationships and knowledge of their reputation in the market as well as by insuring deposits placed for construction work and materials.
The credit risk regarding trade receivables is derived mainly from sales to Volta’s third-party customers. The Company performs ongoing credit evaluations of its customers. The Company maintains an allowance for expected credit losses to provide for the estimated amount of doubtful of collection. The allowance for expected credit losses is based on Management’s assessment of a customer’s credit quality as well as subjective factors and trends, including the aging of receivable balances.
Liquidity risk
Liquidity risk is a risk that the Company will not be able to pay its financial obligations when they are due. The Company’s policy is to monitor its cash balances and planned cash flows generated from operations to ensure that it maintains sufficient liquidity in order to pay its projected financial liabilities. Refer to Note 2 for more details about the Company’s liquidity.
| 2024 | 2025 | 2026 | 2027 | 2028 and thereafter | Total | |||||||||||||||||||
| Trade accounts payable and accrued liabilities | ||||||||||||||||||||||||
| Long-term debt | ||||||||||||||||||||||||
| Lease liabilities | ||||||||||||||||||||||||
The Company does not have any future cash payments associated with warrant liabilities, and accordingly, they are not included in the table above.
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| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 22: | FINANCIAL INSTRUMENTS (Continued) |
| b. | Risk management policy (Continued) |
Concentration risk
Concentration risk arises as a result of the concentration of exposures within the same category, whether it is geographical location, product type, industry sector or counterparty type. The cryptocurrency Mining industry is highly volatile with significant inherent risk. The Company also holds a portion of its working capital in BTC. A significant decline in the market prices of cryptocurrencies, an increase in the difficulty of cryptocurrency Mining, changes in the regulatory environment and adverse changes in other inherent risks can significantly negatively impact the Company’s operations and the carrying value of its assets. Starting in the first quarter of 2023, the Company purchased BTC option contracts to which gave it the right, but not the obligation, to sell digital assets at a fixed price. Options contracts are used to reduce the risk of BTC price volatility and reduce the variability of cash flows resulting from future sales of digital assets. Refer to Note 10 for more details.
| NOTE 23: | TRANSACTIONS AND BALANCES WITH RELATED PARTIES |
| As of December 31, | As of December 31, | |||||||
| 2023 | 2022 | |||||||
| Trade payables and accrued liabilities | ||||||||
| Directors’ remuneration | ||||||||
| Director and senior management incentive plan | ||||||||
Amounts due to related parties are unsecured, non-interest bearing and payable on demand.
Transactions with related parties
During
the year ended December 31, 2022, the Company made rent payments totaling approximately $
In December 2022, the Company’s consulting agreements with two of its
executive officers were terminated, their roles and responsibilities were reduced and termination payments totaling $
| Year ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| General and administrative expenses | ||||||||
| Net financial expenses | ||||||||
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| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 23: | TRANSACTIONS AND BALANCES WITH RELATED PARTIES (Continued) |
Compensation of key management and directors
| Year ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Short-term benefits | ||||||||
| Termination payments | ||||||||
| Share-based payments | ||||||||
| NOTE 24: | CAPITAL MANAGEMENT POLICIES AND PROCEDURES |
The Company’s capital management objectives are to maximize the return to its shareholders. The Company’s definition of capital includes all components of equity. Capital for the reporting period is summarized in Note 21 and in the consolidated statement of changes in equity. In order to meet its objectives, the Company monitors its capital structure and makes adjustments as required in light of changes in economic conditions and the risk characteristics of the underlying assets. These objectives will be achieved by maintaining a strong capital base so as to maintain investor confidence to sustain future development of the business, maintain a flexible capital structure that optimizes the cost of capital at acceptable risk and preserves the ability to meet financial obligations and ensuring sufficient liquidity to pursue organic growth. In order to maintain or adjust the capital structure, the Company may issue new common shares or debt.
| NOTE 25: | SUBSIDIARIES |
In
2023, the Company acquired Orion and two corporations in Paraguay. Refer to note 5 for more details.
| Company name | Security type | Main place of business | Securities | Equity | Voting | |||||||||||
| Backbone | % | % | % | |||||||||||||
| Backbone Argentina | % | % | % | |||||||||||||
| Backbone Paraguay | % | % | % | |||||||||||||
| Backbone Mining | % | % | % | |||||||||||||
| Orion | % | % | % | |||||||||||||
| Volta | % | % | % | |||||||||||||
Substantially all of the assets, liabilities, revenues, expenses and cash flows in the consolidated financial statements are those of Backbone, Backbone Argentina, Backbone Paraguay, Backbone Mining, Orion and of Volta. Refer to Note 29 for geographic information of revenues and property, plant and equipment.
| 57 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 26: | NET EARNINGS (LOSS) PER SHARE |
For the years ended December 31, 2023 and 2022, potentially dilutive
securities have not been included in the calculation of diluted earnings (loss) per share because their effect is anti-dilutive. The additional
potentially dilutive securities that would have been included in the calculation of diluted earnings per share, had their effect not been
anti-dilutive for the year ended December 31, 2023, would have totaled approximately
| NOTE 27: | SHARE-BASED PAYMENTS |
| Year ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Equity-settled share-based payment plans | ||||||||
Options
On
March 31, 2023, upon the voluntary surrender by option holders, the Company cancelled outstanding options exercisable for
During
the year ended December 31, 2023, the Board of Directors approved stock option grants to purchase
| Year ended December 31, | |||||||||||||||||
| 2023 | 2022 | ||||||||||||||||
| Number of Options | Weighted Average Exercise Price ($CAD) | Number of Options | Weighted Average Exercise Price ($CAD) | ||||||||||||||
| Outstanding, January 1, | |||||||||||||||||
| Granted | |||||||||||||||||
| Exercised | ( | ) | ( | ) | |||||||||||||
| Forfeited | ( | ) | |||||||||||||||
| Cancelled | ( | ) | |||||||||||||||
| Expired | ( | ) | ( | ) | |||||||||||||
| Outstanding, December 31, | |||||||||||||||||
| Exercisable, December 31, | |||||||||||||||||
The
weighted average contractual life of the stock options as of December 31, 2023 was
| 58 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
| NOTE 27: | SHARE-BASED PAYMENTS (Continued) |
Options (Continued)
| Grant date | June 30, 2023 | December 22, 2023 | ||||||
| Dividend yield (%) | ||||||||
| Expected share price volatility (%) | % | % | ||||||
| Risk-free interest rate (%) | % | % | ||||||
| Expected life of stock options (years) | ||||||||
| Share price (CAD) | ||||||||
| Exercise price (CAD) | ||||||||
| Fair value of options (USD) | ||||||||
| Vesting period (years) | ||||||||
| Number of options granted | ||||||||
Restricted Share Units (“RSU”)
| Year ended December 31, | |||||||||||||||||
| 2023 | 2022 | ||||||||||||||||
| Number of RSUs | Weighted Average Grant Price ($CAD) | Number of RSUs | Weighted Average Grant Price ($CAD) | ||||||||||||||
| Outstanding, January 1, | |||||||||||||||||
| Granted | |||||||||||||||||
| Settled | ( | ) | |||||||||||||||
| Outstanding, December 31, | |||||||||||||||||
On December 22,
2023, the Board of Directors approved the grant of
NOTE 28: ADDITIONAL DETAILS TO THE STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE PROFIT OR LOSS
| Year ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Energy and infrastructure | ||||||||
| Depreciation and amortization | ||||||||
| Purchases of electrical components | ||||||||
| Electrician salaries and payroll taxes | ||||||||
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| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
NOTE 28: ADDITIONAL DETAILS TO THE STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE PROFIT OR LOSS (Continued)
| Year ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Salaries and share-based payments | ||||||||
| Professional services | ||||||||
| Insurance, duties and other | ||||||||
| Travel, motor vehicle and meals | ||||||||
| Hosting and telecommunications | ||||||||
| Advertising and promotion | ||||||||
| Year ended December 31, | |||||||||||
| Notes | 2023 | 2022 (restated - Note 3e) | |||||||||
| Loss (gain) on revaluation of warrants | ( | ) | |||||||||
| Gain on disposition of marketable securities | a | ( | ) | ( | ) | ||||||
| Gain on extinguishment of long-term debt and lease liabilities | b | ( | ) | ||||||||
| Interest income | ( | ) | ( | ) | |||||||
| Loss on foreign exchange | |||||||||||
| Interest on credit facility and long-term debt | |||||||||||
| Warrant issuance costs | |||||||||||
| Provision expense on VAT receivable | c | ||||||||||
| Interest on lease liabilities | |||||||||||
| Other financial (income) expenses | |||||||||||
| ( | ) | ||||||||||
| a. | Gain on disposition of marketable securities |
During the year ended December 31, 2023 and 2022, the Company funded its expansion in Argentina through the acquisition of marketable securities and the in-kind contribution of those securities to the Company’s subsidiary in Argentina. The subsequent disposition of those marketable securities in exchange for Argentine Pesos gave rise to a gain as the amount received in ARS exceeds the amount of ARS the Company would have received from a direct foreign currency exchange.
| 60 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
NOTE 28: ADDITIONAL DETAILS TO THE STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE PROFIT OR LOSS (Continued)
Net financial expenses (income) (Continued)
| b. | Gain on extinguishment of the BlockFi loan and Reliz lease liability |
In
February 2023, the Company negotiated a settlement of its loan agreement with BlockFi with a then outstanding debt balance of $
In
February 2023, the Company modified its lease agreement with Reliz Ltd. in order to settle its outstanding lease liability of $
| c. | Provision expense on VAT receivable |
Due to the political and economic uncertainties in Argentina, the Company is uncertain when, or if at all, the Argentine VAT receivable will be settled. As a result, the Company has recorded a provision to reduce the Argentine VAT receivable to . The provision is classified within Net financial expenses (income) during the year ended December 31, 2023. Previously, the Argentine VAT not expected to be settled within the next 12 months was classified as a long-term receivable in Note 15 with the short-term portion included in sales tax receivable in Note 8.
NOTE 29: GEOGRAPHICAL INFORMATION
Reportable segment
The reporting segments are identified on the basis
of information that is reviewed by the chief operating decision maker (“CODM”) to make decisions about resources to be allocated
and to assess performance. Accordingly, for Management purposes, the Company is organized into operating segments based on the products
and services of its business units and has
Revenues
| Year ended December 31, | |||||||||
| 2023 | 2022 | ||||||||
| Canada | |||||||||
| USA | |||||||||
| Argentina | |||||||||
| Paraguay | |||||||||
*
| 61 | Page |
| BITFARMS LTD. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| (Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants and digital assets - audited) |
NOTE 29: GEOGRAPHICAL INFORMATION (Continued)
Property, Plant and Equipment
| As of December 31, | As of December 31, | ||||||||
| 2023 | 2022 | ||||||||
| Canada | |||||||||
| USA | |||||||||
| Argentina | |||||||||
| Paraguay | |||||||||
NOTE 30: ADDITIONAL DETAILS TO THE STATEMENTS OF CASH FLOWS
| Year ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Changes in working capital components: | ||||||||
| (Increase) decrease in trade receivables, net | ( | ) | ||||||
| Decrease (increase) in other current assets | ( | ) | ||||||
| Decrease in deposits | ||||||||
| Increase (decrease) in trade payables and accrued liabilities | ( | ) | ||||||
| Increase (decrease) in taxes payable | ( | ) | ||||||
| ( | ) | |||||||
| Significant non-cash transactions: | ||||||||
| Issuance of common shares in connection with acquisitions of assets | ||||||||
| Addition of ROU assets, property, plant and equipment and related lease liabilities | ||||||||
| Purchase of property, plant and equipment financed by short-term credit | ||||||||
| Equipment prepayments realized as additions to property, plant and equipment | ||||||||
| Deferred tax expense related to equity issuance costs | ( | ) | ||||||
| 62 | Page |