What happened
Shares of cryptocurrency mining operation Bitfarms (BITF -8.09%) were up 10.2% today as of 1 p.m. ET. Investors were pleased with the company's financial results for the fourth quarter of 2021, which showed a big jump in revenue from Bitcoin (BTC 2.91%) mining.
A cryptocurrency mining rig. Image source: Getty Images.
So what
Bitfarms reported that it mined 1,045 Bitcoin tokens during the fourth quarter of 2021, resulting in revenue of $59.6 million. The average cost per token mined (which factors in the costs for electricity consumed and cloud-computing hosting) was $8,000. This compares to the 1,051 tokens mined in the third quarter of 2021 for revenue of $44.8 million and an average cost per token of $6,900.
The company also reported net income of $9.68 million in the fourth quarter, up from a net loss of $5.34 million a year ago.
For full-year 2021, Bitfarms mined 3,453 Bitcoin tokens, resulting in total revenue of $169 million and net income of $22 million.
Now what
It's worth noting that Bitfarms is not a typical stock. While the company is realizing revenue from the value of the Bitcoin tokens it's mining (a reward in the form of new tokens gained from helping manage the Bitcoin network), it's holding on to those tokens on its balance sheet. To pay its bills, the company is issuing new shares on the market. During the fourth quarter alone, Bitfarms issued nearly 17.6 million new shares at an average share price of about $6.47, for net proceeds (after commissions) of $110 million.
Additionally, Bitfarms received a $100 million Bitcoin-backed credit line, of which $60 million was drawn. It also received a $32 million equipment financing agreement in February 2022 to help it continue the expansion of its mining operations and increase its share of hash rate on the Bitcoin network.
Nevertheless, Bitfarms is a proxy for the value of Bitcoin itself and could be a key player in the crypto industry because of the size of its holdings of the original crypto. Plus, Bitcoin's price has been rallying in recent weeks. If that trend continues, that would be a positive development for Bitfarms. A rising Bitcoin price increases both the value of Bitcoin held on Bitfarms' balance sheet and could increase the profit margin on new Bitcoin tokens received from its mining operation.
