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Bitfarms Ltd
XTSX:BITF

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Bitfarms Ltd
XTSX:BITF
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Price: 4.13 CAD 0.24% Market Closed
Updated: May 12, 2024

Earnings Call Transcript

Earnings Call Transcript
2022-Q3

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Operator

Good day, and welcome to Bitfarms Third Quarter 2022 Financial Results Call. All participants will be in listen only mode. [Operator Instructions]. After today's presentation you'll have the opportunity to ask questions. Please note that this event is being recorded. Now I'd like to turn the conference over to Mr. David Barnard, LHA, Investor Relations. Please go ahead.

D
David Barnard

Thank you, Nick. Good morning, everyone, and welcome to BitFarms conference call for the third quarter of 2022. With me on the call today is Geoff Morphy, President and Chief Operating Officer; and Jeff Lucas, Chief Financial Officer. Before we begin, please note, this call is being webcast live with an accompanying presentation. To watch along with the slides, you can log on to our website at www.bitfarms.com under the Investors Presentation section. If you prefer to listen to the call on your smartphone, you can download the presentation from there as well. I would like to remind you this morning that Bitfarms issued a press release announcing its third quarter 2022 financial results. Turning to Slide 2. I'll remind everyone that certain forward-looking statements will be made during the call and future results could differ from those implied in this statement. The forward-looking information is based on certain assumptions and is subject to risks and uncertainties and invite you to consult the firm's MD&A for a complete list of these. Also during the call, reference will be made to supporting slides. And again, you can find the presentation on our website under the Investor Relations section. The company will also refer to certain measures not recognized under IFRS and it did not have a standardized meaning described by IFRS and therefore, may not be comparable to similar measures presented by other companies. We invite listeners to refer to today's earnings release and the company's third quarter 2022 MD&A for definitions of the aforementioned non-IFR measures and the reconciliations to IFR measures. Please note that all financial references are denominated in U.S. dollars unless otherwise noted. During today's call, President and COO, Geoff Morphy will review our operations for the quarter. CFO, Jeff Lucas, will follow with a detailed financial review and Geoff Morphy will return for some closing remarks after the Q&A. And with that, it's now my pleasure to turn the call over to Geoff Morphy.

L
L. Morphy
executive

Good morning. Thank you for joining us today as we are excited to talk to you about our recent successes and why Bitfarms is well positioned to manage this crypto winter and thrive in the long run. No one can control or predict the price of bitcoin. It's a reality of this business. All miners margins have been compressed. However, Bitfarms continues to differentiate itself operationally and financially with its low-cost structure, efficient operations and fleet along with stable energy pricing, resulting in superior mining profitability. We have worked hard to establish a consistent track record of execution against our stated goals and growth plan. In fact, we have doubled our hash rate to 4.4x exahash per second year-to-date. However, to be direct in Argentina, while the construction of our farm in Rio Cuarto, has moved on plan and on budget. There are macro developments within the country that impedes importation of all foreign equipment, including our miners. We are working to resolve these issues, and I'll provide more details in a moment. Turning to our highlights of our results. In Q3 2022, Bitfarms mined 1,515 Bitcoin, up 21% from Q2 2022, and we mined an additional 486 bitcoin in October. Although the growth in Q3 2022 production was offset by weaker bitcoin prices, we continued to deliver solid performance metrics and reduced both our direct cost and total cash cost of production. As a result, we generated adjusted EBITDA of $10 million. In addition to consistently being one of the largest producers of Bitcoin, Bitfarms remains one of the lowest cost producers.

And for the last 2 years, we have kept our direct cost of production under $10,000 per bitcoin and, in fact, lowered these costs by $500 in the most recent quarter. Our costs have remained relatively stable as we benefit from a portfolio of geographically diverse hydro power contracts, providing low-cost energy. As new production came online in both Canada and Argentina, we increased our corporate cash rate 17% from the end of Q2 to 4.2 exahash per second at the end of the third quarter. During the month of October, we were mining 15.7 bitcoin per day in daily production and slightly over 115 bitcoin per average exahash per second, which is the highest industry percentile in efficiency and performance.

While the industry is facing challenges due to the sharp decline in the price of Bitcoin, we benefit from experience in managing through past industry cycles, and we further benefit from stable electricity costs, while rising energy prices have an outsized impact on those peers that rely on fossil fuel-generated electricity. We continue to take decisive actions to maintain our financial flexibility and increase our liquidity. Jeff Lucas will cover details in a few moments. Slide 4 summarizes the overall status of our farms. We ended the quarter with 10 locations and 176 megawatts in capacity, an increase of 39 megawatts from 9 locations and 137 megawatts in capacity as at June 30, 2022. In October, we increased our total corporate capacity by 6 megawatts, bringing the total current capacity to 182 megawatts. Now I'll take a moment to detail the operations, plans and recent progress at some of these locations. Turning to Slide 5. We have power supply commitments with Hydro-Sherbrooke for a total of 96 megawatts.

The 3 facilities in our Sherbrooke campus are located in close proximity, which affords numerous efficiency advantages, and we are in the final stages of completing our 2022 expansion plan. Leger continues to operate smoothly at its 30 megawatt capacity, delivering 740 petahash per second from 7,400 miners. On November 10, we energized our first 6 megawatts in the 18,000 square foot Garlock farm with the full 18 megawatts expected to be in production in early December. Phase 3 of the Bunker is progressing as planned, with 6 megawatts energized in late October and the remaining 6 megawatts expected to be online, also in early December. The Bunker first activated in March 2022 is currently drawing 42 megawatts and running 9,400 miners. In December, at full build-out, the Bunker will be a 48-megawatt farm housing 12,400 latest generation miners and contributing over 1.2 exahash per second. We expect to retire our de la Pointe farm by the end of this month and anticipate completing its sale by the end of December, which resulted in cash proceeds of $3.5 million to fund growth. The permanent closure of this facility and replacement and full build-out of our Sherbrooke campus in an industrial area is running 3 months ahead of schedule. When completed shortly at 96 megawatts, up from 30 megawatts in 2021, the local community benefits from increased tax and other revenues as well as higher employment. As we stated in our press release on November 4, our hydroelectric energy agreements in Quebec remain in place, and we are excited about continuing to partner with local communities for future growth. Please turn to Slide 6.

In Rio Cuarto Argentina, as we announced on November 1, we have adjusted our plans for our Argentina build-out. We completed construction of warehouse #1 during the past week, and we are continuing the process of commissioning. More specifically, the initial 10-megawatt module of the first 50-megawatt warehouse was completed in September. And the final 4 10-megawatt modules were completed in October and early November. At present, we are operating almost 9 megawatts capacity with 2,300 miners delivering 237 petahash. Earlier this month, we adjusted our year-end guidance from 6 exahash per second to 5 exahash per second. Argentina's macroeconomic environment has impacted our ability to import miners. We are working with the regulatory authorities and our logistic providers to remedy this matter.

The country is wrestling with high inflation, currency devaluation and a significant debt burden. Importation approval for mining and IT equipment has been delayed, which has adversely affected our ability to bring in the additional 12,000 miners we need to operate the first warehouse at its full capacity. In addition, our private power producer in Rio Cuarto is still awaiting approval of its final operating permit to provide power to us. In the meantime, our farm is drawing power during the startup and commissioning phase from the provincial electrical utility at a higher cost than our agreement with the power producer. We continue to evaluate operations and these higher-than-anticipated energy costs on a daily basis. At around 4% of total production, this temporary variance has limited impact on our total direct cost of production.

While the power producer expects the necessary permit to be forthcoming before the end of 2022, we expect higher cost production at that facility until we can draw at least 26 megawatts. Please move on to Slide 7. Since launching in January, Paraguay operations continue to run smoothly, consistently, contributing about 125 petahash. With extensive hydro power infrastructure, we continue to look for new opportunities in the country. Turning to Slide 8. In summary, at the end of the quarter, we had 10 farms in production in 4 countries and are predominantly drawing power from 3 hydroelectric utilities that are geographically diverse. We now have capacity of 182 megawatts, which is operating at 4.4 exahash per second, and we have a clear path to ending the year at 188 megawatts running at 5 exahash per second with considerable future outside from Argentina. At the Bitfirms, we pride ourselves on our efficient operations, which is measured in a few ways. First, uptime. We consistently achieve uptimes of 98% to 99% in our farms. This high utilization rate is a key revenue driver as bitcoin miners are not paid for downtime. Second, Bitcoin per average exahash. This is a measure of operating and production efficiency. In October, we recorded a 115.7 Bitcoin mine per average exahash, which several analysts have noted being market-leading and a figure in which we consistently rank high. Third, jewels per terahash, which is the measure of energy efficiency for Bitcoin miners and our corporate average continues to show steady improvements. For Q3 2022, we had an average of 40, improving 12% compared to 45.5% during Q3 2021. For more information on our mining fleet, I encourage you to visit our website, bitfarms.com to learn more about the miners we operate and how they are deployed. Please turn to Slide 9. Moving on from metrics to financials. I will now hand the call over to Jeff Lucas.

J
Jeffrey Lucas
executive

Thank you, Jeff. I'm very pleased to report we continued our profitable growth during the third quarter of 2022 and maintain our financial strength and flexibility to execute on our growth plan. Here are some highlights. We ended the third quarter with cash of $36 million and 2064 Bitcoin valued as of September 30 at $40 million for total liquidity of $76 million. We mined 1,515 Bitcoin, up from 1,257 bitcoin in the second quarter, an increase of over 20%. Our quarterly revenue was $33 million compared to $42 million in the second quarter of 2022, reflecting a 21% increase in the Bitcoin mine, offset by the 35% decline in the average bitcoin price quarter-over-quarter. And we achieved adjusted EBITDA for the third quarter of $10.3 million, representing a 31% margin as compared to adjusted EBITDA of $18.7 million for a 45% margin in the second quarter of 2022. More on that in a moment. Let's first focus on mining economics. As illustrated on Slide 10, Bitfarms direct cost of production for bitcoin in the third quarter averaged $9,400 -- and as Jeff noted, is among the lowest reported in the industry. This is a $500 or 5% decrease in production costs from $9,900 per BTC in the second quarter and was driven by a combination of a slightly lower average network difficulty and approximate 2% to 3% improvement in our mining efficiency as measured by jewels per terahash and the beneficial impact of a stronger U.S. dollar, Canadian dollar on our Canadian electricity costs. The direct cost of production in the quarter includes the additional electricity costs associated with the start-up and commissioning phase in Argentina and a full accrual for potential Canadian value-added tax or VAT legislation that affects the VAT rate, which has not yet been passed into law. Excluding the accrual for this potential legislation, our direct cost of production during the quarter would have been $8,300 per bitcoin. This opposed legislation has been actively challenged by a coalition of Canadian miners with whom we are actively involved and which are seeing early indications of success to date. It's worth emphasizing that among the benefit of bidding over 95% hydroelectric energy, we enjoyed very stable electricity costs. Over the past 2 years, our quarterly direct cost to mine Bitcoin has remained in the narrow range of $6,900 to $9,900 per bitcoin. While many of our industry peers wrestle with the impact of rising cost of fuel costs, our electricity costs have remained relatively impervious to that impact.

The total cash cost of production during the quarter was $14,300 per bitcoin. This includes a direct mining cost, fixed cost of sales, including rent, technician salaries, et cetera, as well as cash, general and administrative expenses, otherwise referred to as G&A. The $14,300 per bitcoin total cost of production represents a $2,700 decrease or 16% from $17,000 per bitcoin in the second quarter and well below the current price of Bitcoin. The drivers of the lower total cost of production with a lower direct mining cost and a 15% decrease in cash G&A expense are $1.1 million reflecting management actions expressly taken to reduce discretionary spending, including professional services, travel and other overhead costs. Our overall gross money profit for the quarter was $17 million compared to a $27 million in the second quarter. This represents a 52% gross money margin for the quarter in comparison to 66% in the prior quarter. Turning to Slide 11 and focusing on IFRS reported results. We recorded an operating loss of $98 million in the quarter, which included a $44 million realized loss and disposition of digital assets, a $46 million change in unrealized gain on revaluation digital assets and an $84 million impairment charge to our property, plant and equipment. This compares to a second quarter 2022 operating loss of $173 million, including a $78 million realized loss on disposition digital assets, a $70 million change in unrealized loss on revaluation digital assets and an $18 million impairment on goodwill. Let me take a moment here to drill down on the impairment charge. $79 million of the charge pertains to our Argentinian activities. While the current low price at BTC gave rise to the need for an impairment analysis, the impairment charge is driven in large part by the mechanism to convert U.S. dollars to Argentinian pesos to fund our expansion. We convert U.S. dollars into Argentinian pesos at an attractive commercial exchange rate to acquire construction assets and pay for construction costs. For reporting purposes under IFRS, however, we translate the value of those assets on our books into U.S. dollars at a lower official exchange rate. This multi-exchange rate mechanism results in our recording in foreign exchange gain and reporting of our Argentinian assets at a correspondingly higher value than the U.S. dollars that were actually outlay to fund them.

The impairment charge effectively brings a reported value more in line with the amount of U.S. dollars that were used to fund them. This multi-exchange rate mechanism acts as a governmental incentive to bring hard currencies such as the U.S. dollar into Argentina's monetary reserve. The difference between these 2 exchange rates can be quite significant. Currently, the commercial rate is about 305 pesos to the U.S. dollar, and the official rate is about 167 pesos to the US dollar, almost half. If we begin funding the Argentinian build-out, we have recorded related foreign exchange gains on our income statement of about $50 million, an additional expected $20 million of future gain here for a total of about $70 million with the corresponding increase in the reported value of our Argentinian assets and our impairment assessment. Returning now to our reported results. Net loss for the quarter was $85 million or $0.40 per basic diluted share compared to a second quarter 2022 net loss of $142 million or $0.70 per basic and diluted share. Most importantly, we continue to generate cash in mining operations during the quarter and achieved adjusted EBITDA of $10.3 million. In reference to adjusted EBITDA, we comment tongue in cheek that there are approximately 15 publicly traded miners out there and about 17 different definitions of adjusted EBITDA. We view adjusted EBITDA as the truest measure of our operating performance.

And as such, adjusted EBITDA includes only our operating performance during the period being reported and does not include the impact of any changes in the value of our balance sheet asset from liabilities, including the impact of changing prices from BTC and our treasury and foreign currency translation gains and losses. In summary, despite a 35% lower average BTC price for the third quarter compared to the second quarter, we continued during the quarter to report positive cash flow from operations with an adjusted EBITDA of $10.3 million or 31% of revenue. Turning to Slide 12 in our financing strategy. Balance sheet strength and flexibility continue to be our highest priority. Our strategy is centered on protecting shareholders' investments while supporting our key goals of funding financial commitments, planned growth and selective opportunities at a relatively low overall cost of capital. As such, our approach to financial management is straightforward. We look to utilize the proceeds from the sale of our daily BTC production to fund our operating expenses and contribute to our debt. We use our at-the-market, or ATM program, very judiciously to fund our growth investments so as to minimize shareholder dilution. And we acquired a BTC Holdings and Treasury to reduce our leverage and provide the financial flexibility to enable us to continue our growth activities even amidst the current BTC price volatility. During the quarter, we executed the following: -- we sold a total of 2,595 bitcoin comprised of 1,515 bitcoin from production and 1,080 bitcoin from treasury generating proceeds of $56 million, reducing indebtedness, further deleveraging our balance sheet and lowering our interest expense. We paid down $15 million of our revolving Bitcoin-backed credit facility, reducing borrowings under this facility to $23 million and freeing up about $5.5 million of Bitcoin sales otherwise collateralizing the loan.

We paid down $12 million in equipment debt financing, ending the quarter with a total of $55 million in equipment indebtedness. During the quarter, we paid off in full 2 of our oldest highest interest rate facility. And we raised $13 million in net proceeds from our ATM program that we launched over a year ago. This commencement of the ATM program on August 16 of 2021, we have issued approximately 45 million shares of gross proceeds of $200 million or $4.48 per share. So to repeat, we ended the third quarter with total liquidity of $769 comprised of $36 million of cash and 2054 Bitcoin valued at $40 million. Subsequent to the quarter, we paid down a further $3.2 million on our equipment backed facilities and paid off from toll and most expensive loans. Secondly, we raised another $1.9 million net of expenses under our ATM. And third, we reached an agreement to sell de la Pointe property for $3.6 million, of which we expect to receive net proceeds of about $3.5 million to supplement our cash balance that being during the fourth quarter. I'll wrap up my first and today's remarks with 2 additional highlights. First, when we amended our BTC bank facility to extend the maturity to December 29, 2022, we were able to improve the terms, including reducing the collateral coverage requirements from 143% of the loan value to 135% of the loan value without any change in the stated interest rate despite the increase in general level of interest rates. This is a testimony into Bitfarms credit quality in the eyes of our lenders. Second, it's worth noting that we grow and manage our business with a 2024 having in our sites. All of our current indebtedness is scheduled to mature on or before February 24 in advance of the expected timing date. Before turning the call back over to Geoff Morphy, I would like to mention that we have a number of investor conferences coming up, including the Ladenburg Thalmann Second Virtual Crypto Expo 2022 Conference in December and the Needham 25th Annual Growth Conference in early January. Turning now to Slide 13. I'll now turn the call back over to Jeff.

L
L. Morphy
executive

Thank you, Jeff. Before we take your questions, I'll summarize our strong market position and our growth strategy. As of today, we are operating with 182 megawatts and 4.4 exahash per second, a doubling in just the past 11 months. We are diversified. We have mining production in 4 countries: Canada, the United States, Paraguay and Argentina. We are sustainable. Currently, 95% of our fleet is powered by hydroelectricity. We are transparent. We have continuously led the industry in transparency from establishing the monthly production report standard to our corporate website, which provides unparalleled information about our mining operations, and we are proud of the fact that we have been audited by a big 4 firm since becoming public. We have maintained consistently low direct cost production.

Our Q3 2022 direct mining cost of $9,400 is amongst the lowest in the industry. As these direct mining costs consistently consists mostly of electricity, this goes to a preferred strategy of finding and securing PPAs in areas of surplus and stable hydroelectricity. In fact, since our inception over 5 years ago, our gross mining cost per bitcoin has never exceeded $10,000. Keeping our costs down on a consistent basis is a testimonial to our experienced team and our contracts. Our performance metrics are consistently industry-leading. In October, we recorded 115.7 bitcoin mined per average exahash, placing us at the top of the industry performance from our assets. Even at recent Bitcoin price levels, we continue to generate positive cash from mining operations. We have decreased our financial leverage and maintain a flexible balance sheet and financing resources while continuing to meet our financing obligations and have done so since inception.

The experienced internationally based management team at Bitfarms has demonstrated they are highly capable of finding and building new farms in a cost-effective manner and capable of generating sector-leading results. With bitcoin prices down, this is indeed impressive performance and positions the company very well for future growth. To jump on distressed and underperforming companies or to consolidate on a larger scale. Looking at where we are today, we have a strong balance sheet and financing resources, non-dilutive and otherwise, including positive cash flow from operations to fund our continued growth. And we're following a path of growth with discipline, as evidenced by our track record of operating excellence. We are truly well positioned to take advantage of emerging opportunities and be a consolidator in the industry. Operator, we can now open up the call for questions. Please go ahead.

Operator

[Operator Instructions] The first question comes from Alexandre Schmidt of CoinShares.

A
Alexandre Schmidt;InvestmentAnalyst;CoinShares
analyst

Thank you very much for your time and congratulations on the good results. I just would like to understand a little bit more about your financial flexibility on your commitments. First is are the agreements in Quebec, take-or-pay, I mean, the electricity agreement? And do you have the ability to downscale your operations if needed? And also the flexibility, could you talk about how flexible your CapEx bills are, whether you have to honor your machine deals or your site building contracts as well?

L
L. Morphy
executive

Okay. Let's start with Quebec. Quebec, we have 8 contracts within the province, and we have the rights to receive power. There's electricity capacity and demand charges each month. But on a monthly basis, we can reset those accordingly. So I think you're probably really digging in is if we were to shut down miners or to under clock them if circumstances were more severe, could we adjust down our electricity charges and our associated costs? And the answer is yes. But I will also say that we've already reported on our efficiencies.

We have a fleet of modern current generation miners in that province that are operating very, very well. It's air cooled. So the capital costs are down in that province. These are some of the most efficient mining operations in the world. We're generating positive cash flow, and this might be different for others. But for us, the bitcoin price would have to drop, not a lot further, but further before I think we'd have to even consider something like that. Jeff Lucas, do you have something more do you want to add on that before we go into CapEx deals and miner deals?

J
Jeffrey Lucas
executive

No. I think -- but I wasn't glad to talk to some of the CapEx that we do have in place for the miners. Let me start there, if I may. In responce to your question, we enjoy a very good relationship with the miner manufacturers here. And actually, we announced about 2 months ago that we worked out an arrangement with the manufacturer where we could actually better align both the timing and delivery and also the payments for the miners here to be more in alignment with as our infrastructure becomes gets online and becomes available. So we've had that flexibility. We continue to have ongoing discussions with the manufacturers going forward to continue to refine and make sure that we are indeed aligned between our infrastructure spend and what our miners spend as well. So that's actually moving along pretty well. But on your note, I'll add, if you were to look at our financial statements, you will see what the projected commitments are for the next 3 quarters. That distends currently. And I do want to point out that with the flexibility that we do enjoy with a manufacturer, then maybe some variability there. So we can't actually work towards fine-tuning that very closely to what our actual needs are as the infrastructure becomes available to deploy those miners.

Operator

Thank you. Our next question will be from Kevin Dede, H.C. Wainwright.

K
Kevin Dede
analyst

Dr. Morphy, can we peel the onion back a little bit more on the Argentina situation? I know Mr. Lucas gave us great insight on what was going on the currency side. I was just kind of wondering how you think we should look at things going forward. And maybe dig in a little bit on how you see the import side resolving itself and some sort of time line on that.

L
L. Morphy
executive

Yes, Argentina is a fabulous place for our growth opportunity. We enjoy a great contract down there at some of the lowest prices. It's just taking us a little longer to really see the benefits really unfold there. We could not have forecast that the government was going to go through some of the economic turmoil that it is with some of the IMF issues and debt and inflation. And they've had to pull in their reins -- and we can control what we control and we can't control what we can't control. And Argentina is a situation where they are protecting their economy right now, and they've made moves. And we have to follow the government's lead on this, and we're watching it very closely.

And we've just had to adjust our operations for the first warehouse and then the second warehouse accordingly. But when the door is open, which we are very hopeful will take place in the near future, but we don't know that. Then we will react and move forward. But we're spending our money very prudently there, and we are getting output. We think this is temporary. And it really represents, because of the work we've done on the Río Cuarto site, an opportunity when the door opens, probably more so next year to really ramp up very efficiently and quickly there.

K
Kevin Dede
analyst

I think you mentioned, what, 26 megawatts before you can realize the power from the power station that's close by. I mean, essentially, that means switching from grid to your behind-the-meter sort of situation there?

L
L. Morphy
executive

That's correct. Because of their size, I think this is a wholesale utility size generation facility, and we're located in their backyard. And yes, we're having to take grid power until we get to a certain size because these are big turbines that they have. And so the government here has not given the approval for them to provide power to us. And when they do provide power to us, it has to be at an industrial scale. And unfortunately, we don't have the number of miners there to take it at that level. The plant -- the warehouse that we've built is capable of taking 50 megawatts. The 5 modules are constructed and ready to go. We only have miners in the first module because of the importation restrictions. So we have to take this in concert. We have -- we need to get the miners into the country and installed, and we need the approval on the electricity contract. When we get them both done together, we'll be humming. In the meantime, we have to watch things very carefully.

K
Kevin Dede
analyst

Okay. That helps. Mr. Lucas, can you dive in a little bit on the balance sheet. I appreciate the slides that you offer with regard to how debt has changed. But could you give us some insight on what the levels are now?

J
Jeffrey Lucas
executive

Sure. So at the moment, we have $23 million on our BTC backed facility, and we have $55 million of our equipment backed facility, which the 2 largest components of that really is the indebtedness that we have and that we entered into this year. February, we entered into a $32 million facility and which we've now paid down a substantial portion of that. We only about $22 million left. And then in June, we entered into a $36 million facility with a different lender. And these are both, by the way, nonrecourse loans. I do want to point that out here. At $36 million right now, we're down to just over $31 million outstanding. And then we have an additional about $1.6 million of indebtedness out a little under that on some smaller loans that we entered into about 2 years ago. And those are the loans that are up around, anywhere from the 17 to the 18 percentage point level. So we've actually done quite a bit, in terms of tearing down our overall debt. But that's the where we stand. So again, in summary, we had about $55 million now in equipment backed loans all nonrecourse and $23 million outstanding on our BTC backed facility.

K
Kevin Dede
analyst

Okay. So the equipment loans, you say nonrecourse, that means they're not collateralized with equipment?

J
Jeffrey Lucas
executive

No. I mean they are exclusively collateralized by the equipment that there's no general or corporate guarantee associated with it.

K
Kevin Dede
analyst

Okay. All right. So sort of a separate financing vehicle?

J
Jeffrey Lucas
executive

In essence, yes. It's not done that way from a corporate structuring standpoint. But if you -- in terms of the loan agreement itself and the way the loan agreement is structured, the only collateral that play, there's a modest amount of BTC under certain circumstances that can come into play here, but not currently. It is predominantly just the equipment assets itself.

K
Kevin Dede
analyst

Okay. And what was the Bitcoin that collateralized on that $23 million loan?

J
Jeffrey Lucas
executive

So we comment -- what we said there is that the collateral percentage versus the loan value went down from 143% to 135%. So today, right now, there's a little over $30 million of bitcoin that's collateralizing that $23 million facility.

K
Kevin Dede
analyst

Okay. Right. Got it. Okay. Okay. All right. So the terms on the equipment loan, you expect to have completely settled by the end or beginning in early part of say -- is that what you said February 24?

J
Jeffrey Lucas
executive

Yes, both the 2 facilities that we entered into this year, the one in February for $32 million, the one in June for $36 million. Both are scheduled to be entirely paid off before then. I'm sorry, we paid off by February 2024. That's their maturity date. We have the opportunity to pay them off sooner if that makes sense. Obviously, we'll consider the cost of capital and other factors as we give consideration to that.

K
Kevin Dede
analyst

Okay. Then would you mind reviewing your order standing on the equipment side? I understand that you have flexibility there, and it's a function of whether or not the infrastructure is available. But could you just remind us what you have and total exahash it represents.

J
Jeffrey Lucas
executive

My comments here. So I think the predominant point I think you're speaking to is the 48,000 unit order that we entered into in early last year and once you locked out the prices there midyear. So in terms of where that stands at this point in time, of the 48,000, we pretty much in great shape now for about 36,000 of that. There are 12,000 units that we have not yet as paid for. And those are being discussed, of course, with the manufacturer in terms of the timing of those because they're in connection with the warehouse number 2 for Argentina. But separate from that, for the other 36,000, we paid for roughly 33,000 of those in full. And then those remaining about 3,000 or so or 4,000 or so for which we have a balance of around 40%, which is about $6 million, and that we have reflected in our payment schedule and our financial savings that you see for the fourth quarter, that is the quarter we're in now. Whether we actually make the payment then or whether it gets pushed off a little in the first quarter, it depends again on the timing of the infrastructure, our importation of minor to make sure that we're in alignment that we're actually getting those mines and putting into play concurrent with the availability of the infrastructure.

L
L. Morphy
executive

Because of our size, we maintain direct relationships with the largest miner manufacturers. And because of the size of our orders, that relationship has paid dividends, and that they are working with us to make sure that to the best we can that we build the infrastructure and then provide the miners at the same time. And I guess we have negotiated the deferral of some of these miners because of the situation in Argentina and the second warehouse buildup. They're absolutely working with us. And in fact, as they are developing even better machines miners, like depending on when we get to activate Argentina further, we may get some of those better miners as a result of our relationship with them because of the time and the development of their new equipment. So there could be some real upside in terms of better efficiencies and the cost of miners as we move into the next year and explore the opportunities with them.

K
Kevin Dede
analyst

So Jeff, help us understand how -- I guess, how many miners are sitting on the dock in Argentina? And I know you can't really give us timing on that, understandably, but I'm just wondering how that relates to the 36 units or 36,000 units that you have paid for.

L
L. Morphy
executive

Yes. It's not as much as they're sitting in the dock in Argentina. This has been a widespread Argentina importation issue. So it's not miners. It's not just IT equipment. It's all foreign direct investment coming into the country that are feeling the pain of these measures because they're trying to balance their budgets and their debt and everything else going on there. It's quite the macro effect. There's been some political changes with ministers. And those are now settled, and they're in discussions with the international community in terms of loans and balances and fiscal restraints, and they're going to get this figured out. It's really just a matter of time. And so we have miners that we had to slow down. So they are not like all these miners for the first warehouse that we're short with now are actually in China, we just haven't given the shipping instructions to move them across the ocean yet for entry in Argentina.

K
Kevin Dede
analyst

Okay. As you look at that fleet and you look at your 40 jewels per terahash for the entire fleet, is there some thinking internally about continuing an upgrade path and changing out maybe some of the older machines for the ones that you have bought?

L
L. Morphy
executive

Kevin, excellent idea, and we're already there. We had an upgrade fleet program that's been ongoing. Vast majority of our last generation miners have already been retired. Some sold. We did move a bunch of them late last year and into January of this year into Paraguay. But, we're not achieving these type of efficiency records with taking advantage of older machines. So in Washington, we've got the latest generation machines, pretty much all of Quebec are latest generation machines and what's going into Argentina is latest generation machines. So yes, we have some of these miners, we're quite confident that the government in Argentina will soon reopen and we will be back to the plan.

K
Kevin Dede
analyst

Okay, gentlemen, that's all I can think of at the moment.

Operator

[Operator Instructions]. This time, we have no further questions. Will return the call back over to Mr. Geoff Morphy for closing remarks. Please go ahead.

L
L. Morphy
executive

Thank you, Nick. We are living and working in very challenging times. Context and results are paramount when you consider what Bitfarms has achieved this quarter and this year. In an industry where there are many performance metrics and comparisons, I would like to reiterate 3 points about Bitfirms. Year-to-date, we've mined 4,219 Bitcoin. This places us third in total production amongst the public miners, a testament to our ability to scale the business. 2, benefiting from stable low energy costs, we've maintained profitable mining operations each quarter as evidenced by our generation of $10 million in positive adjusted EBITDA in the third quarter of this year. Third, we've delevered our balance sheet, reducing financial risk and better positioning us to consider the increasing number of opportunities within the industry. Thank you all for attending today's conference call. We look forward to updating you on our monthly production reports as well as other developments and on our Q4 conference call in March 2023. Thank you very much.

Operator

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.