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Bitfarms (TSX:BITF) has announced a strategic miner hosting agreement with Stronghold Digital Mining LLC, a subsidiary of Stronghold Digital Mining (NDAQ:SDIG). This partnership is poised to significantly enhance Bitfarms' mining operations and expand its capacity.
Under the terms of the agreement, Bitfarms will accelerate the deployment of 10,000 Bitmain T21 miners, which are now set to go live in October, two months earlier than initially planned. This move is expected to ramp up Bitfarms' mining capacity to an impressive 2.2 exahash per second (EH/s), marking a substantial boost for the company.
Ben Gagnon, CEO of Bitfarms, highlighted the importance of this agreement, stating, "This hosting agreement represents an important milestone in our efforts to further optimize our assets and take greater control over our top cost element, the cost of power. The opportunity to vertically integrate our operations with Stronghold’s existing power generation infrastructure provides a robust pathway to continued, profitable growth."
The hosting agreement is set to commence on October 1, 2024, and will run until December 31, 2025. The contract includes an automatic renewal clause for additional one-year terms unless either party opts out. Under the agreement, Bitfarms will pay Stronghold a monthly fee amounting to 50 percent of the profits generated by the miners. Additionally, there will be monthly adjustments to account for an upfront payment of $210,000 from Bitfarms to Stronghold.
In preparation for this arrangement, Bitfarms has deposited $7.8 million with Stronghold. This deposit, which covers the estimated cost of power for three months of miner operations, will be refundable upon the expiration of the initial term in late 2025.
Founded in 2017, Bitfarms is a global Bitcoin data center company known for its vertically integrated approach. The company develops, owns, and operates mining facilities, and boasts in-house management, electrical engineering, installation services, and technical repair centers.
This new hosting agreement underscores Bitfarms' commitment to optimizing its mining operations and managing power costs more effectively. The partnership with Stronghold Digital Mining is expected to play a crucial role in Bitfarms' ongoing efforts to enhance its operational efficiency and achieve sustainable, profitable growth in the competitive cryptocurrency mining sector.
