Bitfarms In Distress But Still Functional

Bitfarms' liquidation of its Bitcoin reserves shouldn't come as a surprise as we expected Bitcoin's bear market since May 2021.We showed that Bitfarms' overall mining is still profitable but liquidation was required to cover other business expenses.We also showed that the mining business might not enjoy as much cost savings as we expect as other miners are also scaling and are evident through BITF's historical data.Our valuation framework used in the past is not applicable when the overall mining business is making losses as mining operations might be halted if bitcoin declines further.We look to hard asset value and found that BITF is fairly priced but IREN offers better margin of safety.IntroductionA lot has happened since our last Bitfarms (BITF) coverage 2 quarters ago. The recent headline news was BITF forgoing its HODL strategy to accumulate the mined Bitcoins (BTC-USD). This implication is massive because it affects BITF's valuation and perceived risks.We're no stranger to BITF and have successfully traded BITF in the past. We formulated our thesis to issue a price target of $8.50 when BITF was trading in the $3.00 range. Several months later, BITF reached $9.30 to hit our target. We then updated our thesis and explained 2 major hurdles that might prevent BITF from going higher. The 2 hurdles at that time were BITF's $10 all-time high resistance and Bitcoin's bearish bias. Hence, we issued a call to sell call options wi...