INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(Expressed in thousands of U.S. dollars - unaudited)

BITFARMS LTD.

TABLE OF CONTENTS

Page
Financial Statements (unaudited)
Interim Consolidated Statements of Financial Position 3
Interim Consolidated Statements of Profit or Loss and Comprehensive Profit or Loss 4
Interim Consolidated Statements of Changes in Equity 5
Interim Consolidated Statements of Cash Flows 6
Notes to the Interim Condensed Consolidated Financial Statements
1. Nature of Operations 7
2. Liquidity 8
3. Basis of Presentation and Material Accounting Policy Information 9
4. Significant Accounting Judgments and Estimates 13
5. Other Assets 14
6. Digital Assets 14
7. Derivative Assets and Liabilities 15
8. Assets Held for Sale 18
9. Property, Plant and Equipment 19
10. Intangible Assets 22
11. Long-term Deposits, Equipment Prepayments, Commitments and Other 23
12. Trade Payables and Accrued Liabilities 25
13. Long-term Debt 25
14. Leases 27
15. Income Taxes 28
16. Share Capital 29
17. Financial Instruments 30
18. Transactions and Balances with Related Parties 31
19. Net Loss Per Share 31
20. Share-based Payments 32
21. Additional Details to the Statement of Profit or Loss and Comprehensive Profit or Loss 33
22. Geographical Information 34
23. Additional Details to the Statements of Cash Flows 35
24. Subsequent Events 35
2 Page

BITFARMS LTD.

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Expressed in thousands of U.S. dollars - unaudited)

As of
March 31, 		As of
December 31,
Notes 2024 2023
Assets
Current
Cash 65,961 84,038
Trade receivables 729 714
Other assets 5 3,592 2,199
Short-term prepaid deposits 4,507 6,393
Digital assets 6 57,542 31,870
Digital assets - pledged as collateral 6, 13 - 2,101
Derivative assets 7 3,016 1,281
Assets held for sale 8 1,972 1,388
137,319 129,984
Non-current
Property, plant and equipment 9, 22 177,767 186,012
Right-of-use assets 14 13,225 14,315
Long-term deposits, equipment prepayments and other 11 93,616 44,714
Intangible assets 10 4,546 3,700
Total assets 426,473 378,725
Liabilities
Current
Trade payables and accrued liabilities 12 23,888 20,739
Current portion of long-term debt 13 151 4,022
Current portion of lease liabilities 14 2,126 2,857
Taxes payable 777 1,110
Warrant liabilities 7, 16 18,576 40,426
45,518 69,154
Non-current
Long-term debt 13 1,491 -
Lease liabilities 14 12,183 12,993
Asset retirement provision 1,867 1,816
Total liabilities 61,059 83,963
Shareholders' equity
Share capital 586,255 530,123
Contributed surplus 59,689 56,622
Revaluation surplus 12,876 2,941
Accumulated deficit (293,406 ) (294,924 )
Total equity 365,414 294,762
Total liabilities and equity 426,473 378,725

Should be read in conjunction with the notes to the interim condensed consolidated financial statements

May 14, 2024 /s/ Nicolas Bonta /s/ Jeffrey Lucas
Date of approval of the financial statements Chairman of the Board of Directors & Interim Chief Executive Officer Chief Financial Officer
3 Page

BITFARMS LTD.

INTERIM CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND COMPREHENSIVE PROFIT OR LOSS

(Expressed in thousands of U.S. dollars, except per share amounts - unaudited)

Three months ended March 31,
Notes 2024 2023 (restated - Note 3d)
Revenues 6, 22 50,317 30,050
Cost of revenues 21 (60,999 ) (38,403 )
Gross loss (10,682 ) (8,353 )
Operating expenses
General and administrative expenses 21 (13,196 ) (8,360 )
Realized gain on disposition of digital assets 6 - 587
Reversal of revaluation loss on digital assets 6 - 2,695
Gain (loss) on disposition of property, plant and equipment 170 (1,566 )
Operating loss (23,708 ) (14,997 )
Net financial income 21 11,443 10,967
Net loss before income taxes (12,265 ) (4,030 )
Income tax recovery 15 6,285 330
Net loss (5,980 ) (3,700 )
Other comprehensive income (loss)
Item that will not be reclassified to profit or loss:
Change in revaluation surplus - digital assets, net of tax 6 17,433 1,225
Total comprehensive income (loss), net of tax 11,453 (2,475 )
Loss per share 19
Basic and diluted (0.02 ) (0.02 )
Weighted average number of common shares outstanding 19
Basic and diluted 338,745,000 232,541,000

Should be read in conjunction with the notes to the interim condensed consolidated financial statements

4 Page

BITFARMS LTD.

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of U.S. dollars, except number of shares - unaudited)

Notes Number of shares Share capital Contributed surplus Accumulated deficit Revaluation surplus Total equity
Balance as of January 1, 2024 334,153,000 530,123 56,622 (294,924 ) 2,941 294,762
Net loss - - - (5,980 ) - (5,980 )
Change in revaluation surplus - digital assets, net of tax - - - - 17,433 17,433
Total comprehensive income (loss), net of tax - - - (5,980 ) 17,433 11,453
Transfer of revaluation surplus on disposal of digital assets to accumulated deficit, net of tax - - - 7,498 (7,498 ) -
Share-based payment 20 - - 3,094 - - 3,094
Issuance of common shares 16 16,997,000 37,268 - - - 37,268
Exercise of stock options and warrants 16, 20 5,142,000 18,864 (27 ) - - 18,837
Balance as of March 31, 2024 356,292,000 586,255 59,689 (293,406 ) 12,876 365,414
Balance as of January 1, 2023 (restated - Note 3d) 224,200,000 404,934 47,653 (197,189 ) - 255,398
Net loss - - - (3,700 ) - (3,700 )
Change in revaluation surplus - digital assets, net of tax - - - - 1,225 1,225
Total comprehensive income (loss), net of tax - - - (3,700 ) 1,225 (2,475 )
Share-based payment 20 - - 2,536 - - 2,536
Issuance of common shares 16 15,940,000 15,764 - - - 15,764
Exercise of stock options 16, 20 122,000 76 (29 ) - - 47
Balance as of March 31, 2023 (restated - Note 3d) 240,262,000 420,774 50,160 (200,889 ) 1,225 271,270

Should be read in conjunction with the notes to the interim condensed consolidated financial statements

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BITFARMS LTD.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of U.S. dollars - unaudited)

Three months ended March 31,
Notes 2024 2023 (restated - Note 3d)
Cash flows from operating activities
Net loss (5,980 ) (3,700 )
Adjustments for:
Depreciation and amortization 21 38,977 20,700
Net financial income 21 (11,443 ) (10,967 )
Digital assets earned 6 (49,423 ) (29,208 )
Proceeds from sale of digital assets earned 6 49,570 28,483
Realized gain on disposition of digital assets 6 - (587 )
Reversal of revaluation loss on digital assets 6 - (2,695 )
Share-based payment 20 3,094 2,536
Income tax recovery 15 (6,285 ) (330 )
Loss (gain) on disposition of property, plant and equipment (170 ) 1,566
Interest and financial income received (expenses paid) 524 (2,099 )
Income taxes paid (260 ) -
Changes in non-cash working capital components 23 (323 ) (2,670 )
Net change in cash related to operating activities 18,281 1,029
Cash flows used in investing activities
Purchase of property, plant and equipment (3,920 ) (8,104 )
Proceeds from sale of property, plant and equipment 1,043 2,405
Purchase of marketable securities 21 (2,284 ) (7,163 )
Proceeds from disposition of marketable securities 21 2,622 9,334
Equipment and construction prepayments (74,015 ) -
Net change in cash related to investing activities (76,554 ) (3,528 )
Cash flows from financing activities
Issuance of common shares 16 37,268 15,764
Repayment of long-term debt 13 (4,075 ) (13,474 )
Proceeds from long-term debt 13 1,695 -
Repayment of lease liabilities 14 (779 ) (1,394 )
Exercise of stock options and warrants 16, 20 6,027 47
Net change in cash related to financing activities 40,136 943
Net decrease in cash (18,137 ) (1,556 )
Cash, beginning of the period 84,038 30,887
Exchange rate differences on currency translation 60 47
Cash, end of the period 65,961 29,378

Should be read in conjunction with the notes to the interim condensed consolidated financial statements

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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

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 at 110 Yonge Street, Suite 1601, Toronto, Ontario, Canada, M5C 1T4.

The activities of the Company are mainly comprised of selling its computational power used for hashing calculations for the purpose of cryptocurrency mining in multiple jurisdictions as described in Note 22 "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 to 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 on a daily basis in BTC. Bitfarms accumulates the cryptocurrency fees it receives or exchanges them for U.S. dollars through reputable and established cryptocurrency trading platforms.

Terms and definitions

In these financial statements, the terms below have the following definitions:

Term Definition
1 Backbone Backbone Hosting Solutions Inc.
2 Volta 9159-9290 Quebec Inc.
3 Backbone Argentina Backbone Hosting Solutions SAU
4 Backbone Paraguay Backbone Hosting Solutions Paraguay SA
5 Backbone Mining Backbone Mining Solutions LLC
6 BTC Bitcoin
7 BVVE Blockchain Verification and Validation Equipment (primarily Miners)
8 CAD Canadian Dollars
9 USD U.S. Dollars
10 ARS Argentine Pesos
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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

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 interim condensed consolidated financial statements were authorized for issuance.

A BTC Halving is scheduled to occur once every 210,000 blocks, or roughly every four years, until the total amount of BTC rewards issued reaches 21 million, which is expected to occur around 2140. The most recent BTC Halving occurred on April 19, 2024, at which time BTC block rewards decreased from 6.25 BTC per block to 3.125 BTC per block. Once 21 million BTC are generated on or about the year 2140, the network will stop producing more BTC, and the industry will then need to rely on transaction fees and/or other sources of revenue. While BTC prices have had a history of significant fluctuations around BTC Halving events, there is no guarantee that the price change will be favorable or would compensate for the reduction in Mining rewards and the compensation from Mining Pools.

At current BTC prices, the Company's existing cash resources and the proceeds from sales 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' ownership in the Company may be diluted. If the Company is unable to obtain financing, including by issuing securities, or if funds from operations and proceeds from sales 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 INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 3: BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION

a. Basis of preparation and measurement

The interim condensed consolidated financial statements ("Financial Statements") of the Company comprise the accounts of Bitfarms Ltd. and its wholly-owned subsidiaries. These Financial Statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") applicable to the preparation of interim financial statements, including International Accounting Standard 34, Interim Financial Reporting. These Financial Statements were approved by the Board of Directors on May 14, 2024.

These Financial Statements do not include all the information required for full annual financial statements and should be read in conjunction with the audited annual consolidated financial statements of the Company and the notes thereto for the year ended December 31, 2023.

These Financial Statements have been prepared under the same accounting policies used in the audited annual consolidated financial statements for the year ended December 31, 2023, except for new accounting standards issued and adopted by the Company which are described below. The accounting policies have been applied consistently by the Company's entities and to all periods presented in these Financial Statements, unless otherwise indicated.

The Financial Statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments and digital assets recorded at fair value, and assets held for sale measured at the lower of their carrying amount and fair value less costs to sell.

9 Page

BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 3: BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

b. New accounting amendments issued and adopted by the Company

The following amendments to existing standards were adopted by the Company as of 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, Presentation of the Financial Statements ("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 interim consolidated statements of financial position, 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 adoption by the Company of the amendments listed above did not have a significant impact on the Company's Financial Statements.

c. New accounting amendments and standard 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, 2025, with an earlier application permitted:

Amendments to IAS 21, The Effects of Changes in Foreign Exchange Rates ("IAS 21")

Amendments to IAS 21 require an entity to apply a consistent approach in assessing whether a currency can be exchanged into another currency and, when it cannot, in determining the exchange rate to use and the disclosures to provide.

The Company is currently evaluating the impact of adopting the amendments on the Company's Financial Statements.

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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 3: BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

c. New accounting amendments and standard issued to be adopted at a later date (Continued)

The following new standard has been issued and is applicable to the Company for its annual period beginning on January 1, 2027, with an earlier application permitted:

IFRS 18, Presentation and Disclosure in Financial Statements ("IFRS 18")

On April 9, 2024, the International Accounting Standards Board issued IFRS 18, the new standard on presentation and disclosure in financial statements, which will replace IAS 1, with a focus on updates to the statement of profit or loss. The key new concepts introduced in IFRS 18 relate to:

● the structure of the statement of profit or loss, including specified totals and subtotals;
● required disclosures in the financial statements for certain profit or loss performance measures that are reported outside an entity's financial statements (i.e., management-defined performance measures); and
● enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes in general.

The Company is currently evaluating the impact of adopting the new standard on the Company's Financial Statements.

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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 3: BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

d. 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 and broker 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 of the warrants and broker warrants as a financial liability and measurement of such warrants at fair value through profit or loss, not equity.

The effects of the restatement on the affected financial statement line items for the prior period are as follows:

Interim consolidated statements of profit or loss and comprehensive profit or loss extract for the three months ended March 31, 2023 - Restatement

Three months ended March 31,
2023 (as reported) Warrant adjustments 2023 (as restated)
Operating loss (14,997 ) - (14,997 )
Net financial income (expenses) 12,188 (1,221 ) 10,967
Net loss before income taxes (2,809 ) (1,221 ) (4,030 )
Income tax recovery 330 - 330
Net loss (2,479 ) (1,221 ) (3,700 )
Other comprehensive income (loss)
Item that will not be reclassified to profit or loss:
Change in revaluation surplus - digital assets, net of tax 1,225 - 1,225
Total comprehensive loss, net of tax (1,254 ) (1,221 ) (2,475 )
Loss per share
Basic and diluted (0.01 ) (0.01 ) (0.02 )

Interim consolidated statements of cash flows extract for the three months ended March 31, 2023 - Restatement

Three months ended March 31,
2023 (as reported) Warrant adjustments 2023 (as restated)
Cash flows from operating activities
Net loss (2,479 ) (1,221 ) (3,700 )
Adjustments for:
Net financial income (12,188 ) 1,221 (10,967 )
Net change in cash related to operating activities 1,029 - 1,029
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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 4: SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

The preparation of the Financial Statements requires Management to undertake judgments, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. These estimates and judgments 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.

The significant judgements made by Management in applying the Company's accounting policies and the key sources of estimation uncertainty were the same as those described in the audited annual consolidated financial statements for year ended December 31, 2023, except for the following:

Property, plant and equipment

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.

During the three months ended March 31, 2024, in connection with the replacement of older Miners following the Company's transformative fleet upgrade as described in Note 9 - Property, Plant and Equipment, the Company reviewed and adjusted the useful lives, residual values and method of depreciation of older Miners that will be replaced by the new fleet in 2024.

For these Miners, the depreciation was accelerated to bring the book value to the estimated recoverable value at the time they are expected to be replaced. The residual values were adjusted to reflect the expected proceeds from the eventual sale and the depreciation method was modified from sum-of-years to straight-line method.

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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 5: OTHER ASSETS

As of
March 31,		 As of
December 31,
2024 2023
Sales taxes receivable* 1,138 805
Electrical component inventory 1,017 705
Other receivables 1,437 689
3,592 2,199

* Refer to Note 21b for more details about the provision applied to the Argentine value-added tax (VAT) receivable included in sales taxes receivable.

NOTE 6: DIGITAL ASSETS

BTC transactions and the corresponding values for the three months ended March 31, 2024 and 2023 were as follows:

Three months ended March 31,
2024 2023
Quantity Value Quantity Value
Balance of digital assets including digital assets pledged as collateral as of January 1, 804 33,971 405 6,705
BTC earned* 943 49,423 1,297 29,208
BTC exchanged for cash and services (941 ) (49,570 ) (1,267 ) (28,483 )
Realized gain on disposition of digital assets** - 11,063 - 587
Change in unrealized gain on revaluation of digital assets** - 12,655 - 4,362
Balance of digital assets including digital assets pledged as collateral as of March 31, 806 57,542 435 12,379
Less digital assets pledged as collateral as of March 31,*** - - (74 ) (2,122 )
Balance of digital assets excluding digital assets pledged as collateral as of March 31, 806 57,542 361 10,257

* Management estimates the fair value of BTC earned on a daily basis as the quantity of cryptocurrency received multiplied by the price quoted on Coinbase on the day it was received. Management considers the prices quoted on Coinbase to be a level 2 input under IFRS 13, Fair Value Measurement.

** A portion of the realized gain on disposition of digital assets and the change in unrealized gain on revaluation of digital assets is presented in other comprehensive income after reversing previously recorded revaluation loss on digital assets in the statement of profit or loss. For the three months ended March 31, 2024, a gain of $17,433, net of $6,285 of deferred income tax expense, was presented in other comprehensive income (three months ended March 31, 2023: $1,225 and $442, respectively).

*** Refer to Note 13 for details of the Company's long-term debt and BTC pledged as collateral. During the three months ended March 31, 2024, the NYDIG Loan balance was fully repaid and the BTC previously pledged as collateral thereunder became unencumbered.

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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 7: DERIVATIVE ASSETS AND LIABILITIES

BTC option contracts

Starting in the first quarter of 2023, the Company purchased BTC option contracts that gave it the right, but not the obligation, to sell digital assets at a fixed price. Option 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.

Reconciliation of the fair value measurement of derivatives (Level 2):

As of
March 31, 		As of
December 31,
2024 2023
Derivative Assets Derivative Liabilities Derivative Assets Derivative Liabilities
three-month period twelve-month period
Balance as of January 1, 1,281 - - -
Remeasurement recognized in statement of profit or loss during the period 2,490 - 28 20
Purchases 631 - 1,253 366
Sales (1,386 ) - - (386 )
Balance as of period end 3,016 - 1,281 -

The following gain or loss on derivatives are recognized in Net financial income in the interim consolidated statements of profit or loss and comprehensive profit or loss:

Three months ended March 31,
2024 2023
Unrealized change in fair value of outstanding contracts 2,128 (35 )
Realized gain on settled contracts 362 70
2,490 35
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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 7: DERIVATIVE ASSETS AND LIABILITIES (Continued)

Warrant liabilities

The fair value of warrant liabilities is as follows:

As of
March 31, 		As of
December 31,
2024 2023
2023 private placement 16,586 34,276
2021 private placements 1,990 6,150
18,576 40,426

In November 2023, the Company completed a private placement that included 22,222,000 warrants and 3,000,000 broker warrants to purchase common shares. The warrants and broker 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 of the warrants and broker warrants as a financial liability and measurement of such warrants at fair value through profit or loss recognized in Net financial income.

Details of the outstanding warrants are as follows:

Three months ended March 31,
2024 2023
Number of
warrants 		Weighted
average exercise
price (USD) 		Number of
warrants 		Weighted
average exercise
price (USD)
Outstanding, January 1, 35,105,000 2.83 19,153,000 4.21
Exercised (5,111,000 ) 1.17 - -
Expired (121,000 ) 2.47 - -
Outstanding, March 31, 29,873,000 3.12 19,153,000 4.21

The weighted average contractual life of the warrants as of March 31, 2024, was 1.1 years (March 31, 2023: 1.2 years).

On January 7, 2024, 96,000 broker warrants from the January 7, 2021 private placement expired and were derecognized, which resulted in a non-cash gain on revaluation of warrants of $61 included in Net financial income.

In February 2024, 5,000,000 warrants and 111,000 broker warrants related to the 2023 private placement were exercised resulting in the issuance of 5,111,000 common shares for proceeds of approximately $5,986.

On March 11, 2024, 25,000 warrants relating to the acquisition of the Garlock building in Quebec issued during the first quarter of 2022 expired. These warrants were recorded as equity instruments.

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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 7: DERIVATIVE ASSETS AND LIABILITIES (Continued)

Warrant liabilities (Continued)

The Black-Scholes model and inputs below were used in determining the weighted average values of the warrants and broker warrants prior to their derecognition as described in Note 16 and at period end.

2023 warrants and broker warrants

Remeasurement on
settlement of warrants 		Remeasurement at period end
Measurement date February 12 to 28,
2024 		March 31,
2024 		December 31,
2023
Dividend yield (%) - - -
Expected share price volatility (%) 87 % 86 % 91 %
Risk-free interest rate (%) 4.67 % 4.59 % 4.23 %
Expected life of warrants (years) 2.74 2.65 2.90
Share price (CAD) 4.42 3.01 3.85
Exercise price (USD) 1.17 1.17 1.17
Fair value of warrants (USD) 2.51 1.53 2.15
Number of warrants outstanding (exercised) (5,111,000 ) 10,841,000 15,952,000

2021 warrants and broker warrants

Remeasurement at period end
Measurement date March 31,
2024 		December 31,
2023
Dividend yield (%) - -
Expected share price volatility (%) 95 % 82 %
Risk-free interest rate (%) 4.59 % 4.23 %
Expected life of warrants (years) 0.21 0.46
Share price (CAD) 3.01 3.85
Exercise price (USD) 4.21 4.20
Fair value of warrants (USD) 0.10 0.32
Number of warrants outstanding 19,032,000 19,128,000
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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 8: ASSETS HELD FOR SALE

As of March 31, 2024 and December 31, 2023, assets held for sale consisted of the following:

As of
March 31, 		As of
December 31,
Notes 2024 2023
Miners i. 1,571 521
Mining electrical components 401 867
1,972 1,388
i.Miners held of sale

The following table summarizes the movement of Miners held for sale:

MicroBT
WhatsMiner M30
& M31 Miners 		Innosilicon T2T & T3,
Canaan Avalon A10
and Antminer T15 &
S15 Miners 		MicroBT
WhatsMiner
M20S Miners 		Bitmain S19j Pro
Miners 		TOTAL
Qty Value Qty Value Qty Value Qty Value Qty Value
Balance as of January 1, 2023 - - 1,272 190 2,512 1,030 - - 3,784 1,220
Additions - - 1,848 198 - - 300 205 2,148 403
Dispositions - - - - (1,781 ) (714 ) - - (1,781 ) (714 )
Impairment - - (3,120 ) (388 ) - - - - (3,120 ) (388 )
Balance as of December 31, 2023 - - - - 731 316 300 205 1,031 521
Additions 7,696 1,363 - - - - - - 7,696 1,363
Dispositions - - - - (258 ) (108 ) (300 ) (205 ) (558 ) (313 )
Balance as of March 31, 2024 7,696 1,363 - - 473 208 - - 8,169 1,571
a. S19j Pro Bitmain Miners

During the three months ended March 31, 2024, the Company sold 300 Bitmain S19j Pro Miners with a carrying amount of $205 and disposed of them for net proceeds of $205 resulting in no gain or loss.

b. MicroBT WhatsMiner M30 and M31 Miners

During the three months ended March 31, 2024, the Company ceased using 2,775 MicroBT WhatsMiner M30 Miners and 4,921 MicroBT WhatsMiner M31 Miners and planned to dispose of them within the next 12 months.

c. MicroBT WhatsMiner M20S Miners

During the three months ended March 31, 2024, the Company sold 258 MicroBT WhatsMiner M20S Miners with a carrying amount of $108 and disposed of them for net proceeds of $34 resulting in a loss of $74. Management determined that the remaining MicroBT WhatsMiner M20S Miners continue to meet the criteria to be classified as held for sale as of March 31, 2024.

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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 9: PROPERTY, PLANT AND EQUIPMENT

As of March 31, 2024 and December 31, 2023, property, plant and equipment ("PPE") consisted of the following:

Notes BVVE and
electrical
components 		Mineral
assets 		Land and
buildings 		Leasehold
improvements 		Vehicles Total
Cost
Balance as of January 1, 2024 354,803 - 5,740 50,728 1,262 412,533
Additions 28,480 - 3,247 305 14 32,046
Dispositions (4 ) - - (560 ) (27 ) (591 )
Transfer to assets held for sale 8 (24,875 ) - - - - (24,875 )
Balance as of March 31, 2024 358,404 - 8,987 50,473 1,249 419,113
Accumulated Depreciation
Balance as of January 1, 2024 199,794 - 424 25,656 647 226,521
Depreciation 37,028 - 38 1,012 39 38,117
Dispositions (3 ) - - (423 ) (16 ) (442 )
Transfer to assets held for sale 8 (23,403 ) - - - - (23,403 )
Impairment on deposits transferred to PPE 553 - - - - 553
Balance as of March 31, 2024 213,969 - 462 26,245 670 241,346
Net book value as of March 31, 2024 144,435 - 8,525 24,228 579 177,767
BVVE and
electrical
components 		Mineral
assets 		Land and
buildings 		Leasehold
improvements 		Vehicles Total
Cost
Balance as of January 1, 2023 308,205 9,000 4,392 45,278 1,082 367,957
Additions 63,598 - 1,348 5,924 272 71,142
Additions related to asset acquisitions 13 - - 30 - 43
Dispositions (7,325 ) (9,000 ) - (5 ) (92 ) (16,422 )
Transfer to assets held for sale 8 (9,688 ) - - - - (9,688 )
Effect of change in discount rate - - - (499 ) - (499 )
Balance as of December 31, 2023 354,803 - 5,740 50,728 1,262 412,533
Accumulated Depreciation
Balance as of January 1, 2023 120,097 6,000 270 21,636 526 148,529
Depreciation 77,551 - 154 3,556 194 81,455
Dispositions (5,756 ) (9,000 ) - (5 ) (73 ) (14,834 )
Transfer to assets held for sale 8 (8,418 ) - - - - (8,418 )
Impairment 1,882 3,000 - - - 4,882
Impairment on deposits transferred to PPE 14,438 - - 469 - 14,907
Balance as of December 31, 2023 199,794 - 424 25,656 647 226,521
Net book value as of December 31, 2023 155,009 - 5,316 25,072 615 186,012
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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 9: PROPERTY, PLANT AND EQUIPMENT (Continued)

BVVE

Further details of the quantity and models of BTC BVVE held by the Company as of March 31, 2024 and December 31, 2023 are as follows :

Notes MicroBT
WhatsMiner* 		Bitmain
S19j Pro 		Bitmain
T21 		Total
Quantity as of January 1, 2024 51,738 16,361 - 68,099
Additions 100 - 2,982 3,082
Dispositions (258 ) (300 ) - (558 )
Quantity as of March 31, 2024 51,580 16,061 2,982 70,623
Classified as assets held for sale 8 (8,169 ) - - (8,169 )
Presented as property, plant and equipment 43,411 16,061 2,982 62,454

* Includes 473 M20S classified as assets held for sale, 36,018 M30 of which 2,775 M30 are classified as assets held for sale, 12,517 M31 of which 4,921 M31 are classified as assets held for sale and 2,572 M50 Miners.

Refer to Note 8 for more details on assets held for sale.

Notes MicroBT
WhatsMiner* 		Bitmain
S19j Pro 		Innosilicon
T3 & T2T 		Bitmain
S19XP 		Total
Quantity as of January 1, 2023 45,375 7,172 5,711 - 58,258
Additions 8,281 9,289 - 409 17,979
Dispositions (1,918 ) (100 ) (5,711 ) (409 ) (8,138 )
Quantity as of December 31, 2023 51,738 16,361 - - 68,099
Classified as assets held for sale 8 (731 ) (300 ) - - (1,031 )
Presented as property, plant and equipment 51,007 16,061 - - 67,068

* Includes 731 M20S classified as assets held for sale, 36,018 M30S, 12,517 M31S and 2,473 M50 Miners.

Refer to Note 8 for more details on assets held for sale.

20 Page

BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 9: PROPERTY, PLANT AND EQUIPMENT (Continued)

Changes in the useful life, residual value and depreciation method of certain BVVE

i. Background

During the three months ended March 31, 2024, the Company exercised its purchase option for 28,000 Bitmain T21 Miners and entered into purchase agreements to acquire 19,280 Bitmain T21 Miners, 3,888 Bitmain S21 Miners and 740 Bitmain S21 hydro Miners. Refer to Note 11 for more details. The Company intends to liquidate its older Miners that are expected to be replaced with the Bitmain T21 Miners, Bitmain S21 Miners, Bitmain S21 hydro Miners and other hydro Miners.

ii. Accelerated depreciation

The older Miners will remain in service until the new Miners are installed to replace them. The Company has changed the usage and the retention strategy of the older Miners and, accordingly, revised their specific useful life, residual value and depreciation method.

The changes are summarized as follows:

● decreasing the specific useful life of the older Miners from 5 years to 2 years to reflect their eventual disposal in 2024;
● decreasing the residual values to reflect the expected proceeds from the eventual disposals; and
● accelerating the depreciation method from sum-of-years over 5 years to straight-line method over 2 years to represent the change in pattern in which their future economic benefits are expected to be consumed by the Company.

During the three months ended March 31, 2024, the Company recorded accelerated depreciation of $18,503 on its older Miners. These assets are expected to be depreciated to their residual values by the end of 2024.

The decision to replace the older Miners, as well as a review of the useful life, residual value and depreciation method were indicators for impairment testing. As a result, 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. Based on its calculations, which were based on discounted cash flow models, the Company determined that no impairment loss should be recorded during the three months ended March 31, 2024.

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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 10: INTANGIBLE ASSETS

Systems software Access rights to
electricity 		Total
Cost
Balance as of January 1, 2024 5,150 3,801 8,951
Additions - 912 912
Balance as of March 31, 2024 5,150 4,713 9,863
Accumulated amortization
Balance as of January 1, 2024 5,138 113 5,251
Amortization 4 62 66
Balance as of March 31, 2024 5,142 175 5,317
Net book value as of March 31, 2024 8 4,538 4,546
Systems software Access rights to
electricity 		Total
Cost
Balance as of January 1, 2023 5,150 - 5,150
Additions related to asset acquisitions - 3,801 3,801
Balance as of December 31, 2023 5,150 3,801 8,951
Accumulated amortization
Balance as of January 1, 2023 5,117 - 5,117
Amortization 21 113 134
Balance as of December 31, 2023 5,138 113 5,251
Net book value as of December 31, 2023 12 3,688 3,700

Additions related to access rights to electricity

In April 2023, the Company received approval from the power supplier in Washington State for a 6 MW expansion. During the second quarter of 2023, the Company began constructing an additional production facility on Company-owned land and paid $912 to the power supplier for establishing the connection, which was capitalized as long-term deposits, equipment, prepayments and other. During the three months ended March 31, 2024, the power supplier established the electricity connection, allowing the Company to access the 6 MW of hydro power capacity. As a result, the balance of $912 was reclassified from long-term deposits, equipment, prepayments and other to intangible assets.

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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 10: INTANGIBLE ASSETS (continued)

The following table summarizes the access rights to electricity:

Year Location Additions to intangibles ($) Additional capacity Term of contractual access rights Amortization method and period
2024 Washington State, USA 912 6 MW No termination date Declining balance 4%
912 6 MW
2023 Baie-Comeau, Quebec 2,315 22 MW No termination date Straight-line over the lease term of the facility
2023 Paso Pe, Paraguay 1,065 50 MW * Ending in December 31, 2027 Straight-line over the access rights period
2023 Yguazu, Paraguay 421 100 MW Ending in December 31, 2027 Straight-line over the access rights period
3,801 172 MW
178 MW

* In November 2023, the Company finalized an amendment to the existing contract for an additional 20 MW of energy capacity for a total capacity of 70 MW.

NOTE 11: LONG-TERM DEPOSITS, EQUIPMENT PREPAYMENTS, COMMITMENTS AND OTHER

As of
March 31, 		As of
December 31,
2024 2023
Security deposits for energy, insurance and rent 5,331 4,901
Equipment and construction prepayments a 88,285 39,813
93,616 44,714
a. Equipment and construction prepayments

The following table details the equipment and construction prepayments:

As of
March 31, 		As of
December 31,
2024 2023
Miner credits i. - 11,330
Bitmain T21 Miners Purchase Order and Purchase Option ii. 66,333 16,912
March 2024 Purchase Order iii. 8,718 -
Other BVVE and electrical components iv. 4,963 4,400
Construction work and materials v. 8,271 7,171
88,285 39,813
i. Miner credits

In December 2022, the Company renegotiated its previous purchase agreements for 48,000 Miners by extinguishing the outstanding commitments of $45,350 without penalty and establishing a $22,376 credit for deposits previously made. The Company received $3,279 of Miners, reducing the outstanding credit balance to $19,097 of as December 31, 2022, which was fully utilized during 2023 for the acquisition of hydro Miners and hydro containers. These items were received or in transit during the three months ended March 31, 2024 and the long-term deposit balance was reduced to nil upon the transfer to property, plant and equipment.

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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 11: LONG-TERM DEPOSITS, EQUIPMENT PREPAYMENTS, COMMITMENTS AND OTHER (Continued)

a. Equipment and construction prepayments (Continued)
ii. Bitmain T21 Miners Purchase Order and Purchase Option

During the fourth quarter of 2023, the Company placed a firm purchase order for 35,888 Bitmain T21 Miners (the "Purchase Order'') totaling $95,462 with deliveries scheduled from March 2024 to May 2024 and made a non-refundable deposit of $9,464. In addition, the Company secured a purchase option for an additional 28,000 Bitmain T21 Miners (the "Purchase Option'') totaling $74,480 and made a non-refundable deposit of $7,448. This Purchase Option gives the Company the right, exercisable until December 31, 2024, but not the obligation, to purchase, up to 28,000 additional Bitmain T21 Miners.

During the three months ended March 31, 2024, the Company made additional deposits of $57,356 towards the Purchase Order, of which approximately 3,000 Bitmain T21 Miners with a book value of $7,935 were received or in transit. During the same period, the Company also fully exercised the Purchase Option with deliveries scheduled from September 2024 to October 2024. As of March 31, 2024, the deposit balance for the Purchase Order and the Purchase Option was $66,333.

iii. March 2024 Purchase Order

During the three months ended March 31, 2024, the Company purchased an additional 19,280 Bitmain T21 Miners, 3,888 Bitmain S21 Miners and 740 Bitmain S21 Hydro Miners (collectively defined as the "March 2024 Purchase Order'') for $51,285, $13,608 and $4,338, respectively, with deliveries scheduled from April 2024 to November 2024. The Company made a deposit of $8,718 for the March 2024 Purchase Order during the three months ended March 31, 2024.

iv. Other BVVE and electrical components

As of March 31, 2024, the Company had deposits for other BVVE and electrical components in the amount of $4,963.

v. Construction work and materials

As of March 31, 2024, the Company had deposits for construction work and materials in the amount of $8,271, mainly for the Paraguay expansions.

b. Commitments

The Company's remaining payment obligations in connection with the Purchase Order, the Purchase Option and the March 2024 Purchase Order are outlined below:

As of
March 31,
2024
Three months ending June 30, 2024 39,528
Three months ending September 30, 2024 85,889
Three months ending December 31, 2024 30,772
156,189

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 being taken against the Company, which may result in damages payable by the Company and forced continuance of the contractual arrangement. Under such circumstances, the Company's growth plans and ongoing operations could be adversely impacted.

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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 11: 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 25%.

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 $9,424 do not apply. While the final outcome of this matter is uncertain at this time, Management has determined it is not probable that it will result in a future cash outflow for the Company, and, as such, no provision was recorded as of March 31, 2024.

NOTE 12: TRADE PAYABLES AND ACCRUED LIABILITIES

As of
March 31, 		As of
December 31,
2024 2023
Trade accounts payable and accrued liabilities 10,669 9,077
Government remittances 13,219 11,662
23,888 20,739

NOTE 13:LONG-TERM DEBT

As of
March 31, 		As of
December 31,
2024 2023
Building financing 1,642 -
Equipment financing - 4,022
Total long-term debt 1,642 4,022
Less current portion of long-term debt (151 ) (4,022 )
Non-current portion of long-term debt 1,491 -

Movement in long-term debt is as follows:

As of
March 31, 		As of
December 31
2024 2023
three-month period twelve-month period
Balance as of January 1, 4,022 47,147
Issuance of long-term debt 1,695 -
Payments (4,147 ) (33,233 )
Gain on extinguishment of long-term debt - (12,580 )
Interest on long-term debt 72 2,688
Balance as of period end 1,642 4,022
25 Page

BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 13:LONG-TERM DEBT (Continued)

a. Building financing

During three months ended March 31, 2024, the Company sold its Garlock building in Sherbrooke, Quebec for $1,695 and immediately leased it back for 10 years. Since the lease agreement included a substantive repurchase option of the building in a form of a call option, the Company has not transferred the control of the asset to the buyer, and the transaction does not qualify as a sale. Accordingly, it is accounted for as a financing arrangement for the proceeds received from the buyer, and the building continues to be recognized as property, plant and equipment of the Company.

b. Equipment financing activity

Repayment of NYDIG Loan

In June 2022, Backbone entered into an equipment financing agreement, referred to as the "NYDIG Loan", for gross proceeds of $36,860 collateralized by 10,395 WhatsMiner M30S Miners. The net proceeds received by the Company were $36,123, net of origination and closing fees of $737. As part of the agreement, the Company was required to maintain in a segregated wallet an approximate quantity of BTC whose value equates to at least one month of interest and principal payments on the outstanding loan. The pledged BTC was held in a segregated Coinbase Custody account and owned by the Company unless there was an event of default under the NYDIG Loan.

During three months ended March 31, 2024, the NYDIG Loan balance was fully repaid, and the Company's Miners collateralizing the loan and BTC pledged as collateral became unencumbered.

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 $829.

Settlement of the loan with BlockFi Lending LLC ("BlockFi")

In February 2022, Backbone Mining entered into an equipment financing agreement for gross proceeds of $32,000 collateralized by 6,100 Bitmain S19j Pro Miners referred to as the "BlockFi Loan". The net proceeds received by the Company were $30,994 after capitalizing origination, closing and other transaction fees of $1,006.

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 $20,330 for cash consideration of $7,750, discharging Backbone Mining of all further obligations and resulting in a gain on extinguishment of long-term debt of $12,580 recognized in Net financial expenses (income) in the consolidated statements of profit or loss and comprehensive profit or loss during the three months ended March 31, 2023. Upon settlement, all of Backbone Mining's assets, including the 6,100 Miners collateralizing the loan, were unencumbered.

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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 14:LEASES

Set out below are the carrying amounts of the Company's right-of-use ("ROU") assets and lease liabilities and their activity during the three months ended March 31, 2024 and the year ended December 31, 2023:

Leased
premises 		Vehicles Other
equipment 		Total ROU
assets 		Lease
liabilities
As of January 1, 2024 13,762 544 9 14,315 15,850
Additions and extensions to ROU assets - 91 - 91 91
Depreciation (742 ) (61 ) (5 ) (808 ) -
Lease termination (373 ) - - (373 ) (518 )
Payments - - - - (1,085 )
Interest - - - - 306
Foreign exchange - - - - (335 )
As of March 31, 2024 12,647 574 4 13,225 14,309
Less current portion of lease liabilities (2,126 )
Non-current portion of lease liabilities 12,183
Leased
premises 		Vehicles Other
equipment 		Total ROU
assets 		Lease
liabilities
As of January 1, 2023 15,694 265 405 16,364 17,864
Additions and extensions to ROU assets 1,020 534 - 1,554 1,553
Reclass to property, plant and equipment - - (364 ) (364 ) -
Depreciation (2,952 ) (213 ) (32 ) (3,197 ) -
Lease termination - (42 ) - (42 ) (23 )
Payments - - - - (5,025 )
Gain on extinguishment of lease liabilities - - - - (255 )
Interest - - - - 1,391
Foreign exchange - - - - 345
As of December 31, 2023 13,762 544 9 14,315 15,850
Less current portion of lease liabilities (2,857 )
Non-current portion of lease liabilities 12,993
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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 15: INCOME TAXES

Deferred taxes

Deferred taxes are computed at a tax rate of 26.5% based on tax rates expected to apply at the time of realization. Deferred taxes relate primarily to the timing differences on recognition of expenses relating to the depreciation of fixed assets, loss carryforwards and professional fees relating to the Company's equity activity that are recorded as a reduction of equity.

As at March 31, 2024, the Company has analyzed the recoverability of its deferred tax assets and has concluded that it is not more likely than not that sufficient taxable profit is expected to utilize these deferred tax assets.

Current and deferred income tax (expense) recovery

Three months ended March 31,
2024 2023
Current tax expense:
Current year - (112 )
Prior year - -
- (112 )
Deferred tax recovery:
Current year 6,285 442
Prior year - -
6,285 442
6,285 330
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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 16: SHARE CAPITAL

Common shares

The Company's authorized share capital consists of an unlimited number of common shares without par value. As of March 31, 2024, the Company had 356,292,000 issued and outstanding common shares (December 31, 2023: 334,153,000).

i. At-The-Market Equity Offering Program ("ATM Program")

Bitfarms commenced an at-the-market equity offering program on March 11, 2024 (the "2024 ATM Program"), 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 gross proceeds of up to $375,000.

During the three months ended March 31, 2024, the Company issued 16,997,000 common shares in the 2024 ATM Program in exchange for gross proceeds of $39,341 at an average share price of approximately $2.31. The Company received net proceeds of $38,107 after paying commissions of $1,180 to the sales agent for the 2024 ATM Program and $54 in other transaction costs. The Company capitalized $839 of professional fees and registration expenses to initiate the 2024 ATM Program.

During the three months ended March 31, 2023, the Company issued 15,940,000 common shares in the 2021 ATM Program in exchange for gross proceeds of $16,360 at an average share price of approximately $1.03. The Company received net proceeds of $15,764 after paying commissions of $548 to the sales agent for the 2021 ATM Program and $47 in other transaction costs.

ii. Stock Options

During the three months ended March 31, 2024, option holders exercised stock options to acquire 31,000 common shares (three months ended March 31, 2023: 122,000) resulting in proceeds of approximately $41 (three months ended March 31, 2023: $47) being paid to the Company.

iii. Warrants

In February 2024, 5,000,000 warrants and 111,000 broker warrants related to the 2023 private placement were exercised resulting in the issuance of 5,111,000 common shares for proceeds of approximately $5,986.

The Black Scholes model and the inputs described in Note 7 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 $1,836 included in Net financial income.

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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 17: FINANCIAL INSTRUMENTS

Measurement categories and fair value

Financial assets and financial liabilities have been classified into categories that determine their basis of measurement. The following tables show the carrying values and the fair value of assets and liabilities for each of the applicable categories:

As of
March 31, 		As of
December 31,
Measurement 2024 2023
Financial assets at amortized cost
Cash Level 1 65,961 84,038
Trade receivables Level 3 729 714
Other receivables Level 3 1,437 689
Financial assets at fair value through profit and loss
Derivative assets Level 2 3,016 1,281
Total carrying amount and fair value 71,143 86,722
Financial liabilities at amortized cost
Trade accounts payable and accrued liabilities Level 3 10,669 9,077
Long-term debt Level 2 1,642 4,022
Financial liabilities at fair value through profit and loss
Warrant liabilities Level 2 18,576 40,426
Total carrying amount and fair value 30,887 53,525
Net carrying amount and fair value 40,256 33,197

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.

BTC option contracts

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

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 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.

Refer to Note 7 for more details.

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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 18: TRANSACTIONS AND BALANCES WITH RELATED PARTIES

The following table details balances payable to related parties:

As of
March 31, 		As of
December 31,
2024 2023
Trade payables and accrued liabilities
Directors' remuneration 116 112
Senior management remuneration 1,614 -
Director and senior management incentive plan 46 1,567
1,776 1,679

Amounts due to related parties are unsecured, non-interest bearing and payable on demand.

Transactions with related parties

In March 2024, the Board of Directors elected to terminate the employment agreement of the Company's Chief Executive Officer (the "CEO"). It was planned that the CEO would depart upon completion of an executive search and would lead the Company during the interim. A termination payment under the CEO's employment agreement totaling $1,614 is expected to be paid after the CEO's departure. However, the final amount of the termination payment has not yet been agreed to by the Company and the CEO and may be subject to change. During the three months ended March 31, 2024, $1,614 was accrued and included in Trade payables and accrued liabilities (as of December 31, 2023: nil).

The transaction described above occurred in the normal course of operations and recognized in profit or loss under General and administrative expenses.

NOTE 19: NET LOSS PER SHARE

For the three months ended March 31, 2024 and 2023, potentially dilutive securities have not been included in the calculation of diluted 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 three months ended March 31, 2024, would have totaled approximately 16,035,000 (three months ended March 31, 2023: 3,577,000).

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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 20: SHARE-BASED PAYMENTS

The share-based payment expense related to stock options and restricted stock units ("RSU") for employees, directors, consultants and former employees received was as follows:

Three months ended March 31,
2024 2023
Equity-settled share-based payment plans 3,094 2,536

Options

Details of the outstanding stock options are as follows:

Three months ended March 31,
2024 2023
Number of
Options 		Weighted
Average
Exercise Price ($CAD) 		Number of
Options 		Weighted
Average
Exercise Price ($CAD)
Outstanding, January 1, 20,939,000 2.41 21,804,000 3.47
Exercised (31,000 ) 1.85 (122,000 ) 0.52
Forfeited (105,000 ) 2.95 - -
Cancelled - - (10,535,000 ) 5.40
Expired - - (15,000 ) 2.45
Outstanding, March 31, 20,803,000 2.41 11,132,000 1.68
Exercisable, March 31, 9,911,000 1.79 2,286,000 0.48

The weighted average contractual life of the stock options as of March 31, 2024 was 3.8 years (March 31, 2023: 3.9 years).

Restricted Share Units ("RSU'')

Details of the RSUs are as follows:

Three months ended March 31,
2024 2023
Number of
RSUs 		Weighted
Average
Grant Price ($CAD) 		Number of
RSUs 		Weighted Average
Grant Price($CAD)
Outstanding, January 1, 625,000 4.05 400,000 2.98
Granted 175,000 2.95 - -
Outstanding, March 31, 800,000 3.81 400,000 2.98

On March 28, 2024, the Board of Directors approved the grant of 175,000 RSUs (three months ended March 31, 2023: nil) to certain members of senior management, which vest 50% after approximately one month from the grant date and an additional 25% every 6 months. The value of the RSUs on the grant date was $2.17 per RSU.

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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 21: ADDITIONAL DETAILS TO THE STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE PROFIT OR LOSS

Cost of revenues

Three months ended March 31,
2024 2023
Energy and infrastructure (21,314 ) (17,027 )
Depreciation and amortization (38,977 ) (20,700 )
Purchases of electrical components (387 ) (320 )
Electrician salaries and payroll taxes (321 ) (356 )
(60,999 ) (38,403 )

General and administrative expenses

Three months ended March 31,
2024 2023
Salaries and share-based payments (9,141 ) (5,157 )
Professional services (1,658 ) (1,878 )
Insurance, duties and other (1,957 ) (974 )
Travel, motor vehicle and meals (246 ) (178 )
Hosting and telecommunications (78 ) (92 )
Advertising and promotion (116 ) (81 )
(13,196 ) (8,360 )

Net financial income

Three months ended March 31,
Notes 2024 2023
(restated - Note 3d)
Gain (loss) on revaluation of warrants 9,040 (1,221 )
Gain on derivative assets and liabilities 2,490 35
Gain on disposition of marketable securities a 338 2,171
Gain on extinguishment of long-term debt and lease liabilities - 12,835
Interest income 680 266
Loss on foreign exchange (61 ) (270 )
Interest on long-term debt (72 ) (1,251 )
Provision expense on VAT receivable b (65 ) (1,009 )
Interest on lease liabilities (306 ) (369 )
Other financial expenses (601 ) (220 )
11,443 10,967
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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 21: ADDITIONAL DETAILS TO THE STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE PROFIT OR LOSS (Continued)

Net financial income (Continued)

a. Gain on disposition of marketable securities

During the three months ended March 31, 2024 and 2023, 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.

b. 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 nil. The provision is classified within Net financial income during the three months ended March 31, 2024. Prior to October 1, 2023, the Argentine VAT not expected to be settled within the next 12 months was classified as a long-term receivable in Note 11 with the short-term portion included in sales tax receivable in Note 5.

NOTE 22: 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 one material reportable segment, cryptocurrency Mining, which is the operation of server farms that support the validation and verification of transactions on the BTC blockchain, earning cryptocurrency for providing these services, as described in Note 1.

Revenues

Revenues* by country are as follows:

Three months ended March 31,
2024 2023
Canada 32,138 23,489
Argentina 11,576 1,296
USA 4,887 3,891
Paraguay 1,716 1,374
50,317 30,050

*Revenues are presented based on the geographical contribution of computational power used for hashing calculations (measured by hashrate) or sales to external customers. During the three months ended March 31, 2024 and 2023, the Company earned 98% and 97% of its revenues, respectively, from one Mining pool. The Company has the ability to switch Mining Pools or to mine independently at any time.

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BITFARMS LTD.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. dollars, except data relating to number of PPE, shares, warrants, options and digital assets - unaudited)

NOTE 22: GEOGRAPHICAL INFORMATION (Continued)

Property, Plant and Equipment

The net book value of property, plant and equipment by country is as follows:

As of
March 31, 		As of
December 31,
2024 2023
Canada 78,618 101,454
Argentina 50,598 54,657
USA 15,902 18,154
Paraguay 32,649 11,747
177,767 186,012

NOTE 23: ADDITIONAL DETAILS TO THE STATEMENTS OF CASH FLOWS

Three months ended March 31,
2024 2023
Changes in working capital components:
(Increase) decrease in trade receivables, net (15 ) 327
Decrease (increase) in other current assets 885 (1,161 )
Increase in deposits (1,670 ) (1,821 )
Increase in trade payables and accrued liabilities 550 97
Decrease in taxes payable (73 ) (112 )
(323 ) (2,670 )
Significant non-cash transactions:
Addition of ROU assets, property, plant and equipment and related lease liabilities 91 215
Purchase of property, plant and equipment financed by short-term credit 3,142 1,416
Equipment prepayments realized as additions to property, plant and equipment 26,717 4,714

NOTE 24: SUBSEQUENT EVENTS

2024 ATM Program

During the period from April 1, 2024 to May 14, 2024, the Company issued 42,155,000 common shares through the 2024 ATM Program in exchange for gross proceeds of $85,167 at an average share price of approximately $2.02. The Company received net proceeds of $82,477 after paying commissions of $2,690 to the sales agent. Refer to Note 16 for further details of the Company's 2024 ATM program.

Canadian Sales Tax Refund

In April 2024, the Company received a positive ruling from the tax authorities that Canadian sales taxes paid by the Company will once again be refunded. Between February 5, 2022, the date on which the new tax legislation was enacted, and April 2024, the Company filed monthly sales tax claims totaling approximately $23,703 (CAD$32,000) that were not paid to the Company. The refund of sales taxes relates to sales taxes charged on various expenditures including, but not limited to electricity costs, cost of property, plant and equipment, professional services, etc.

Contingent Liability

As described in Note 18, in March 2024, as a result of the Company's decision to terminate the CEO's employment, a termination payment of $1,614 was accrued during the three months ended March 31, 2024 based on the terms of the CEO's employment agreement, and classified in trade payables and accrued liabilities. On May 10, 2024, the CEO filed a Statement of Claim in the Superior Court of Ontario against the Company claiming damages for breach of contract, wrongful dismissal and aggravated and punitive damages for a total amount of $26,676. The Company believes the claims are without merit and intends to defend itself vigorously against the claims. Such matters are inherently uncertain, and there can be no guarantee that the outcome of any such matter will be decided favorably to the Company. The loss, if any, is not estimable at this time and Management does not believe the outcome of this matter will have a material adverse impact on its results of operations, cash flows and financial condition.

Yguazu Power Purchase Agreement Amendment

On May 13, 2024, the Company amended its power purchase agreement ("PPA") for its future Yguazu facility in Paraguay to increase the contracted power from 100 MW to 200 MW beginning on January 1, 2025. The Company is required to pay security deposits totaling $16,245 between June 2024 and January 2025 for future electricity consumption. The security deposits paid to the energy supplier are refundable at the end of the contract term in December 2027 assuming the Company draws power based on the agreed upon schedule and is not in breach of other clauses in the PPA.

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Bitfarms Ltd. published this content on 15 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 May 2024 12:09:36 UTC.