United States securities and exchange commission logo
January 18, 2024
Jeffrey Lucas
Chief Financial Officer
Bitfarms Ltd
18 King Street East
Suite 902
Toronto, Ontario
Canada M5C 1C4
Re: Bitfarms Ltd
Form 40-F for the
Fiscal Year Ended December 31, 2022
Filed March 21,
2023
File No. 001-40370
Response dated
October 5, 2023
Dear Jeffrey Lucas:
We have reviewed your October 5, 2023 response to our comment
letter and have the
following comments.
Please respond to this letter within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe a
comment applies to your facts and circumstances, please tell us why in
your response.
After reviewing your response to this letter, we may have
additional comments. Unless
we note otherwise, any references to prior comments are to comments in
our September 18,
2023 letter.
Form 40-F for the Fiscal Year Ended December 31, 2022
Exhibit 99.2 Consolidated Financial Statements
Consolidated Statements of Cash Flows, page 8
1. We continue to evaluate
your response to comment 1.
Jeffrey Lucas
FirstName LastNameJeffrey Lucas
Bitfarms Ltd
Comapany
January 18,NameBitfarms
2024 Ltd
January
Page 2 18, 2024 Page 2
FirstName LastName
Note 3. Basis of Presentation and Significant Accounting Polcies
Revenue Recognition, page 13
2. We acknowledge your response to comment 2. Please respond to the
following:
Your disclosure indicates that your single performance obligation
is providing
computing power and your response indicates your single performance
obligation is
providing hashrate. We believe your disclosure requires a more
precise description of
your promise and single performance obligation. Please tell us
whether a more
accurate description of your promise and single performance
obligation is a service to
perform hash calculations for the pool operator, and if so, revise
your disclosure to
clarify.
With respect to the termination provisions in both your current
and prior
arrangements with your mining pool operator for the reporting
periods presented,
specifically clarify whether you have concluded that the mining
pool operator with
whom you contract is your customer and address whether the mining
pool operator,
as your customer, has a unilateral enforceable right to terminate
the contract at any
time without substantively compensating you for the termination. In
your response,
refer us to the applicable portion of your arrangement. If such a
termination right
exists, tell us your consideration of whether the duration of the
contract extends
beyond the goods or services already transferred, and, if not,
whether the duration of
the contract is less than 24 hours and the contract continuously
renews throughout the
day. Make corresponding revisions to your accounting policy as
necessary.
To the extent your mining pool operator possesses the ability to
terminate the contract
at any time, it appears this right could be akin to a renewal
right. If this right exists,
tell us whether it is a material right. For example, clarify
whether the terms,
conditions, and compensation amounts of the renewal right is at the
then-current
market rates. If so, tell us whether you have concluded that the
customer s renewal
option is not a material right. Refer to IFRS 15.26(j). Make
corresponding revision to
your accounting policy and related disclosures to the extent
necessary.
Revise your accounting policy to disclose the form of
consideration to which you are
entitled for providing the service of performing hash calculations
for the pool
operator (i.e., bitcoin) and your conclusion that the consideration
is variable. Also,
revise your accounting policy to identify the payout methodology
used to determine
the amount of consideration to which you are entitled and describe
the variables that
comprise the formula. For example, under the Full Pay Per Share
(FPPS) payout
model it appears you earn compensation equal to the sum of your
share of (a)
network block subsidies and (b) network transaction fees less (c)
pool operating fees
and that each of these components has a number of variables.
Revise the statement in your accounting policy describing the
transaction price to
clarify whether you constrain any portion of your estimate of the
variable
consideration to which you are entitled for performing the service.
For example,
clarify whether the uncertainties in the FPPS variables no longer
exist at 23:59:59
UTC irrespective of the timing of your receipt of confirmation of
the bitcoin you will
Jeffrey Lucas
Bitfarms Ltd
January 18, 2024
Page 3
receive or your actual receipt of such bitcoin.
We note your disclosure that you measure the non-cash
consideration based on the
price on the day it is received. Revise your accounting policy to
describe how the
measurement date relates to both the date of contract inception
and the date you
transfer control of the service under the contract.
In your response, you state in your discussion of IFRS 15.46
that your provision of
computing power and the settlement of the receivable occur on the
same day, on page
14 of your response you state the non-cash consideration is
received at the end of the
day, and in the discussion of IFRS 15.68 you state that the
bitcoin is received a few
hours later. Please confirm for us when you receive the non-cash
consideration.
We are unable to reconcile your response that [t]he Company
recognizes revenue
only after receiving confirmation from the mining pool to the
requirements of IFRS
15.31, which indicates that recognition occurs upon the transfer
of control of the
service, not upon receipt of the consideration to which you are
entitled for
transferring control of that service. Please revise your
accounting policy to comply
with IFRS 15 and your accounting policy disclosures. Please tell
us if applying the
corrected policy to historical periods results in a material
change to the historical
financial statements presented.
Digital Assets, page 14
3. We acknowledge your response to comment 3. Your disclosure on page 14
of Exhibit 99.2
states that you classify the bitcoin as current assets because you
determined the bitcoin has
markets with sufficient liquidity. In future filings, please clarify
in your disclosure, similar
to your response and IAS 1.66 that you classified the bitcoin as
current assets because you
expected to realize the asset within twelve months after the reporting
period.
4. You disclose that you account for your cryptocurrency as intangible
assets under IAS 38.
We note per IAS 38.3 that IAS 38 applies in accounting for all
intangible assets except
those that are within the scope of another standard. Please tell us
your consideration for
whether your cryptocurrency is held for sale in the ordinary course of
business and meets
the definition of inventory under IAS 2.6(a).
Please contact Kate Tillan at 202-551-3604 or Rolf Sundwall at
202-551-3105 if you
have questions regarding comments on the financial statements and related
matters.
FirstName LastNameJeffrey Lucas Sincerely,
Comapany NameBitfarms Ltd
Division of
Corporation Finance
January 18, 2024 Page 3 Office of
Crypto Assets
FirstName LastName
