United States securities and exchange commission logo
September 18, 2023
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 July
27, 2023
Dear Jeffrey Lucas:
We have reviewed your July 27, 2023 response to our comment
letter and have the
following comments. In some of our comments, we may ask you to provide
us with information
so we may better understand your disclosure.
Please respond to these comments 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 our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your response to these comments, we may have
additional
comments. Unless we note otherwise, our references to prior comments are
to comments in
our June 26, 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 acknowledge your
response to comment 1. IAS 7.16 states that only expenditures that
result in a recognised
asset in the statement of financial position are eligible for
classification as
investing activities and examples of cash flows arising from investing
activities include cash
receipts from sales of property, plant and equipment, intangibles
and other long-term
assets. We note that your digital assets are classified as an intangible
asset, even though you
classify this asset as a current asset. Your discussion of IAS
Jeffrey Lucas
FirstName LastNameJeffrey Lucas
Bitfarms Ltd
Comapany 18,
September NameBitfarms
2023 Ltd
September
Page 2 18, 2023 Page 2
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7.16(b) seems to dismiss its applicability simply because your digital
assets are classified
as current assets. Since we note that IAS 7.16(b) specifically refers
to sales of intangible
assets, please tell us further about your consideration of this
guidance.
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:
We note from Appendix A that the terms of service may change.
Confirm that the
version you sent to us covers the financial statement periods
included in your Form
40-F and provide us with any new versions that were issued
subsequent to the
financial statement periods presented.
Your response told us that you only have one mining pool customer,
but your
disclosure refers to contracts with mining pools. Tell us why.
With respect to step one of IFRS 15, tell us how you considered
when contract
inception occurs and the duration of the contract. Tell us how you
considered the
termination provisions of the contract including sections 3(d) and
8. Refer to IFRS
15.9 - 15.17.
With respect to step 2 of IFRS 15, we note that Appendix B to the
contract refers to
the payment of a flat amount of BTC for each share submitted to the
pool. Respond
to the following:
o Tell us what a share represents and whether the share is your
performance
obligation.
o Substantiate how the provision of computing power to the
mining pool is
your sole performance obligation.
o Tell us whether it is possible to provide computing power
that does not result in
valid shares.
o Tell us how/when you report your work performed to the mining
pool operator.
With respect to step three of IFRS 15, you told us that your
computing power
(hashrate) is transferred to the mining pool over a 24-hour period.
You disclose that
revenue from contracts with customers is recognized when control
over the goods or
services is transferred to the customer. Tell us at what point
control over the goods or
services is transferred to the customer and whether you satisfy
your performance
obligation over time or at a point in time and why. Refer to IFRS
15.31 - 15.46.
With respect to step four of IFRS 15, tell us whether the
consideration includes
a variable amount and, if so, how you constrain estimates of
variable consideration.
Refer to IFRS 15.47 - 15.59.
With respect to your non-cash consideration, you told us that you
measure the Bitcoin
earned and received from mining activities based on the price
quoted on the day the
Bitcoin are received as that measurement time is a few hours after
the company
completes its performance obligation of providing its hashrate for
24 hours. We note
from BC253 of IFRS 15 that the boards observed that once
recognised, any asset
arising from the non-cash consideration would be measured and
accounted for in
accordance with other relevant requirements. Tell us how you
considered the
Jeffrey Lucas
Bitfarms Ltd
September 18, 2023
Page 3
guidance in IFRS 15 since it appears that the timing of your
measurement of the fair
value of the non-cash consideration is in a period following when
revenue is
recognized. Refer to IFRS 15.66 - 15.69.
With reference to Section 7 of the agreement, tell us how you
account for pool fees
paid to the mining pool. Refer to IFRS 15.70 - 15.72.
Digital Assets, page 14
3. We acknowledge your response to comment 4. You state that the majority
of your mined
Bitcoin are sold within an operating cycle to fund operations, while
the remaining Bitcoin
are held for trading and used when needed. Please tell us your
consideration of disclosing
the amount of Bitcoin you do not expect to realize within an operating
cycle. Refer to
IAS 1.61 and 1.65.
4. We acknowledge your response to comment 5, however your response did
not provide all
of the information requested. Please respond to the following:
Tell us how the use of Coinmarketcap complies with IFRS, noting
that
Coinmarketcap is not itself a market where bitcoin and other
cryptocurrencies are
traded. To the extent you agree that Coinmarketcap is not your
principal market,
identify your principal market for us, and explain why that is
your principal market.
Otherwise, explain why Coinmarketcap meets the requirements of
IFRS 13. Your
response should explain how you considered and applied the
requirements of IFRS
13, including paragraphs .16 through .20.
You told us that you currently sell Bitcoin through Coinbase and
another corporate
third-party in Canada that has a platform connected to the main
cryptocurrency
exchanges in the world with the objective of selling Bitcoin at
the best price across
these multiple markets. Tell us the name of the corporate
third-party.
You may contact Kate Tillan at (202) 551-3604 or Rolf Sundwall at (202)
551-3105 with
any other questions.
FirstName LastNameJeffrey Lucas Sincerely,
Comapany NameBitfarms Ltd
Division of
Corporation Finance
September 18, 2023 Page 3 Office of Crypto
Assets
FirstName LastName
