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6 décembre 2024
VIA EDGAR
Securities and Exchange Commission
Division of Corporation Finance
Office of Crypto Assets
100 F Street, NE
Washington, D.C. 20549
| Attn: | Kate Tillan |
Rolf Sundwall
| Re: | Bitfarms ltée |
Form 40-F for the Fiscal Year Ended December 31, 2023
Filed March 7, 2024
File No. 001-40370
SEC Staff letter dated November 21, 2024
Dear Ms. Tillan and Mr. Sundwall,
On behalf of Bitfarms Ltd. (the “Company”), we hereby provide responses to comments received from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) by letter dated November 21, 2024 (the “Comment Letter”) with respect to the above-referenced Form 40-F for the fiscal year ended December 31, 2023 (the “2023 40-F”) filed with the Commission on March 7, 2024.
Securities and Exchange Commission
6 décembre 2024
Page 2
The headings and paragraph numbers in this letter correspond to those contained in the Comment Letter. To facilitate the Staff’s review, we have reproduced the text of the Staff’s comments in bold and italics below, followed by responses from the Company. Capitalized terms used but not defined herein have the meanings given to them in the 2023 40-F. All references to page numbers and captions (other than those in the Staff’s comments and unless otherwise stated) correspond to the page numbers and captions in the 2023 40-F.
In addition, as noted in further detail below, the following appendix is included with this response to the information requested in the Comment Letter:
| ● | Appendix A – Proposed draft excerpts of the Company’s applicable material accounting policy information to be included in future filings with the Commission where a detailed description of the Company’s accounting policies is included. |
Form 40-F for the Fiscal Year Ended December 31, 2023
Consolidated Statements of Cash Flows, page F-7
| 1. | We acknowledge your response to prior comment 2. As previously requested, and consistent with the requirements of IAS 7.16(b), please revise to classify the proceeds from sales of your digital assets classified as intangible assets within investing activities. |
The Company respectfully acknowledges the Staff’s comment and confirms it will revise the Consolidated Statements of Cash Flows in the 2023 40-F to classify proceeds from sales of digital assets that are classified as intangible assets to investing activities. The Company will also amend its Management Discussion and Analysis, and file an amended and restated 2023 40-F. The Company will also revise its unaudited interim condensed consolidated financial statements (and interim MD&A) for the three and nine months ended September 30, 2024, previously furnished on Form 6-K.
Note 3. Basis of Presentation and Material Accounting Policy Information
Revenue Recognition, page F-12
| 2. | In your response to the second bullet of prior comment 3, you told us that you decide when to provide services to the mining pool operator. In order to provide a more fulsome description of your accounting policy related to mining revenue, we continue to believe your disclosure should include an explanation that your enforceable right to compensation begins when, and continues as long as, you provide services, and you decide when to provide services under the contracts. Please revise your disclosure in future filings accordingly or further explain to us how your current disclosure includes that information. |
The Company respectfully acknowledges the Staff’s comments and will further clarify the disclosure in its future filings with the Commission where a detailed description of its accounting policies is included. The revised disclosure will specify that the Company’s enforceable right to compensation begins when, and continues as long as, the Company provides services, and the Company decides when to provide services under the contracts. The Company is currently in the process of drafting its proposed disclosures (refer to Appendix A hereto) which have not yet been finalized as of the date of this response letter.
* * * * *
Securities and Exchange Commission
6 décembre 2024
Page 3
Please contact me at (212) 735-3712 or ryan.dzierniejko@skadden.com if the Staff has any questions or requires additional information.
| Very truly yours, | |
| /s/ Ryan J. Dzierniejko |
| cc: | Jeffrey Lucas, Chief Financial Officer, Bitfarms Ltd. |
Securities and Exchange Commission
6 décembre 2024
Page 4
Appendix A
Proposed draft excerpts of the Company’s applicable material accounting policy information to be included in future filings with the Commission where a detailed description of the Company’s accounting policies is included.
Cumulative changes from the disclosure in the financial statements for the year ended December 31, 2023 are reflected in red below, with the changes resulting from the most staff’s most recent comment letter reflected in bold.
Reconnaissance des revenus
Les produits des contrats avec les clients sont comptabilisés lorsque le contrôle des biens ou des services est transféré au client. Le prix de la transaction est le montant de la contrepartie que l'on s'attend à recevoir sur la base des termes du contrat, à l'exclusion des montants perçus pour le compte de tiers (tels que les impôts). Les critères particuliers de reconnaissance des revenus qui doivent être remplis avant que les revenus ne soient comptabilisés sont les suivants :
Recettes provenant de la vente de la puissance informatique utilisée pour les calculs de hachage
The Company has entered into arrangements with a Mining pool operator, which is the Company’s customer, and has undertaken the single performance obligation of providing a service to perform hash calculations for computing power used for hashing calculations to the Mining pool operator, which is an output of the Company’s ordinary business activities, in exchange for noncash consideration in the form of cryptocurrencyBitcoin, which is variable consideration. The Bitcoincryptocurrency earnings are calculated based on a formula which, in turn, is based on the hashrate contributed by the Company’s provided computing power used for hashing calculations allocated to the Mining pool, assessed over a 24-hour period, and distributed daily based on the FPPS methodology. The Company assesses the estimated amount of the variable non-cash consideration to which it expects to be entitled for providing computational power used for hashing calculations at contract inception and subsequently measures if it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. The uncertainties regarding the daily variable consideration to which the Company is entitled for providing its computational power used for hashing calculations are no longer constrained at 23:59:59 UTC regardless of the timing of the BTC received. The amount earned is calculated based on the Company’s computing power used for hashing calculations provided to the Mining pool and the estimated (i) block subsidies and (ii) daily average transaction fees which the Mining Pool expects to earn, less (iii) a Mining pool discount.
(i) Les subventions de blocs font référence aux récompenses de blocs qui devraient être générées sur le réseau BTC dans son ensemble. La commission perçue par la Société est d'abord calculée en divisant (a) le montant total de l'hashrate que la Société fournit à l'opérateur du pool minier, par (b) l'hashrate implicite total du réseau BTC (tel que déterminé par la difficulté du réseau BTC), multiplié par (c) le montant total des subventions de blocs qui devraient être générées sur le réseau BTC dans son ensemble.
(ii) Les frais de transaction correspondent au total des frais payés par les utilisateurs du réseau pour exécuter des transactions. La commission versée par l'opérateur du pool minier à la Société est calculée en divisant (a) le montant total des commissions de transaction effectivement générées sur le réseau BTC dans son ensemble, moins les 3 plus grandes et 3 plus petites transactions par bloc, par (b) le montant total des subventions de bloc effectivement générées sur le réseau BTC dans son ensemble, multiplié par (c) la commission perçue par la Société telle que calculée au point (i) ci-dessus. La société a droit à sa part relative de la contrepartie même si un bloc n'est pas ajouté avec succès à la blockchain par le pool minier.
Securities and Exchange Commission
6 décembre 2024
Page 5
(iii) Le rabais du pool minier fait référence au rabais appliqué au paiement total du FPPS autrement attribué aux fournisseurs de services de puissance informatique pour leur vente de puissance informatique utilisée pour les calculs de hachage, tel que défini dans le quadrillage tarifaire de l'accord avec l'opérateur du pool minier.
The Company is entitled to the fee from the Mining Pool as calculated above regardless of the actual performance of the Mining Pool operator. Therefore, even if the Mining Pool does not successfully add any block to the blockchain in a given contract period, the fee remains payable by the Mining Pool to the Company. Accordingly, the Company is not sharing in the earnings of the Mining pool operator. The Company’s enforceable right to compensation begins when, and continues as long as, the Company provides its services to the Mining pool operator, and the Company decides when to provide these services under the contracts.
Les accords conclus par la société avec l'opérateur du pool minier confèrent à ce dernier et à la société le droit exécutoire de résilier le contrat à tout moment sans indemnisation substantielle de l'autre partie pour cette résiliation. En cas de résiliation, l'opérateur de la piscine minière est tenu de payer à la société le montant dû au titre des obligations de performance précédemment remplies. Par conséquent, la société a déterminé que la durée du contrat est inférieure à 24 heures et que le contrat est renouvelé en permanence tout au long de la journée. La société a également déterminé que le droit de renouvellement de l'opérateur du pool minier n'est pas un droit important étant donné que les conditions et les montants de la rémunération correspondent aux taux du marché en vigueur à ce moment-là.
The Bitcoincryptocurrency earned is received in full and can be paid in fractions of Bitcoincryptocurrency. Revenues from providing a service to perform hash calculations for the Mining pool operator cryptocurrency computational power used for hashing calculations are recognized upon delivery of the service, i.e., when the Mining pool operator obtains control of the hash calculations, over a 24-hour period, which generally coincides with the receipt of crypto assets in exchange for the provision of computational power used for hashing calculations and the contract inception date. The Company updates the estimated transaction price of the non-cash consideration received at its fair market value. Management estimates fair value daily based on the quantity of Bitcoincryptocurrency received multiplied by the price quoted from Coinbase Inc. (“Coinbase”) on the day it was received. Management considers the prices quoted on Coinbase to be a level 1 input under IFRS 13, Fair Value Measurement.