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The most undervalued crypto stock in the market

Founders of Bitfarms

Founders of Bitfarms

Canadian cryptomining company Bitfarms LTD (BITF.V / BFARF) is extremely undervalued compared to his US peers

Crypto stocks have had an insane development in the past year. And this year is also starting very well, with Bitcoin holding the $55,000 mark easily. The fact that BTC is touching 60k (and might break it soon) is helping a lot, but also because the crypto mining industry as a whole is maturing.

I believe that Bitfarms is in a better overall position compared to their competitors on multiple levels, mainly in terms of scalability. But also at controlling costs, and this will pay off in the future with better profit margins as the industry grows.

Company overview

Bitfarms is a Canadian blockchain infrastructure company, located mainly in Quebec, providing an essential service: validation and verification of global cryptocurrency transactions. Bitfarms has been building and operating industrial Bitcoin mining facilities since 2017.

In 2020 Bitfarms led the industry as the largest publicly traded Bitcoin miner in terms of production and efficiency, mining 3,014 Bitcoin in 2020 with one of the lowest average costs of production.


Bitfarms owns and operates one of the largest mining operations in North America with 69 MW of built-out capacity. Bitfarms increased its hash rate capacity by 185 PH/s or 24% in 2020.

Bitfarms also operates five advanced Bitcoin mining facilities in Quebec, Canada. Each mining facility is powered by low-cost renewable hydropower. They mine Bitcoin at all facilities and Litecoin at two. Bitfarms’ 2020 year-end hash rate is 965 PH/s. Bitfarms’ anticipated ending Hashrate Q1 2021 is 1,205 PH/s.

Bitfarms has mined the most Bitcoin during the nine months ending September 30, 2020, with an industry-leading average cost per Bitcoin of $5,300. With the current price of BTC being around $49 000, this gives you a gross mining margin per BTC at 89%.

Being located in Quebec, they have an edge on electricity costs, but also on sustainable energy use, their power-hungry enterprise is powered by Quebec’s almost 100% hydroelectric grid. Which is 100% renewable.

As you can see here, Bitcoin’s energy usage is a very hot debate.


The case with Bitfarms is especially interesting as their value proposition is to be the most cost-effective crypto miner.

Relative their competition, all Canadian miners seem to be undervalued right now, by looking at the table below.

Bitfarms against leading market peers

Looking at the financials (Q3 2020 nine-months), compared to RIOT, and HUT 8 mining below (12 Feb market closing):

CompanyMarket capRevenueGross mining margin
Bitfarms375 M23.3 M38%
Hut 8 Mining994 M27.7 M-5%
RIOT3.3 B6.7 M38%

The fact that RIOT is listed on Nasdaq obviously has a major impact on their market cap. But it might soon change for Bitfarms, as they are actively looking to be listed on the American stock exchange sometime this year.

Valuations are complex in this industry and usually, the companies present PH/Market Cap to demonstrate the business potential based on capacity. The average PH/MC (current) for the 11 listed companies (in the chart above), is 1.18. Average MC is 1.16 B.

Based on these numbers alone, Bitfarms market cap should be 2.2 B (Average PH/MC x Multiple = Average MC). In this case, a share price based on the current float would be $25.6 (32.4 CAD).

This is a very high valuation and relative to their competition. The valuation would bring Bitfarms PH/MC ratio to 1.18, which is approx. the same as for HIVE. Bear in mind that we are only looking at PH alone, not gross mining profit.

Accounting for the fact that Bitfarms is not listed on Nasdaq (eliminating outliners MARA, RIOT, BTBT, NCTY). The average market cap is 620 M for the remaining 7 companies, with an average PH/MC at 1.32. This would give Bitfarms a market cap at 1 B, which would put the share price at $11.6 (14.7 CAD). So even compared to non-Nasdaq listed crypto miners, Bitfarms is undervalued.

All these calculations are based on data from 12 of Feb as this research took some time to compile, and for this news website to launch. Since today, all the crypto mining stocks have gone up, but Bitfarms is still undervalued relative their competition and mining capacity as of April 4th 2021.

Upcoming catalysts

The company is preparing to establish a sixth mining center

Potential NYSE listing.

Gaining new institutional investors (investments up to 60 M (CAD) from US institutional investors since January)


Like other crypto mining companies, the stock price is affected by the volatility and the price of major cryptocurrencies (BTC, ETH, LTC)

Ability to scale up production and meet their set PHs targets for 2021

Attract new institutional investors

Price and supply of electricity, as this is their major cost of production

· The whole crypto industry might be overvalued right now, which would indicate a coming correction


Bitcoin continues to show signs that this time around, it’s here to stay. And while the digital coin can be highly volatile and significantly risky, it also has a tonne of potential.

So, while you may not want to take a major position in Bitcoin in your portfolio, it’s an asset that most investors will at least want some exposure to due to its incredible long-term potential.

$HIVE is similar in a lot of ways to $BFARF / $BITF , however, it mines multiple cryptocurrencies, giving its operations some important diversification.

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