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November 8, 2024
Benjamin Gagnon
Chief Executive Officer
Bitfarms Ltd.
110 Yonge Street, Suite 1601
Toronto, Ontario, Canada M5C 1T4
Re: Bitfarms Ltd.
Registration Statement on Form F-4
Filed October 15, 2024
File No. 333-282657
Dear Benjamin Gagnon:
We have conducted a limited review of your registration statement and
have the
following comments.
Please respond to this letter by amending your registration statement
and providing
the requested information. If you do not believe a comment applies to your
facts and
circumstances or do not believe an amendment is appropriate, please tell us why
in your
response.
After reviewing any amendment to your registration statement and the
information
you provide in response to this letter, we may have additional comments.
Registration Statement on Form F-4
General
1. Please confirm your understanding that we will not be in a position to
declare your
registration statement on Form F-4 effective until all outstanding
comments regarding
Bitfarms' Form 40-F and Stronghold's Form 10-K for the fiscal year ended
December
31, 2023 have been resolved. Also, to the extent that any comments
related to our
reviews of Bitfarms' Form 40-F and Stronghold's Form 10-K apply to
disclosure in the
registration statement, please make corresponding revisions to all
affected disclosure.
Conditions to Completion of the Merger, page 7
2. Please revise here to disclose which of the conditions of the merger
agreement listed
on pages 7 and 8 may be waived.
November 8, 2024
Page 2
Summary
Regulatory Approvals, page 7
3. We note your disclosure on page 7 that "[u]nder the merger agreement,
Stronghold
and Bitfarms must cooperate in good faith and jointly determine no later
than 45 days
following the execution of the merger agreement whether pre-merger
filings are
required under the HSR Act" and that "[i]f the parties determine that
such filings are
required, they must make these filings no later than 10 business days
following the
date of such determination." Please update to disclose your
determination regarding
whether pre-merger filings are required under the HSR Act, and, if so,
the date such
filings were made.
Termination of the Merger Agreement, page 9
4. Please revise your disclosure on page 9 to include a summary of the
termination fees
that each party may owe pursuant to the merger agreement.
The Merger Proposal
Background of the Merger, page 38
5. Please revise your disclosure in this section to identify the key
representatives from
Bitfarms and Stronghold that attended each of the meetings related to
this transaction.
6. Please revise your disclosure in the last paragraph on page 21 to
identify the members
of the Bitfarms Special Committee formed on April 16, 2024. Please
identify how
many unsolicited proposals Bitfarms received and the number of third
parties from
whom it received such proposals.
7. Please revise to update your disclosure in this section to address
Bitfarms' negotiations
with Riot, including Riot's requisitioning of a special meeting of
Bitfarms
shareholders, Riot's purchase of Bitfarm's shares, the hearing regarding
the poison pill
before the Capital Markets Tribunal of the Ontario Securities
Commission, the change
to the Bitfarms board on June 27, 2024 and the settlement agreement
between Riot
and Bitfarms. In addition, to the extent that Stronghold considered the
ongoing
negotiations between Riot and Bitfarms while negotiating the terms of
the merger
agreement or discussed the situation with Bitfarms, please disclose.
Similarly, to the
extent that Bitfarms considered Riot's takeover attempt and the ongoing
negotiations
with Riot in connection with its negotiations with Stronghold, please
disclose.
8. Please revise to disclose the exchange ratio proposed by Stronghold on
July 29, 2024
and whether the August 2, 2024 Bitfarms' revised merger agreement
changed the
proposed exchange ratio, and, if so, the exchange ratio included in the
August 2, 2024
revised merger agreement.
Board of Directors and Management of Bitfarms after the Merger, page 48
9. Please revise your disclosure on page 48 and in the summary section of
the
registration statement to discuss how the September 23, 2024 Settlement
Agreement
between Bitfarms and Riot may change the size and composition of the
Bitfarms
board and disclose the issues that will be considered at the November
20, 2024 special
meeting of shareholders. In this regard, we note your disclosure on page
53 that one of
November 8, 2024
Page 3
the risks considered by the Stronghold board of directors was related to
potential
governance changes at Bitfarms prior to closing including the
possibility that a
majority of the Bitfarms board of directors may be replaced during the
pendency of
the merger. In addition, in an appropriate place in your registration
statement, please
include a description of the material terms of the September 23, 2024
Settlement
Agreement between Bitfarms and Riot and discuss changes to the Bitfarms
board of
directors and its executive officers that have occurred to date as a
result of
negotiations with Riot.
Bitfarms' Reasons for the Merger, page 49
10. In an appropriate place, please provide additional detail regarding the
initiatives you
mention on page 49. For example:
describe the energy trading, demand response and curtailment
programs in which
Bitfarms will be able to participate;
describe, the "opportunity for a transformative fleet upgrade" to
improve
efficiency and hash rate, by providing quantitative information that
compares the
hash rate and age of Bitfarms' existing miners with the hash rate of
Bitfarms' fleet
of miners following the merger;
provide a definition of HPC/AI and discuss how you intend to
implement and use
HPC/AI following the merger; and
describe your plans to add technologies that generate power from
remediation,
land reclamation and detoxification of waterways and why the merger
allows you
to add such technologies.
11. Please revise your disclosure on page 50 to quantify the "substantial
transaction fees
and costs in connection with the merger."
Unaudited Pro Forma Condensed Combined Financial Statements
Note 4. U.S. GAAP to IFRS Adjustments to the Historical Financial Statements of
Stronghold, page 118
12. We note that Stronghold has cryptocurrency mining revenue and
cryptocurrency
hosting revenue. Please tell us about your consideration of whether
there is any U.S.
GAAP to IFRS adjustment for Stronghold's revenue recognition.
Note 5. Pro Forma Adjustments and Assumptions for the Merger, page 119
13. Refer to adjustment (c). We note no purchase price adjustment to the
valuation of
Stronghold's property, plant and equipment. Please tell us how you
considered the
purchase price allocation to these assets. Further, please tell us your
consideration of
other identifiable intangible assets to be acquired in the acquisition.
Refer to IFRS
3.10-14 and B31-40.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence
of action by the staff.
November 8, 2024
Page 4
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
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. Please
contact Sonia Bednarowski at 202-551-3666 or John Dana Brown at 202-551-3859
with any
other questions.
Sincerely,
Division of
Corporation Finance
Office of Crypto
Assets
cc: Christopher Barlow