Dominion Capital provided $20 million in strategic debt financing to Bitfarms, one of the largest blockchain technology companies in the world through its ownership of Backbone Hosting Solutions.
The financing will be used to fund the company’s ongoing operational expansion.
The secured loan will be made available in four, $5 million tranches tied to the ongoing satisfaction of customary covenants and various milestones, including Bitfarms’ infrastructure build-out and associated mining hardware purchases. Amounts drawn under the facility will bear a 10% interest rate, with each tranche carrying a 24-month term and balloon repayment on outstanding balances at maturity. Bitfarms will make regular monthly principal and interest payments equivalent to a minimum of 10% of aggregate cryptocurrency production.
As part of the financing, Dominion will receive approximately 6.7 million Bitfarms (Canada) equity purchase warrants if the full $20 million is drawn. The warrants can be exercised to acquire common shares of Bitfarms with a term of five years from the date of issuance at an exercise price of $0.40 per share. 1.67 million warrants have been granted to Dominion concurrent with the first $5 milliion funding tranche which has been completed.
In the event that the arrangement is not completed, the warrants will become an obligation of the company.
“The loan financing will enable us to pursue Bitfarms’ expansion strategy, underpinned by our large and economical 162.5-megawatt portfolio of green energy within the province of Québec. Current hardware pricing presents a compelling opportunity to invest in our operational build-out. We plan to purchase new generation, higher efficiency mining hardware for our expansion and will begin immediate construction of Phase 1 and Phase 2 of our new modern computing center within the municipality of Sherbrooke, Québec. Proceeds from the Loan Financing are expected to increase our installed operational capacity by approximately 30 megawatts, in addition to utilizing the full capacity of our current operational facilities,” said Wes Fulford, Bitfarms CEO.
He added, “Despite challenging public market financing conditions, we have successfully funded Bitfarms’ expansion plans with minimal dilution to shareholders. Our strategy remains focused on delivering superior returns to investors through prudent capital deployment. Given our efforts to vertically integrate our business model, we have 100% control of the Sherbrooke expansion and full operational control following completion. We are confident that we can continue to increase Bitfarms’ hash power and market share in a timely manner and at significantly lower costs than our closest peers. The loan financing is a testament to the strength of our team, our strategic plans and our operational excellence.”
Bitfarms owns and operates blockchain farms that power the global decentralized financial economy. The company provides computing power to cryptocurrency networks such as Bitcoin, earning fees from each network for securing and processing transactions, and is powered by clean and competitively-priced hydroelectricity.