In the ever-evolving world of cryptocurrency and blockchain technology, bitcoin remains a dominant player. With its consistent rise in value and widespread adoption, many investors and companies are exploring innovative ways to leverage their bitcoin holdings. One such strategy is the use of bitcoin call options, a tool that can help individuals and organizations – like Bitfarms – optimize their bitcoin portfolios.

Understanding bitcoin HODLing

HODLing is a popular term in the cryptocurrency space, referring to the act of holding onto an asset, typically bitcoin, for an extended period, with the expectation that its value will increase over time. Many long-term bitcoin investors swear by this strategy, as it has historically yielded substantial returns. However, HODLing also has its drawbacks, such as poor liquidity and missed opportunities to manage risk from price fluctuations.

This is where Synthetic HODL comes into play – offering an alternative approach that combines the benefits of holding bitcoin while allowing for flexibility in optimizing portfolio level risk management.

What is Synthetic HODL?

Synthetic HODL is the use of financial derivatives to provide investors with the ability to gain exposure to the price of bitcoin without physically owning the underlying asset. This method is known as "synthetic" because it mimics the performance of HODLing bitcoin, and they are called "bitcoin call options" because they provide the option to buy bitcoin at a predetermined price at a future date.

Here's how it works:

1. A bitcoin call option holder pays a premium to enter a contract with the option seller (often a financial institution such as a market maker).
2. The option contract has a predetermined time frame (the contract's duration) and a strike price – which is the price at which the holder can buy bitcoin if they choose to exercise the option.
3. During the contract's duration, the holder can choose to monetize bitcoin at the strike price or simply let the option expire.
4. If the market price of bitcoin rises above the strike price, the holder can monetize the contract and realize a profit that is the difference between the market price and the strike price.
5. If the market price of bitcoin falls below the strike price, the holder can choose not to monetize the option, limiting their loss to the premium paid.

Advantages of Synthetic HODL

Synthetic HODL provides additional value over the traditional HODL method in a variety of ways:

● Capital Efficiency: The cost of a bitcoin call option is only a fraction of the cost of a bitcoin.

● Limited Risk: The maximum loss for an option holder is limited to the premium paid, regardless of how much the market price of bitcoin falls. This limited risk can be attractive to risk-averse investors.

● Leverage: Bitcoin call options allow investors to control a larger position in bitcoin than they could by simply buying it. This can amplify returns when bitcoin's price rises.

Bitfarms Latest Strategy Update

Although Bitfarms holds a significant amount of bitcoin, Synthetic HODL serves as a valuable complement to our overall HODL strategy. Combining the two HODL strategies enables Bitfarms to manage a more capital-efficient HODL portfolio, composed of bitcoins in custody and bitcoin call options, and where risk management becomes a central focus. This initiative provides Bitfarms' investors with leveraged upside to bitcoin in a manner that complements the bitcoin exposure derived from our mining operations.

The use of financial derivatives benefits more than just our HODL strategy. They help increase Bitfarms' enterprise value in several ways:

● Hedging: Bitfarms can use options to hedge against potential bitcoin price declines, reducing our exposure to market volatility.

● Revenue Generation: Bitfarms can generate additional revenue by selling Synthetic call options on their bitcoin holdings. This income can offset operating costs and help fund our growth projects.

● Liquidity: Bitfarms will increase liquidity in the short-term through bitcoin call options, rather than waiting for selling opportunities during bitcoin price increases.

● Optimizing Bitcoin Holdings: By selectively monetizing options when bitcoin prices are favorable, Bitfarms can optimize our bitcoin holdings and maximize the return on investment.

● Risk Management: Options can help Bitfarms manage the risk associated with our bitcoin holdings, especially in a highly volatile market.

Synthetic HODL call options offer a sophisticated and flexible approach to managing bitcoin holdings. These financial derivatives are not limited to hedge funds and trading firms, but can be equally beneficial for companies like Bitfarms, providing new opportunities to optimize their bitcoin HODL strategies while managing risk effectively.

However, we must remind ourselves that options trading involves its own set of complexities and risks. It is essential to have a deep understanding of the options market and consider consulting with financial professionals or experts – like those on the Bitfarms team – before integrating Synthetic HODL call options into any bitcoin investment thesis. These financial instruments can be powerful tools when used wisely, but they must be purposefully designed and actively risk-managed to have the desired effect.

For more information on Bitfarms, visit www.bitfarms.com.

Disclaimer Regarding Forward-Looking Information:

This blog presentation has been issued as a matter of interest to investors and other followers of Bitfarms Ltd.  This presentation contains forward-looking information and Bitfarms cautions readers that forward-looking information is based on certain assumptions and risk factors that could cause actual results to differ materially from the expectations of Bitfarms.  Readers should not place undue reliance on forward-looking information.  Please refer to those risks set out in the public documents of Bitfarms filed on https://www.sedar.com/.  Securities regulators including the Toronto Stock Exchange and Nasdaq have not reviewed the information disclosed in this blog presentation and no securities regulator accepts responsibility for the adequacy or accuracy of this content.

The post Leveraging Synthetic HODL™ & Bitcoin Call Options appeared first on Bitfarms Ltd. (BITF).

To succeed in the crypto mining space, companies must continually innovate and optimize their operations. Bitfarms, one of the leading bitcoin mining companies, has distinguished itself by implementing key strategies that make it among the most efficient companies in the field.

1. Strategic Miner Curation: Upgrading to the Most Efficient Fleet

As always, we look for the best opportunities to upgrade our fleet in the most cost-effective way possible. Our most recent upgrade includes adding over 35,000 Bitmain T21 miners next year, elevating our fleet to the next level. This strategic move bolsters our position as one of the most efficient Bitcoin mining companies.

The upgrade will increase our hashrate to 12.0 EH/s by Q2 2024 with the option to hit 17.0EH/s by H2 2024. Our fleet efficiency will improve by 29 percent and 25 w/TH. This not only puts Bitfarms in an energy-efficient position for the upcoming Halving but also lowers our costs and opens us up to more financial flexibility.

2. Fleet Optimization: Staying Ahead with Updates

Bitfarms' success begins with its fleet optimization strategy. We operate a large number of mining rigs, and the efficiency of each machine is crucial to overall profitability. One of the standout features of Bitfarms' strategy is its commitment to keeping its mining hardware up to date through regular firmware updates that are carefully selected for best performance.

Firmware plays a critical role in improving the performance and efficiency of mining equipment. By working closely with hardware manufacturers and third-party firmware providers, Bitfarms ensures that its machines are equipped with the latest firmware, which often includes bug fixes and performance improvements. This proactive approach not only extends the lifespan of our mining hardware but also maximizes the hashrate, while reducing energy consumption.

3. Operational Consistency: Reliability as a Cornerstone

Bitfarms understands that consistency is key in the highly competitive world of cryptocurrency mining. We have established robust operational procedures that minimize downtime and ensure a consistent mining output. Our commitment to maintaining the highest standards of operational consistency is intended to ensure that our miners are performing optimally.

This consistency extends beyond just the mining equipment itself. Bitfarms' mining facilities are equipped with state-of-the-art electrical design and redundant network infrastructure. By reducing downtime and maximizing uptime, Bitfarms can mine Bitcoin efficiently, even in challenging market conditions.

4. Exceptional Miner Maintenance: Extending Lifespans and Reducing Costs

Maintenance is a significant cost factor in cryptocurrency mining, but Bitfarms excels in that area. The Company's dedication to exceptional miner maintenance is key to our efficiency strategy. Bitfarms' technicians are highly skilled in diagnosing and resolving hardware issues promptly with the assistance of our proprietary MGMT system. This attention to detail extends the lifespan of our mining rigs.

Regular cleaning, inspection, and replacement of worn components help prevent costly breakdowns and hardware failures. Bitfarms also has its own repair lab that performs in-depth repairs at the hashboard level. We can repair or change any failed component on a board directly on-site, saving us time, money, and downtime. This approach minimizes both the financial and operational impact of maintenance, contributing to the Company's efficiency.

5. Energy Throughput: Maximizing Profitability with Efficiency

One of Bitfarms' most impressive strategies is its mining power management. By optimizing the power throughput of our fleets, we are able to manage our efficiency and the temperature of our miners. The longevity of our fleet is sustained by the prioritization of using a higher or lower throughput in a strategic manner.

By delineating when to push our hardware to the max and when to be more efficient, we minimize the wear and tear on our miners. The extended lifespan of our miners, supported by our miner maintenance and care, can lead to higher profits due to a lower turnover rate in miners. Being able to control the throughput also enables us to be more flexible and strategically leverage the maximum of our allowed power capacity and infrastructure.

6. The Expertise of Our Team: A Competitive Edge

We recognize that the knowledge and experience of our team members are invaluable assets. The Company employs a diverse team of experts in various fields, including mining hardware and electrical engineering. This multidisciplinary approach enables Bitfarms to stay at the forefront of innovation and adapt to the rapidly changing landscape of cryptocurrency mining.

Bitfarms' track record as one of the most efficient cryptocurrency mining companies in the industry has always been attributed to careful planning and operational know-how. With the future addition of the Bitmain T21s – and in combination with our other strategies – Bitfarms not only aims to maximize its profitability but also has established a benchmark for sustainable and efficient cryptocurrency mining practices. In a field where efficiency is the key to success, Bitfarms stands out as a shining example of how to thrive in a rapidly evolving industry.

For more information on Bitfarms, visit www.bitfarms.com.

Disclaimer Regarding Forward-Looking Information:

This blog presentation has been issued as a matter of interest to investors and other followers of Bitfarms Ltd.  This presentation contains forward-looking information as defined under Canadian securities laws and forward-looking statements as defined under United States securities laws (collectively, "forward-looking information"), and Bitfarms cautions readers that forward-looking information is based on certain assumptions and risk factors that could cause actual results to differ materially from the expectations of Bitfarms.  In particular, the ability of the Company to optimize its mining fleet inventory and operate this equipment effectively is forward-looking information.  There can be no assurance that mining fleet upgrades and operational optimization will necessarily be profitable. Other factors that could cause actual results to differ materially from those expressed or implied by the forward-looking information in this presentation include, but are not limited to: conditions in the digital currency market; the ability to successfully mine digital currency; revenue may not increase as currently anticipated, or at all; it may not be possible to profitably liquidate the current digital currency inventory, or at all; a decline in digital currency prices may have a significant negative impact on operations; an increase in network difficulty may have a significant negative impact on operations; the volatility of digital currency prices; the anticipated growth and sustainability of hydroelectricity for the purposes of cryptocurrency mining in the applicable jurisdictions; the inability to maintain reliable and economical sources of power for the Company to operate cryptocurrency mining assets; the risks of an increase in the Company's electricity costs, cost of natural gas, changes in currency exchange rates, energy curtailment or regulatory changes in the energy regimes in the jurisdictions in which the Company operates and the adverse impact on the Company's profitability; the ability to complete current and future financings; historical prices of digital currencies and the ability to mine digital currencies that will be consistent with historical prices; and the adoption or expansion of any regulation or law that will prevent Bitfarms from operating its business, or make it more costly to do so.  For further information concerning these and  other risks and uncertainties, please refer to the public documents of Bitfarms filed on https://www.sedar.com/ and on www.sec.gov/EDGAR. Readers should not place undue reliance on forward-looking information. Securities regulators and stock exchanges, including the Toronto Stock Exchange and Nasdaq, have not reviewed the information disclosed in this blog presentation, and no securities regulator or stock exchange accepts responsibility for the adequacy or accuracy of this content. The Company undertakes no obligation to revise or update any forward-looking information other than as required by applicable law.

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