Aurelius Capital Management, a New York City-based investment firm, has made headlines with its significant investment in Bitfarms, a cryptocurrency mining company. According to a recent SEC filing dated November 13, Aurelius has acquired over 6.7 million shares of Bitfarms, valued at approximately $19 million. This new position not only makes Bitfarms the largest reported equity holding of the fund for the quarter but also represents a noteworthy 34.4% of Aurelius’s total assets under management, as detailed in the filing.
As of the latest trading session, Bitfarms shares are priced at $2.53, reflecting a robust 39% increase over the past year, notably outperforming the S&P 500 index, which has seen a gain of 16.5% during the same timeframe. This investment reflects a strategy by Aurelius to concentrate capital in areas deemed to have significant optionality, even amid uncertainties surrounding the stock’s full recovery.
The filing reveals that Aurelius’s portfolio includes other holdings, but none compare in size to its stake in Bitfarms. Following Bitfarms, the fund’s next largest positions are in Corz (with $8.4 million or 15.3% of AUM), CIFR ($6.3 million or 11.4% of AUM), WULF ($5.1 million or 9.3% of AUM), and Riot ($4.5 million or 8.2% of AUM).
Overviewing Bitfarms, the company operates cryptocurrency mining farms and generally generates revenue by validating transactions on the Bitcoin blockchain, earning rewards and transaction fees. With a market capitalization of $1.5 billion, Bitfarms has experienced a year-over-year revenue increase, reporting about $276.4 million for the trailing twelve months (TTM), although it also experienced a net loss of $128.2 million during the same period.
Bitfarms has shown improvement in its financials, with third-quarter revenues from continuing operations reaching $69 million—an impressive 156% increase compared to the previous year. The company also reported an adjusted EBITDA of $20 million, which constitutes 28% of its total revenue. Although it continues to face challenges with net losses, Bitfarms has fortified its balance sheet through a substantial $588 million convertible note offering, providing it with total liquidity of around $814 million, inclusive of cash and bitcoin holdings.
Looking ahead, management is actively redeploying this liquidity into more lucrative infrastructure projects. These initiatives include converting a site in Washington to support high-performance computing and AI workloads, alongside advancing various North American projects aimed at facilitating next-generation GPU technologies. If successful in shifting focus from traditional mining to broader digital infrastructure, Bitfarms could experience considerable upside potential from its current valuation.
For long-term investors, the concentrated positioning in Bitfarms signals a commitment to a comprehensive infrastructure strategy amid the volatile cryptocurrency market. Aurelius Capital’s bold move reflects a belief that operational scale, access to power, and balance sheet flexibility will be pivotal in navigating the industry’s dynamic landscape.
