H.C. Wainwright analyst Mike Colonesse described Bitfarms’ agreement to acquire Stronghold Digital Mining as “a transformational acquisition.”

The analyst commented on the Bitcoin (BTC) miner’s potential to benefit from the Stronghold acquisition in a note shared with crypto.news on Aug. 22. It comes a day after Bitfarms’ announcement on Aug. 21.

Colonesse views the $125 million all-stock deal for Stronghold as a significant opportunity for Bitfarms to expand its operations substantially over the next 16 months. When finalized in the first quarter of 2025, Stronghold’s power capacity will enable Bitfarms to approach 1 gigawatt of power by the end of the year.

“After the integration and expansion of Stronghold’s assets, Bitfarms will be poised to more than triple total capacity to 955 MW by YE2025, up from 310 MW operating at the end of 2Q24,” the analyst wrote.

Furthermore, the deal is expected to increase Bitfarms’ U.S. footprint to approximately 47% of its total portfolio, up from the current 6%. The expansion of Stronghold’s sites in Pennsylvania could also contribute an additional 23 EH/s to the anticipated growth of 35 EH/s by the end of 2025, a target Bitfarms had set before announcing the Stronghold acquisition.

Reiterate buy with $4 price target

Given the above outlook, H.C. Wainwright believes the Bitfarms stock is undervalued. The key catalysts for 2025 include a significant upgrade to the mining firm’s fleet and potential organic growth.

The analyst has reiterated a buy rating for BITF, with a $4 price target. The Bitfarm stock currently trades around $2.28, which implies a 75.4% upside potential. BITF rose 22% after Bitfarm’s Q2, 2024 results.

Factors that may impact the achievement of this price target include volatility in Bitcoin’s price, operational delays, network hash rate changes, and the potential for shareholder dilution.