Keel Infrastructure no longer expects to sign three data center leases by the end of 2026, as Pennsylvania’s new regulatory framework has pushed permitting and commercial timelines back by months, executives said on the company’s third-quarter earnings call.
Chief Executive Officer Ben Gagnon said demand for the company’s sites remains strong and that no prospective customer has walked away because of the delays. Keel has not yet signed a lease, and management declined to provide new target dates for individual agreements.
“It’s a 15-year commitment, and we will not sign the wrong lease at the wrong price just to hit a date,” Gagnon said. He added that Keel intends to reflect construction and financing costs in lease economics.
The update came as Keel reported third-quarter revenue of $28 million, down from $68 million a year earlier, largely because it decommissioned its U.S. Bitcoin mining operations in the second quarter and the average Bitcoin price declined.
Permitting and project updates
Keel broke ground at Moses Lake, Washington, during the third quarter after receiving the approvals needed to begin construction. Gagnon said the project remains on track to be the company’s first site energized in 2027 and its first to generate high-performance computing revenue.
Moses Lake is being funded from Keel’s balance sheet and does not require a lease or project financing to be completed, Gagnon said. He told analysts that no additional permits or engineering work are needed before a lease can be signed, and that the company is in technical diligence and negotiations with multiple prospective customers.
In Pennsylvania, the company’s Sharon project has 110 megawatts of secured power and is awaiting one final state environmental permit, which has been issued in draft form. Panther Creek has 350 megawatts of secured power and three remaining environmental permits: one in draft and two undergoing technical review.
Gagnon said Keel remains confident in securing the permits, although he said it is difficult to forecast timing because of a backlog at the Pennsylvania Department of Environmental Protection. He said none of the company’s permit applications had been denied.
The company expects substations at Sharon and Panther Creek to be energized in 2027. Ready-for-service dates depend on when leases are signed and construction begins, with revenue expected to begin in early 2028 and capacity ramping through that year, Gagnon said.
Keel also pushed its expected update on expansion load studies at Panther Creek and Scrubgrass to the first quarter of 2027, from as early as December or January. The company is exploring a potential acquisition of a constructed powered shell and 75 megawatts of power in Allentown, Pennsylvania, but is still conducting due diligence.
Pennsylvania rules and leasing strategy
Gagnon said Pennsylvania’s August executive order made the state’s GRID standards for data center development mandatory. Keel’s permits currently before regulators are not subject to the order’s new requirements, he said, although removing data centers from a fast-track permitting program has contributed to a larger regulatory backlog.
Keel has developed a backup-power solution incorporating battery storage to comply with the order. Gagnon said the company does not expect the change to meaningfully affect project economics or timing for tenants.
For its larger Pennsylvania projects, Keel is focusing on investment-grade tenants or counterparties backed by investment-grade credit support, Gagnon said. Moses Lake is more likely to fit a smaller, fast-growing AI or cloud company, while Panther Creek’s scale is drawing discussions with the largest buyers of capacity.
Gagnon said the company would consider powered-land leases, powered shells or colocation arrangements. It is not pursuing a full-compute business model.
Loss widens as mining operations wind down
Keel’s third-quarter operating loss narrowed to $8 million from $18 million a year earlier. Its loss from continuing operations widened to $62 million, or $0.10 per share, from $11 million, primarily because of a $55 million noncash unrealized loss on the fair value of capped calls associated with its 2025 convertible notes offering, Chief Financial Officer Jonathan Mir said.
Adjusted EBITDA was negative $27 million, compared with positive $19 million in the prior-year quarter. The company sold 2,520 Bitcoin for $192 million during the quarter and had nominal Bitcoin holdings as of Sept. 30, Mir said.
Keel continues to operate a small Canadian Bitcoin mining business. Gagnon said the company does not plan to invest in additional miners or plant upgrades and expects the operation to shrink as it works toward converting its Quebec assets.
Liquidity and financing
Keel had approximately $780 million in unrestricted cash as of Nov. 4, plus $53 million in restricted cash serving as collateral for letters of credit, Mir said. Current pre-lease capital commitments total $380 million through the end of 2028; approximately half relates to completing Moses Lake, with most of the remainder tied to substation and fiber work at Sharon and Panther Creek.
Mir said Keel has sufficient liquidity to fund required spending before leasing and construction, as well as cash selling, general and administrative expenses, through 2028. The company does not currently anticipate needing external debt or equity financing before signing a lease.
For Sharon and Panther Creek, Keel plans to commit the bulk of construction capital after signing leases and securing project financing. Mir said the company expects to seek private credit financing for Moses Lake once it is leased and intends to recycle proceeds into its equity contributions for the Pennsylvania projects.
About Bitfarms (NASDAQ:BITF)
Bitfarms Ltd. is a vertically integrated Bitcoin mining and data center company. Its primary business is operating specialized computing equipment that validates transactions on the Bitcoin network and earns Bitcoin rewards. The company also develops and operates power and data center infrastructure to support its mining activities.
Founded in 2017, Bitfarms has focused on building and managing large-scale mining facilities in locations with access to relatively low-cost electricity, including hydroelectric power.
