Argo Blockchain plc — Q3 2023 Form 6-K Summary
Business context and reporting period
Argo Blockchain plc, a cryptocurrency mining company listed on the LSE and Nasdaq, reported unaudited results for the three and nine months ended 30 September 2023. Its operations include mining facilities in Quebec and Texas, with predominantly renewable-powered operations.
Key financial and operating metrics
| Metric | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 |
|---|---|---|---|---|
| Revenue | $10.4m | $13.1m | $34.4m | $47.7m |
| Mining margin | $6.1m; 58% | $5.4m; 41% | $16.3m; 47% | $29.8m; 62% |
| Gross margin | $(0.8)m; (7%) | $2.1m; 16% | $(2.1)m; (6%) | $(42.5)m; (89%) |
| Adjusted EBITDA | $3.1m | $(7.0)m | $5.4m | $10.9m |
| Net loss | $9.9m | $18.0m | $26.1m | $57.6m |
| Bitcoin and equivalents mined | 370 BTC | Not provided | Not provided | Not provided |
Economic curtailment at the Helios facility generated $4.4 million of power credits in Q3, contributing to a reported fleet-wide direct electricity cost of approximately 3.5–4.0 cents per kilowatt-hour. Average direct cost per Bitcoin mined fell 33% sequentially, from $17,566 in Q2 2023 to $11,736 in Q3.
Cash and cash equivalents were $8.0 million at 30 September 2023, compared with $20.1 million at 31 December 2022. The company reported approximately $70 million of debt outstanding at quarter-end, including $38.1 million of bonds and $29.9 million of loans and borrowings on the statement of financial position. Total equity was negative $2.9 million.
For the nine months ended 30 September 2023, operating activities used $1.9 million of cash, investing activities used $0.6 million, and financing activities used $8.1 million. Loan repayments were $8.4 million and interest paid was $8.0 million. The company issued shares for $7.5 million.
Material changes versus comparable periods
- Q3 revenue declined approximately 21% year over year, while nine-month revenue declined approximately 28%.
- Q3 mining margin increased to 58% from 41%, primarily because of Helios power credits and curtailment benefits.
- Q3 Adjusted EBITDA improved from a $7.0 million loss to positive $3.1 million.
- Q3 net loss narrowed to $9.9 million from $18.0 million; the nine-month net loss narrowed to $26.1 million from $57.6 million.
- Recurring non-mining operating expenses decreased 11% from the prior quarter.
- Debt owed to Galaxy Digital declined from $32 million to $27 million during the quarter.
- The company completed deployment of BlockMiner machines adding approximately 0.3 EH/s, increasing total hashrate capacity to 2.8 EH/s.
- A $1.2 million non-cash charge was recorded for prior-period Canadian sales taxes following new tax regulations. Total restructuring and one-time items were $1.5 million in Q3 and $2.9 million for the first nine months.
Outlook, commentary, risks and unusual items
Management attributed the improved quarter to the ability to curtail Helios operations during periods of high electricity prices and earn power credits. Argo said it was in advanced discussions to sell certain non-core assets and continued to evaluate additional debt-reduction options. No specific revenue, profitability, production or financing guidance was provided.
Key risks include cryptocurrency price and network conditions, electricity prices and availability, the effectiveness of power-curtailment arrangements, the ability to complete contemplated Galaxy-related transactions, access to additional financing, and the possibility that working capital will be insufficient to fund operations for the next twelve months. The filing states that forward-looking statements are subject to material uncertainty and are not guarantees of future performance.
Investor verification points
- Verify the company’s liquidity position and whether $8.0 million of cash is sufficient for near-term operating, interest and debt obligations.
- Review debt maturities, security arrangements and the status of the Galaxy Digital transactions or other proposed debt-reduction measures.
- Assess the sustainability of the $4.4 million Helios power credits and the reported 58% mining margin.
- Confirm the terms and expected proceeds of any non-core asset sale.
- Reconcile the reported approximately $70 million debt balance with the detailed balance-sheet classifications.
- Monitor cryptocurrency prices, mining difficulty, network economics, electricity costs and regulatory or tax changes.