Argo Blockchain plc — Form 6-K Summary
Reporting period: September 2022 operational update, filed October 11, 2022. Argo is a dual-listed cryptocurrency mining company with its flagship facility in Texas and operations in the United States, Canada, and the United Kingdom.
Key Financial and Operating Metrics
| Metric | September 2022 | August 2022 | Change |
|---|---|---|---|
| Bitcoin and Bitcoin Equivalents mined | 215 BTC | 235 BTC | Down 8.5% |
| Mining revenue | £3.78 million ($4.27 million) | £4.39 million ($5.23 million) | Down 13.9% in GBP |
| Bitcoin and Bitcoin Equivalent Mining Margin | 25% | 20% | Up 5 percentage points |
| Mining profit | £938,000 ($1.06 million) | £882,000 ($1.05 million) | Up 6.3% in GBP |
| IFRS gross loss | £5.807 million ($6.560 million) | £4.471 million ($5.334 million) | Loss increased |
| IFRS gross margin | (154%) | (110%) | Declined |
| Hashrate capacity | 2.5 EH/s | Not clearly provided | Expected to reach 2.9 EH/s after installation |
At September 30, Argo held 512 Bitcoin, including 167 Bitcoin Equivalents. The company uses derivatives to manage Bitcoin holdings and mitigate risk exposure. The filing does not provide clear figures for operating cash flow, total cash, liquidity, debt, net income, or EBITDA.
Material Changes Versus the Prior Comparable Period
- Bitcoin production fell by 20 BTC, primarily because average network difficulty increased 12% during September.
- Operations at the Helios facility in Texas continued to be curtailed during periods of high electricity prices.
- Revenue declined, but the reported mining margin improved to 25% from 20%, and mining profit increased modestly.
- IFRS gross loss widened due in part to unfavorable changes in the fair value of digital currencies. September included £4.967 million of such losses, compared with £2.944 million in August.
- Realized losses on digital currency sales declined to £55,000 from £765,000.
- Argo sold 3,400 mining machines to a third party, as reported separately on October 7. Following the sale, expected completed hashrate capacity was revised to 2.9 EH/s.
Guidance, Outlook, Risks, and Unusual Items
- Argo expected to complete installation of its Bitmain S19J Pro machines by the end of October 2022, increasing total hashrate capacity to approximately 2.9 EH/s, which management described as an 81% increase since the first quarter of 2022.
- High electricity prices, Bitcoin price volatility, network difficulty, and cryptocurrency fair-value movements remain material operating and financial risks.
- The reported Bitcoin and Bitcoin Equivalent Mining Margin is a non-IFRS measure. It excludes mining equipment depreciation, digital-currency valuation movements, and realized losses on digital-asset sales, and therefore is not equivalent to IFRS gross margin.
- Perry Hothi is stepping down as Chief Technology Officer effective October 15 and will become a transitional advisor. Jean Esquier will lead the technology function, and Jason Zaluski joined as Vice President of Mining.
- The filing contains forward-looking statements regarding capacity expansion and future operations. Actual results may differ materially, and the company does not undertake to update such statements except as required by applicable law.
Investor Verification Checklist
- Verify completion, timing, and costs of the Bitmain S19J Pro installation and whether 2.9 EH/s capacity was achieved.
- Assess the financial impact of the 3,400-machine sale, including proceeds, book value, and any gain or loss.
- Review cash balances, debt maturities, financing arrangements, and liquidity, which are not disclosed in this operational update.
- Reconcile the non-IFRS mining margin with IFRS gross profit, depreciation, digital-currency valuation changes, and realized digital-asset losses.
- Monitor the effects of electricity prices, Helios curtailments, Bitcoin prices, network difficulty, and derivative positions on production and liquidity.