Argo Blockchain plc — October 2022 Operational Update
Filing: Form 6-K dated 8 November 2022, reporting October 2022 operations. Argo is a dual-listed cryptocurrency mining company with operations in the U.S., Canada and the U.K.
Key Financial and Operating Metrics
| Metric | October 2022 | September 2022 |
|---|---|---|
| Bitcoin and Bitcoin Equivalents mined | 204 BTC | 215 BTC |
| Mining revenue | £3.55 million ($4.00 million) | £3.78 million ($4.27 million) |
| Bitcoin and Bitcoin Equivalent Mining Margin | 32% | 25% |
| Mining profit | £1.129 million ($1.271 million) | £0.938 million ($1.060 million) |
| IFRS gross profit/(loss) | £(1.486) million ($1.673 million loss) | £(5.807) million ($6.560 million loss) |
| IFRS gross margin | (42%) | (154%) |
| Hashrate capacity | 2.5 EH/s | 2.5 EH/s |
As of 31 October 2022, Argo held 138 Bitcoin, including 119 Bitcoin Equivalents. The company repaid the previously outstanding $6.7 million BTC-backed loan with Galaxy Digital. The filing does not provide a broader cash balance, liquidity total, net debt figure or operating cash flow for the period.
Material Changes Versus September
- Bitcoin production declined by approximately 5.1% to 204 BTC, primarily because of a significant increase in Bitcoin network difficulty.
- Mining revenue decreased by approximately 6.1% to £3.55 million.
- Mining margin improved from 25% to 32%, and mining profit increased from £0.938 million to £1.129 million.
- Reported IFRS gross loss narrowed substantially, from £5.807 million to £1.486 million. October included a £658,000 loss from changes in the fair value of digital currencies, compared with a £4.967 million loss in September.
- Argo sold 3,843 new-in-box Bitmain S19J Pro machines, described as the final batch of the original Bitmain order scheduled for October installation. Hashrate capacity therefore remained at 2.5 EH/s.
Outlook, Risks and Unusual Items
- Argo stated that access to power at its two Quebec facilities is expected to continue for the foreseeable future, following discussions with Hydro-Québec and the City of Baie-Comeau and in response to media reports regarding potential electricity restrictions.
- The company remained engaged in financing discussions announced on 31 October 2022 and said it would update investors in due course. No financing terms or committed funding are provided in this filing.
- Repayment of the Galaxy Digital loan reduces exposure to downside Bitcoin price risk, but the filing does not quantify the effect on remaining liquidity.
- Bitcoin and Bitcoin Equivalent Mining Margin is a non-IFRS measure. It excludes mining-equipment depreciation, digital-currency valuation movements and realized gains or losses on digital-asset sales, and therefore is not equivalent to IFRS gross margin.
- Key operating risks include Bitcoin price volatility, network difficulty, cryptocurrency valuation changes, energy availability and costs, financing needs, and the potential effect of industry or regulatory developments.
Investor Verification Points
- Verify the company’s post-repayment cash position, liquidity runway and any subsequent financing or restructuring developments.
- Reconcile the reported non-IFRS mining margin with IFRS results, including depreciation, digital-currency fair-value changes and realized asset-sale results.
- Monitor Bitcoin prices, network difficulty, production levels and the sustainability of the 2.5 EH/s capacity.
- Confirm continued power availability and the applicable commercial terms at the Quebec facilities.
- Review subsequent SEC and FCA filings for changes in debt, asset sales, financing arrangements and going-concern or other liquidity disclosures.