Argo Blockchain, a global leader in cryptocurrency mining (LSE: ARB), is pleased to announce its results for the six months to 30 June 2021.
Financial highlights
· Revenues increase by 180% to 31.1m reflecting increase in production coupled with an increase in Bitcoin prices (H1 2020: 11.1m)
· EBITDA* increased by 332% to 16.0m (H1 2020: 3.7m) despite a £6.2m downward revaluation of digital assets and a £1.6m share-based payment charge
· Mining margin of 81% (H1 2020: 39%)
· Pre-tax profit of 10.7m (H1 2020: 0.5m)
· Total number of Bitcoin and Bitcoin Equivalent mined during H1 2020 was 883 BTC (2020: 1,669). The change from the previous period was mainly due to the halving of May 2020
· Total number of Bitcoin and Bitcoin Equivalent held as at 30 June 2021 were 1,268 BTC, an increase from 127 Bitcoin and Bitcoin Equivalent as at 30 June 2020
*Earnings before interest, tax, depreciation and amortisation
Operating highlights
· Mining capacity increased from 685 petahash as at 31 December 2020 to 1,075 petahash as at 30 June 2021
Post period end
· Broken ground at the Texas facility
· In late June and July, significant changes in mining difficulty led to a substantial decrease in the global hashrate, resulting in an increase in the number of Bitcoin Argo mines with the same hashpower
· New board appointments
Commenting on the results, Peter Wall, chief executive and interim chairman, said: ” We have capitalised on a change in market conditions in the first half of 2021 to deliver strong growth in both revenues and profits, demonstrating that our smart growth strategy is delivering value to shareholders.”
Update on Mining Infrastructure
The Company announces an update to its 22 February 2021 announcement relating to the expansion of the Company’s mining capacity in Q4 2021 and 2022. As previously announced, Argo committed to an initial purchase of US$8 million of mining rigs from ePIC Blockchain Technologies (“ePIC”), with delivery expected to begin in Q4 2021. However, based on limitations of technology, Argo and ePIC have agreed to amend the agreement. Under the amended agreement, the initial purchase order was cancelled and, at Argo’s option, $5 million deposited with ePIC, in whole or in part, can be applied to the purchase of ePIC mining machines or ePIC common stock or repaid in full.
This announcement contains inside information.
About Argo:
Argo Blockchain plc is a global leader in cryptocurrency mining with one of the largest and most efficient operations powered by clean energy. The Company is headquartered in London, UK and its shares are listed on the Main Market of the London Stock Exchange under the ticker: ARB and on the OTCQX Best Market in the United States under the ticker: ARBKF.
Interim Management Report
Argo entered 2021 with a clear business strategy of “smart growth” and its mining operations continue to gain momentum as new production capacity was brought onstream. The Group’s mining margin has remained strong during the first half of 2021, averaging 81 per cent over the period.
In the first quarter, the Group conducted two fundraisings which together generated £49.2m in new equity. These fundraisings enabled the Group to invest in new machines and fund working capital requirements as well as a strategic investment in Pluto Digital PLC (“Pluto”) and an acquisition of DPN LLC to acquire the Helios project and land in West Texas, as described below. The Group has been able to grow its crypto holding to 1,268 Bitcoin and equivalents at the end of June 2021 as a result of the cash generated from these placements and the monies collected from options and warrants exercises, which helped to fund working capital.
In March, the Group acquired the Helios project – 160 acres of land in West Texas primed for the development of a cryptocurrency data centre – through the acquisition of DPN LLC. The land has access to up to 800 megawatts (MW) of power, primarily from renewable sources. Post period end, the Group has broken ground at this facility and expects the first stage of this development, a 200MW Facility, to be completed in the first half of 2022.
The Group is mindful of its carbon footprint and has previously committed to announce its climate action plan to achieve the Group’s goal of becoming a net zero greenhouse gas (GHG) company. Alongside this plan, in March the Group announced “Terra Pool”, a Bitcoin mining pool powered by clean energy, with the aim of expediting the shift from conventional power to clean energy and reducing the impact of Bitcoin mining on the environment. The mining pool will provide a platform for cryptocurrency miners to produce Bitcoin and other cryptocurrencies in a sustainable way.
In two separate investment rounds completed in early 2021 Argo invested a total of £8.4m in Pluto. Pluto is a crypto technology company that is exploring solutions to connect Web 3.0 technologies to the global economy. Pluto is investing in, incubating and advising digital asset projects based on decentralised technologies (DeTech), decentralised finance (DeFi) and networks such as Ethereum and Polkadot. Pluto also plans to support the operation of proof-of-stake networks by staking and operating validator nodes.
Having successfully completed a major expansion, the Group’s strategic focus is to optimise operations by further increasing efficiency and reducing operating costs and executing the build out of Argo’s Texas facility in line with the timeline the Group set out in the first quarter of 2021.
