TIDMARB
RNS Number : 5937R
Argo Blockchain PLC
07 July 2022
Press Release
7 July 2022
Argo Blockchain PLC
("Argo" or "the Company")
June 2022 Operational Update
Operational Update
Argo Blockchain plc, a global leader in cryptocurrency mining
(LSE: ARB; NASDAQ: ARBK), is pleased to provide the following
operational update for June 2022.
During the month of June, Argo mined 179 Bitcoin or Bitcoin
Equivalents (together, BTC) compared to 124 BTC in May 2022. The
increase in BTC mined is primarily due to an increase in total
hashrate capacity and greater uptime at the Helios facility
compared to the previous month.
Based on daily foreign exchange rates and cryptocurrency prices
during the month, mining revenue in June amounted to GBP3.38
million [$4.35 million*] (May 2022: GBP3.07 million [$3.89
million*]).
Argo generated this income at a Bitcoin and Bitcoin Equivalent
Mining Margin of 50% for the month of June (May 2022: 55%)(1) .
This reduction in mining margin was driven primarily by the reduced
price of Bitcoin and higher electricity costs at Helios.
As of 30 June 2022, the Company held 1,953 Bitcoin, of which 210
were BTC Equivalents.
(1) Bitcoin and Bitcoin Equivalent Mining Margin for May 2022
was previously reported to be 62%; however, certain fee invoices
for Helios had not been received and were not included in that
prior calculation.
Financing Update
During the month of June, the Company sold 637 Bitcoin at an
average price of approximately $24,500. Proceeds were used to fund
operating expenses and growth capital, as well as to reduce
obligations under a BTC-backed loan agreement with Galaxy Digital.
This is in line with the Company's risk management strategy that
has been in place since January 2022. Throughout 2022, the Company
has been selling a significant portion of monthly Bitcoin
production, steadily reducing its exposure to its BTC-backed loan,
and strengthening its balance sheet. As of 30 June 2022, the
Company had an outstanding balance of $22 million under the
BTC-backed loan. The Company is confident that it possesses
sufficient liquidity to avoid any potential liquidation of the
BTC-backed loan if Bitcoin price continues to decline.
Since Q4 2021, the Company has been using derivatives to limit
downside risk. Further, in June 2022, the Company hired a full-time
derivatives trader to augment its in-house capabilities within risk
and treasury management.
Helios Update
During the month of June, delivery and installation of the
Company's S19J Pro machines ordered from Bitmain has continued in
line with the timetable set out in September 2021. As of 30 June
2022, the Company has paid in excess of 95% of the total purchase
price for the Bitmain machines, which includes discounts received
as a result of the decrease in the price of Bitcoin. During the
month of June, the Company increased its total hashrate capacity to
2.2 EH/s. The Company remains on track to install all 20,000
machines purchased from Bitmain by October 2022.
Additionally, the Company continued to make progress in
executing its machine swap agreement with Core Scientific. As of 30
June 2022, 5,000 S19J Pro machines have been delivered and
installed under this agreement.
"Ongoing efforts to significantly upscale Argo's mining
operations are reflected in this month's numbers and our increased
hashrate," said Peter Wall, Argo's CEO. "These numbers, along with
our continued installations of the S19J Pro machines, put us in a
solid position with regards to our mining capacity.
"We have seen positive results from our risk management strategy
through which we have reduced the Company's exposure to its
BTC-backed loan, and we have hired a full-time derivatives trader.
We believe the Company is well positioned to navigate the current
market conditions and further increase our efficiencies."
Non-IFRS Measures
Bitcoin and Bitcoin Equivalent Mining Margin is a financial
measure not defined by IFRS. We believe Bitcoin and Bitcoin
Equivalent Mining Margin has limitations as an analytical tool. In
particular, Bitcoin and Bitcoin Equivalent Mining Margin excludes
the depreciation of mining equipment and so does not reflect the
full cost of our mining operations, and it also excludes the
effects of fluctuations in the value of digital currencies and
realized losses on the sale of digital assets, which affect our
IFRS gross profit. This measure should not be considered as an
alternative to gross margin determined in accordance with IFRS, or
other IFRS measures. This measure is not necessarily comparable to
similarly titled measures used by other companies. As a result, you
should not consider this measure in isolation from, or as a
substitute analysis for, our gross margin as determined in
accordance with IFRS.
The following table shows a reconciliation of gross margin to
Bitcoin and Bitcoin Equivalent Mining Margin, the most directly
comparable IFRS measure, for the months of May 2022 and June
2022.
Month Ended 31 May Month Ended 30 June
2022 2022
------------------------------ -------------------------------
GBP (000s) $ (000s) GBP (000s) $ (000s)
Gross (loss)(1) (11,934) (14,919) (14,925) (18,657)
Gross Margin(1)(,2) (384%) (384%) (429%) (429%)
Depreciation of mining
equipment 2,012 2,516 2,350 2,937
Charge in fair value of
digital currencies 11,031 13,790 9,216 11,521
Realised loss on sale of
digital currencies 602 752 5,087 6,359
Mining Profit(1) 1,711 2,139 1,728 2,160
Bitcoin and Bitcoin Equivalent
Mining Margin(1) 55% 55% 50% 50%
-------------------------------- ------------------- --------- -------------------- ---------
(1) Certain fee invoices for Helios had not been received and
could not be included in the prior calculations for: Gross (loss)
(Previously reported in May 2022 to be GBP11,719,569/$14,650,191),
Gross Margin (Previously reported in May 2022 to be 377%), Mining
Profit (Previously reported in May 2022 to be
GBP1,926,383/$2,408,099) and Bitcoin and Bitcoin Equivalent Mining
Margin (Previously reported in May 2022 to be 62%).
(2) Due to unfavourable changes in the fair value of Bitcoin and
Bitcoin Equivalents in May 2022 and June 2022 there was a loss on
change in fair value of digital currencies.
* Dollar values translated from pound sterling into U.S. dollars
using the noon buying rate of the Federal Reserve Bank of New York
as at the applicable dates
Inside Information and Forward-Looking Statements
This announcement contains inside information and includes
forward-looking statements which reflect the Company's or, as
appropriate, the Directors' current views, interpretations, beliefs
or expectations with respect to the Company's financial
performance, business strategy and plans and objectives of
management for future operations. These statements include
forward-looking statements both with respect to the Company and the
sector and industry in which the Company operates. Statements which
include the words "expects", "intends", "plans", "believes",
"projects", "anticipates", "will", "targets", "aims", "may",
"would", "could", "continue", "estimate", "future", "opportunity",
"potential" or, in each case, their negatives, and similar
statements of a future or forward-looking nature identify
forward-looking statements. All forward-looking statements address
matters that involve risks and uncertainties because they relate to
events that may or may not occur in the future. Forward-looking
statements are not guarantees of future performance. Accordingly,
there are or will be important factors that could cause the
Company's actual results, prospects and performance to differ
materially from those indicated in these statements. In addition,
even if the Company's actual results, prospects and performance are
consistent with the forward-looking statements contained in this
document, those results may not be indicative of results in
subsequent periods. These forward-looking statements speak only as
of the date of this announcement. Subject to any obligations under
the Prospectus Regulation Rules, the Market Abuse Regulation, the
Listing Rules and the Disclosure and Transparency Rules and except
as required by the FCA, the London Stock Exchange, the City Code or
applicable law and regulations, the Company undertakes no
obligation publicly to update or review any forward-looking
statement, whether as a result of new information, future
developments or otherwise. For a more complete discussion of
factors that could cause our actual results to differ from those
described in this announcement, please refer to the filings that
Company makes from time to time with the United States Securities
and Exchange Commission and the United Kingdom Financial Conduct
Authority, including the section entitled "Risk Factors" in the
Company's Registration Statement on Form F-1.
For further information please contact:
Argo Blockchain
Peter Wall via Tancredi +44 203 434
Chief Executive 2334
--------------------------
finnCap Ltd
--------------------------
Corporate Finance
Jonny Franklin-Adams
Tim Harper
Joint Corporate Broker
Sunila de Silva +44 207 220 0500
--------------------------
Tennyson Securities
--------------------------
Joint Corporate Broker
Peter Krens +44 207 186 9030
--------------------------
OTC Markets
--------------------------
Jonathan Dickson +44 204 526 4581
jonathan@otcmarkets.com +44 7731 815 896
--------------------------
Tancredi Intelligent Communication
UK & Europe Media Relations
--------------------------
Emma Valgimigli
Fabio Galloni-Roversi Monaco +44 7727 180 873
Nasser Al-Sayed +44 7888 672 701
argoblock@tancredigroup.com +44 7915 033 739
--------------------------
About Argo:
Argo Blockchain plc is a dual-listed (LSE: ARB; NASDAQ: ARBK)
blockchain technology company focused on large-scale cryptocurrency
mining. With its flagship mining facility in Texas, and offices in
the US, Canada, and the UK, Argo's global, sustainable operations
are predominantly powered by renewable energy. In 2021, Argo became
the first climate positive cryptocurrency mining company, and a
signatory to the Crypto Climate Accord. Argo also participates in
several Web 3.0, DeFi and GameFi projects through its Argo Labs
division, further contributing to its business operations, as well
as the development of the cryptocurrency markets. For more
information, visit www.argoblockchain.com .
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