Argo Blockchain plc increases bitcoin mining output despite challenging conditions

Argo Blockchain PLC (LSE:ARB, OTCQX:ARBKF, NASDAQ:ARBK, ETR:0XP) mined 2,156 bitcoins or bitcoin equivalents (BTC) during fiscal 2022, up 5% compared to 2021, according to the London-listed the company’s Friday earnings call.

Mining generated £47.4 million ($58.6 million) in revenue, down 36% from 2021 due to the bitcoin bear market, an increase in global hash rate and network difficulty, and rising energy costs.

Adjusted EBITDA of £1m was down from £55m in 2021, while margins fell to 54% from 84%, with a net loss of £194.2m.

Argo had a total of 141 bitcoins as of December 31, which amounted to approximately £2.34 million at the time, or £4.2 million as of April 28.

In terms of operational highlights, Argo increased its hashrate capacity by 55%, from 1.6 EH/s at the end of 2021 to 2.5 EH/s at the end of 2022.

Other operational highlights saw Argo sign an agreement with ePIC Blockchain Technologies to purchase 2,870 BlockMiner machines to be deployed in the third quarter of 2023, as well as complete an exchange agreement with Core Scientific for S19J Pro machines representing around 970 PH/s, and close hosting agreement with Core instead of self-mining operations with Helios.

On December 29, Argo Blockchain completed a series of agreements with Galaxy Digital (TSX-V:GLXY) Holdings Ltd. for £53m to sell the Helios facility for £53m, and to refinance existing equipment finance loans with a new asset-backed loan from Galaxy for £28m.

Argo maintained ownership of its entire fleet of mining machines, and Galaxy now hosts approximately 23,619 Bitmain S19J Pro machines on Helios under a two-year hosting agreement.

Total debt, net of cash, as at 31 December was approximately £46m.

Interim CEO Seif El-Bakly said: “After navigating challenging market conditions in both the crypto sector and the global economy in the second half of 2022, Argo has emerged stronger and in a much more solid financial position.

“Following the construction of Helios and the strategic transaction with Galaxy, we have streamlined our operations to maximize efficiency and increase our hashrate while maintaining our mining capacity thanks to our hosting agreement.

“Based on this foundation, we continue to work diligently on the next stage of Argo’s growth and development, with the goal of delivering long-term value to our shareholders.”

Going forward, Argo intends to focus on improving operational efficiency at its Quebec sites by optimizing its mining fleet and utilizing excess capacity at these sites.

The new BlockMiner machines, which represent an incremental 300 PH/s hashrate capacity, will be deployed at the group’s Quebec facility.

Update for the first quarter

In the first quarter of 2023, 491 BTC were mined (an average of 5.5 BTC per day), marking an increase of 5% year-on-year, but a decrease of 8% quarter-on-quarter.

Revenue came in at £9m with an improved mining margin of 45-50%, up from around 35% in the previous quarter due to higher Bitcoin prices and lower electricity prices in Texas.