Argo Blockchain plc, a global leader in cryptocurrency mining (LSE: ARB; NASDAQ: ARBK), is pleased to announce its audited results for the year ended 31 December 2022.
Increased hashrate capacity by 55% from 1.6 EH/s at the end of 2021 to 2.5 EH/s at the end of 2022
Energized the Helios facility in Dickens County, Texas and commenced mining operations on 5 May 2022
Executed an agreement with ePIC Blockchain Technologies (“ePIC”), as amended, to purchase BlockMiner machines for use with Intel's Blockscale ASIC chip (2,870 machines expected to be deployed in Q3 2023)
Completed a swap agreement with Core Scientific (“Core”) for S19J Pro machines representing approximately 970 PH/s, which ended the Group’s hosting agreement with Core in place of self-mining operations at Helios
Released the Group's 2021 Sustainability Report and maintained climate positive status by producing no Scope 1 emissions and offsetting all Scope 2 and Scope 3 emissions through renewable energy credits and verifiable emissions reductions
Financial highlights
Total number of Bitcoin or Bitcoin Equivalent ("BTC") mined during 2022 was 2,156, a 5% increase compared to the BTC mined in 2021, despite an increase in global hashrate and network difficulty
Revenues of £47.4 million ($58.6 million), a decrease of 36% from 2021, driven primarily by a significant decrease in Bitcoin price and an increase in the global hashrate and associated network difficulty level
Adjusted EBITDA of £1.0 million ($1.2 million), down from Adjusted EBITDA of £55.0 million ($74.2 million) in 2021
Mining margin of 54%, down from 84% in 2021. Similar to revenue, this decrease was largely attributable to the decrease in Bitcoin price and an increase in network difficulty, as well as significantly higher than expected power costs in Texas
Net loss of £194.2 million ($240.2 million), driven primarily by the change in fair value of digital assets, impairment of assets, and losses associated with our divestitures
Total number of BTC held at 31 December 2022 was 141, of which 116 were Bitcoin Equivalents
Sale of Helios & Hosting Agreement with Galaxy
On 29 December 2022, the Group completed a series of agreements with Galaxy Digital Holdings Ltd. (TSX: GLXY) ("Galaxy")
As part of the agreements, Argo sold its Helios facility to Galaxy for £53 million ($65 million), Argo refinanced existing equipment financing loans with a new asset-backed loan from Galaxy for an amount of £28 million ($35 million), and Galaxy agreed to host Argo's mining machines at Helios (“the Transactions”)
The Transactions improved the Group's balance sheet and liquidity by reducing total indebtedness by £33 million ($41 million) and improving its cash position. As of 31 December 2022, after accounting for the Transactions, the Group’s total debt was approximately £63 million ($76 million), and debt, net of cash, was £46 million ($56 million)
Argo maintained ownership of its entire fleet of mining machines, and Galaxy is now hosting the fleet of approximately 23,619 Bitmain S19J Pro machines at Helios under a two-year hosting agreement
Under the hosting agreement, Argo has access to the electricity price that Galaxy obtains through its power purchase agreement, and Argo pays an incremental hosting fee based on its actual electricity usage
Board and Senior Management Changes
Subsequent to 31 December 2022:
on 30 January 2023, Chief Financial Officer and Executive Director Alex Appleton resigned from his positions to pursue other opportunities. After a formal recruitment process led by an executive search firm, the Board appointed Jim MacCallum as Chief Financial Officer effective 5 April 2023
on 8 February 2023, Sarah Gow resigned as non-executive director of the Company for health reasons; and
on 9 February 2023, Chief Executive Officer and Interim Chairman Peter Wall resigned from his positions to pursue other opportunities. Matthew Shaw became Chairman of the Board, and the Board appointed Chief Operating Officer Seif El-Bakly, CFA, to serve as Interim CEO. The Group will provide an update on the CEO recruitment process in due course
Q1 2023 Update (Preliminary and Unaudited)
Total number of Bitcoin or Bitcoin Equivalent ("BTC") mined during Q1 2023 was 491, or 5.5 BTC per day. This is a 5% increase in daily BTC compared to the same period in 2021, and it is a 8% decrease in BTC production compared to the prior quarter. The decrease compared to Q4 2022 is primarily due to an increase in the network difficulty
Generated revenues of approximately £9 million ($11 million) with a mining margin in the range of 45% to 50%; mining margin increased from approximately 35% in Q4 2022 due to higher Bitcoin price and lower electricity prices in Texas
Average direct cost per Bitcoin mined was approximately £10,000 ($12,000)
Average all-in costs (power costs and hosting fees) at Helios was approximately $0.05 to $0.055 per kilowatt-hour
Outlook for 2023
Renewed Focus on Quebec
Going forward, in the near term, Argo will be focusing on improving operational efficiency at its Quebec facilities by optimizing its mining fleet and utilizing excess capacity at these sites
Both data centers have access to 99% renewable electricity generated from hydropower at competitive prices
Deployment of ePIC BlockMiners
The Group is expecting the delivery of 2,870 units of ePIC “BlockMiner” machines beginning in early Q3 2023
These new BlockMiner machines, representing an incremental 300 PH/s of hashrate capacity, will be deployed at the Group’s Quebec facilities
Commenting on the results, Seif El-Bakly, Argo Blockchain Interim CEO, said,
Having navigated 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 build 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. On the basis of these foundations, 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.
*The tables below reconcile Bitcoin and Bitcoin Equivalent Mining Margin to gross margin, the most directly comparable IFRS measure, and Adjusted EBITDA to net income/(loss), the most directly comparable IFRS measure:
Inside Information and Forward-Looking Statements
This announcement contains inside information and includes forward-looking statements which reflect the Company's 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 "remains confident", "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, including the risk that the Company may receive the benefits contemplated by its transactions with Galaxy, the Company may be unable to secure sufficient additional financing to meet its operating needs, and the Company may not generate sufficient working capital to fund its operations for the next twelve months as contemplated. 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.
Tancredi Intelligent Communications UK & Europe Media Relations
Salamander Davoudi Emma Valgimigli Fabio Galloni-Roversi Monaco Nasser Al-Sayed
argoblock@tancredigroup.com
About Argo:
Argo Blockchain plc is a dual-listed (LSE: ARB; NASDAQ: ARBK) blockchain technology company focused on large-scale cryptocurrency mining. With mining facilities in Quebec, mining operations 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. For more information, visit https://argoblockchain.com.
