Q1 2022 Unaudited Results

2022 - May | Q1 2022 Unaudited Results

Press Release
18 May 2022

Argo Blockchain plc

("Argo" or "the Company")

Q1 2022 Results (Unaudited)

Argo Blockchain plc (LSE: ARB; NASDAQ: ARBK), a global leader in cryptocurrency mining, is pleased to announce its unaudited financial results for the quarter ended 31 March 2022. All $ amounts are in United States Dollars ("USD") and all £ amounts are in British Pounds ("GBP"), unless otherwise stated.

  • Revenue of $19.5 million (£14.9 million) (+9% Y/Y)
  • Produced net income of $2.1 million (£1.6 million) and $19.1 million of Adj. EBITDA (£14.5 million of Adj. EBITDA) (+24% Y/Y)
  • Mined 470 Bitcoin and Bitcoin Equivalents in Q1 2022 (+21% Y/Y)
  • "HODL" of 2,700 Bitcoin and Bitcoin Equivalents as of31 March 2022

Peter Wall, Chief Executive of Argo, said: "During the first quarter, our team has focused on working towards the completion of Helios Phase 1, while continuing to deliver strong performance from our existing fleet. To be a successful miner you need three  components  - power, miners, and capital. We already have a strong foundation for growth at Helios with our access to 800 MW of power capacity. This quarter, we improved our access to capital by establishing a financing relationship with NYDIG and  strengthened  our  access  to  miners through our supply agreement with Intel for their new Blockscale ASIC chips. This will allow us to build custom-designed mining machines specifically to Argo's specifications and built for use in immersion-cooling technology.

"As mining operations begin this month at Helios, we are excited to be delivering on our commitment to shareholders to build a best-in-class Bitcoin mining facility."

Q1 2022 Financial Performance

  • The Company generated $19.5 million (£14.9 million) of revenue in the quarter, a 9% increase over the same period in 2021. This increase was primarily driven by Argo's growth in hash rate throughout 2021 and partially offset by lower Bitcoin prices in Q1 2022.
  • The Company produced net income of $2.1 million (£1.6 million).
  • Argo achieved Adj. EBITDA of $19.1 million (£14.5 million), an increase of 24% over the same period in 2021.
  • Total Bitcoin mined in the quarter increased by 21% to 470 Bitcoin and Bitcoin Equivalents (together, "BTC"), compared to 387 BTC mined in the same period in 2021.
  • The Company's mining margin for the first quarter was 76%, with an average direct cost per BTC mined of $9,779 (£7,448).
  • The Company ended the quarter with 2,700 BTC in its HODL; this, combined with a cash balance of $11.9 million (£9.1 million), provides the Company with ample liquidity.

Q1 2022 and Recent Operational Highlights

  • The Helios facility was energized and commenced Bitcoin mining activities on5 May 2022. The Company held a grand opening ceremony to commemorate the event with elected officials, partners, suppliers, and members of the local community in attendance.
  • The Company still expects to increase its hashrate to 5.5 EH/s by the end of 2022, subject to machine deliveries.
  • In March 2022, the Company signed an agreement to swap approximately 10,000 S19 mining machines currently hosted at Core Scientific facilities for new S19J Pro mining machines to be delivered to the Helios facility. To mitigate any temporary loss of hashrate for Argo, the swap of miners will occur in stages as the machines are delivered, which has already commenced and will continue through July 2022. Upon completion of this mining machine swap, Argo will no longer have any hosted machines and will have completed its strategic pivot away from hosting to a fully vertically-integrated model.
  • In January 2022, the Company formally launched Argo Labs, its in-house innovation arm established to identify opportunities within the disruptive and innovative sectors of the cryptocurrency ecosystem while supporting the decentralization of various blockchain protocols. Argo Labs is primarily focused on two key areas: network participation and strategic diversification through the efficient deployment of a portion of the Company's crypto treasury assets. Argo has allocated approximately 10% of the Company's crypto assets in its "HODL" to Argo Labs, which gives the Company the opportunity to integrate cryptocurrencies into existing financial infrastructure and gain exposure to the wider digital asset ecosystem.

Q1 2022 and Recent Financing Highlights

  • Argo entered into two significant non-dilutive debt financing arrangements with New York Digital Investment Group LLC ("NYDIG").
  • In March 2022, Argo signed loan agreements to borrow$26.7 million (£20.2 million at the 3 March 2022 exchange rate), with the proceeds to be used for the continued build out of Helios Phase 1. Under these loan agreements, the borrowings are secured against certain electrical infrastructure at Helios.
  • In May 2022, Argo signed additional loan agreements to borrow up to$70.6 million (£56.3 million at the 3 May 2022 exchange rate), subject to customary drawdown conditions, with the proceeds to be used for the continued build out of Helios Phase 1. Under these loan agreements, the borrowings are secured against certain Bitcoin mining machines installed at Helios

Q1 2022 and Recent Personnel Updates

  • The Company strengthened its executive team by appointing Seif El-Bakly as Chief Operating Officer and Alana Marks as Vice President of People and Culture.
  • Justin Nolan, who previously held the role of Vice President of Business Development, was promoted to the role of Chief Growth Officer.
  • The Company appointed Raghav Chopra, a seasoned finance and investing professional, as a non-executive director.

Earnings Conference Call

Argo   will   host   a   conference   call   to   discuss   its   results   at08:00   ET/12:00   BST   tomorrow, Wednesday 18 May 2022. The live webcast of the call can be accessed via the Investor Meet Company platform.

Investors can sign up to Investor Meet Company and add Argo Blockchain via the following link: https://www.investormeetcompany.com/argo-blockchain-plc/register-investor

Investors already following Argo Blockchain on the Investor Meet Company platform will be invited automatically.

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 Annual Report on Form 20-F.

Non-IFRS Measures

Bitcoin and Bitcoin Equivalent Mining Margin and Adjusted EBITDA are financial measures not defined by IFRS. We believe Bitcoin and Bitcoin Equivalent Mining  Margin  and  Adjusted EBITDA have limitations as analytical tools. 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. Further, Adjusted EBITDA excludes interest income (expense), taxes, depreciation and amortization, change in fair value of digital currencies, and share based payments, which are important components of our IFRS net income/(loss). These measures should not be considered as an alternative to gross margin or net income/(loss), as applicable, determined in accordance with IFRS, or other IFRS measures. These measures are not necessarily comparable to similarly titled measures used by other companies. As a result, you should not consider these measures in isolation from, or as a substitute analysis for, our gross margin or  net  income/(loss),  as applicable, as determined in accordance with IFRS.

Argo Blockchain - Q1 2022 Statement of Income
Argo Blockchain - Q1 2022 Balance Sheet

*Dollar values translated from pound sterling into U.S. dollars  at  the  rate  of£1.00  to $1.31 unless otherwise specified.

For further information please contact:

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 Nasdaq Global Select Market in the United States under the ticker: ARBK.

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