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Thanks all, some really good posts, thoughts & links. What a refreshing board to some of them I follow on here.
Yes my numbers were a tad out, (should have been sleeping not crunching at that time of night). Taken a fair position this morning @£1.52 & will do more research into if I add more.
GLA, pleasure to be aboard
Some good posts here. We can all try to value ARB, all have our own judgements re PE etc and we will all be wrong to some degree. But we cannot argue with the wider macro picture - BTC adoption...
Currently c. 130m BTC 'users'
Internet took 7 years to go from 130m to $1bn
BTC forecast to do it by 2025, ie nearly twice as fast as the internet and to surpass Paypal users within 2 years, ie the fastest growth of any new technology in history.
Fixed supply (or in truth falling supply as hodlers hodl) + massive demand = ?
Impact on ARB in next 3.5 years?
That is how I am looking at it.
Sorry, should have added you need to look under Analysts & Research
Also, don't forget Align Analyst Research, see: https://argoblockchain.com/investors/#Reports_and_Shareholder_documents_section
Fag packet valuation - I do not smoke! Plus there is no smoke without fire. GL argonauts (and any thinking of investing)/true believers, 600
@flushfrank
Nice to see you thinking about investing - and doing some research before you do!
First off though I think you've missed a zero off on your mining average which is actually closer to £7.5m per month.
This is revenue obviously, not profit. Mining margin is over 80% but this only allows for electricity and hosting costs. To allow for other costs (mainly the cost of machines) using 60-65% is probably good enough for a fag packet. So this would give around £50m p.a. profit before tax on current mcap of £580m - so sp already looking pretty cheap perhaps?
The growth in profit will come mainly from increased mining and (hopefully) increasing BTC value.
Mining is expected to increase about 50% due to new machines expected before the end of October.
And then there's Texas. They are raising about £100m from the IPO which will bring mcap to around £680m (not sure where you get £611m from)?
If they fully kit out Texas with machines using all the power available then mining could increase a further four to five fold - though will cost much more than £100m to do so. However in terms of profit the 60-65% margin should hold up pretty well as most of the costs are electricity/hosting plus the machine costs which will all rise in proportion - and probably less as greater efficiency is expected which will should offset any faster rise in other costs (like in building the Texas infrastructure).
To complete Texas the mcap may be closer to £1bn (at today's share price assuming funding via further dilution) but with the upcoming 50% increase in mining, profit before tax could be £75m p.a. and then with Texas this could be £300m+ p.a.
Then as you say there is BTC price. IF this doubles to the $100k many are expecting (though of course no guarantee) then could double all the above numbers but care needed here as increasing BTC usually means increased mining difficulty and so some of the gains will be offset. On the other hand the current (and future increase in) HODL will go up in proportion and these increases will feed into profit.
Finally they are also diversifying into wider activities (including investment in Pluto) but these are probably best left off a fag packet calculation as much more uncertain what such activities will bring and with the prospect of over £300m p.a. profits already without them it almost seems greedy to factor them in!
All the above sounds very bullish but of course there are many risks (BTC value is the obvious one but take a look at the IPO prospectus where a long list of others is given).
Anyway, hope these ramblings help with your research and let us know what you decide!
If you want to apply the number of shares after the IPO then a ‘back of a fag packet’ comparison would be to divide £1bn by 456m instead of 381m (e.g. 220p rather than 260p). The FinnCap estimate is in the middle. Then try doubling the price of BTC by Christmas and see where you end up.
Or just read the report.
Why use back of fag packet when there are professional valuations available? Have a look at the method in the FinnCap report and just adjust the assumptions as you prefer. That one adjusts for three main variables. A rough value of say £1bn by end this year doesn’t seem excessive. Probably the biggest assumption is then what forward P/E ratio you want to apply, and of course what future BTC price, and whether you think the IPO has positive or negative effect on the SP. FinnCap valued at 240p per share, pre IPO, with BTC at $40k, assuming Texas is completed, for example.
Interested in what people feel MCAP should be with BTC at £35k & future thoughts
If have numbers right,
Float value will be £611m if SP stays here
£57m held in BTC
Mining average £750k a month.
Is the value coming from future price of BTC anticipated, or are they ramping up the mining ?
Genuine question, don’t hold but potentially looking too after doing deeper research