Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Hi Hexam - yeah it’s common in the US to report on non-IFRS measures and then reconcile them back to IFRS, just like we are now doing with our monthly updates and the gross profit - that’s purely for the US investors and what they are used to seeing I suspect. The argument being that a one size fits all IFRS approach doesn’t necessarily show the commercial performance in an appropriate light.
FP99 - thanks for the link.
Hi Wolf - I suspect you are right on both counts which is why there isn't a single approach used by all miners for accounting currently and why I don't think ARB will need to change their approach. Having said that my only concern is that the SEC did step in with respect to MSTR (though only I believe for non-IFRS numbers) and of course ARB could decide to change anyway (though I don't think they will).
Hi Hexam - last time I looked at this from a technical viewpoint the impression I got was that crypto didn’t quite fit into any of the asset buckets particularly nicely and rules are really still being established.
Someone above mentioned Nasdaq but that shouldn’t affect the way the accounting is done as the standard is IFRS regardless of the exchange. It’s the disclosure in relation to information that will be different, rather than the information itself.
Hexam
I have heard MARA described as "hooky". That is not a view I would subscribe to on any public forum.
K3,
But that's why I'm confused. The BTC MARA mines IS treated the same way as MSTR. It is only the BTC that they buy (just like MSTR) that is treated differently.
btw - consider me teased (in a non creepy way)
Hexam
MARA mines its btc. Well, maybe it buys some as well. MSTR buys them. Isn't it as simple as that?
As for the depreciation, I was only teasing. It was a conversation i should have excused myself from, before joining it.
I yield.
K3,
I'm not sure why MSTR and MARA have to treat their BTC HODL value differently (assuming they are and I haven't misunderstood the situation). Not sure what you mean by 'current account product' but both are buying an asset in the same way so not sure why the treatment differs between them.
If Arb did now have to report in the same way MARA does then this will reduce the profits they report (until they sell the BTC) so I hope they don't have to (even though it doesn't change the 'real profit').
As for depreciation, my issue with this has always been two-fold. First if comparing companies a like-for-basis should be used. So I get irritated when people bang on about ARBs 80%+ mining margin and say it is better than other companies when all those other companies include depreciation in their direct mining costs and ARB doesn't.
Secondly, depreciation is indeed a techie accounting thing but what it represents certainly isn't. For miners it mainly represents the cost of machines which is a huge part of the business and when comparing companies is something that shouldn't be ignored. So for me any measure of profit that excludes such a fundamental part of the business is pretty meaningless unless viewed in the proper context. This is why for miners I think EBITDA is particularly misleading as one company may look better than another one on this metric but if it has paid a lot more for its machines then it won't be. Also anybody using EBITDA as an indicator of overall profitability is leaving out what is probably the biggest expense.
Hexam
"It looks then like MSTR have to account for their BOUGHT BTC HODL in the same way as MARA's MINED BTC HODL but MARA can account for their BOUGHT BTC HODL in the way that MSTR 'want' to account for their BOUGHT BTC HODL."
Is it because btc is a balance sheet asset with MSTR, but a current account product with MARA?
"I'm confused! Just wonder what this means for ARB, if anything, now that they're on nasdaq?"
I assume they would account for btc in the same way as MARA.
"As James says though, none of this changes the actual finances of any company - just the way that they are reported."
Well, I have always felt the same way about depreciation of mining equipment.
Argo tweet described as an "update".
STARTS Perry is at Helios and he is wearing his camelhair coat. ENDS
Oh, I'm easily confused - just better at hiding it sometimes :)
Hi hexam
If your confused, God help the rest of us ;)
FP - That's very interesting.
It looks then like MSTR have to account for their BOUGHT BTC HODL in the same way as MARA's MINED BTC HODL but MARA can account for their BOUGHT BTC HODL in the way that MSTR 'want' to account for their BOUGHT BTC HODL.
I'm confused! Just wonder what this means for ARB, if anything, now that they're on nasdaq?
As James says though, none of this changes the actual finances of any company - just the way that they are reported.
@HGN
Might be of use for you... 14 mins in
https://youtu.be/-TeQMLS53cg
Hexam - many thanks.
HGN - Sorry, I'm afraid I'm not familiar with what exactly Microstrategy were doing. From the little I do know it appears like they were trying to strip out impairments due to falls in BTC to say look what the results would be if we didn't have to do this. I can understand why they would want to do this and why the SEC would have an issue with it but I may have misunderstood the situation and tbh I'm not interested enough in MSTR to look at in more detail (it's not exactly fun trawling through accounts)!
What is interesting to me though is that I've looked previously at the financials for a few miners and they each have a different approach for accounting for changes in the value of BTC they hold.
ARB is alone from the ones I've looked at in that they bring ALL the changes in BTC value directly through to the headline profit (i.e.profit before tax and net income). So its reported profits will soar even more if BTC does really well, and will sink if it doesn't. So impairments don't apply as profit already reflects the full movement in the value of HODL already - and makes the reported profit more volatile.
MARA though only seem to do this for BTC they have bought. For mined BTC they do not include any upside on HODL (until presumably they sell) but do impair for any decrease in value since mining even if that value then subsequently goes up again.
HUT8 meanwhile do seem to allow for all changes in HODL value (like ARB) but 'below the line' i.e. in other comprehensive income.
Key takeaways for me from this are:
1) Never just compare profits at face value between companies - it can be very misleading
2) Now that we are on NASDAQ will ARB change in any way the approach to reporting (e.g. like MARA - or even MSTR)?
Heaxam - you seem to know your onions on the financials, whats your take on 'Microstrategy - U.S. Securities and Exchange Commission reportedly rejected the company's bitcoin accounting strategy. We note your response to prior comment 5 and we object to your adjustment for bitcoin impairment charges in your non-GAAP measures," the filing said. "Please revise to remove this adjustment in future filings.'
Thanks
Chances are he's definitely English
yep he seems like a big warty rock
Haha that was very quick Hexam,
So he’s Scottish?
Nah but he rhymes with rock.
herdie does IK live on fraggle rock
And IK, lets not even start on Amigo Lol,.
Lets have a little comparison IK THG All time High £7.97 8th Jan 2021 - Now £1.24, Argo in the same timeframe £1.17 down to £.75p - Sorry if i dont take much notice of your ramblings,
Could be worse we could be sinking on the good ship THG ;)