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I don’t expect June to be any better than May with regards to BTC per EH.
I’m not expecting fireworks on the numbers but am at least hoping for back nearer 200 than 124. The ‘reassurance’ I’m looking for is an update on the terrapool issue, the Galaxy Loan and maybe a funding update. Silly I know!
I also want clarity on the pool - and expect around 200 also. Any additional updates would be very welcome. Especially anything about this hedging stuff.
I don’t think we’ll get any of those this month Hexam, maybe the TerraPool news, but I’d be pleasantly surprised if there was more.
I’m expecting mid-hundred for the mining numbers and an update on machines installed. Anything more than that will be bonus-ville for me.
"Especially anything about this hedging stuff."
Must admit I was a bit bemused when they waffled on about this at the Q&A in response to the questions around BTC and the Galaxy Loan - particularly as if it was something new. Maybe I was misunderstanding but they employ hedging already - as per accounts:
"These ‘digital assets’ can be subject to high levels of volatility, and it may not always be possible for the Group to trade out or effectively hedge its position. The Group will always seek to manage the price volatility risk and actively monitor its portfolio of digital assets."
And in 2021 hedging costs of £326k appeared under admin expenses. So I'm not expecting anything in particular on this but still hoping against they either state what action they've taken to reduce the risk from the Galaxy Loan (like BITF did) or why they don't need to.
They have employed someone new, the job was posted on LinkedIn a while back. Was interesting, smart growth sort of stuff. Think we'll hear more...
"They have employed someone new". Indeed, so maybe it's a case of them doing what they've already been doing only better hopefully as they now have a specialist on board. Maybe they will say something but I'm not holding my breath and will still prefer to hear anything that helps show that funding out the 200mW is still not (much of) an issue and that they've managed the risk of the Galaxy Loan in particular (by hedging, paying some down or whatever).
Hexam, I just watched the Q&A (finally) - you won't get a Galaxy update next week, but you'll get that update on the Q2/H1 the following month.
The new hire is a derivatives specialist and has just started.
They said the 20,000 S19J Pro's are 90% paid in full, and the 200MW build out is 95% paid.
We'll get a general Helios update next week.
Thanks AB. I remember the 90% bitmain paid comment plus the 95% of the infrastructure being paid (which was good to hear). By my reckoning that still leaves around $20m-$25m funding for these bits plus whatever is remaining of the intel order - so could be up to $75m?
From what they were saying about further funding being split debt/BTC sales and that they can 'lean in or lean out' of the Intel order suggests that they don't have existing funds to pay for all this (which previously I thought they might).
It's going to be hard to raise any more debt in my view, especially given how little headroom on collateral they are likely to have now, so in the absence of any further update I think the more likely option is a delay to the intel order.
As to the Galaxy Loan I probably missed the reference to H1 as they were waffling on so much but this remains my biggest concern and so disappointed if we have to wait until the interims for an update.
The June update is only a few days away now so rather than speculate any more I'll just wait to see what it says. One thing for sure though is that it will provide a lot of talking points one way or another and I'm looking forward to it and dreading it in equal measure :)
Yeah not a lot more to say until then really.
Then it will be a wait until H1 to get clarity on financial position. Although it will still mostly be pre Helios, but at least will be able to see status of loans.
If they delay Galaxy loan update until the interims they're praying btc recovers! the longer the silence the longer the conjecture.
Oh i do love argos transparent ways !
The thing to be doing right now is establishing which companies survive the bear market & which do not. I have sold positions I had in companies I do not believe will survive this downturn and moved the money into companies that give a more certain longevity. Picking which miners will or will not survive is brave at this point.
Many of us were doing that three weeks or so ago, the problem is bitcoin has fallen lower than almost anyone expected and now there are NO miners that we could safely say will survive this bear market if the price trades below $20k well into 2023 which is a very real possibility.
Whilst a bitcoin recovery is very much not on the cards I imagine what the miners are all praying for is a relief rally to $28-$30k for a chance to free up cash 50% higher than today's price and possibly try to raise funds whilst the mood music is a little more positive - those that make the most of any dead cat will outlast those who fail to.
If the mcap of Argo falls below its debts are the loans immediately called in ?
currently Mcap 185 million usd debt 112 million usd ? Not much wiggle room and another 40 percent drop in sp and its getting called?
I hope not as the $112m doesn’t include the additional NYDIG funding (up to $70n or so)!
No, it’s the value of assets (and particularly those used as collateral) that really matters which is why I’m so keen to know the position with Galaxy.
You had this sussed a long time ago Hexam, the numbers just dont add up anymore!
We know the weighted interest rate is <10% but I would just use 10% as the figure. Do we know if they are interest only or repayment type loans? I should know this....
Not clear from the RNS, but has two year expiry on the newer nydig one (up to usd70.6mil), so if this is all taken, monthly interest would be usd706k (12%), which is 37btc just now. If repayment straight line this would add 2.9mil each month, which would be 152 BTC just now. Would be good to understand if repayment or not.
Pretty sure it will be interest only with capital repaid on maturity - would be very unusual and too burdensome if not.
Thanks Hexam. Ultimately it has to be repaid, but hopefully BTC will be in a better place when they pay it off.
Did you see the bis news?
After two years though it hopefully won’t be a problem (or on the gloomier side, won’t matter)!
What news???
Just further acceptance - obviously we have to get through the bear market but I'm confident with Argo and not concerned with the Bears narrative (most of it stinks of desperation). I know you're more worst case scenario than I and it is always a worthwhile exercise, but I think we're getting a decent update next week.
Thanks for posting that link on the BIS news AB.
Perhaps one day one of these 'increased adoption' stories will prove a tipping point but generally they don't seem to be having an impact individually or cumulatively on BTC value. So I don't pay much attention to them especially as I don't think even if BTC was 'fully adopted' it necessarily means a much higher BTC price anyway - but maybe that's just me being more worst case scenario again ;-)
Usually a company would just keep refinancing or if it had excess cash start paying down debt.
Worry now is what happens when they come to re-finance as the number of options must be limited and the underlying asset on which to fix any finance doesn't offer much security.
Is there any finance secured on the Helios building Hexam?