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Those are basically the questions I put forward, alongside a’at roughly what BTC price, difficulty where it is now, would Argo be back generating cash?’ but they were ignored for silly questions like ‘is Argo thinking about paying a dividend this year?’
"The $31k direct costs from Q1 does not include depreciation so let's move on from this idea that they are still generating cash - that's simply not the case!"
Blimey - that's horrendous. The obvious follow-ups are why is it so high and how has it increased so much since they last reported (only a minority part of it is due to increased difficultly) and is such an increase temporary (due to weather etc.). So happy to admit I was wrong but in my defence I don't think anybody would expect their mining costs to have increased so much in such a short space of time. It also leaves unanswered the peculiar Q4 depreciation numbers.
So on these numbers they are barely breakeven cashwise even before interest and overheads. What's the saying? "They've got two chances. Slim, and none. And Slim just left town"?
They've confirmed electricity of just under 5 cents per kwh. (I'm not clear if this is inclusive of curtailment benefit or not). They also confirmed that they are underclocking, so the J/T might be a little less than the 30 J/T, but would also reduce hashrate if they are doing this.
60ish cost per coin for electricity/hosting is expensive - and does not include interest payments/corporate bloat/etc.
"It all depends on what that $31k 'direct cost' per BTC in Q1 actually includes. If it is just electricity/hosting then yes they certainly are but if it includes depreciation then almost certainly not."
Someone asked this question in Argo's Investor call during the Q&A, the official answer directly from Argo is... No, the $31k does NOT include depreciation.
Are you listening to the q&a? Are you Jason, Hexam? Ha
The $31k direct costs from Q1 does not include depreciation so let's move on from this idea that they are still generating cash - that's simply not the case!
HC - I agree the $18m is a real concern but as I said I'm not so sure that they are burning cash at the moment. It all depends on what that $31k 'direct cost' per BTC in Q1 actually includes. If it is just electricity/hosting then yes they certainly are but if it includes depreciation then almost certainly not. I can't believe their costs have shot up so much (or that they had next to no depreciation in Q4) but it all looks very strange (wrong?) so I can't be sure either way.
I thought we would know a lot more from the FY results but actually I'm much more uncertain now - at least until they, or someone else, can shed any light on what on earth is going on with these bizarre (to me anyway) looking numbers.
Flatliner - The new management have done a good job but nearly all of that improvement is simply down to last year's figures having both a big devaluation of BTC assets in them (when they had a HODL) and the huge losses incurred when they sold HELIOS and new machines at such a high discount.
So they've done wonders steadying the ship but the big numbers in the improvement have very little to do with them and those improvements won't be seen again.
Hexam this answered my question on upcoming debts, short term debt is therefore above the cash position and as they will likely be burning cash rather than generating now, even if modestly, it means that cash needs to be raised at some point just to pay those debts and not even for growth.
Albeit the majority maturing in June I assume which is still a long way off.
The company's total comprehensive loss for the year was $17.3 million (2022: $191.1 million).
Not smelling of roses, but hey Good job to the leadership here.
Yeah. To the outsider who doesn't follow Argo too closely monthly revenues will look something like this, unless BTC rallies in the immediate term:
Jan - $5.3m
Feb - $4.5m
March - $7m
April - ~$5.6m?
May - $3.8m?
That March figure is what was needed month on month here.
Yeah Q1s will be deceptively flattering for everyone, tipping point only really kicking in now. Once May monthly reports start coming through could be start of some carnage. Banking on Mara having their sht together by then, other big names should be fine too, but for a lot of smaller players it feels like a rugpull is getting going now.
Exactly. The question is will Chippas signal a new direction and if so will the market buy it? Only a SP spike and a massive raise off the back of it keeps Argo alive into 2025
As I’ve said before if Argo was valued at £15m now they’d be a punt to be had on survival but at £70m the potential upside isn’t worth the more likely outcome of failure.
They should get into memecoins - Petecoin anyone?
They have some energy credits which will help them, but they are done for by year end barring some miracle.
Hash won't drop, S21's are coming through, and in many cases you can fit twice the hash into the same slot as the previous old gen miner.
The constant expansion of the last year has been a drag for us miner investors, but it's pretty clear now why it had to happen, and also why many are moving to AI for revenue support.
Q1's coming next month and should look good on the surface with pre-halving revenue and FASB profits.
Argo are going to need to pivot into some other form of crypto biz, they cant afford to stay in this business. Next month they are mining 50 if they are lucky and at this price thats 3.3 million revenue a month, problemos!
Bear or bull market Argo lose money, hopefully these inferior miners get ironed out and Global hashrate starts dropping a little bit.
1.4 EH to make 1 BTC per day at 630 EH thats mental! the economics dont work for many, Either btc needs to fly or a lot of these miners have to start accepting the futility of btc mining and give it up.
Indeed - and we have the HK ETF go live next Tuesday as our next source of hope.
Really hoping to start moving to 100 soon as I'm keen to get out. A little more patience.....
To add to miner woes fees cratering won't help anyone, oh well that reprieve was fun while it lasted, back to btc price hopium instead.
Just checked the last 10Q - 4.4 per kwh
Hexam - yeah, it's all these other costs that make the other half of the puzzle - wages, interest, bonuses, etc. Plus trying to grow operations, and grow HODL etc.
Argo has 30/JT machines so electricity input costs there are doubled, not sure what their power cost per kwh is though.
But hash will keep growing and the next bear will be brutal.
CB - I prefer a top-down approach to costs i.e. looking at what it has actually cost them but it gets much the same answer.
I agree that CLSK etc. should be mining at around $30k per BTC (post-halving, normal fees) just allowing for electricity costs (and is another thing that makes the current $31k for ARB pre-halving look silly/misleading/wrong). Other cash costs would perhaps (up to) double that so I would think most miners are slightly cash generative at today's price - they don't need it go up to $100k. However, this doesn't leave much to invest in growth so they need a higher BTC to do that (and show profitability allowing for non-cash costs) or fees to remain so high - though of course they haven't been shy to issue equity to fund growth instead!
Different miners and setups have different values. I think Cleanspark's were around 4.6 or something per kwh last time I checked. 40% overhead for cooling sounds too high to me, I think the mining industry achieves 10-30%.
My mistake on electric cost. Industrial is around 9c
So your calc is 21mw+40% = 29.4mw
29400*24*0.09 = $63504
Electric cost is around 35c kwh.
Data centre cooling is approx 40% of energy costs on average.
Perhaps Lanz, but Argo need it more than anybody else. Anyway, those like CLSK and MARA can survive comfortably with BTC less then $100k especially if other, weaker miners go to the wall.
That's not true.
You've all missed my calculation adventures, so here's one for old times sake.
The S21 Pro that Cleanspark are buying is 15 J/T. It can mine for an electricity cost of $29k.
Workings:
- Current network hash of 630EH
- Rewards only excluding fees of 450BTC per day.
- 1.4EH is required to mine 1BTC a day average.
- electricity cost of 5 cents per kwh
- S21 Pro is 234 TH
- 5983 machines required at 3510 W each = 21MW requirement - add 10% for cooling let's say 24MW
- 24MW at 5 cents per kwh
- 24000*0.05*24 = 28800
What if you add fees? What if the electricity price is lower than 5 cents?
Most miners, not just Argo NEED Bitcoin to be 100k by the autumn or a substantial drop in difficulty, but that looks to still be going up in May.
Ah yes, the notes do go to 30 then start again 1-6 for some reason that I can't make sense of.
Employees = 30, wages = 6mil, indicating average salary of $200k.