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It’s against the value of electrical infrastructure at the Helios site, those 800MW transformers, step down transformers and switching gear. Basically, about $20m of the $50m cost for phase 1 is the electrical installation that makes the totality of the land commercially viable as a data centre site. Phase 2 is then only $30m because the infrastructure is already there. They’re just recovering the $20m spent as a loan so they can spend it again, presumably on machines or ASIC chips.

There isn’t an insolvency risk. Argo remains a net cash/asset business, with large profit margins and relatively low debt compared to peers. I agree that finance options limit the pace of growth but I don’t see any major problem in the medium term. In effect, the new leverage is against the value added to Helios so far rather than additive to previous debt ratio (i.e. proportionally it has no effect)

With respect, you started the MARA comparisons a d have been banging on about them for months. Fair play to anyone who’s made money from their 70% loss of value in three months but I’m not invested there as they appear to be a bunch of crooks and it’ll likely end in tears like the other slash and burn businesses they’ve been involved in previously.

@Hexam - it’s a smart deal and I’m not sure Chaebol even understands what they’ve done. Buying all the extra generators and transformers up front from the IPO wasn’t necessary for phase 1 production but it has added massively to the infrastructure value of the Helios site (against which they can now recover their expenditure as a securitised loan and reuse the same cash a second time). It doesn’t beg any questions, it makes good business sense. We know the site and build us paid for with cash to spare. This adds £20m with no raise and no reduction in free hodl. Interest adds £1.7 a year to running costs of course (£140k/month), which should be easily covered by rising profits.

ARB is in a much better cash position than some public miners we could mention (and they didn’t give away all their profits to the BoD either). Churning the cash from the IPO through selective refinancing of added value is clever if they secure decent rates for it, and 8.5% is massively better than the 14.5% some miners are paying. They would be able to do the same with the building possibly. Mortgaging or selling the Canadian data centres is the other option.

This loan facility is recycling cash from the IPO, not collateralising hodl. Basically they’ve bought those big generators and the step transformers, which add enormous value to the Helios site, and then borrowed against them. The company is still net cash.

"Something big is planned imo with these generators being ordered at once."

Having all the power infrastructure in place makes the entire Helios site much more valuable as collateral, and therefore more mortgageable, would be my guess. Gives the board another option on which financial levers to pull.

I can think of more than one public miner that's running on coal

This is huge news. Quick, anyone know a miner operating in the US that might be considered a responsible innovator with an eye on climate impacts? Might be a good day to buy shares in them if you can think of one... ;-)

https://www.whitehouse.gov/briefing-room/statements-releases/2022/03/09/fact-sheet-president-biden-to-sign-executive-order-on-ensuring-responsible-innovation-in-digital-assets/

"The United States must maintain technological leadership in this rapidly growing space, supporting innovation while mitigating the risks for consumers, businesses, the broader financial system, and the climate."

"That is why today, President Biden will sign an Executive Order outlining the first ever, whole-of-government approach to addressing the risks and harnessing the potential benefits of digital assets and their underlying technology. The Order lays out a national policy for digital assets across six key priorities: consumer and investor protection; financial stability; illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation."

"Support Technological Advances and Ensure Responsible Development and Use of Digital Assets by directing the U.S. Government to take concrete steps to study and support technological advances in the responsible development, design, and implementation of digital asset systems while prioritizing privacy, security, combating illicit exploitation, and reducing negative climate impacts."

VanEck’s Digital Assets Mining ETF (DAM) tracks the MVIS Global Digital Assets Mining Index. ARB is one of 25 component stocks in that index, currently weighted at 2.8%. Here's the full list https://mvis-indices.com/indices/sector/MVIS-Global-Digital-Assets-Mining/components

COMPONENT COUNTRY WEIGHT
RIOT BLOCKCHAIN INC US 11.41%
HUT 8 MINING CORP CA 8.81%
MARATHON DIGITAL HOLDINGS INC US 8.27%
IRIS ENERGY LTD AU 7.37%
CANAAN INC KY 6.59%
HIVE BLOCKCHAIN TECHNOLOGIES CA 6.24%
BITFARMS LTD/CANADA CA 5.51%
BLOCK INC US 5.46%
NORTHERN DATA AG DE 5.36%
SILVERGATE CAPITAL CORP US 4.93%
CLEANSPARK INC US 4.59%
COINBASE GLOBAL INC -CLASS A US 4.38%
STRONGHOLD DIGITAL MINING-A US 3.27%
ARGO BLOCKCHAIN PLC GB 2.83%
BIT DIGITAL INC KY 2.11%
VOYAGER DIGITAL LTD CA 2.06%
MAWSON INFRASTRUCTURE GROUP INC US 1.94%
CIPHER MINING INC US 1.62%
EBANG INTERNATIONAL HOLDINGS INC KY 1.62%
BIT MINING LTD KY 1.60%
BAKKT HOLDINGS INC US 1.25%
DMG BLOCKCHAIN SOLUTIONS INC CA 0.94%
GREENIDGE GENERATION HOLDING US 0.83%
GALAXY DIGITAL HOLDINGS LTD KY 0.82%
BIGG DIGITAL ASSETS INC CA 0.20%

It’s not the ETF, it’s the US executive order pushing BTC sector optimism, responsible American miners look to be in the clear going forward (as we knew they would be)

Wouldn’t want to be short today ;-)

It's not at all likely but would fit roughly on a linear projection of S2F, if we expected to achieve an average $100k over the whole of this cycle and if we expected to hit that average roughly half way through the cycle.

@FP - "And the bigger your mining pool the more luck you have. "

The laws of statistical probability would contradict your intuition. In fact, the reverse is true. The bigger your mining pool the less luck plays a part in your results. Imagine every mining machine flipping a coin or rolling a dice. Each roll has an equal probability of a certain outcome (you can just as easily roll six sixes in a row as 1,2,3,4,5,6) but the more dice you roll the more likely it is that the overall results will be spread evenly between the available outcomes. It's the same with mining machines. If you have one miner in your bedroom you might be 'lucky' one day (or never). If you have 10,000 rigs going then you can estimate your return over time, but you may get lucky days. If you have 100,000 rigs overclocking then you are pretty much ruling out luck (apart from bad luck of breakdowns and power outage)

That is not true FP, at least not necessarily. There are different market risks in being small or large. The latter is not without risk. Look at MARA for example. Their share price has collapsed by 70% since the BTC high point in November, more than any other public miner and about 20pps more than the corresponding drop in ARB share price. As we've been over before, investing is about percentages not integers.

$42k maybe

The Bitcoin price trend might tend to disagree with your assessment. It certainly was true and BTC was aligning veru closely with risk-off technology stocks in the past few months but that link seems to have broken recently, and the price has held up very well around current fair value estimates and on higher lows. If we look at long term trend, BTC has also risen gradually but consistently against gold over the past decade, which seems like a good measure of its underlying adoption as store of wealth https://www.longtermtrends.net/bitcoin-vs-gold/

No change in ARB share price today, so definitely not getting cheaper. Agreed that it might of course on another day.

@FP - "Every company thats mining btc is taking away the chance of getting that btc from argo. And the more EH they have in comparison the smaller share there is for others"

and by the same logic, the more EH Argo has in comparison the smaller the share for others, proportionality cuts both ways (but absolute numbers don't). I have shares in most of the main public miners, not just Argo, I don't have an axe to grind. It's just a logical truism that within any given investment time period the miner who grows more % grows more %. For example, in the time frame of this year Argo has a plan to double its EH. Most of the miners don't. That alone makes it an interesting investment option. There are other contingencies of course around whether it delivers on that, but then others failed monumentally to deliver last year (like MARA).

I agree there is low demand for miners on NASDAQ but ARB is not out of line. Average daily has been 2.2m shares and currently 0.75 after two and a half hours of trading. Today will not be unusual and may well be up, as it was in London.