Member Info for HarChris

Predictions for Argo back a year, eighteen months ago are likely to be well off the mark simply for the way in which bitcoin miners are valued now - back then it looked like they were going to be considered high growth tech stocks, forward projections had Argo making £100m a year (still can) with p/e ratios of 20, 30, even 40 and hence 400p a share, 600p, even 800p... but since then the whole business model has been called into question and no longer can they be viewed in that light - barriers to entry are too small, differentiation is almost impossible and simply it's a race for hash power (whilst keeping electricity costs as low as possible and efficiency as high as possible).

Interestingly it's actually a bear market that may create some differentiation - less efficient miners will struggle to keep the lights on let alone grow whilst those that can weather it will also have the opportunity to buy up rigs on the cheap and HODL considerably more as difficulty decreases. Coming out of an extended bear market we're likely to see fewer large NA miners than there were before whilst those that make it through best won't only survive, they will thrive.

Ps Bitcoin back above $30k.

I agree with you on this occasion Pdub, I get the impression alfredh is simply a troll disguising himself as a genuine investor keen for discussion.

I get what you're saying but you chose not to invest in Argo because of a couple of trolls on the LSE bb and a couple of others who can't resist the bait? The investment case should be more important to you than that!

@AIG you might think i'm one of the bulls, I'm not. I moved to about 70% cash just before the war in Ukraine broke out which has served me well and I'm slowly dripping money into stocks I think will multibag coming out of a recession if they are able to whether the intermediary period successfully. I've recently bought into Argo and for me it's much more of a punt than I like but at 51p I'm betting on bitcoin surviving what's to come and going on just one more bull run to multibag from here - it might not happen and I lose the lot but I see this as a good entry and am not desperate to get in much lower - in fact if it goes 35p, 30p I'll probably be no more tempted to go large as it means BTC has dropped to a dangerous price for Argo.

At 51p and $29k we are looking at a BTC price that merely needs to hold til the end of the year for Argo to become highly profitable again.

The HODL mentality played an absolutely essential role in getting bitcoin to where it is today and continues to play a major role. How else do you convince ordinary people to continue to hold as their savings bag and bag and bag again? I have many friends with pretty much every penny to their name in bitcoin, two of them started with £25k each and saw that rise to £275k yet they refused to sell... that £25k is still worth £135k though.

HODL also takes away the most difficult challenge for retail investors, timing one's exit. It's simple - take all your savings, put it in bitcoin, dollar cost average in with what you can afford each month and set your time horizon to 5, 10, 20 years, that's your financial future secured.

I hope it plays out that way for them!

I agree with you that the chances are this goes lower, the chances are there's worse still to come for the stock market but it's worth remembering that almost everyone is thinking this now, that there is widespread agreement about inflation, that the bottom for the nasdaq, the ftse, crypto is still far off - it's often this one-track sort of thinking that causes a surprise...

One surprise month of better than expected inflationary data and markets rebound hard.

'But, what investors need to think about is, is a $20k to $25k cost worth the risk for an asset trading at around $29k, with a likely drop off to <$20k imminent?'

And that's where risk/reward comes into it.

Let's look at two scenarios six months from now - (i) being bearish and (ii) being bullish and compare how Argo might fair vis a vis bitcoin.

(i) Bitcoin is @ $22k, sentiment still incredibly bearish. In this scenario bitcoin has sustained a long drawn out downturn, the interest in crypto & bitcoin mining will have decreased considerably so let's say global hash rate is @ 180EH and some of the less efficient miners are struggling to keep the lights on. Argo is only just profitable at this price and the risks would be obvious (further drops in BTC would leave it unprofitable + no cash to reinvest + no appetite for lenders to lend)

Those investing today in BTC would be 25% down, what would the argo share price be? I think mining 700 coins a month even with the bearish sentiment Argo is still around 50p. Okay maybe it's fallen further, but more than 25%? Share price 35p? Possible but even in this scenario Argo still likely holds up better than bitcoin itself.

(ii) Bitcoin is @ $55k, it's weathered the storm, sentiment has returned to the space and belief in new ATHs has once again returned. Those invested directly in BTC are happy, their $29k buy has appreciated by 90%, what about Argo? In this scenario they arre mining around 415 coins with good margins, does the Argo share price match the 90% (i.e 95p) that bitcoin has appreciated by or do we think it's better or worse? I see £2 a share in this scenario and hence a way, way greater upside (whilst in the bear scenario a similar downside)

Of course one can sit out the space completely but this is just some comparison for investing in bitcoin today vs Argo.

These are some of the scenarios then I see for October 2022 onwards:
Bitcoin stays low, $28k, difficulty doesn't increase, AISC $19k, 670 coins mined a month, $9mx12 = $108m profit before tax
Bitcoin @ $40k, difficulty increases 33%, AISC $25k, 460 coins mined a month, $15m x 12 = $180m profit before tax
Bitcoin @ $55k, difficult increases 40%, AISC $28k, 415 coins mined a month, $27m x 12 = $324m profit before tax

Final possibility generates PBT > today's mcap.

Apologies, I meant the breakeven price will be *below the BTC price as long as Helios Phase 1 is complete as planned and hash rate target is met.

Surely what we can say with some confidence is that the breakeven price will be above the BTC price (unless we see a humongous crash of course). Difficulty is about to be adjusted down this week following the recent fall in bitcoin and I see that continuing if bitcoin fails to retake $30k.

If we see ~$25k BTC for extended 'crypto winter' my take is global has rate moves closer to 175EH with Argo mining 850 a month at 5.5EH

Great, I appreciate that and all your efforts on here - whilst you're right about the £9k figure being extremely misleading you'll also notice that your $34k current AISC figure is being weaponised now - I've seen virtually no mention of the $9k figure recently but the $34k is being repeated numerous times a day by the same poster.

AB, of course there's too many unknowns to predict accurately right now but what would be your best guess if someone put a gun to your head today for what the accounts at the end of the year would show as the AISC breakeven price? I run my own numbers through a few times with my own predictions of what difficulty will be, whether 5.5EH is met etc and came up with $22k, but I lack a lot of the knowledge that you Hexam and others have - be good to hear what number (or range) you come up with.

Hexam, we all appreciate this breakdown of the current all in costs but would you be happy to put out your 'best estimate' for how things will be looking in October, perhaps leaning towards the more conservative end to account for the risks of execution?

Helios Phase 1 will be live in the not too distant future so focusing on today's costs when this is what Argo have been building up to for a long time now is less meaningful for an investor looking further than the end of their nose.

The *only* reason is that things can still go wrong, no further bids could come and the share price could start to retrace again - people were saying the same about Twitter last week, why would anyone sell below $54.20? Well it's $37.29 currently.

Some of this I agree with, some I don't. In at least the short to medium term BTC going as low as you're describing is v unlikely, there are millions HODLing who are still not budging even as the nasdaq looked to be crumbling earlier this week (has recovered a bit since). Luna looked like it could bring down the whole crypto ecosystem and the nasdaq falling 5% was another huge test but to be sitting above $30k following both those events is quite impressive.

My thesis is in the very near term, $40k is more likely than $25k now.

Shorts need to get out don't they? Sure their friends will make it as pain free as possible!

I take back my comments, I'm just tired and a bit relieved by this news having wanted out... I imagine this gets pumped well above 170p tomorrow and has a shot at an intra day high above 200p.

Took some in February at 124p a week or so after the first buy out rumours and have sat on it since.

It's not been a comfortable hold for me I must add, sure many others will be looking for more than that.

Who knows but my guess is £1.60, will take my profit and exit happily around that level I think.