Member Info for HarChris

Hmmm well they always gave the bitcoin HODL like this ;
'At the end of 'X', the Company owned 2,317 Bitcoin or Bitcoin Equivalent but then from January 2022 onwards it switched to this:
'At the end of 'X', the Company owned 'Y' Bitcoin, of which 'Z' were BTC equivalents.

Slight different wording but they've always called Zcash BTC equivalents.

Hexam, that bitcoin equivalent number also includes Zcash, doesn't it? So not all that 119 will be for Argo Labs I'd have thought...

It's irrelevant PI, Argo Labs isn't worth anything besides what it has in bitcoin, it's an arm of the business that never amounted to anything. If you want we could say that Argo Labs is worth 119 x $17000 = $2m but it's not as Argo are clearly going to need that $2m back to keep running operations.

'I wonder what Argo labs is worth?'

Zero. At last count Argo had 138 bitcoin left, at the end of November it will be down to double figures at most, do you think Argo Labs is playing around with a few thousand dollars worth of bitcoin?

I really don't think in a business like this that there's any cost cutting that could make enough fo a difference. They can't benefit from switching off machines even at $17k, at $17k they generate about $2m cash a month but they then have $17m debt servicing so they are burning $15m a month. They are merely adding to the mountain of debt every month and there's no end in sight, why would their creditors give them leeway?

Nout can be done, they built the world's largest bitcoin mining company during the bull market at top dollar prices with massive amounts of debt and then the commodity they mine turned too sharply against them.

What choice do they have? It’s one last hurrah before they enter administration. It’s possible they issued more before the most recent drop, haven’t managed to find any info on that though.

I am sure they are going to zero but due to inexperience and fear (of some how having misread this) I bailed on the short haha I am going to stick to longs only.

'What are corz mining with, FTT tokens?'

They have a $100m ATM placing, I assume they are diluting the crap currently to keep operating for a few extra months.

Yeah there's a limit to how far these miners can stretch themselves and we're approaching that limit now you would think, due to the length of time (<$40k for seven months) and the harsher recent drop <$17K.

Decisions by miners will have been made on perception, on the hope that bitcoin can recover soon enough to prevent them needing to mothball machines. Recent events will surely now lead to action being taken rather than just bleeding slowly to death over the next six to twelve months. The question is though, will hash rate decline gradually or will it stay fairly stable before imploding.

Ps Corz mined a record number of BTC yesterday, 45.3, that's a hell of a lot of EH/s to go offline from one company alone.

Yes neil, Argo signalled distress in early October with bitcoin closer to $21k, their actions have only bought them an extra few months so far and now bitcoin is below $17k which means burning through the last of their funding much quicker.

Look at the bitcoin they held month on month:
30 Jun - 1953
31 Jul - 1295
31 Aug - 1098
30 Sep - 512
31 Oct - 138

It should be mentioned that Argo paid down what was outstanding to Galaxy Digital but the fact remains they are cash flow negative, they have nothing left to sell (after flogging ~7500 new machines in the past few months) and by the end of the month probably no bitcoin left either. So yes it's a matter of time for the next bit of bad news unless bitcoin turns dramatically, as you say.

Yeah or just follow it every couple of weeks when it is adjusted up or down, next adjustment is in 5 days: https://btc.com/stats/diff

As you'll see hash rate is at all time highs but it's most likely peaked now and will begin to decline unless bitcoin picks up.

Yeah I wouldn’t be surprised if the next rns from Argo is telling us that they’ve chosen to switch off their machines for the foreseeable

For those interested I noticed Hut8 are down 31% in the past week compared to much small falls elsewhere in the sector. Upon a little digging it appears this is the reason:

'On November 9, 2022, the Company delivered a notice of event of default to Validus Power Corp. ("Validus"), a third-party supplier of energy to the Company's mining facility in North Bay, Ontario. Validus has failed to achieve certain key operational milestones by the dates contemplated under the terms of the power purchase agreement ("PPA") it entered into with the Company. Validus has also demanded that the Company make payments for delivery of energy that are higher than those negotiated under the terms of the PPA. Hut 8 has been in ongoing dialogue with Validus in an attempt to mitigate the operational and commercial impacts arising from the Validus defaults and Validus' failure to meet its contractual obligations under the PPA. However, such mitigation efforts have been unsuccessful to date and the Company was required to deliver the notice of event of default.

The Company intends to pursue all legal remedies available to it to enforce the terms of the PPA and will provide additional updates to the market in respect of the North Bay facility as appropriate. Notwithstanding the notice of event of default, the Company is exploring alternatives to mitigate any potential effect on its operations, including through potential organic and inorganic growth opportunities. There is no assurance that energy will continue to be delivered on an uninterrupted basis to North Bay under the terms of the PPA. Such actions may hinder the Company's ability to continue its mining activities at the North Bay site, and if any such mining activities are continued, they may not be performed at previously disclosed rates.'

From what I can tell North Bay Ontario makes up about a fifth of Hut8's current mining hash rate so a meaningful impact if mining is discontinued/interrupted. Anyway thought it might interest some of you on here.

Nope, but as barely anyone is anymore this bb has become a de facto all things bitcoin and bitcoin mining space.

I couldn't be any clearer, this is not about bitcoin's future price potential this is about the bitcoin price in the very near term. If BTC doesn't bounce back over $20k by early 2023 then Argo's future is very much in doubt. Either Argo will have gone under, the machines are mothballed and the business continues a little longer with a skeleton staff or shareholders have been diluted into oblivion just to keep the lights on a few extra months.

If bitcoin recovers to ~$21k they'll have a few options and will survive for a while longer and if BTC were to start its bull market by then then Argo lives to fight another day and there will be plenty of money to be made.

I obviously don't know which of these it will be but the odds are with BTC staying <$20k for a while longer so for that reason I no longer see a potential trade at these levels (or even 6p).

It's more than that AB, it's not just about funding but funding without giving away tons of equity. As has been said on here for two weeks now, since the strategic investor pulled out, realistically Argo need a bitcoin rally and a share price rally if they want to stay in the game. Raising now with the space in disarray and Argo running out of time will not be done on favourable terms, they are not in a position to negotiate... it will be done at 6.5p and will mean 230 million shares to churn through just to raise $15m!

That's a humongous dilution just to simply keep the lights on for another 4 months.

Haha thanks Hexam, to be honest I have no idea, I have ~$25k breakeven cash and ~$40k profitability in my head but I've not bothered to actually work it out. I'll bump that up to $29k and $42k for my rough investment case models.

'BTC going crazy again, let’s see where it ends up.'

I see this, go to check the bitcoin price immediately expecting $18k or something only to find it's $16.6k... it needs to rise about 50% from here to get Argo back to cash generation (~170% to reach profitability)

I see a light at the end of the tunnel simply because Novacyt have so many chances to get this right. Just look at the past year, a total failure from DA and yet (ignoring the share price) where has it left novacyt? Are they fighting for their life? No they have millions in the bank and are debt free. They are in a sound financial position whilst an awful macroeconomic backdrop is going to leave tens of thousands, maybe hundreds of thousands of UK business bankrupt over the next few years. A couple of those businesses are likely to be acquired by novacyt...

The last year has been extremely inauspicious but they do have more bites at the cherry still and if they haven't turned the corner in another 6 months or so, well, there's always the dispute outcome to offer up a potential decent exit price for those fed up of waiting for a turnaround.

I agree with that Pokerchips... Argo needs funding to survive, what use would it be for PW simply buying shares on the open market only to lose the lot? If there was a placing however his money could be put to work keeping Argo afloat.

'After q3 results our own ARB piranha PW will start accumulating ARB shares, wait and watch.'

Peter Wall is many things but he's not stupid.

It's important not to lose sight during this discussion that what's okay for bitcoin is not necessarily for the miners. Look across twitter and the chatter going on and you'll see that a consensus is forming that this crypto bear market, this crypto winter is going to be a long and bleak one. Whilst this is okay for bitcoin it isn't for the mining industry, miners have been absorbing losses in the hope that bitcoin will turn and many of them are running out of time without additional funding., funding that won't readily be forthcoming. Corz will be wiped out very soon, Argo's runway at $17k BTC is about 4 months tops, others will start showing distress well before any solid upturn if it doesn't come before 2024.

The investment case for Argo was tenuous at $21k, at $17k and 8p a share with 12+ months of low prices predicted the investment case is non-existent.