Member Info for Hexam

DNP - the improvement in mining margin came from lower power costs which was the really good news in the RNS but need to see how much of this was due to ongoing lower costs or simply because they curtailed production so much when costs were higher.

However, that curtailment meant they only mined 147 BTC so the fixed costs were spread much less and overall the cost per BTC mined was be a lot worse (the monthly updates don't include the overhead costs so the profits shown are not the whole story). Also the loss that was shown was smaller as BTC didn't fall so much in December. Of course the results will improve if BTC rises but to get back to overall profitability it needs to rise a lot.

"Many might have missed this key line above.
...will be used to repay all existing indebtedness..
ALL existing debt..."

MisterPositive - you've misinterpreted this as many others did at the time. It is not ALL debt, just the all the debt owed to NYDIG and North Mill. That leaves the Bond notes ($40m) and the mortgages on the Canadian properties ($4m) and in the latest update they confirmed that total debt including both these and the new Galaxy Loan ($35m) is now $79m.

I'll probably shouldn't respond to you Poor because as I said it's in my best interests to keep my mouth shut as I want the sp to go up. It's also a waste of time debating with you. But here goes for others that might be interested and I'll be kind and use November's numbers as December gives over $50k per BTC mined.

November coins mined - 198 (source RNS - November mining update)

Mining Costs - $2.46m (source RNS - November mining update)
Depreciation - $2.18m (source RNS - November mining update)
Overheads - $4.00m (source 30/6 accounts where overheads inc interest were $12m for latest 3 months)

Total cost $8.64m for 198 BTC so $43,600 per BTC

The overheads are the only estimate in the above numbers - the rest are given to us by ARB each month. I think the overheads may well be lower now and MAY come down further with the hosting agreement so $40k may be top end now but it's certainly not less than $30k.

The above are costs for earnings. Cash costs are less as can remove depreciation and share based employee costs. So cash costs are around $20-$30k per BTC mined but then need to add cash spent on for any new machines or any other growth spend when it occurs.

Would also expect numbers to drop if they get the benefits of a decent PPA and interest may also come down though we don't yet know what rate they are paying Galaxy. Bottom line though is that they need BTC to rise a lot more before they can become profitable again - we should get a better idea of just how much once we get the year end accounts and details of the hosting arrangements with Galaxy and of the interest payments.

I hope you're right but I'm not going to get greedy for 14p. Thirteen is my selling point and I'll stick to that and then see what happens next.

Haha - I'm hoping there's enough of you rampers to push this over 13p and then I'll exit my latest trade. The only thing burning is my long term holding but my hope is that there are enough clueless people who don't understand the dire financial and strategic position this company is in that will keep pumping this share. That way I may be able to recover all my long term losses through trading. So don't let me put you off and I guess it's in my own interests to keep quiet :-)

"good luck to those that can work out when to get on the bus"

I think the wheels fell off some time ago. Let's hope they can find a way to stick them back on so that they can go round and round again - and that we still have a ticket when they do.

Yes, costs may have reduced (we need to see the hosting arrangements) and that's one reason I've been generous with the $30k (it currently well over $40k to mine each BTC).

As to the lending Galaxy are in a very strong position. They've got Helios on the cheap and if ARB fold then they simply get all the machines too. So they'll get their money back one way or another.

"with BTC rising earning will grow and debt will drop"

You do realise that the loss they made in 2022 is likely to be over $150m and that future earnings will only be positive if BTC is well over $30k and probably over $40k? Debt won't be reducing further anytime soon I'm afraid.

Yes a P/E ratio of 10 is fairly typical for a non-growth stock but unfortunately ARB’s earnings are currently negative and will be for some time yet, so it can’t be applied. Not sure what he’s using as earnings (just mining profit?) but it should be profit after tax (but removing any one-offs) and this would allow for all costs, not just mining costs.

They only mine BTC and zcash (which they say they convert immediately to BTC). The 'equivalents' in Argo Labs are purchased. This is the note in the accounts:

"Digital assets are cryptocurrencies not mined by the Group. The Group held crypto assets during the year, which are recorded at cost on the day of acquisition. Movements in fair value between acquisition (date mined) and disposal (date sold), and the movement in fair value in crypto assets held at the year end, impairment of the intangible assets and any increase in fair value are recorded in the fair value reserve.

The digital assets held below are held in Argo Labs (a division of the Group) as discussed above. The assets are all held in secure custodian wallets controlled by the Group team and not by individuals within the Argo Labs team."

FP - the way Argo are taxed means that selling BTC doesn't create a taxable event. They are taxed on unrealised gains anyway (unlike individuals).

And there's just been a long chat on Pluto. The value disclosed on the balance sheet in the last accounts was £5.009m. The chat has been about what value might be shown at the end of 2022.

Thanks 0134. I still think though that the 6p is a red herring as the Pluto investment is valued on the equity method - so it is valued at the initial cost (£8.4m) then increased by c25% of whatever comprehensive profit/loss is made by Pluto. Of course the percentage will seemingly change to c20% and there will also need to be a one-off adjustment but I'm pretty sure that the end result won't simply be 155m x 6p. It may though just switch back to historic cost (£8.4m) if the percentage falls below 20% but not sure of this. It only makes a few million difference either way to the valuation so not worth getting too excited about and I'm sure Alex has it all under control :-)

Btw ARB have about 155m shares in Pluto. The 121m was just the second tranche of investment. The first saw them get £1m of shares at 3p each.

I don’t think it is as straightforward as that but we’ll see when we get the next set of accounts.

@0134 - The 6p per share is what they were priced at in the latest share issue (which ARB took part in to maintain their 24.65% holding). In all the amount invested by ARB was £8.4m but it is was valued at £5m (as at 30/6) following losses made by Pluto. Since then a lot appears to have happened to Pluto so it’s anybody’s guess what the value is now (both ‘real’ and accounting wise).

Fair enough Quant - it will be interesting to see what value they do place on the machines and Pluto in the year end accounts. Argo labs though is just valued at the tokens that are in it (the BTC equivalents). The big question for me though is an update on Intel - if that has still got legs then that would certainly be a positive as would any other indicator of growth potential.

Quant. This is my breakdown of what I think ARB's assets are worth:

Cash - $20m (as notified in RNS)
BTC (inc in equivalents in Argo Labs) - $2m (as notified in RNS)
Pluto - $6m (as per last published accounts)
Canadian Data Centres - $12m (as per last published accounts)
Machines - $30m (estimate based on recent sales of in the box machines vs second hand)

Total $70m

I think the value I've given for machines is quite generous but on the other hand Pluto may be worth more now and they MAY have assets still as part of the Intel arrangement.

However, I can't see how the total could be much more than the $79m of debt they have but if you think it is then happy to be persuaded with any sound alternative.

Mooh - they borrowed $35m from Galaxy AND they received $65m from the sale of Helios. They also released $6m of cash held against NYDIG loans. So total of $106m.

The repaid $85m on loans though (nearly all NYDIG).

So improvement in cash available was $106m - $85m = $21m.

Quant, please can you explain why you think ARB's assets are much greater than their liabilities? I honestly am interested to know where you are getting a much higher figure than the $79m we know they have in debts. What have I missed?