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@shazabo - they will almost certainly declare a sizeable, positive EBITDA for the first six months of 2022 as the figure you mentioned was all achieved in the second half of last year when the US Box Office was slightly lower than it has been so far this year. Could be over $500m.

However, adjusted EBITDA is not profit but a measure of profit that misses out a lot of things including all the costs of renting (which comes through in the form of depreciation and interest) as well as other depreciation and interest on bank loans. It will also exclude any one off charges (and benefits).

So overall profit is still likely to be negative at the half-year I'm afraid or at best a tiny positive.

Hi Wolf,

I don't think there is any finance secured against the Helios building so it's probably only that and PW's beard that they've got left to act as collateral. Mind you the bond issue last year was unsecured so they could go down that route again but hard to see it being on attractive terms given the current state of the industry and the total debt ARB already has.

And on an aggregate basis the interest paid was $227.3m.

Thanks for posting that link on the BIS news AB.

Perhaps one day one of these 'increased adoption' stories will prove a tipping point but generally they don't seem to be having an impact individually or cumulatively on BTC value. So I don't pay much attention to them especially as I don't think even if BTC was 'fully adopted' it necessarily means a much higher BTC price anyway - but maybe that's just me being more worst case scenario again ;-)

Total Interest paid in 2021 was $227.3m - see cash flow statement (pg. 98).

As you say interest appearing in income statement is closer to $750m BUT this includes lease liability interest of nearly $450m. This is not interest actually paid and so does not impact cash flow and neither therefore the ability to pay off debts. It is just the amount caused by the unwinding of the interest rate on the value of the lease liabilities (as the outstanding lease payments are one year closer).

So most of the interest is not actual interest payments at all in the same way that lease liability is not debt at all. It is just the way leases are treated now for accounting purpose where both a liability AND an asset are set up in respect of future lease payments. Before 2019 it was just the lease payments themselves that went through profit and loss and leases didn't touch assets, liabilities, depreciation or interest at all.

So as interest rates go up the interest paid will go up but it is only the $227.3m that is affected and even then only that portion (the majority) which is on a variable rate basis.

If you're going to quote numbers at least try to quote the correct ones. They don't have to pay interest at '$750m per year at current rates'. It's not even a third of that.

As to profit they certainly made one in June so not sure in what world they need to wait a year or two to break-even. Might be touch and go whether they make a profit as a whole this year but shouldn't have any problem doing so next year.

As to breaching covenants the biggest issue (as has been recognised plenty of times here) is the June RCF covenant and we await news on that. Beyond that there seems little to be worried about in that respect.

And staff costs? They have staff and they pay them. Shocker.

Poor effort.

After two years though it hopefully won’t be a problem (or on the gloomier side, won’t matter)!

What news???

Pretty sure it will be interest only with capital repaid on maturity - would be very unusual and too burdensome if not.

I hope not as the $112m doesn’t include the additional NYDIG funding (up to $70n or so)!

No, it’s the value of assets (and particularly those used as collateral) that really matters which is why I’m so keen to know the position with Galaxy.

If the sp goes lower then they will probably find it more difficult to raise whatever the amount it is that they want to raise. As even though everybody will still have to stump up the same amount to take part (assuming whatever the amount they want to raise is unchanged) it will look much bigger when compared to their existing shareholding. If you sell the rights instead then you are crystallizing much of the the loss between now and whatever the sp falls to.

So the RI itself doesn't really change, it just means everybody is starting from a worse position, which no-one I would think wants (assuming they're currently invested).

Thanks AB. I remember the 90% bitmain paid comment plus the 95% of the infrastructure being paid (which was good to hear). By my reckoning that still leaves around $20m-$25m funding for these bits plus whatever is remaining of the intel order - so could be up to $75m?

From what they were saying about further funding being split debt/BTC sales and that they can 'lean in or lean out' of the Intel order suggests that they don't have existing funds to pay for all this (which previously I thought they might).

It's going to be hard to raise any more debt in my view, especially given how little headroom on collateral they are likely to have now, so in the absence of any further update I think the more likely option is a delay to the intel order.

As to the Galaxy Loan I probably missed the reference to H1 as they were waffling on so much but this remains my biggest concern and so disappointed if we have to wait until the interims for an update.

The June update is only a few days away now so rather than speculate any more I'll just wait to see what it says. One thing for sure though is that it will provide a lot of talking points one way or another and I'm looking forward to it and dreading it in equal measure :)

"They have employed someone new". Indeed, so maybe it's a case of them doing what they've already been doing only better hopefully as they now have a specialist on board. Maybe they will say something but I'm not holding my breath and will still prefer to hear anything that helps show that funding out the 200mW is still not (much of) an issue and that they've managed the risk of the Galaxy Loan in particular (by hedging, paying some down or whatever).

"Especially anything about this hedging stuff."

Must admit I was a bit bemused when they waffled on about this at the Q&A in response to the questions around BTC and the Galaxy Loan - particularly as if it was something new. Maybe I was misunderstanding but they employ hedging already - as per accounts:

"These ‘digital assets’ can be subject to high levels of volatility, and it may not always be possible for the Group to trade out or effectively hedge its position. The Group will always seek to manage the price volatility risk and actively monitor its portfolio of digital assets."

And in 2021 hedging costs of £326k appeared under admin expenses. So I'm not expecting anything in particular on this but still hoping against they either state what action they've taken to reduce the risk from the Galaxy Loan (like BITF did) or why they don't need to.

I’m not expecting fireworks on the numbers but am at least hoping for back nearer 200 than 124. The ‘reassurance’ I’m looking for is an update on the terrapool issue, the Galaxy Loan and maybe a funding update. Silly I know!

HC - I still believe in ARB but you are right I do think some US miners are probably better placed to ride this out and are potentially better value with respect to their growth plans. However, as I've said before, it is about more than just current/future headline numbers and immediate apparent risk. To choose a different miner I would want to research it so that I understand it as much as I think I understand ARB and then make the call (if to me it is clear cut). I will probably start with BITF and CORZ as they look most promising.

But in the meantime I want to avoid any nasty surprises and don't want to just jump out of the frying pan into the fire. Besides, until recently my platform didn't allow investment in international shares so I didn't have that choice!

You should be able to sell some or all of your rights.

So using the example given of you owning 400,000 shares and so meaning your current shares are worth about £20k (at TODAY's sp of around 5p) and them wanting to raise £70m then options include (ASSUMING SP STAYS THE SAME):

1) Taking up full rights in which case it will cost you around £60k (as per @Jimmyg56) and your total value of shares immediately after the RI should be worth around £80k (i.e. £20k+£60k).

2) Selling all your rights. If 19:1 then you'd be selling for around £16k and your existing shares immediately after the RI would be worth around £4k. If it is 9:1 then you could sell the rights for around £12k and your existing shares would be worth around £8k. Again the total equals £20k (the amount you started with).

3) Somewhere in between including tail-swallowing where you sell enough rights and use these to buy new shares so that your value of shares immediately after RI remains at £20k (and you've not shelled out or received any money)

Of course the sp will change and we don't know the terms, including the amount to be raised, but the following rule should always apply so long as it is possible to sell the rights:

Value of your shares before the RI plus new money you invest
= What your shares are worth immediately after the RI + Cash from any rights you sold

It's not quite as simple as that as market sentiment obviously affects the price throughout the process but if neutral then you do not gain or lose value because of an RI regardless of what you decide to do (so long as you don't just let the rights lapse).

Of course if you choose to sell the rights then you don't benefit as much from any subsequent rises in sp as you have a smaller share in the company. On the other hand you don't suffer as much if it falls as you've already banked some money.

In short whether you take up the rights should depend on how much confidence you have in the company post RI - just as with any share investment. And of course on how much you can afford and are willing to risk.

Bit waffly but hope it makes sense.

No - the figures requested, and provided, were revenue only - not profit. That can be estimated too but more going on and more unknowns so would be less reliable.

"I don’t understand as an investor yourself, what you would’ve liked to have seen?"

I just cannot seem to get to get through to you so I will try and make it clear one last time:

1) I agree with their strategy (other than not selling some BTC last year) that's why I invested
2) Unfortunately BTC has fallen sharply and caught ALL the miners out, not just ARB
3) In addition they have, by any measure, underperformed this year in terms of mining. This is indisputable but I believe Helios will sort out most of the issues and the rest (like terrapool) should be readily addressed

So on the above three points I don't see that we differ that much? Do we?

However where we do differ clearly is that I believe ARB are in no better place than most other miners to deal with the next six months should BTC not improve and in some respects they may be in a worse position. I have also given my reasons why I believe this (debt linked to BTC and rigs, low HODL and negative cash flow in part caused by the poor mining numbers).

No one on this board has provided any meaningful counterargument to this. Instead it's just about the future (if ARB gets through unharmed) which I agree with anyway or BITF (but we are in the same position) or MARA (that's just one miner and again I don't disagree much with your view on them).

I'm still invested in ARB and would really welcome any sensible and positive counterargument in case I've missed something. As it is I'm looking to the June update to either reassure me or make me reconsider my investment. As that's what I believe investment is about i.e. not to get too attached to a company but act on the information in front of you and if this changes then it is sensible to review your position.

Wait until the June update. ARB are in the same position BITF were (and still are to an extent). If ARB have any sense they will have done something similar to what BITF have done so expect that "2/3rds" to shrink - if not next week then soon after.

And once and for all ARB do not have much lower energy costs per BTC mined than many. Certainly compared to CORZ, BITF and RIOT.

I am not disagreeing with you about ARB's potential future (with 100% immersion etc.) but it's current position in order to be able to maximise that future is under real threat at the moment especially given it's low HODL, high debt (backed by BTC and rigs) and current abysmal mining numbers.

And for the avoidance of doubt I think there is only a small chance they will go bust. More likely is that they will need to scale back growth plans (e.g. push back intel order), sell most of their HODL (to get shot of galaxy loan and/or meet running costs and some outstanding capex commitments) and other potentially damaging short term actions.

Best thing though is simply for BTC to rocket and then we CAN just focus on future plans.

"They are set up for Jam today, not too endure a lengthy bear market."

It's the jam today that may help them endure a lengthy bear market (as long as they haven't overextended themselves making that jam). ARB are certainly not 'jam today' but are not particularly well set up to survive the bear market either.

If they do though, without too much compromise, and they execute Helios well then I agree they should be in a great position. To make jam tomorrow though you need for there to be a tomorrow.