Member Info for Hexam

*NYDIG

AB - that interest figure is before either of the NTDIG loans so will be at least double that.

Actually thinking about it a bit more, IF cash is tight then one easy option is to install what they've already paid for, or can pay for already (all the s19s??) and wait until they generate enough of the cash that these + immersion + swaps will deliver.

Another option is to payback the Galaxy Loan if terms allow as this is worth a lot less BTC than the 1,500 being held as collateral - smacks a bit of desperation though. Instead more likely they'll go for another small loan if required.

So plenty of ways to deal with it if it is a problem and I don't think dilution will be one of them.

AB - agreed but what you say is probably only enough to offset interest payments (if that) which I excluded and as I said I agree Helios will improve things but to me it’s touch and go whether they get enough of those additional benefits before they have to pay for them. I was also generous with starting off at 200 BTC.

All I’m saying is that it looks tight and the fact we’re discussing more the finer detail of the calcs suggests perhaps it is.

AB - I agree but they have to get there first and it must be getting tight whether they can pay for the remaining machines this year out if HODL.

I think (getting my $'s and £'s right this time) they said they needed $125m to $135m to complete phase 1 and they have since issued a loan of $70m and had cash at the end of March of $12m. That leaves just $50m or so to find but they only have about 1200 BTC available to sell (including the 'equivalents held in Argo Labs). So this gives $36m at $30k BTC which means they have to mine the rest but at $30k per BTC and a cash cost of around $20k per BTC, then 200 per month would generate around $2m cash per month. So unless BTC picks up I think they made need to raise a little more from somewhere depending on how quick they can install the first machines and get the additional benefits from them. If BTC falls further then I think they're really struggling.

Does this sound right - or have I slipped up somewhere?

@HarChris - What I think makes that a really difficult question to answer is the possible future relationship between price and hashrate in that scenario. If everybody tries to keeps mining for as long as possible then everybody will suffer more, and more are therefore likely to got to the wall. If though there is a quicker exit of miners the difficulty may adjust quick enough for the pain to be reduced significantly for the survivors and so more of them may weather it.

Also, presumably in this scenario the race for new machines will slow down (and they'll get cheaper) and so cash spend will reduce which, as well as further helping reduce difficulty, will help the cash flow/balance sheet directly.

So at least some will fold but how many is really difficult to say as it's almost a 'chicken and egg situation' but at least ARB should be in a better position than most - certainly if Helios is up and running.

In short though - I don't know - and it makes my head hurt too much just thinking about it!

"My quick fag packet calculation was just looking at cash related costs"

If you're looking at cash related costs then that's even worse as you exclude depreciation but add the (much higher) cost of the new machines coming on board.

I agree, there may be a cash squeeze as not all the funding for the new machines is coming from new money (loans) but some from sells of BTC and they only have, at most, 1200 spare (maybe less depending on whether they have to increase the amount they are using as collateral for the Galaxy loan due to the fall in BTC).

Agree AB - The key thing about depreciation is exactly your last point - that it matches better the expense to the relevant income. If you just let the cost go through as an expense when the money was actually paid and then it would be a long time before ARB showed any profit (assuming it keeps growing). For example this year the entire cost of the 20,000 s19s and all the Intel machines would hit profit even though most of the income they will produce won't be until later years - and the result would be a thumping (and very misleading) loss.

"Isnt it because bitcoin is down 32% on the year"

But the results are as at 31 March. The real downturn in BTC came after that so Q2 is looking very ugly at the moment.

As to coins per EH it doesn't matter what the excuse is (and it's not just weather) it's part of performance.

Fair point about raising questions but I think the likely responses will make me even madder than the Q1 results have made me - and it's not the results themselves (they're pretty much as expected but for the exceptional items) - but the way they have played fast and loose with the numbers and commentary. They're hardly going to be receptive to questions about that especially as most of mine would be rhetorical anyway.

Btw depreciation is over three years for machines so yes the cost will disappear once that time is up and why it is often excluded (e.g. in EBITDA). For miners though we know they will keep buying machines at regular intervals, just to stand still, let alone to grow, so the cost is really ongoing which is why I think any measure excluding it gives a false impression of profit.

Can anyone explain why the results are 'good' or 'decent' and not by just saying it?

They would have made a loss in Q1 had it not been for two exceptional items, one of which (ironically) is due to the sp falling so much.

Production for Q1 was way behind nearly every other miner in terms of coins per EH.

They've shown again they can't be trusted to get numbers right.

Yes, BTC price is outside their control but I'm sure most people will conveniently forget that if it moons so the fact it has contributed to poor results shouldn't be dismissed.

Don't get me wrong - I'm impressed with how Helios has progressed and with the funding route they've taken so it all looks good for the future but how can these results in isolation be called anything positive?

"Some on here are capable of convincing themselves that black is white"

Example? I certainly stand by everything I've posted this morning unless someone can prove otherwise (and name-calling isn't proof).

As to the strong balance sheet the price of BTC has dropped by about a third since this balance sheet was put together and should bear in mind that over half the HODL is held as collateral for the Galaxy Loan.

So I don't think the liquidity is quite as "ample" as suggested in the Q1 commentary.

Lotto - simply marginal costs versus full costs. You keep them switched on if they cover the marginal costs and so at least make some contribution to the fixed costs. Also of course you hope the price of what you mine goes up before you have to sell it.

"98 percent ebitda la thats the clue"

chae - the figure is actually 'correct' for the EBITDA but they've used the word 'adjusted' which usually means adjusting for exceptional items and there are two big ones they've left in which is what gives the stupid and meaningless %.

EBITDA is pretty meaningless anyway for miners as it misses out their biggest ongoing cost - machines.

The problem is the reported numbers are very different to the 'same' numbers already reported whilst others are presented in a very dubious way. Maybe it's not 'subterfuge' but there are at least a few other suitable names for it.

It's a shame - I think ARB is a very good business with excellent prospects but they keep shooting themselves in the foot with the inconsistent numbers and the cavalier way they present them. I'll certainly be taking little notice of the monthly updates from now on as I simply can't trust them anymore.

AB - I think the depreciation is OK as it is almost exactly 1/36th of the cost amount in the accounts - my point is why are the monthly numbers already given to us so wrong (assuming the Q1 numbers are indeed correct). Not just depreciation either.

"Thanks Hexam. Will take a deeper look shortly."

That's OK but whilst your at it maybe you'd like to add up the figures in the monthly updates and explain why they are so different to the Q1 numbers? For example depreciation of machines adds up to $5,247k on the updates but $6,961k (33% higher) on the Q1 figures. Most other numbers are miles out too.

And how they reported a mining margin of 74% for Jan, 71% for Feb and 74% for Mar but their Q1 mining margin is 76%?!?

And don't even get me started on the Adjusted EBIDTA figure that gives a margin of 98%. Showing a profit measure that is meant to represent a view of normalised ongoing profit as almost equaling revenue is ridiculous.

I know companies present their figures in the best light but they are going beyond this IMO.

Direct Costs $4,596k
Depreciation of mining equipment $6,961k (actually described elsewhere by ARB as also being a 'Direct Cost')
Consulting Fees $208k
Professional Fees $1,262k
General and administrative $2,908k

Total Costs excluding share based payments (as lumpy) and before interest = $15,935k

Coins mined = 470

Cost per BTC = 15,935k / 470 = $33,904

"As per results "average direct cost per BTC mined of $9,779 (£7,448)"

So actual costs for each Bitty is probably double!"

It's actually more than treble. The numbers are all there to do the calculation accurately and the all-in cost is $33,904 per BTC mined in Q1 although even this excludes share based payments and interest. This should come down a fair bit with Helios though.

"lets get the actual Mining cost out once and for all"

Not sure what you mean? Do you mean expected future costs as I doubt ARB themselves are clear enough on these to be able to quote them. Whereas if you mean actual costs these are fully disclosed in the accounts and (in terms of just mining costs before overheads) in the monthly updates too.