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I sort of agree with you Chuz but I don't think it's that simple.

First, as AB has already pointed out, profits can still grow if the growth in BTC value more than offsets any decrease in mining. This places a greater reliance on BTC though and I'd personally prefer (faster and more reliable) growth to be achieved via mining.

Secondly if (and it is an if) ARB can achieve a significant portion of their revenue from diversification then obviously they will be less reliant on mining for growth.

There is also scope for profit growth through greater efficiency but this is more limited.

Still, investing is all about picking companies where profits, and hence share price, will grow and the best way for ARB to do this in my view remains to at least stay with the pack and not to fall behind - which, with competitors upping their game, is a real risk at the moment.

Well if ANYbody can do it why can’t we? ;-)

Thanks for posting FP. This is huge. I’m still trying to get my head around the scale, the financing and the implications but it’s a bit like ARB announcing they’ve got all the rigs sorted for Texas!

For me the most interesting and thought provoking article (that isn’t directly about ARB) that’s been posted in a long time.

Wow.

"How would anybody know who is posting if they are filtered?"

Easy. If they've only filtered one person.

My understanding is that MSTR were trying to show in an alternative metric what the numbers would be IF they didn't impair the BTC they hold for any decreases in value since they bought them. So this is an additional measure not defined by accounting rules (just like ARB's 'mining margin' isn't) but SEC didn't like it. As far as I know (just going by the reports as I have not looked at MSTRs actual accounts) they are not showing the wrong numbers - just additional numbers that don't appear acceptable to SEC. If though they were trying to pass a non-GAAP measure off as a GAAP one (as the headline of the article seems to possibly suggest) then that would be a definite no-no for SEC - and any other regulator.

Chaebol,

Wolf is right, SEC do not set the accounting rules but all submissions must follow those rules where they apply. However, SEC can decide whether to allow additional numbers (where the rules don't apply) to be shown - which in this case they didn't.

Really no surprise that you don’t recognise a bit of humility when you see it - or if you do then you think it is a sign of weakness.

For me it is a very positive message as you can only get away with a message like that once - as a second time and it won’t be taken seriously. So suggests to me quite a bit of confidence in the future.

Hi Wolf - I suspect you are right on both counts which is why there isn't a single approach used by all miners for accounting currently and why I don't think ARB will need to change their approach. Having said that my only concern is that the SEC did step in with respect to MSTR (though only I believe for non-IFRS numbers) and of course ARB could decide to change anyway (though I don't think they will).

K3,

But that's why I'm confused. The BTC MARA mines IS treated the same way as MSTR. It is only the BTC that they buy (just like MSTR) that is treated differently.

btw - consider me teased (in a non creepy way)

K3,

I'm not sure why MSTR and MARA have to treat their BTC HODL value differently (assuming they are and I haven't misunderstood the situation). Not sure what you mean by 'current account product' but both are buying an asset in the same way so not sure why the treatment differs between them.

If Arb did now have to report in the same way MARA does then this will reduce the profits they report (until they sell the BTC) so I hope they don't have to (even though it doesn't change the 'real profit').

As for depreciation, my issue with this has always been two-fold. First if comparing companies a like-for-basis should be used. So I get irritated when people bang on about ARBs 80%+ mining margin and say it is better than other companies when all those other companies include depreciation in their direct mining costs and ARB doesn't.

Secondly, depreciation is indeed a techie accounting thing but what it represents certainly isn't. For miners it mainly represents the cost of machines which is a huge part of the business and when comparing companies is something that shouldn't be ignored. So for me any measure of profit that excludes such a fundamental part of the business is pretty meaningless unless viewed in the proper context. This is why for miners I think EBITDA is particularly misleading as one company may look better than another one on this metric but if it has paid a lot more for its machines then it won't be. Also anybody using EBITDA as an indicator of overall profitability is leaving out what is probably the biggest expense.

Totally agree Fun, there are many levers that affect profitability, any one of which may be better than in their base case scenario to offset any shortfall in their admissions assumption (which come the end of June may not be a shortfall anyway).

Oh, I'm easily confused - just better at hiding it sometimes :)

FP - That's very interesting.

It looks then like MSTR have to account for their BOUGHT BTC HODL in the same way as MARA's MINED BTC HODL but MARA can account for their BOUGHT BTC HODL in the way that MSTR 'want' to account for their BOUGHT BTC HODL.

I'm confused! Just wonder what this means for ARB, if anything, now that they're on nasdaq?

As James says though, none of this changes the actual finances of any company - just the way that they are reported.

@FunInvestor - CINE's base case scenario was that they hit 90% of 2019 levels by the end of 2019 (which as you rightly say they did - in October) but also that they maintain it (which obviously so far they haven't). I agree though it is not a bare minimum as this is a scenario in which they felt they would not breach the covenant - we don't know if 85% or whatever would also be enough. And as I mentioned in my previous post I think they will still be ok one way or another.

Base Case wording from the accounts below for info:

"The Group’s base case scenario assumes a continued gradual recovery from the current shutdown, with cinemas across all
territories remaining open. Admissions are forecast to return to levels representing 90% of comparable periods in 2019 by the end of the year. Admissions are then forecast to remain on average 10% below 2019 levels throughout 2022"

"Debt covenant breach is absolutely nailed on."

No it isn't. Using CINE's own projections where they felt they needed 90% of 2019 revenues by the end of 2021 (and then to maintain those levels) to avoid breaching the covenant then there is still a good chance they'll be ok. Given recent figures they obviously need more than 90% now for the remaining months but with the films Fun has listed there is every chance they'll get enough.

Even if they don't, providing the run-rate and outlook by the summer is much better, another waiver will probably be given.

HGN - Sorry, I'm afraid I'm not familiar with what exactly Microstrategy were doing. From the little I do know it appears like they were trying to strip out impairments due to falls in BTC to say look what the results would be if we didn't have to do this. I can understand why they would want to do this and why the SEC would have an issue with it but I may have misunderstood the situation and tbh I'm not interested enough in MSTR to look at in more detail (it's not exactly fun trawling through accounts)!

What is interesting to me though is that I've looked previously at the financials for a few miners and they each have a different approach for accounting for changes in the value of BTC they hold.

ARB is alone from the ones I've looked at in that they bring ALL the changes in BTC value directly through to the headline profit (i.e.profit before tax and net income). So its reported profits will soar even more if BTC does really well, and will sink if it doesn't. So impairments don't apply as profit already reflects the full movement in the value of HODL already - and makes the reported profit more volatile.

MARA though only seem to do this for BTC they have bought. For mined BTC they do not include any upside on HODL (until presumably they sell) but do impair for any decrease in value since mining even if that value then subsequently goes up again.

HUT8 meanwhile do seem to allow for all changes in HODL value (like ARB) but 'below the line' i.e. in other comprehensive income.

Key takeaways for me from this are:

1) Never just compare profits at face value between companies - it can be very misleading
2) Now that we are on NASDAQ will ARB change in any way the approach to reporting (e.g. like MARA - or even MSTR)?

So he’s Scottish?

“How can omicron be used to explain a hit on Q3 results for Wizz??? Q4 is Oct to Dec. Omicron discovered in Oct. Have missed something here?”

Yes - you have. Q3 for Wizz is Oct to Dec as their reporting year ends in March.

They already have:

https://www.londonstockexchange.com/news-article/WIZZ/3rd-quarter-results/15302049

"But issuing NFT shares at 4p when the sp is 2.475p"

That's not how it works I think in this case. From what it says Pluto is the bigger company (it's a RTO). So the price to use isn't simply the price of nft shares now but using the value of the proposed new, much larger company and the total number of shares and then working backwards. This is tricky as there is no quoted price for Pluto but I'm sure it can be worked out - I'm just not good enough to do it quickly and don't have the time at the moment to try and do it slowly. So I just trust the numbers are ok as they have presumably done all the sums properly.