Member Info for Hexam

The 50% costs is about what they are currently running at (the costs included in the 80%+ mining margin are a minority of the costs they incur). This may improve as they grow but hard to predict.

One thing I should have mentioned though is that additional profit will come from any increase in the value of HODL from BTC rises and this could be very significant - as could the returns from Pluto etc. which the article also glossed over a bit. Lots of moving parts and reasons to be optimistic but just feel the article painted an overly simplistic picture, based on a few headline numbers, and in places an inaccurate one - so should be taken with a big pinch of salt.

The £272m is potential revenue not earnings - the profit might be about half this after allowing for all costs. The 3.7 EH clearly won’t produce 620 BTC per month as the article does indeed ignore difficulty levels (both past impact and likely future impact) but agree that rises in BTC value should act the other way so revenue estimate may be reasonable.

Article suggests though that 3.7 EH is capacity when Texas complete but will be much more than this - even for first 200mW. The 3.7 EH is only that from current known orders and without benefits of immersion. However it also gives the impression this 3.7 EH is fully funded which is very debatable.

All in all I don’t think this is a very well informed article and that it overstates the shorter term financials but underplays longer term growth potential. I’m bullish about Argo - but for me this piece has too many holes in it to affect my confidence either way.

"Ok, so you think $120m isn’t important to a company valued at $650m? Or that current annualised revenue is 20% of mcap? Really?"

Yep, really. That is in the sense of thinking whether the current sp is cheap or not. It is what the company will earn in the future that drives the sp, or more accurately what the market thinks it will earn. The current earnings just gives the starting point for that view. How quickly, affordably and efficiently argo can expand is key and hence why people ask questions about it. Seems fair.

My response, like yours I think, is just let them get on with it (as long as they do 'get on with it' of course).

K3, confused by your response as my answer was I don't care much how they fund it as long as they do. So I'm not as stressed as those asking the question but I recognise how important the question is to some - and it usually doesn't get answered.

As to the current revenue and HODL that's all very well but shares aren't valued on current assets or earnings but expected future earnings - and that comes back to the expansion question.

I don't think it's FUD spreading to talk about how argo is going to fund the growth necessary to keep up with other miners and avoid the likely fall in mining revenues if they don't. This is the big stuff, not how PW comes across in a five minute interview, shaving a bit off the electricity bill or how much the shiny building in Texas might be worth.

They certainly cannot afford just to wait until the share price reaches 150-200p before doing a fund raise as there is no guarantee it will get there in time. They do of course have other ways of raising funds but I suspect selling BTC will also be unpopular whilst it is questionable just how much more they can raise through loans.

I still believe in ARB but that doesn't mean dodging the big questions. For me though the answer is simple in that I don't care so much how they raise the money as long as they do it as ultimately however they do it will lead to greater benefits for shareholders, given the profits involved, than not expanding quickly enough.

The problem with the scenarios that were produced by SAGE is that they were exactly that - scenarios, not predictions. They were based on the assumption (as directed by the government) that Omicron is as severe as Delta so if it proves that Omicron is less severe (and certainly the early signs are promising) then the reality will probably be much better than even the 'best case' scenarios.

It's still too early to say what the severity of Omicron really is but I haven't seen any data on hospitalisations yet that is alarming in any way - quite the opposite so far and hope it stays that way.

Agreed HGN but these are directors, officers and other shareholders close to the company. It would be a bit worrying if these would be so keen to sell out at such a low sp at the first opportunity.

Unlikely I would have thought. There aren't that many shares involved (around 2% of total shares I think) and can't see many directors etc. wanting to sell now at a loss.

"I think he [PW] has a better handle on profitability than random investor."

I think they both have a good handle on profitability - they are just quoting different measures. The figure of $5-$10k per coin that PW quoted only includes hosting and electricity costs. Random Investor simply uses a wider definition of costs so his numbers are higher and he does this to try to look more at overall profitability and to compare companies on like-for-like basis.

Whatever way you look at it though the business is very profitable for ARB at much lower levels of BTC than today's price.

AB - Agreed but whatever the value is that is reported in the accounts (whether book value or some other value) that is the NAV. Like mcap it is a factual value not what we think it should be.

Also should point out that for NAV need to deduct all the liabilities (loans etc.).

AB - Helios may be worth that much at some point in the future with all the machines in it but at the moment it won’t be valued at more than it is funded for or that it’s costing (assuming it was already built) which I think is around $100m including land? The NAV if it was reported today would I think be some way short of current mcap - though still represents very decent value IMO.

HarChris - Just beat me to it :)

@exapt - “ Opps well spotted... 45 deaths were recorded today, a decrease of 66 from last week's 111 and percentage decrease of 59.5 %”

I’m afraid that’s still not quite correct. You are comparing the 45 deaths reported yesterday with the number of people that died a week ago (and were reported later) and not the number of deaths reported a week ago which was actually 52.

Still a decrease and still encouraging but not quite as dramatic as 59.5%.

@poorinvester - indeed - and you sir :)

@poorinvestor - I agree with most of what you say although not with your conclusion that it is "inevitable" that btc will keep rising. I think it is likely but not certain since as you state you've made the assumption bitcoin remains popular. If that assumption is wrong then the limited supply may then outstrip demand. I do think it will remain popular but I don't KNOW it will - how can anybody?

That was not the point of my post (and some others) though. Will BTC rise over time and is it a good hedge against inflation are two different questions. For me a good hedge against inflation is something you would expect to give a real rate of return i.e. beat inflation consistently. I just think BTC will beat inflation - but very inconsistently and too much so for it to be a good hedge against it.

"Will it prove over time to be hedge against inflation? No one knows yet but that's how you make /money, you place your bets and take your chances."

Surely if it's a case of placing your bets and taking your chances then it's not a very good hedge at all. Will it go up more by inflation over the long-term? Probably, but that's a very different thing and certainly over shorter time periods its volatility means it provides no protection against inflation at all (e.g. inflation is on the march at the moment but BTC is currently in retreat).

There are many good reasons for believing in BTC but a hedge against inflation is not one of the most convincing ones - for me anyway.

HI Flowerpot,

It's certainly a possibility but anything more than that is obviously speculation. I do think it would require an RNS though if it got past the planning stage but not necessarily immediately - but just my guess.

"I think that across the board investors didn't properly factor in the costs of a hashrate arms race and the subsequent borrowing/dilution/hodl reduction. But we have covered that point a gazillion times."

No matter how many times it is covered though it appears from some of the more bullish posts that maybe it's still not sunk in for many. I agree with your other points though and that at this price the fear from this need to continually fund growth, the execution risk and that of BTC generally is probably overdone now. Even, as is likely, difficulty doubles over the next year and even if another raise is done to meet the cost of getting to 3.7EH, and it's a bit late, then the numbers still comfortably add up for me at this price - especially if we get the other benefits of Texas (from immersion and cheaper electricity) and assuming of course that BTC doesn't plummet in the meantime. Plus Pluto IPO could also provide a welcome and sizeable bonus. So I've had another nibble at this price.

Maybe Emma is correct Flowerpot but that means ARB have effectively got the machines a year early for free or put another way they only paid half the original price which, as welcome as it would be, I don't think is the case especially given how the RNS has been worded.

"that makes sense, so the overall contract was terminated at no cost each way, just we paid them USD for 125 BTC" - no if this is the case then ARB has gained $6m as we no longer have to pay the lease payments - which would be great but I think the BTC are being received for payments ARB are no longer getting. But just my guess and happy to be wrong as that would mean ARB have got something for nothing.