Member Info for Hexam

Planet FUD. Just look at their post history. Ignore.

Bit strange but FGP, SGC and especially GOG all struggling too. Maybe as simple as the good news on international travel is weighing down the domestic travel stocks. Probably over simplistic but then again that's what the market seems to do best.

"What constitutes a profit here though? Holding all the bitcoin?"

Yes. Profit is recognised when the coins are mined but so is any subsequent change in HODL value. The profit shown in the report and accounts includes both with the BTC value taken as at the date of the accounts i.e. 31/12/2021 for the next FY accounts.

To be fair Jeff your mining figures could end up being spot on and the rest could have been close had your guess on BTC been correct.

Incidentally, the mining margin wouldn't necessarily increase with mining capacity as the 'fixed' costs such as salaries aren't included in it - but a $62k BTC and the recent reduction in mining difficulty would probably have done the trick anyway.

Keep enjoying the wine though and hopefully a rising BTC will mean your predictions are just a month or two out :-)

Excellent point on the FOMO brigade Herdie. This share seems to be traded more on fear and FOMO at the moment rather than the fundamentals - so will probably go much higher than expected if BTC goes up to £72k and much lower if it drops significantly.

As the fundamentals continue to improve though (new rigs, Texas etc.) and get noticed more (eg published accounts, nasdaq) I would expect the sp to still rise nicely even if BTC remains flat.

Think you're being a bit optimistic but agree there is plenty of scope for sp increase later this year/early next from that list of goodies (and more e.g. Pluto) - and so refreshing to see a post that is actually about ARB.

Hi Marsha, the article says Amazon has denied it so you didn't read it wrong. I agree, there are some very thin-skinned people on here so if you say anything that doesn't fit with the 'Boom' narrative you are likely to be attacked I'm afraid. I wouldn't include Eddie in that as to be fair I think it was reasonable to ask for the link as it wasn't obvious elsewhere and was well buried in the article itself. Others though were all too quick to leap in.

It really shouldn't be you doing the apologising. It should be the shameless rampers, de-rampers and anyone else not able to read a differing opinion without throwing accusations around or becoming offensive.

Here is the report on Bloomberg cited by Marsha that "doesn't exist" which now says Amazon has denied the initial report of it accepting Bitcoin. In case this link isn't viewable (it's a subscription service) here is the relevant part.

"Citing a company “insider,” U.K. financial publication City A.M. reported that Amazon was planning to accept Bitcoin payments by the end of the year and introduce its own crypto coin in 2022.

The company denied the report."

https://www.bloomberg.com/news/articles/2021-07-26/amazon-job-posting-hints-at-plan-to-accept-cryptocurrency?srnd=cryptocurrencies

Personally I think Amazon will accept BTC in the nearish future but at the moment, like it or not, it is just speculation.

Don't worry, they'll soon be a rumour denying the rumour that denied the rumour that Amazon will be accepting BTC.

If you're talking about the July results then the performance is mostly fixed. Any price rise will only affect the revenue shown for coins mined in the last few days as the price is taken when it they are mined, not the end of the month or day of reporting. It is only in the half-year and full year accounts that the impact of any subsequent rises (r falls) will be included.

I agree though that July figures will be impressive (for the number of coins mined) and that Texas and NASDAQ will be positive but 75% rises in a day? They could happen of course but saying they 'will' is another matter.

"HOLD and you will see 75% to 100% in day gains soon".

There's been quite a bit of ramping today - 160p on open, 160p tomorrow, £10 this year etc. and now this.

I sometimes fear for inexperienced investors seeing this stuff and being seduced into investing in something they perhaps don't fully understand. I know it's been a good few days and excitement is high but can only imagine the grief anybody would get if they posted something even slightly negative with, like the above claims, nothing given to support it.

To me this is worse than de-ramping as it is encouraging FOMO and for people to gamble. It is these people that will then be easy prey for the FUD spreaders if things don't go up in a straight line.

The only thing I would urge to anybody currently holding or thinking of investing is to DYOR and so come to your own conclusions. If you are investing' holding or selling make it your decision and not that of the rampers or de-rampers.

Good point Night_Watch. Must admit I'm not the biggest fan of outsourcing from experience (looks attractive but can be a false economy) but suspect you may be right. They may also be attracted by a greater resilience especially if they are currently suffering from key people having to keep isolating. All theory but agree that the sp just looks very cheap at the moment so thinking of adding more.

"Suprising amount of sells today. Further proof that a US Nasdaq listing will allow Argo to grow.
We don't seem to get it here in the UK. I mean Amazon rumoured to be adapting Bitcoin and people sell?"

Shouldn't be surprising at all. This rumour is now probably fully priced in and the sp has gone up 60% in a few days. Can't blame anybody who invested at the recent lows not to think about banking such a thumping profit over such a short time. It may not prove to be the best move (and I don't think it is) but it would be foolish not to even consider it.

K3, the hosting and electricity costs are the only costs included in the mining margin and as you know these are reported fully each month. They are known already and are £5-£6m ytd so there is no more upside here I’m afraid.

Hi K3,

Not sure what you mean by expenses having halved - they've gone up since 2020. (The mining margin has improved but this is to do with BTC being higher than last year - mining costs have increased and other costs will have to.)

I think the H1 profits will be £10-£15m before tax on the big assumption that there are not yet significant development costs going through the P/L.

This is made up of revenue £30m (RNSs), Costs £12m (split about half mining costs from RNSs and half other costs) and estimated impact of BTC price movement of -£5m between when BTC was mined/bought and the end of June.

So if pay no tax (?) and no currency gain/loss (??) get P/E ratio pretty much the same as you i.e. about 15 on current sp.

This is good but would have been way better if BTC had held on to its value of earlier this year. It will also improve in second half of the year due to the mining difficulty reduction, as long it lasts, and increase in rigs (costs will go up to but not as fast).

Conclusion: In short I think we are undervalued somewhere between quite a bit and an awful lot! But this is subjective and based on estimates that may be significantly out because they can easily put unexpected things through the accounts (though arguably such things shouldn't affect the true underlying P/E ratio).

Hope that makes sense and happy to be corrected on anything.

JH - I think the $17.5m you are referring to is effectively to purchase the land and this is being paid through additional shares (see below from Land Purchase RNS 8th March):

"The acquisition of DPN LLC (by way of a merger with a wholly owned subsidiary of Argo) gives Argo access to up to 800-megawatts of electrical power, where Argo intends to build a new 200mw mining facility over the next 12 months. This facility will provide Argo with what it believes are some of the lowest electricity rates in the world, the majority of which is from renewable sources.

The consideration for the acquisition was an initial price of US$5M, satisfied by the issue and allotment to the shareholders of DPN LLC of 3,497,817 new ordinary shares in Argo, with up to a further US$12.5m in shares at a predetermined price being payable if certain contractual milestones related to the facility are fulfilled."

Agree Blubay. Lots of moving parts at the moment, not least the unpredictable nature of BTC, but like you would also hope for a £1bn mcap before too long. Whichever way I look at it though the current mcap seems ridiculously low for the current profitability and how this profit is likely to increase in the near future.

@AimInvestor

Just realised you have mentioned both 20x earnings and 20x revenue so not sure which one you actually mean for ARB. I think 20x earnings (after all costs and tax) is closer to a fair value which as it happens is about 10x revenue for ARB - so I agree £600m may be about right. Although I think revenue will be much higher than £60m this year because of reduced mining difficulty and new machines due - and BTC may even increase! So £600m would be a minimum for me but all very subjective.

They raised £49m through fund raises in Q1 and recently took out a 6 month £14m loan plus they have the IPO coming up as part of the proposed dual listing which I expect will raise a significant amount.

Some has already been spent on Pluto, operational costs, lease payments for new rigs in Q1 and possibly some Chinese rigs but think they will have plenty of cash left over for Texas and hopefully more besides.

I agree ARB is undervalued but struggle to see 20x as necessarily being appropriate. Agree that growth stocks should have higher multiples but comparing two different growth stocks is very difficult and extremely subjective. Also ARB is already at the stage when using P/E ratio is probably better than price to sales.