Member Info for Hexam

"Not a good idea" to buy more? It's very straightforward. I did my research, I understand the financials and I believed the share was good value. I could have made the wrong choice of course. It happens. But if I thought ARB was value at £1.70 then it's even better value at 85p - so happily bought some more.

Averaging down is not always a good idea - it depends on the reason the price is falling. The only reason I can see in this case is that BTC has dropped and sentiment with it. BTC is a volatile asset but I knew that when I signed up and though I'm no crypto disciple I believe it is here to stay and don't give a fig about resistance or support levels. That's all short-term and just dodgy theory anyway. As for the other fundamentals, they seem to be going the right way (expansion, difficulty levels dropping etc.)

So unless my view changes on BTCs future or the company messes up I'll keep taking advantage of a falling sp.

As I said I may be wrong but it's my call/responsibility and the tiresome de-ramping means nothing to me and I struggle to understand why people get so upset with it if they have the courage of their convictions. Instead it always seems to turn into pantomime nonsense as it has done again - so a good time to cook the tea!

Me

Rory - the costs of the machines are not in the mining margin, just the costs of running them (hosting/electricity). The costs of the machines are about £0.8m pm (including the leasing costs on the new machines in Q1) and the admin costs are as you say small (£0.2 pm from accounts at year end but probably gone up a bit since then).

So £1m+ in costs not included in the mining margin on top of the £1m costs that are included (and which can be easily derived from the monthly numbers).

*mine, not sell 200 coins

Sorry Rory, can't believe I'm saying this but Pearls is right in this one instance.

Ongoing costs are about £2m per month (close to $3m). So to cover these would have to sell approaching 200 coins at $15,000. The $7,500 would only cover mining costs and not salaries, depreciation of rigs etc.

It's academic though as the key is what the future is longer term for BTC as that is what will determine the ultimate profit.

The rest of Pearls note is garbage though.

I'm not focused on any FUD Everup, but instead would like to focus on more constructive thoughts (positive and negative) about ARB.

On the positive side:

- the ease of mining has increased over 40% for the whole of July compared to the whole of June so should mean bumper figures in the next update
- should get news soon about the Texas development
- more rigs will soon be operational (and even sooner if ARB have acquired any of the Chinese ones)
- now a constituent in many index funds

On the less positive side:

- Weakness of BTC a major drag on sp
- Nasdaq hasn't been the best example of how to communicate

Lots more beside and it would be good to get back to discussing these rather than each other. But maybe you'll say I'm a dreamer - but hopefully I'm not the only one. Just imagine :)

I agree Everup that there are individuals who post here with the sole intention of worrying investors, regardless of whether they are organised or not. But their attempts are blindingly obvious and best ignored, hard as that is, otherwise the board is just clogged up with pointless exchanges. I say pointless as whilst your enthusiasm for ARB is laudable I would hope most are savvy enough to spot a de-ramp when then see one - or at least be suspicious. Have faith in people, they can choose what to take note of, do their own research and make their own minds up. If not then they should probably think twice about investing anything at all in the stockmarket.

Besides I don't think you can take the moral high ground about organised FUD and unsubstantiated claims about drops in sp given your contributions to the SGI board recently.

Mining difficulty has dropped again. Nearly 5% so nothing like the previous drop of 28% but will probably be the last change this month and should keep ARB on track for bumper July figures. Maybe 240-250?

The content was nicked from another link. It’s the added naming that was malicious. In amongst the obvious trolls were innocent posters being accused a crime. Would you feel the same about the post if yours was one of those names?

I agree though that this board spends more time discussing each other and other non-ARB related topics but lots are guilty of that - including the two of us right now :)

Might be time to remind people it’s a fake.

Thank you!

Thanks Wolf - yes, they do relate to the 4500 machines. I think it’s mentioned somewhere but it’s also consistent with the cost of the machines given elsewhere in the accounts and in the relevant RNS.

Agree with everything you say Wolf which is why I am wary of trying to ‘accurately’ predict the impact of Texas etc.

The profitability of existing machines (including those in installed in Q1) can be determined pretty accurately though with the exception of admin costs but even if they’ve doubled it won’t make that much of a difference.

I think the P/E at the moment is about 15 but is was under 10 when BTC was higher earlier this year.

So yes, something has gone seriously wrong - the sp!

FWIW I just think the market hasn’t quite grasped how profitable this business is (or won’t at least until such profits actually get reported). Or maybe the market understands the profitability but doesn’t like the volatility that goes with? Who knows? All I do know is that the sp and profitability appear wildly out of step to me and given that I think the profitability is likely to increase even more this is why I’m invested. The risk is BTC value but I believe this will increase in time but admit is the thing that I am less confident of - certainly compared to most other posters (apart from the trolls)!

*sorry I meant I’d expect overall profit to increase somewhat with new machines etc, not necessarily margin though that will certainly increase if BTC goes on roll!

Hi Wolf,

Actually it’s a bit simpler than it seems. The mining costs (hosting and electricity as you say) are given each month in the RNS from the revenue and margin. For June this is 22% of £4.36m i.e. £1m. April and May gave similar answers. So these are known.

The depreciation on existing machines is I think £0.5m pm from memory (can take from the accounts) and the lease on the new machines is £0.3m pm from memory. So these are all the hardware costs going through P/L.

This leaves only the admin costs and these are relatively small and were about £0.2m pm last year. Probably have increased a bit but shouldn’t have done so significantly.

So I’m pretty sure the total current cost base (pre Texas) is around £2m pm and hence can determine pretty accurately overall profit before tax of current operations for a given BTC value.

Going forward though it is trickier. Although can estimate impact of difficulty reduction, the income from new machines and their their costs is less clear - plus there are other Texas costs, impact of Pluto etc. Would hope and expect though that given how quickly machines pay back investment that the overall margin will increase somewhat.

Very boring post I know but hope it helps explain why I said what I did before?

AB - The 13m 53 average block time you mentioned was for the last completed block (up to July 3rd) hence the 28% drop in difficulty then. The current block is taking between 10 and 11 minutes. Good news is that the current rate of mining is much closer to the target 900 BTC per day so ARB should do more than 210 this month.

Agree Wolf that mining margin is not gross margin but my estimates were based on the latter. The mining costs included in the mining margin have been around £1m pm (easy to work out from RNS). The total other costs (including the depreciation on the rigs is similar (see report and accounts and cost of leasing for machines in Q1).

It is fairly easy from there to get to P/E ratio approaching 10 and as long as BTC holds up then the reduced difficulty and the expansion should bring it to 10 and then below. If BTC takes off then get a ridiculous P/E and today’s sp will be history.

But of course we don’t ‘know’ what BTC will do.

The amount being invested in the business won’t have that big an impact on reported profits (the cost of all the current rigs is less than £1m per month and all have already paid for themselves - even the ones installed in Q1). The other Texas costs will also presumably be spread or have value in the accounts (as will Pluto). The key to profits is BTC. If it stays where it then probably are looking at £30-£40m this year as Arps gave.

If gets back to ATH then will be approaching £100m!

If BTC halves though then will struggle to break even.

As others have said it comes back to where you stand on BTC. Pick a side.

Hi Arps,

Your numbers look in the ball-park. P/E is based on net profit not EBITDA (depreciation in particular must be included for ARB as that’s where the cost of the rigs come in). However, your admin costs are overdone so swings and roundabouts and as you say things will only get better with the reduced mining difficulty and Texas expansion.

So agree good value - so long as BTC holds up which is where the risk comes in.

The drop in share price is a worry but rather than listen to the trolls would just suggest anybody concerned switch off from their lies and fear-spreading and just do their own research and see what conclusion they come to - or simply remember why they invested in the first place and think has anything really changed in terms of longer term expectations. GLA.

Not quite old guard but been invested a while now.

I think only two material things have changed in that time. The fall in BTC and the recent Chinese clampdown which has reduced sharply the difficulty of mining. The first has reduced revenue, the second will increase it and we'll be probably soon be around the same revenues as were at earlier in the year.

So we're likely to be at the same level of profitability we were at in March and April but at a lower BTC value - so actually in a better place (as more potential for upside on BTC). The sp has suffered though, largely I suspect because of BTC's woes which appear to have dominated sentiment while the reduced mining difficulty is yet to kick into the figures.

Looking forward, nobody knows where BTC value will go so it comes back to where you stand on this. If you think the long term picture for BTC is rosy then the financials of ARB speak for themselves and the sp should rise as the reported profits do.

If you don't think the future of BTC is rosy then perhaps it's a good idea to look elsewhere.

If you're not sure then you are just gambling on the toss of a coin.

PS - Good to see you post again Albert - hope all is well with you