Member Info for Hexam

Agree K3. The big kicker is BTC - if gets back to ATH then the profit goes through the roof (of course it reduces if BTC falls more).

For the fag packet calculations I think it is worth allowing for all costs as these are significant. The mining margin of c80% only allows for hosting/electricity costs of mining. It doesn’t allow for admin costs (small) but also the cost of rigs (large but are spread in the accounts).

Upshot is the mining costs are about £1m pm and so are the total other costs so about £2m pm in total and means a gross overall margin of around 60% currently.

However - you are right - this is all detail. However you cut it, profits are great and will get much better as difficulty decreases, expansion continues and BTC (hopefully) rises. So the £25-£30m (and any other number) will be out of date very soon.

Correct darien - the PE should allow for all costs and tax but don’t know where you get £10m from. Total costs are around £2m pm so indicates around £25-£30m profit so still pretty close to the PE of 10 K3 stated. This is before mining levels take off in the second half of the year.

So the numbers speak for themselves - if calculated correctly :)

Chaebol, I don't think that's the case. The $100m is a facility which as far as I am aware has not been touched yet but the size does not mean it was all expected to be used. It's just good to have such a facility available for any expanding company.

So I don't think we need to read anything more into this than ARB taking an opportunity to take advantage of what it presumably sees as cheaper alternative financing but could be wrong and I agree it would be better if they were more open about the funding requirements, and the logic for this route, to avoid speculation and possible negativity in the market.

To be clear the company is not "racking up debts" in the alarmist way suggested.

Yes, it has just taken out a loan for £14m for 6 months. Until then it was practically debt free - a very unusual position for ANY company, let alone such a rapidly expanding one already making decent profits.

Let's keep things in perspective.

PS From someone not on an island (well, actually I am but not that one) but gets this share perfectly well thank you.

"With income of £5m a month, why wasn't the recent deal concluded out of free cash flow?" - Because the view was taken that from its current low value the BTC price would increase and so it is better to HODL for 6 months and use it then rather than sell it now.

"Equally, why wasn't the £14m raised from a more conventional source?" - See answer to previous question.

Sorry Chaebol I don't think it is naive, just common sense for the reasons I gave. If you disagree then fine - everybody entitled to view. One thing to point out though is that when the previous raises were done the HODL was much smaller and the total value was just a fraction of the £49m raised. So this wasn't much of an option then. I agree it is now but in my view the loan is a better one, and also better than exercising the already agreed loan facility. However, I do agree that it would have been good to reference in the RNS why that facility was not being used.

He will part with it and has done before (most of 2020 in fact) so simply false. With BTC so low it's no surprise he's taken this route for loan and HODL strategy in general at the moment.

Agree and don't blame you Mike. It seems this one is suggesting BTC is not income, liquid or disposable. Go figure.

Hi Chaeboi,

You make some fair points but I don't think the following is one of them:

"Now the end of June we are borrowing 14 million over 6 months which will probably have to be paid with a dilution."

I think a dilution in 6 months to repay the loan is extremely unlikely. Apart from anything else why not just do that now instead of incurring the additional costs involved of doing both? Of course one reason could be that they may be waiting for a higher sp to get more from any dilution but that's much the same as what they have done anyway i.e. take a punt on BTC. Clearly they are expecting BTC to be higher in 6 months so they can pay off the loan by selling fewer coins than they would need to do now. That's a gamble and I like the odds so for me it's a good move but can understand the market maybe not seeing it quite that way.

Well, you're missing the rest of the cost base not included in the 80% margin (overall profit margin is nearer 60% at the moment) and I think coins mined in June will be around 180-185 but agree with sentiment especially with the July reduction in difficulty likely to bring us to the numbers you describe and more. Once all you said plays out I'm sure the sp will rise but in the meantime it's a case of negotiating all the turbulence.

It probably won’t be - but it won’t be the highest either.

Nothing smart about buying high and selling low.

Agreed Xenor - and I see you're using your ready reckoner :-)

*hits $100k - obviously :)

No ramping or buffoonery to suggest £5 if BTC hits $100m. That's about triple the revenue and more than triple the profit - and that's before the likely sharp increase in coins mined due to reduction in difficulty and Texas expansion etc. So £5 may be about right.

The ramping would be saying BTC will hit $100k as nobody knows.

Agree Lolades - but that's my point. It's the expansion that's exciting not this RNS - though I agree it may mean we are expanding more rapidly then we (and ARB) originally thought which would indeed by great. Like you I look forward to that RNS! GLA

No. If they wanted to do a share issue they would have done it now rather than do a loan (with interest) and then do one in 6 months. Why go through both exercises? More likely they will sell BTC at a hopefully much higher price than it is now or maybe extend the loan in some way.

First off I believe ARB is an extraordinarily well managed company, with an excellent strategy, an exciting future and with super large profits on the horizon - therefore I think the current share price is a bargain.

I don't see though why the rns is brilliant or should be expected to move up the sp. They've taken out a loan and even though it is for expansion it is still a company announcing extra financing. It's the expansion itself that is the exciting bit and that news is already out there. I agree that it is a smart move to raise money in the way ARB has but others in the market may see this as further BTC risk for a company already vulnerable to its price. If BTC goes down over the next six months then they will need more BTC to repay the loan (plus interest) than if they had sold HODL now. I don't think that will be the case and neither I think do most other posters here which is why we see it as a clever play. It is what the market more generally thinks that matters to the share price though and I doubt the rns would have made many waves beyond the crypto faithful.

So I believe everything is peachy and the rewards will come in time but the rns itself is not that big news - but just my view.

Likewise. I don't know why it has fallen (again) unless, as has been suggested, it is just being dragged down be negative sentiment on travel stocks generally following EU news. Fundamentals look decent (especially compared to other travel companies) so agree this seems an opportunity to get cheap stock - so just topped up.

No worries. Yeah, I think the average is around $47k for May.